Elmquist v. Lock

• Decision Date: 28 July 1961
• Citation: Elmquist v. Lock, 15 Cal.Rptr. 447, 194 Cal.App.2d 372 (Cal. App. 1961)
• Parties: George M. ELMQUIST and Irene H. Elmquist, Plaintiffs and Appellants, v. Del R. LOCK and Marion C. Lock, Defendants and Respondents. Civ. 24862.
• Court: California Court of Appeals

Page 447

15 Cal.Rptr. 447

194 Cal.App.2d 372

George M. ELMQUIST and Irene H. Elmquist, Plaintiffs and Appellants, v. Del R. LOCK and Marion C. Lock, Defendants and Respondents.

Civ. 24862.

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

July 28, 1961.

J. E. Simpson, Eugene M. Elson, Los Angeles, for appellants.

Leonard Nasatir, Los Angeles, for respondents.

SHINN, Presiding Justice.

Plaintiffs were the owners of a restaurant and cocktail bar which defendant wished to acquire, as well as a general onsale liquor license. Plaintiffs purchased with their own funds the license for $7,087.50 and pursuant to an application filed by plaintiff George M. Elmquist and defendant Del R. Lock, on or about June 23, 1952, there was issued such a license in the names of the applicants for the operation of a business on plaintiffs' property to be known as Del's Chuck Wagon. The parties entered into a contract by the terms of which plaintiffs agreed to sell and defendants to buy the restaurant, bar equipment and license for the sum of $17,949.32, the purchase price to include the liquor license priced at $7,087.50, payable in installments with interest on deferred payments at 3% per annum. Plaintiffs also leased the property to defendants, who took possession and operated the business until February 1958. Installments of the purchase price were paid to that date in the total amount of $6,907.53 of which plaintiff credited the sum of $4,502.84 to principal and $2,404.69 to interest. Upon cessation of payments plaintiffs terminated the agreement and were restored to possession of the property.

In the meantime, plaintiff George M. Elmquist surrendered the liquor license to the Board of Equalization.

The present action was instituted to quiet title to the liquor license and to require Del R. Lock to perform whatever acts were necessary to vest title thereto in George M. Elmquist. In a separate cause of action plaintiffs sought recovery of $588.95 for the conversion of a refrigerator, as to which the appeal presents no question. Defendants filed a cross-complaint by which they sought a judgment requiring plaintiffs to cause the license to be transferred to Mr Lock. It was alleged that defendants had paid in full the purchase price of the license with the exception of $243.77 which had been tendered by defendants to plaintiffs as the unpaid balance of the price of the license. Except for the award to plaintiffs of $588.95 plus $100 as attorney's fees, the judgment denied further recovery by either side. The basis of the judgment was that the provisions of the conditional sales contract under which each of the parties seeks to acquire full ownership of the license are illegal and void.

The illegality of the controlling provisions of the contract as construed by the court consists of the violation of the prohibitions of section 24076, Business and Professions Code which read as follows: '24076. Pledge of transfer as loan security prohibited. No licensee shall enter into any agreement wherein he pledges the transfer of his license as security for a loan or as security for the fulfillment of any agreement. Each application for the transfer of a license shall be accompanied by or contain a statement verified by both the transferor and [the] transferee specifically stating that the transfer application or proposed transfer is not made to satisfy the payment of a loan or to fulfill an agreement entered into more than ninety (90) days preceding the day on which the transfer application is filed with the board or to gain or establish a preference to or for any creditor of the transferror or to defraud or injure any creditor of the transferror. This statements shall become part of the transfer application any any misrepresentation contained in the statement shall be considered the misrepresentation of a material fact.'

Each party claims under the following provisions of the contract: '4. In addition to all those items of personal property listed in the attached Exhibit hereto, Vendors hereby agree to sell and Vendees agree to buy that certain on-sale liquor license 'On-Sale General License, No. P-5475-G' issued by the Board of Equalization of the State of California. The purchase price of Seven Thousand Eighty Seven and 50/100 ($7,087.50) Dollars of said liquor license is included in the total purchase of Seventeen Thousand Nine Hundred Forty Nine & 32/100 ($17,949.32) Dollars set forth in paragraph 1 (above). Although said liquor license bears the name of George M. Elmquist and Del R. Lock thereon yet the consideration for same was advanced completely and solely by the said George M. Elmquist, the said name of Del R. Lock having been added thereto for convenience only. It is intended by the parties hereto that all payments made in this Conditional Sales Contract shall first be applied on the purchase of the said liquor license and it is agreed by the said George M. Elmquist that at such time as the Vendees herein shall have paid an amount equal to one-half (1/2) the total purchase price set forth in paragraph 1 (above), that he will do all things necessary to remove his name from the said liquor license in order that the same may be wholly and completely owned by the said Del R. Lock. However, in the event that this Contract or the said Lease entered into between the parties hereto, shall be in default for breach of any of the provisions of this Contract or the said Lease by the Vendee herein, prior to the said payment of one-half (1/2) of said purchase price hereunder, then said Del R. Lock shall, and he hereby agrees that he will do all things necessary to have his name removed from the said liquor license in order that the same may be transferred by the said George M. Elmquist, alone, and in his individual capacity. 5. Title shall not pass to the Vendees with delivery of the aforesaid property but shall remain vested in the Vendors until the purchase price is paid, except as otherwise set forth above. Vendees hereby acknowledge receipt of said property.'

The court made the following conclusion of law: 'I. That the provisions of paragraph Four of said 'Conditional Sales Contract' insofar as they require defendant Del R. Lock in the event that said defendant Lock 'shall be in default for breach of any of the provisions of this contract or the said lease * *...