Merchants' Ice & Cold Storage Co. v. Globe Brewing Co.

167 P.2d 503, 73 Cal. App. 2d 828, 1946 Cal. App. LEXIS 911
CourtCalifornia Court of Appeal
DecidedApril 3, 1946
DocketCiv. 12905
StatusPublished
Cited by14 cases

This text of 167 P.2d 503 (Merchants' Ice & Cold Storage Co. v. Globe Brewing Co.) 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
Merchants' Ice & Cold Storage Co. v. Globe Brewing Co., 167 P.2d 503, 73 Cal. App. 2d 828, 1946 Cal. App. LEXIS 911 (Cal. Ct. App. 1946).

Opinions

GOODELL, J.

This is an appeal from a judgment of dismissal entered after demurrers were sustained to appellant’s second amended cross-complaint and appellant declined to amend.

Merchants’ Ice & Cold Storage Co. filed suit against Globe Brewing Co., the appellant Sozzi, Pacific Empire Holdings, [830]*830Inc., Pacific Empire Corporation, A. J. Scampini and one M. Maffei for the foreclosure of a chattel mortgage. Appellant filed therein an answer and cross-complaint alleging fraud and joining as cross-defendants said ice company, said Maffei, and the respondents herein. After a demurrer of the ice company thereto was sustained appellant filed an amended cross-complaint. Thereafter the ice company dismissed its foreclosure complaint with prejudice. A motion was then made by the remaining cross-defendants to dismiss the amended cross-complaint for failure to state a cause of action, whereupon appellant filed his second amended cross-complaint, now before the court. The ice company filed an answer thereto without demurring. Separate demurrers thereto, filed by the cross-defendants Maffei, Scampini and the two Empire corporations, were sustained with leave to amend, but appellant declined to do so and the judgment was entered from which he appeals.

In his cross-complaint appellant alleges that the two Empire corporations own the stock of Merchants’ Ice & Cold Storage Co., and completely dominate and control it, and that on February 10, 1936, Scampini, Maffei, and others entered into a conspiracy with the ice company and the two Empire corporations to induce appellant to invest large sums of money nominally in Globe Brewing Co. but actually for the benefit of the ice company and the other cross-defendants. It is alleged that pursuant thereto respondent Scampini, who was appellant’s attorney, made the following representations to appellant: that Globe Brewing Co. was in involuntary bankruptcy; that $25,000 was required to effect a complete reorganization of that concern; that if appellant would advance $17,500, the ice company, which was one of Globe’s creditors, would advance $7,500; that the assets of Globe were worth $300,000 and from $65,000 to $75,000 was required to clear up its liabilities; that Herbert Fleishhacker, Tom Walker, and Grace Bros., Inc., all were interested in purchasing the brewery ; that despite receivership the brewery was operating at a profit and had in fact made $24,000 in one month; that Globe could easily be sold at a profit of $100,000 within thirty days if appellant could raise the sum asked. Appellant informed Scampini that he could raise $14,000 only, whereupon Scampini agreed personally to invest the remaining $3,500.

In specifying the falsity of the above representations, the cross-complaint alleges that it was true that Globe was in [831]*831bankruptcy and that the ice company was a creditor thereof, but that in every other particular the representations were false.

The eross-complaint alleges also that at the time of these representations Seampini was attorney for and an officer of the ice company and its subsidiary, Merchants’ Ice Acceptance Corporation but that this fact was unknown to appellant and all the respondents joined in concealing it from him; that all the respondents knew the falsity of the representations made by Seampini and caused them to be made either with knowledge of their falsity or in reckless disregard of their truth or falsity, to induce appellant to invest his money in Globe.

Thereafter, on February 15, 1936, appellant entered into a written contract with the Acceptance Corporation. This contract, according to the cross-complaint, was prepared by Seampini and provided that his law firm should be retained by both the appellant and the Acceptance Corporation to effect the reorganization of Globe. Appellant alleges that between February 15 and March 30,1936, in reliance on the representations, hé turned over to the cross-defendants said $14,-000; that Globe was reorganized (prior to May 11, 1936) and appellant was made a vice-president thereof; that after 90 days had elapsed he inquired why the sale had not been consummated, and was informed by Seampini that during the delay in reorganization said Walker had become interested in the reorganization of another brewery, but that Grace Bros., Inc., were still investigating; Seampini represented that in the meantime Globe was earning a substantial profit. It is alleged that Globe in fact never operated at a profit after the reorganization.

Seampini thereafter informed appellant that further capital was required to continue the operation of the brewery, and accordingly appellant turned over to Globe 3050 shares of “Italo Pete” stock which he owned, to be used by it as collateral security for a loan from the Bank of America; Globe failed to repay this loan and the bank sold the appellant’s stock for $17,000 and applied that amount to the obligation. The cross-defendants, it is alleged, agreed to repay this sum to appellant or to cause Globe to do so.

Thereafter, it is alleged, Seampini and Maffei informed appellant that it was necessary to secure still further working [832]*832capital to keep the brewery in operation until it could be sold as originally represented, and that appellant advanced approximately $28,051.19 between May 23, 1936, and November 5, 1937, as a loan to Globe in reliance on the representations previously made and in full faith and confidence in Seampini because he was appellant’s lawyer and a “co-adventurer’’; that the total sum turned over to the cross-defendants and to Globe by appellant in reliance on all these representations (including the stock which was lost to appellant) amount to $51,051.19, no part of which has been repaid; that the assets of Globe were distributed in bankruptcy but the liquidation left nothing for the creditors, and no part of the assets were distributed directly or indirectly to appellant.

Appellant alleges that he remained in ignorance of the falsity of the representations made by Seampini until June 16, 1938. On or about June 1, 1938, appellant engaged a firm of accountants to examine charges for refrigeration made against Globe by the ice company; the accountants on June 16, 1938, reported substantial overcharges and appellant requested Seampini to commence action against the ice company. Seampini replied that he could not do so because he had long been attorney for and a director of the ice company. Appellant alleges that he thereupon launched an investigation and learned the falsity of the representations. The demand was for said $51,051.19, and interest.

The three demurrers before the court set up the following grounds: that the cross-complaint fails to state a cause of action; that several causes of action are improperly united and not separately stated; that the pleading fails to set forth the written contract between appellant and Acceptance Corporation, and that the action is barred by the statute of limitations.

One of the representations in the case at bar was that the assets of Globe were worth $300,000, and it is alleged that their real value did not exceed one-tenth thereof. It was represented that between $65,000 and $75,000 would clear up the Globe’s liability while the allegation is that in fact $119,540 was required to do so. It was represented that despite bankruptcy proceedings Globe was operating at a profit and had made a profit of $24,000 in a single month, while the allegation is that it was not operating at a profit, nor had it made $24,000, in one month nor any sum approximating that amount.

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Merchants' Ice & Cold Storage Co. v. Globe Brewing Co.
167 P.2d 503 (California Court of Appeal, 1946)

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Bluebook (online)
167 P.2d 503, 73 Cal. App. 2d 828, 1946 Cal. App. LEXIS 911, Counsel Stack Legal Research, https://law.counselstack.com/opinion/merchants-ice-cold-storage-co-v-globe-brewing-co-calctapp-1946.