Kessinger v. Organic Fertilizers, Inc.

312 P.2d 345, 151 Cal. App. 2d 741, 1957 Cal. App. LEXIS 1821
CourtCalifornia Court of Appeal
DecidedJune 18, 1957
DocketCiv. 22226
StatusPublished
Cited by17 cases

This text of 312 P.2d 345 (Kessinger v. Organic Fertilizers, Inc.) 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
Kessinger v. Organic Fertilizers, Inc., 312 P.2d 345, 151 Cal. App. 2d 741, 1957 Cal. App. LEXIS 1821 (Cal. Ct. App. 1957).

Opinion

FOURT, J.

This is an appeal by Myrtle Kessinger from a judgment in two actions, in one of which she was the plaintiff and in the other of which she was a defendant, which actions were consolidated for trial.

The suit in which Myrtle Kessinger was the plaintiff and Organic Fertilizers, Inc., Leslie E. Johnson and Neil Andrews were the defendants, was filed in the Pasadena Branch of the Superior Court of Los Angeles County on August 12, 1954. The action in which Organic Fertilizers, Inc., hereinafter referred to as the “Corporation,” and Leslie E. Johnson, hereinafter referred to as “Johnson,” were the plaintiffs and Myrtle Kessinger and the Bank of America National Trust and Savings Association were the defendants, was filed on August 13, 1954, in the Los Angeles County Superior Court.

A résumé of the facts of the ease as developed by the evidence is as follows:

On August 1, 1953, and for several years theretofore, appel *743 lant had been the owner of certain property located on 8th Avenue in Arcadia, California, upon which property she had conducted a worm farm business since 1946. A month or so before August 1, 1953, Johnson entered into negotiations with appellant for a lease of the worm farm which occupied the rear portion of appellant’s lot on 8th Avenue. Both parties retained the services of the attorneys who represent the appellant in this appeal, and a proposed rough draft of the lease was prepared and submitted to each of the parties. Johnson took his copy, and after some changes and modifications were made and it was rewritten, the lease was submitted by him to appellant on August 1, 1953. On that date the lease was executed as rewritten.

The lease was for a period or term of 10 years and provided, among other things, for a payment of $500 per month as rental to the appellant, the expenditure of monies by the lessee for some permanent improvements on the property and for the accumulation of a fund from the sale of merchandise by the lessee, to be deposited in a bank in Arcadia, with the joint signatures of Johnson and appellant required for the withdrawal of said monies therefrom. All of the accumulations in such fund, above the expenditures for permanent improvements and the payment of certain operating costs, were subject, up to the amount of $12,000 to the following provision :

“In the event that the lessee shall breach this agreement, or shall terminate this lease for any reason other than the act or fault of the lessor, then the entire fund in said joint special account as of the date of said breach or termination prior to the end of the ten-year period shall become the property of the lessor, and shall constitute liquidated damages as between the parties for said breach of the covenants, or for the termination of said lease. ’ ’

The lease also provided that the lessee was to maintain an inventory of worms in beds at a level not lower than the inventory attached to the lease, and upon termination, to return the worm beds to their original condition, together with all equipment and structures, plus any others erected upon the property during the lease term.

The area leased was in fact but a large lot lying back of appellant’s residence, and was reached by a driveway running into the property from 8th Avenue, which bounded the front of appellant’s property.

At about the same time the lease was executed, appellant *744 sold to Johnson approximately 3,500 cubic feet of worm manure in beds and piled on appellant’s lot, at the agreed value of $1.00 per cubic foot.

Contiguous to the appellant’s property on the north was a lot owned by a Mrs. Null. The two lots were separated by an imaginary line, and the Null lot was accessible to vehicles only by the driveway on the appellant’s lot. There was no practical ingress or egress to the Null lot by vehicles except by the driveway on the appellant’s property, as indicated.

The corporation was organized and on September 3, 1953, the lease and other properties sold by appellant to Johnson were transferred to the corporation with appellant’s written recognition and consent. Johnson was not released from his obligations under the terms of the assignment. The corporation then operated the business of the worm farm, raising and marketing the worms for soil aeration and fish bait, and processing and selling the worm manure under the name “Onagra” as high-grade, organic plant food.

Johnson became the secretary, general manager, and a director of the corporation; appellant became a shareholder and one of its directors, as did Neil Andrews and two other men, Victor Coveil and Rex King-Morgan. Appellant was employed by the corporation to superintend the worm culture for eight and one-half months between August 1, 1953, and August 1, 1954, at a rate of from $300 to $350 per month.

On April 16, 1954, the corporation entered into a written lease of the Null property and installed worm beds on it, as the worm beds on the appellant’s property had grown prolific, and thereafter the corporation farmed the two lots as a joint operation, crossing back and forth across the line between the two lots and using the driveway on appellant’s lot in producing and harvesting the worms and worm manure on both lots.

During approximately the one year of the corporation’s operation of the business it paid appellant $500 per month rental, expended about $1,956 in improvements on her property and had accumulated on August 8, 1954, in the “liquidated damages” account in the Bank of America, kept separate from the other corporate funds, the net amount of $4,439.30.

In July of 1954, difficulties apparently arose in the corporation and negotiations ivere opened between the representatives of the corporation and appellant to the end that there might be a settlement of their troubles. On July 31, *745 1954, in the evening, there was an informal meeting of some of the directors. Appellant and Johnson were each present and acting as directors, and each participated in the discussions and negotiations. There was a conflict in the testimony as to which directors were actually present at the meeting. There was a dispute as to whether the meeting was regularly noticed and called, or whether it was a consent meeting. There were no formal signed minutes of the session. The secretary did, however, make a memorandum of what took place at the meeting, shortly after the session adjourned, wherein he set forth the substance of the proposals which were to be laid before another meeting of the board of directors, with a contract of settlement and cancellation which might be attached and submitted for its approval. There was much discussion at the meeting of the directors of the settlement terms and conditions. Appellant stated that she “would like to have the Null farm, which is adjoining mine.” A proposal was made by the directors to the appellant as to certain divisions of the properties in question, cancellation of the lease and continued use of the premises by the corporation until October 1, 1954. The proposal was not to become effective unless made the subject of a written contract to be attached to the minutes of the board of directors and mutually executed by the parties.

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Cite This Page — Counsel Stack

Bluebook (online)
312 P.2d 345, 151 Cal. App. 2d 741, 1957 Cal. App. LEXIS 1821, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kessinger-v-organic-fertilizers-inc-calctapp-1957.