VICE v. THACKER (1946)

The defendant, Harry Kurofsky, appeals herein from a judgment for plaintiff for the recovery of certain articles of personal property hereinafter described, or the value thereof in case delivery cannot be had and for damages. The court found in favor of the defendant Thacker and no appeal was taken by the plaintiff from the resulting judgment. The case went to trial on plaintiff's second amended complaint containing causes of action for recovery of personal property after rescission, and claim and delivery. The judgment was rendered in plaintiff's behalf, notwithstanding a finding by the court that the notice of rescission was not promptly nor timely made.

The findings are in general accordance with the allegations of such complaint and are, in effect, as follows: That plaintiff for many years has conducted a shoe repair shop in Los Angeles, and on August 9, 1943, had a stock of merchandise and supplies on hand consisting of leather, heels, and other articles necessary in the conduct of such a business, and various items of shoe repair machinery, tools and store fixtures, against which there were no liens or claims of any kind; that the defendant, Thacker, was the local representative of The Landis Machine Company, a Missouri corporation, manufacturers of shoe making and repairing equipment, and maintained and branch office and store room in Los Angeles; that plaintiff had known Thacker for many years, reposed implicit confidence in him, and that a confidential relationship existed between them; that plaintiff was an elderly man, in poor health, and with the advice of Thacker decided to discontinue the operation of his business for a period of time and sell and dispose of his stock of merchandise and supplies, but to keep and store his machinery, tools and fixtures, without expense, at the place of business of The Landis Machine Company in Los Angeles, where Thacker represented that ample space could be provided. Thacker offered and agreed to act as plaintiff's agent to find a purchaser for plaintiff's said merchandise and supplies, which offer was accepted by plaintiff. They then boxed up all of such stock and Thacker stated that it should be delivered by plaintiff to any purchaser whom Thacker might find who would pay $1,000 therefor. That through the efforts of Thacker, numerous people made offers to plaintiff for his stock of merchandise and supplies, until on August 9, 1943, Thacker, as agent for plaintiff, represented that he had a party who would purchase such stock, not including any machinery, tools, or fixtures, for the sum of $1,000, to be paid as soon as such stock was delivered to Thacker's place of business. That on the same day, for and on behalf of defendant Kurofsky, and while also acting as agent for plaintiff, Thacker prepared in his office a bill of sale including all of the plaintiff's machinery, tools and fixtures, as well as the stock of merchandise and supplies, inserting his own name as buyer. That prior to the presentation of such bill of sale to plaintiff Thacker directed a woman who was employed by him in his office and who was a notary public, to affix her notarial acknowledgment to such instrument. Thacker thereupon proceeded to the place of business of plaintiff and while purporting to act as agent for plaintiff, and also acting for and on behalf of Kurofsky as his agent, presented said instrument to plaintiff without disclosing to him its nature, contents or effect, and further informed him that such instrument included only the stock of merchandise and supplies and that it was not necessary for him to examine or read and same, all of which plaintiff believed, and in reliance thereon signed the instrument without reading or knowing its contents, and delivered the same to Thacker. That Kurofsky paid plaintiff, through Thacker, the sum of $1,000 by delivering same to the latter as Kurofsky's agent, with directions to pay same to plaintiff, and on the same date, August 9, 1943, Thacker executed and delivered to Kurofsky a bill of sale covering all of the machinery, supplies and other property included in the other bill of sale from plaintiff to Thacker, and reciting the same consideration of $1,000. That plaintiff had no knowledge of such latter transaction or that Thacker was acting as agent of Kurofsky, nor did such defendants disclose to plaintiff their relationship concerning such matters. That on said day, while Thacker was purporting to act as agent for plaintiff, the latter delivered to him the key to his shoe repair shop where the stock of merchandise and supplies, as well as the machinery, tools and fixtures, were then located, and plaintiff gave Thacker permission to remove the stock of merchandise and supplies for the purpose of delivering it to the buyer, but with the understanding, as previously agreed between them, that the machinery, tools and fixtures were to be delivered to and stored at Thacker's place of business. That Thacker then delivered the key to plaintiff's premises to Kurofsky and invited plaintiff to accompany him on a trip outside the state of California. That during plaintiff's absence on the trip, Kurofsky used the key, entered the premises, and removed therefrom the stock of merchandise and supplies, but did not then remove the machinery, tools and fixtures. That on or about September 6, 1943, Kurofsky and several workmen came to plaintiff's premises to remove those articles, and plaintiff thereupon telephoned Thacker and was advised by the latter that plaintiff should deliver the items mentioned to the men who came for them and that he would take care of everything for plaintiff, and plaintiff, in the belief that his property was being removed to Thacker's place of business for storage, consented to its delivery and removal. That instead of taking the machinery, tools and fixtures to his place of business, Thacker and Kurofsky, in accordance with an agreement which they had entered into for the purpose of obtaining from plaintiff the possession of said property, and with full knowledge of the rights of plaintiff, took and delivered the same to the place of business of Kurofsky, whereupon the latter installed and put the same in use and operation and continued to use the same in his own business for a long time thereafter. That a few days later plaintiff went to Thacker's place of business for the purpose of inspecting his property which he believed to be stored there and for the first time learned that it had been delivered elsewhere, and then for the first time read and examined the bill of sale which he had signed in favor of Thacker, as buyer, and learned that it included not only the stock of merchandise and supplies, but also the machinery, tools and fixtures. On September 14, plaintiff retained an attorney but the latter failed to take any action in the matter so that, on October 27, plaintiff withdrew all papers which he had deposited with that attorney and retained new counsel. On or about November 1, 1943, plaintiff served on defendants a notice rescinding the purported sale of his property to Thacker but the rescission so attempted was not promptly nor timely made. The trial court found that the reasonable value of the stock of merchandise and supplies was the sum of $350, and of said machinery, tools and fixtures the sum of $892.50, or a total of $1,242.50, and that at the time of the service of the notice of rescission, plaintiff offered to return to defendants everything of value that he obtained from them upon his being restored to the property with which he parted, or the reasonable value thereof. The court further found that all of the involved property is now in the possession of Kurofsky and that plaintiff is entitled to have it returned to him or in lieu thereof the sum of $1,242.50, as its reasonable value in case delivery is not made; also the sum of $1,122 damages for loss of use thereof, conditioned upon defendant either paying to or crediting the defendant Kurofsky with the sum of $1,000 which plaintiff has heretofore received from such defendant, and the additional sum of $150 which Kurofsky paid out in making repairs on the property, or a total of $1,150. Judgment followed accordingly, as against Kurofsky.

