Crogan v. Metz

• Decision Date: 30 November 1956
• Citation: 303 P.2d 1029,47 Cal.2d 398
• Court: California Supreme Court
• Parties: Hazel L. CROGAN, Plaintiff and Respondent, v. Bert METZ, Vivian Metz, and Dewey Letsinger, Defendants and Appellants. S. F. 19096.

Page 1029

303 P.2d 1029

47 Cal.2d 398

Hazel L. CROGAN, Plaintiff and Respondent, v. Bert METZ, Vivian Metz, and Dewey Letsinger, Defendants and Appellants.

S. F. 19096.

Supreme Court of California, In Bank.

Nov. 30, 1956.

Rehearing Denied Dec. 24, 1956.

Byron Arnold, George I. Hoffman, Lansburgh, Hoffman, Arnold & Schiller and Theodore M. Monell, San Francisco, for appellants.

Ralph Wertheimer, San Francisco, for respondent.

Chandler P. Ward Los Angeles, as amicus curiae on behalf of respondent.

SHENK, Justice.

Separate appeals have been taken by the defendants from a judgment for the plaintiff in an action to recover secret profits in a real estate transaction.

The defendants Bert Metz and Dewey Letsinger and another real estate broker, William W. Mogan, shared office space in San Francisco but each carried on an independent real estate business. There is substantial evidence that, beginning in the early part of 1951, they engaged in the following activities.

The defendant Letsinger represented one Desiano who owned income property on Scott Street in San Francisco which he wished to sell for $165,000 net to himself, less a $5,000 bonus to Letsinger if he could arrange for the sale within a specified time. Letsinger's associate Mogan represented one Rinas who owned property on Bay Street which he wished to exchange for more valuable income property. Rinas had been unsuccessful in attempts to sell the property for $110,000 and even $100,000, and for purposes of exchange valued the property at $100,000. Accordingly Letsinger and Mogan attempted to arrange for an exchange of the Scott Street for the Bay Street property and $60,000 in cash but Desiano was not interested in acquiring additional property.

It became obvious that in order for Letsinger and Mogan to consummate negotiations on the terms required by their principals and to provide commissions for themselves it would be necessary for them to sell the Bay Street property at a price in excess of the $100,000 valuation placed on it by its owner, Rinas. Acting together they advertised it for $115,000. Desiano knew nothing of these activities. Rinas knew of the advertised price for his property but believed that no one would accept at that figure and that if a buyer was found that he, Rinas, would share in the increase over his named price.

Meanwhile the defendant Bert Metz learned of the pending transactions from his associates. He advised the plaintiff, a widow whom he had represented for a number of years, that he had an advantageous deal for her whereby she could acquire a valuable property in excellent condition for $115,000; that she could use property she owned on Fulton Street valued at $50,000 in partial payment on a trade, and that she probably could secure a loan upon the execution of a deed of trust on the Bay Street property for the difference. He assured the plaintiff that the owners were asking $115,000 and that they 'wouldn't budge' from that price. She entered into an agreement with Metz wherein he was authorized to arrange for the exchange of her property according to the terms he suggested to her. No explanation was made to her by Metz that a multiparty transaction was involved, nor that a price of $15,000 over and above Rinas' demands had been set by the brokers so that they could recover their commissions from the fund which would be realized upon the consummation of all the transactions involved. The plaintiff agreed to execute a second deed of trust in favor of Metz in payment of his commission for services rendered to her.

The exchange of properties suggested by the plaintiff's offer of exchange would not, of course, supply the necessary funds to consummate the transaction contemplated. Accordingly, each of the three brokers participated in obtaining bids for the plaintiff's property and a purchaser, Mrs. Lukes, was found who was willing to pay $49,500 for it. On June 28, 1951, the transactions were closed by means of five grant deeds: The Scott Street property from Desiano to Rinas, the Bay Street property from Rinas to Desiano and from Desiano to the plaintiff, and the Fulton Street property from the plaintiff to Desiano and from Desiano to Lukes. In addition the following transfers of funds were made: Mrs. Lukes paid into escrow $49,500, the plaintiff paid $65,000, Rinas paid $60,000, and Desiano received $160,000 less minor costs and fees. Commissions paid through the title company to the three brokers totaled $11,984.50, including Letsinger's bonus. In addition to other commissions received by Metz the plaintiff executed her note to him, secured by a second deed of trust on the Bay Street property, in the sum of $3,000, $2,500 of which represented commissions. Certain other costs and fees absorbed the balance of the fund placed in the brokers' hands.

Letsinger and Metz testified that the three brokers had acted 'in concert' and 'as a team' in negotiating the 'three cornered deal', and that they had cooperated in showing and obtaining buyers for the property of Rinas and of the plaintiff. Each knew that the price the plaintiff paid for the Bay Street property had not been set by the owner, Rinas. The record shows that each of the brokers was fully aware of the nature of all transactions.

Shortly after the sale was consummated the plaintiff learned that Rinas had been asking only $100,000 for his property. She thereupon commenced this action for $15,000 and punitive damages against Metz, joining Letsinger, Mogan and Mrs. Vivian Metz as co-defendants. The amended complaint alleges facts based on three different legal theories. Count I alleges fraud and the making of false representations to the plaintiff by the defendant Metz in his personal capacity and as agent of each of the other defendants, for the purpose of fraudulently inducing the plaintiff to purchase certain property at a price of $15,000 in excess of the owner's willingness to accept. Count II incorporates allegations of Count I as to the status of the parties and ownership of the properties involved, including an allegation that the defendant Metz acted for himself, as agent for the plaintiff, and as agent for each of the other defendants. It then alleges that Metz, in effecting the exchange of the properties involved 'retained, and does now retain, monies, property and secret profits received by him for the use of and belonging to plaintiff herein in the sum of Fifteen Thousand ($15,000.00) dollars, no part of which has been paid to plaintiff, and the same is now due, owing and unpaid.' Count III incorporating all of the allegations of Count, I, alleges that the three brokers conspired to defraud the plaintiff in the sum of $15,000. Punitive damages were prayed for as to Counts I and III. The action was tried by a court sitting without a jury. The defendant Mogan died prior to the trial and no further proceedings were taken as to his alleged part in the transaction.

The court made only two findings, namely: 'I. The allegations set forth in plaintiff's amended complaint on file herein are True. II. The defendants and each of them conspired to obtain from plaintiff, and did assist each other in obtaining, by means of the fraudulent conduct more fully set forth in the findings of fact herein and in violation of the fiduciary duty owed by defendant Bert Metz to plaintiff, the sum of $15,000.' Judgment was entered against the defendants Bert Metz, Vivian Metz and Dewey Letsinger in the sum of $15,000, together with interest at the rate of 7% from June 28, 1951, and in the sum of $2,500 as punitive damages in favor of the plaintiff against the defendants Letsinger and Bert Metz.

From its general finding that the allegations of the amended complaint are true, it is not readily ascertainable upon which of the theories pleaded the court based its judgment. It is well established that a complaint may plead different theories on which relief is sought with legal propriety. Faulkner v. California Toll Bridge Authority, 40 Cal.2d 317, 328, 253 P.2d 659; Tanforan v. Tanforan, 173 Cal. 270, 273, 159 P. 709. It is noted that here each of the counts is based upon the same allegations of fact and that there are no contradictory or antagonistic facts. Cf. ...