Opinion
Rehearing Denied May 24, 1961.
Hearing Granted June 28, 1961.
Opinion vacated 17 Cal.Rptr. 134, 366 P.2d 486.
Crooks & Gunter, Long Beach, for appellant Harriman.
Karl K. Ransom and Toshiro Hiraide, Gardena, for respondent Tetik.
Irving D. Friedman, Los Angeles, for respondent Calstate Escrow Service, Inc.
FOURT, Justice.
This appeal is 'from the judgment entered in this action against the plaintiff and in favor of defendants; this appeal is specifically directed to the whole of said judgment including that part of said judgment which reads as follows: "That of the sum of $2,322.91 held in escrow by defendant Calstate Escrow Service, Inc., the sum of $1,977.91 be released to plaintiff, Herbert W. Harriman, and the sum of $325.00 be retained by defendant Calstate * * * for attorneys fees and court costs; * * *." A resume of some of the facts is as follows:
Prior to October 18, 1958, respondent Tetik was the sole proprietor and licensee of an on-sale tavern business under the name of 'Fancy Free' in Wilmington, California.
In October, 1958, Tetik listed the entire business for sale with a licensed business opportunity broker. The appellant, through the broker, became interested in purchasing the business. During the negotiations it was orally agreed that appellant would purchase a one-half interest in the business, and in pursuance thereof, on October 18, 1958, appellant and Tetik entered into an agreement in the form of escrow instructions. Respondent, Calstate Escrow Service (hereinafter referred to as 'Calstate') was the escrow holder. The execution of the instructions was admitted by all parties to the action.
Pursuant to said agreement appellant deposited the sum of $9,500 in escrow. Thereafter, the sum of $2,925 was released by Calstate to Tetik, which sum represented one-half interest in liquor inventory and merchandise on hand at the time, and a sum equal to one-half of the lease-hold interest was paid respondent Tetik outside of escrow.
From November 5, 1958 to February 9, 1959, appellant and Tetik jointly operated the business. During this period there was a question about the matter of the transfer of the liquor license from Tetik to himself and appellant as partners. Tetik testified that appellant did not wish to effectuate the transfer because appellant was considering the purchase of Tetik's remaining one-half interest. Appellant admitted that he was considering the purchase of Tetik's share of the business on the condition that he (appellant) be allowed to operate the business himself for about a month and also admitted that the transfer of the license was to be held in abeyance until such time as appellant made a decision with reference thereto.
The above situation continued until February 9, 1959, when a notice of rescission was served on Tetik. Appellant admitted that he never discussed his dissatisfaction with the arrangement or his desire to terminate the agreement with Tetik prior to the service of the rescission notice.
On February 13, 1959, appellant filed against Tetik (Calstate was not named) a 'Complaint for Rescission and Declaratory Relief.' Appellant also caused a levy of attachment to be made on the business premises, said attachment causing Tetik to close the business two weeks thereafter.
On March 2, 1959, Tetik filed his 'Demurrer to Complaint.' Thereafter, on March 17, 1959, appellant filed his 'First Amended Complaint for Return of Consideration after Rescission, Declaratory Relief, and Breach of Statutory Duty', this time naming both Tetik and Calstate as defendants. Therein, three causes of action were asserted. The first was based upon purported misrepresentations made by Tetik. Appellant sought from Tetik '(a) $10,199.09 as a return of consideration paid; (b) For costs of suit; (c) For such further relief as the court deems just.' The second cause of action asserted that Calstate had certain money on deposit in connection with the escrow and prayed that the court declare '(a) That the Calstate Escrow Service, Inc. should pay to plaintiff all moneys held by them as escrow agent for the parties hereto and paid to said escrow company by plaintiff herein as part of the consideration for the purchase of the business interest involved; (b) That defendant should return and pay to plaintiff all of the moneys paid directly by plaintiff to defendant as part of the consideration for the sale of said business interest to plaintiff.' The third cause of action was based upon a purported breach of duty by Calstate. Therein, it was asserted that Calstate paid to defendant Tetik the sum of $6,740.09, and appellant prayed judgment against Calstate for '(a) $6,740.09; (b) For costs of suit; (c) For such other relief as the court deems just.' Tetik's 'Answer to First Amended Complaint', which was filed March 26, 1959, consisted of general and specific denials and also set forth three affirmative defenses.
