Irer v. Gawn

From the judgment and findings covering a group of three consolidated cases which involved an accounting of a joint adventure to construct a bungalow court, several appeals were perfected and will be considered conjointly.

The plaintiff Irer owned three lots in the city of Los Angeles. December 1, 1923, he entered into a written contract with the appellant Gawn to engage in a joint adventure, by the terms of which they agreed to construct a bungalow court on these lots. For the purposes of this enterprise the lots were valued at $10,000. Gawn contributed $4,000, which he secured by obtaining credit for $2,200 to purchase materials for the bungalow court from the Hammond Lumber Company, in payment for which he transferred to that company a trust deed upon other property. The remaining $1800 he procured by transferring to

In the several appeals which have been perfected in this combination of consolidated eases, numerous grounds of alleged error are urged, among which it is contended that the court erred in failing to find that the transaction constituted a joint adventure; or that the contract was breached by the appellant Gawn. It is further asserted that the assets of the enterprise were distributed between the parties in improper proportions; that the court was without jurisdiction to set aside the original findings and judgment, or to modify and enter the final judgment; that the court erred in charging each of the joint adventurers with the obligation of paying one-half of the net loss of the enterprise, instead of fixing the relative proportions of loss according to

In both the original and amended conclusions of law the court did correctly find “That the said agreement . . . constituted a joint adventure.” The single transaction of becoming joint owners of real property upon which a bungalow court is constructed for sale from the joint contributions of the interested parties, under the circumstances disclosed by the record in these cases, clearly indicates that the parties intended to create a joint adventure. The nature of this transaction, as a joint adventure, is not changed by the fact that the agreement incidentally provided that the respective parties were to render personal services in the construction of the buildings and when so employed they were to receive $10 per day, which allowance was to be charged as “items of expense in the construction.” But so far as the interests of the principals in this transaction are concerned it is immaterial whether it be deemed to be a copartnership or a joint adventure, for the legal principles which are applicable are the same. (14 Cal. Jur. 760, sec. 2; Butler v. Union Trust Co., 178 Cal. 195 [ 172 Pac. 601 ].)

It is asserted by the appellant Gawn that the court erred in failing to find that the contract of joint adventure was broken by him; that this is fatal for the reason that the losses must be borne alone by the party who is guilty of the breach. In the present case, however, the joint adventure was apparently terminated by mutual consent. The pleadings allege without dispute, and the court found that dissensions arose between the parties, and that the operations in the construction of the bungalow court ceased about June 1, 1924, leaving the building incomplete, with unpaid bills in the aggregate sum of about 110,000 and that the respective parties agreed to terminate the venture, hold an accounting and appoint a receiver to take charge of the property and liquidate the debts. In truth the appellant Gawn prayed for this very relief in his cross-complaint. It is unnecessary to adopt findings upon a subject upon which no issue is presented by the pleadings. (24 Cal. Jur. 952, sec. 191.) It was therefore unnecessary for the court to

“ In the absence of an express agreement between the parties to a joint adventure as to the proportions in which they are to share in the profits thereof, the law presumes that they intended that each should share equally with the others, notwithstanding an inequality in the amounts contributed by them to the capital employed in the venture. ’ ’ Reason prompts the application of the same rule to the participation in the losses of such an enterprise, where the contract fails to specify the relative obligations of the parties. (14 Cal. Jur. 762, sec. 3.) The rule prescribed by the statutes of California with respect to partnership profits and losses announces only the common-law doctrine which is applicable to the circumstances of the present cases. Section 2403 of the Civil Code provides;

“In the absence of any agreement on the subject the shares of partners in the profit or loss of the business are equal, and the share of each in the partnership property is the value of his original contribution, increased or diminished by his share of profit or loss. ’ ’

This means that in the event of the termination of a contract of joint adventure, the respective parties are entitled to be reimbursed to the extent of the value of their original contribution less their proportion of the loss sustained. Section 2404 of the Civil Code also provides that:

“An agreement to divide the profits of a business implies ■ an agreement for a corresponding division of its losses, unless it is otherwise expressly stipulated.”

These sections of the code are in accord with the common-law rule applicable to the relationship of a partnership or joint adventure, where the contract is silent as to the participation in losses. Whatever inferences may be drawn from the contract in the present cases lead to the conclusion that it was the intention of the parties to participate equally in the losses as well as the profits of the enterprise. It follows that the court therefore properly held that the respective parties to this joint adventure were bound to participate equally in the losses.

