Aaron v. Puccinelli

From a decree in declaratory relief in favor of defendants, plaintiffs appeal.

Question Presented

Did plaintiffs’ own acts terminate the fiduciary relationship then existing between them and defendants?

Evidence

This action was brought to establish a trust in favor of plaintiffs in a certain lease held by defendants. Since about 1920 certain premises in San Francisco have been known as ‘ Coliseum Market. ’ ’ The business of the market was operated under lease from the owners of the realty by three distinct departments, a meat department, a grocery department, and a combined fish and vegetable market. Each department was owned by a separate partnership and operated independently of any other department. The personnel of these partnerships varied from time to time as members died or partnership interests were sold. No partner in one department ever had any interest in any other department. In 1941, a 10-year lease was obtained. This lease was not signed by all of the then partners in the three departments. The lease provided that no assignment of any interest in it could be made without consent of the lessors. No formal consents to assignments of the lease interests were made when changes were made in ownership of interests in any of the departments. However, the lessors accepted the new partnership members without releasing the old, even though they refused to recognize an assignment from the- outgoing member. At the time of the occurrences upon which this suit is based, the meat department was owned by the three plaintiffs, the grocery department by Vincent P. Nicolai and Angelo Nicolai, and the vegetable and fish department by defendants. Of the original signatories to the lease, there were then left only Vincent P. Nicolai of the grocery department, and defendants Puccinelli and Dell ’Osso of the fish and vegetable department. Although none of plaintiffs was signatory to that lease, the landlord by reason of plaintiff’s having succeeded to the interests of the

Over the years each department paid one-third of the rental prescribed in the lease, and of the costs incident to the maintenance of the premises, such as janitorial services, utilities, watchmen, insurance, also one-third of the advertising. Otherwise the departments were independently operated, except that all departments cooperated for the common good. Of course, each department bore its own losses and retained its own profits.

In 1949 the lease had approximately three years to run. The departments desired to continue operations as in the past, remodel the market by interior and external changes, and obtain a renewal of the lease. Conferences with the landlord and between the departments were held. The departments could not agree on the changes to be made. The record is highly controversial concerning these discussions, but all parties agree that no agreement was reached and that the discussion terminated in December, 1949.

Termination op Fiduciary Relationship

Before proceeding to the next occurrences, it would be well to consider the legal relationship of the parties at that time. Although all of the partners in the three departments were not formally parties to the lease, they were recognized by the landlord and each other as cotenants. An assignment by operation of law takes place by the landlord’s acceptance of a new tenant and the consent of the old tenant. (Baker v. Maier & Zobelein Brewery, 140 Cal. 530 [ 74 P. 22 ] ) As cotenants, each bore to his other cotenants a fiduciary relationship.

' After the negotiations between the departments themselves and with the landlord had terminated in December, 1949, the Nicolai brothers wanted to sell their grocery department to one Scagolia, who apparently would not buy unless a longer lease could be obtained than then existed. The Nicolais commissioned their attorney, Young, to obtain such a lease. Young contacted the landlord. The latter was not satisfied with Scagolia’s financial responsibility. What occurred from then on is highly controverted. However, there is substantial evidence to support the court’s finding that then plaintiffs without the consent or knowledge of defendants engaged Young tó secure a lease for them alone. After the landlord’s refusal to execute a lease to Scagolia, Young met with plaintiffs, and

Plaintiffs contend that the evidence shows that defendants in obtaining the 1950 lease were obtaining it as joint venturers for themselves and plaintiffs. While there was evidence from which the court could have so concluded, there is substantial evidence to the contrary. Undoubtedly at the time the parties first negotiated with the landlord for an extension of the existing lease, there existed a fiduciary relationship between the parties, and even after the negotiations were broken off, had defendants obtained a new lease it would necessarily have been for the benefit of plaintiffs as well as of defendants. (Koyer v. Willmon, 150 Cal. 785 [ 90 P. 135 ]; Thayer v. Leggett, 229 N.Y. 152 [ 128 N.E. 133 ]; Hendrickson v. California Talc Co., 55 Cal.App.2d 467 [ 130 P.2d 806 ]; Stewart v. Shearman, 22 Cal.App.2d 198 [ 70 P.2d 702 ]; Munson v. Fishburn, 183 Cal. 206 [ 190 P. 808 ].) But, after the negotiations were terminated and plaintiffs for themselves alone started to negotiate with the landlord, the fiduciary relationship was terminated and it became a case of each party for himself.

“As said in Beck v. Cagle, 46 Cal.App.2d 152 , 162 [ 115 P.2d 613 ], ‘The abandonment or dissolution of a partnership or joint adventure may take place by conduct inconsistent with its continuance.’ (See, also, Middleton v. Newport, 6 Cal.

In our case the court found that plaintiffs did not come into court with clean hands. Their attempt to get the lease for themselves alone supports this finding.

The judgment is affirmed.

Peters, P. J., and Wood (Fred B.), J., concurred.