Opinion
Rehearing Denied May 19, 1931
Hearing Granted by Supreme Court June 22, 1931.
Appeal from Superior Court, Los Angeles County; Charles D. Ballard, Judge.
Action by Mae Murray Divani against Jack Donovan, Jeanette G. Donovan, and others. From a judgment for plaintiff and an order denying a motion for a new trial, named defendants appeal.
Reversed.
COUNSEL
W. Joseph Ford, A.P. Michael Narlian, Joseph N. Beardslee, and Patrick F. Kirby, all of Los Angeles, for appellants.
O’Melveny, Millikin & Tuller and J.R. Girling, all of Los Angeles, for defendant First Nat. Bank of Hollywood.
David H. Cannon and Howell Purdue, both of Los Angeles, for respondent.
OPINION
LAMBERSON, Justice pro tem.
On April 30, 1926, the plaintiff, who is the respondent herein, entered into a written contract with Jack Donovan, one of the defendants and appellants, whereby the respondent agreed to buy from said appellant a certain piece of property located at 13047 San Vincente boulevard, Los Angeles, together with the residence and garage located upon the property and all the furnishings on the premises, including a pipe organ. The contract recited that in further consideration of the payment of the purchase price of $50,000 the appellant agreed to supervise the construction of certain additions to the residence and also to the garage, the respondent to pay for all the work and material needed in the construction of the additions and alterations. The appellant also agreed to provide at his own expense certain changes in landscaping effects. The property was to be delivered to the respondent free of incumbrances except a mortgage of $9,000. A complete inventory was to be taken of all the furnishings included in the same, which inventory should be held until delivery of the property was made. Payments of the purchase price were to be made as follows: $2,000 upon the signing of the agreement, which was paid; $10,000 upon the completion of the escrow and the balance in fourteen equal installments of $2,000 each, payable monthly, except the last installment which should be $3,000. The appellant also agreed to furnish at his own expense the drapes and interior decoration for the bedrooms and baths which were to be added. On May 3, 1926, the defendant and appellant Jeanette G. Donovan, mother of Jack Donovan, executed a deed to the respondent, of the property described in the contract of April 30. The title to the property appears to have stood in her name. On May 11, 1926, the respondent and the appellant Jack Donovan entered into a written agreement whereby said appellant agreed to build for the respondent certain additions to the residence and garage, which were mentioned in the original agreement of April 26, but which were more particularly described in the agreement of May 11, and it was agreed by the parties that the cost of doing the work, including labor and materials, would be $6,000, to be paid in certain installments set forth therein, the final installments to be paid when the house was ready for delivery. The contract recited that the plans for the changes had been drawn by said appellant and had been submitted to and approved by the respondent. The entire sum of $6,000 was paid by respondent.
