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(209 P.) that case tending to show that Carstens was, many 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 be including the services of the driver. Robert tween him and the other parties to the pro- Graham, a member of the copartnership, had ceeding, or to the applicant, was introduced general control of the operation of these after the notice was served upon him. Car- trucks during working hours through a forestens never appeared, was never represented, man, who gave orders as to when, where, and took no part in the proceedings. In the and how the materials were to be hauled present case the petitioner was accorded and the trucks otherwise used. For some ample opportunity to present his defense in time Conklin, who appears to have had an opposition to the claim of the applicants. interest in a truck, was employed by Gra
The 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 $3,000, 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
 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 eriwas 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 ham Bros., and justify the award against the both, for compensation for injuries due to United States Fidelity & Guaranty Company, occupational hazards (Employers' Liability its insurance carrier, but utterly fail to esAssurance Corp. v. Industrial Acc. Comm., tablish any liability on the part of Pruitt. 179 Cal. 432, 438, 439, 177 Pac. 273), the facts  There is neither evidence nor finding here under review do not bring the case to show that petitioner ever exerted, or had within the application of the rule.
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
in the joint employment of both the defend that a proposed plan of business is not unfair, ants W. L. Pruitt and Graham Bros." should unjust, or inequitable, etc., he shall issue a be construed to have that effect, there is no permit for the sale of securities on such terms evidence in the record to support it. Ordi
and conditions as he may provide, attacked as narily, in cases such as this, the reviewing
violating Const. U. S. Amend. 14, and Const.
Cal. art. 1, § 11, authorizes the commissioner court is bound by the decision of the triers
to impose only such conditions as are necesof fact. The finding of the commission in
sary to secure safety and security, and it cansuch matters stands upon the same footing
not be assumed in advance that he will impose as the finding of a judge, or the verdict of a
| any other conditions. jury, and is not to be set aside if there is any substantial evidence upon which it can In Bank. rest. Pigeon's Case, 216 Mass. 51, 52, 102 N. Original petition by Francis E. Agnew for E. 932. Ann. Cas. 1915A, 737; Massachusetts, la writ of prohibition, directed to Edwin M. etc., Co. v. Industrial Acc. Comm., supra. A Daugherty, Commissioner of Corporations of review of the findings in such cases may be
| the State of California. Petition denied. had, however, on the theory that the commission has no jurisdiction to make a find
Westervelt & Ball, of Los Angeles, for peing where there is no evidence to support it. | titioner. Dearborn v. Industrial Accident Commission (Cal. Sup.) 203 Pac. 112; Southern Pacific SHAW, C. J. The applicant has filed a peCo. v. Industrial Accident Commission, 177 tition for a writ of prohibition, directed to Cal. 378, 380, 170 Pac. 822. The last-men-Edwin M. Daugherty, commissioner of corpo tioned finding falls squarely within this cate- rations of the state of California, to prohibit gory and may be disregarded.
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.
certificate of the corporation commissioner
authorizing him to do so. The petition sets We concur: SHAW, C. J.; LENNON, J.; forth that he has acquired a lease and option MYERS, Justice pro tem.; RICHARDS, Jus- of certain mining property, and that he has tice pro tem.
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 AGNEW V. DAUGHERTY, State Commis.
a part of his petition, he states that he has sioner of Corporations. (S. F. 10355.)
created a trust, designating it as the “La (Supreme Court of California. Aug. 18, 1922.)
Plata Smelting Company," has appointed
William H. Test, H. E. Williams, and W. C. 1. Licenses en 181/2, New, vol. 12A Key-No. | Randall as trustees thereof, and has empow
Series-Interests in trust and mining options ered them as such trustees to receive all pay. held "securities," which could not be sold
ments that may be due to him for interests in without permit from commissioner of corpora.
the lease, and to hold the same and all funds tions.
received from the sale of the product or the Where one having a lease and option on.
oh, 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 operated, evidenced by certificates and each represent
cates, and disburse, use, and manage the ing 1/2000 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, includ. view 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 necessary.
number as may be necessary, are sold, he is [Ed. Note. For other definitions, see Words to execute to the said trustees a proper asand Phrases, First and Second Series, Secu-signment of said lease. The remaining 1,500 rity.)
of the "interests" are to be retained, and pe2. Licenses em 1812, New, vol. 12A Key-No. titioner reserves the right to hold them for Series-Commissioner can impose only such himself and his associates as a consideration conditions on sale of securities as are neces- for the transfer of the property to be consary to safety and security.
