Opinion
Rehearing Granted Oct. 27, 1971.
Rehearing Granted Oct. 20, 1971.
Opinions on pages 332 to 355 omitted.
REHEARINGS GRANTED [*]
Subsequent opinions not certified for publication.
[97 Cal.Rptr. 612] George R. Maury, and John J. Collins, Los Angeles, for plaintiffs, defendants and appellants.
Daniel A. Lipsig, Beverly Hills, for defendants, plaintiff and respondent.
LILLIE, Acting Presiding Justice.
The within actions were consolidated for a nonjury trial and resulted in two judgments, the appeals from which have been consolidated by agreement of the parties. The controversy had its genesis in certain transactions leading to the purchase by plaintiffs of certain improved Los Angeles real property. In No. 36700 the court found against plaintiffs' claims for damages, both compensatory and punitive, set forth under six causes of action alleging fraud, equitable restitution (unjust enrichment) as well as money had and received; the appeal is from a portion of such judgment. In No. 36701 the appeal is from a modified judgment for $13,000 plus designated interest in favor of plaintiff Raleigh Construction Company against defendant Dorothy A. Routh, under her promissory note in the above principal amount; attorney's fees were also awarded, as provided for by the instrument.
The portion not challenged is in favor of defendant David Rosenthal, individually, under section 631.8, Code of Civil Procedure.
The properties purchased by plaintiffs Routh consisted of two apartment buildings, one on Genesee Avenue and the other on Hampton Avenue; as appears below, defendants denied that they were the owners and sellers thereof. The Rouths contended that the purchase price for each property was the same, $93,000, in each instance consisting of the assumption of a $69,000 first encumbrance and $24,000 in cash. The alleged sellers (defendants in No. 36700) contended, on the other hand, that the sale price for the Genesee building (to Dorothy only) was $106,000, broken down as follows: $24,000 cash, assumption of a $69,000 trust deed and a promissory note for $13,000 (the subject of No. 36701). As for the Hampton building the sellers asserted that the agreed sale price was $106,500, consisting of $24,000 in cash and the assumption of a trust deed for $82,500. Without their knowledge, according to the Rouths, after oral negotiations for the transactions had been agreed upon, the sellers encumbered the Hampton property with a new trust deed in the sum of $82,500, substituted for the former encumbrance of $69,000, causing the Rouths to sustain a loss of $13,500 for which reimbursement was sought in No. 36700. (Defendants also contended that two limited partnerships [Genesee Building Co. and Hampton Building Co.] were in fact the owners and sellers of the respective properties.) In neither transaction was there the customary escrow, further adding to the conflict of the parties' respective claims.
We first dispose of the assignments of error urged in No. 36700. They assert that certain findings, involving all causes of action, are not supported by the evidence; it is additionally contended that the court erred in failing to find on the existence of an alleged confidential relationship between the Rouths and George Rosenthal, the president of defendant corporation, and in refusing to admit into evidence a certain exhibit offered by plaintiffs.
The court found, in pertinent part, that each sale was by a limited partnership of which defendant Raleigh Construction was a general partner; that in March 1961 plaintiffs agreed to purchase the Hampton property on terms different from those in connection with the purchase by Dorothy of the Genesee building, that the total consideration therefor was $106,500, and that there were no misrepresentations by seller to plaintiffs in regard thereto. As to the [97 Cal.Rptr. 613] Genesee transaction, the court found that the sale to Dorothy occurred in December 1959 and that it was for a consideration of $93,000 payable in the manner set forth earlier (including assumption of the $69,000 encumbrance). The court further found that there was no unjust enrichment by defendants, at plaintiffs' expense or otherwise, in the sum of $13,500 (being the increase in the encumbrance on the Hampton property). All of the above findings dealt with the first four causes of action. As to the fifth cause of action, money had and received in the sum of $22,000 by defendants for plaintiffs' benefit, the court found that such transaction was wholly unrelated to the sales of the two apartment buildings, and that no indebtedness thereby became due from defendants--it involved the surrender of two notes and the reconveyance of two trust deeds securing the same in exchange for promotional stock in certain companies. The sixth cause of action, also for money had and received, pertained to sums expended by Dorothy for refinancing the Genesee property after its purchase by her; the court found that no indebtedness was due from defendants thereunder.
No mention is made of the $13,000 note executed by Dorothy as further consideration therefor; in the companion appeal, however, the court made a finding (No. 2) that the total consideration for the sale was $106,000, including the above note ($13,000).
From the foregoing findings, conclusions of law were drawn that none of the defendants were unjustly enriched or received money for plaintiffs' benefit. There was the further conclusion of law that no false representations were made by defendants in connection with the sale of the Hampton property, although nothing is set forth with respect to the Genesee transaction. It is held, however, that the mere absence of a specific conclusion will not avail to defeat a judgment if the findings would support conclusions necessary to such judgment. (D'Andrea v. Pringle, 243 Cal.App.2d 689, 697, 52 Cal.Rptr. 606.)
