Ottney v. Finnie

The defendant has appealed from a judgment which was rendered against him in a suit instituted by the nine plaintiffs herein to recover the purchase price which each paid, together with damages for costs expended by each incident to contracts for undivided interests in real property and for memberships in a country club to be established and maintained by the appellant thereon. The complaint contains nine counts, each one of which specifies the separate claims of a plaintiff. The cause was tried by the court sitting without a jury. Findings were adopted favorable to the plaintiffs. A judgment against the defendant was rendered accordingly.

The respondents claim that the evidence in support of the judgment shows breaches of the membership agreements and

There is some conflict of evidence regarding the alleged breaches of contracts on the part of the defendant, but the following facts are sufficiently supported by the record: The defendant purchased 157 acres of mountain land in Shasta County about fifty miles east of Redding, known as Brokeoff Meadows, through which the Manzanita Creek flows. He bought this land for $6,240 in 1925. He also owned two lots at Juniper Lake in Lassen County. In 1927 he conceived the idea of converting this property into a country club and selling 200 undivided interests therein, entitling each purchaser to membership in the club with all privileges incident thereto, including the right of each member to select a site upon which he could construct and use his own cabin. The members were to enjoy the privileges of the use of the property to the exclusion of others. The membership interests were to cost $600 evidenced by promissory notes payable in four annual instalments, upon the satisfaction of which the defendant agreed to execute to the purchasers deeds of conveyance to their respective interests therein. Upon the sales of membership interests in the property brief uniform memoranda in writing were prepared by the defendant and signed by the purchasers. Only three of those memoranda of sales were also signed by the defendant. Apparently he retained these documents in his possession. They were not dated, and they contained no specified time within which the defendant was to complete the securing of the 200 members or the construction of the improvements which he agreed to make on the premises, except the following clause: “Upon completion of the membership you (the defendant) are to construct a Lodge upon the property which shall be known as the Brokeoff Mountain Alpine Club and agree to spend in road improvement and

The defendant testified that he sold about 40 memberships from 1927 to 1931, including those which were purchased by the plaintiffs, but that only 17 contracts were in force at the time of the trial of the suit, the others having been forfeited for nonpayments on the part of the purchasers. He admitted that he had not sold any memberships after 1931, claiming that the depression prevented further sales. He admitted that he had collected $8,979, on account of sales of shares in the property, and that he had expended in the construction and maintenance of the club house the sum of $2,000, and in the building of the roadway the additional sum of $3,000. Both the club house and the roadway were permitted to deteriorate. There is evidence that the club house windows were broken, the roof leaked and the floor was out of repair. The roadway was nearly impassable ; the dam which impounded the water of Manzanita Creek for a swimming pool had gone out during flood

This is not a suit for specific performance to enforce the provisions of a written contract for an interest in real property. It is an action for damages for the breach of agreements to convey undivided two-hundredths interests in real property together with memberships in a country club to be established thereon, including the enjoyment of benefits to be derived from improvements costing $20,000 to be constructed thereon within a reasonable time. The damages also include the money expended by some of the plaintiffs for cabins and improvements placed by them on the premises in reliance upon the fulfillment of the contracts on the part of the defendant. Nine individuals joined in the complaint. The claims for reimbursement of each plaintiff are specifically set out in separate counts of the pleading. While it

The court found that from June 30, 1927, to September 1, 1929, the defendant entered into agreements with the various plaintiffs for memberships in the country club as alleged in the complaint pursuant to which they paid the defendant membership fees and interest on deferred payments thereof, the following amounts: Ottney, $665.74; Knock, $557.82; Long, $600; Taylor, $579.60; Lawrence, $600; Pence, $550; Wilson, $600; Craig, $680, and Millington, $564. In addition thereto the following named plaintiffs expended in improvements constructed on the premises in reliance upon the defendant’s contracts with relation thereto the following amounts: Ottney, $850; Knock, $749.22, and Pence, $1269.50, no part of which sums had been repaid; that the defendant agreed to expend $20,000 in improvements, but that the contracts did not specify the time within which the improvements were to be constructed, but that after the lapse of a reasonable time therefor, the defendant failed, neglected and refused to complete the membership list or construct the improvements and abandoned his contracts; that the defendant breached the terms of his contracts by expending for improvements not more than $5,000, and by failing within a reasonable time to adequately construct and maintain the club house or roadway, together with other promised improvements, by failing to complete his membership list, by renting cabins and permitting persons who were not members of the club to occupy and use the prem

The findings and judgment are sufficiently supported by the evidence. While there is a conflict of evidence in that regard, the record supports the finding to the effect that the defendant abandoned his contracts and refused to complete his membership list of the country club, or to construct the improvements on the property agreed upon. The plaintiffs and other witnesses testified to that fact. The written memoranda of agreements specify that “upon completion of the membership you (the defendant) are to construct a Lodge upon the property . . . and agree to spend in road improvement and in the construction of said lodge with equipment not less than $20,000.00”. Six years elapsed after the making of the first contract before this action was commenced. Over four years elapsed after the making of the last contract which is involved in this suit before the contracts were rescinded by the plaintiffs. For approximately two years the defendant apparently made no effort to sell memberships in the country club. We are satisfied that not only does the evidence support the finding that the defendant abandoned. his contracts, but it also shows that his failure to complete the membership list of the country club and construct the improvements agreed upon for an unreasonable period of time constitute a breach of the contracts upon which the plaintiffs are justified in maintaining their suit to recover the money which they expended pursuant thereto.

