CRESTVIEW CEMETERY ASSOCIATION v. Chauncey McKeever, Cross-Defendant and Appellant.*

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District Court of Appeal, First District, Division 1, California.

CRESTVIEW CEMETERY ASSOCIATION et al., Plaintiff, Cross-Defendant and Appellant, v. Leonard DIEDEN, Defendant, Cross-Complainant and Respondent, Chauncey McKeever, Cross-Defendant and Appellant.*

No. 18452.

Decided: February 26, 1960

Livingston & Borregard, Lawrence Livingston, Paul C. Maier, San Francisco, for appellants. Robert C. Burnstein, Fred C. Cooper, Oakland, for respondent.

Crestview Cemetery Association, plaintiff and cross-defendant, is substantially owned and controlled by cross-defendant Chauncey McKeever. Because all of the transactions which are the subject of this litigation were conducted by him and because it is conceded that both the association and McKeever, as an individual, are bound by any of those transactions and have virtually identical interests in them, we shall refer to plaintiff and cross-defendant simply as McKeever. Leonard Dieden, defendant and cross-complaint, is referred to simply as Dieden.

The Facts. In 1956, McKeever owned land which he wished to develop as a cemetery. After he had bought the land it was annexed to the city of Hayward and zoned for residential purposes. McKeever employed Mr. Marlin Haley, an attorney, to endeavor to persuade the city council of Hayward to rezone the land for commercial use, but Haley, after some efforts, told McKeever that competing cemetery interests had made the task too difficult. He withdrew from the engagement, with McKeever's consent, and was paid for his services.

In April 1956, Dieden was recommended to McKeever. McKeever and Dieden were and are lawyers. McKeever telephoned to Dieden and explained that he had purchased the land for the purpose of operating a cemetery, and told of Haley's efforts. A meeting was held in Haley's office. McKeever, Haley and Dieden, the three participants at the meeting, testified to the conversation which ensued and which established the terms of the oral contract which is the subject matter of this litigation. There is almost complete agreement among the three about the content of the conversation. Indeed, there is no contradiction by any of the three of the testimony given by any other.

A summary of the testimony of the three witnesses is given in the succeeding paragraphs. We have caused to be italicized those portions of the testimony which show the basic part of the contract, namely, what Dieden undertook to accomplish in order to be entitled to payment of a contingent fee.

Dieden testified that McKeever asked him what he would charge to make the land available for cemetery purposes. Dieden asked $10,000, McKeever said the fee would have to be contingent on success. There was some negotiation about amount, and it was not agreed upon at the meeting, but about a week later, in a telephone conversation, $7,500 was set as a contingent fee.

McKeever testified that he told Dieden he had paid Haley on a per diem basis, but that any fee paid to Dieden would be contingent on success. He testified, exactly as Dieden had testified, that he asked how much Dieden would charge to make the land available for cemetery purposes. He testified that all decisions as to steps to be taken, whether permits, licenses, variances or rezoning, were up to Dieden if he took the employment. He testified that Dieden said he should be allowed six months, but that Haley said he thought three months should be enough, and Haley testified that Dieden agreed to that substantially, though ‘the term three months and six months was used rather generally.’ The later conversation about the amount of the fee was related just as Dieden had stated it.

Haley's testimony goes on a bit farther, and some of it is in the form of conclusions, but there was no objection to the form of the answers. Haley testified that McKeever told Dieden he wanted to establish a cemetery; McKeever did not say how this was to be accomplished; McKeever wanted to know if Dieden was willing to accept employment to secure whatever was necessary from the city to enable McKeever to establish a cemetery. Either Dieden or Haley suggested that the procedure should be rezoning rather than a variance permit. McKeever said he wanted to get whatever was necessary to be able to use the property for cemetery purposes. McKeever said that what procedure Dieden should use so far as the city was concerned was to be in his (Dieden's) discretion.

It is unnecessary to relate his testimony about the amounts to be paid or the time element because it is in agreement with McKeever's. But the following sentences of Haley's testimony give the essentials of the employment of Dieden: ‘[T]he contingency was based upon Mr. Dieden being able to secure whatever rezoning or permit was necessary from the City of Hayward to enable them to establish a cemetery on the property * * *. [H]e wasn't concerned with how Mr. Dieden, or what process he went through to obtain rezoning or permit or whatever was necessary * * * [t]o establish a cemetery or to secure a permit to establish a cemetery on the property, * * * [a]nd that was entirely up to Mr. Dieden to decide for himself.’ (Emphasis added.)