It is a familiar appellate principle that 'in a case tried without a jury, the trial judge is the sole arbiter of all conflicts in the evidence, conflicting interpretations and conflicting inferences which reasonably may be drawn therefrom; is the sole judge of the credibility of the witnesses and may disbelieve them even though they are uncontradicted if there is any rational ground for doing so; and, in the exercise of a sound legal discretion, may or may not refuse to draw inferences reasonably deducible from the evidence. [Citations.] When the sufficiency of the evidence to sustain a finding of fact is contested on appeal, the issue thus presented is whether there is any substantial evidence, direct or indirect, contradicted or uncontradicted, which will support the finding [citations]; it will be assumed that the trial judge resolved every factual conflict in favor of the prevailing party [citations]; and every inference reasonably deducible from the evidence which will support the finding must be accepted. [Citations.] Finally, it is settled that contradictions in the testimony of a witness do not require its total rejection. [Citation.]' (Davis v. Kahn, 7 Cal.App.3d 868, 874, 86 Cal.Rptr. 872, 875.) The rule is also established that 'If there is any substantial evidence to support [a challenged] finding it cannot be disturbed even though there is a sharp conflict in the evidence and abundant evidence to support a contrary conclusion. [Citations.]' (Estate of Jamison, 41 Cal.2d 1, 13, 256 P.2d 984, 990); and it is likewise settled that 'All of the evidence most favorable to the respondent must be accepted as true, and that unfavorable discarded as not having sufficient verity to be accepted by the trier of fact.' (Estate of Teel, 25 Cal.2d 520, 527, 154 P.2d 384, 388.)
First, as to the sale of the Genesee property, there was received in evidence (exh. 16) a letter dated December 15, 1959, from Genesee Building Company (and signed by George Rosenthal) to plaintiffs, stating that such letter 'shall act as our agreement [97 Cal.Rptr. 614] regarding the purchase of the apartment building owned by this firm at 1043 N. Genesee.' Under such agreement the purchase price is stated to be $106,000 consisting of the assumption of an existing trust deed ($69,000), cash down-payment of $24,000 and the execution of a demand note, to be held unrecorded, in the sum of $13,000 in favor of Raleigh Construction Company. Purportedly on the same date (December 15, 1959) Dorothy Routh executed a promissory note ($13,000) in favor of Raleigh Construction Company (exh. 15); later, on December 28, 1959, she issued her check (exh. 9) for $24,000, payable to the Raleigh Company. While given the above date (December 15, 1959), the note was not actually delivered to defendants until November 16, 1960--George Rosenthal testified that he was advised by his company's auditors that there was no record of the obligation in its files, and he acted accordingly. A deed to the property had been previously delivered to Dorothy in March of 1960, being recorded that same month. In September of 1961, according to exhibit 26, Dorothy sought to refinance the Genesee property by application for a loan from Home Savings and Loan Association; therein it was stated that she bought the property in 'December of 1959 for $118,000' (even more than defendants claimed that she agreed to pay), and that the balance on the then encumbrance was $67,000, which it was sought to increase to $77,000. A new promissory note was signed by Dorothy in connection therewith and, to secure said note, she also signed a new trust deed. (Also signed by Dorothy was a 'Borrower's Instructions' form provided by Home [exh. 32].) George Rosenthal testified that the net proceeds of the Genesee refinancing, approximately $10,000, were applied as a credit on Dorothy's note; later he was advised by the Rouths that they did not wish the funds to be so applied, and the monies were then repaid to Dorothy.
To all of the foregoing, plaintiffs reply by reference to evidentiary items which tend to indicate that the factual situation was otherwise. Specifically, they assert that the letter of December 15, 1959, was not written until at least 1961; that the promissory note was likewise not dated on December 15, 1959, but much later; that Dorothy's signature on exhibit 26 (application for refinancing) is not genuine. The resolution of these questions was for the trier of fact--for example, it is held that the genuineness of the decedent's signature in a will contest is for the jury. (Estate of Nelson, 191 Cal. 280, 282, 216 P. 368.) With respect to exhibit 32 (Borrower's Instructions'), although plaintiffs do not dispute that they were signed by Dorothy on page two thereof, they argued (at trial) that page one (setting forth the amount of the new note applied for [$77,000]) was missing. Cross-examination, however, produced evasive and unsatisfactory answers; too, George Rosenthal testified that both plaintiffs read both pages of the exhibit in his presence, and both pages were filled in at that time. Reference is also by plaintiffs to an earlier 'Notice of Intended Decision' by the trial court in No. 36701 which adopted the view by them here contended for, namely that Dorothy executed the note on February 9, 1962, at the request of Raleigh so that it would be reflected on Raleigh's records for tax purposes; that such 'tax transaction' did not create a bona fide indebtedness from Dorothy to Raleigh and was 'a sham,' it being there concluded that 'the total consideration for the acquisition by Dorothy of the Genesee property was $93,000 * * *.' However, as noted at the outset such views were later changed by a modified judgment in No. 36701; such action was taken under section 662, Code of Civil Procedure, which empowers the court to change its findings when it deems itself mistaken by its previous view of the evidence. 'It [97 Cal.Rptr. 615] is the purpose of section 662 to have the trial court correct previous errors so as to subserve the ends of justice.' (Avery v. Associated Seed Growers, Inc., 211 Cal.App.2d 613, 625, 27 Cal.Rptr. 625, 633.)