The appellant Gawn complains of alleged misconduct and prejudice on the part of the trial judge, depriving him of a fair trial. It is asserted that while he was a witness and testifying in his own behalf in support of a claim for $805 for personal services as carpenter and care taken of the premises for 80% days between May 17 and August 14, 1924, at the agreed rate of $10 per day, the court became displeased with the conduct of the witness and criticised the unsatisfactory character of his evidence. In a colloquy with counsel, the judge said: “I think this man did some work, Mr. Wells, during that time. I think he has padded his bill very badly. ... I don’t blame the referee for disallowing the claim entirely.”

Later, in reply to this appellant’s attorney, the court again said: “ ... To be very frank with you ... I was rather disgusted with your client on the witness stand, his manner of answering questions, and I came to the conclusion he was padding his report. I didn’t want to do him an injustice. I could just as easily have said, I approve the report of

The record discloses evidence which tends to warrant the court in discrediting the merits of this claim. It included only twenty-one days’ actual carpenter work. The balance appears to have been for care of the premises to August 14th. But the construction work ceased June 1st, and this suit was commenced June 4, 1924. It may well be said there is not much merit in a claim for more than sixty days’ pay at -$10 per day for a mere inspection of the premises after the work ceased and the suit for accounting was commenced. The record is indeed unsatisfactory with respect to this claim. The referee disallowed this entire claim and the court seemed satisfied that nothing should have been allowed, yet with an evident disposition to compromise it, out of an abundance of precaution for appellant’s welfare, he allowed him $320. This procedure may not be said to indicate a prejudiced mind on the part of the court or unfairness toward this appellant. Certainly no misconduct on the part of the judge is shown. No objection or exception to these remarks was reserved by the appellant. The question of prejudice on the part of the trial judge is raised for the first time on appeal. In order to avail himself of the benefit of alleged prejudicial utterances of a trial judge, exception to the remarks or an assignment of misconduct must be reserved during the process of the trial. (Compton-Gardena Milling Co. v. McCartney, 69 Cal. App. 708 , 710 [ 231 Pac. 764 ]; Franceschi v. Nardi, 77 Cal. App. 78 , 81 [ 246 Pac. 130 ]; Hughes v. Hartman, 206 Cal. 199 [ 273 Pac. 560 ].) In support of the validity of this claim it is urged that plaintiff’s attorney acknowledged its merit by offering to allow one-half of the claim. He did say: “I think the testimony shows conclusively that the bills are padded. ... I am willing, for the purpose of saving time . . . that one-half of this amount claimed he allowed.” This offer to compromise was, however, not accepted. It was specifically made in the interest of saving time. A proffer of compromise under such circumstances is not an admission of the merit of the claim. (Jones on Evidence, 3d ed., 437, sec. 291; 5 Cal. Jur. 408, sec. 20.)

“Where the parts of the typewritten record relied upon on appeal are required to be printed in the briefs (Code Civ. Proc., sec. 953a et seq.) it shall be sufficient to state therein the substance of such record parenthetically referring to the line and page of the typewritten transcript for verification. ...”

Because of the failure to comply with this rule it must be assumed that the challenged findings are amply supported by the evidence.

November 30, 1926, findings of fact and conclusions of law were adopted and filed, based upon which a judgment was entered. Subsequently, upon motion, these findings and judgment were set aside and other findings with modified conclusions of law were adopted and a new judgment entered thereon. From the order setting aside the later findings and judgment an appeal has been perfected.

A judgment may be set aside upon motion and another judgment entered in lieu thereof, where erroneous con

The plaintiff prayed that Kitts be required to account for and pay to him said sum of money. The answer admitted substantially all the facts alleged except that it was stated that the $1800 was held by Kitts .to be applied on the payment of said bills only when directed by the joint adventurers, and that the bungalow court was never completed and the defendant Kitts was not instructed to pay the claims. Upon