There was considerable discussion between Haley and Dieden, in McKeever's presence, about the relative desirability of obtaining rezoning or procuring a use permit (a variance from zoning classification allowed by the city charter), but Haley testified that McKeever did not say anything about what he was to get in order to operate a cemetery. Haley testified that it was up to Dieden ‘to get from the City whatever is necessary to do that whether it's rezoning or permit or what have you.’

Neither party knew at that time of the possibility of referendum against a city ordinance.

A few weeks later McKeever signed an application for rezoning at Dieden's request. And on July 24, 1956, again at Dieden's request, McKeever attended a meeting of the city council of Hayward. It was a prolonged session at which many speakers expressed favor or disfavor of the propsed ordinance to rezone; but at the end, the council voted, four to three, to rezone the property from residential to commercial use. After the vote, Dieden came to McKeever and said, ‘There's your permit. Send me a check.’ McKeever congratulated Dieden.

Almost at once there came an indication that all was not well. A woman approached McKeever and Dieden and said, ‘You haven't heard the last of this. We are going to start tomorrow.’ McKeever asked what she meant, and Dieden answered that she meant a referendum petition (or, perhaps, the testimony varies slightly here; Dieden used the word ‘recall’) was going to be circulated. McKeever asked how many signatures were necessary, and Dieden replied that he did not know. Dieden asked the city attorney, who was nearby, and was informed it would take a percentage of voters to sign within a certain period, in order to subject the ordinance to referendum. Dieden told this to McKeever, and then excused himself to do other business.

On July 27, 1956, McKeever sent Dieden a letter in which he sent a check for $5,000 and promised ‘the balance for you shortly. One of my associates is out of town.’ He wrote ‘I enclose my check for $5,000.00 on account of your legal fee in the amount of $7,500.00 for services in connection with the adoption of a rezoning ordinance in the City of Hayward on behalf of Crestview Cemetery Association.’ A few days later, Dieden called McKeever and asked for the $2,500 balance. McKeever told him that one of his associates had not yet returned from a trip but that he would have the money for him as soon as he returned. Dieden telephoned again and was given the same answer.

Dieden testified that on one occasion when he called, McKeever asked him ‘how the referendum or the reference of the action of the council to the voters was proceeding.’ Dieden replied that he did not keep in touch with the referendum proceedings, but that he would make some inquiry any call McKeever back. A few days after, he telephoned to say that referendum petitions were being circulated. Dieden testified that again McKeever promised to pay the balance owed when his associate came back to town.

It was stipulated that within 30 days of the passage by the city council of the ordinance of July 24, 1956, a petition of referendum in respect thereto, bearing the requisite number of signatures and in proper legal form, was filed with the city clerk; and that on September 11, 1956, in response to said petition of referendum, the city council passed an ordinance which repealed the July 24 ordinance and restored the land to its previous zoning classification.

McKeever refused to pay the $2,500 balance, and on September 19, 1956 he wrote Dieden and demanded return of the $5,000 already paid. Dieden refused saying that he had been employed only to obtain passage of an ordinance rezoning the property and that he had done so and was, therefore, entitled to his fee.

The Pleadings. Plaintiff in the case is Crestview Cemetery Association, a corporation. The complaint is one for common count, for money had and received in amount $5,000. The answer is a simple denial. The cross-complaint by Dieden against Crestview and McKeever does not refer at all to the contingent fee contract which admittedly was the agreement between the parties, but alleges that cross-complainant performed professional services at cross-defendant's special instance and request ‘consisting of preparing, drawing and engrossing various instruments in writing and in counselling and advising the Defendants [sic] (this should have been cross-defendants throughout) and each of them in connection with the rezoning of certain property owned and to be used by the Defendants [sic] and each of them located within the City of Hayward from Zone 1 Residential Low Density to Zone 3 Business and Commercial as the same is defined under the Zoning Ordinances adopted by the City of Hayward, a Municipal Corporation organized and existing under and by virtue of the laws and the constitution of the State of California for which Defendants and each of them promised and agreed to pay Cross-Complainant the sum of Seven Thousand Five Hundred Dollars ($7,500.00) which was the reasonable value of such services.’ The cross-complaint alleges the payment of $5,000 and nonpayment of $2,500, and prays for judgment for $2,500.