Vigorously challenged by plaintiffs is the assertion by George Rosenthal that the original of the note was 'lost,' thus making it easier to 'doctor' the photocopy which was admitted in lieu of the original.
Whether the modified judgment (contrary to the view above set forth) was due to the additional argument presented on defendants' behalf, or additional self-reflection by the court, or both, the fact remains that its final determination favored, and adopted, defendants' position that the Genesee property was sold for $106,000 pursuant to the terms asserted by defendants, set forth heretofore. Necessarily viewed in a light most favorable to them (defendants) as the prevailing parties, the evidence sufficiently supports the finding to that effect.
Necessarily taking the same view of the evidence, the finding that the purchase price of the Hampton property was in the sum claimed by defendants ($106,500) is likewise sufficiently supported. Plaintiffs contended, and so testified, that they did not learn until December of 1963 that the encumbrance thereon was $82,500 and not $69,000. The deed of trust in the former amount was dated February 20, 1961, and recorded 10 days later (March 2), prior to acquisition of the property by plaintiffs on July 1, 1961, by deed bearing that date; the latter instrument was recorded October 23, 1961, and delivered to the Rouths on October 23, 1961. Affixed to it were documentary stamps (totalling $26.40) reflecting a cash equity of $24,000 in excess of $82,500. According to George Rosenthal, he told the Rouths in April of 1961 (prior to delivery of the grant deed) that the amount of the encumbrance was $82,500. The Rouths' accountant (whom they had employed for more than 20 years) carried the cost of the Hampton property on their books at $106,000, and plaintiffs admittedly knew of this action as early as February 1962. There were other adverse admissions and acts by plaintiffs which need not be mentioned; overall, they are not consistent with plaintiffs' claims that defendants misrepresented the amount of the existing encumbrance on the Hampton property. Plaintiffs have argued throughout that they expected to pay the same price ($93,000) for each property; the evidence supports the finding that the same price was agreed to be paid, albeit in a larger amount, for each building.
Plaintiffs challenge the persuasiveness of this claim, asserting that it merely shows a cash payment of $24,000, and reflects nothing concerning the encumbrance; they do not, however, make a similar reply to the Genesee grant deed which bore $40.70 in stamps reflecting an equity of $37,000 over and above the then existing encumbrance of $69,000 (26 U.S.C.A. $ 922), even though a cash payment of $24,000 was there also made.
Just as the determinations of the claims advanced in the first four causes of action hinged primarily on credibility questions, so also must the contentions made as to the fifth cause of action be similarly resolved. As stated earlier, the court found that it involved transactions independent of the sales and purchases of the apartment buildings; thus, plaintiffs' claims were pleaded in general form by the common count of money had and received. Briefly, plaintiffs endeavored to show that their wholly owned corporation, Wetherly Development Corporation, took two notes from R.C.R. Development Company ('R.C.R.'), of which George Rosenthal was president, each secured by subordinated deeds of trust on lots 2 and 9 of the Wetherly Tract; thereafter they agreed to surrender said notes and accept, in lieu thereof, a note in a lesser sum secured by the purchasers of the two above lots, the consideration therefor being the promise of defendants in this litigation to give plaintiffs an unspecified number of Playboy Club stock or an interest in a shopping center. There was evidence that increased construction costs, rather than the promise ascribed to defendants, prompted plaintiffs to accept a reduction in the sale price on both lots. Too, [97 Cal.Rptr. 616] George Rosenthal testified that he never owned any Playboy Club stock or an interest in any shopping center. The trial court chose to believe the evidence produced by defendants, both as to construction costs and non-ownership of the assets assertedly constituting the consideration for the transactions in question. We cannot substitute our views for those of the trial court and, therefore, we conclude that the challenged finding should not, as a matter of law, be set aside.
The sixth cause of action also involved the resolution of credibility questions. George Rosenthal testified that he returned all of the money ($10,000) which Dorothy received by refinancing the Genesee property. The issue was simply which side should be believed--purely one within the province of the trier of fact. Accordingly, we will not disturb the finding as to such cause of action.
