VAN FLEET, District Judge
(after stating the facts as above). The demurrer gives rise to two questions: First, whether under the law of this state the capital stock of a corporation, the par value of which has been fully paid up, is thereafter subject to assessment by the corporation for the payment of its obligations; second, if it is so [979] subject, whether 'the assessment here in question was so vitiated by fraud in its purpose and procurement as to entitle complainant to have it set aside.
1. As to the first question I feel justified in saying that so far as this court is concerned the inquiry is concluded and set at rest by the leading case, decided by the Supreme Court of the state, of Santa Cru£ Railroad Co. v. Spreckles, 65 Cal. 193, 3 Pac. 661, 802, involving the precise question here. In that case, where the sections of the California Civil Code providing for the assessment of the stock of corporations were under consideration, the court, after a very careful review of the question both in department and in bank, reached the conclusion, and so held, that, under these provisions, corporate stock, notwithstanding the subscription price has been fully paid in and no part thereof remains subject to call, is nevertheless liable to assessment by the corporation for corporate purposes — in that case the payment of obligations incurred for operating expenses. It is true that the conclusion there reached was by a divided court, and this fact has led to a very earnest attack by complainant’s counsel upon the integrity of the case as an authoritative decision, upon the ground, as claimed, that the opinion of the court (by Mr. Justice Ross) did not in fact receive the sanction of a majority of the court; it appearing that but one associate concurred generally, one concurred specially, the Chief Justice concurred in the judgment, while the other three justices dissented.
I do not feel called upon to analyze the attitude of the members of the court nor determine precisely how far it might affect the value of the case as authority upon a question presenting a sharp conflict of decision, for such is not the case here. This decision was rendered more than á quarter of a century ago, and during all the period elapsing since that date the doctrine as declared in the opinion of Judge Ross has stood without question in this state and has been received and accepted by the profession generally, I might say universally, bench and bar alike, as an authoritative determination of the question involved, and has been quoted and referred to as such,'not only by text-writers, but in decisions of the same and other courts (Green v. Abietine Medical Co., 96 Cal. 322, 31 Pac. 100; Vermont Co. v. Declez Co., 135 Cal. 579, 67 Pac. 1057, 56 L. R. A. 728, 87 Am. St Rep. 143; Turner v. Fidelity Roan Concern, 2 Cal. App. 122, 83 Pac. 62, 70), and it is safe to say that upon the faith of it millions of dollars have since its rendition passed hands in the transactions of corporations in this state without question. Under the circumstances, the question, involving as it does the construction of the statutes of the state, it would be asking much of this court, even if it entertained a serious 'doubt of the correctness of that construction, to reopen the question here, since obviously the initiative to that end should come from the courts of the state. But I find, moreover, that my own views as to the proper interpretation of the provisions of the Code involved are in full accord with those expressed by Judge Ross; and I am further satisfied, as suggested in that opinion, that the earlier case of Sullivan v. Triunfo M. Co., 39 Cal. 459, there referred to, so necessarily involved the same question that, while it was not discussed, the conclusion arrived at must be regarded as sustaining the same view. Such being the result [980] of the decisions of the Supreme Court of the state, further inquiry into the subject here must be deemed foreclosed.
2. Does the bill state a case for equitable interposition on the ground of fraud? Very obviously to my mind it does not. It is averred generally and repeated in various forms that the defendants through malice and enmity and other improper motives have entered into a conspiracy to deprive complainant of his holdings in the defendant hop company through fraudulent and inequitable means by making repeated assessments upon the stock without right or necessity, in the expectation of selling out his stock without notice to him and without an opportunity to protect himself. But there is an absence of tangible facts to sustain these general averments. Mere general allegations of fraud are, of course, not sufficient. They must be pointed by specific facts which in and of themselves tend to impart that complexion to the transaction, or that, at least, are susceptible of that construction. Without such support the denunciation of a transaction as being the result of conspiracy and fraud is a mere hurtless conclusion, however strongly charged or frequently reiterated.
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VAN FLEET, District Judge
(after stating the facts as above). The demurrer gives rise to two questions: First, whether under the law of this state the capital stock of a corporation, the par value of which has been fully paid up, is thereafter subject to assessment by the corporation for the payment of its obligations; second, if it is so [979] subject, whether 'the assessment here in question was so vitiated by fraud in its purpose and procurement as to entitle complainant to have it set aside.
1. As to the first question I feel justified in saying that so far as this court is concerned the inquiry is concluded and set at rest by the leading case, decided by the Supreme Court of the state, of Santa Cru£ Railroad Co. v. Spreckles, 65 Cal. 193, 3 Pac. 661, 802, involving the precise question here. In that case, where the sections of the California Civil Code providing for the assessment of the stock of corporations were under consideration, the court, after a very careful review of the question both in department and in bank, reached the conclusion, and so held, that, under these provisions, corporate stock, notwithstanding the subscription price has been fully paid in and no part thereof remains subject to call, is nevertheless liable to assessment by the corporation for corporate purposes — in that case the payment of obligations incurred for operating expenses. It is true that the conclusion there reached was by a divided court, and this fact has led to a very earnest attack by complainant’s counsel upon the integrity of the case as an authoritative decision, upon the ground, as claimed, that the opinion of the court (by Mr. Justice Ross) did not in fact receive the sanction of a majority of the court; it appearing that but one associate concurred generally, one concurred specially, the Chief Justice concurred in the judgment, while the other three justices dissented.
