Keyes v. Nevada Gas Co., Limited

Appellant takes the position that, regardless of the relief prayed for, if the complaint, disregarding the prayer, states a cause of action against the defendant, the court should disregard such prayer and overrule the general demurrer, it being entirely within the province of the trial court to grant or deny the specific relief prayed for. 1 Bancroft's Code Pleading, p. 316, par. 184.

Does the amended complaint, eliminating the prayer for relief, state any cause of action against the defendant? We submit that it does, particularly in the following respects:

(a) Plaintiff alleges that the defendant had failed to perform its agreement to issue and deliver to him twenty percent of its capital stock, in exchange for the assignment of permit and certificate, although demand therefor was made. Defendant, by its demurrer, admitted that this was true, and the court, therefore, erred in sustaining the general demurrer, for it might very well have rendered judgment requiring this defendant to issue its stock to plaintiff, or granting judgment for the value thereof. Gallatin County Farmers' Alliance v. Flannery, 59 Mont. 534,197 P. 996; Hillyer's Corporate Management, p. 287.

(b) Plaintiff alleges in his amended complaint, and the allegation is admitted by the demurrer, that the defendant had refused him the right to inspect its books and records. Inasmuch as his complaint properly alleges that he was entitled to the issuance to him of certain of the capital stock of defendant, and that the issuance thereof had been improperly refused, the court erred in sustaining the general demurrer to his amended complaint, for it might properly have rendered judgment granting plaintiff this right of inspection. Mushet v. Department of Public Service, 35 Cal.App. 630, 170 P. 653; Hillyer's Corporate Management, p. 908. As no damages are asked and as there is no allegation upon which an award of damages could be made, the amended complaint cannot be held to have stated a cause of action at law. It is apparent, therefore, that if any cause of action is set forth therein, it must be of an equitable nature. Looking to the prayer of the complaint merely to determine the nature of the cause of action, if any existed (1 Bancroft Code Pleading, p. 35), we find that the prayer prays for the rescission or cancellation of certain written instruments. It is certain that the complaint does not state facts sufficient for this kind of relief, because no fraud or bad faith is alleged, and mere want or failure of consideration, whether partial or total in character, when unmingled with fraud or bad faith, is not sufficient in equity to obtain the rescission or cancellation of an executed contract. 4 R.C.L. 500; 9 C.J. 1181; Thompson v. Jackson, 15 Am. Dec. (Va.) 721; Southall v. Farish, 1 L.R.A. (Va.) 641; Virginia, etc. Co. v. Cottrill, 9 S.E. 132; Loomis v. Jackson, 6 W. Va. 613; Wren v. Moncure, 63 S.E. (Va.) 588; Beach v. Williamson, 9 A.L.R. (Fla.) 1438.

The amended complaint does not state a cause of action in equity to enforce the issuance and delivery of a certificate, because no certificate is mentioned, and because plaintiff has alleged that the capital stock is worthless, and equity will not require a vain act or an act which would be ineffective or not beneficial to plaintiff. 58 C.J. 881. Nor could a court grant judgment for the value of the stock, when it appears in the amended complaint that the stock is worthless.

Mandamus is the proper remedy to enforce the right to inspect the books of a corporation. Brown v. Crystal Ice Co., 122 S.W. (Tenn.) 84, 19 Ann. Cas. 308; 22 A.L.R. 99.

Mandamus is a legal remedy and cannot be obtained on a bill in equity. 38 C.J. 861.

OPINION The amended complaint alleges that the city of Las Vegas granted to the plaintiff a permit to install, lay down, and maintain gas mains, distributing pipes, and all necessary and proper appliances used in connection therewith, in, through, over, across, under, and along all of the highways, streets, alleys, or public grounds of the said city; that thereafter the plaintiff entered into an agreement with Mike Lang and Howard M. Lang, doing business as Lang Transportation Company, to proceed to procure from the public service commission of Nevada a certificate of public convenience and necessity, incorporating all of the terms of the said permit, and, upon the issuance thereof, to assign the same, together with said permit, to a corporation to be thereafter formed by the said Langs for the purpose of carrying out the aims and purposes of said permit and certificate of public convenience, and to issue to the plaintiff 20 percent of the original capital stock of said company.

