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Cumming v. Johnson

616 F.2d 1069 (1979)

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Cumming v. Johnson

United States Court of Appeals for the Ninth Circuit

616 F.2d 1069 (1979)

Facts

Glendon Johnson (defendant) was married to Bobette Johnson. During the marriage, Glendon acquired 132,563 shares of Terracor, Inc., and the title to the shares was held in only Glendon’s name. Glendon’s brother Franklin Johnson also owned Terracor shares. Ian Cumming (plaintiff), the president of Terracor, agreed to personally finance the settlement of litigation against Terracor, Glendon, and Franklin in return for Glendon’s and Franklin’s Terracor shares. Terracor’s executive committee, of which Cumming was a member, sent Glendon and Bobette a letter promising to indemnify the couple in the litigation. Glendon allowed Cumming to settle the litigation with Cumming’s own money and property, and Glendon subsequently refused to give Cumming his Terracor shares. Cumming sued Glendon for specific performance, and the district court awarded Glendon’s Terracor shares to Cumming. Glendon appealed, arguing that Bobette had a joint-management community-property interest in the shares, so they could not be unilaterally disposed of. Glendon argued that Cumming had actual or constructive notice of Bobette’s interest in the shares because the executive committee's indemnification letter was addressed to Bobette in addition to Glendon.

Rule of Law

Issue

Holding and Reasoning (Goodwin, J.)

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