LYON v. GOSS ET AL

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District Court of Appeal, Third District, California.

LYON v. GOSS ET AL.

Civ. 6582.

Decided: July 31, 1941

Russ Avery and Harmel L. Pratt, both of Los Angeles, for appellant. Bartlett & Kearney, Alfred L. Bartlett, and Wm. B. Gilroy, all of Los Angeles, for respondents.

This is an action by plaintiff and appellant, as administrator with the will annexed of the estate of Homer Laughlin, deceased, for a declaratory judgment construing a contract dated March 11, 1929, for a 20–year lease entered into between Homer Laughlin, as the owner of the real property, and C. A. Goss, to commence November 1, 1939, covering property then under lease to the Grand Central Public Market, a corporation, which lease would expire October 31, 1939. The new lease was drawn up and assigned by Goss to a trustee to be held until the terms of the contract for the lease had been performed. The real property affected by the lease was used as a public market and was divided into some 70 stalls, occupied by subtenants operating meat and vegetable markets, grocery stores, lunch counters, and other types of concessions found in such places.

The contract provided that Mr. Goss was to immediately commence to sublease spaces in the market for the term of the new lease, and that the subleases should provide for the payment of bonuses by the prospective subtenants in amounts set forth in a schedule attached to the contract, in addition to the rentals therein specified. The sum of all the bonuses to be so paid when the market was fully sublet amounted to $485,000. Of this Laughlin was to receive the first $205,000, the balance to be thereafter equally divided between himself and Mr. Goss.

The contract also provided that Goss should proceed with diligence to obtain subleases from prospective tenants until the whole of the market was sublet; and that unless Goss procured contracts for subleases calling for the payment of $135,000 in bonuses by March 11, 1932, and a total of $205,000 in bonuses by March 11, 1935, and subleases providing for the payment of rentals totaling $9,500 per month by the latter date, respondent should forfeit all his interest in the lease and the market premises. It also provided that Goss should replace with new leases any leases that might be withdrawn. By April, 1931, Goss had obtained contracts for the payment of bonuses of $264,000, and a letter of that date was addressed to the trustee by the parties to the contract providing that no default should be declared by Laughlin on account of any violation or failure to perform the conditions as to the amounts to be signed up for rents or bonuses.

By December, 1932, all but one of the contracts, however, were in default. On December 27, 1932, Homer Laughlin died, and appellant Beach D. Lyon was appointed the administrator with the will annexed of his estate.

This present action was filed June 30, 1938, and after a hearing upon the issues so raised, the court on March 2, 1939, entered what it denominated an interlocutory judgment and decree wherein respondent Goss was given four months from the date thereof within which to secure $205,000 bonus contracts, said bonuses being payable in cash, or at least 10 per cent upon execution and 10 per cent after acceptance by plaintiff, and the balance on or before the first day of November, 1939; and the total of the subleases to provide for a rental of $9,500 per month. It also provided that in case Goss should fail to procure the bonus contracts and subleases within the time specified or should fail to continue with diligence to procure such contracts and subleases, all of his rights in regard to the market should cease. And finally, that at the end of four months after the date of the decree a further hearing should be had and an additional decree entered as might be just and equitable. It is from this decree and the terms thereof this appeal is taken.

Many points are urged by appellant for a reversal. The first ground for such reversal is that the contract for the lease lacked mutuality, and is therefore void and unenforceable. In the contract Goss agreed to procure subleases and contracts, to enter into subleases, and further provides that,

“Second party (Goss) further agrees to immediately endeavor to secure contracts to enter into leases and subleases under the terms hereof and to continue such endeavor with diligence until the same are secured for all space in the leased premises to be used for market purposes. Second party further agrees to secure contracts to enter into subleases, etc.”

There seems to be no other provision in the contract which attempted to bind Goss to any other obligation or for the performance of any other act.

The rule as stated in 13 Corpus Juris, at page 329 is:

“A promise is a good consideration for a promise, provided always that it imposes some legal liability on the person making it. If it imposes none, then it cannot be a good consideration. A promise may be too vague and uncertain to amount to a consideration for a promise made by the other party.” See, also, 17 C.J.S., Contracts, § 98.

Many cases could be cited in support of this general rule. In Jackson v. Alpha Cement Co., 122 App.Div. 345, 106 N.Y.S. 1052, a cement dealer, in consideration that he would give the manufacturer's brand a preference in his sales and to push the same, was to have a lower rate per barrel than other dealers. This contract was held void for lack of mutuality, since the dealer did not bind himself to make any sales of cement.