The record of the testimony taken at the trial of the case and which is somewhat lengthy, discloses that on the evening of April 28, 1926, and upon the invitation of the appellants, the respondent visited the premises and was there for a period of approximately one hour, during which time the respondent was shown about the house and the gardens by the appellants and her attention was called to the furniture and furnishings of the residence. In the course of their conversation the appellants spoke of various articles of furniture as being genuine antiques, and also represented that the furniture was of great value and that some articles thereof had been heirlooms in the Donovan family for many years. Apparently the respondent made a cursory examination of the premises and furniture and expressed herself as being charmed therewith and a portion of her visit was spent in conversation upon general subjects and in musical entertainment. During the forenoon of the day following, the appellant Jeanette G. Donovan telephoned to the respondent stating that an offer had been made by another person to buy the premises and that it had occurred to herself and her son that possibly the respondent might have in mind the purchase of a home and under the circumstances they had thought it best to advise the respondent of the offer. The respondent was invited again to visit the place and on that same day spent approximately an hour in an examination of the premises. During the course of her visit the Donovans conducted respondent through the house and about the premises and made statements similar to those made on the evening before, concerning the furniture and furnishings and the construction of the house and the skill of the appellant Jack Donovan as an architect. During the course of the second visit the respondent asked the appellant Jack Donovan what his price for the house would be, to which he replied that it would be $75,000. The respondent in effect replied that the price was too high and asked him what other price he had, to which he replied: "Well, seeing it’s you, $50,000." The parties then discussed how such sum would be paid, and the respondent testified that she left the house that morning saying that she would buy it and that either the next day or a few days later they had papers drawn up and she made the first payment of $2,000. During the second visit the respondent stated to the Donovans that she would require more room than that which the premises afforded and described the additions that she would like to have made. The appellant Jack Donovan informed her that he would be willing to make the changes at cost price and would prepare the plans and specifications himself. He also said that approximately $3,000 would cover all of the changes. The respondent does not appear to have entered into possession of the premises until July, 1926. Afterwards she made a trip to Europe and several months elapsed before she returned to the property. Previously, upon taking possession of the property she ascertained that certain articles of furniture, particularly a shrine which had stood in the patio, had been taken away and were not in the house; also that substitutions had been made in several instances and she also learned that the additions which were to be made by Jack Donovan were not properly constructed. After taking possession of the house and during the winter of 1926-1927, the basement was flooded with water and various fixtures in the basement, including attachments of the organ, were ruined, and as a consequence of the continued dampness the floors were swelled and badly damaged.
The complaint alleges in substance that during conversations among the parties the appellants represented that the furniture, furnishings, and fixtures then and there in the house were almost entirely "genuine antiques" and of great and extraordinary value as antiques; that the same had been in the possession of the Donovan family for many years as heirlooms and prized possessions and that the appellants were peculiarly attached thereto; that a certain piano and a pipe organ on the premises were in the best of condition; that the house had been constructed by appellants as a permanent family home and habitation, and by the use of the finest materials and the best of labor; that the appellant Jack Donovan was an experienced and competent architect and designer and builder of beautiful and enduring homes and had constructed many houses and buildings of the finest character and was then being solicited to construct and supervise the construction of several exceedingly expensive and beautiful buildings, including a beach club; that all of the trees, plants, and shrubbery which the respondent observed along and near the side margins of the property belonged to and went with the property; that the respondent stated to the appellants that if she purchased the property she would need to have certain additions made and that thereupon the appellant Jack Donovan stated and promised respondent that if she would purchase the property he would prepare without cost to respondent all necessary plans and specifications and would supervise the construction and would cause the additions to be constructed immediately upon the premises in the finest manner and of the best material so that the new construction would be as near the original building’s construction as possible; that certain installations would be made in accordance with the requirements of the respondent, including new shrubbery of a certain value. The complaint goes on to allege that during the second visit either or both of the appellants were continuously talking with respondent, attracting her attention to things they desired her to see and that they so contrived that respondent had no opportunity to make any independent or careful examination of the premises; that the appellants stated that the property was of a reasonable market value in excess of $50,000 and that the respondent, believing all of the representations and promises made by the appellants, relied upon them and was thereby induced to accept the offer of the appellants and agreed to pay them the sum of $50,000 for