I do not feel called upon to analyze the attitude of the members of the court nor determine precisely how far it might affect the value of the case as authority upon a question presenting a sharp conflict of decision, for such is not the case here. This decision was rendered more than á quarter of a century ago, and during all the period elapsing since that date the doctrine as declared in the opinion of Judge Ross has stood without question in this state and has been received and accepted by the profession generally, I might say universally, bench and bar alike, as an authoritative determination of the question involved, and has been quoted and referred to as such,'not only by text-writers, but in decisions of the same and other courts (Green v. Abietine Medical Co., 96 Cal. 322, 31 Pac. 100; Vermont Co. v. Declez Co., 135 Cal. 579, 67 Pac. 1057, 56 L. R. A. 728, 87 Am. St Rep. 143; Turner v. Fidelity Roan Concern, 2 Cal. App. 122, 83 Pac. 62, 70), and it is safe to say that upon the faith of it millions of dollars have since its rendition passed hands in the transactions of corporations in this state without question. Under the circumstances, the question, involving as it does the construction of the statutes of the state, it would be asking much of this court, even if it entertained a serious 'doubt of the correctness of that construction, to reopen the question here, since obviously the initiative to that end should come from the courts of the state. But I find, moreover, that my own views as to the proper interpretation of the provisions of the Code involved are in full accord with those expressed by Judge Ross; and I am further satisfied, as suggested in that opinion, that the earlier case of Sullivan v. Triunfo M. Co., 39 Cal. 459, there referred to, so necessarily involved the same question that, while it was not discussed, the conclusion arrived at must be regarded as sustaining the same view. Such being the result [980] of the decisions of the Supreme Court of the state, further inquiry into the subject here must be deemed foreclosed.
2. Does the bill state a case for equitable interposition on the ground of fraud? Very obviously to my mind it does not. It is averred generally and repeated in various forms that the defendants through malice and enmity and other improper motives have entered into a conspiracy to deprive complainant of his holdings in the defendant hop company through fraudulent and inequitable means by making repeated assessments upon the stock without right or necessity, in the expectation of selling out his stock without notice to him and without an opportunity to protect himself. But there is an absence of tangible facts to sustain these general averments. Mere general allegations of fraud are, of course, not sufficient. They must be pointed by specific facts which in and of themselves tend to impart that complexion to the transaction, or that, at least, are susceptible of that construction. Without such support the denunciation of a transaction as being the result of conspiracy and fraud is a mere hurtless conclusion, however strongly charged or frequently reiterated.
What is there in the bill, as the facts are stated, tending to impart the aspecf of fraud to the transaction counted upon, or to sustain the repeated assertion of a conspiracy to “freeze out” the complainant and deprive him unjustly of his stock? The company was very heavily indebted and had hypothecated all of its tangible assets, its real estate, to the trust company as security for that debt. Neither of these facts is assailed in any way as wanting in good faith. This indebtedness, as appears from the bill, was due and payable; the- allegation as to the conditions of the trust under which the deed was given and accepted being simply that the trust company was to hold the land without disposition for a period of two years to be reconveyed if the indebtedness should.be liquidated within that time. The hop company could therefore pay its debt at any time, and, if it wanted to save its lands from forced sale, it must pay within the two years the trust was to exist. This being so, it was competent and proper for the debtor company to take any legal course to relieve itself of its obligations. The assessment of its stockholders was, then, as we have seen, one mode it could-adopt, unless there was something in the contractual situation of the parties to prevent that course or make it inequitable. But nothing is alleged that could have that effect. The complainant himself had put the trust company in control of the affairs of its 'debtor, and there is no express averment of any promise or agreement on its part that the stock of the hop company should not be assessed. It is not alleged in any specific way that the assessment' was not levied for a proper purpose, but simply that it was not levied “in good faith, but for the purpose of freezing out this complainant.” Since fraud will not be presumed, but must be made to appear, this averment is not sufficient to negative the presumption that the assessment was levied for a proper purpose or cast discredit upon its bona fide character. The theory of the complainant seems to be that, because the lands held, by the trust company were greatly in excess in value over the amount of the indebtedness, the trust company should be willing to let its demand await conditions which would enable it to be worked out of the land, and [981] that it is inequitable and unjust for assessments to be levied through its procurement upon the stock of the hop company. But there bemg no legal obligation on its part to take that course, there is nothing inequitable in any actionable sense in its seeking to have its debt paid through any proper means within its control. And the means being a legal one, the averment of a malicious or sinister motive behind its actions adds nothing to the bill. The motive with which a creditor pursues a perfectly proper remedy to secure payment of a debt does not affect his right to that remedy. And, of course, if one is pursuing.a proper remedy to collect his debt, the fact of the debtor’s situation being one which makes it difficult to meet his obligation offers no objection, legal or equitable. The averment that the complainant was promised by the trust company “that his interests would be carefully guarded and protected, and that he might feel secure,” is, in the light of the other averments of the bill, too vague and indefinite to add anything of value to complainant's case. It does not appear from any fact disclosed that his interests or rights, in any legal sense, were being transgressed or ignored. Nor does the averment of a want of notice to complainant of the purpose to assess the stock add anything of substance to the bill. 1 know of no obligation independent of one created by specific agreement or by-law requiring notice to either a director or stockholder, absent from the country, of proceedings of a corporation to assess its stock. No* such obligation is stated in the bill.
The bill, as I construe its averments, therefore, is wanting in equity, and the demurrer must be sustained.
It is so ordered.