Campbell v. Clark

• Decision Date: 17 April 1958
• Court: California Court of Appeals Court of Appeals
• Parties: Emma CAMPBELL, Plaintiff and Appellant, v. Ethel M. CLARK, Maurice Wilson, Harry A. Wardenburg, Warren Hook, Willis Clark, Ernest W. Tiegs, and California Test Bureau, a corporation, Defendants and Respondents. Civ. 22624.

Page 51

324 P.2d 51

159 Cal.App.2d 432

Emma CAMPBELL, Plaintiff and Appellant, v. Ethel M. CLARK, Maurice Wilson, Harry A. Wardenburg, Warren Hook, Willis Clark, Ernest W. Tiegs, and California Test Bureau, a corporation, Defendants and Respondents.

Civ. 22624.

District Court of Appeal, Second District, Division 2, California.

April 17, 1958.

Marvin Gross, Beverly Hills, for appellant.

Waters, Arditto & Waters, Los Angeles, for respondents.

HERNDON, Justice.

Plaintiff appeals a judgment rendered against her after defendants' objection to the introduction of any evidence had been sustained and after plaintiff's motion for leave to amend her complaint had been denied. The stated ground of the objection and the basis for the ruling was that the complaint failed to state a cause of action. Similar rulings were made in another action which was consolidated with the instant action for purposes of trial. The appeal from the ensuing judgment in the companion case is the subject of our opinion this day filed in Campbell v. Clark, Cal.App., 324 P.2d 55.

It is well settled, of course, that an objection to the introduction of any evidence on the ground that a complaint fails to state a cause of action is in the nature of a general demurrer to the complaint or a motion for judgment on the pleadings. Upon such an objection the allegations of the complaint must be accepted as true for the purposes of the objection. Miller v. McLaglen, 82 Cal.App.2d 219, 223, 186 P.2d 48; Bice v. Stevens, 136 Cal.App.2d 368, 373, 289 P.2d 95; Domino v. Mobley, 144 Cal.App.2d 24, 26, 300 P.2d 324; Byson v. City of Los Angeles, 149 Cal.App.2d 469, 472, 308 P.2d 765. It is also a well established rule that after such an objection is sustained, leave to amend must be granted 'unless it appears to a certainty that no basic right of action can possibly exist or no relief can possibly be granted.' Miller v. McLaglen, supra, 82 Cal.App.2d at page 228, 186 P.2d at page 53, and Bice v. Stevens, supra, 136 Cal.App.2d at page 379, 289 P.2d at page 102.

We must accordingly examine and test plaintiff's complaint in the light of these applicable rules of law.

The complaint, which is most inartificial and which her present counsel concedes to be 'deficient in several respects,' was filed on July 13, 1955. It is most deceptively and inaccurately entitled 'Complaint For Damages; Refusal to Transfer Stock on Books of Corporation.' It names as defendants California Test Bureau, a corporation, and a number of individuals alleged to be then present or former officers and directors of said corporate defendant.

After various allegations with respect to the official capacities of the individual defendants, plaintiff alleges in paragraph VII that on November 27, 1940, the corporate defendant's predecessor issued its stock certificates for ten shares of its capital stock to one Emery W. Harvey and that by virtue of his ownership of said certificate Harvey became the owner and entitled to receive ten shares of the capital stock of the defendant corporation.

In paragraph VIII it is alleged that between May 7, 1931, and April 10, 1951, the corporate defendant issued a total of twenty shares of its capital stock to one Hazel W. Whedon. In paragraph IX it is alleged that on June 22, 1953, plaintiff purchased Harvey's ten shares and took an assignment thereof. In paragraph X it is allaged that on June 19, 1953, plaintiff purchased Whedon's twenty shares and that both Harvey and Whedon by separate instruments assigned their respective interests in said shares to plaintiff. Paragraph XIII alleges that by the assignments 'plaintiff acquired all of the right, title and interest held by her assignors in and to said shares of stock.' The gist of plaintiff's first purported cause of action is set forth in paragraphs XIV, XV, and XVI as follows:

'XIV

'That since the date of acquisition of the shares of this plaintiff's assignors, as aforesaid, defendant California Test Bureau at all times during which said assignor's held stock in said corporation, did operate at a profit and has made financial gains and profits of a substantial nature which said profits and gains have been unlawfully concealed and withheld from this plaintiff who has a legal right thereto by virtue of the assignment of said stock, with the rights pertinent thereto, and said sums have been wrongfully paid to the officers and directors of said corporation as aforesaid; that the exact amount of said sums thus wrongfully withheld and illegally paid to the aforenamed officers and directors of this corporation is unknown to this plaintiff, but this plaintiff is informed and believes and upon such information and belief alleges that such sums are in excess of $750,000 of which her rightful share is in excess of $60,000 and interest thereon.

'XV

'That this plaintiff, for the first time, discovered the false and fraudulent representations of these defendants relative to the gains, profits and wrongful withholdings of moneys of said corporate defendant by these named defendants in a hearing before the office of the Corporations Commissioner of this state during the period of June through December 1953 and again in January, 1954 through May, 1954.

'XVI

'That the statements of the defendants, and each of them, with regard to the extent of profits and liabilities of the corporate defendant and their untrue representations of the same during the period as aforesaid, were untrue and were made to plaintiff's assignors with the intent to deceive, mislead, intimidate and induce plaintiff's assignors to accept dividends and profits less than those actually earned by the corporation; that as the proximate result of the acts and representations of the defendants, as aforesaid, plaintiff therein as assignee of the rights of the assignors, as aforesaid, has been deprived of her present, past and future rightful share in the profits and earnings of defendant corporation in a sum in excess of $60,000 plus interest thereon.'

The second cause of action repleads the first and alleges that the officers and directors conspired together to wrong plaintiff's assignors; that they voted themselves excessive salaries, bonuses, royalties, dividends and commissions and (on information and belief) that defendants have used large amounts of funds of the corporation for their own benefit and use and have collected commissions for goods and services which they did not sell.

In the third cause of action plaintiff repleads the allegations of the first two causes of action and alleges that all of the alleged wrongful acts of the defendants were done maliciously and with the intention to 'injure plaintiff in and to her name, reputation and property rights, * * * and by reason thereof demanded exemplary and punitive damages.'

In the prayer to her complaint plaintiff requests relief 'as assignee of the rights of Hazel Whedon and Emery W. Harvey' praying: '(1) That all sums, profits and earnings belonging to said corporation and the stockholders thereof which have wrongfully been appropriated or concealed by these defendants be returned to said corporation; (2) That defendant officers and directors be restrained by injunction from paying excessive sums as salaries, bonuses, royalties and commissions to themselves; (3) That an account be taken of the acts of defendant officers and directors and that they be charged with all moneys they have wrongfully appropriated; (4) That plainti...