veyed 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
wFor other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
(209 P.) property and assets of said trust, are to be be used by it in issuing or disposing of them issued by the petitioner to each purchaser of are not such as, in his opinion, will work a an “interest,” and they shall have equal fraud upon the purchaser thereof, the commisrights to the profits of the enterprise, and sioner shall issue to the applicant a permit auare to be entitled to equal benefits therein. thorizing it to issue and dispose of securities. Certificates may be transferred only upon
as therein provided, in this state, in such the books of the said Agnew until enough of
amounts and for such considerations and upon the "interests" are sold to justify him in con
such terms and conditions as the commissioner
may in said permit provide. Otherwise he veying to said trustees the lease and options
shall deny the application and refuse such perand the proper license to operate under cer
mit and notify the applicant in writing of his tain letters patent in connection with said decision.” lease. Thereafter the trustees agree to keep such transfer books. All this is set forth in his declaration. He
He claims that this gives power to the
commissioner to act arbitrarily and authorproposes to begin the sale of such "interests" |
izes him to deny the applicant the equal proat once, and a form is set forth of the terms of the sale proposed to be made, embodying
tection of the law, contrary to the Four
teenth Amendment to the Constitution of the all the preceding provisions of the trust.
United States and to section 11, article 1, The commissioner of corporations, it is al
of our Constitution, requiring that “all laws leged, is interfering with his business, and has informed him that the certificates of in
of a general nature shall have a uniform
operation.” The passage in the above quoterest issued by him are "securities," as that term is defined in the Corporate Securities
tation from the statute which allows the Act (Stats. 1917, p. 673, and amendments
commissioner to issue a permit authorizing thereto (St. 1919, p. 231; St. 1921, p. 1114]),
the applicant to sell his securities "upon such
terms and conditions as the commissioner that a sale or issuance thereof without haying a permit to do so, as provided in the act,
may in said permit provide" must be read in is a public offense punishable by fine and im
connection with the context, which provides
that the commissioner must inquire into the prisonment, and has demanded that he apply for such permit before proceeding further.
method of doing business, and shall ascertain [1, 2] It will be seen from the foregoing
| if the same is fair, just, and equitable, and that the commissioner of corporations is
that the methods used in disposing of them
would not work a fraud upon the purchasers right in his contention. The certificates of
thereof. The terms and conditions to be preinterest which he proposes to issue under his trust scheme are "securities” within the
scribed in the permit must not be such as meaning of the Corporate Securities Act,
would make a greater burden than is consist. "The singular number includes the plural,
ent with safety and security. The condition and the plural the singular,” according to the
imposed must be such as could fairly be said opening clause of section 2 of the act, and
to be necessary to accomplish that purpose. so the fact that the assignor, so called, name
If the commissioner should refuse to issue a ·ly, Mr. Agnew, is the person who alone is to | permit, except upon conditions which would
issue and sell the "interests," is of no mo | be unjust, unfair, or inequitable to the appliment. Their effect is the same as if they cant, doubtless he would have the right to were issued and sold by trustees, consisting have such permit revised and reformed so as of two or more. The terms of the trust are to make it equitable and fair, but we cannot to govern the rights of the holder in all assume that he will impose such conditions cases. They are much the same as the "unit in advance of his action. He is proposing shares" or "unit interests" that were to be now to proceed in accordance with the law, sold under the scheme set forth in the case and until he has exceeded his powers it is of In re Girard, 186 Cal, 722, 200 Pac. 593, not proper for this court to interfere with which were held to be subject to the same him in performing them. The law is delaw. All the objections to the validity of signed to secure fair dealing on the part of the law urged by the petitioner here were those who propose to sell corporate securiconsidered and determined in that case to be ties, and it should be observed by all who without merit, except the following, namely, come within its terms. We think the petithat said act allows the commissioner to is- tioner is one of those who are to be controlled sue a permit by the following clause: by the provision of the act. "If he finds that the proposed plan of busi
| The petition is denied. ness of the applicant is not unfair, unjust or inequitable, that it intends to fairly and honest- We concur: WASTE, J.; LENNON, J.; ly transact its business, and that the securities MYERS, Justice pro tem.; RICHARDS, Justhat it proposes to issue and the methods to tice pro tem.