In Leach v. Kentucky Coal Co., D.C., 256 F. 686, 688, the dealer agreed to sell as much coal as possible, and in consideration thereof he was to obtain coal at a lower rate. The court therein stated: “There is no obligation whatever upon plaintiff to order any coal. If plaintiff had refused or neglected to order coal, defendant would not have had any cause of action against him.”

In Bartlett Springs Co. v. Standard Box Co., 16 Cal.App. 671, 117 P. 934, the contract there was held good because the purchaser bound himself to buy all his needs for a given period from the seller, and a purchase elsewhere of that commodity would have been a breach of the contract.

In Schimmel v. Martin, 190 Cal. 429, 213 P. 33, the owner of a pumping plant agreed to furnish water to adjoining land. The court held this contract was lacking in mutuality, for there was an absence of any agreement by the plaintiff to accept the water offered for sale by the contract.

George v. Weston, 26 Cal.App.2d 256, 79 P.2d 110, was an action for specific performance of an agreement to lease property for the development of oil and gas. It was there argued there was a want of mutuality because appellant could not be compelled specifically to perform for the reason he could surrender the lease at will, and was not obligated to perform any acts involving the drilling of oil wells, and also required the performance of personal service. The court held that a contract which could be terminated at the will of one of the parties without liability for damages so far as it remained executory, was not binding for want of mutuality.

In Charles Brown & Sons v. White Lunch Company, 92 Cal.App. 457, 268 P. 490, 491, it was stated: “It will be noted that the executory contract imposes no burdens, promises, or restrictions upon the plaintiff. It was free to terminate the contract at will at any time, and it imposed no obligation to supply any goods to defendant for any price or at any time. It appears, therefore, that there exists no mutual obligation imposed by the writings, except as to the purchase of the stock by plaintiff, which was fully executed. Had plaintiff discontinued its business or refused to sell its wares to defendant, defendant would have been without a remedy. A contract which can be terminated at the will of one of the parties without liability for damages, so far as it remains executory, is not binding for want of mutuality.”

In the case at bar Goss, under the contract in question, had the right to abandon his contract at any time without incurring any personal liability, and for that reason the agreement lacked mutuality. Also Goss had been president of the Grand Central Market for many years, and thereby had a personal acquaintanceship with the tenants and their needs, and of the conditions generally in the market with which he had been so long connected, and it would thus appear the agreement between himself and the owner contemplated the rendition of personal services on the part of Goss, making it further impossible to compel performance by him. § 3390, C.C.

Also another point urged for a reversal is that there was a breach of the contract between the parties by reason of the failure of Goss to procure any subleases after the death of Mr. Laughlin in December, 1932. In 1931 Mr. Goss had procured some $266,000 of bonus contracts, but within a year thereafter practically all of these contracts were in default. Under the agreement Mr. Goss was to furnish other parties to replace those whose contracts were defaulted, but no replacements were made, or had been up to the hearing of this matter. As a matter of fact, as found by the trial court in this matter, the respondent was not relieved of his obligation to replace and make good said (defaulted) contracts within a reasonable time. It is true that no definite time was specified for such replacements, but under section 1657 of the Civil Code if no time is specified for the performance of an act required to be performed a reasonable time only is allowed. More than four years had here elapsed and no replacements have been made. We find no waiver of the provision as to replacement of defaulted contracts, nor any excuse for the long delay, and it would clearly appear that Mr. Goss had had more than a reasonable time within which to complete his agreement.

In Ottney v. Finnie, 5 Cal.App.2d 356, 42 P.2d 714, 716, defendant had agreed to sell 200 club memberships. The court said: “The defendant testified that he sold about 40 memberships from 1927 to 1931 * * *. He admitted that he had not sold any memberships after 1931, claiming that the depression prevented further sales. * * * For approximately two years the defendant made no effort to sell memberships in the country club. We are satisfied that not only does the evidence support the finding that the defendant abandoned his contracts, but it also shows that his failure to complete the membership list of the country club and construct the improvements agreed upon for an unreasonable period of time constitutes a breach of the contracts. Since the contracts specify no limitation of time within which the membership list was to be completed or the improvements made, the law affords a reasonable time therefor.” § 1657, Civ. Code; Williams v. Bergin, 116 Cal. 56, 47 P. 877; 6 Cal.Jur., p. 218; 6 R.C.L., p. 646. Here respondent obtained no additional subcontracts or leases, with the exception of one, from 1932 until the commencement of the action in 1938.