He concedes on this appeal that the record amply supports the court's finding that in all dealings between himself and Thacker concerning the sale and purchase of the involved personal property, the latter was plaintiff's agent. The evidence is also sufficient to show the existence of a confidential relationship between plaintiff as principal, and Thacker as his agent, and a reliance thereupon by plaintiff in the transactions here in question. This being the case, and in the light of the evidence taken as a whole, the trial court was justified in concluding that the bill of sale, prepared and presented by Thacker with himself shown as buyer, fraudulently included the plaintiff's machinery, tools and fixtures, and was presented to plaintiff for his signature without disclosing such deceit; that in reliance upon the representations of such agent as to the contents of the instrument, and that he need not read the same, the signature of plaintiff was fraudulently obtained thereto without his having read the document or knowing that it included the additional property therein.

It is argued in behalf of Kurofsky that even though it be established that Thacker was the agent of plaintiff and fraudulently breached their confidential relationship by procuring a bill of sale from plaintiff to Thacker in which the machinery, tools and fixtures were wrongfully included, there is no evidence to show any knowledge upon the part of such appellant of any such fraud or that Thacker was also acting as agent for appellant in such dealings. Under the court's findings Kurofsky is charged with knowledge of Thacker's acts and representation by reason of the latter's double agency status, rather than by any evidence of direct knowledge on the part of appellant. While the evidence as to Thacker's agency on the part of Kurofsky is highly conflicting, and other conclusions might reasonably have been drawn therefrom, the weight to be given thereto, as well as the inferences to be deduced therefrom, were questions for the trial judge and, if there is any substantial evidence in the record to support his findings as to such agency, they must be upheld on appeal. In support of such findings the record disclosed that Thacker had known Kurofsky for some time and the latter had asked him to arrange to find and get for him, at the best possible price, equipment of the general kind later obtained from plaintiff; that Thacker agreed to try to find it for him and told him about plaintiff's property; that appellant went to see it at plaintiff's shop and met Thacker there. On his return from inspecting the property he told Thacker he wanted it and instructed him to buy it; that Thacker then bought it for Kurofsky after having first obtained the money from him with which to purchase it, which money was paid over to plaintiff; that Thacker had the property sold to himself because plaintiff said he wouldn't trust anybody else and he wanted Thacker to do the business for him, which facts were known to appellant. Kurofsky then accepted a bill of sale from Thacker, executed and delivered by the latter as seller, on the same day and covering the same property as mentioned in plaintiff's bill of sale to Thacker. Upon receiving the key to plaintiff's shop where all the property was located, Kurofsky, in plaintiff's absence, removed therefrom only the stock of merchandise and supplies. Some four weeks later he and two workmen came to plaintiff's store to take the remaining property, consisting of the machinery, tools and fixtures. Instead of hauling the property to be stored at Thacker's office, he took it to his own place of business, where Thacker helped him install it. Such evidence substantially supports the court's finding that Thacker was also acting as agent for appellant during all of the dealings and transactions in question.

