Ruffinilli

Plaintiffs seek damages arising out of their purchase from defendants of corporate shares for which no permit had been issued at time of sale. The ease was tried to the court, without jury. Judgment was for defendants on the ground the statute of limitations had run. Plaintiffs appeal.

Four plaintiffs purchased stock in April 1952, and one bought additional shares in January 1953. Permit of the Commissioner of Corporations did not issue until June 19, 1953, and it is conceded that all the sales were therefore invalid. Complaint was filed March 10, 1959.

One who sells a security for which a permit is required by the Corporate Securities Act impliedly represents that such permit has been secured. Falsity of the implied representation gives rise to an action for fraud (Mary Pickford Co. v. Bayly Bros., Inc., 12 Cal.2d 501, 526 [ 86 P.2d 102 ]). Such right of action accrues on discovery of the fraud (id.), and is not barred until three years thereafter (Code Civ. Proc., § 338, subd. 4; Gormly v. Dickinson, 178 Cal.App.2d 92,104 [ 2 Cal.Rptr. 650 ]).

Relying upon this rule, plaintiffs alleged and testified that they had no knowledge of the absence of a permit until that fact was…