the property, together with the actual cost of the material and labor involved in making the additions promised by the appellant Jack Donovan; that she thereupon paid the initial instalment of $2,000 and later the further sum of $10,000 and executed to the appellants a promissory note in the principal sum of $29,000, together with a deed of trust securing the note; that about the 11th of May, 1926, the appellant Jack Donovan represented to plaintiff that the actual cost of labor and material involved in making the changes promised by him would amount to the sum of $6,000 and that thereupon at his request respondent signed the contract dated May 11, 1926; that all the representations made by the Donovans were false, fraudulent, and untrue and known by them to be so; that they were made with the intent to defraud the plaintiff; and that the promise to construct the additions required by the contract of May 11 was made by the appellants with no intent to perform the same. As specifications of false representations the respondent alleged in her complaint that none of the furniture was composed of genuine antiques, but that on the contrary the articles claimed to be antiques were cheap imitations and secondhand furniture of mediocre quality; that the furniture had not been in the possession of the Donovan family for many years; that the piano and pipe organ were not in the best of condition but were in poor condition; that the house had been constructed for the purpose of a quick sale only; that the appellant Jack Donovan was not an experienced and competent architect and designer; that he was not competent to prepare the plans and specifications for the changes and that he caused the same to be prepared by an unlicensed architectural draftsman; that a large part of the shrubbery near the margins of the property did not belong to the land; that the original residence had not been constructed of the finest materials or the best of skilled labor and was not suitable or satisfactory for a permanent home, but on the other hand its construction was of exceedingly poor and inferior quality and that the construction of said house and of the additions made under the contract of May 11 had not been performed in a workmanlike manner, but was defective in a large number of particulars which are set forth in the complaint. The complaint goes on to allege that the appellants concealed from the plaintiff material facts regarding the drainage of the premises and the flow of storm water upon and across the premises and knew that the premises were subject to overflow and that great quantities of water had during heavy storms accumulated and would accumulate upon the premises and that no drainage was provided for taking care of such water or from preventing the same to enter beneath the house as a consequence of floods; that after the purchase of the property by respondent the blower and operating mechanism of the pipe organ and the gas furnaces had been rendered useless and the piers supporting the house had settled; that the appellants did not make certain installations provided for in their agreement; had not planted the shrubbery provided for and had not furnished materials or labor in the amount of $6,000; had never completed the additions but had left the same in an unfinished and useless condition and the respondent had found it necessary to make large expenditures in repairing the house and completing the construction of the additions; that by reason of the acts of the appellants the respondent had been damaged in the sum of $32,295 and the respondent prayed for judgment in that amount. The trial court found that the allegations of the complaint were true and gave judgment for the respondent in the sum of $32,295, apparently upon the theory that the measure of damages was the difference between the value of the property received by the respondent from the appellants and the price paid for the property, viz., the sum of $50,000 plus the sum of $6,000, being the amount paid by the respondent to the appellant Jack Donovan for constructing the additions and alterations provided for in the contract of May 11. The appellants made a motion for a new trial which was denied and from the judgment they have perfected this appeal under the provisions of section 953a of the Code of Civil Procedure, and have also requested that the court review the proceedings had upon the motion for a new trial. A large mass of testimony was introduced at the trial in regard to the representations alleged to have been made by the appellants and in regard to the value of the furniture in the house, and of the real property with the buildings thereon, and the nature of the construction of the original house as well as of the additions and alterations and as to various changes in and substitutions of articles of furniture. Some of the findings are not sustained by the evidence, others cover matters which are not material, but an adequate discussion of the findings in detail would prolong this opinion to an excessive length, and in view of the conclusions which we shall express, we consider it unnecessary to enter into such a discussion.
In various jurisdictions there is some conflict of authority, but the rule in California is well settled that in an action for fraudulent representation as to the character or value of property the measure of damages which a vendee is ordinarily entitled to recover from the vendor is the difference between the actual value of the property and its value had the property been as represented, and the measure of the recovery is not affected by the price paid. The vendee may also recover for the depreciation in the value of improvements which he may have placed upon the property— a depreciation resulting from the fact that the actual value was not the represented value, and he may also recover for any other legitimate expenditures he may have made. Hines v. Brode, 168 Cal. 507, 143 P. 729; Spreckels v. Gorrill, 152 Cal. 383, 92 P. 1010; Perry v. Ayers, 159 Cal. 415, 114 P. 46; Wood v. Niemeyer, 185 Cal. 526, 197 P. 795; Cople Co. v. Hindes, 34 Cal.App. 576, 170 P. 155; Berettoni v. Sargentini, 78 Cal.App. 472, 248 P. 760.
