Harm v. Frasher

• Citation: 5 Cal.Rptr. 367,181 Cal.App.2d 405
• Court: California Court of Appeals
• Decision Date: 26 May 1960
• Parties: Hattie HARM and George Robert Harm, Plaintiffs and Respondents, v. Isabelle F. FRASHER and Ernest E. Frasher, as Executors of the Estate of Harold B. Frasher, deceased, and Isabelle F. Frasher, Ernest E. Frasher, Gail H. Crawford and Morris A. Atkins, Individually, Defendants and Appellants. Civ. 6065.

Page 367

5 Cal.Rptr. 367

181 Cal.App.2d 405

Hattie HARM and George Robert Harm, Plaintiffs and Respondents, v. Isabelle F. FRASHER and Ernest E. Frasher, as Executors of the Estate of Harold B. Frasher, deceased, and Isabelle F. Frasher, Ernest E. Frasher, Gail H. Crawford and Morris A. Atkins, Individually, Defendants and Appellants.

Civ. 6065.

District Court of Appeal, Fourth District, California.

May 26, 1960.

Rehearing Denied June 21, 1960.

Hearing Denied July 20, 1960.

Leslie C. Gillen, John R. Golden, C. J. Goodell, San Francisco, and James T. Barstow, Fresno, for Isabelle F. Frasher and Morris A. Atkins, and Savage & Shepard and Richard L. Shepard, Fresno, for Ernest E. Frasher, appellants.

Dubsick & Helon and Marvin E. Helon, Fresno, Amicus Curiae, for appellants.

Lopez & Hyde, and Floyd H. Hyde, Fresno, for respondents.

COUGHLIN, Justice.

This is an appeal from a judgment in an action arising out of a sale of the controlling interests in a trucking business.

In 1951, Valley Motor Lines, Inc., and Valley Express Company, each of which was a corporation, together with the plaintiff Hattie Harm and the Estate of Harold B. Frasher, deceased, acting through duly appointed executors, as co-partners doing business under the firm name of Terminal Warehouse, were engaged in an integrated trucking business. The plaintiff Hattie Harm, individually and as trustee of the George Robert Harm Trust, hereinafter referred to as the 'Harm Interests', owned 293 shares of stock of Valley Motor Lines Inc., and 982.5 shares of stock of Valley Express Company. The estate of Harold B. Frasher, hereinafter referred to as the 'Frasher Estate', owned 524.08 shares of stock of Valley Motor Lines, Inc., and 1658.50 shares of stock of Valley Express Company. The latter company owned 495.34 shares of stock of the former company.

Prior to July 5, 1951 representatives of the 'Harm Interests' and of the 'Frasher Estate', as prospective sellers, met with representatives of Consolidated Copperstate Lines, a corporation, hereinafter referred to as 'Copperstate,' as a prospective buyer, respecting a sale of the corporate shares of the aforesaid corporations and the co-partnership business known as 'Terminal Warehouse'. The prospective sellers quoted a sale price of $1,000,000.00 for the total trucking operation, but explained that they did not own 14.7% of the shares of Valley Motor Lines, Inc., and offered to sell only the shares which they owned, together with the partnership business, for the sum of $919,012.80. This offer was accepted and three instruments, each entitled 'Agreement' and each dated July 5, 1951, were simultaneously executed. One 'Agreement', on its face, purported to be between 'Copperstate' as 'Buyer' and the 'Frasher Estate' as 'Seller'; the second 'Agreement,' on its face, purported to be between 'Copperstate' as 'Buyer' and the 'Harm Interests' as 'Seller'; and each provided for the sale of the Seller's shares of stock to the Buyer. The third 'Agreement' purported to be between 'Copperstate' as 'Buyer' and the 'Frasher Estate' and Hattie Harm as 'Seller', and provided for the sale of the partnership business. Each of the three agreements, by way of recital, set forth the stock and partnership ownership of each of the parties named in all of the agreements, and referred to the fact that 'Copperstate' wished to acquire all of the shares of stock described and all of the business of the co-partnership. Also by way of recital, each of the two stock sales agreements referred to the other and to the partnership sale agreement. The partnership sale agreement, in turn, referred to the two stock sale agreements. Each of the two stock sale agreements contained the following provision: 'The transaction provided for herein shall be closed concurrently with the closing of the sales under the aforesaid separate contracts,' i. e., the other two contracts referred to in the recital. The partnership agreement contained a similar provision, i. e., 'The transaction provided for herein shall be closed concurrently with the sale by' the parties named in the stock sales agreement of their stock in the two corporations. Each of the three agreements in substance stated that, as a condition precedent to the obligation of either party to perform thereunder, the sales in the other two agreements 'shall be ready for closing at the same time as the transaction provided for herein.' The two stock sale agreements also made approval by the Public Utilities Commission, and the Interstate Commerce Commission, conditions precedent to such obligation. The 'Frasher Estate' stock sale agreement provided that approval by the Probate Court should be a condition precedent to the obligations therein contained.

