Breakers Holding Co. v. Josebra Co.

• Decision Date: 25 January 1954
• Docket Number: No. 15598,15598
• Citation: 122 Cal.App.2d 741,265 P.2d 938
• Court: California Court of Appeals Court of Appeals
• Parties: BREAKERS HOLDING CO. v. JOSEBRA CO. et al.

Page 938

265 P.2d 938

122 Cal.App.2d 741

BREAKERS HOLDING CO. v. JOSEBRA CO. et al.

No. 15598.

District Court of Appeal, First District, Division 2, California.

Jan. 25, 1954.

Hearing Denied March 25, 1954.

Bertrand Lurie, Leonard S. Lurie, San Francisco, for appellant.

Harry Gottesfeld, Joseph A. Brown, Hutchinson & Quattrin, San Francisco, for respondent.

KAUFMAN, Justice.

This is an appeal by Joseph Abrams, an individual, defendant below, from a judgment against him in the amount of $10,876.74 plus interest, arising out of a sale by him to respondent of imported Portuguese brandy. The trial court held that a certain document and transaction of December 11, 1945, constituted an agreed and voluntary rescission by the parties of the purchase orders for the 400 cases of brandy, and the court approved and confirmed said rescission, giving judgment in favor of respondent for the purchase price paid plus certain incidental expenses and interest.

Appellant was a wholesale liquor merchant in San Francisco doing business as Josebra Company. Respondent corporation operated a restaurant and bar, The Breakers, at Mason and O'Farrell Streets in San Francisco. Prior to the transactions here involved, respondent had been a regular customer of appellant, dealing through appellant's salesman Salbert. During the latter part of 1943 when a shortage of domestic distilled spirits appeared imminent, Salbert proposed to respondent the sale of Portuguese brandy which appellant was then importing, stating that it was good brandy, that respondent was lucky to get it, and that he was doing respondent a favor to furnish him with part of the shipment.

Mr. Adams, president of respondent, placed an order with Salbert on August 17, 1943, for 200 cases from a shipment expected to arrive within a few months. Respondent gave him a check for $1,000.00 on the purchase price, and on October 1, 1943 ordered another 200 cases of brandy expected from Portugal at a latter date. Another deposit receipt agreement was executed, appellant receiving a second check for $1,000.00 from respondent on account.

On November 11, 1943, respondent purchased 50 cases of Portuguese brandy which appellant had in stock, and this lot was delivered to respondent's place of business and was paid for. Fifteen cases out of this lot were sold by respondent at a profit. During the trial respondent withdrew the issue as to this lot, hence it is not involved on this appeal.

The first order of 200 cases arrived in San Francisco during December 1943, and was placed in a federal bonded warehouse, under bond No. 2317. Upon payment of the balance due, the storage company issued its receipt to respondent evidencing its title to the 200 cases. The second lot of 200 cases arrived during the month of February 1944, and the same procedure was followed as in the case of the first lot. From the date of arrival until withdrawn in December 1945, the two lots remained in bond in the name of respondent who paid all storage charges to the warehouse company.

In April 1944, the Pure Food and Drug Division of the State of California, suspecting that some bottles of imported Portuguese brandy might contain particles of glass, issued a statewide order to all distributors and sellers of such brandy, requiring them to withhold further sale until inspection could be made to determine the condition of the brandy. The federal authorities issued a similar order, hence the 400 cases sold to respondent were detained by the federal government for examination but were subsequently released, said releases being directed to the Josebra Company, and produced by them at the trial.

Respondent first learned of the quarantine from reports in a San Francisco newspaper. On the same day he was visited by appellant's salesman, Salbert, with whom he discussed the report. Respondent's president, Adams, testified that Salbert assured him that Josebra Company would filter the brandy and put it in a saleable condition before he would have to take it, or before he did take it. Salbert said that they had to pick up the brandy wherever they had delivered it and return it. Adams told Salbert that if it had to be filtered or anything, that he didn't want it. Salbert responded that everything would be taken care of.

