Aronson & Co. v. Pearson

This is an appeal by the defendant from the judgment herein against her, based upon her alleged liability as a stockholder of the Pearson Ranch Company, a corporation, having a capital stock of $500,000, divided into 5,000 shares of the par value of $100 each.

In May, 1922, 4,749 shares of such stock were issued to W. J. Pearson, the husband of defendant, they having been married in the year 1909. This action is prosecuted on the theory that the defendant was at all times the equitable owner of such shares of stock and the court so found. The principal question presented by this appeal is whether the evidence sustains such finding.

June 1, 1922, the Pearson Ranch Company created an .indebtedness of $188,000, evidenced by 188 bonds of the face value of $1,000 each, bearing interest at seven per cent per annum, payable semi-annually; the earliest date of maturity of any of the bonds being June 1, 1927. On the day of

The complaint alleges that subsequent to the first day of January, 1923, the plaintiff requested the trustee to declare all of the bonds then outstanding to be due and payable immediately and that “thereafter and prior to the commencement of this action, the said trustee executed under its corporate seal and delivered to the said Pearson Ranch Company a notice and demand in writing declaring the principal of all bonds secured by the aforementioned trust indenture and then outstanding, to be due and payable immediately.” The court found the allegation to be true. Appellant contends that such finding is without support in the evidence. It is true that there is no evidence in the record tending to prove or disprove the allegation, but there is no sufficient denial thereof in the answer. The attempted denial thereof is as follows:

“Defendant admits that no part of the interest payable on any of said one hundred eighty-eight (188) bonds on the first day of December, 1923, and represented by the coupons payable on said day, has been paid. Defendant alleges she has not sufficient knowledge of information upon which to base a belief and placing her denial upon that ground, denies that subsequent to the first day of January, 1923, plaintiff requested or required by a writing delivered to the trustee named in said indenture, that said trustee by notice to said Pearson Ranch Company declare the principal of all

bonds secured by said indenture and then outstanding, to be due or payable immediately; and denies that thereafter or prior to the commencement of this action, the said trustee executed under its corporate seal or delivered to the said Pearson Ranch Company a notice or demand in writing, declaring the principal of all bonds secured by the aforementioned trust indenture.”

[1] For sixty-eight years the form of denial adopted by the defendant has been held insufficient. Relative to the denial of the allegations of a verified complaint, section 437 of the Code of Civil Procedure provides: “If the defendant has no information or belief upon the subject sufficient to enable him to answer an allegation of the complaint, he may so state in his answer, and place his denial on that ground.” Section 46 of the Practice Act, as amended in 1854, permitted a defendant to deny an allegation of a verified complaint “according to his information and belief.” In Curtis v. Richards & Yantine, 9 Cal. 34 , 38, the defendants based their denial upon the averment that “they have- not sufficient knowledge or information to form a belief.” The court said: “By the forty-sixth section of the Practice Act, as originally passed in 1851, it was provided, that an allegation of the complaint might be controverted by a denial ‘of any knowledge thereof sufficient to form a belief. ’ In practice, this mode of denial was found to furnish a convenient pretext for evading the statute. In some instances, defendants became critical in their judgments, as to the extent of knowledge sufficient to form a belief, and would, without hesitation, deny, in that form, facts upon the existence of which they did not hesitate to act in other matters. In 1854, the forty-sixth section was amended to the present language, and the wisdom of the amendment is well illustrated by the present case.” , The same construction has been placed upon the foregoing provision of section 437 of the Code of Civil Procedure. (Naftzger v. Gregg, 99 Cal. 83 , 87 [ 37 Am. St. Rep. 23 , 33 Pac. 757 ]; Turner v. Watkins, 36 Cal. App. 503 , 504 [ 172 Pac. 620 ]; Nave v. Graham, 37 Cal. App. 332 , 334 [ 174 Pac. 76 ].) Such a denial will not be held fatally defective upon appeal if it was treated by the parties at the trial as creating an issue, but, since in this case neither party offered any evidence bearing upon the question, there is no ground for holding that it was so

