Procedural Posture

Plaintiff sellers brought a cause of action against defendant purchasers alleging that the purchasers fraudulently induced the sellers to sell capital stock in a distributing corporation that the sellers had organized. The San Francisco Superior Court (California) entered judgment in favor of the sellers. The purchasers sought review of the judgment.

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Overview

The sellers alleged that the purchasers, during the negotiations for the sale of the stock, concealed the fact that the corporation was going to be involved in a profitable sale. The purchasers contended that there was conflicting evidence as to whether they were guilty of misrepresentation in connection with their purchase of the seller's stock. The purchasers argued that the evidence established that the sellers knew the allegedly concealed facts and did not act in reliance upon said representations and that the representations were not material. On appeal, the court affirmed the judgment in part and reversed the judgment in part. The court found that the evidence supported the trial court's findings that one of the purchasers not only intentionally concealed the large sale from the sellers, but actually represented to them that no such sale had taken place for the purpose of getting them to acquiesce in the termination of their agency and to sell their stock. The court found that it was obvious that the sellers would have valued their stock more highly if they had known the true situation. The court reversed the award of judgment interest to the sellers.

Outcome

The court affirmed the judgment in the favor of the seller but reversed the award of judgment interest.