The trial court found that the plaintiff had acquiesced in the deal. However, plaintiff here was the administrator of the estate of Homer Laughlin, and as such was only the agent of the estate, with limited authority.

In See v. Joughin, 18 Cal.App.2d 414, 64 P.2d 149, 151, it appeared plaintiff settled a crop lien and expended money in improving property in reliance upon the premises of the agent of the executor. The court there said: “The executrix had no power to compromise or waive a claim in favor of the estate without an order of court. An executrix is a mere trustee in charge of the property of the estate and may act only pursuant to law.”

In 11b Cal.Jur., “Executors and Administrators”, it is said: “No estoppel, it is said, can grow out of the acts of the representative as an individual which will affect his official title to the property of the estate, except where the estoppel is based upon and can be supported by equities against the estate.”

It would therefore appear that the administrator was without power to waive the strict performance of the contract, and he was not authorized to construe the contract to the prejudice of the estate.

It is also urged by appellant, and seemingly correctly, that the facts justify the conclusion that, following the death of Mr. Laughlin, Mr. Goss abandoned the contract.

In Morrow v. Coast Land Co., 29 Cal.App.2d 92, 84 P.2d 301, a somewhat similar question was presented and a conclusion reached that in spite of the fact there was no definite time fixed for performance, that a rescission by consent be implied from the acts of the parties. A similar rule is likewise expressed in Middleton v. Newport, 6 Cal.2d 57, 56 P.2d 508.

Also, the plaintiff herein, being an administrator of the estate, an agent, had no right to take any action which would revitalize the contract or waive the performance of any of its provisions.

From the testimony of the respondent it would seem that it was recognized that a contract could not be completed within a reasonable time. The court asked the following question:

“When you say that the contract could be secured do you mean that the bonus could be secured at the present time? A. Yes. I would certainly have to have a chance to work that out on a different basis.

“Q. I am not talking about some other contract or some other basis. I am asking about the particular schedules here that are attached to the contract. A. I cannot make this schedule––I will be honest.”

It would appear that the court had attempted to impose a new contract upon the parties. The original contract itself was silent as to how the bonuses were going to be paid, and also silent as to any limitation upon the kind of contract that plaintiff could accept.

In Foley v. Euless, 214 Cal. 506, 6 P.2d 956, 958, appears the following: “Courts have been careful not to rewrite contracts for parties by inserting an implied provision, unless, from the language employed, such implied provision is necessary to carry out the intention of the parties.”

To the same effect is the law in Loyalton, etc., Co. v. California, etc., Co., 22 Cal.App. 75, 133 P. 323, where it is said that when parties have entered into written engagements expressing the obligations which each is to assume, the court should hesitate to enlarge such obligations; the presumption being that the parties have expressed all of the conditions to which they intend to be bound.

It is urged by respondent that the judgment and decree from which this appeal is taken is interlocutory, and therefore not appealable. In this we think respondent is in error. In the declaratory relief statute (1060 C.C.P.) it is specifically provided that a party “may ask for a declaration of rights or duties, * * * and the court may make a binding declaration of such rights or duties, whether or not further relief is or could be claimed at the time”, and further providing that the declaration “shall have the force of a final judgment”.

In the judgment here appealed from it is provided the contract of March 11, 1929, “is still in force, and that the defendant Goss is entitled to an opportunity to fulfill the same upon his part upon the terms hereinafter stated”, which is in effect a complete declaration of rights of the parties, and has the effect of a final judgment. Clement v. Duncan, 191 Cal. 209, 215 P. 1025; Guaranty, etc., Bank v. Los Angeles, 186 Cal. 110, 199 P. 35; Perry v. West Coast Bond & Mortgage Company, 136 Cal.App. 557, 29 P.2d 279.

As further evidence of the finality of this decree it is provided in a latter portion, that respondent should have four additional months within which to comply with the contract as construed by the court, and at the end of that time a further hearing should be had. This later hearing was not for the consideration of the contract itself but for the purpose only of determining if respondent had been able to obtain the requisite contracts for the subleases.

From the foregoing it would appear that the contract lacked mutuality, and for that reason was unenforceable and void. It is also apparent that respondent, after the death of Laughlin, from his own statement, abandoned his contract.

For the foregoing reasons the judgment should be reversed, and it is so ordered.

PER CURIAM.