Silver Hills Country Club v. Sobieski
| Decision Date | 20 December 1960 |
| Citation | 9 Cal.Rptr. 694 |
| Court | California Court of Appeals Court of Appeals |
| Parties | SILVER HILLS COUNTRY CLUB, Country Clubs, Inc., John Bowen, Dean Melvin Jennings, 'Skeets' Slater, 'Bill' Rasey and 'Gordy' Hinrichs, Petitioners and Respondents, v. John G. SOBIESKI, as Commissioner of Corporations of the State of California, Respondent and Appellant. Civ. 19249. |
Stanley Mosk, Atty. Gen., Harold B. Haas, Victor Griffith, Deputies Atty. Gen., for appellants.
Broun & King and LeRoy A. Broun, Fremont, for respondents.
On September 4, 1959, John Sobieski as the Commissioner of Corporations of the State of California, issued a Desist and Refrain Order directed to petitioners, to halt the sale by them of memberships in the Silver Hills Country Club. The basis of the Commissioner's action was that petitioners were engaged in the sale of 'securities' as defined in section 25008 of the Corporations Code, that they had not applied for or received a permit so to do from his department and hence were violating the law. After following the proper procedure before the department to have the action of the Commissioner rescinded and being denied relief, the petitioners sought a writ of mandate directing the Commissioner to vacate and set aside his said order. From the judgment granting the peremptory writ of mandate the Commissioner appeals.
The facts are undisputed. In June of 1959, petitioner John E. Bowen acquired a parcel of land of approximately 22 acres in Novato, Marin County, and thereafter, with the other petitioners, undertook to develop the same for use as a country club, and in furtherance of the undertaking petitioners sold and engaged others to sell memberships in the Club until served with the Desist and Refrain Order.
Membership in the Club is obtained by application which must be passed upon by a Board of Governors, appointed by the petitioners. Charter memberships sell for $150 and future memberships are proposed to sell at $200 and $250. Dues are set by the Board. All applicants are informed of the by-laws and members must subscribe to them. Upon acceptance of the application and payment of the membership fee and dues and subscribing the by-laws, the applicant becomes a member of the Club, and thereafter is entitled to the use of all the Club's faciities. The membership application and by-laws provide that no interest in the real or personal property of the Club is conferred upon or granted a member, his only right being the use of the Club. All income, profits and assets of the Club are the property of the petitioners and a member has no present or future right to participate therein. Members may be expelled for misconduct. Memberships may be resold and pass by inheritance, subject to approval of the Board. So long as the member remains in good standing, both he and his family are entitled to full use of the Club.
The appellant argues that the buyer of one of these memberships acquires a 'transferable share' or 'beneficial interest in title to property' within the meaning of Corporations Code, § 25008 defining a 'security.' This argument is based upon the theory that the membership privileges include an irrevocable and transferable right of user of real and personal property, which is an equitable interest in property. The membership application purports to grant the members only the use of the premises for the period of their membership, and specifically negates any proprietary interest by virtue of club membership. Pope v. Henry, 1852, 24 Vt. 560, 565; Swartz v. Swartz, 1846, 4 Pa. 353, 358; Flickinger v. Shaw, 1890, 87 Cal. 126, 133, 25 P. 268, 11 L.R.A. 134; Ricoli v. Lynch, 1923, 65 Cal.App. 53, 58, 223 P. 88; Cooke v. Ramponi, 1952, 38 Cal.2d 282, 286, 239 P.2d 638, are cited by appellant for the proposition that the members acquired irrevocable licenses. These cases are based upon the doctrine of equitable estoppel; the licensee expended either money or its equivalent in labor in the execution of a license, unenforceable because it was parol, and the license was found to be irrevocable to prevent the licensor from perpetrating a fraud upon the licensee. That is not the situation here, where the membership fee is paid only after approval of the membership application and by-laws by the prospective member, which instruments make it clear that membership gives nothing more than a bare right to use the premises. Another case cited by appellant in connection with his irrevocable...
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