The first of the affirmative defenses was to the effect that appellant knew or should have known the facts concerning the purported misrepresentations. The second charged that appellant failed to perform all the conditions '* * * but on the contrary has wholly refused to accept the transfer of said licenses although the defendant insisted upon compliance with said agreement.' Finally, Tetik asserted that '* * * upon the service of Notice of Rescission * * * plaintiff refused to return or tender any and all consideration received by plaintiff, to wit: all profits received by plaintiff from said business from the date of said agreement to the date of notice of said rescission.'
On the same date, Tetik filed a 'Cross-Complaint' wherein it was asserted that the cross-defendant (appellant) failed to comply with the agreement and that by reason of said breach, Tetik suffered damages in the sum of $3,000 'being the contract price for one-half interest of said alcoholic beverage license cross-defendant was required to purchase pursuant to said agreement.' Tetik also asserted that because of the breach Tetik suffered damages in a sum unknown, said damages constituting 'one-half of the net profits from said business collected by the cross-defendant between the dates October 18, 1958 and February 9, 1959.'
Appellant's 'Answer to Cross-Complaint of Defendant Jack Tetik' was filed April 2, 1959. It consisted of certain admissions and denials.
On April 3, 1959, the 'Answer of Calstate Escrow Service, Inc.' was filed. It consisted of certain denials and also an affirmative defense, said affirmative defense being that the appellant promised and agreed in writing '(A) To pay, indemnify and hold harmless this defendant against all costs, damages, judgments, attorney's fees, expenses, obligations and liabilities of every kind which in good faith this defendant may incur or suffer in connection with or arising out of said escrow. (B) That this defendant shall not be liable for any failure of any conditions of said escrow, nor for damages through exercise of its discretion or otherwise. (C) That this defendant shall not be required to perform any service or duties other than as escrow holder, and in the event any other services shall be required, then this defendant shall be entitled to additional compensation, which plaintiff agreed to pay.'
It was then asserted that since appellant's complaint arose out of the escrow, Calstate was entitled to attorney's fees in the sum of $1,000.
On the same date, Calstate filed a 'Cross-Complaint in Interpleader.' Therein, appellant, Tetik, and Does I to X were named as cross-defendants. It was asserted that Calstate '* * * is ignorant of the respective rights of the cross-defendants, * * * and claims no interest in said property or money, excepting * * * reasonable attorney's fees * * * together with its court costs expended in this action; that the sum of $1,000.00 is reasonable for such attorney's fees.' Calstate also asserted that it was entitled to additional escrow fees because it was prevented from completing and closing the escrow because of the dispute.
Appellant filed his 'Answer to Cross-Complaint' (i. e. Calstate's Cross-Complaint in Interpleader) on June 22, 1959. Therein, appellant denied that Calstate was entitled to additional escrow fees and/or attorney's fees.
Respondent Tetik's 'Answer to Cross-Complaint in Interpleader' was filed November 4, 1959. Tetik asserted that he was the owner of the money and property held by Calstate and then denied that Calstate was entitled to attorney's fees or additional escrow fees.
On January 18, 1960 a 'Pre-Trial Conference Order' was filed. It incorporated a 'Joint Pre-Trial Statement of the Parties.' This statement provides in pertinent part as follows: 'Plaintiff pleads three separate causes of action:
'A. 1) For a return of consideration paid pursuant to a contract between plaintiff and defendant, Jack Tetik, after Notice of Rescission duly served, said rescission being based on fruad, the acts constituting the fraud being set forth in the First Cause of Action;
'2) For declaratory relief as to the rights of all of the parties to certain funds paid into defendant, Calstate * * * by the plaintiff and for a judicial determination of the meaning of certain warranties set forth in the contract between plaintiff and defendant, Jack Tetik;
'3) For damages against defendant, Calstate * * * for having paid out money delivered to it by plaintiff in violation of law.
