Opinion ID: 537185
Heading Depth: 2
Heading Rank: 3

Heading: issues raised by gold technics defendants

Text: 142 A. Sale Of 30 Percent Interest To Rex Montis (Gold Technics Defendants' Issue No. 1) 143 The Gold Technics Defendants contend that the district court erred in refusing to award them recision in connection with Gold Technics' September 1980 sale of a 30 percent interest in the mine lease to Rex Montis in exchange for 480,000 shares of Rex Montis stock. Under the Purchase Agreement, Rex Montis expressly agreed to convey 480,000 Rex Montis shares to Gold Technics in exchange for a 30 percent interest in the mine lease and Rex Montis' appointment as general partner of Gold Technics: 144 Rex Montis agrees, subject to the warranties, conditions and terms of this Agreement as made by Technics and Technics Limited Partners, to convey to Gold Technics Ltd., as full consideration for the above referenced purchase, 480,000 shares of its common capital stock.... 145 (Exh. 308, Purchase Agreement at 2.) Rex Montis further warranted that the [s]hares of common stock of Rex Montis deliverable pursuant hereto, when issued and delivered, will be validly issued and outstanding shares of the common stock of Rex Montis Silver Company. (Id. at 3.) In addition, Rex Montis agreed that [i]n the event the transaction contemplated by this Agreement or any part thereof is subject to the review or approval of any governmental agency or department having jurisdiction in the state of California, or otherwise, Rex Montis agrees to bear any and all costs required by such review or approval. (Id. at 6.) 146 Rex Montis never conveyed or delivered the 480,000 Rex Montis shares to Gold Technics. It did not do so in part because the shares were unregistered and Rex Montis could not obtain the California Corporations Commission's approval of the transaction as required by California law. See Calif.Corp.Code Secs. 25110, 25113. 147 Although, this might ordinarily provide grounds for recision, Restatement (Second Contracts Secs. 372-73 (1981), the district court refused to order recision here because it concluded that Gold Technics was barred by doctrines of waiver, unclean hands, and the failure adequately to tender back to Rex Montis the consideration and benefits it had received. Gold Technics failure adequately to exercise its recision rights under the California Corporation Code, which controlled the transfer of Rex Montis' stock. Calif.Corp.Code Secs. 25110, 25113, 25507. The affirmative defenses found by the district court bar a common law right to recision. We have reviewed the record and can not say that the district court's finding of fact with regard to these affirmative defenses was clearly erroneous. Accordingly, we affirm the holding refusing to grant recision to Gold Technics. 27 148 B. Conversion Of 38,000 Shares Of Rex Montis Stock (Gold Technics Defendants' Issue No. 2) 149 The Gold Technics Defendants contend that the district court improperly failed to award it $18,000 in damages against Cascade, Rex Montis and Weston for their conversion of 38,000 shares of Rex Montis stock belonging in equity to Gold Technics. The district court did specifically find such a conversion, Accounting Findings 28, and it did award damages of $18,620 against Rex Montis and for the benefit of Gold Technics, Ltd., apparently as a result of this conversion. Accounting Findings 32. Although the damages were not specifically mentioned again in the district court's conclusions of law, Accounting Conclusions of Law 6, we think it is clear that Gold Technics was awarded such damages. We remand so that the district court may also enter judgment against Cascade and Weston for this amount. 150 C. Damages For Termination Of Joint Venture (Gold Technics Defendants Issue No. 3) 151 The Gold Technics Defendants contend that the district court erred in awarding them only $5,000 for the termination of the Joint Venture. The Gold Technics Defendants do not object to the dissolution of the Joint Venture, but argue that the district court improperly gave all right, title and interest to equipment, and other [Joint Venture] assets to Weston, the person responsible for the bad acts and collapse of the Joint Venture. (Gold Technics Br. at 17.) 152 It is unclear whether the district court, in awarding $5,000, took into account the Gold Technics Defendants' interest in the mine lease and other mine assets. Accounting Findings 27. Although it is possible that the district court did take all of these matters into account when it ordered no further accounting between the parties, we can not be sure that it did so. Accounting Finding 33. 153 Therefore, we vacate the district court's award of $5,000 in nominal damages and remand for a complete winding up of the Joint Venture. As part of the winding up on remand, the district court should allocate the venture's assets (which may include the mine lease or its proceeds) and the venture's liabilities in accordance with the Joint Venture Agreement and general partnership law. To the extent that the venturers are indebted to one another consistent with this opinion, those debts should be accounted for as part of the winding up. 154 D. Interest Of R.E. Donahey (Gold Technics Defendants' Issue No. 4) 155 The Gold Technics Defendants contend that in dissolving the Gold Technics limited partnership and in allocating the money judgment among the Gold Technics Defendants, the court erred in failing to give any recovery to one of Gold Technics' limited partners, R.E. Donahey. 156 The district court made no express findings as to why it denied recovery to Donahey. See Jan. 22, 1986 Order Amending Judgment. The record shows that (1) Donahey was a full-share limited partner of Gold Technics (Exh. 305, Partnership Agreement); (2) Donahey signed the September 1980 Purchase Agreement with Rex Montis (Exh. 308); (3) Donahey signed a June 14, 1982 letter requesting rescission of the Purchase Agreement (Exh. 375); and (4) Donahey otherwise has participated as a party in the prosecution and defense of this litigation from its inception. On remand, the district court either should allow Donahey to recover on the same terms as the other limited partners of Gold Technics, or else should make findings explaining why Donahey is not so entitled.