Ferrara v. La Sala

186 Cal. App. 2d 263, 9 Cal. Rptr. 179, 1960 Cal. App. LEXIS 1626
CourtCalifornia Court of Appeal
DecidedNovember 10, 1960
DocketCiv. 24443, 24539
StatusPublished
Cited by10 cases

This text of 186 Cal. App. 2d 263 (Ferrara v. La Sala) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ferrara v. La Sala, 186 Cal. App. 2d 263, 9 Cal. Rptr. 179, 1960 Cal. App. LEXIS 1626 (Cal. Ct. App. 1960).

Opinion

LILLIE, J.

The present appeals were consolidated upon request of the parties. In No. 24443, plaintiff Nicolas Ferrara, a Los Angeles attorney, and his wife sought recovery of the unpaid balance on a promissory note for $6,776.77 (payable in $250 monthly installments) executed by defendants La Sala and Poole Truck Lines, a corporation, of which company the *266 La Salas and Ferrara were stockholders and officers; a second count against Poole Truck Lines only, was for sums assertedly due under a lease of certain realty owned by Mrs. Ferrara. The corporation defaulted. The answer of the La Salas admitted delivery of the note and payment of $1,250 thereunder but denied the complaint’s allegations concerning defendants’ execution of the note, their promise to pay and their default in payment. Various affirmative defenses were interposed; thus, in addition to the bare claim that the La Salas signed the instrument solely as representatives of the corporation, it was alleged that Ferrara and the La Salas came to an oral agreement whereby the former would sell them his stock and receive payment therefor out of available company funds only, that Ferrara would forego payment in the absence of such funds and retain the stock, and that pursuant to said oral agreement Ferrara “as the attorney for the named defendants herein” prepared the note in suit and submitted the instrument for signature; too, that Ferrara ‘1 as the attorney for the defendants” drafted the promissory note and “did fraudulently, willfully and deceitfully represent to the defendants” that it was prepared pursuant to the oral agreement of the parties and would carry such agreement into effect, and that the defendants believed Ferrara’s representations, “as their attorney,” that they were not incurring any personal liability in the premises. The business of the company did not prosper, and the present action was commenced. The trial court found in favor of the defendants La Sala; a motion for new trial having been denied, plaintiffs filed timely notice of appeal from the judgment.

Nine days after their notice of appeal from the judgment, plaintiffs filed in the trial court a “Notice of Motion and Motion to (1) Change and Correct Findings of Fact, (2) Change and Correct Findings of Fact in Conjunction with Denial of Motion for New Trial.” Sought to be changed and corrected were certain findings declaring that Ferrara’s oral representations were fraudulently and deceitfully made. Plaintiffs have appealed from the denial of such motion. (No. 24539).

As to the appeal from the judgment, the principal questions concern the sufficiency of the evidence to support the determination below that an attorney-client relationship existed at the time of and with relation to the particular transaction in suit by which an advantage was obtained, thereby bringing into operation the recognized rule, applicable to such a rela *267 tionship and codified by section 2235 of the Civil Code, 1 that all such transactions and dealings are presumptively the result of undue influence by the attorney and voidable at the election of the client; also, whether the aforesaid rebuttable presumption was overcome by the quantum of evidence necessary to make it ineffectual under the circumstances at bar. Whether an attorney-client relationship existed at the time the agreement was signed is a question of law (De Long v. Miller, 133 Cal.App.2d 175, 178 [283 P.2d 762]), but where there is a conflict in the evidence, the factual basis must be determined by the trial court whose province it is to evaluate the evidence (Median v. Hopps, 144 Cal.App.2d 284, 289 [301 P.2d 10]) ; it then becomes the province of this court to decide whether there is substantial evidence, including any reasonable inference deducible therefrom, to support the trial court’s findings. There is evidence of the following salient facts:

Long before the controversy in question, Ferrara and Leonard La Sala became sufficiently acquainted to discuss going into business; thereafter they purchased and operated as partners a gasoline filling station, selling the business and dissolving the partnership; shortly thereafter, Ferrara and the La Salas, together with Harry Novak and Edward Poole, had their first discussion about organizing Poole Truck Lines. These discussions resulted in an oral understanding that the La Salas and Ferrara would each invest $6,000 in exchange for stock; Poole (already in the trucking business) agreed to transfer to the new corporation, in exchange for stock, his trucking permits and personal property, while Novak was to secure stock in return for his services. It was understood that Ferrara would act as the company’s attorney and be compensated therefor on a monthly retainer; accordingly, he prepared articles of incorporation and subsequently obtained a permit to issue and sell stock. Meantime, and before any stock was issued, disagreements arose among the parties over Novak’s right to any stock as well as Poole’s further participation in the affairs of the company; Ferrara, at Sam La Sala’s request, loaned Sam and Leonard $3,000 each to purchase Poole’s right to stock. On November 1, 1956, stock certificates *268 were issued to Ferrara and the La Salas: 66% shares to Ferrara and 116% shares each to Sam and Leonard. The company commenced operations with Sam as president; Leonard, vice-president and Ferrara, secretary. Ferrara testified that his role as an officer was an inactive one, although he was consulted occasionally and filed an answer on behalf of all concerned when Novak sued the corporation and the parties to this appeal. Some months later Ferrara discussed with the La Salas the sale and purchase of his stock; he told them that the corporation was actually their business, that he was not active in its management and was not being paid for his services. When the defendants agreed to Ferrara’s suggestion, the latter prepared (and all parties signed) a memorandum in letter form which is set forth below : 2

Balanced against the promissory note and the confirmatory agreement just mentioned was opposing testimony elicited from Leonard La Sala. Preliminarily, it is useless for plaintiffs at this state to invoke, as they do, the parol evidence rule and the principle respecting the finality of written instruments, since proof of Ferrara’s oral representations (alleged in the various affirmative defenses) went in without *269 objection and the admission of such testimony cannot now be challenged. (Pao Ch’en Lee v. Gregoriou, 50 Cal.2d 502, 506 [326 P.2d 135].) According to La Sala, he signed both the promissory note and the agreement prepared by Ferrara; his execution of the latter instrument, however, was explained as follows: “. . . he (Ferrara) said, ‘Sign it.’ I took it upon good faith. I know the man for a long time.

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Bluebook (online)
186 Cal. App. 2d 263, 9 Cal. Rptr. 179, 1960 Cal. App. LEXIS 1626, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ferrara-v-la-sala-calctapp-1960.