* * *
* * *
'Defendant Jack Tetik cross-complains for breach of contract and claims to have been damaged in the amount of $3,000.00 therefor.
'Defendant, Calstate * * * cross-complains solely for additional escrow fees and for attorney fees because of the requirement of said defendant to defend against plaintiff's complaint.
'Admitted Facts
'1. Plaintiff and * * * Tetik entered into the written agreement attached to the First Amended Complaint.
'2. Defendant Jack Tetik received approximately $6,000.00 from the plaintiff in consideration of transfer of one-half interest in the business involved.
'3. Defendant Calstate * * * paid out from escrow to * * * Tetik or to his creditors the sum of $5,240.09, a further sum of $1500.00 to a broker employed by said defendant, making a total of $6,740.09 paid out of escrow to said defendant or for his benefit; said defendant Calstate Escrow also paid $10.50 publication costs and $225.00 to its attorney for retainer fee and costs.
'Disputed Facts
'1. All of the allegations in Paragraph III of plaintiff's First Amended Complaint, being the acts complained of and asserted to be the basis for the alleged rescission of the contract by plaintiff.
'3. At the time of the execution of said contract, defendant Jack Tetik falsely represented to plaintiff that:
'2. The service of and the sufficiency of the Notice of Rescission attached to the complaint.
'3. The payment to * * * Tetik by plaintiff of the amount of $2925.00 for a 'Issues
'1. Defendant Jack Tetik's fraud.
'2. Performance of defendant Jack Tetik's promises under said contract.
'3. Performance of plaintiff's promises under said contract.
'4. Damages suffered by and entitled to either defendant Jack Tetik or plaintiff on account of failure to perform said promises.
'5. Damages recoverable by plaintiff on account of defendant's fraud.
'6. The ownership and disposition of the funds now remaining in escrow.
'7. Liability of defendant Calstate Escrow Service, Inc. for breach of statute and damages suffered by plaintiff on account thereof.
'8. The liability of defendant Jack Tetik and plaintiff for additional escrow fees and attorney fees recoverable on account of the pending litigation.'
After the trial, on February 19, 1960, the trial judge filed his memorandum of decision. It provides in part as follows:
'Plaintiff has attempted to rescind a contract of purchase and has sued defendants for return of consideration.
'Against defendant Tetik he has charged misrepresentation and fraud.
'Against defendant Escrow he has charged violation of duty.
'Fraud and misrepresentation are serious charges and the (sic) cannot be presumed but must be established by clear and convincing proof. In my opinion that burden of proof has not been met. I am not even convinced that he got a bad deal. Had he not been so secretive and so hasty this whole thing could have been worked out. The place was making good money. There was no problem about having the license transferred; about the lease or the dancing permit at the time of the Rescission. (Emphasis added.)
'Some proceedings should have been initiated with the A.B.C. to qualify plaintiff as a tranferee. They never were, which means to me that plaintiff wanted to wait and have but one license transfer when he took over the entire bar. His attempted rescission, filing suit and attachment were all ill timed. (Emphasis added.)
'As to the Escrow Company, plaintiff agreed to all steps of the escrow and cannot hold Escrow Company liable. (Emphasis added.)
'Neither party can be restored to his former position and the balance of the money in escrow after payment of additional fees and costs of $325 should be repaid to plaintiff.
'Plaintiff's Amended Complaint
'1. First cause of action:
'Judgment for defendant.
'2. Second cause of action:
'Judgment for plaintiff for $1,977.91 ($2,322.91 less $325)--$325 to be retained by Escrow Company for attorney's fees, $300, for costs, $25.
