Eisenberg v. Greene

• Decision Date: 16 November 1959
• Citation: 175 Cal.App.2d 326,346 P.2d 60
• Parties: Louis EISENBERG, Wilfred S. Eisfelder and Arthur M. Eisfelder, Plaintiffs and Appellants, v. Arthur M. GREENE, Defendant and Respondent. Civ. 23704.
• Court: California Court of Appeals Court of Appeals

Page 60

346 P.2d 60

175 Cal.App.2d 326

Louis EISENBERG, Wilfred S. Eisfelder and Arthur M. Eisfelder, Plaintiffs and Appellants, v. Arthur M. GREENE, Defendant and Respondent.

Civ. 23704.

District Court of Appeal, Second District, Division 3, California.

Nov. 16, 1959.

Lackman & Lackman, Long Beach, for appellants.

Norman A. Obrand, Los Angeles, for respondent.

PER CURIAM.

Plaintiffs appeal from a judgment of dismissal based upon an order sustaining a demurrer to the amended complaint and upon the failure of plaintiffs to amend within the time allowed for amending.

There are two purported causes of action in the amended complaint.

The allegations of the first cause of action are, in substance, as follows: About April 22, 1957, defendant desired to sell, and plaintiffs desired to purchase, a certain self-service laundry business, then owned and operated by defendant in Culver City for the total purchase price of $20,000. About said date plaintiffs and defendant opened an escrow with an escrow company in Los Angeles and executed and deposited escrow instructions therein. A copy of the instructions is attached to the complaint and made a part thereof by reference.

Paragraph 15 of the escrow instructions provided: 'Seller warrants that all furniture, fixtures and equipment being conveyed herein are free and clear of all encumbrances of any nature whatsoever except those specifically mentioned herein.' In the escrow instructions defendant agreed to sell and plaintiffs agreed to purchase the laundry business for the total purchase price of $20,000 upon the terms and conditions therein particularly set forth, and pursuant thereto plaintiffs took possession of said business and assets and ever since have been in possession thereof. Paragraph 18 of the escrow instructions provided that plaintiffs were given the option 'to have' $10,000 of the seller's price secured by a conditional sales contract with discounted interest at the rate of 6 per cent payable in 30 equal monthly installments. Between April 22 and May 7, 1957, plaintiffs paid to defendant, on account of said purchase price, $10,000 in cash and paid and performed all things on their part to be paid and performed in accordance with the escrow instructions, but plaintiffs were unable, as the defendant well knew, to pay the balance of $10,000 in cash and elected to exercise the option referred to above. Plaintiffs, being then in possession of said business, notified defendant of their election and requested 'of said defendant' the loan or forbearance of said $10,000, being the balance of the total purchase price, and offered to secure the dame by a conditional sales contract. Defendant agreed thereto, but, as a condition thereof, demanded of plaintiffs the sum of $1,500 as discount interest for said loan or forbearance of said $10,000 and demanded that the same, including said discount interest of $1,500, be repaid in 30 equal monthly installments, commencing June 1, 1957, which plaintiffs agreed to pay. Accordingly, about May 7, 1957, plaintiffs as buyer and defendant as seller entered into an agreement in writing entitled 'Conditional Sales Contract', a copy of which is attached to the complaint and made a part thereof by reference. Said conditional sales contract provided: 'The Seller does hereby covenant and agree with the Buyer, that the Seller is a lawful owner of the personal property sold under this Contract; that said personal property is free from all claims and encumbrances, except those specifically mentioned; and that Seller has good right and title to sell the same; and the Seller does hereby warrant and defend the same against the lawful claims and demands of all persons.' Defendant was not the owner of said personal property on said May 7, 1957, or at any time, and the personal property was not free from all claims and encumbrances, and seller did not have any right to sell the same. I. Gordon and Associates, Inc., at all times was and is the owner of all said personal property, and on May 7, 1957 said personal property was subject to the claims of said I. Gordon and Associates, Inc., against defendant in the sum of approximately $10,486.67, being the unpaid balance upon a conditional sales contract. Between June 1, 1957 and May 1, 1958, pursuant to the terms and conditions of said conditional sales contract, defendant demanded, and plaintiffs paid to defendant, the sum of $4,600.06, in which the sum of $600 was included as interest upon said loan or forbearance. Plaintiffs did not receive any consideration or thing of value from defendant for said conditional sales contract, or for the payments thereunder, other than said loan or forbearance of said sum of $10,000. Said loan or forbearance, and agreement to sell said business as set forth in the escrow instructions, and the conditional sales contract were, and each of them was, in violation of the Usury Law of California. Defendant demanded, received, and accepted from plaintiffs interest at a rate of more than 10 per cent per annum upon said loan or forbearance for the use thereof, which was in excess of the maximum rate of interest allowed by law and in violation of said usury law. By reason of the matters alleged, said discount interest of...