By August 18, 1954, all of such approvals had been obtained. Thereupon 'Copperstate' informed all parties thereof; set September 1, 1954 as the closing date; and tendered performance. The executors of the 'Frasher Estate' refused to perform. Although the 'Harm Interests' indicated their willingness and intention to perform, 'Copperstate', pursuant to its agreement, refused to proceed without performance by all parties. Thereupon 'Copperstate' brought an action against all of the parties to enforce performance, and a judgment in their favor became final after affirmance by this court. Consolidated Copperstate Lines v. Frasher, 141 Cal.App.2d 916, 297 P.2d 692. In compliance with that judgment the sales were consummated on August 7, 1956.

Under the 'Agreements' executed by 'Copperstate' and the 'Harm Interests', the latter were to be paid, on the closing date, the sum of $51,853.57 plus interest at the rate of 5% per annum on the sum of $285,626.67 for the period commencing April 5, 1952 and ending on the closing date, and were to receive a promissory note, dated as of the closing date, in the sum of $233,773.10, payable in six equal annual installments, the first coming due one year after the closing date, and bearing interest at 5% per annum on the unpaid balance. The 'Copperstate' judgment decreed that its liability to pay interest ceased as of the day of tender, i. e., September 1, 1954.

The 'Harm Interests' claimed damage resulting from the delay in performance by the 'Frasher Estate' from September 1, 1954 to August 7, 1956, and brought this action to recover that damage claiming, in substance, that the refusal of the 'Frasher Estate' to complete the sale on September 1, 1954 constituted not only the breach of an agreement between 'Copperstate' and the 'Frasher Estate', but also constituted the breach of an agreement between the 'Harm Interests' and the 'Frasher Estate'. By the complaint herein and its amendments, the plaintiffs, i.e., the 'Harm Interests', claimed the damage sustained by them amounted to a sum equal to interest at the rate of 7% per annum, for the period from September 1, 1954 to August 7, 1956, on $163,871.95, being the cash tendered to them by 'Copperstate' on September 1, 1954, and on the further sum of $233,773.10, being the principal amount of the note tendered to them on said date.

At the time of the transaction in question, the defendant Isabelle F. Frasher, Ernest E. Frasher, Gail H. Crawford and Morris A. Atkins were executors of the Frasher Estate. This action was filed against the first two defendants individually and as executors, and against the last two defendants individually; the last two defendants no longer being executors. The defendant Crawford neither appeared nor was served with summons herein. After a trial, at which the other defendants were represented, the court found that the sales transaction in question was expressed in three separate written contracts, each of which by its own terms was made dependent upon the others, and concluded that the agreement to sell was one transaction which was expressed in three written contracts, mutually integrated and interdependent. Judgment was entered in favor of the plaintiffs and against all of the defendants, including Crawford, in all capacities named. All defendants, except Crawford, appealed. The defendants contend that the foregoing finding and conclusion of the trial court were erroneous. At their request that court also found that neither of the plaintiffs was 'a party or signatory' to the stock sale agreement signed by 'Copperstate' and the executors, and that none of the executors was 'a party or signatory' to the stock sale agreement signed by 'Copperstate' and the 'Harm Interests'.

The general rule applicable to the issue at bar has been stated in varying ways. In Burnett v. Piercy, 149 Cal. 178, 189, 86 P. 603, 607, the court said:

'Where two or more written instruments are executed contemporaneously with reference to each other, for the purpose of attaining a preconceived object, they must all be construed together and effect given, if possible, to the purpose intended to be accomplished.' (Emphasis added.)

This statement has been quoted and followed in Mayers v. Loew's, Inc., 35 Cal.2d 822, 827, 221 P.2d 26; and People v. Ganahl Lumber Co., 10 Cal.2d 501, 507, 75 P.2d 1067. With less restrictive elements the rule was expressed in Symonds v. Sherman, 219 Cal. 249, 253, 26 P.2d 293, 295, as follows:

'It is a general rule that several papers relating to the same subject-matter and executed as parts of substantially one transaction, are to be construed together as one contract. (Citing Cases.)' (Emphasis added.)

cf. Shattuck v. Chase, 86 Cal.App.2d 810, 813, 195 P.2d 475. The statutory statement of the rule is expressed in Section 1642 of the Civil Code which provides:

'Several contracts relating to the same matters, between the same parties, and made as parts of substantially one transaction, are to be taken together.'

The term 'contract' as used in the code section is descriptive only of a writing and, in reality, refers to an 'intrument'. Cadigan v. American Trust Co., 131 Cal.App.2d 780, 787, 281 P.2d 332; Citizens...