'3. Third cause of action:
'Judgment for defendant.
'Defendants recover costs.
'Cross-Complaint of Tetik
'1. Judgment for cross-defendant.
'Cross-Complaint of Calstate
'1. Judgment for cross-complainant for $325, viz., $300 fees, $25 costs, to be taken from escrow funds; the balance of escrow funds to be paid to plaintiff and cross-defendant.
'Attorneys for Defendants to Prepare Findings and Judgment.
'Dated: February 18, 1960.
's/s Joseph M. Maltby
'Judge of the Superior Court.'
In accordance with the aforementioned memorandum of decision, the attorneys for defendants prepared the findings of fact and conclusions of law, and the 'Judgment on
On March 10, 1960, appellant (plaintiff) filed 'Objections to Findings, Request for Counter Findings, and Request for Special Findings.'
The trial judge refused to consider appellant's objections and so indicated by writing in longhand thereon as follows:
'3/10/60 These objections came after Findings & Judgment were signed & therefore have not been considered.
'S/S Joseph M. Maltby
Judge.'
Thereafter, on May 9, 1960, appellant (plaintiff) filed the 'Notice of Appeal.'
Appellant has raised several contentions on appeal. First, appellant asserts that Calstate is liable on two theories. It is stated that 'It (i. e. Calstate) violated express provisions of the escrow instrument by paying out money before the close of the escrow and it is liable by operation of the law of the California statutes relating to the transfer of liquor licenses.'
Insofar as any violation of the express provisions of the escrow instrument, Paragraph 16 thereof provides:
'Your escrow is authorized and directed to disburse on the sale date to the seller, provided funds are available and enough money in the escrow to pay all costs, expenses, claims and demands deposited as of said sale date, from funds deposited herein by purchaser, the sum of $6,000.00, and you shall charge the account of the seller therefore (sic), and you shall not be liable or responsible for said disbursement prior to close of escrow.' (Emphasis added.)
Appellant contends that the provisions contained in the 'Notice of Sale of Stock in Bulk and Notice of Intended Transfer of Liquor License or Licenses' must be construed as a part of the escrow instructions. The pertinent provision thereof provides as follows:
'That a sale, transfer and assignment of the aforesaid stock in trade, fixtures, equipment and goodwill of said business will be made, and the consideration therefor together with the consideration for the transfer and assignment of the aforesaid license (or licenses) will be paid on the 4th day of November, 1958, at 10 o'clock a. m. at the Escrow Department of Cal-State Escrow Service, Inc. * * * provided that prior to such date the Department of Alcoholic Beverage Control has approved said transfer of said license.' (Emphasis added.)
The gist of appellant's argument is that the 'sale date' never arrived since the Department of Alcoholic Beverage Control had not approved the transfer of the license, and therefore, Calstate violated the express instructions contained in the escrow. In support thereof appellant cites Kelly v. Steinberg, 148 Cal.App.2d 211, 306 P.2d 955. Factually, the case at bar differs from the Kelly case. In the present case the escrow instructions specifically provided that the escrow holder 'shall not be liable or responsible for said disbursement prior to the close of escrow.' It is clear that it was contemplated by the parties that money would be disbursed by Cal-state prior to the close of the escrow. In the Kelly case, supra, at page 214 of 148 Cal.App.2d, at page 957 of 306 P.2d it was set forth: '* * * The escrow was Appellant testified on cross-examination that pending the execution of an agreement whereby appellant would purchase the entire interest, 'the matter of the license would be held in abeyance.'
It seems clear that the phrase 'on the sale date' must have been intended by all parties to mean November 4, 1958, the date specified by the parties in Paragraph 7 of the escrow instructions, and in the Notice of Intended Sale (supra), else there would have been neither need nor meaning to the above mentioned words 'prior to the close of escrow.'
