LOVE v. WHITE (1961)

Plaintiff appeals from a judgment against her and in favor of defendant on his counterclaim in the sum of $1,897.25.

The following facts are undisputed. On December 2, 1958, plaintiff (seller) and defendant (buyer) entered into a written contract for the sale and purchase of a business known as Carol's Cafe, including the stock in trade, fixtures, equipment, good will and a lease held by plaintiff which would entitle defendant to possession of the premises for approximately five years, for a total price of $7,000. The contract, in the form of an escrow agreement (Exhibit 1) provides among other things: that the buyer (defendant) will hand the escrow holder $3,000 cash, execute a conditional sales contract for $4,000 in favor of seller payable $100 per month, buy the inventory outside of escrow when he takes possession of the premises, and make immediate application for all licenses necessary for the operation of the business; that the seller (plaintiff) will accept the conditional sales contract as part of the purchase price, deliver a lease of the premises of approximately three years duration, with a two-year option to renew, payable at a rental of $100 per month, and deliver to the escrow holder various instruments including a bill of sale covering the stock in trade, fixtures, equipment and good will of the business; and that (1) possession is to be granted to the buyer outside of escrow when agreed upon between buyer and seller, (2) the seller warrants the premises will pass all inspections necessary for the operation of the business, and (3) if seller, for any reason, refuses or is unable to deliver the property to the buyer as agreed in the instrument, she will refund to the buyer all moneys deposited by him in escrow.

The agreement was executed December 2, 1958. Several days thereafter defendant deposited $1,500 in escrow; he did not take possession of the premises until January 20, 1959, but immediately made application for a beer license. On January 20, 1959, defendant took possession, paid outside of escrow directly to plaintiff the sum of $372.92 for stock on hand, and discovered certain defects in the equipment and the premises which he caused to be repaired prior to obtaining a city license for which he paid the sum of $171.48. On May 12, 1959, the escrow holder notified the parties that the escrow was ready to close. On May 25, 1959, plaintiff and defendant, meeting at the escrow office, were unable to agree concerning payment for certain repairs. A dispute arose. Thereafter, plaintiff went to defendant's bar to collect the May payment of $100 due under the conditional sales contract where she threatened to see her lawyer. On the next day, May 26, defendant received a letter from plaintiff's lawyer demanding immediate possession of the premises (Exhibit 2). The day following, May 27, plaintiff filed the within action, mainly in claim and delivery, and pursuant to a Writ of Possession, the marshal took possession of the premises. Up to this time defendant had operated the business continuously from January 20, 1959. Plaintiff had made no reimbursement to defendant of the sum expended on repairs, and had not delivered in escrow or to defendant a lease of the premises.

Count I of the complaint, in claim and delivery, alleges that plaintiff is the owner of and entitled to possession of, Carol's Cafe; that the defendant took possession under an agreement, failed to pay the balance of the purchase price ($1,500) into escrow and refused to deliver up possession; and that as a result she was damaged in the sum of $6,600. Count II was dismissed; Count III prayed for recovery of $6,600 on a common count for money had an received; and Count IV, for recission and damages on the ground of fraud, alleges that defendant falsely represented that he was able to pay the purchase price.

Defendant filed an answer and first amended counter claim denying his wrongful possession of the premises and alleging that on May 27, 1959, he was entitled to possession under the contract, that he had duly performed all conditions of the agreement and had at all times been able to and was willing to pay the balance of the purchase price into escrow, but that plaintiff repudiated the contract and took possession of the business before he was obliged to make the payment, that plaintiff warranted the business would pass all necessary inspections but it would not and he was obliged to pay $171.48 for repairs in order to obtain a business license, that plaintiff was unable to and failed to deliver the lease for the premises in escrow, and he was thus entitled to a refund of the money he had paid into escrow under the contract ($1,500); and that he was the owner of certain fixtures and equipment in the bar, the reasonable value of which was $397.25, which plaintiff wrongfully converted to her own use.

The trial court heard the cause and entered judgment for the defendant in the sum of $1,897.24 ($1,500 paid into escrow by defendant, and $397.25, the reasonable value of certain fixtures and equipment).

