(209 P.)

that case tending to show that Carstens was, maný motor trucks which the partnership did in any way related to the matter in hand was not own. It was its custom to hire these taken before he had received any notice of trucks promiscuously, without being conthe application. It was not repeated after cerned as to who the owners might be, payhe had received such notice, and no evi-ing at the rate of $3 per hour for their use, dence indicating any relation whatever between him and the other parties to the proceeding, or to the applicant, was introduced after the notice was served upon him. Carstens never appeared, was never represented, and took no part in the proceedings. In the present case the petitioner was accorded ample opportunity to present his defense in opposition to the claim of the applicants.

including the services of the driver. Robert Graham, a member of the copartnership, had general control of the operation of these trucks during working hours through a foreman, who gave orders as to when, where, and how the materials were to be hauled and the trucks otherwise used. For some time Conklin, who appears to have had an interest in a truck, was employed by GraThe commission found that the decedent, ham Bros. at the rate of $3 per hour for his Conklin, was at the time of his injury in the own services and the use of the truck. About joint employment of both the defendants, two weeks before the accident this arrangePruitt and Graham Bros., that both of the ment was changed. Pruitt, who already had employers and employee were subject to the two trucks in the service of Graham Bros., provisions of the Workmen's Compensation, bought the truck Conklin was using, and Insurance and Safety Act, and that the de- thereupon notified Graham Bros. that Conkfendant United States Fidelity & Guaranty lin was working for him. He arranged with Company was the insurance carrier for the Conklin, however, that Conklin should condefendant Graham Bros. It accordingly made tinue to use the truck in the service of Graits award in favor of the applicants and ham Bros. as before, and on the same terms. against this petitioner, Pruitt, and the Unit- He agreed with Conklin "to give him 25 per ed States Fidelity & Guaranty Company, and cent. of his wages-what he earned from each and either of them, in the total sum Graham Bros." If for any reason the truck of $5,000, and medical expenses in the sum was laid off, Conklin received nothing for the of $174.95. It ordered that Graham Bros. time he was idle. He was charged with the be released from all liability in the premises. care of the truck, which he kept at his own [4] The finding and award of the commis- home when it was not in use. Pruitt paid sion, which can only be predicated upon an the bills for its upkeep, and for the oil and application of the theory of a general and a gasoline used in its operation. He agreed special employment of Conklin, is not con- to pay Conklin the usual wages of a mechantroverted by the respondent insurance car-ic for his time when he made any repairs to rier of Graham Bros. It does not dispute the truck. Having made these agreements the liability of the partnership in the prem- with Graham Bros. and Conklin, Pruitt did ises. The petitioner, Pruitt, is here alone not thereafter give any orders, or directions, contending that there was a want of suffi- to either, and exerted no measure of control cient evidence to sustain the finding that he over the truck or its driver. On this eviwas liable, and that therefore the award is, dence the commission correctly found that at as to him, without support. This contention the time of the injury Conklin was operating must be sustained. While it has been held the truck "in the service of Graham Bros." that in some cases where, at the time of under the above arrangement, and that "durthe accident, both the general and special ing all of said time said Paul R. Conklin was employer exerted some measure of control subject to the control and direction of said over the injured employee, both should be defendant Graham Bros. in the operation and held liable, and that under such circumstanc-movement of the truck." These findings supes an employee may look either to the gener-port the claim for compensation against Graal employer or to the special employer, or to both, for compensation for injuries due to occupational hazards (Employers' Liability Assurance Corp. v. Industrial Acc. Comm., 179 Cal. 432, 438, 439, 177 Pac. 273), the facts here under review do not bring the case within the application of the rule.

ham Bros., and justify the award against the United States Fidelity & Guaranty Company, its insurance carrier, but utterly fail to establish any liability on the part of Pruitt.

[5] There is neither evidence nor finding to show that petitioner ever exerted, or had the right to exert, the slightest degree of That Conklin's death was the result of in- control over Conklin in connection with his juries he received when the truck he was employment in the service of Graham Bros. driving was struck by a train, while he was Yet to uphold an award against him it must in the discharge of his duties and while act-so appear. Employers' Liability Assurance ing within the scope of his employment, is Corp. v. Industrial Acc. Comm., supra; De not disputed. Graham Bros., copartnership, Noyer v. Cavanaugh, 221 N. Y. 273, 275, 116 was engaged in the general contracting busi-N. E. 992. If it be contended that a further ness. For the purpose of hauling broken finding of the commission, that "at the time rock, gravel, and sand the firm used a great of said injury the said Paul R. Conklin was 209 P.-3