'7. You are hereby directed and authorized to pay such claims of such of the bona fide creditors of the Seller as shall file their claims with you before November 4, 1958, if the conditions of this escrow have not been complied with at the time herein provided you are nevertheless to complete the same as soon as the conditions have been complied with.'
Also, the instructions provide that the buyer and seller are obligated to indemnify and hold harmless the escrow holder. See, Simmons v. Bank of America, 159 Cal.App.2d 566, 323 P.2d 1043. It was also expressly provided that Calstate 'shall not be liable for any failure of any conditions of this escrow, nor for damages through exercise of * * * (its) discretion, or otherwise.'
Insofar as the payment by Calstate of the money to the brokers, the escrow instructions provide in paragraph 17 thereof that Calstate was to pay the brokers 'forthwith out of funds deposited into escrow as per supplemental instructions between seller and broker.'
In support of his contention that Calstate violated its statutory duty, appellant cites Business and Professions Code, §§ 24073 and 24074.
Section 24073 provides in pertinent part as follows:
'No retail license limited in numbers shall be transferred unless before the filing of the transfer application with the department the licensee or the intended transferee records in the office of the county recorder of the county or counties in which the premises to which the license has been issued are situated a notice of the intended transfer, stating all of the following:
* * *
* * *
'(e) An agreement between the parties to the transfer that the consideration for the transfer of the business and license or licenses, if any there be, is to be paid only after the transfer is approved by the department. * * *' (Emphasis added.)
Section 24074 provides in part as follows:
'Before the filing of such a transfer application with the department, if the intended transfer of the business or license involves a purchase price or consideration, the licensee and the intended transferee shall establish an escrow * * * and the intended transferee shall deposit with the escrow holder the full amount of the purchase price or consideration. The licensee and intended transferee shall also enter into an agreement, which agreement shall be deposited with the escrow holder, directing the escrow holder, out of the purchase price or consideration, to pay the claims of the bona fide creditors of the licensee who file their claims with the escrow holder before the escrow holder is notified by the department of its approval of the transfer of the license or if the purchase price or consideration is not sufficient to pay the claims in full, to distribute the consideration pro rata to the creditors of the The above-cited sections of the Business and Professions Code obligate the licensee and intended transferee, not the escrow holder, to enter into an escrow agreement and give the escrow holder certain instructions. Calstate merely complied with the written instructions in disbursing escrow funds. As stated by the trial judge in his memorandum:
'As to the Escrow Company, plaintiff (i. e. appellant) agreed to all steps of the escrow and cannot hold Escrow Company liable.'
Even if the instructions which Cal-state followed were illegal, where both parties with full knowledge have joined in a contract which is illegal, the court will leave them where they find them; neither party can recover damages for breach, nor, by rescinding, recover the consideration with which he parted. See, Wells v. Comstock, 46 Cal.2d 528, 297 P.2d 961; Mansfield v. Hyde, 112 Cal.App.2d 133, 245 P.2d 577; Industrial Indemnity Co. v. Golden State Co., 117 Cal.App.2d 519, 256 P.2d 677.
The case of Lenchner v. Chase, 98 Cal.App.2d 794, 220 P.2d 921 does not support appellant's contention. Therein it is stated at page 804 of 98 Cal.App.2d, at page 927 of 220 P.2d:
'With respect to the position of the Chase Company (i e., a licensed business opportunity broker) the court found that that (sic) appellant took the $3,800 from the escrowed $15,000 'with full knowledge that said transfer [of the license] was not certain to take place * * * in disregard of the escrow instructions, and without the knowledge or consent of plaintiffs or of defendant Nona Harwick * * * for its own use and benefit' and that on November 7, 1946, which was after the transfer had been disapproved, 'without the knowledge or consent of plaintiffs and contrary to the terms of the agreement of sale, defendant L. F. Chase Company paid, out of said escrow funds previously deposited by plaintiffs, the sum of $10,000.00 * * *' (Emphasis added.)