The answer to the cross-complaint denies the charging allegations and sets up, as an affirmative defense, an agreement between the parties that McKeever would pay Dieden if and when Crestview was authorized to operate the cemetery, by permit, rezoning, or whatsoever means might be necessary to comply with the requirements of the city of Hayward, and that Dieden agreed that if he failed to do whatever was necessary to enable Crestview to operate cross-defendant should pay him nothing. It is alleged that Crestview is not authorized to operate a cemetery, and that plaintiff and cross-defendants paid Dieden the sum of $5,000 in error.

Findings of Fact. (1) Relating to the cross-complaint. There is a finding of non-payment of $2,500, but there is no finding as to the reasonable value of services, which was the essence of the cross-complaint. Nor had there been any evidence of the value of the services. Apparently the quantum meruit theory was abandoned in the face of the admitted contingent fee contract. The judgment for cross-complainant in amount $2,500 apparently, then, is not based on the cross-complaint itself which is on quantum meruit only, but upon the contract which was alleged in the answer to the cross-complaint. In fact, the judgment does not state that the $2,500 award is on the cross-complaint, but that it is ordered that defendant and cross-complainant have judgment against cross-defendants in the sum of $2,500.

(2) Relating to the complaint and the answer to the cross-complaint. There is no finding directly on the money had and received allegation of the complaint, but impliedly it is found to be not true, because of the findings in respect to the answer to the cross-complaint.

The most important finding is that Dieden, under the terms of the contract of May 14, 1956, ‘was to secure the re-zoning of said land from residential to commercial zoning’ and ‘was to have a period of three (3) months from and after the 14th day of May, 1956 within which to secure an ordinance adopted by the City Council of the City of Hayward re-zoning said property from residential to commercial and that when the said re-zoning was accomplished and effected through the adoption of an ordinance by the City Council of the City of Hayward re-zoning said land from residential to commercial, the Defendant and Cross-Complainant was to receive as and for his service in accomplishing the said re-zoning the sum of Seven Thousand Five Hundred Dollars ($7,500.00).’

It was found that the contract was fully performed and that payment of the $5,000 was not in error.

It appears at first sight that the obligation of Dieden found by the court was not to make the land available for cemetery uses by whatever means would be selected by Dieden, as the parties and the independent witness had testified, but to get a re-zoning ordinance passed by the city council.

The finding cannot be sustained if it reduces the contractual obligation of one of the parties. We cannot sustain the finding, and the judgment based on it unless: (1) the passage of the ordinance made the land available, at least for some period of time, for cemetery uses, or (2) the agreement to make the land ‘available’ for cemetery purposes meant something less than making it usable legally, at least for some period, as a cemetery.

1. Did the land become available for cemetery purposes, at least for some period of time, by the passage of the ordinance which was repealed upon referendum? No.

It is the theory of respondent that the land did become so available and that the repeal was the effectuating of a ‘condition subsequent,’ as respondent puts it. It is conceded by respondent, of course, that the land did not become available for cemetery use for more than the 49 days elapsing between the vote of the council rezoning the land and the repeal of the rezoning, but respondent contends that this suffices and that, short as the period of ‘availability’ was, nevertheless, it did exist. Thus, he argues, he became entitled to his contingent fee. Appellant argues that the ordinance did not go into effect at all, not even momentarily, and that the land was not available at any time, for cemetery uses.

This leads us to consider the status of an ordinance of the city of Hayward, a charter city, during the period elapsing between final passage of the ordinance and repeal brought about by referendum.

Article IV, section 1 of the Constitution of California provides, in part, as follows: ‘The initiative and referendum powers of the people are hereby further reserved to the electors of each county, city and county, city and town of the State to be exercised under such procedure as may be provided by law. * * * This section is self-executing, but legislation may be enacted to facilitate its operation, but in no way limiting or restricting either the provisions of this section or the powers herein reserved.’