in the joint employment of both the defendants W. L. Pruitt and Graham Bros." should be construed to have that effect, there is no evidence in the record to support it. Ordinarily, in cases such as this, the reviewing court is bound by the decision of the triers of fact. The finding of the commission in such matters stands upon the same footing as the finding of a judge, or the verdict of a jury, and is not to be set aside if there is any substantial evidence upon which it can rest. Pigeon's Case, 216 Mass. 51, 52, 102 N. E. 932, Ann. Cas. 1915A, 737; Massachusetts, etc., Co. v. Industrial Acc. Comm., supra. A review of the findings in such cases may be had, however, on the theory that the commission has no jurisdiction to make a finding where there is no evidence to support it. Dearborn v. Industrial Accident Commission (Cal. Sup.) 203 Pac. 112; Southern Pacific Co. v. Industrial Accident Commission, 177 Cal. 378, 380, 170 Pac. 822. The last-mentioned finding falls squarely within this category and may be disregarded.

that a proposed plan of business is not unfair, unjust, or inequitable, etc., he shall issue a permit for the sale of securities on such terms and conditions as he may provide, attacked as violating Const. U. S. Amend. 14, and Const. Cal. art. 1, § 11, authorizes the commissioner to impose only such conditions as are necesnot be assumed in advance that he will impose sary to secure safety and security, and it canany other conditions.

In Bank.

Original petition by Francis E. Agnew for a writ of prohibition, directed to Edwin M. Daugherty, Commissioner of Corporations of the State of California. Petition denied.

Westervelt & Ball, of Los Angeles, for petitioner.

SHAW, C. J. The applicant has filed a petition for a writ of prohibition, directed to Edwin M. Daugherty, commissioner of corporations of the state of California, to prohibit and enjoin him from proceeding in the matThe finding of facts made in this proceed-ter of the trust described in the petition, and ing fails to support the award as to the pe- to require the petitioner to discontinue the titioner, W. L. Pruitt. The award against sale or negotiation of the trust certificates the United States Fidelity & Guaranty Com-and other securities mentioned in the trust set pany is affirmed, and the award against W. forth in the petition, until he has received a L. Pruitt is annulled and set aside.

We concur: SHAW, C. J.; LENNON, J.; MYERS, Justice pro tem.; RICHARDS, Justice pro tem.

AGNEW v. DAUGHERTY, State Commissioner of Corporations. (S. F. 10355.) (Supreme Court of California. Aug. 18, 1922.)

1. Licenses 182, New, vol. 12A Key-No. Series-interests in trust and mining options held "securities," which could not be sold without permit from commissioner of corporations.

certificate of the corporation commissioner authorizing him to do so. The petition sets forth that he has acquired a lease and option of certain mining property, and that he has conveyed the same to certain persons as trustees under a contract in writing with them defining the trust.

The terms of the trust are not set forth, as such, but in his declaration, which is made a part of his petition, he states that he has created a trust, designating it as the "La Plata Smelting Company," has appointed William H. Test, H. E. Williams, and W. C. Randall as trustees thereof, and has empow ered them as such trustees to receive all payments that may be due to him for interests in the lease, and to hold the same and all funds received from the sale of the product or the Where one having a lease and option on. operation of said lease, as a trust fund for mining property was selling interests therein, the holders of the several interest certifiand in a trust under which it was to be operat-cates, and disburse, use, and manage the ed, evidenced by certificates and each representing 1/3000 part of the property and assets of same as such trustees. When they have rethe trust, such interests were "securities," ceived a sufficient amount from the sale of within Corporate Securities Act, especially in interests they shall start operations, includview of section 2, providing that the singular in- ing the work and development of the mines cludes the plural, etc., and a permit from the on the property. The "interests" are 3,000 in commissioner of corporations for their sale was number. When 1,500, or so many of that number as may be necessary, are sold, he is to execute to the said trustees a proper asSecu-signment of said lease. The remaining 1,500 of the "interests" are to be retained, and petitioner reserves the right to hold them for himself and his associates as a consideration for the transfer of the property to be conveyed in trust, namely, of the lease and opThe Corporate Securities Act, providing tion aforesaid. Share certificates, conveying that, if the commissioner of corporations finds to the holder thereof 1/3000 part of the said

necessary.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, rity.]

2. Licenses 182, New, vol. 12A Key-No. Series-Commissioner can impose only such conditions on sale of securities as are necessary to safety and security.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(209 P.)