Since the contracts specify no limitation of time within which the membership list was to be completed or the improvements made, the law affords a reasonable time therefor. (Sec. 1657, Civ. Code; Williams v. Bergin, 116 Cal. 56 [ 47 Pac. 877 ] ; 6 Cal. Jur., p. 218, see. 143; 6 S. C. L., p. 646, sec. 60.) Section 1657 of the Civil Code provides

It has been held that in the absence of a stipulated time within which a contract must be fulfilled, where a demand therefor is necessary, that such demand may be made within the time limited by statute for the maintenance of an action for breach of the contract or for the termination thereof. (Meherin v. San Francisco Produce Exchange, 117 Cal. 215 [ 48 Pac. 1074 ] ; Caner v. Owners Realty Co., 33 Cal. App. 479 [ 165 Pac. 727 ] ; Tisdale v. Bryant, 38 Cal. App. 750 [ 177 Pac. 510 ].) In the Meherin case, supra, it is said in that regard:

“What is to be considered a reasonable time for the purpose (of demand) does not appear to be settled by a precise rule. It must depend on circumstances. If no cause for delay be shown it would seem reasonable to require the demand to be made within the time limited by the statute for bringing the action.”

The appellant contends that the statute of limitations began to run in the present case from the dates upon which the final payments were made by the respective plaintiffs upon their membership agreements, and that this action is therefore barred against all of them. In support of his claim in that regard, the text in 16 California Jurisprudence, page 522, section 121, is cited as follows:

“When upon full performance by the purchaser of a contract to convey land the vendor refuses to convey as agreed, the purchaser may sue to recover back the purchase money paid. And if the contract contains no provision for a demand for a deed to put the vendor in default, the statutory period runs from the date of the last payment made under the contract, without the necessity of a demand either for the deed, or for the return of the money paid under the contract.”

In the present ease, however, the contracts were not merely for the purchase of an interest in the real property and the conveyances of those interests by deeds. The chief consideration for the payments of membership fees, was the securing of 200 members of the club and the expenditure

The portion of the text in 16 California Jurisprudence, section 121, which follows the above-quoted language does apply to the circumstances of this case. It reads:

“Where no express time of performance is fixed, a purchaser is not obliged to treat the contract as abandoned upon its breach, but has his election still to rely upon it; and the statute does not commence to run against a right of action to recover money paid under the agreement until there is an election no longer to rely upon the contract and to sue for the money paid.”

The chief consideration for which the plaintiffs in this case paid their money was the promise of the defendant to secure the 200 members of the club and to expend $20,000 in improvements. The appellant claims, that this expenditure was not required of him except “upon completion of the membership”. The statute of limitations, therefore, began to run when the defendant abandoned his contract to secure-the membership, or when the plaintiffs elected to declare the contracts void for the breach thereof by the defendant. At the conference which occurred in the law office of Mr. Seth Millington, March 16, 1932, for the first time the defendant declared that he would attempt to sell no more memberships. The plaintiffs then elected to declare their reliance upon the defendant’s breach of contracts, and then demanded the return of their money. We are of the opinion the statute of limitations .began to run at that date. The written memoranda of membership in the club together with the printed prospectus may be deemed to constitute the contracts between the respective parties. These documents should be construed as parts of the same contract. (See. 1642, Civ. Code.) The statute of limitations therefore authorized the commencement of this action within four years from March 16, 1932. (Sec. 337, Code Civ. Proc.) This action was therefore not barred by the

The appellant contends that the court erred in admitting evidence over his objection, of agreements on 'the part of the defendant to construct improvements on the property other than the club house and roadway, on the ground that such evidence varies the terms of the written contracts. Assuming that the written memoranda constitute the contracts between the parties, notwithstanding the fact that the defendant did not sign them, the appellant admitted, without objection thereto, -that “those things were all contemplated . . . and they were more or less to be included in the expenditure of the $20,000.00". Moreover, the challenged evidence of a failure to perform covenants other than the construction of the club house and roadway, mentioned in the memorandum contract, is harmless, for there is ample evidence that independently of the other omissions the defendant abandoned his contract to secure 200 members of the club and failed to construct and maintain the club house or roadway in the manner agreed. The evidence objected to is merely cumulative and therefore harmless.

The judgment is affirmed.

Pullen, P. J., and Plummer, J., concurred.

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 May 16, 1935.