It is further alleged that, pursuant to said agreement, this plaintiff did procure said certificate of public convenience from said public service commission, and that the said Langs did cause to be incorporated under the laws of the State of Nevada, for the purpose of operating and maintaining a gas distributing system in the city of Las Vegas, Nevada, the Nevada Gas Company, Limited, a corporation. That pursuant to said agreement the plaintiff did assign his said permit and certificate of public convenience and necessity to the said Nevada Gas Company, Limited.

It is further alleged that the said Langs are the majority stockholders in said company and are in complete control thereof, and that the said Mike Lang and said Howard M. Lang, ever since the incorporation of said company have been, and now are, the president and secretary, respectively, of said company; that, though the plaintiff has often demanded of the defendant and each of them that they cause to have issued to him 20 percent of the original stock in said company, they have failed, neglected, and refused, and still fail, neglect, and refuse, to issue to him said stock, or any stock whatever in said company.

It is further alleged that plaintiff has often demanded of defendants, and each of them, that they permit him to inspect the books, records, and papers of said company at some reasonable time, but that they have failed, neglected, and refused, and still so fail, neglect, and refuse such request; that plaintiff is informed and believes, and so alleges the fact to be, that the defendant company is now insolvent, and that its capital stock is worthless.

The plaintiff prays judgment that the assignment of said permit and of said certificate of public convenience and necessity be canceled and declared null and void, and that the defendants, and each of them, be ordered to surrender and return to plaintiff the said permit and certificate of public convenience and necessity, with the assignments thereof, and that the court decree that any pretended right, title, and interest which the defendants, or either of them, may have therein by reason of said assignments, be terminated, and for general relief.

To this complaint defendant company demurred generally. The individual defendants were not served with summons and did not appear. The demurrer having been sustained, and plaintiff declining to further plead, judgment was entered for defendant company, from which an appeal has been taken.

1. Counsel for appellant makes two propositions as grounds for a reversal of the judgment. The first proposition is that the prayer of a complaint is not to be considered on general demurrer. Section 8594, N.C.L., states what a complaint must contain. It requires, among other things, that the complaint shall contain "a demand for the relief which the plaintiff claims. If the recovery of money or damages be demanded, the amount thereof shall be stated." Hence it appears that a complaint without a prayer for relief is incomplete. It is true, however, that the prayer for relief forms no part of the statement of the cause of action (Kingsbury v. Copren, 43 Nev. at page 454, 187 P. 728, 189 P. 676), and, when an answer is filed and a trial is had, judgment will be awarded in accordance with the facts pleaded and proven. But, where no answer is filed, the relief which may be granted is expressly limited by section 8792 N.C.L., to "the relief demanded in the complaint." Burling v. Goodman, 1 Nev. 314; Esden v. May, 36 Nev. 611,135 P. 1185, 1187; Bliss, Code Pl. (3d ed.) secs. 160, 161; Kelly v. Downing, 42 N.Y. 71.

2. There being no allegation of fraud in the complaint, it is clear that no cause of action for a rescission of the contract is stated. 4 R.C.L. p. 500, sec. 14; 9 C.J. 1181. Counsel for appellant concede such to be the rule, but contend that, because of the prayer for general relief, he should be permitted to recover upon any theory, provided the facts alleged entitle him thereto. While we do not find it necessary to determine this point, the weight of authority, under provisions of the civil practice act relative to the demand for relief, such as above mentioned, is against the contention. In Russell v. Shurtleff,28 Colo. 414, 65 P. 27, 29, 89 Am. St. Rep. 216, the court said: "The relief which the statute contemplates shall be granted in the absence of an answer is the relief demanded. A general prayer is not such a demand" — citing authorities. And a demurrer is not an answer. Kelly v. Downing, 42 N.Y. 71.

3. Counsel for appellant seem to be of the opinion that the refusal of the demand to inspect the books of the company entitles plaintiff to some relief, though no theory or authority is advanced as a basis therefor. It does not appear that plaintiff has been injured in any way because of such refusal. The subject of the right of inspection by a stockholder is covered in 14 C.J. 853 et seq., and in 7 R.C.L. p. 322, to which we direct attention.

4. Appellant contends that he is entitled to a decree directing the issuance to him of a certificate for 20 percent of the capital stock of the defendant company. There being no allegation in the complaint that this amount of stock in the company remains unissued, whatever else might be offered on this point, the contention is not well taken. Smith v. North America Min. Co., 1 Nev. 423; 14 C.J. pp. 485, 486. 5. In view of the allegation in the complaint to the effect that the stock in question is worthless, no judgment for damages can be rendered.

Judgment affirmed.