In the case at bar, appellant agreed to all steps taken by Calstate Escrow Co.
Appellant's next contention is that respondent Tetik warranted that the liquor it was his duty to initiate steps to transfer it was his duty to initiate steps to tranfer the license.
Paragraph 13 of the escrow agreement provides as follows:
'13. It is understood and agreed between buyer and seller that seller warrants that if, for any reason whatsoever, the seller herein should fail, refuse, or be unable to deliver subject business as per these instructions, seller named herein will refund all monies deposited herein by buyer or his agent.'
The gist of the appellant's contention is that no liquor license having been transferred, Tetik breached the express warranty.
Under Sections 23950 to 23954 inclusive of the Business and Professions Code, appellant was required to make an application with the Department of Alcoholic Beverage Control and submit to finger printing and investigation before a liquor license could be transferred.
Respondent Tetik, the licensee, could not effectuate the transfer alone without the appellant as one of the intended transferees, making the aforesaid application and submission to the required investigation of his character. In other words, before a license would issue, it was necessary for appellant to qualify. See, Coletti v. State Board of Equalization, 94 Cal.App.2d 61, 209 P.2d 984.
The Reporter's Transcript clearly discloses that appellant was aware of the necessary procedure, yet did not take any steps to comply therewith. Appellant testified on cross-examination as follows: 'Q. You were familiar, were you not, with the procedure that was required by the Department of Alcoholic Beverage Control for the transfer of a license? A. I became familiar with it.
* * *
* * *
'Q. Sometime in December you testified, or you are testifying that you went down to the Department of Alcoholic Beverage Control and determined in your own mind what the procedures for transfer would be? A. That's right.
* * *
* * *
'Q. * * * you did determine that, among other things required of you as a new applicant, that you would be required to be fingerprinted? A. I knew that. I did not determine it at that time.
'Q. You knew it earlier? A. Yes.
'Q. Prior to December 10, 1958, you knew it would be necessary for the Department of Alcoholic Beverage Control to take approximately 30 days to approve you as a licensee? A. That's correct.
'Q. And you knew there were certain investigatory procedures that had to be gone through in your case that would not apply to Mr. Tetik because he was presently licensed? A. Yes.
'Q. During that period of time you made no effort on your part, did you, sir, you did not initiate any proceedings with the Alcoholic Beverage Control * * * to qualify you personally for licensing?
* * *
* * *
'Q. You did not personally, did you, sir? A. I did not.
'Q. At any time initiate any proceedings with the Department of Alcoholic Beverage Control to qualify yourself as a licensee? A. I did not.' (Emphasis added.)
As stated in the trial court's memorandum:
'Some proceedings should have been initiated with the A.B.C. to qualify plaintiff as a transferee. They never were, which means to me that plaintiff wanted to wait and have but one license transfer when he took over the entire bar. His attempted rescission, filing suit and attachment were all ill timed.'
As stated in 12 Cal.Jur.2d., Contracts, Section 228, pages 451-452:
'Prevention Generally.--Want of performance of an obligation or any delay therein is excused: (1) when performance is prevented or delayed by act of the obligee or by operation of law, * * *; (2) when it is prevented or delayed by an irresistible, superhuman cause or by the act of public enemies, unless the parties expressly agree to the contrary; or (3) when the obligor is induced not to perform by any act of the obligee intended or naturally tending to have that effect, done at or before the time the obligation may be performed, and not rescinded before that time. * * *' (Emphasis added.)
Appellant's reliance upon Lenchner v. Chase, supra, 98 Cal.App.2d 794, 220 P.2d 921, and Riff v. Mayhew, 90 Cal.App.2d 712, 203 P.2d 812, is unjustified. In both of those cases, the agency refused to issue licenses. In the case at bar, appellant failed to take the necessary steps in order to obtain the license even though he was aware of the necessity of his so doing.
