Court Opinion

ID: 5447465
Source: CourtListenerOpinion
Date Created: 2022-01-08 18:13:19.271195+00
Date Added: 2024-06-11T08:32:14.832244
License: Public Domain

McFarland, J.
The court below sustained a demurrer to the complaint, and, plaintiff declining to further amend, judgment went for defendants. Plaintiff appealed.
The court below correctly sustained the demurrer, and gave judgment for defendants. The demurrer was upon various grounds, among others, that the com*16plaint does not state facts sufficient to constitute a cause of action, that the action is barred by several sections of the code about the limitations of actions, and that the plaintiff is shown to have been guilty of laches. The material averments of the complaint, which are made upon information and belief, are these: The defendant, the Silver King Mining Company, is a corporation, and during the years 1877,1878, and 1879 one Benjamin W. Reagan was the owner of a large portion of the shares of the capital stock of said corporation, which were represented by a certificate in due form, No. 72, issued to one J. W. Anderson, who was the agent of said Reagan for the purpose of holding said shares and collecting the dividends thereon. It was averred that between the twenty-fourth day of October, 1877, and the thirtieth day of June, 1879, the said corporation regularly declared dividends on its stock, and that upon said dividends * there became an'd was due and payable from said defendant, the Silver King Mining Company, to said J. W. Anderson, trustee, as agent of said Benjamin W. Reagan, on the shares of stock represented by said certificate No. 72,” the sum of two hundred and twenty-four thousand nine hundred and thirty-two dollars and fifty cents. Said Reagan died intestate on the twenty-sixth day of July, 1879, and his widow, Mary A. Reagan, was duly appointed as administratrix. She entered upon said office of administratrix on the 10th of September, 1879, and continued to be such administratrix until the 7th of November, 1882, when she resigned, and one Joseph Nash was then duly appointed administrator, and remained such until the 6th of March, 1884, when there was a final decree of distribution of the estate, and a closing of the administration. It was averred that at periods before and after the said decree plaintiff herein, who married the said widow, took an assignment from all the heirs and distributees of their interest in the property of said estate. It is further alleged that said administratrix, Mary A. Reagan, on or about the tenth day of Septem*17ber, 1879, “ applied to the defendant corporation and its officers in the city and county of San Francisco for information as to said shares of stock, and as to whether any dividend which had been declared thereon prior to the death of said Reagan, or any part of such dividend, was unpaid, and as to whether any money was due from said defendant corporation to said estate or to her as administratrix for or on account of any dividend or dividends declared by said defendant corporation prior to the death of said Benjamin W. Reagan”; and that the said corporation and its officers, for the purpose of defrauding said administratrix at said time, stated to said administratrix “that all dividends due on said shares of stock had been paid to said J. W. Anderson, and that no money was due or owing or unpaid on account of ... . any dividends declared on said shares of stock during the lifetime of said Benjamin W. Reagan.” It is further averred that said administratrix believed said statement as to said dividends. It does not appear that said administratrix, or her successor, the said Nash, or any other person interested in the estate, ever made any further effort to discover any facts with respect to said alleged dividends. No demand was made for an inspection of the books or papers of said corporation, and no effort was made to discover from said J. W. Anderson whether or not it was true that such dividends had been paid to him. Said dividends were not included in the inventory of said estate as property thereof; and said estate was distributed and closed without any reference to said alleged dividends. No reason is shown why inquiries were not made about said dividends of the said Anderson, the only averment in that respect being simply that he was absent from the state at the time of the death of said Reagan. There is no averment of any conspiracy between said corporation and the defendant, Anderson, to conceal any facts about said dividends, and no misconduct whatever is charged against said Anderson. It is merely averred that Anderson refused to bring this suit, and that, there*18fore, he is made a party defendant, there being also an averment, “ on belief,” that he asserts some right over said dividends. It is further averred that on the 10th of January, 1885, the person who afterward became the attorney of record of plaintiff in this present action informed plaintiff that said dividends had not been paid, and that this was the first information plaintiff had of that fact. This action was commenced, as appears by an amendment to the record, on the twenty-seventh day of April, 1886. The complaint contains nine counts, each on a separate dividend alleged to have been declared as aforesaid during the said period above mentioned; and judgment is demanded for the said sum of two hundred and twenty-four thousand nine hundred and thirty-two dollars and fifty cents, with interest. It is further averred that on January 10, 1885, the said Mviry A. Bills (formerly Mary A. Reagan) demanded of said corporation the payment to her of said dividends; and that on or about the 10th of! January, 1885, the said plaintiff demanded of said corporation the payment to him of said dividends, and also made the same demand on the 6th of January, 1886, and that the defendant corporation wholly refused to comply with any of said demands.