DOMENIGONI v. IMPERIAL LIVE STOCK & MORTGAGE CO. (L. A. 7095.)

(Supreme Court of California. Sept. 1, 1922. Rehearing Denied Sept. 28, 1922.)

1. Licenses 182, New, vol. 12A Key-No. Series-Subscriptions to stock held not to comply with permit of corporation commissioner under Blue Sky Law.

Under the Blue Sky Law and Civ. Code, §§ 1550, 1668, a permit issued by the corporation commissioner, authorizing the licensee to sell shares of its capital stock at par "upon subscription agreements providing for the payment of 25 per cent. of the subscription price in cash, and the execution of promissory notes bearing interest at 6 per cent. by the subscriber for the balance," was not complied with where the licensee's agent took a note to the corporation for 75 per cent. of a subscription, and another note for 25 per cent. thereof due in six months, payable to "myself" and indorsed by the purchaser, though the agent immediately thereafter converted the smaller note into cash by discounting it at a bank, the evidence being insufficient to show that the purchaser authorized the selling agent to make the discount as the agent of the purchaser, and the fact that the subscription contract recited that 25 per cent. of the price was paid in "cash," was immaterial. 2. Licenses 39- Neither party to illegal transaction in violation of Blue Sky Law entitled to relief.

Where a permit under the Blue Sky Law and Civ. Code, §§ 1550, 1668, authorized the sale of stock by the licensee "upon subscription agreements providing for the payment of 25 per cent. of the subscription price in cash," a transaction by which a purchaser of stock gave his note to the corporation for 75 per cent. of the subscription price and a smaller note for the balance to the sales agent, payable in six months to "myself," and indorsed by the purchaser to the agent, who immediately discounted the note at a bank, was merely a device to evade the law, and neither of the parties was entitled to relief in a court of equity, and the purchaser of the stock could not maintain an action to cancel the notes, though defendant did not interpose the defense of illegality.

In Bank.

the defendant, and also certain agreements by plaintiff with defendant for the purchase of stock of said defendant. The right of the law for the regulation of corporations, the plaintiff depends upon the provisions of approved May 18, 1917 (Stats. 1917, p. 673), usually known as the "Blue Sky Law." His contention is that the notes and agreements were made in violation thereof, and that therefore they are against the policy of the law (Civ. Code, §§ 1550, 1668) and void.

*

This statute provides that no corporation shall sell its capital stock, except for a delinquent assessment, until it has secured from the commissioner of corporations a permit authorizing it to do so (section 3), and that the permit, when issued, shall authorize the corporation to issue and sell its "securities * in such amounts and for such considerations and upon such terms and conditions as the commissioner may in said permit provide" (section 4). The word "security," as defined in section 2, includes shares of the capital stock of the corporation which makes such sale. The act also provides that every corporation "which shall directly or indirectly issue or cause to be issued any security contrary to the provisions of this act, * * * or in nonconformity with a permit of the commissioner authorizing the same," is punishable by a fine not exceeding $10,000 (section 13); also that any agent of such company who does the like is guilty of a felony (section 14).

In pursuance of this act the corporation commissioner on December 30, 1919, issued to the defendant a permit granting it the right to sell 190,000 shares of its capital stock, at par, "upon subscription agreements providing for the payment of 25 per cent. of the subscription price in cash, and the execution of promissory notes bearing interest at 6 per cent., by the subscriber, for the balance," at the price of $10 per share; that being its par value. Under this permit the defendant sold to the plaintiff 2,000 shares of its stock at the price of $10 per share, by four separate sales; the first being a sale of 250 shares on June 10, 1920, the second for 250 shares on July 10, 1920, the third for 500 shares on October 19, 1920, and the fourth

Appeal from Superior Court, Riverside for 1,000 shares on November 17, 1920. County; W. D. Dehy, Judge.

Action by Angelo Domenigoni against the Imperial Live Stock & Mortgage Company. From a judgment for defendant, plaintiff ap

peals. Reversed.

Thomas T. Porteous, of Riverside, for appellant.

Marshall Stimson and Noel C. Edwards, both of Los Angeles, for respondent.