Appellant next contends that 'Tetik, as a matter of law, accepted appellant's rescission.'
The basis for this contention is the fact that Tetik ultimately sold the liquor license to his lawyer.
The difficulty with appellant's contention is that the issue of 'mutual rescission' was not raised in the trial court and was not treated as an issue in the case. Compare Hagen v. Sherman, 147 Cal.App.2d 28, 30, 304 P.2d 767.
The 'Notice of Rescission' served on respondent Tetik provided in pertinent part as follows:
'That the basis for this recission is the fraud committed by you in the inducement of the aforesaid contract, the failure of consideration, and other reasons; the undersigned The course of conduct pursued by appellant constituted a rescission in pais (i. e., rescission accomplished by the unilateral act of a party to the contract). Appellant's action was for recovery of the consideration paid under the contract, predicated upon the prior rescission by his unilateral act. Civil Code, § 1689.
The 'Pre-Trial Conference Order' itself provided in pertinent part:
'Plaintiff pleads three separate causes of action:
'A. 1) For a return of consideration paid pursuant to a contract between plaintiff and defendant, Jack Tetik, after Notice of Rescission duly served, said rescission being based on fraud, the acts constituting the fraud being set forth in the First Cause of Action; * * *.' (Emphasis added.)
The 'Issues' as set forth in the Pre-Trial Conference Order do not include an issue of 'mutual rescission.'
Even in appellant's 'Objections to Findings, Request for Counter Findings, and Request for Special Findings' there is no mention of any issue of 'mutual rescission.'
When appellant served the notice of rescission, filed the Complaint for Return of Consideration, and attached Tetik's property, appellant waived the tort and the action was one in assumpsit upon a promise implied by law in order to prevent unjust enrichment. Philpott v. Superior Court, 1 Cal.2d 512, 36 P.2d 635, 95 A.L.R. 990; McCall v. Superior Court, 1 Cal.2d 527, 36 P.2d 642, 95 A.L.R. 1019.
The appellant had the burden of proving that his rescission in pais was justified in order to be entitled to a return of consideration.
The case of Richards v. Oliver, 162 Cal.App.2d 548, 328 P.2d 544, is somewhat factually similar to the case at bar. There the plaintiff purchased a bar and restaurant business, partial purchase price was released to defendant seller through escrow, and plaintiff operated the business for several months, after which he served notice of rescission on the ground of misrepresentation. Seller took over the business, operated it a short time and ultimately, the business was resold to a third party without an accounting of the proceeds thereof to plaintiff. Plaintiff sued for return of consideration. The trial court rendered judgment for defendant and plaintiff appealed. The court stated at pages 565-566 of 162 Cal.App.2d, at page 555 of 328 P.2d as follows:
'* * * In the instant case the gravamen of appellant's cause of action was that he entered into the contract here in question because of fraudulent or mistaken representations. This primarily presented a factual situation for determination by the duly authorized trier of the facts. If no fraud was perpetrated upon appellant, as was found by the trial court, then under his pleadings and the theory upon which he tried the case, he was not entitled to rescind the contract which he made. * * * In the absence of fraud, misrepresentations or mistake, parties cannot be relieved from their voluntary contracts on the ground alone that they constituted a mistake in business judgment or are improvident (Cherney v. Johnson, 72 Cal.App. 725, 734 238 P. 150). It is manifest that appellant's case must stand or fall upon the verity of the testimony addressed to the trial court. * * * As has so often been repeated, reviewing judges are, obviously in no position to determine the credit which should be accorded to witnesses or to weigh their testimony. The triers of fact are the exclusive judges of the credibility of witnesses (Code Civ.Proc., Sec. 1847), and are the judges of the effect and value of evidence addressed to them. * * *' On the issue of fraud, the trial court found against appellant. As stated in the memorandum:
'Against defendant Tetik he (i. e. appellant) has charged misrepresentation and fraud.