Complaining of certain findings of fact, appellant claims that Findings I, III and XIV are unsupported by the evidence and in conflict on a material issue—ownership of the property; that the trial court erred in finding that defendant complied with the conditions of the contract (III) and that he performed all of the undertakings to be performed by him thereunder except that he did not pay the remaining $1,500 into escrow (X); and that the evidence does not support the findings that the city inspected the premises and required defendant to make certain improvements and changes in order to conduct business (IX), that plaintiff was not able to and at no time delivered the lease of the premises (XIII), and that on May 27, 1959, defendant was the owner of certain fixtures and equipment of a beer tavern (XIV), the reasonable value of which was $397.25 (XV). She also argues that the conclusion of law that defendant is entitled to judgment in the sum of $1,897.25 is error in that said amount consists of the $1,500 paid in escrow, which is in possession of the escrow holder and does not belong to her, and $397.25, which is to reimburse defendant for property she has always owned and which has never belonged to defendant.

Viewing the evidence in the light most favorable to the findings, the record discloses that plaintiff defaulted under the agreement prior to and at the time she repudiated the same and filed the within action; that up to that time defendant had performed all of the conditions of the agreement and was not in default thereof; and that on May 27, 1959, defendant was properly in possession of the premises and entitled thereto under the agreement.

The parties executed the agreement on December 2, 1958; it left the time when defendant could take possession thereunder to the agreement of the parties, and pursuant thereto and at the request of plaintiff that she be allowed to operate the cafe and bar throughout the holidays, the parties mutually orally agreed that defendant would not take possession until January 20 or 21, 1959. Defendant, however, immediately made application for the transfer of the beer license. Pursuant to their oral agreement defendant took possession of the premises on January 20, 1959, and on said date paid $372.92 directly to plaintiff for the stock on hand. On the same day the premises were inspected by Long Beach City Health Inspectors; defendant then found certain repairs and replacements necessary—the sink leaked on the bar, the girls were ‘getting shocked on the beer cooler,’ the generator wore out, a new pipe had to be installed in the keg cooler and later, on February 12, the motor of the refrigerator burned out. Defendant had these defects repaired and the equipment replaced for $171.48, prior to obtaining a city license. It is a fair and reasonable inference from the evidence that these repairs were made at the instance of the inspectors before a business license could be granted; indeed it is clear that defendant was unable to operate the business until the work was done, and that the premises did not pass all inspections necessary for the operation of the business. Thereafter under the conditional sales contract executed by the parties outside of the escrow for the payment of the $4,000, defendant paid directly to plaintiff four monthly installments of $100 each, for February, March, April and May.

In February, 1959, when defendant made the first $100 payment he asked plaintiff why the escrow could not then be closed; she told him she was having ‘a little trouble’ with the Board of Equalization and did not know when she would be able to close it. In March when he made the second payment he asked her ‘(W)hy can't we get this escrow closed?’ and she replied ‘(W)e just can't do it until I get out of trouble with the Board of Equalization.’ In April when he paid the third installment he said, ‘What goes on? What is the matter we can't get this escrow closed?’; she told him that the Board would not release the assignments. Finally in May, 1959, defendant received a letter from the escrow holder (Exhibit A) advising him that the escrow could be closed; plaintiff then asked him to release the money he had in escrow to her. The next day, May 25, 1959, they went together to the escrow office. Defendant asked the escrow officer if she would then release the $1,500 to plaintiff and told her he would come in the next week with a certified check from his savings account so the escrow could be closed. The escrow holder told them that the Board of Equalization had an attachment on the $1,500 and plaintiff ‘didn't have any of the $1,500 coming’ and that there would be no funds to release until ‘we get the rest of the money.’ Defendant told her, ‘I can't do it this week. I will have to go to the bank the last part of the week because it is a savings account, not a checking account and I have to get a certified bank check’; and he told plaintiff, ‘We'll have to put it off to a Friday because I can't get to the bank.’ Then he said to her, ‘It was a mutual agreement, wasn't it, between you and I, that the bar would pass city health inspection, which I couldn't get my city license for a month after I was in there until I made the necessary cleanliness of the bar in order to serve’; plaintiff replied, ‘I don't want to hear no more about it’; defendant then said, ‘(A)ll right then, I'll wait and get the money and we will close escrow later on this week.’ A dispute arose concerning who would pay for the repairs, the parties became angry and left. No decision was made and no agreement was then reached with the escrow officer. Thereafter, but on the same day, plaintiff, who obviously did not then consider defendant's failure to deposit the $1,500 in escrow on that day a breach of the agreement, came to defendant's bar for the May payment of $100 under the conditional sales contract. After he paid her, plaintiff told him she was going to see her lawyer if he did not deposit the $1,500 in escrow, waive any claim against her for repairs and permit the escrow to close. Defendant said, ‘I don't think you need to. We agreed we are going to close escrow this week’ and further that he had to go to the bank for the money but could not go that week, but would ‘go the following Monday * * * we will go to escrow and clear it up.’ At the trial defendant testified, ‘I couldn't get away from the bar. My wife couldn't go to the bank; she didn't get through until later. The only time she could go to the bank was the following Friday;’ and said he had explained this to the plaintiff. However, the day after this conversation he received her counsel's demand of possession and the next day the marshal closed up the premises. Defendant testified that at all times from December 2, 1958, to May 27, 1959, he had in excess of $3,000 in his bank account and was able to pay the amount due under the contract.