SHAW, C. J. This is an action to cancel and have delivered up to the plaintiff certain promissory notes delivered by plaintiff to

The plaintiff claims that each of these sales were made in consideration of his note for one-fourth of the price, made payable by him to the agent of the defendant, and to himself, indorsed by him, and delivered

another note for three-fourths of the price payable directly to the defendant, and that in neither instance did he pay the one-fourth of the price in cash. The defendant, on the other hand, claims that on each occasion the plaintiff agreed to pay one-fourth of the price in cash, executed his note for a sum equal to such one-fourth, payable to himself, and indorsed and delivered the same to one

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(209 P.)

W. B. Lawrence; that he thereupon authorized Lawrence, in his behalf and as his agent, to sell said note at a bank for cash to raise the money necessary to make the cash payment by Domenigoni, and for him to apply such cash in payment of the one-fourth part of the purchase price of the stock then sold, and that Lawrence, in accordance therewith, made the sale and paid the money to the defendant in satisfaction of that part of the purchase price. The court made findings in favor of the defendant on this proposition, stating specifically therein with respect to each sale that:

"The plaintiff made the said W. B. Lawrence his agent and authorized him to cash the said note, for the purpose of paying the first installment of the subscription agreement of even date with said note, which plaintiff executed at said time."

the sales to the plaintiff, namely, W. B. Lawrence, Charles O. Harding, and James W. Lynch. Lawrence was present at the time each of the sales was made, Harding at the first two, and Lynch at the third and fourth. Harding and Lawrence first saw the plaintiff some time in April, 1920, and suggested to him the purchase of this stock. The plaintiff then expected to sell his farm for a considerable sum of money and expressed his desire to make an investment in case he sold it. The transactions with respect to each sale, as the evidence discloses, were precisely similar in all essential particulars, and the relation of one will suffice for all. On June 10, 1920, Lawrence and Harding visited the plaintiff at his residence. They had been furnished by McPhail with a supply of forms for the transaction then entered into. These included notes payable to "myself," payable in six months, other notes payable to the defendant

The judgment went for the defendant, and by name and forms of authorization as herethe plaintiff appeals.

[1] The only question arising upon the appeal is the sufficiency of the evidence to sustain the finding of the court just quoted. The issuance and sale by the defendant of its capital stock, or an agreement for such sale, in a manner not in conformity with the permit issued to it by the commissioner of corporations, would be illegal and void. The permit so issued required that the agreement of sale of the stock should provide "for the payment of 25 per cent. of the subscription price in cash" and for the execution of notes by the purchaser for the balance. A sale made in consideration of a price, all of which was represented by notes given by the purchaser to the defendant or its agents, would be contrary to the permit. The sufficiency of the evidence to support this finding depends upon its sufficiency to show that the note for one-fourth of the price of each sale, given at the time thereof, was a note given to an agent of the defendant corporation in consummation of the sale, or a note executed by the plaintiff to his own agent, authorized to sell the note for its face value and apply the proceeds upon the cash payment by transmitting the same for plaintiff to the defendant.

The facts bearing on this question are in the main not contradicted. One C. H. McPhail was employed by the defendant as its exclusive agent to sell the 190,000 shares of stock above mentioned. The agreement provided that the defendant was to furnish McPhail with all statements and literature for any advertising campaign that McPhail should undertake in selling said stock, and that McPhail should use and make no statements or representations to any prospective purchaser, other than those contained in the literature so furnished. C. W. Francis was the manager for McPhail in selling said stock. Three agents appointed by McPhail or Francis were instrumental in negotiating

inafter shown. They also included a form of subscription agreement providing for the payment of the price "not less than onefourth cash accompanying this application, and the balance thereof as evidenced by promissory note of even date herewith, bearing interest at the rate of 6 per cent. per annum," and a form of receipt to the purchaser as hereinafter given.

On that occasion they obtained from the plaintiff his signature to an agreement in the form above stated for the purchase of 250 shares of stock and his note payable to the defendant for $1,875; also his note payable in six months to himself on one of the "myself" forms and his indorsement thereon, which note he then delivered to said Lawrence; also his signature to one of the authorization agreements aforesaid in the following words:

They also executed to him a receipt as follows:

"Receipt to be Given Subscriber.

"June 10, 1920. "Received of Angelo Domenigoni, of Winchester, Calif., the sum of twenty-five hundred dollars. Cash, $625; notes $1875.

"Payable to Imperial Live Stock & Mortgage Company as payment for two hundred and fifty (250) shares of the capital stock of the Imperial Live Stock & Mortgage Company, as set forth in this subscription contract, numbered the same as the receipt and bearing even date herewith.

"(Not valid unless signed.) "Imperial Live Stock & Mortgage Company,

"Harding & Lawrence, Special Agents."