People v. Roth

31 P.2d 813, 137 Cal. App. 592, 1934 Cal. App. LEXIS 942
CourtCalifornia Court of Appeal
DecidedMarch 29, 1934
DocketDocket No. 2307.
StatusPublished
Cited by15 cases

This text of 31 P.2d 813 (People v. Roth) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
People v. Roth, 31 P.2d 813, 137 Cal. App. 592, 1934 Cal. App. LEXIS 942 (Cal. Ct. App. 1934).

Opinion

ARCHBALD, J., pro tem.

From judgments of conviction entered on verdicts of guilty returned by the jury on seventeen counts charging grand theft and four counts charging violations of the Corporate Securities Act, and from orders denying his motions for arrest of such judgments and for new trials, defendant has appealed.

The evidence shows that defendant at the age of twenty-one made a business connection with C. C. Julian and continued in such business until December, 1924, at which time they transferred to S. T. Lewis fifty-one per cent of the voting stock of the Julian Petroleum Corporation, providing Lewis would pay to such corporation within ninety *596 days the sum of $3,000,000. The corporation named was indebted to Julian and defendant in the sum of approximately $1,300,000, which indebtedness was finally settled for $300,000. In February of 1927 defendant organized a Nevada corporation named J. H. Both & Company, which was licensed to conduct a brokerage business in California. Such license was revoked July 27, 1929, and after that date no certificate to act as a broker was issued to such corporation or to defendant. The company leased space at No. 651 South Spring Street, Los’ Angeles, and spent some $37,000 in improving the premises, opening for business on April 12, 1927. Mr. James C. Battle was introduced to defendant by Julian, and became secretary-treasurer and attorney at a salary of $1,000 per month, of which he was to use $400 per month in the purchase of stock of the corporation. Battle remained with the company some time but none of the corporate stock so purchased was ever issued to him. Two other men were induced to put in $13,000 and $25,000, respectively. The first was never able to secure the stock or to see the stock book; the second was issued 500 shares. Both withdrew and brought suit to recover the amounts so invested. Defendant was made president of the concern but no stock was issued to him, and the qualifying shares in the names of the incorporators were indorsed in blank and remained at all times in the stock book, which was kept in the possession of defendant.

After about two years defendant and' his private secretary were the only active directors present on the few occasions a meeting was deemed necessary by defendant, and the latter was apparently the only one having any voice in the management of the concern. In June of 1929 the company began selling stock under what is known as the twenty-payment plan. It did not have a seat on any exchange, but opened accounts with houses which did, under the names of the cashier, Miss J. Jadwin, and O. S. Witherall, defendant’s secretary, who was not connected officially with the corporation. Mr. Conway Beavans was bookkeeper and Mr. William J. Howell the sales manager. The company did not prosper and attachments were being run by one of the suing stockholders. Another serious complication was the taking of the books of the corporation by the district attorney under a search-warrant and subpoena duces tecum *597 in November, 1929. In December of that year defendant caused a new corporation to be organized under the laws of1 Nevada, called “Security Investment Counselors, Inc.”, with a capital investment of $500. This company was to pay the former corporation $25,000 for the lease at 651 South Spring Street, $12,500 for the fixtures and $30,000 for the assignment of contracts to purchase stock. On December 21, 1929, 363 of such contracts were assigned to the new corporation, with balances due from the purchasers of $207,859.88. The market value of the stocks called for by such contracts on that day was $213,759.76, and dividends had accrued of $2,286.35. In other words, the obligations assumed by the new corporation on such contracts amounted to $8,186.22 more than the total amounts that would be paid in by the contract holders if they completed their payments, and the securities transferred to the new corporation aggregated in value but $1334.75. The financial condition of the corporation at the outset, considering the obligations assumed and its capital, was bad.

Defendant did not appear as a director or officer of the new corporation for very obvious reasons, but the bookkeeper and cashier were the same as before, and Mr. Howell, sales manager of the former concern, was made vice-president and general manager, leaving the corporation, however, about four months after its organization because of a disagreement with defendant. Apparently defendant’s was the only voice of authority in this corporation from its organization, although to the public at large he seemed to have no interest in it. The income of the concern in 1930 wa,s $49,477.16 and its expenses $101,655.72. The items of expense do not include the sum of $35,387.10 paid defendant for his personal use, nor the portion of the so-called “suspense” account aggregating $38,550, which was withdrawn in cash and given defendant by his private secretary or the cashier. The income in 1931 to the date in March when a transfer was made to another corporation, as hereinafter mentioned, was $8,618.66, with expenses of $20,318.02.

The new corporation, like its predecessor, had no broker’s license or certificate, nor any trading account with brokerage houses, but in its dealings with two or three such concerns it used the name of its cashier, a Miss Engle, and the fictitious name of Nickle. About the middle of 1930 de *598 fendant attempted to dispose of the remaining accounts of J. H. Roth & Company and also of Security Investment Counselors, Inc., but without success. The lease above referred to was finally disposed of for approximately $7,000 and the use of the premises while alterations on the building were in progress. About March 20, 1931, the remaining accounts of the Security Investment Counselors, Inc., were transferred to the Coast Investment Corporation, Ltd'., which had been doing a similar line of business and had a broker’s license, some twenty-five accounts and the sum of $2,605.94 cash in bank. The deal for the three issued shares of the capital stock of the Coast Investment Corporation was made by one J. H. Williams, who was a salesman and had been acquainted with defendant for ten or twelve years. There is evidence supporting the conclusion that the suggestion to make the deal came from defendant, that he was the one interested in it and that Williams had no interest other than the salary he drew, which was fixed by defendant. The owners of said three shares of stock were paid the sum of $2,625, or but $19.06 more than the cash in bank of said Coast Investment Corporation. Williams testified that such shares were indorsed in blank by the former owners and placed in the minute-book, or with the papers, and that it was his understanding that defendant “held it all”; that he had no agreement with defendant as to a division of the same.

There were 366 contracts transferred by Security Investment Counselors, Inc., to the Coast Investment Corporation. The latter concern was to make collections and turn the money over to the former, which was to deliver the stock to the Coast Investment Corporation to cover any contracts completely paid.

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Bluebook (online)
31 P.2d 813, 137 Cal. App. 592, 1934 Cal. App. LEXIS 942, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-v-roth-calctapp-1934.