Pomona Golf & Country Club v. Eaton

179 Cal. App. 376
CourtCalifornia Court of Appeal
DecidedApril 1, 1960
DocketCiv. No. 24178
StatusPublished

This text of 179 Cal. App. 376 (Pomona Golf & Country Club v. Eaton) 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
Pomona Golf & Country Club v. Eaton, 179 Cal. App. 376 (Cal. Ct. App. 1960).

Opinion

HERNDON, J.

By this action the plaintiff, Pomona Golf and Country Club, a California corporation, seeks a judgment declaring that defendant Fred Eaton holds the lessee’s interest under a certain lease as a constructive trustee for plaintiff’s use and benefit. The gist of plaintiff’s complaint is that the defendant negotiated and obtained the lease while he was serving as plaintiff’s employee and agent, and that, in obtaining the lease for himself, defendant violated duties arising from a fiduciary relationship then existing between the parties.

The trial court found that during the term of an earlier lease under which plaintiff was the lessee of the land in question defendant was plaintiff’s sublessee, and that defendant was plaintiff’s agent or manager in the operation of a liquor bar located on the premises. The trial court found, however, that defendant commenced his negotiations to obtain the leasehold, which is the subject matter of this litigation, only after the termination of his relationship as plaintiff’s employee or agent, and that, in obtaining the new lease for himself, defendant violated no fiduciary duty owing to plaintiff.

On this appeal from the judgment, plaintiff’s principal contention is that there is no substantial evidence in the record to sustain the findings to the effect that any fiduciary relationship theretofore existing between the parties had been terminated when defendant negotiated for the lease in question. Plaintiff argues that the evidence is such as to compel a finding that defendant was its agent and manager in the operation of the golf club properties, and that defendant violated duties stemming from this fiduciary relationship when he sought to lease the premises on his own account.

In obedience to the well established rule, we have surveyed the record in a light favorable to the findings and conclusions [378]*378of the court below (see 4 Cal.Jur.2d 485 et seq., Appeal and Error, §606). We conclude that the challenged findings of the trial court are well supported and that the judgment must be affirmed.

In 1947 plaintiff acquired the lessee’s interest in a lease of a golf course and clubhouse located in the Pomona area. The owners of the property were Ealf and Lalla Goddard.

In October, 1952, defendant and his wife met with Dr. Joseph N. Reynolds, plaintiff’s president, and presented to him a written proposal setting forth terms under which defendant would take over operations of the club. An oral agreement was reached, providing that defendant would undertake the operation of the club properties, would keep all gross receipts therefrom and would pay plaintiff $1,000 per month, plus 8 per cent of the gross receipts in excess of $10,000 per month. It was agreed that the relationship would continue until the end of plaintiff’s lease, so long as defendant “honestly” reported the amount of rent due. Defendant further agreed to purchase the inventory of liquor and food then on hand, to maintain and repair the premises and facilities at his own expense and to pay all salaries, taxes, utilities, license fees and other expenses incident to the club’s operation.

Defendant took over the operation of the club on or about November 1, 1952, at which time he paid plaintiff for the liquor and food inventory. During the ensuing five and one-half years, and until August 1, 1958, defendant regularly mailed monthly checks to plaintiff as directed. Various of these checks carried the notations “base rental” and “rental” which were never questioned by plaintiff’s president. Defendant also submitted to plaintiff monthly financial reports indicating the amount of gross receipts and some of these reports indicated the amount due to plaintiff as “base rent” and “total rent.” It does not appear that defendant was at any time asked to disclose to plaintiff the net amount of his profits in the operation of the country club.

Following the year 1951, the “on-sale” liquor license used at the clubhouse was issued to “Reynolds, Joseph N., doing business as Pomona Golf and Country Club.” On January 21, 1953, defendant signed an affidavit in support of an application for the renewal of said license wherein he was designated as “manager.”

Soon after taking over the country club, defendant was instrumental in the formation of a private organization, the

[379]*379Pomona Country Club Association, the members of which paid a monthly amount to defendant who refunded a portion thereof for the use of the association. In 1955, when defendant undertook construction of an additional nine holes on the property, members of the association contributed their services in aid of this project, after being assured by plaintiff that defendant was a sublessee under a verbal month to month lease. Also pursuant to this assurance, the association made several capital improvements on the clubhouse property.

In 1957, plaintiff’s lessors executed an inter vivos trust, under the terms of which the Title Insurance and Trust Company (hereinafter called the “Trust Company”) took title to the property covered by the lease. In July of the same year, plaintiff’s president contacted the president of the Trust Company in regard to an extension or renewal of plaintiff’s lease. For some time thereafter, Dr. Reynolds carried on more or less continuous negotiations with Trust Company officials.

Prior to July 9, 1958, one Mr. Harrison of the Trust Company met defendant in connection with certain inspections of the country club premises. At one of these meetings defendant indicated that he would like to lease the premises as an individual, but the record indicates that Harris on did not discuss the matter with defendant.

In March, 1958, plaintiff engaged one Thomas L. Garry, an attorney, to undertake negotiations with the Trust Company in connection with the lease. At that time, Garry was informed that the Trust Company had received no offers from any other person and was negotiating with no one else for a lease on the property.

Several weeks prior to July 9, 1958, plaintiff’s president retained the law firm of Krag and Krag to negotiate for a new lease of the country club property. On July 9 a meeting was held between representatives of plaintiff and officials of the Trust Company. At this time Dr. Reynolds made the statement that defendant did not represent him, that he did not trust defendant and that he was negotiating for himself alone. After further negotiations, it appeared that Reynolds and the Trust Company were unable to agree upon the terms of a lease.

On July, 29, 1958, Dr. Reynolds and his attorneys called upon defendant, informing him that the Trust Company was confused with respect to his status, that the Trust Company [380]*380had inferred that defendant was plaintiff’s tenant, whereas it was plaintiff’s view that defendant was its “manager” and subject to plaintiff’s supervision. On August 5, 1958, defendant was handed a letter signed by Dr. Reynolds which informed him that he was discharged. At the same time, defendant was served with a “Notice to Quit” and a “Notice of Non-Responsibility” was posted in two places on the clubhouse premises. Plaintiff’s attorney told defendant: “Now that you are denying that you were an employee, we certainly couldn’t leave the [liquor] license here” and that “We can’t trust you with the license. You have lied and a license is too valuable to leave with you .'. . ” Defendant later called Dr. Reynolds and asked him if he had been fired; Dr. Reynolds replied in the affirmative.

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Bluebook (online)
179 Cal. App. 376, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pomona-golf-country-club-v-eaton-calctapp-1960.