Relative to the lease of the premises for three years with a two-year option, at $100 per month rental, which the agreement required plaintiff to deliver, and which lease, without question constitutes a substantial part of the assets plaintiff agreed to convey to defendant, it is clear from the record that the lease was neither ever delivered into escrow nor handed to defendant by plaintiff or anyone else. L. E. Creedon, landlord and owner of the premises, had the lease in his possession. He consented in writing to an assignment thereof from plaintiff to defendant, but only on condition that plaintiff pay him money she owed him under the lease. He gave written instructions by letter to the escrow holder, dated February 2, 1958, (part of Exhibit A), that he would not deposit the lease in escrow for plaintiff until he was paid $150 which she owed him for the last two months' rent due under the lease. Plaintiff did not have a copy of the lease in her possession. She did not pay to Mr. Creedon the $150 due; and she did not cause anyone to deposit the lease. Plaintiff admitted in her testimony that she never delivered the lease in escrow and that she at no time ever handed that lease to the defendant. She testified that defendant could go and get the lease from Mr. Creedon himself. The escrow officer testified that no lease was ever deposited in escrow by anyone; and the escrow file discloses that none was ever delivered.

It is appellant's argument that in order to justify the judgment, the trial court must have held that even though the escrow never closed, title to the property, nevertheless, passed to the defendant when he signed the agreement, and when by her claim and delivery action she repossessed the property on May 27, 1959, she converted defendant's property to her own use; and that neither the findings nor conclusions dispose of plaintiff's action in claim and delivery. (A.O.B. p. 15).

We have no quarrel with appellant's view that no title to the business including equipment, fixtures, et cetera, passed to defendant at the opening of escrow on December 2, 1958, for it is true under the escrow agreement and the law of this state that no title passes until the conditions of the agreement have so far been performed that the buyer is entitled to the bill of sale. However, under the instant claim and delivery action the issue of ownership of the property is wholly immaterial. It is the rule that in order to sustain such an action, even where plaintiff has a general or special property in the thing sought, he must be entitled to the immediate and exclusive possession thereof at the time of the commencement of the action. (Commercial Discount Co. v. Cowen, 18 Cal.2d 610, 116 P.2d 599.) ‘* * * ‘(T)he ultimate issue is the single question of whether or not the plaintiff is entitled to possession of the property.’ * * *' (Emphasis added.) Stockton Morris Plan v. Mariposa County, 123 Cal.App.2d 509, 511, 267 P.2d 47, 48, citing 10 Cal.Jur.2d 496, 497. ‘Ownership of property is only important when it bears on the right of possession’ (Shockley v. Elmore, 9 Cal.App.2d 419, 425, 50 P.2d 91, 94) and then, it must entitle plaintiff to its immediate and exclusive possession at the time he commences his action. Commercial Discount Co. v. Cowen, 18 Cal.2d 610, 116 P.2d 599. Thus one who has sold property and transferred its possession, reserving at the same time the transfer of title until the performance of certain contractual conditions, cannot legally recover possession of the property as long as the buyer continues to perform these conditions. Lambert v. McCloud, 63 Cal. 162.

Although the findings concerning ownership of the property on May 27, 1959, appear to be confusing, we deem them to be of little significance, for the main issue relates not to ownership but to the right of possession of the property at the time of the commencement of the action; thus if such findings are in any way contradictory, the inconsistency is immaterial and would not constitute reversible error, for they clearly pertain to no material issue and a correct determination of the same is not necessary to sustain the judgment against plaintiff on her claim and delivery action.

