DAWSON v. GOFF (1954)

Dorothy C. Dawson, as special administratrix of the Estate of C. L. Dawson, Jr., deceased, and Dorothy C. Dawson and Howard D. Dawson as successors in interest of C. L. Dawson, Jr., brought an action in the Superior Court of Los Angeles County against the defendants and respondents to recover damages for breach of a contract whereby the defendants agreed to purchase certain shares of stock. The Superior Court of Los Angeles County granted defendants' motion for a change of venue to San Diego County, the motion being made upon the grounds that the defendants were residents of San Diego County and the contract sued upon was made in San Diego County. From the order granting the motion for change of venue plaintiffs appeal.

Plaintiffs alleged in their complaint that on or about the 26th day of February, 1953, in the County of Los Angeles, a contract in writing was entered into whereby plaintiffs agreed to sell and defendants agreed to purchase specified shares of stock at an agreed price, ‘payment therefor to be within three years from said date, with interest thereon at the rate of five per cent per annum on deferred payments; that plaintiffs tendered delivery of said shares of stock to defendants on said 26th day of February, 1953’; that defendants refused to accept delivery of the shares, and plaintiffs in writing notified defendants of plaintiffs' election to declare the default of defendants and to hold defendants for damages. The contract sued upon was not annexed to the complaint nor made a part thereof.

The defendants demurred and concurrently filed a notice of motion for a change of venue, with supporting affidavits.

It appears therefrom that on February 28, 1950, the defendants executed, in San Diego County, a document reading as follows:

‘February 28, 1950

‘Mr. C. L. Dawson, Jr.

2668 Victoria Drive

Laguna Beach, California

‘Dear Dr. Dawson:

‘The undersigned hereby agree to purchase from you, your heirs or assigns, upon demand written or verbal at any time after February 28, 1951, not to exceed forty thousand (40,000) common shares of Grand Stores Co. for a price of $2.53 per share. The terms of the payment for this stock to be determined by negotiation at the time demand is made but in any case full payment is to be made within three years from that date and interest on deferred payments to be at 5%.

Yours very truly,

Charles R. Goff

R. Hastings Garland

‘This agreement terminates if no demand is made on February 28, 1953.

Charles R. Goff

‘Accepted 2/28/50

C. L. Dawson, Jr.'

On February 26, 1953, the plaintiffs made written demand that the defendants purchase 28,800 shares and tendered the shares to defendants (the agreement above quoted had been modified by reducing the number of shares to be purchased from 40,000 to 28,800). The demand was signed by the plaintiffs in Los Angeles and was deposited in the United States mail at Los Angeles, addressed to the defendants at their respective addresses in San Diego. Upon failure of the defendants to accept delivery of the stock, plaintiffs notified defendants of their election to declare a default.

Section 395 of the Code of Civil Procedure, so far as here pertinent, provides as follows: ‘* * * When a defendant has contracted to perform an obligation in a particular county, either the county where such obligation is to be performed, or in which the contract in fact was entered into, or the county in which the defendant, or any such defendant, resides at the commencement of the action, shall be a proper county for the trial of an action founded on such obligation, and the county in which such obligation is incurred shall be deemed to be the county in which it is to be performed unless there is a special contract in writing to the contrary. * * *’

It is respondents' position that the letter and acceptance of February 28, 1950, executed in San Diego County, constituted a contract—an offer, acceptance and meeting of the minds—, the performance of the contract being suspended until a demand was made upon respondents. Respondents further argue that the ‘demand’ of February 26, 1953, was not an acceptance of an offer, but an act which ‘related back’ to the original contract of February 28, 1950, fixing rights according to the terms of that contract.

Appellants' position, however, is that no contract was created by the instrument of February 28, 1950, which constituted merely an offer. That the contract was created by the ‘demand’ made by appellants on February 26, 1953, which constituted an acceptance of the offer of February 28, 1950, to purchase stock. Appellants' contention is sound. The instrument of February 28, 1950, was no more than an offer to purchase stock at a specified price, upon demand within a limited time. In the absence of a demand within the specified time there was no obligation upon the buyers to buy or the sellers to sell. The indorsement, ‘accepted’ by C. L. Dawson, Jr., is of no significance, since it created no obligation upon him whatsoever. The situation remained that of an offer to buy which could be accepted by the seller within a specified time limit, which offer could be rejected by the seller, either expressly or by failure to make a demand and tender within the limited time. The letter of February 28, 1950, contains no language whatsoever binding the owner of the stock to hold it available for the buyers. The offeree (C. L. Dawson, Jr.) assumed no obligations, but was at liberty to accept or reject the offer within the prescribed time limits. See Los Angeles County Flood Control District v. Andrews, 52 Cal.App. 788, 205 P. 1085, and Caldwell v. Dalary Mines, Inc., 68 Cal.App.2d 180, 156 P.2d 52.

It follows that a determination of where the contract was made depends upon the rules applicable where there has been an offer followed by an acceptance. It is not disputed that an offer was made in San Diego County, but the ‘demand’ made by the plaintiffs on February 26, 1953, (which ‘demand’ we hold to be an acceptance of defendants' offer of February 28, 1950) was executed in Los Angeles County, and transmitted to defendants' by deposit in the United States mails in Los Angeles County. It is settled that a contract is made at the place where the letter of acceptance is mailed, such being the place where the last act necessary to the formation of the contract is performed. Civ.Code, § 1583; Parker Co., Inc., v. Exeter Refining Co., 26 Cal.App.2d 610, 612, 79 P.2d 1114, and cases cited. See also Morello v. Growers Grape Products Ass'n, 82 Cal.App.2d 365, 370, 186 P.2d 463.

Further, it appears to be settled that the place of performance of a contract to sell shares of stock, in the absence of agreement, express or implied, to the contrary, is at the situs of the stock or the residence of the seller. See Civ.Code, §§ 1763 and 1754; Robbins v. Pacific Eastern Corp., 8 Cal.2d 241, 270, 65 P.2d 42; Neer v. Lang, 2 Cir., 252 F. 575. The plaintiffs herein resided in Los Angeles County and held the stock in that county.

Returning to respondents' contention that the ‘demand’ of February 26, 1953, ‘related back’ to the document of February 28, 1950, it must be held that the doctrine of ‘relation back’, which is an equitable fiction adopted when necessary for the purposes of justice, Ludy v. Zumwalt, 85 Cal.App. 119, 259 P. 52, has no application to the situation here presented. As heretofore stated, there was no contract in existence until the holders of the stock transmitted their letter of February 26, 1953.

For the foregoing reasons the order appealed from is reversed.

WHITE, Presiding Justice.

DORAN and DRAPEAU, JJ., concur.