the defendant, and also certain agreements DOMENIGONI V. IMPERIAL LIVE STOCK by plaintiff with defendant for the purchase & MORTGAGE CO. (L. A. 7095.)
of stock of said defendant. The right of (Supreme Court of California. Sept. 1, 1922.
the plaintiff depends upon the provisions of
the law for the regulation of corporations, Rehearing Denied Sept. 28, 1922.)
approved May 18, 1917 (Stats. 1917, p. 673), 1. Licenses 1812, New, vol. 12A Key-No.
usually known as the "Blue Sky Law." His Series Subscriptions to stock held not to contention is that the notes and agreements comply with permit of corporation commis- were made in violation thereof, and that sioner under Blue Sky Law.
therefore they are against the policy of the Under the Blue Sky Law and Civ. Code, 88 law (Civ. Code, $8 1550, 1668) and void. 1550, 1668, a permit issued by the corporation. This statute provides that no corporation commissioner, authorizing the licensee to sell shall sell its capital stock, except for a delinshares of its capital stock at par "upon sub- quent assessment, until it has secured from scription agreements providing for the payment the commissioner of corporations a permit of 25 per cent. of the subscription price in cash, autho
rice in cash, authorizing it to do so (section 3), and that and the execution of promissory notes bearing
the permit, when issued, shall authorize the interest at 6 per cent. by the subscriber for the balance," was not complied with where the li-i
corporation to issue and sell its "securities censee's agent took a note to the corporation
* * * in such amounts and for such confor 75 per cent. of a subscription, and another
siderations and upon such terms and condinote for 25 per cent, thereof due in six months, tions as the commissioner may in said permit payable to “myself” and indorsed by the pur- provide” (section 4). The word "security," chaser, though the agent immediately thereafter as defined in section 2, includes shares of the converted the smaller note into cash by dis capital stock of the corporation which makes counting it at a bank, the evidence being insuffi such sale. The act also provides that every cient to show that the purchaser authorized the
corporation "which shall directly or indirectselling agent to make the discount as the agent
e agently issue or cause to be issued any security of the purchaser, and the fact that the subscription contract recited that 25 per cent. of
contrary to the provisions of this act, * * * the price was paid in "cash," was immaterial.
or in nonconformity with a permit of the
commissioner authorizing the same," is 2. Licenses 39 - Neither party to illegal
punishable by a fine not exceeding $10,000 transaction in violation of Blue Sky Law en
(section 13); also that any agent of such titled to relief.
company who does the like is guilty of a felWhere a permit under the Blue Sky Law ony (section 14). and Civ. Code, $$ 1550, 1668, authorized the
de In pursuance of this act the corporation sale of stock by the licensee "upon subscription agreements providing for the payment of
commissioner on December 30, 1919, issued 25 per cent. of the subscription price in cash,” | to the defendant a permit granting it the a transaction by which a purchaser of stock right to sell 190,000 shares of its capital gave his note to the corporation for 75 per stock, at par, "upon subscription agreements cent. of the subscription price and a smaller providing for the payment of 25 per cent. of note for the balance to the sales agent, payable the subscription price in cash, and the execuin six months to "myself," and indorsed by the tion of promissory notes beariug interest at 6 purchaser to the agent, who immediately dis
| per cent., by the subscriber, for the balance," counted the note at a bank, was merely a de
at the price of $10 per share; that being its vice to evade the law, and neither of the parties was entitled to relief in a court of equity,
par value. Under this permit the defendant and the purchaser of the stock could not main
sold to the plaintiff 2,000 shares of its stock tain an action to cancel the notes, though de
at the price of $10 per share, by four sepafendant did not interpose the defense of illegal rate 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 In Bank,
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.
The plaintiff claims that each of these Action by Angelo Domenigoni against the
sales were made in consideration of his note
for one-fourth of the price, made payable Imperial Live Stock & Mortgage Company.
to himself, indorsed by him, and delivered From a judgment for defendant, plaintiff ap
by him to the agent of the defendant, and peals. Reversed.
another note for three-fourths of the price Thomas T. Porteous, of Riverside, for ap | payable directly to the defendant, and that in pellant.
neither instance did he pay the one-fourth of Marshall Stimson and Noel C. Edwards, the price in cash. The defendant, on the both of Los Angeles, for respondent.
