Spinks v. Clark

82 P. 45, 147 Cal. 439, 1905 Cal. LEXIS 418
CourtCalifornia Supreme Court
DecidedAugust 5, 1905
DocketL.A. No. 1378.
StatusPublished
Cited by29 cases

This text of 82 P. 45 (Spinks v. Clark) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Spinks v. Clark, 82 P. 45, 147 Cal. 439, 1905 Cal. LEXIS 418 (Cal. 1905).

Opinion

ANGELLOTTI, J.

This is an action to rescind a contract whereby certain real property of the plaintiff was exchanged for certain oil stock of defendants Clark and Bryan in the Westlake Oil Company. The exchange was effected June 6, 1900. The action was commenced September 21, 1901. The cause of action stated in the original complaint was one for the rescission of the contract upon the ground of fraudulent misrepresentations on the part of Clark and Bryan. On the trial, the complaint was amended by adding thereto certain allegations designed to show, in addition to the actual fraud theretofore alleged, a case of constructive fraud, said allegations tending to show that Clark and Bryan were from January 6, 1897, to the date of the transaction in question, the agents of plaintiff, under a contract of employment for the sale of said real property, and that by reason of such agency Clark and Bryan became possessed of information as to the estimation in which plaintiff held the property, and he reposed faith and confidence in theip. to the effect that with reference, to any sale or negotiation of said property they would use their efforts to obtain the best obtainable price for him.

Anna P. Leach was made a defendant because she had, before the commencement of the action, become the holder of the record title to the real property.

*443 The findings and judgment were in favor of the defendants, and plaintiff appeals from the judgment entered thereon and from an order denying his motion for a new trial.

It is practically conceded that as to defendant Leach the judgment and order must be affirmed. The findings of the court, supported by testimony free from conflict, are to the effect that she. purchased the real property for a valuable consideration,—viz., sixteen thousand dollars,—which was the full value thereof, without any notice whatever of any claim on the part of plaintiff, and without any notice of any prior dealings between plaintiff and Clark and Bryan with relation to said property.

Plaintiff contends that although the. real property may have found its way into the hands of an innocent purchaser for value, the contract of exchange may nevertheless be rescinded, and Clark and Bryan adjudged, in the event of such rescission, to deliver the money received for such property in lieu of the property itself. It will be assumed for the purposes of this decision that plaintiff’s claim in this regard is well founded.

(The findings of the court are attacked upon the ground of insufficiency of evidence, to sustain them]) and this attack presents the main questions for consideration on this appeal.

The alleged fraudulent misrepresentations may for the purposes of the discussion be divided into two classes, the first being representations of Clark and Bryan to the effect that they would not exchange any of their stock in said corporation for plaintiff’s real property; that they were not disposing of any of their stock, and that the stock which it was proposed to exchange belonged to a stockholder resident in San Francisco; and the second being certain alleged representations as to the value of the stock, its dividend-producing capacity, the freedom of the corporation from debt, and that the quoted value of the stock upon the stock board was based upon the intrinsic value.of the property of the corporation and the merits of the business, and was not at all fictitious or inflated in any way.

(To the. extent stated above, the trial court found that the representations of the first class had been made?) As to the second class, the court found that none of the alleged repre *444 sentations had been made, except a single one to the effect that the corporation had paid two per cent dividends, and this representation the court found to be true.

A careful examination of the record makes it clear that the findings as to the precise representations made are sufficiently supported by evidence. The evidence is also sufficient to support the finding that the representation made as to dividends was true.

This leaves us to consider only the effect upon the transaction of the. representations of the first class—viz., those as to the indisposition of Clark and Bryan to part with their own stock—and the further representation in aid thereof, to the effect that the stock to be transferred belonged to a San Francisco stockholder.

The trial court found that no representation of any kind was made by defendants to plaintiff for the purpose of inducing him to make such exchange; (that plaintiff did not act upon the faith of any representation made by defendants, and consented to such exchange and made his conveyance without regard to any such representation]

It is clear that if this finding is sustained by sufficient testimony, it is a complete answer to plaintiff’s claim, so far as alleged actual fraud is concerned.

The well-settled rule in this regard, as stated by Mr. Pomeroy, is as follows, viz.: “Another element of a fraudulent misrepresentation, without which there can be no remedy, legal or equitable, is, that it must be relied upon by the party to whom it is made, and must be an immediate cause of his conduct which alters his legal relations. Unless an untrue statement is believed and acted upon, it can occasion no legal injury. It is essential, therefore, that the party addressed should trust the representation, and be so thoroughly induced by it, that, judging from the ordinary experience of mankind, in the absence of it he would not, in all reasonable probability, have entered into the contract or other transaction.” (Pomeroy’s Equity Jurisprudence, see. 890. See, also, Civ.Code, sec. 1568.)

(The evidence was clearly sufficient to support the conclusion of the court that the representations under discussion did not operate to induce action on the part of plaintiffs A brief statement as to some of the evidence will make ihis plain.

*445 Plaintiff purchased the real property in January, 1897, through Clark and Bryan, who were partners in the real-estate business, and who, in that transaction, were acting for the vendor, a Mrs. Haley. He paid twelve thousand dollars therefor. The improvements on the property were only of nominal value, and the rents therefrom were very small in proportion to the investment, and this condition continued during the whole period of plaintiff’s ownership. He apparently purchased purely for purposes of speculation, and, according to his testimony, at once told Clark and Bryan to put the property on the market for fifteen thousand dollars. No proposition of purchase or exchange that was satisfactory to him was ever made, until the idea of exchanging the same for oil stock occurred to him. In the. mean time, oil in considerable quantities had been discovered in Los Angeles, and in January, 1900, the Westlake Oil Company was incorporated, both Clark and Bryan being among the original incorporators. Clark was the secretary. This company acquired the property in the supposed oil-bearing territory, and was successful in producing oil in paying quantities. Prior to June 1, 1901, three dividends of two per cent each on the capital stock were paid. The stock was bought and sold on the market, and the property was apparently a valuable one, both in the eyes of the public and those interested in the corporation.

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Bluebook (online)
82 P. 45, 147 Cal. 439, 1905 Cal. LEXIS 418, Counsel Stack Legal Research, https://law.counselstack.com/opinion/spinks-v-clark-cal-1905.