¶1 I cannot agree with the conclusion of the court in the foregoing opinion. The plaintiff and the defendant Davis were both stockholders in the Tom Reed Gold Mines Company. Under the law every stockholder has a right to inspect the mine. Both parties must be presumed to know this. The complaint shows that the defendant Davis knew that the plaintiff made the contract with the expectation of obtaining means of making payments by reselling the stock to other persons. By the contract twenty-five thousand five hundred *564 dollars was due on the. 2d of September, and a much- larger sum, one hundred and two thousand dollars, on or before the 2d of October. Defendant knew that the plaintiff could not obtain the latter sum unless he was allowed to examine the mine to discover its condition before making a resale. The condition of the mine was such that if he examined the mine he would have been enabled to make a resale and could have completed the contract. All this was known to the defendant. With the fraudulent intention of preventing plaintiff from carrying out the contract, the defendant caused the company to immediately refuse to permit the plaintiff to enter the mine for examination. He did this to prevent plaintiff from carrying out the contract, and persisted in so doing until after the payment of September 2d became due, knowing and believing that by that means he would avoid performance of the contract. In my opinion this was fraudulent and constituted an estoppel against the defendant, sufficient to prevent him from now claiming that the plaintiff was in default for failing to pay the comparatively small amount due on September 2d. If the plaintiff had paid that amount, as it may be conceded he was able to do, he was confronted with the certainty that the refusal to permit him to examine the mine would prevent him from making the much larger payment due in October, and that he would thereby forfeit the money already paid. In my opinion the defendant is in no position to claim the default which he himself has in this manner produced. I think the complaint states a cause of action.
168 Cal. 556
143 P 733
Hobbs v. Davis
Decided October 5, 1914
California Supreme Court · decided 1914-10-05
<p>Mines and Minerals—Inspection of Property—Bight of Stockholder to Make.—A stockholder in a mining corporation is entitled to inspect the mining property of the company, and this includes the right to be accompanied by an expert.</p> <p>Id.—Contract to Purchase Mining Stock—Specific Performance— Sufficiency of Complaint.—In an action by a purchaser of stock to enforce specific performance of the contract of sale, which makes time of the essence and provides for periodical payments, the complaint fails to state a cause of action if, after alleging, as an excuse for the failure of the plaintiff to make the payments as provided, that the defendant in conspiracy with the other directors of the company prevented the plaintiff’s engineer from, making an examination of the mine, which examination was necessary to enable him to obtain funds wherewith to make the payments, it alleges nothing from which it can be inferred that the plaintiff was unable to pay the comparatively small amount which was called for as the first payment or that the defendants prevented Mm from making such payment and thereby put him in default.</p> <p>Id.—Contracts—Making Payments—Timé as Essence.—Provisions of a contract calling for payments strictly at a time specified cannot be applied where the efficient cause of the failure of the party seeking specific performance to comply strictly and literally with the contract was the conduct of the other party; but in the present ease the conduct of the defendants was not the efficient cause of the plaintiff’s default in making his first payment.</p> <p>Id.—Unreasonableness of Contract—Inadequacy of Consideration. A contract which does not appear just and reasonable, or founded upon an adequate consideration, will not be specifically enforced. Hence specific performance cannot be had of a contract for the sale of mining stock which fixes a grossly inadequate price.</p> <p>Id.—Pleading—Misjoinder of Parties and Causes of Action.'—If the complaint in an action for specific performance, brought by the buyer of mining stock against the seller, the corporation and its directors, is treated as a complaint for damages for breach of contract, it is subject to demurrer for improper joinder of defendants, and for improper joinder of causes of action affecting some, but not all, of the defendants.</p>
Cited by 1 later decisions — most recently March 1943
1 state decisions
Good law ✅— No negative treatment on recordhow we know
Decided 1914-10-05
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