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Copr. © Bancroft-Whitney and West Group 1998
including dissolution and possible buyers for the corporation as well as
various proposed settlements. Nokes indicated this was not a good time
to expect buyers, since the time to sell a corporation is during a
successful phase with substantial profits and one or more "hot" new
products. The corporation, however, had "no new hit products and [was]
losing considerable money each month." In addition to analyses of the
corporation's various products, Nokes reported on various deals he had
made or was then negotiating with respect to various of the corporation's
thirds, terminating his and Persson's salaries, cutting the salaries of
salespeople and factory management by 40 percent minimum and *1149
reducing their work week to three days if necessary. Nokes offered to
$200,000 for additional shares in the corporation (which he did on July
20, 1999), and was to receive that amount in addition to the $1.4 million.
Nokes's lawyers prepared a Stock Redemption Agreement which
battery-operated, touch-activated portable light fixture. Nokes had begun
looking at the device as early as April 1999, but did not mention it to
Persson. In mid-May 1999, Nokes showed the Tap Light, along with a
after in
the
infomer
cial
marketi
ng
busines
s. In
and in
late
July
units of
the Tap
Light,
an air
date of
August
and
3. the damages claimed by Persson were not proximately caused by the
alleged concealment.
releases by Nokes, Smart Inventions and Persson, under which Persson
released Nokes and Smart Inventions from all liability of any kind, known
or unknown, "relating to this Agreement and [Persson]'s relationships in
representations to execute a contract, the party has the option of
rescinding the contract or affirming it and recovering damages for the
fraud. (De Campos v. State Comp. Ins. Fund (1954) 122 Cal.App.2d
general rules are that:
(1) In order to escape from the obligations of a contract induced by fraud,
the aggrieved party must rescind the contract (Rosenthal v. Great
and
repudia
te the
Institut
e of
Techno
581]
(Simmo
ns ).)
his
promis
e to
alleged fraud, he would be entitled to retain the $15,600 as the contract
and to prevent the taking of unfair advantage. Restoration is not required
unless the ends of justice require it." (Id. at p. 112, 212 P.2d 946.) [FN4]
FN4. The parties argue at length over whether the nondisclosure of the
court had the equitable power to set aside a release in a contract it found
was induced by fraud, and was not constrained by the rule against partial
rescissions, which itself is founded on equitable principles. [FN5]
The trial court found Nokes owed and breached a fiduciary duty to
Persson on two theories. It concluded that, despite the incorporation of
the business in 1994, Nokes and Persson continued to operate as a
when they **347 terminated the formal partnership and began to operate
as a corporation. No evidence was presented of any failure since that
time to observe corporate formalities. The corporation issued shares,
ground
partner
ship
which
e here."
The
"indicia
n,
Nokes
and
the
same
salary,
Copr. © Bancroft-Whitney and West Group 1998
including dissolution and possible buyers for the corporation as well as
various proposed settlements. Nokes indicated this was not a good time
to expect buyers, since the time to sell a corporation is during a
successful phase with substantial profits and one or more "hot" new
products. The corporation, however, had "no new hit products and [was]
losing considerable money each month." In addition to analyses of the
corporation's various products, Nokes reported on various deals he had
made or was then negotiating with respect to various of the corporation's
thirds, terminating his and Persson's salaries, cutting the salaries of
salespeople and factory management by 40 percent minimum and *1149
reducing their work week to three days if necessary. Nokes offered to
$200,000 for additional shares in the corporation (which he did on July
20, 1999), and was to receive that amount in addition to the $1.4 million.
Nokes's lawyers prepared a Stock Redemption Agreement which
battery-operated, touch-activated portable light fixture. Nokes had begun
looking at the device as early as April 1999, but did not mention it to
Persson. In mid-May 1999, Nokes showed the Tap Light, along with a
after in
the
infomer
cial
marketi
ng
busines
s. In
and in
late
July
units of
the Tap
Light,
an air
date of
August
and
3. the damages claimed by Persson were not proximately caused by the
alleged concealment.
releases by Nokes, Smart Inventions and Persson, under which Persson
released Nokes and Smart Inventions from all liability of any kind, known
or unknown, "relating to this Agreement and [Persson]'s relationships in
representations to execute a contract, the party has the option of
rescinding the contract or affirming it and recovering damages for the
fraud. (De Campos v. State Comp. Ins. Fund (1954) 122 Cal.App.2d
general rules are that:
(1) In order to escape from the obligations of a contract induced by fraud,
the aggrieved party must rescind the contract (Rosenthal v. Great
and
repudia
te the
Institut
e of
Techno
581]
(Simmo
ns ).)
his
promis
e to
alleged fraud, he would be entitled to retain the $15,600 as the contract
and to prevent the taking of unfair advantage. Restoration is not required
unless the ends of justice require it." (Id. at p. 112, 212 P.2d 946.) [FN4]
FN4. The parties argue at length over whether the nondisclosure of the
court had the equitable power to set aside a release in a contract it found
was induced by fraud, and was not constrained by the rule against partial
rescissions, which itself is founded on equitable principles. [FN5]
The trial court found Nokes owed and breached a fiduciary duty to
Persson on two theories. It concluded that, despite the incorporation of
the business in 1994, Nokes and Persson continued to operate as a
when they **347 terminated the formal partnership and began to operate
as a corporation. No evidence was presented of any failure since that
time to observe corporate formalities. The corporation issued shares,
ground
partner
ship
which
e here."
The
"indicia
n,
Nokes
and
the
same
salary,
