Goodwin v. Wolpe

• Decision Date: 17 March 1966
• Citation: 50 Cal.Rptr. 55,240 Cal.App.2d 874
• Court: California Court of Appeals Court of Appeals
• Parties: Ben GOODWIN et al., Plaintiffs, Cross-Defendants, and Appellants, v. Joseph P. WOLPE et al., Defendants, Cross-Complainants, and Respondents, Paul Krampe, Defendant and Respondent. Civ. 597.

Page 55

50 Cal.Rptr. 55

240 Cal.App.2d 874

Ben GOODWIN et al., Plaintiffs, Cross-Defendants, and Appellants, v. Joseph P. WOLPE et al., Defendants, Cross-Complainants, and Respondents, Paul Krampe, Defendant and Respondent.

Civ. 597.

District Court of Appeal, Fifth District California.

March 17, 1966.

David N. M. Berk, Beaumont, and Matthew M. Richman, Palm Springs, Maxwell J. Wihnyk, Beaumont, for appellants.

Harry B. Cannon, Palm Desert, for respondents Wolpe and others.

Thurman Arnold, Jr., Palm Springs, for respondent Paul Krampe.

CONLEY, Presiding Justice.

Plaintiffs filed a complaint for damages based upon express fraud. (Civ.Code, §§ 1572, 3294.) The complaint alleged that the defendants, Wolpe, Volpe and Reed, owned a business consisting of the Club Caravan bar and hotel located in a building in Indio, and that defendant, Paul Krampe, was the agent and broker of the defendant-sellers of the business (in accordance with a request contained in plaintiffs' pretrial statement, an amendment to paragraph IV of the complaint was later made to the effect that Krampe was agent for both the sellers and the buyers); that before the sale, and to induce plaintiffs to purchase the business including stock, fixtures, lease and good will, and with intent to deceive and defraud the plaintiffs, all of the defendants fraudulently represented to plaintiffs that there were 'no violations or conditions' against the building wherein the business was situated; that before the sale each of the defendants had knowledge of 'violations and conditions' against the building and that condemnation proceedings were contemplated by the Indio city officials; that the plaintiffs relied upon these representations, paid the full price asked and performed all conditions required of them; that defendants Wolpe, Volpe and Reed transferred title of the property to plaintiffs, and plaintiffs took possession and began operating their business; that as the defendants knew, the representations which had been made by them were false and the building in question was about to be condemned at the time of the sale on the ground that it was unsafe for human occupancy, and that except for these representations, plaintiffs would not have purchased the property; that on December 20, 1960, the building was in fact condemned and plaintiffs were forced to abandon the premises and were deprived of their business; that for these reasons plaintiffs have been damaged. Plaintiffs further alleged they have offered to return to the defendants, Wolpe, Volpe and Reed, everything of value received by them if the defendants will make a corresponding return; that the defendants have not done so; that in the event defendants should be able to act accordingly, plaintiffs still offer to return everything of value received from defendants in exchange for all that plaintiffs gave defendants. Plaintiffs prayed for $100,000 damages and for $25,000 exemplary damages and costs of suit.

The defendants, Wolpe, Volpe and Reed, cross-complained alleging that on January 5, 1960, the Goodwins made and delivered to them a promissory note for $10,000 agreeing to pay that total sum, besides interest, by February 16, 1961, in installments of $500 or more on the 15th of each month, commencing March 15, 1960; that no interest or principal was paid except $5,075.62 and there was due $4,924.38, plus 6 percent interest from January 15, 1961; that cross-defendants became obligated by the note to pay attorneys' fees if suit were instituted; and that $750 is a reasonable attorneys' fee.

After several days of trial by the judge, sitting witout a jury, defendants were awarded a judgment that plaintiffs take nothing by their complaint, and that cross-complainants should recover $6,029.18 as principal and interest on the note, $750 attorneys' fees, and costs. The court found that Paul Krampe did not represent prior to the sale or at all that there were 'no violations or conditions against the building' and that none of the defendants were guilty of fraud; the court further found that prior to the sale defendants had no knowledge of any 'violations' against the building, that no condemnation proceedings were contemplated by Indio officials at the time of the sale and that defendants did not conceal or fail to disclose any fact which they were under a duty to disclose.

In the pretrial order it is stated that $31,250 in cash was paid on the note by plaintiffs out of a total specified consideration of $41,250; that all payments were made according to the requirements of the note up to January 15, 1961, and there remains an unpaid balance of $4,924.38 together with interest from the date of the last payment on the obligation.

At the outset, it is essential to inquire whether or not the appellants are able legally to argue the chief point which they urge on the appeal. Their present contention is characterized by a shifting of position; originally, plaintiffs sued on a theory of outright fraud consisting of alleged representations made by or on behalf of all of the defendants as to the character of the building involved in the sale of the business. The plaintiffs allege in their complaint that the defendant Paul Krampe was at all times acting as the agent and broker for the sellers, Joseph P. Wolpe, George A. Volpe and Charles T. Reed, and that the defendants 'falsely and fraudulently represented to the Plaintiffs that there were no violations or conditions against the building located at 45--333 Jackson Street, wherein the Defendants' business was situated.' There was no hint of constructive fraud. At the time of the pretrial order, the plaintiffs received permission to amend their complaint to allege that Mr. Krampe was the representative and agent of both parties prior to and at the time of the sale. But this latter position was completely abandoned, as is stated by the record, prior to the submission of the case. The reporter's transcript shows that the following took place in this respect:

'MR. BERK: Your Honor, in the interests of expediting things, we will withdraw the contention that Mr. Krampe was the agent of both parties. We don't think the proofs substantiate the fact Mr. Krampe was the agent of the buyer, excepting for a limited purpose only of his being the agent in taking them to see Mr. Cologne.

'MR. ROSENBERG: Your Honor, I appreciate the offer of counsel at this point, but I think he is fired by his own petard, having at one time insisted they shall amend the pleadings to read 'and buyers.'

'MR. RICHMAN: Your Honor, we can withdraw any position at any time. We concede no evidence here to sustain our prior contention there was any agency on the part of Mr. Krampe, insofar as the plaintiffs are concerned, except with the limited exception.

'MR. BERK: Indicated.

'MR. ROSENBERG: Your Honor, we are not willing to ask for a stipulation.

'MR. RICHMAN: We are not asking for a stipulation. We are abandoning that position because we feel we have maintained our purpose.

'MR. ROSENBERG: Your Honor, the plaintiffs have rested without any plea to come in with motion to strike.

'MR. BERK: Your Honor, we don't have to do that, because the intention was Pre-Trial.

'THE COURT: I think they can abandon the stipulation if they don't think it shows something.'

While there was thus a complete abandonment, in the trial court prior to the decision of the case, of the contention that Mr. Krampe was an agent of the plaintiffs, the appeal is based on a...