Griffith Co. v. Hofues

• Decision Date: 16 March 1962
• Citation: 201 Cal.App.2d 502,19 Cal.Rptr. 900
• Parties: GRIFFITH COMPANY, a corporation, Plaintiff and Respondent, v. Frank S. HOFUES, Jr., as Administrator, etc., Defendant and Appellant. Civ. 22.
• Court: California Court of Appeals Court of Appeals

Page 900

19 Cal.Rptr. 900

201 Cal.App.2d 502

GRIFFITH COMPANY, a corporation, Plaintiff and Respondent, v. Frank S. HOFUES, Jr., as Administrator, etc., Defendant and Appellant.

Civ. 22.

District Court of Appeal, Fifth District, California.

March 16, 1962.

Young, Wooldridge & Paulden, Robert J. Self, Bakersfield, for appellant.

Walter L. Maas, Bakersfield, for respondent.

BROWN, Justice.

Defendant is the administrator with the will annexed of Frank S. Hofues, Sr., deceased. During the course of administration certain property owned by the estate, herein designated as the Bakersfield Inn, comprised of real property, personal property and certain leasehold interests, was sold as a unit to one Walter H. Nelson and on April 3, 1959, and order confirming the sale was duly made and entered in the probate proceedings pending in Los Angeles County. Except as herein mentioned, the details of that sale are no concern of this court. It is important to note that an escrow was opened and Nelson was not to receive title or possession until he had complied with specified conditions and had paid certain moneys. Defendant's resident manager, J. Paul Montgomery, remained in active charge of the Bakersfield Inn until about August 17, 1959.

During the early part of April 1959, plaintiff's construction superintendent, Horace S. T. Massey, at the request of one Clayton Smith, who was acting in behalf of Nelson, inspected the condition of certain parking areas and walkways situated on the grounds of the Bakersfield Inn, with a view to submitting a bid for repairs, resurfacing and repaving. On April 17, 1959, plaintiff, through Massey, Submitted to Clayton Smith, personally, a written estimate covering the work, directed to 'Bakersfield Inn, P. O. Box 526, Bakersfield, California Attention: Mr. Clayton Smith.' Subsequent negotiations were had between Massey and Smith until August 15, 1959. During that period of time, Massey dealt with Smith, alone, regarding the proposed improvement. No person other than Massey negotiated in behalf of plaintiff. Although he never inquired concerning the capacity or authority of Smith, and Smith made no representation to him, Massey simply assumed Smith was either manager, or acting in behalf of the owner, or the owner of the Bakersfield Inn. Massey, in fact, did not know who owned the Bakersfield Inn. Plaintiff's bid, dated April 17, 1959, was accepted by 'Nelson-Smith Hotel Co.' and signed by Walter H. Nelson and Clayton V. Smith. Immediately to the right of Nelson's signature appear the words and figures, 'Approved August 15, 1959.'

On August 17, 1959, Nelson and defendant entered into a written agreement which recited, in relevant part, that Nelson had purchased the Bakersfield Inn and escrows were pending; that he had been unavoidably delayed in putting up the balance of the purchase price, and believed such funds would be available to him only if he was let into possession of the Bakersfield Inn; and that, upon the payment of a specified sum, it was deemed desirable to place Nelson in possession on the 'standard form hotel management agreement' for a period of thirty days. Pursuant to that agreement Nelson was let into physical possession of the Bakersfield Inn on August 17, 1959. Neither the form nor testimony concerning the contents of the standard form hotel management agreement is before this court. However, it may be disregarded since the record clearly shows that Nelson was in possession as purchaser and not as manager.

Nelson was to pay all operating expenses of the Bakersfield Inn, together with specified installment payments, and all income was to be owned by him. A commercial banking account was established in the name of Nelson-Smith Company, the signatories thereto being Nelson, Smith, Mr. Parker (auditor for Nelson-Smith, Co.), Mr. Montagnan, defendant Hofues, Mr. Wills (controller for Hofues), one Wanda (private secretary for Hofues), and, later, J. Paul Montgomery. All receipts derived from the operation of the business were deposited therein. Although Hofues did not expressly reserve the right to review or approve obligations incurred or expenditures made, all withdrawals of funds on deposit in the commercial account required two signatures--that of Nelson or one of the signatories authorized by him to sign checks, and that of defendant Hofues or one of the signatories authorized by him to sign checks. There was testimony that the reason was to insure the expenditure of funds only for business purposes, and prevent Nelson from making withdrawals to recoup his payments on the purchase price in the event he determined not to consummate the purchase transaction. Hofues requested Nelson to obtain a waiver of lien rights for anything done affecting the real property.

Nelson entered into possession of the Bakersfield Inn on August 17, 1959. Although the name 'Nelson-Smith Hotel Co.' is indicative of an association between Nelson and Smith, there is testimony to the effect that Smith was placed in active charge of the Bakersfield Inn about August 17, 1959, as Nelson's Manager. Nelson did not testify.

It is conceded that the work which is the basis of this action was commenced by plaintiff after August 17, 1959, and was completed prior to September 16, 1959. When the work had progressed to about the halfway mark, Massey was asked by one other than defendant and presumably by Smith, to sign a waiver of lien rights. He refused on the basis that he was not authorized by plaintiff so to do. No lien was recorded.

By a statement dated September 16, 1959, plaintiff billed 'Bakersfield Inn, 1101 Union Avenue, Bakersfield, California,' in the sum of $3,455. Nelson and Smith were then in possession. Montgomery was in and around the Inn during the period of the work and knew it was being done. Defendant testified that he knew by 'indirection' that the work was being per formed but that he never saw plaintiff's bill and no check in payment thereof was ever presented to him for signature.

Nelson defaulted under his agreement with defendant. After proceedings which we must presume to have been regular, the Superior Court of Los Angeles County, on March 14, 1960, (after many continuances) made and entered its order which, in relevant part, vacated and set aside the decree of confirmation of sale to Nelson. Subsequent thereto, defendant regained possession of the Inn.

Plaintiff's bill not having been paid, this suit was brought on the theory of an implied contract for materials furnished and services rendered. Upon a nonjury trial, the court entered judgment in favor of plaintiff. Defendant appeals.

The task of this court is to determine whether the trial court erred in finding this to be a proper case for application of the doctrine of unjust enrichment.

At the outset it should be noted that, although the theory of ostensible agency runs like a thread throughout this case from the pleading stage to the memorandum decision of the court, that question is not presented to us on appeal. It seems clear that the court predicated its formal judgment, which supersedes the memorandum decision, upon the doctrine of unjust enrichment. Plaintiff concedes the point in its brief, without argument. Therefore, it may be disregarded.

Plaintiff does not contend that Nelson-Smith Hotel Co. or Walter H. Nelson or Clayton V. Smith, individually, who authorized this work and employed the plaintiff, had any legal authority as such to do so, so as to bind the defendant. Neither is it contended that they were in any way authorized to contract for plaintiff. The only theory upon which the recovery is sought to be sustained is unjust enrichment.

No California case has been cited by either plaintiff or defendant in which the factual situation is similar to that here involved. Our research has not developed a case of this state which...