Ogier v. Pacific Oil & Gas Development Corp.

• Decision Date: 22 April 1955
• Docket Number: No. 16502,16502
• Citation: 282 P.2d 574,132 Cal.App.2d 496
• Court: California Court of Appeals Court of Appeals
• Parties: , Blue Sky L. Rep. P 70,273 Elizabeth H. OGIER, Plaintiff and Appellant, v. PACIFIC OIL AND GAS DEVELOPMENT CORPORATION, a corporation, A. F. Hilding, Dorothy Hilding, James P. George, Robert W. Casey, Elizabeth Casey, et al., Defendants and Respondents.

Page 574

282 P.2d 574

132 Cal.App.2d 496, Blue Sky L. Rep. P 70,273

Elizabeth H. OGIER, Plaintiff and Appellant, v. PACIFIC OIL AND GAS DEVELOPMENT CORPORATION, a corporation, A. F. Hilding, Dorothy Hilding, James P. George, Robert W. Casey, Elizabeth Casey, et al., Defendants and Respondents.

No. 16502.

District Court of Appeal, First District, Division 1, California.

April 22, 1955.

Rehearing Denied May 20, 1955.

Hearing Denied June 16, 1955.

Melbert B. Adams, Arthur Matin, San Francisco, for appellant.

Joseph A. Brown, San Francisco, for respondents, James P. George and Pacific Oil & Gas, etc.

Frank J. Baumgarten, San Francisco, for A. F. Hilding and Dorothy Hilding.

George H. Sullivan, San Francisco, for Robt. W. Casey and Elizabeth Casey.

BRAY, Justice.

Plaintiff appeals from a judgment of dismissal upon sustaining without leave to amend defendants' demurrers to an amendment to an amended complaint and upon granting a motion to strike said amendment.

Questions Presented.

1. After the sustaining with leave to amend of demurrers to a complaint, is an amendment to that complaint a proper pleading?

2. Does the complaint as thus amended state causes of action?

3. Are the causes of action barred by the statute of limitations?

4. Laches.

Record.

Defendants demurred generally and specifically to the original complaint. Upon the sustaining of demurrers thereto plaintiff filed an amended complaint. Again demurrers thereto were sustained with leave to amend. Plaintiff then filed an 'Amendment to Complaint.' The court ordered the amendment stricken, the demurrers thereto sustained, and entered judgment of dismissal.

1. Effect of Amendment.

The original complaint and the amended complaint contained 25 causes of action. The amendment to the complaint recites that the amended complaint is amended: (1) by changing paragraph VIII in the first 12 causes of action to read as in the amendment set forth, so as to set forth facts purporting to avoid the application of the statute of limitations; and (2) by changing paragraph X of the next 12 causes of action for the same purpose.

The effect of this procedure was to adopt by reference the amended complaint changed as set forth in the amendment. It is elementary that a complaint may adopt by reference various writings. The amended complaint referred to is 24 transcript pages long. No particular point would be gained by rewriting that complaint. It was perfectly obvious to court and counsel what was before the court. We can see no reason why the complaint as thus amended did not constitute a proper pleading.

In California it is fundamental that pleadings should be liberally construed in furtherance of justice in order that every case may be determined so far as possible on its real facts. To decline to permit the procedure followed here would be bowing to highly technical requirements to the exclusion of a consideration of the pleading as thus amended without any good reason for so doing. See Big Boy Drilling Corp. v. Rankin, 213 Cal. 646, 648, 3 P.2d 13, 14; 'The complaint, as originally filed, was not superseded by the amendment thereto, but was merely augmented or supplemented by the addition of allegations pertinent alone to the appellant's liability, and necessary to cause the complaint to conform to the proofs in this regard. It is not important that an amendment to the complaint was filed instead of an amended complaint.' See also Maddux v. Mora, 99 Cal.App. 695, 699, 279 P. 467. And Redington v. Cornwell, 90 Cal. 49, 61, 27 P. 40, 43: 'Unless otherwise required by the court, an amendment to a complaint, whether it consists of a mere additional averment, or effects a change in the original, may be filed by itself, without being incorporated in the original by engrossment of the complaint as amended, (Code Civ.Proc. [sec.] 432) * * *.' While in these cases no demurrer had been sustained, the liberal attitude of the courts towards pleadings is indicated. In Tidwell v. Henricks, 124 Cal.App.2d 64, 268 P.2d 84, the default of the defendant was taken for failure to answer the complaint. Thereafter the plaintiff filed and served an amendment to the complaint and again took the default of the defendant for failing to answer. It was held that the filing of the amendment vacated the default to the original complaint and that the complaint as thus amended superseded the original complaint. The court then set aside the second default for failure of the plaintiff to serve the original complaint with the amendment. As we are not dealing here with default and no objection was made here to the failure to serve another copy of the original complaint, the latter portion of the court's decision in the Tidewell case is not applicable.