On the main issue of right of possession, the trial court properly found against plaintiff and in favor of defendant, and the record before us amply supports the findings—that on May 27, 1959, defendant had the right to possession of the property including stock in trade, fixtures, equipment and good will in that on January 20, 1959, with full consent of plaintiff, defendant took possession thereof under the escrow agreement of December 2, 1958, (Finding II) and on May 27, 1959, he was entitled to possession thereunder (Finding I); that defendant was not in default of the agreement and had performed all of the undertakings to be performed by him with the exception that he had failed to pay the balance of the cash purchase price ($1,500) into escrow, but that he was at all times ready, willing and able to pay the same (Finding IV); that plaintiff was in default under the agreement in that she failed to perform all of the undertakings required of her—she did not deliver the lease (Finding XII) violating the condition that she deliver a lease of approximately three years duration with a two-year option to renew, payable at the rate of $100 per month, and she failed to comply with the further provision that she would deliver the property as agreed in the instrument—the city required defendant to make certain repairs in order to conduct business for which he was required to, and did, pay $171.48 and as a result she did not convey premises that would ‘pass all inspections necessary for the operation of the business' as warranted by her (Finding XI); and that on May 27, 1959, and prior thereto, plaintiff repudiated the agreement and on that date took possession of said assets and put it out of her power to comply with the agreement (Finding X).

On the theory that where an agreement does not contain a provision from which it can be inferred that the undertaking of one party was meant to precede that of the other they are regarded as dependent and the law implies that the acts of the parties are to be done concurrently, we are in accord with the trial court's view that defendant was under no duty to deposit the $1,500 until plaintiff complied with her part of the agreement to be performed. Defendant's deposit of the money and plaintiff's delivery of all instruments necessary for her to comply with the escrow agreement were concurrent conditions—they were mutually dependent, each promise given in consideration of the other, and each being due at the same time. Katemis v. Westerlind, 120 Cal.App.2d 537, 261 P.2d 553. Thus before plaintiff could require defendant to perform his part of the agreement—deposit the $1,500—plaintiff must have fulfilled all her conditions precedent and must have been able to, and have offered to, fulfill all conditions concurrent imposed upon her. This plaintiff did not do and for this failure she was in default of the agreement on and prior to May 27, 1959.

The findings on the material issues, though poorly drawn and a disorder of legal terminology, are nevertheless proper and amply supported by the evidence, dispose of the allegations of her complaint, particularly the claim and delivery action, and are fatal to plaintiff's cause; they likewise support the allegations of defendant's first counter claim. Appellant claims that other findings in connection with her cause of action should have been made. But where matters covered by the findings defeat a plaintiff's right of recovery, the trial court is not required to make additional findings upon other issues (Vidler v. De Bell, 125 Cal.App.2d 326, 270 P.2d 120; Aguirre v. Fish and Game Commission, 151 Cal.App.2d 469, 311 P.2d 903); further, it appears from the evidence and the findings that had the additional findings been made they would have been adverse to the plaintiff. Meadows v. Snyder, 209 Cal. 270, 286 P. 1012; Goldberg v. Paramount Oil Co., 143 Cal.App.2d 215, 300 P.2d 329.

It is also obvious that defendant's recovery of the $1,500 in the judgment was not, as suggested by appellant, predicated on damages for plaintiff's conversion of ‘the defendant's property to her own use’ (A.O.B. p. 15), but upon the defendant's right to a return of the money he deposited in escrow based upon plaintiff's breach of the agreement, under the specific provision therein that ‘If, for any reason, sellers herein are unable or refuse to deliver said property to the buyer herein as per agreement, said seller does hereby warrant and agree to refund all money deposited in this escrow by the buyer or his agents,’ and upon plaintiff's repudiation of the contract in bringing the within action. The trial court having specifically found, which findings are well supported by the evidence, that at no time prior to repudiating her agreement and taking possession of the premises (May 27, 1959) was plaintiff able to nor did she ever deliver the lease in question (Finding XII) and, in connection with the provision of the agreement that plaintiff ‘warrants premises to pass all inspections for the operation of said business,’ that city inspectors required defendant to make certain changes in the premises and replace certain equipment in order to conduct business for which he incurred charges of $171.48 (Finding XI), and that defendant at all times up to and including May 27, 1959, was ready, willing and able to pay into escrow the sum of $1,500 (Finding X) and was not in default of the agreement, defendant then under the provisions in the agreement was entitled to a refund of all money deposited in escrow by him; and the trial court so ordered.