other hand, claims that on each occasion the
plaintiff agreed to pay one-fourth of the SHAW, C. J. This is an action to cancel price in cash, executed his note for å sum and have delivered up to the plaintiff certain equal to such one-fourth, payable to himself, promissory notes delivered by plaintiff to l 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 author- the sales to the plaintiff, namely, W. B. Law. ized Lawrence, in his behalf and as his agent, rence, Charles 0. Harding, and James W. to sell said note at a bank for cash to raise Lynch. Lawrence was present at the time the money necessary to make the cash pay- each of the sales was made, Harding at the ment by Domenigoni, and for him to apply first two, and Lynch at the third and fourth. such cash in payment of the one-fourth part Harding and Lawrence first saw the plaintiff of the purchase price of the stock then sold, some time in April, 1926, and suggested to and that Lawrence, in accordance therewith, him the purchase of this stock. The plaintiff made the sale and paid the money to the de- then expected to sell his farm for a considfendant in satisfaction of that part of the erable sum of money and expressed his depurchase price. The court made findings in i sire to make an investment in case he sold it. favor of the defendant on this proposition, The transactions with respect to each sale, as stating specifically therein with respect to the evidence discloses, were precisely similar each sale that:
in all essential particulars, and the relation "The plaintiff made the said W. B. Lawrence of one will suffice for all. On June 10, 1920, his agent and authorized him to cash the said | Lawrence and Harding visited the plaintiff note, * * * for the purpose of paying the at his residence. They had been furnished first installment of the subscription agreement by McPhail with a supply of forms for the of even date with said note, which plaintiff ex- transaction then entered into. These includecuted at said time.”
ed 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.
inafter shown. They also included a form  The only question arising upon the ap- of subscription agreement providing for the peal is the sufficiency of the evidence to sus- payment of the price "not less than onetain the finding of the court just quoted. fourth cash accompanying this application, The issuance and sale by the defendant of its and the balance thereof as evidenced by capital stock, or an agreement for such sale, promissory note of even date herewith, bearin a manner not in conformity with the permiting interest at the rate of 6 per cent. per anissued to it by the commissioner of corpora- num," and a form of receipt to the purchaser tions, would be illegal and void. The permit as hereinafter given. so issued required that the agreement of sale On that occasion they obtained from the of the stock should provide "for the payment plaintiff his signature to an agreement in the of 25 per cent. of the subscription price in form above stated for the purchase of 250 cash" and for the execution of notes by the shares of stock and his note payable to the purchaser for the balance. A sale made in defendant for $1,875; also his note payable consideration of a price, all of which was in six months to himself on one of the "my. represented by notes given by the purchaser self” forms and his indorsement thereon, to the defendant or its agents, would be con which note he then delivered to said Lawtrary to the permit. The sufficiency of the rence; also his signature to one of the auevidence to support this finding depends up- thorization agreements aforesaid in the folon its sufficiency to show that the note for lowing words: one-fourth of the price of each sale, given at
"June 10, 1920. the time thereof, was a note given to an
"To Any Bank or Banker: agent of the defendant corporation in con
“You are at liberty to purchase my note of summation of the sale, or a note executed
this date for $625, given to W. B. Lawrence, if by the plaintiff to his own agent, authorized
you desire. to sell the note for its face value and apply
“There are no offsets or conditions against the proceeds upon the cash payment by this no
Angelo Domenigoni." transmitting the same for plaintiff to the defendant. The facts bearing on this question are in
They also executed to him a receipt as the main not contradicted. One C. H. Mc
follows: Phail was employed by the defendant as its “Receipt to be Given Subscriber. exclusive agent to sell the 190,000 shares of
“June 10, 1920. stock above mentioned. The agreement pro- "Received of Angelo Domenigoni, of Winchesvided that the defendant was to furnish Mc- ter, Calif., the sum of twenty-five hundred dolPhail with all statements and literature for lars. Cash, $025; notes $1875. any advertising campaign that McPhail ign that McPhail "Payable to Imperial Live Stock & Mortgage
Payable to im should undertake in selling said stock, and
Company as payment for two hundred and fifty that McPhail should use and make no state.
(250) shares of the capital stock of the Im
perial Live Stock & Mortgage Company, as ments or representations to any prospective
set forth in this subscription contract, numbered purchaser, other than those contained in the
the same as the receipt and bearing even date literature so furnished. C. W. Francis was herewith. the manager for McPhail in selling said "(Not valid unless signed.) stock. Three agents appointed by McPhail "Imperial Live Stock & Mortgage Company, or Francis were instrumental in negotiating "Harding & Lawrence, Special Agents."