Based upon these findings, as a conclusion of law, the court first held that Buchanan was entitled to a judgment against Kitts for the sum of $1800. This conclusion seems to have been based upon the theory that the sale of the property was procured by the fraudulent oral promise of the receiver, Gawn and Kitts, to see that the $1800 was contributed to the payment of debts. The court seems also to have first assumed that the purchase of the real property carried with it all the other assets of the joint adventure. Fraud, however, was not pleaded, and unfortunately the alleged agreement to apply the $1800 to the payment of debts was not in writing or signed by the interested parties to be charged. It was, therefore, not enforceable. Moreover it was. found by the court to have been made without the knowledge or consent of Irer, one of the material parties to the joint adventure, who was vitally interested in the enterprise and the sale of the property. According to the findings the sale does not purport to convey any assets belonging to the joint adventure except the right, title and interest in the bungalow property. The $1800 constituted a trust fund, which was a money asset of the joint enterprise entirely independent of the sale and conveyance of the real property. It cannot be said that real or personal property entirely separate and distinct from the bungalow property, which was all that was sold, would pass to the purchaser in the absence of a written contract to that effect. If an assignment of these claims had actually been made to the plaintiff Buchanan, an appropriate action would lie

Since this inconsistency existed between the original findings of fact and conclusions of law which authorized the modification of the conclusions of law and judgment, it was not error to add. to the judgment a provision holding that the joint adventurers were equally liable for the losses of the enterprise, for this declaration followed the original findings as a mere matter of law. The appeal from the order setting aside the original findings and judgment is without merit. The case of Hughes v. DeMund, 96 Cal. App. 365 [ 274 Pac. 405 ], cited by appellant Gawn, is not in conflict with the law applicable to the facts of the present case. In that case one judge heard the evidence in- an action for partnership accounting and adopted findings of fact. Another judge who did not hear this evidence subsequently set the findings aside and adopted other findings of fact. As the court very properly says in its opinion: “The findings of fact . . . were final on the issues therein,” and could not properly be set aside in the proceeding. .But in the present case the findings of fact based upon the evidence formerly adduced were not modified or disturbed, but remained in the precise form in which they were adopted. All that the court attempted to do in the present case was. to modify the conclusions of law pursuant to section 663 of the Code of Civil Procedure to conform to the facts adopted by the former trial judge. This became a mere matter of applying the principles of law to the facts which had been

Subsequent to the filing of the original complaint by Irer for an accounting, upon motion under section 379 of the Code of Civil Procedure, W. J. Kitts, who held possession of a portion of the joint adventure funds involved in the controversy, was made a party defendant. A pleading which was denominated a supplemental complaint was filed setting up the facts with relation to the custody of the trust funds. On appeal from the final judgment the defendant Kitts claims that he was improperly united as a party defendant, and that the office of a supplemental complaint is to allege only new matter which occurs after the filing of the original complaint or answer. (Sec. 464, Code Civ. Proc.) He asserts that all of the facts which are alleged in the pleading designated as a supplemental complaint existed before the filing of the original complaint. This is true. The facts, however, indicate that he was a proper party to the action and that the new matter would have been appropriate to set up in an amended complaint. A pleading will not be measured by its title alone. The appropriate allegations which it contains will determine the nature of the document. There was no error in permitting the filing of this pleading. (Stark v. Hoeft, 205 Cal. 102 [ 269 Pac. 1105 , 1107].)

The defendant Kitts may not complain because the receiver was not made a party to the action. A receiver merely holds the custody of the property involved in the litigation, in behalf of the court for the real owners thereof, and the court may direct the delivery to the receiver of specific property which is involved in the litigation. (22 Cal. Jur. 493, sec. 79.) An objection on the ground of nonjoinder of parties plaintiff or defendant must be presented by demurrer or answer in the manner provided by statute, or it will be deemed to have been waived. (20 Cal. Jur. 573, sec. 56; Stackpole v. Pacific Gas & Elec. Co., 181 Cal. 700 [ 186 Pac. 354 ]; Breitenbucher v. Oppenheim, 160 Cal. 98 [ 116 Pac. 55 ].) The objection on the part of

The records in these consolidated cases seem to be free from prejudicial error. The order of January 13, 1927, vacating the findings and judgment dated November 30, 1926, and which order authorized the amendment and modification of the conclusions of law so as to conform to the findings of fact theretofore adopted, and permitting the entry of an amended judgment, is affirmed. The subsequent judgment dated and filed February 3, 1927, from which the several appeals are herein prosecuted, is also affirmed.

Plummer, Acting P. J., concurred.

A petition for a rehearing of this cause was denied by the District Court of Appeal on June 15, 1929, and a petition by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on July 15, 1929.

All the Justices present concurred.