Findley v. Garrett, 109 Cal. App. 2d 166 (1952)

Citation: Findley v. Garrett, 109 Cal. App. 2d 166 (1952)
Parent Document: Findley v. Garrett, 109 Cal. App. 2d 166 (1952)
Jurisdiction: California (state)
Effective Date: 1952-02-08
Original Source: https://www.courtlistener.com/opinion/1138834/findley-v-garrett/ ↗

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complained of “were concealed and kept secret from all persons and corporations, including defendant Douglas Aircraft, its directors and stockholders, and said facts are still concealed and kept secret.” In other words, in that complaint directors of Douglas who had no financial interest in Garrett were not implicated in any alleged wrongful acts. A demurrer to that complaint was sustained. One of defendants’ arguments in support of that demurrer was that under that complaint an independent majority of the Douglas board, being unassociated with the alleged wrong, had refused to commence the action. In the amended complaint, under consideration here, nine other persons, who had been at some time after 1936 directors of Douglas, were included as defendants. The exhibits attached to the amended complaint show that those additional defendants never owned any stock or held any position in Garrett. If the nine additional directors of Douglas were implicated in the wrongs allegedly committed by the organizers of Garrett, then it could not be said that a majority of the Douglas board, independent and disinterested in Garrett, had refused to commence the action. In other words, under those circumstances, it might be argued, as it is argued here, that a majority of the Douglas board was under disability and powerless to act with respect to the alleged wrongs because a majority of the board was ‘ ‘ accused of participation in the fraud. ’ ’ The above-mentioned allegations to the effect that the said nine additional directors of Douglas became directors of Douglas with full knowledge of the conspiracy of the organizers of Garrett and “participated” in the acts committed pursuant to the conspiracy, “became active participants” in the acts of conspiracy, and “knowingly shielded” and “actively concealed” said acts of conspiracy by “affirmative representations” which were “fraudulent concealments” of material facts, and that the directors refused “in bad faith” to seek redress, are general statements which are not supported by allegations of specific facts. Those general allegations are made upon information and belief and are intended to implicate the said additional nine directors in an alleged fraud and conspiracy, which fraud and conspiracy are also alleged upon information and belief. In other words, it appears that plaintiffs have attempted to charge the said additional directors with fraud and conspiracy upon information and belief and have not alleged any fact upon which the charge of fraud or conspiracy is based or upon which the belief is based. In Dowling *177 v. Spring Valley Water Co.,

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