The action was clearly barred by the statute of limitations. If the alleged liability sued on is to be considered as one founded upon an instrument in writing, it is barred by section 337 of the Code of Civil Procedure. If it be not an obligation founded upon an instrument in writing it is barred by section 339 of said code. And, under any view of the liability, it is barred by section 343. Appellant contends that an action cannot be maintained for a dividend declared by a corporation until a demand shall have been made for the same; and that, therefore, the statute of limitations did not commence to run in the case at bar until the time in 1885 or 1886 when the said demands last above stated were made. There is some conflict of authority upon the point whether such a dividend is a debt owing by the *19corporation to the holder of the shares, or mere property of the shareholder rightfully in possession of the corporation, and, therefore, a conflict as to whether a demand is necessary before suit. But, in any event, no particular form of demand is necessary; and, therefore, waiving for the present the point above suggested, it is clear that what occurred between the administratrix and the corporation in 1879, as hereinbefore stated, amounted in law to a demand for the dividends. She was informed at that time by the corporation that there was no money due or owing- or unpaid on account of said dividends; and it was a clear refusal of her request for the payment of said dividends, and a denial of any liability of the corporation thereon. The corporation then and there put itself in a state of hostility to the estate of said Beagan with respect to any alleged obligation in the matter of said dividends, and no further demand or refusal was necessary; and, if suit had been brought against it, want of demand would not have been a defense. Appellant contends, however, that he is entitled to relief on the ground of fraud, and that, under subdivision 4 of section 338 of the Code of Civil Procedure, the cause of action did not accrue until what he contends to be the discovery of the facts constituting the fraud in 1885. But, waiving the question whether the averments of facts constituting the fraud in the complaint are specific enough, or whether such averments are sufficient if made only upon information and belief, still the statute of limitations cannot be avoided in a case where the facts are sufficient to put a person of ordinary intelligence and prudence on inquiry as to the truth. And in the case at bar the administratrix, Mary A. Beagan, was certainly guilty of the grossest laches in not making any effort to discover what she now alleges to be the real facts with respect to the dividends. She was informed that this large sum of money, amounting to nearly a quarter of a million, had been paid to Anderson, who she avers to have been the agent of her deceased husband, yet she never made any in*20quiry of the said Anderson as to the truth of the statement that this large amount of money had been paid to him; and she went on to administer the estate, and, without any allusion to said large sum of money, she and her successor, as administrator, and all interested in the estate, allowed it to be settled and finally distributed without any reference whatever to said dividends. Under these circumstances the plaintiff in this case cannot be heard to say that his assignors were deceived for so many years by an alleged false statement of the defendant corporation, which, if false, could have been disproved so easily by the use of the slightest diligence. The foregoing views render it unnecessary to consider other points made by respondent—as, for instance, that Anderson, being the holder of the certificate, could alone sue on it, and that the plaintiff is not the proper person to maintain an action upon said certificate; that plaintiff has not shown a proper deraignment of title from the heirs and distributees of the estate of Reagan; that the averments of fraud are not against the corporation, but simply against one or two of its officers; that, under any view, the plaintiff should have sued Anderson as trustee, and enjoined the corporation from paying dividends to him, and thus, through a decree in equity, have secured said dividends, etc.
The judgment and order appealed from are affirmed.
Harrison, J., and Van Fleet, J., concurred.