Plaintiffs also contend that the foregoing adverse findings were erroneously reached in view of the court's asserted failure to find, or even consider, that a confidential relationship (as alleged in their complaint) existed at all pertinent times between the parties. Citing numerous cases, plaintiffs argue that George Rosenthal was their agent and, therefore, owed them the duty of full disclosure and utmost good faith. If there was any agency at all, it related to the collection of rents and disbursements on the two apartment properties, not their sales. Moreover, 'Where the fiduciary relationship of agency has been established, and where the principal questions the agent's actions, the agent bears the burden of showing that he acted in good faith and discharged the duties imposed upon him [citation]; otherwise, he will be held liable to the principal for all 'benefits and advantages' he acquired from the agency. [Citation.]' (Italics added; Loughlin v. Idora Realty Co., 259 Cal.App.2d 619, 632, 66 Cal.Rptr. 747, 755.) In the present case plaintiffs alleged that they 'reposed implicit trust and confidence in the integrity and honesty of the Defendants * * *.' The trial court, while not finding specifically as to the above assertions did expressly find that there were neither misrepresentations nor enrichment and, also, that 'none of the other allegations of plaintiffs' complaint is true.' Any reasonable construction of the findings to support the judgment, and such is the rule on appeal, compels the conclusion that the trial court gave consideration to the claim of confidential relations and concluded, among other things, that Rosenthal acted in good faith at all pertinent times. Too, the evidence amply supports the implied determination that Mr. Routh was a sophisticated businessman who arrived at his own decisions in financial matters--his principal livelihood since 1944 was from stock market investments, coupled with his purchase of a large tract of undeveloped land (Wetherly Tract) which he and his wife proceeded to subdivide and develop themselves. For the foregoing reasons, the instant claim of error cannot be sustained.
The final point in the first of these appeals asserts prejudicial error in the court's refusal to admit plaintiffs' exhibit No. 60 'to show the terms of the sale of the Genesee property.' There was no error. The proffered document allegedly made reference to another exhibit (No. 35) which had already been admitted by stipulation; it is argued that when one part of a writing is in evidence, any other part may be received to elucidate the former. (Evid.Code, § 356.) Since Mr. Routh subsequently testified to the terms of the sale, plaintiffs suffered no prejudice by the ruling which, among other things, may have been based on the self-serving nature of the proffered document--it was prepared some two years after the instant action was commenced.
We now proceed to the second of the two appeals (No. 36701), which gave defendants' judgment on Dorothy's demand note, admittedly never paid. The first, and primary, question is the bar of the statute of limitations (Code Civ.Proc. [97 Cal.Rptr. 617] § 337, subd. (1)--four years). According to plaintiffs, the instrument became negotiable on the date it bore, December 15, 1959, and defendants did not begin suit thereon until July 23, 1964. The court found that the note was not delivered to defendants until November of 1960; Mr. Routh, on the other hand, testified that the note was delivered to his wife in February of 1962, more than a year later. Section 3097, Civil Code (since repealed) was then still effective and provided in pertinent part that 'Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. * * *' It is held that the issue of delivery of a note is a question of fact. (Harper v. French, 29 Cal.App.2d 214, 217, 84 P.2d 216.) Accordingly, regardless of whose version of the incident is believed, the instant action was commenced well within four years from the note's delivery and, therefore, not barred by the applicable statute.
Remaining points concern themselves with asserted errors in the findings (the insufficiency of the evidence in support thereof), particularly the action of the court in reversing itself after previously concluding that there was no consideration for the note which, according to a prior ruling, was executed for tax purposes and a mere sham. Previously we determined that the trial court was authorized under section 662, Code of Civil Procedure, to correct any judicial errors it may have made; its findings are substantially supported and, therefore, binding on us as an appellate court.
Such complaint is made despite lack of complete consistency on plaintiffs' part: thus, they denied that the note was part of the purchase of the Genesee property (No. 36700), but argued that it was delivered in February of 1962 and barred by the statute of limitations (No. 36701).
An award of $4,000 attorney's fees was made under a clause in the note providing therefor; the amount of such fee is not challenged. Defendants also ask that an attorney's fee be awarded for services on appeal (Clejan v. Reisman, 5 Cal.App.3d 224, 241, 84 Cal.Rptr. 897); such request is proper, and we conclude that the sum of $2,000 is a reasonable fee for such services.
In case No. 36700, the findings are thereby amended to provide that part of the purchase price of the Genesee property was the execution of the $13,000 note by Dorothy A. Routh; as amended, the judgment is affirmed, defendants to recover their costs on appeal. In No. 36701, the judgment is affirmed, and defendant Dorothy A. Routh is ordered to pay plaintiff additional attorney's fees on appeal in the sum of $2,000.
THOMPSON and CLARK, JJ., concur.
[*] Subsequent opinions not certified for publication.