W. J. Pearson, who then held the record title to 1,560 acres of the Glenn County land, on the 14th of January, 1916, conveyed the same to the defendant, “to her sole and separate use and to her separate estate.” May 1, 1919, W. J. Pearson acquired title to 243.6 acres of adjoining land. November 12, 1919, he and the defendant joined in the execution of a deed conveying both tracts of land to Alva P. Page and Willard W. White. In exchange for such lands, Page and White conveyed to defendant certain real property and to W. J. Pearson other real property and also gave their promissory note for $106,000 to W. J. Pearson, secured by a trust deed of the Glenn County lands. Page and White defaulted in their payments and the trustee sold the land under the terms of the trust deed, W. J. Pearson becoming the purchaser, and a deed was made to him by the trustee on the 25th of April, 1921. On the same day, W. J. Pearson and the defendant executed a deed in the usual form, purporting to convey the same lands to the Citizens Trust & Savings Bank. While the latter deed was absolute in form, it appears to have been given as security for an indebtedness of W. J. Pearson to the grantee. May 19, 1922, the Citizens Trust & Savings Bank conveyed the lands to the Pearson Ranch Company. The minutes of the company of May 10, 1922, show that the Pearson Ranch Company agreed to purchase all of the Glenn County lands and the personal property thereon for 4,999 shares of its capital stock. The minutes of May 19, 1922, show that in pursuance of such agreement the company issued to W. J. Pearson 4,749 shares of its stock and the remaining shares to other persons. July 3, 1923, W.

The defendant testified at the trial that she operated the Glenn County ranch from January, 1916, until it was sold to Page and White in 1919; that her husband advanced money for the operation of the ranch during that time and to a large extent gave up his own business and devoted his time to managing the ranch; that upon the sale of the land to Page and White she and her husband made an equitable division of the proceeds of the sale; that the property then conveyed to her husband by Page and White and the note for $106,000 constituted his part of the division and that she had no interest therein; that her husband did not purchase the land for her at the trustee’s sale but for himself; that she never owned any stock in the corporation prior to July 3, 1923, when her husband transferred his stock to her in settlement of an indebtedness of $80,000 then owing by him to her. Her husband testified to substantially the same effect. The defendant also testified that at the time her deposition was taken she “got out of a sick bed to come down to give that testimony,” that her “mind was confused.” On cross-examination, however, she testified that, a few days after the deposition was taken, “it was read, over and corrected by me in Mr. Gilbert’s office with Mr.

The court found, in the language of the complaint, “That at the time the said bonds, and all of them, Avere executed and delivered the defendant . . . was the owner and holder of four thousand seven hundred forty-nine shares of the subscribed capital stock of said Pearson Ranch Company.” Appellant contends that this finding is but a conclusion of law and that it “is insufficient for the reason that it does not show how or in what manner appellant Avas the OAvner of said stock at the time in question.” The corresponding allegation of the complaint is the only averment therein relative to the defendant’s ownership of the stock, and the defendant’s answer thereto consists only of a specific denial of such allegation. “Except . . . when the evidentiary facts stated are necessarily inconsistent therewith, such a general allegation of ownership is always recognized as an allegation of the ultimate fact, and a complaint containing it sufficiently pleads plaintiff’s ownership.” (Robinson v. City of Glendale, 182 Cal. 211 , 214 [ 187 Pac. 741 ].) “It has been frequently observed that findings should be of ultimate facts, and that it is unnecessary to state the probative or evidentiary facts, for a finding of ultimate facts includes a finding of all the probative facts necessary to sustain it.” (24 Cal. Jur. 968.) [6] Upon an issue raised by a mere allegation of ownership and the denial thereof, “a finding upon the fact of title or ownership is good without a finding of the particular facts upon which

The judgment is affirmed.

Richards, J., Waste, C. J., Shenk, J., and Seawell, J., concurred.

Rehearing denied.