The defendant testified: That, when the matter of the sale and purchase of the stock was under negotiation between him and the agents of the corporation, the said agents "represented that they had the agency for the California State Life Insurance Company, that they was reselling all of their business for them. As I had stock in the California State Life Insurance Company, I took a chance. They represented that the dividends were enormous and that the dividends were already earned; they had the money to pay the dividends.

...

. . After representing that they had the agency for the California State Life, and as I knew that they were doing a big business, and representing that the dividends were earned, they had them there to pay, and that if I didn't want the stock that they would resell it on the fifteenth day of January. Q. Now, you are speaking about this stock in the Pacific Securities Company? A. Yes, sir. Q. This was the stock that these agents tried to sell you? A. Yes, sir."

The defendant, after so testifying, further said that the reason he renewed the note on the several occasions referred to above was because he was told that the stock had been issued to him, although he had not received the certificate therefor. He declared that the agreement was that the certificate would be issued and dated at the time of the delivery of the original note, and that he would, therefore, be entitled to any dividends earned by the stock from that time on; that, as a matter of fact, the certificate was not issued until nearly a year after he had bought the stock, and that he would, as a consequence, lose the dividends, if any accrued upon the stock, for the entire time during which he believed he was the owner of it. On cross-examination, however, the defendant testified that the reason he renewed the note as indicated was because he did not have ready money with which to take the note up.

The above is the sum of the testimony upon which the jury founded their verdict.

Nowhere is there any testimony to be found in the record that the corporation was not financially sound or not doing a business profitable to its stockholders. Nor did the defendant testify or show by any other testimony or proof that the capital stock of the corporation was not of the value that it was represented to be by the corporation's agents. And there

is absolutely no proof whatever that the stock purchased by the defendant was not dividend earning property.

As to the representations made by the corporation's agents to the defendant at the time the stock was purchased by the latter, it is difficult to say from the testimony of the defendant whether, in making said representations, the agents were referring to the California State Life Insurance Company and its stock or to Securities Company and its stock, In any event, the testimony of the defendant, as it is presented in this record, is that he personally knew that the stock to which said agents were referring and as to which the representations mentioned were made was of great value and profitable to the stockholders.

But, when boiled down to its actual purport, the real gist of the defendant's complaint against the transaction involved herein, as the same is gathered from his testimony, is that he has been defrauded of the dividends to which he was entitled on his stock, because the corporation failed to keep its alleged agreement that, contemporaneously with the delivery to it of the original note, it would issue and deliver to the defendant a certificate for the twenty-five shares of stock purchased by him, and, furthermore, that he suffered injury because it failed to keep its agreement to sell said stock for him, upon his demand, at a price in advance of that paid by him therefor, by January 15, 1914. It is very obvious that these omissions on the part of the corporation do not involve such misrepresentation or fraud as will work a rescission of the contract of sale. Indeed, they cannot be said to involve misrepresentation at all. They amounted to a mere breach of certain covenants of the contract. As above stated, the stock purchased by the defendant became his property the moment that the sale was completed, and the certificate amounted only to tangible proof of such ownership. He was, of course, entitled to a certificate showing his ownership of the stock, but the failure of the corporation to issue and deliver it to him could not have the effect of vitiating the contract of sale or impairing his title to the stock. It was, as above suggested, merely the violation by the corporation of an obligation which the defendant by appropriate legal proceedings could have compelled it to discharge.

As to the point involving failure by the corporation to resell the stock, it is perfectly clear that, even if that were

a legitimate ground upon which rescission of the sale could be worked, the defendant, having made a payment on the original note and given a new note for the balance subsequent to the expiration of the time within which he was authorized to require the corporation to resell his stock, thereby waived that covenant or, at any rate, is by that act estopped from setting up the breach thereof as against the honesty and good faith of the transaction culminating in the making of the note in dispute or as against the legal integrity of the note itself.

Our conclusion is that the proofs utterly fail to disclose fraud on the part of the plaintiff in the transaction involved herein, and that if the stock of the defendant earned dividends during the period of time intervening between the date of the purchase thereof and the date of the issuance and delivery to the defendant of the certificate for said stock for which the corporation has not accounted or which it has not paid to the defendant, the latter should have set up the amount of such dividends as a setoff or counterclaim to the note in suit. This was the only recourse left to him under the facts of the transaction as he himself has detailed them in this case.