Article XI, section 8 of the Constitution of California allows a city to frame a charter ‘consistent with and subject to this Constitution; * * *’ The same section, in its home rule provision, reads: ‘It shall be competent in any charter framed under the authority of this section to provide that the municipality governed thereunder may make and enforce all laws and regulations in respect to municipal affairs, subject only to the restrictions and limitations provided in their several charters and in respect to other matters they shall be subject to general laws.’

The two provisions of the charter of the city of Hayward which are to be considered are: ‘Section 403. Initiative, Referendum and Recall. Except insofar as is otherwise provided by ordinances hereafter enacted, the provisions of the Elections Code of the State of California, as the same now exist or may hereafter be amended, governing the initiative, the referendum and the recall of municipal officers shall apply to the use thereof in the City insofar as the same are not in conflict with this Charter.’ This is the only reference in the charter to referendum.

‘Section 620. Ordinances. Effective Date. An ordinance shall become effective upon the date of its adoption, unless the effective date is otherwise stated in the ordinance.’

The state law on referendum is contained in the Elections Code. Section 1770 of that code provides that no ordinance shall become effective until 30 days from and after the date of its final passage, except some kinds of ordinances which are not relevant here. Section 1771 provides that if within the 30 days, a petition signed by 10 per cent of the voters of the city protesting the adoption of the ordinance is filed, the effective date of the ordinance is suspended, and the legislative body of the city shall reconsider it. Section 1772 provides that if the legislative body does not entirely repeal the ordinance, there shall be an election, and the ordinance shall not become effective until a majority of the voters favor it. Thus, throughout, there is expressed the purpose that an ordinance shall have no effect until there has been opportunity for the use of the referendum procedure, and if that opportunity has been taken by the required percentage of voters, until the issue shall have been resolved.

Respondent contends that under section 620 of the charter of Hayward, the ordinance became effective on the date of its adoption by the city council, and that, although it was subject to referendum, it had the breath of life in it for a time. He contends that section 403 of the charter adopts the Elections Code provisions only to the extent that they do not conflict with other provisions of the charter, and that suspension of the effective date of an ordinance would conflict with section 620 which makes ordinances effective on the date of their adoption. He would resolve the problem by having it that all of the Elections Code provisions relating to referendum apply except those which suspend the effective date. Thus, the ordinance would become effective at once, but subject to later defeat.

Appellant contends that the apparent conflict between section 620 of the charter and the provisions of the Elections Code can be solved by construing the words ‘date of its adoption’ as used in section 620 to mean a time 30 days after final passage of the ordinance if there is no referendum, or the date of approval by a majority of the voters if there is referendum, with subsequent approval of the ordinance by the voters.

We agree with appellant's contention. The construction for which respondent contends would vitiate the constitutionally reserved power of the people. A charter city is entitled, under the home rule grant of article XI, section 8 of the Constitution, to determine its own method for referendum of city ordinances, but it cannot, by silence on the subject or otherwise, prevent the operation of an effective referendum of ordinances. Hopping v. Council of City of Richmond, 170 Cal. 605, 609, 150 P. 977; Brown v. Boyd, 33 Cal.App.2d 416, 420, 91 P.2d 926.

To hold that section 403 of the charter of the city of Hayward does not incorporate the suspension of the effective date of an ordinance, as provided by section 1770 of the Elections Code, would be so derogatory of the right of referendum as to make that power, in many instances, useless. In fact, at oral argument, counsel for respondent was compelled by following his reasoning, to contend that if the cemetery had been completed physically in the 49 days between passage of the ordinance and its repeal, the accomplished feat could not be disturbed. We cannot accept what often would amount to nullification of a prime political power retained by the electorate.

If section 403 does not incorporate the suspension of the effective date, it incorporates almost nothing of the Elections Code, and the city is left without an effective referendum. The essential feature of the plan in the Elections Code is suspension until there may be petition, and after proper petition, suspension until the city council repeals, or, if the council does not repeal, suspension until the voters choose to enact the ordinance. It is to be observed that if the council does not repeal the ordinance against which the petition is filed, a majority vote is required to pass, not to defeat, the ordinance, under section 1772 of the Elections Code. If, then, the city council had not repealed the ordinance, what would have been its status? It would have no effect unless and until the voters should choose to pass it. Or, if section 1772, as well as sections 1770 and 1771 of the Elections Code, with their suspension of effectiveness provisions, were held not to apply to the city of Hayward, what would be incorporated by section 403 of the charter? Nothing substantial whatever. Section 403 would be almost meaningless.