On April 26, 1944, appellant sent a form letter to all of its customers advising them to return all Portuguese brandy, and that it would be examined and returned at appellant's expense. Appellant admits that the 400 cases of brandy ordered by respondent, were examined, cleared and released at appellant's sole expense while in the federal bonded warehouse.

On December 11, 1945, the following document was executed by respondent and accepted by appellant. It reads as follows:

'San Francisco, California

'December 11, 1945

'In consideration of our transfer to Josebra Company of ownership of brandy now stored in the San Francisco Warehouse Co. in customs--bond, tax unpaid, the undersigned shall be released of all liability for payment of any balance due for taxes on account of such merchandise, and Josebra Company upon such transfer shall be entitled to sell or dispose of the same to any person or firm whosoever for which purpose we relinquish to Josebra Company all our rights, ownership, title and interest therein.

'Breakers Holding Corp.

'(Signed) Forrest Adams President'

Following the execution of this document the brandy was exported to China for sale under appellant's export license. Respondent's president Adams testified that a friend of his, a Mr. Scanlon (who died prior to the trial) wished to buy the brandy from respondent for export. He told Scanlon that he could not sell it to him because he had no license. Scanlon asked where he had bought it, and when told, said that they would go down there and see if Adams could turn it back, and if so, he, Scanlon, would make arrangements to export it. Adams testified that he went to appellant's office with Scanlon, that they were not there very long, that Scanlon and Abrams talked of shipping other things besides brandy to China, and that he didn't pay much attention to this discussion as he wasn't interested. As they were leaving someone in the office said that Scanlon would pay them and they in turn would pay The Breakers. That was the only time he was in appellant's office. When asked if he had not sold 150 cases of the lot of 400 in China at $100.00 per case, he flatly denied it, saying that the Breakers Corporation had nothing to do with the brandy after it was released.

Appellant's sole proprietor, Abrams, who attended the conference with Adams and Scanlon, was questioned very briefly by his counsel on direct examination. In regard to what took place at the conference he was asked only if he had made the remark 'Now we have the merchandise--you can whistle for it', which he denied.

Davis, a former employee of appellant who was present with Abrams, Adams and Scanlon at the meeting in appellant's office, testified that Adams said he wished to dispose of the brandy by shipping it to China. Davis said he advised him that it could not be done without a Federal export license. He was asked if Josebra Company could export it for the account of The Breakers, and he told them it could be done legally if title rested with Josebra. He suggested that it could be transferred back without other monetary consideration than $1.00. Adams, he said, told him that he wished to export it, and that Scanlon would handle disposition of it in China. He thought that the transfer of title was drawn up in the next day or so. Davis said that he pointed out to Adams and Scanlon the large amount of detail work involved in preparing an export shipment, that his firm would take care of these matters for $1.50 per case or a total of $600.00. Appellant introduced in evidence a check signed by Adams with date stamped December 10, 1945, for $600.00 on which was written 'Warehouse Expense Exportation of 400 cases of Brandy.' Another check for $724.85 signed by Adams matched in amount appellant's invoice dated January 2, 1946, for charges in preparing and loading the shipment.

Jaeger, an insurance broker, who had dealt with respondent's Mr. Adams for years, and who had also been an accountant for respondent, handled the policy of marine insurance on the cargo. He stated that Scanlon paid for the policy and that Adams was to pay for the ocean charges. Adams testified that Scanlon needed help, therefore he advanced him the money and had his bookkeeper draw the check.

On this appeal appellant contends (1) that the trial court's findings are not supported by the evidence; (2) that the judgment is based on findings of fact and conclusions of law outside the issues joined by the pleadings; (3) that the amount of the judgment is not sustained by the evidence.

The Amended Complaint contains three causes of action: the first, a claim for damages in fraud for knowingly selling plaintiff merchandise unfit for human consumption; the second, for breach of warranty; the third, a claim for $600.00 for money had and received.

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