The judgment and the order are reversed, with directions to the court below to grant the defendant leave, if he may elect to take that course, so to amend his answer as to plead therein any counterclaim available to him by reason of the stock dividends claimed by him.

Chipman, P. J., and Ellison, J., pro tem., concurred.

[Civ. No. 1552. Third Appellate District.-July 6, 1916.]

C. CURTIN et al., Petitioners, v. W. S. KINGSBURY, etc., Respondent.

SCHOOL LANDS—REDEMPTION FROM DELINQUENT TAX SALES—Failure TO PAY INTEREST-EFFECT OF ACT OF MAY 14, 1915.-Purchasers of school lands sold to the state for delinquent taxes in the year 1907, and for which a deed to the state was made in the year 1912, are not entitled to redeem, where they did not, prior to the going into effect of the act of May 14, 1915 (Stats. 1915, p. 605), providing that "the unsold portions of the sixteenth and thirty-sixth sections of school lands. . . shall be sold at public auction by the surveyor-general," make a payment of all interest due and unpaid on the land as required by section 3788 of the Political Code under the amendment of March 2, 1909 (Stats. 1909, p. 122), along with their payment of the taxes, penalties, and accruing costs. ID. STATUS OF DEFAULTING PURCHASERS

RESTORATION-COMPLIANCE WITH EXISTING LAWS.-Upon a sale made to the state of school lands for nonpayment of taxes followed by a deed to the state therefor, all rights of defaulting purchasers in such lands are extinguished, and the only method by which they can be restored to their former rights is by compliance with the law existing at the time of making application for such restoration.

ID. CONDITIONS TO RESTORATION

RIGHT OF STATE TO IMPOSE.-The state under such circumstances has the right, as the absolute owner of the lands, to dictate the terms upon which they may be repurchased by the original or a new purchaser, or the conditions upon which the owners or purchasers or their assigns may be restored to their original state or title.

ID.-PAYMENT OF INTEREST AS CONDITION TO REDEMPTION-REASONABLENESS OF METHOD.—The method provided by the amendment of 1909 to section 3788 of the Political Code (repealed by the act of 1915) of enforcing payment of interest as a condition to the repurchase or redemption of school lands sold for nonpayment of taxes is not more burdensome than the former method of foreclosure.

APPLICATION for a Writ of Mandate originally made to the District Court of Appeal for the Third Appellate District, to compel the surveyor-general to issue a certificate of purchase of school lands.

The facts are stated in the opinion of the court.

W. H. Larew, and Jos. Barcroft, for Petitioners.

U. S. Webb, Attorney-General, and Robert T. McKisick, Deputy Attorney-General, for Respondent.

CHIPMAN, P. J.-Mandate. It appears by the petition that, on November 19, 1901, the state of California issued its certificate of purchase to one J. Frank Miller for all of section 36, township 9 south, range 19 east, M. D. B. & M., in Madera County, for which he paid twenty per cent of the purchase price of $1.25 per acre, said land being "only fit for grazing purposes"; that there remained due to the state one dollar per acre, or $640, with interest at seven per cent per annum; that, in 1904, said Miller assigned said. certificate of purchase to plaintiff Curtin and W. C. Hensley, who "entered into the possession of said land and became and were the sole owners thereof, subject only to the paramount title of the state." On February 21, 1910, said Hensley died and thereupon petitioner R. C. Jay was appointed and now is administrator of his estate. On June 22, 1907, the land in controversy was sold to the state for nonpayment of taxes, followed by a deed to the state dated July 16, 1912. On June 13, 1913, petitioner Curtin applied for and received. from the auditor of Madera County an estimate of the amount necessary to redeem said land from tax sale, and, on the same day, paid to the treasurer of said county the amount of said estimate, together with other delinquent taxes on the land, which "redemption was duly recorded, and it was noted upon the recorded certificate and the recorded tax deed that the land was redeemed'; on September 10, 1915, at the request of petitioners, the auditor and treasurer furnished them "a statement of all interest then due and unpaid on said” land, and petitioners paid to the treasurer the amount shown by said statement. It is then alleged that the certificate of sale issued to said Miller has been lost, and that the defendant refuses to accept from the treasurer of Madera County the amounts paid by petitioners and refuses to issue a new certificate of purchase in lieu of the lost one. It is alleged, upon information and belief, that there are no claims adverse to petitioners to said land. There is also an allegation "that no foreclosure for nonpayment of interest ever was had or attempted in the matter of the delinquency in payment of