Laws designed to carry the right of referendum into execution are to be construed liberally in favor of the reserved power of the people. Blotter v. Farrell, 42 Cal.2d 804, 270 P.2d 481; Ley v. Dominguez, 212 Cal. 587, 593, 299 P. 713; Dye v. Council of City of Compton, 80 Cal.App.2d 486, 182 P.2d 623.

To accept the construction of section 620 of the charter as meaning, by date of adoption, the effective date under the Elections Code will give effect to the constitutional reservation, the Elections Code and both sections of the city charter. It is well established that an interpretation of two or more laws which will give effect to both, or all, is to be made if it can be done reasonably. Gibson v. City of San Diego, 25 Cal.2d 930, 156 P.2d 737; Dye v. Council of the City of Compton, supra, 80 Cal.App.2d 486, 182 P.2d 623. It is reasonable to interpret section 620 of the charter of the city of Hayward to mean that ‘date of adoption’ means a date 30 days after final passage if there is no referendum and the date of election if the voters choose to enact the ordinance subsequent to a referendum petition. Section 620 fulfills the purpose of declaring that an ordinance is not retroactive unless it says so, and that its effective date is not more removed than to the termination of the referendum period.

Respondent cites some cases in which there is language to the effect that city ordinances go into effect immediately, but they are distinguishable from the one before us. O. T. Johnson Corp. v. City of Los Angeles, 198 Cal. 308, 245 P. 164, involved a street improvement ordinance class not subject to referendum in general. Elections Code, § 1770. Johnston v. City of Claremont, 49 Cal.2d 826, 836, 323 P.2d 71; Dorr v. Marsh, 184 Cal. 588, 194 P. 1002, had to do with a tax ordinance, also in general not subject to referendum. Hunt v. Mayor and Council of City of Riverside, 31 Cal.2d 619, 623, 191 P.2d 426, and Voorhees v. Morse, 1 Cal.2d 179, 34 P.2d 153, involved an emergency ordinance, also not subject to referendum.

In Pacific Palisades Ass'n v. City of Huntington Beach, 196 Cal. 211, 237 P. 538, 40 A.L.R. 782, the question of referendum did not enter. The court simply held that a mayor whose function in signing an ordinance was ministerial could be compelled to sign by mandamus. The effective date was not the point of the case.

We hold that the ordinance purporting to rezone the land for commercial, including cemetery, purposes, did not become effective even for an instant.

2. Did the parties intend that passage of the ordinance in itself and without regard to the possibility of referendum would constitute making the land ‘available’ for cemetery purposes? No.

It is to be observed that we are considering the intention of the parties at the time the contract was made, and we are not considering any novation or modification or waiver of performance. The court found that the contract of May 14, 1956 was fully performed. There was no pleading and no finding of novation or modification. We find that we cannot come to the conclusion that when the parties agreed upon a contingent fee contract, they intended that the owner of the land would become liable for payments upon the mere passage of an ordinance which did not make the land ‘available’ for the intended purpose, even momentarily.

In the first place, ‘to be available for a purpose means capable of being used for that purpose.’ State v. Hoblitt, 87 Mont. 403, 288 P. 181, 185. That Dieden undertook to have the land made available for cemetery purposes appears from his own testimony. The land never did become usable as a cemetery, and did not become even theoretically or legally ‘available,’ for the desired purpose, for a moment of time. It is conceivable that McKeever might have contracted to pay the contingent fee for a short-lived ‘availability,’ but, under our analysis of the nature of the referendum even the ephemeral ‘availability’ which respondent contends did exist, actually never came into being, and there is no substantial evidence that the parties meant that payment should be made for anything less than causing the land to be made ‘available’ for the use. McKeever received absolutely nothing, in theory or in fact, while the contract was that he was to receive such measures as would make his land usable for a certain purpose.

In the next place, we must consider that the fee was a contingent one, and that McKeever took pains to make it so. A contingent fee is earned only on the occurrence of the stipulated condition, and the precise event agreed upon must happen. 7 C.J.S. Attorney and Client § 188, p. 1072.