In the case of Perry v. Ayers, supra, the court said, at page 418 of 159 Cal., 114 P. 46, 48: "If the agreement was as claimed by defendant and found by the court, it was clearly an entire contract for the sale of various items of property for a lump sum of $10,000. The purchase price was not apportioned to the various items of property, and there is no basis upon which this court can divide the purchase price, and say that any specific part of it was applicable to the stock of the Mother Lode Company and any other part to the interest in the Crystalline mine. See Norris v. Harris, 15 Cal. 226, 256. If there was an entire contract, it cannot be said that the plaintiff received no consideration for his payments. He did receive the 25,000 shares of stock and, in the absence of a rescission and a return of this stock, he certainly can have no claim for the repayment of his money as money paid without consideration. Nor (under the assumption that the contract was as found by the court) did plaintiff furnish any foundation, either in his pleadings or his proof, for a judgment for damages for the fraud practiced upon him. All that he showed was the fact that he had paid certain money and that a part of the consideration to be received by him for this money was not received or was valueless. But this does not show what his damage was. The measure of damages for a fraud inducing the plaintiff to purchase property is the difference between the actual value of what he received and the value which it would have had if the fraudulent representations had been true."
In the instant case it appears that the appellants made no statement that the price of $50,000 was the actual value of the property. We have heretofore quoted all of the testimony as to the conversation which occurred among the appellants and respondent upon that subject, in the course of which the appellant Jack Donovan first stated that his sale price was $75,000 and upon being told by the respondent that the price was too high said: "Well, seeing it’s you, $50,000." Apparently there was no thought in the mind of any of the parties of the value of the respective items which would go to make up the sale price, and no hesitancy on the part of the respondent in accepting the offer as satisfactory to herself. We do not consider that the statement of the appellant Jack Donovan was a statement of a fact as to the value of the property or of his opinion that the value of the property offered to the respondent was the sum of $50,000. There is no other evidence in the record as to what the value of the real property or the value of the residence or garage or the furniture and furnishings therein would have been if the representations alleged to have been made by the appellants had been true. The evidence therefore does not support the finding that the respondent was damaged in the sum named in the judgment.
We are of the opinion that the court erred in denying the motion for a new trial. In discussing the question as to the proper rule as to the measure of damages we have assumed for the purposes of the case that the contract for the sale of the property and the contract of May 11 in regard to the construction of additions to the residence and garage, constituted one transaction, as they were apparently considered to be by the trial court in fixing the amount of damages. It may be observed at this point that the measure of damages for misrepresentations inducing the purchase of property is much different from the measure of damages fixed for a breach of contract. The complaint does not allege, and there is no evidence that the appellant Jeanette G. Donovan was a party to the contract of May 11 executed by the respondent and the appellant Jack Donovan, which was a contract for personal services to be rendered by Jack Donovan. A special demurrer was interposed in behalf of each of the appellants upon the ground that there was a misjoinder of causes of action and a misjoinder of parties defendant. The demurrers were overruled by the court. We are of the opinion that in the absence of allegations in the complaint or a showing that the appellants Jeanette G. Donovan and Jack Donovan acted in concert and followed out, by the execution of the contract of May 11, a scheme to induce the respondent to enter into an agreement for the purchase of the premises by holding out to her the promise of the appellant Jack Donovan to make the alterations and additions covered by the agreement of May 11, the two agreements must be considered as entirely separate. There was no evidence introduced at the trial that the appellant Jeanette G. Donovan had any part in the execution of the agreement of May 11 and there was no evidence introduced tending to show that at the time of the execution of such agreement or at the time the original representations and promises were made, the appellant Jack Donovan did not intend to carry out the terms of the agreement of May 11. We are of the opinion that the special demurrers should have been sustained. Before a retrial of the case is had the plaintiff should be allowed to amend her complaint in order to have the issues properly placed before the trial court.
It is ordered that the judgment and order appealed from be reversed.
We concur: MARKS, Acting P.J.; JENNINGS, J.