It is true that when a demurrer to a complaint is sustained, the complaint, except for purposes of review, is, in effect, destroyed as an existing pleading. However, that fact would not prevent its being incorporated by reference in the amendment. Cases cited by defendants like Hendricks v. Osman, 72 Cal.App.2d 465, 164 P.2d 545, and Ross v. Goins, 51 Cal.App. 412, 197 P. 132, dealing with the refusal of the plaintiff to amend after demurrer sustained, have no application here.

2. Does The Complaint as Thus Amended State A Cause of Action?

(a) Lack of Permit.

The first 12 counts allege the sale to plaintiff of oil properties in violation of the Corporate Securities Act, Corporations Code, § 25000 et seq., because no permit for the issuance of securities was obtained. Count 1 is typical of these counts. ¹ It alleges that plaintiff is single, practically blind, aged 85, and because of age and infirmity likely to be deceived by designing persons; that at all times defendant A. F. Hilding was acting as the agent of all defendants, that defendants were engaged in the business of selling and issuing 'certificates of interest in an oil title,' within the meaning of the Corporate Securities Act and as specified; that on specified occasions defendant A. F. Hilding induced her to buy one of the said certificates of interest; that each defendant knew the land was in unproved territory and that plaintiff had neither money nor ability to prospect for oil; that it was the plan and scheme of defendants to induce plaintiff to part with her money upon her expectation that she would be able at some future time to lease her interest to defendant Pacific Oil and Gas Corporation or some oil company and thereby receive large and prospective oil royalties when oil was actually discovered on said land as the result of drilling thereon by either the defendant corporation or some other oil company. Plaintiff relied upon the representations. It is further alleged that defendants' scheme was to execute grant deeds to plaintiff purporting to convey title to prospective oil lands, or to an interest therein; that under the Corporate Securities Act a permit was required for the issuance of said securities and that defendants did not obtain such permit; that by making said sales defendants fraudulently represented that said sales were legal but in fact they were illegal and void; that a total failure of consideration resulted and plaintiff has been damaged in the amount paid. Plaintiff imposed full confidence in defendant Hilding and had no knowledge of the absence of said permit until on or about December 23, 1952. Plaintiff is uncertain whether she is entitled to recover against certain or all of the defendants, because all defendants were the grantors in the deeds at various times, and plaintiff is uncertain who was the real issuer of the securities and who ultimately received the consideration therefor. Plaintiff has no recollection of the exact amount she paid in each transaction but believes the amounts indicated by the revenue stamps on each deed are the true amounts. The property deeded her is described, the purchase price indicated by the stamps is $2,000, and the purchase date was January 2, 1941. A notice of rescission was served on all defendants June 23, 1953. The complaint further alleges that at the time of the transaction plaintiff was 75 years of age, had poor eyesight and a progressively declining physical condition, her faculties were impaired and she was easily influenced by defendant Hilding in whom she reposed great trust and confidence; that he deliberately sought her trust so that he could induce her to enter into the described transactions; that he always saw her alone; that she accepted his word for everything and that a confidential relationship existed between them until about November 15, 1952; that upon investigation by her attorney she became fully aware of the falsity of the representations about February 24, 1953, and that she refrained from filing suit until June 21, 1953, at the request of defendants' attorney.

The theory of the first 12 counts is that by failing to satisfy the requirements of the Corporate Securities Act defendants fraudulently transferred the 'securities' (deeds) to plaintiff. Our first inquiry, then, is whether deeds to lands represented as oil bearing constitute a 'certificate of interest' under Corporations Code section 25008. Any such certificate issued without a permit is void under section 26100. A buyer of such a certificate may seek recovery of the purchase price paid either by way of rescission or an action for damages. See Auslen v. Thompson, 38 Cal.App.2d 204, 213, 101 P.2d 136, and Woods v. Deck, 9 Cir., 112 F.2d 739, 741.

Section 25008 defines a 'security' as '(a) Any stock, including treasury stock; any certificate of interest or participation; any certificate of interest in a profit-sharing agreement; any certificate of interest in an oil, gas, or mining title or lease; any transferable share, investment contract, or beneficial interest in title to property, profits, or earnings.' (Emphasis added.) Taormina v. Antelope Mining Corp., 110 Cal.App.2d 314, 320, 242 P.2d 665, 668, states: '* *...