The further argument that the judgment for $1,500 against plaintiff was in error because that sum is in escrow and title thereto never passed to plaintiff (A.O.B. pp. 15, 19) is without substance. Under a specific provision in the escrow agreement signed by plaintiff she warranted and agreed to refund ‘all money deposited in this escrow’ by the buyer or his agents, ‘if, for any reason’ she is unable or refuses to deliver the property to defendant as her part of the agreement. It is also interesting to note that plaintiff not always considered the deposit in escrow beyond her reach, for in a letter (Exhibit 2) written for her by her counsel to defendant on May 26, 1959, demanding immediate possession of the business she represented to defendant that she was able to and would return to him the money he had paid into escrow. Counsel wrote defendant that plaintiff ‘has authorized * * * me to tender to you all money * * * deposited by you in escrow * * *’.

We concur in appellant's last contention that recovery of $397.25 under defendant's second counter claim based upon findings of wrongful conversion by plaintiff of ‘his fixtures and equipment of a beer tavern, consisting of a bar, back bar, shuffleboard, cocktail sink, tap beer box, beer bottle box, stools and miscellaneous items of personal property,’ of which defendant was the owner and the reasonable value of which was $397.25 (Findings XIV, XV), is contrary to the evidence and the law. It cannot be disputed that under the terms of the escrow agreement the fixtures and equipment of Carol's bar and restaurant were part of the assets defendant had agreed to purchase through escrow and under a conditional sales contract. Title thereto would pass to defendant neither under the agreement nor under the law relating to the passing of title in escrow transactions (Helperin v. Guzzardi, 108 Cal.App.2d 125, 238 P.2d 141; Todd v. Vestermark, 145 Cal.App.2d 374, 302 P.2d 347) until all of the conditions of the escrow had been performed and the escrow closed. Thus defendant did not become the owner of this property upon either the execution of the agreement on December 2, 1958, or upon the transfer of its possession to him on January 20, 1959. The same is not true however of the stock in trade purchased outright from plaintiff by defendant out of escrow under a separate transaction when defendant took possession of the premises on January 20, 1959, for which inventory he paid directly to plaintiff the sum of $372.92.

The only theory upon which defendant could successfully claim ownership of the fixtures and equipment consisting of the various items specified in his second counter claim, is that they do not constitute the same fixtures and equipment defendant received from plaintiff on January 20, 1959, and for which he was to pay through escrow, but are actually other items acquired from subsequent sources, or stock in trade he purchased outright from plaintiff on January 20, 1959, or later. However, the record is completely silent in this regard; indeed it even fails to show that on May 27, 1959, the named items were taken from the possession of defendant. At most the evidence discloses that all of defendant's property that was taken under the writ of possession was ‘merchandise in stock on hand,’ ‘inventory of stock,’ ‘beer and back bar, like peanuts,’ ‘back bar for edibles' and money in the cash register. It can be assumed that when the premises were repossessed certain fixtures and equipment thereon were also taken from defendant, but the evidence does not reveal, nor can we assume, what those fixtures and equipment were or that they constituted items defendant had purchased out of escrow and thus belonged to him. There is clearly no evidentiary support for the finding that on May 27, 1959, defendant ‘was the owner of certain fixtures and equipment of a beer tavern, consisting of a bar, back bar, shuffleboard, cocktail sink, tap beer box, beer bottle box, stools and miscellaneous items of personal property’ located on the premises. (XIV).

Nor does the evidence warrant the finding that ‘said property’ had a reasonable market value of $397.25. (Finding XV). Not only is the record silent on the issue of what, if any, ‘certain fixtures and equipment’ were taken, but no mention is made in the evidence of their purported value. The only proof of value found in the record refers solely to the ‘inventory of stock,’ which defendant placed ‘around 340 or 41 dollars' and ‘twenty-five dollars and some cents in the cash register.’

For the foregoing reasons that portion of the judgment awarding defendant the sum of $1,500 is affirmed and that portion of the judgment awarding him the sum of $397.25 is reversed.

LILLIE, Justice.

WOOD, P. J., and FOURTH, J., concur.