‘One who acquires the property from the fraudulent vendee under such circumstances that he cannot be held to be a purchaser in good faith and for a valuable consideration is in no better position than the fraudulent vendee, and the defrauded party has the same remedies against him that he had against such fraudulent vendee. See Sargent v. Sturm, 23 Cal. 359, 83 Am.Dec. 118. * * *’ Wendling, etc., Co. v. Glenwood, etc., Co., 1908, 153 Cal. 411, 414, 95 P. 1029, 1030. Knowledge on the part of Kurofsky's agent, Thacker, was knowledge in Kurofsky. Under the circumstances here existing the law will presume in favor of plaintiff that his agent communicated all the facts in his possession to his principal, Kurofsky, and the latter is chargeable with all of the acts and knowledge of his agent (Verder v. American Loan Society, 1934, 1 Cal.2d 17, 27, 32 P.2d 1081; McKenney v. Ellsworth, 1913, 165 Cal. 326, 329, 132 P. 75), and this is true even though such agent may have an opposing personal interest, so long as he is acting for his principal in the transaction. McKenney v. Ellsworth, supra, 165 Cal. at page 329, 132 P. 75; Frankish v. Federal Mortgage Co., 1939, 30 Cal.App.2d 700, 721, 87 P.2d 90; Honan v. National Thrift Corp., 1936, 14 Cal.App.2d 458, 462, 57 P.2d 967. With knowledge so acquired by appellant, he is a principal in the fraudulent dealings here involved, and not only cannot be held to be a purchaser in good faith and for value, but in fact is in no better position, so far as the right of plaintiff to recover directly from him is concerned, than was Thacker, his fraudulent vendor.

The judgment herein is, however, materially inconsistent with the court's findings. The attempted rescission by the plaintiff of the fraudulent sale of his property was specifically found by the court to be ineffective due to its lack of promptness and timeliness. While the evidence would have supported a contrary finding, the question whether a party has acted promptly depends upon the circumstances of the particular case and is one primarily for the trial judge. 25 Cal.Jur. 725; Carpenter v. First Trust, etc., Bank, 1936, 11 Cal.App.2d 668, 674, 54 P.2d 495. It having been resolved by him adversely to the contention of plaintiff, and being based upon conflicting but material evidence we are bound thereby. With no rescission of the fraudulent transaction having been accomplished, that part of the judgment wherein it is ordered that plaintiff do have and recover from Kurofsky all of the involved personal property is inconsistent and erroneous, as are also those portions awarding damages for its loss of use in the amount of $1,122 and allowing credit to such defendant for repairs which he made upon the property in the sum of $150.

The judgment is consistent with the findings as to the fixation and allowance of damages for fraud in the purchase and sale of such property in the sum of $1,242.50. When a plaintiff files a complaint which, by proper and sufficient averments, sets out that he has been induced by fraud to enter into a contract and has endeavored to rescind it because of such fraud, and prays relief upon the basis of a rescission, he may be accorded damages for such fraud even though the evidence reveals circumstances whereby the right of rescission has been lost. Bancroft v. Woodward, 1920, 183 Cal. 99, 102, 190 P. 445; Brunswig Drug Co. v. Springer, 1942, 55 Cal.App.2d 444, 451, 130 P.2d 758; Hjorth v. Bernstein, 1941, 44 Cal.App.2d 561, 565, 112 P.2d 643. These averments are included in the complaint herein and, in addition to other relief asked, a request for damages in the sum of $3,500 and for such other and further relief as to the court may seem meet is contained in the prayer. It is not essential however to the allowance of damages that the complaint in an action for rescission ask for such relief. Murphy v. Sheftel, 1932, 121 Cal.App. 533, 541, 9 P.2d 568. See also Waters v. Woods, 1935, 5 Cal.App.2d 483, 487, 488, 42 P.2d 1072; MacIsaac v. Pozzo, 1945, 26 Cal.2d 809, 815, 161 P.2d 449. ‘Where equity has acquired jurisdiction for one purpose, it will retain it to the final adjustment of all differences between the parties arising from the cause of action presented, it being the duty of a court of equity, where all the parties to a controversy are before it, to adjust the rights of all and leave nothing for further litigation.’ Murphy v. Sheftel, supra, 121 Cal.App. at page 541, 9 P.2d at page 571. See also Sonnicksen v. Sonnicksen, 1941, 45 Cal.App.2d 46, 52, 113 P.2d 495.

To the extent that the court made its finding that all of the involved personal property with which plaintiff parted was of the actual value at that time of $1,242.50 and ordered that defendant be given credit for the amount of $1,000 which he actually paid plaintiff for it, the proper measure of damages was applied. Civ.Code, sec. 3343; Rothstein v. Janss Invest. Corp., 1941, 45 Cal.App.2d 64, 73, 113 P.2d 465; Jacobs v. Levin, 1943, 58 Cal.App.2d Supp. 913, 137 P.2d 500. This leaves the sum of $242.50 due plaintiff by defendant as damages for the fraud. Interest at the legal rate on this sum should be added from August 9, 1943. Taylor v. Wright, 1945, 69 Cal.App.2d 371, 384, 159 P.2d 980.

The judgment is hereby modified by striking therefrom all of paragraphs 1, 2, 3 and 4 and by substituting in their place the following: ‘Wherefore it is ordered, adjudged and decreed that plaintiff do have and recover from the defendant Harry Kurofsky the sum of $242.50 as damages together with a sum equal to 7% interest thereon from August 9, 1943 to date of judgment May 10, 1945.’ The trial court is hereby ordered to amend the conclusions and judgment in accordance herewith. As so modified the judgment is hereby affirmed, appellant to be allowed his costs on appeal.

KINCAID, Justice pro tem.

DESMOND, P. J., and SHINN, J., concur.