Frank v. Dominick

264 P.2d 161, 122 Cal. App. 2d 45, 1953 Cal. App. LEXIS 1449
CourtCalifornia Court of Appeal
DecidedDecember 15, 1953
DocketCiv. 19270
StatusPublished
Cited by3 cases

This text of 264 P.2d 161 (Frank v. Dominick) 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
Frank v. Dominick, 264 P.2d 161, 122 Cal. App. 2d 45, 1953 Cal. App. LEXIS 1449 (Cal. Ct. App. 1953).

Opinion

VALLÉE, J.

Appeal by plaintiff from an adverse judgment in an action for damages for breach of an agreement of partnership, and for rescission of an agreement dissolving the partnership on the grounds of fraud and mistake. The court found there was no breach of the agreement, and no fraud or mistake.

The evidence and the reasonable inferences therefrom will be stated in the light most favorable to defendant-respondent, disregarding conflicting evidence and inferences. (Berniker v. Berniker, 30 Cal.2d 439, 444 [182 P.2d 557].)

On April 1, 1946, plaintiff and defendant entered into a written agreement of partnership to conduct a battery separator business for 15 years. Defendant had been conducting the business for many years and owned the land and building in which it was conducted. Defendant agreed to rent the land and building to the partnership for the term at $500 a month. The business was operated successfully until October 5,1949. On that date, a large part of the stock and machinery was destroyed by fire. After the fire, the parties discussed dissolution of the partnership, that one or the other would buy or sell; offers and counteroffers were made. Settlement with an insurance company was had; and, on December 1, 1949, the parties divided the proceeds, each receiving $29,000. They also divided the cash on hand with the exception of sufficient to take care of outstanding checks. On December 5, 1949, the parties met in an attorney’s office and discussed dissolution with him. After much conversation back and forth, the parties agreed that defendant would buy plaintiff’s interest in the partnership for $16,000. The attorney prepared a written agreement of dissolution which was read and signed by both parties. 1 Defendant on that day gave plaintiff *49 a check for $16,000. On January 10, 1950, plaintiff gave defendant a written notice of rescission of the dissolution agreement on the claimed grounds of fraud, mistake, want of consideration, and failure of consideration.

Plaintiff asserts the findings are not supported by the evidence. He claims that after the fire, and prior to the dissolution agreement, defendant falsely represented to him that he (defendant) did not intend to go back into the separator business, and that it was only because of this representation that he entered into the agreement. A short time after December 5,1949, defendant went back into the separator business at a new location. There was evidence he intended to do so at the time the dissolution agreement was entered into. Plaintiff himself testified that on December 5, 1949, in *50 the discussion as to what the dissolution agreement should contain, he said he wanted it to provide that defendant would not go into the same business again for a year so he (plaintiff) “would have a year of freedom from competition,” and that defendant said, “[N]o, he wouldn’t do that, ... he wouldn’t agree to that.” The agreement was then prepared by the attorney and later in the day, read, and signed by both parties. This evidence is sufficient to support the finding that there was no fraud. While there was much evidence from which a different conclusion could have been drawn, the function of this court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uneontradicted, which will support the finding.

At the time of dissolution, the term of the partnership had 11% years to run. Defendant paid plaintiff $16,000 for his half interest. Plaintiff claims the consideration for the agreement was grossly inadequate and that it should have been canceled on that ground. The building in which the business was conducted was completely destroyed by the fire; the machinery and equipment were substantially destroyed and rendered unuseable Avithout the expenditure of a large sum of money. Plaintiff was thoroughly familiar with the business of the partnership and with the assets remaining after the fire. He employed an adjuster to act for the parties in adjusting the losses sustained with an insurance company; assisted the adjuster in making an inventory of the stock on hand after the fire; and, with the adjuster, determined the salvage value of the stock on hand to be $4,000. The salvage value of the machinery was about $30,339.06. Plaintiff says that by the agreement, in addition to the value of the stock and machinery, he also gave up a half interest in $5,000 worth of lumber, 2% million separators, a $1,500 truck, and accounts receivable of $4,200.

The claimed inadequacy of consideration is apparently argued as a badge of fraud. Since the court found there was no fraud, and since the finding is supported by the evidence, the fact that plaintiff may have given up more than he received is of no consequence. The court found there had been a complete accounting between the partners, and that plaintiff executed the dissolution agreement with full knowledge of its contents and of his legal rights under" it, and of his OAArn free will; that at the time plaintiff was fully advised and informed, and had knowledge, of the assets and liabilities *51 of the partnership; and that there was no concealment of any kind by defendant. These findings are supported by substantial evidence.

The dissolution agreement has a provision by which each party released all claims he might have against the other. Plaintiff claims that at the time the agreement was entered into there were various errors in bookkeeping in defendant’s favor of which he had no knowledge, and that he did not discover the errors until he was preparing for trial. He says that a general release does not extend to claims which the creditor does not know or suspect exist in his favor at the time of executing the release, and that the agreement should have been canceled on that ground. The books were kept by one Ward. Ward testified that proper charges and credits were made in the books as to all transactions. An illustration of the items of which plaintiff complains is the crediting of $22,491.15 to defendant’s investment account in 1949. Ward testified the $22,491.15 was an overage in the deposits over and above what was shown on the books; that before he credited it to defendant’s investment account he “got both” plaintiff’s and defendant’s consent to it; that between the 10th and the latter part of November, 1949, when plaintiff and defendant were present, “they both agreed on my suggestion that it belonged to Mr. Dominick because there was just approximately that difference in their capital account.” Defendant testified he “left the money in the bank to carry on the business.” Defendant also testified that after April 1, 1946, plaintiff received half of everything. The evidence concerning the items of which plaintiff complains was highly conflicting, and the court’s conclusions with respect to them may not be disturbed.

It is argued that there was a mutual mistake of fact and that the dissolution agreement should have been canceled on that ground. The asserted mutual mistake of fact is that the parties believed the dissolution agreement was only an agreement for the purchase by defendant of plaintiff’s interest in the fire salvage and in the accounts receivable. A few days after the fire defendant selected another location for the business, but plaintiff would not agree to it.

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Cite This Page — Counsel Stack

Bluebook (online)
264 P.2d 161, 122 Cal. App. 2d 45, 1953 Cal. App. LEXIS 1449, Counsel Stack Legal Research, https://law.counselstack.com/opinion/frank-v-dominick-calctapp-1953.