The contract did not specify the means of gaining the desired end. There was to be but one criterion of performance—availability, or usability, of the land for cemetery purposes.

We must consider at this point the fact that McKeever made the $5,000 payment with knowledge of the referendum. The matter of his knowledge of the referendum is the only subject on which there is any factual dispute; but we must, of course, upon conflicting evidence, accept as true the factual situation most favorable to respondent, which is that McKeever knew of the referendum at the time he sent the $5,000 check.

This poses the question: Did not McKeever's conduct in making the payment show the meaning of the contract to have been that passage of the ordinance by the city council was the test of performance of the contract?

If the terms of the contract were uncertain, the conduct of the parties would be of much importance in construing the agreement (12 Cal.Jur.2d § 129, p. 341), but where there is no uncertainty in the terms, the conduct of the parties plays no part in interpretation. Bettis Rubber Co. v. Kleaver, 104 Cal.App.2d 821, 826, 233 P.2d 82; Dabney v. Dabney, 9 Cal.App.2d 665, 51 P.2d 108. The Bettis case was one in which a party had made payments which, under the plain terms of the contract, were not required. The court would not look beyond the terms of the agreement itself.

In the present case we find no ambiguity in the terms. The whole contract shows unmistakably that it was a prerequisite to payment that the land be made available, for some time at least, for cemetery purposes. There is no room for interpretation. If, for example, the parties had asked declaratory relief while the contract was admittedly executory, Dieden inquiring of the court if his duties would be fulfilled if he were instrumental in having a rezoning ordinance passed, which succumbed to referendum action, and the court having in mind the law as we now have decided it to be, that such an ordinance did not give life, even for a moment, to the rezoning, we do not doubt that there would be but one answer possible—the fee, contingent upon success in securing the availability of cemetery use, would not be earned.

Therefore, the fact that payment was made does not change the meaning of the contract. Nor does the fact that payment of the $2,500 was promised. The binding determination of the meaning of a contract is that of the court, and although the court must find the intention of the parties where they made the agreement, by the terms of the agreement alone if it is unambiguous, and by extrinsic evidence including the parties' actions and admissions in cases where the contract is ambiguous, nevertheless the court's determination does not yield even to actions performed and declarations made by a party contrary to his own interests. Achen v. Pepsi-Cola Bottling Co., 105 Cal.App.2d 113, 123, 233 P.2d 74; Citizens Utilities Co. v. Wheeler, 156 Cal.App.2d 423, 432, 319 P.2d 763.

It is argued by respondent that the fact that the time for performance by Dieden was limited to three months shows that final passage of the ordinance by the council was the test of the performance, because the referendum procedure in itself might be expected to consume several weeks (actually, it took 49 days, as events developed), and, indeed, under the Elections Code, there would be a 30-day period in which the petition could be filed. We do not regard the argument as having merit, because: (1) as we said in discussing the fact of the $5,000 payment, the contract was very clear that the land must be made available for the cemetery. The argument, like that relating to McKeever's payment, might have been persuasive if the agreement were in doubt, (2) neither party knew of the possibility of referendum; therefore, the three-month limitation was not selected as a choice between the date of final passage and the date of conclusion of referendum procedure, and (3) passage of the ordinance need not have been had at all, under the agreement, because a use permit would have been equally satisfactory, provided, whether it be the one or the other, the land be made available for the desired use.

Thus, considering the contract of May 14, 1956, no modification, novation, or waiver of performance having been pleaded or found, we conclude that the terms were not that merely an ordinance should have been passed by the city council, but that, by whatever means, the land should have been rendered available for a cemetery. There was no performance of the terms of that contract.

3. Should judgment for appellant be directed by this court for return of the $5,000? N0.

Appellants have urged that if we agree with their contention that the contract was not performed, we should order judgment to be rendered for return of the $5,000 that was paid, on the ground that it was mistakenly paid. The subject of restitution, although briefed on appeal, was of little or no importance at the trial because of the court's finding that the contract had been performed.

The judgment is reversed and remanded to the trial court for a retrial solely of the issue of restitution.

DEVINE, Justice pro tem.

BRAY, P. J., and TOBRINER, J., concur.

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