* * *
* * *
'Fraud and misrepresentatin are serious charges and the (sic) cannot be presumed but must be established by clear and convincing proof. In my opinion that burden of proof had not been met. * * *' (Emphasis added.)
Appellant's next contention is that the trial court erred in refusing to consider plaintiff's (appellant's) 'Objections to Findings, Request for Counter Findings, and Request for Special Findigs' filed March 10, 1960.
As set forth in the statement of facts above, the trial judge indicated on the Objections filed that '* * * These objections came after Findings & Judgment were signed & therefore have not been considered.'
Section 634 of the Code of Civil Procedure provides:
'In all cases where findings are to be made, a copy of the proposed findings shall be served upon all parties to the action and the court shall not sign any findings therein prior to the expiration of five days after such service. The court may direct a party to prepare findings.
'Within five days after such service any other party may serve and file objections, counter-findings and requests for special findings.
'If upon appeal or upon a motion under Section 657 or 663 of this code it appears that the court has not made findings as to all facts necessary to support the judgment, or that the findings are ambiguous or conflicting upon a material issue of fact, the court before which such appeal or motion is pending shall not infer that the trial court found in favor of the prevailing party on such issue if it appears that the party attacking the judgment made a written request for a specific finding on such issue either prior to the entry of judgment or in conjunction with a motion under Section 663 of this code.'
Although appellant argues that the trial court had a duty to consider the objections, etc., he has not shown that the findings were unsupported by the facts, or that the trial court failed to make findings as to all facts necessary to support the judgment, or that the findings are ambiguous or confliciting upon a material issue of fact.
Insofar as the award of $325 to Calstate Escrow for attorney's fees and costs, paragraph 3(j) of the escrow instructions expressly provided that 'Each of the parties to this escrow agree to indemnify and hold harmless the escrow holder against any and all claims and demands, costs, damages, attorney's fees and liabilities and in the event the escrow holder is compelled to commence, maintain, prosecute, defend or interplead in any proceedings in connection herewith, the escrow holder shall be entitled to all expenses, costs, and reasonable attorney's fees, from the party or parties by reason of whom such action is taken.' (Emphasis added.)
Appellant's remaining contentions have been disposed of.
The judgment is affirmed.
WOOD, P.J., and LILLIE, J., concur.
'(a) he was the owner and holder of
'(a) he was the owner and holder of number PB4916E, issued to him by the Department of Alcoholic Beverage Control of the State of California for use at the premises described in said contract and that said license was in good standing with said agency and not subject to suspension or revocation because of said defendant's conduct prior to making said representation and execution of said contract;
'(b) he was the owner and holder of a dancing license issued by the Sheriff of Los Angeles County for use at said premises and that said license was in good standing and not subject to suspension or revocation because of any of his conduct prior to making said representations and execution of said contract;
'(c) he intended to join with plaintiff in an application to the Department of Alcoholic Beverage Control and to the Sheriff of Los Angeles County for the transfer of said licenses from his name as the sole licensee to the name of a partnership composed of said defendant and plaintiff and to take the necessary steps to procure such change immediately after the execution of said contract;
'(d) he intended to assign to said partnership his leasehold interest in the premises described in said contract immediately after the execution of said contract;
'(e) he would immediately after the execution of said contract execute and deliver into escrow a bill of sale to the fixtures and equipment then on the premises described in said contract.'
* * *
'Wherefore by reason of the law and the findings aforesaid,
'It Is Hereby Ordered, that plaintiff Herbert W. Harriman take nothing from defendant Jack Tetik; that of the sum of $2,322.91 held in escrow by defendant Calstate Escrow Service, Inc., the sum of $1,977.91 be released to plaintiff Herbert W. Harriman, and the sum of $325.00 be retained by defendant Calstste Escrow Service, Inc. for attorney's fees and court costs; and that defendant Jack Tetik recover from plaintiff Herbert W. Harriman costs and disbursements incurred in this action, amounting to the sum of $_____.'