Hayutin v. Weintraub

• Decision Date: 07 September 1962
• Docket Number: No. 26097,26097
• Citation: 24 Cal.Rptr. 761,207 Cal.App.2d 497
• Parties: Harvey HAYUTIN, Plaintiff and Appellant, v. Seymour WEINTRAUB, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

Page 761

24 Cal.Rptr. 761

207 Cal.App.2d 497

Harvey HAYUTIN, Plaintiff and Appellant, v. Seymour WEINTRAUB, Defendant and Respondent.

No. 26097.

District Court of Appeal, Second District, Division 2, California.

Sept. 7, 1962.

Swerdlow, Glikbarg & Nicholas, by Harry B. Swerdlow and Allan Albala, Beverly Hills, for appellant.

Goodman & Cogen, Los Angeles, for respondent.

ASHBURN, Justice.

Plaintiff Harvey Hayutin appeals from an adverse judgment rendered in favor of defendant and cross-complaint Seymour Weintraub in an action brought for equitable cancellation of an agreement under which the parties had participated in a private auction of their shares of stock in an equally owned corporation named Banner Productions, Inc., Weintraub being the successful bidder; plaintiff also sought a judgment directing reopening of the auction and resumption of the bidding. The court awarded to defendant specific performance upon his cross-complaint.

Appellant's principal contentions on appeal are that the court erred prejudicially (1) in refusing him leave to file an amended complaint on the day of trial, and (2) in denying his motion for a new trial.

Banner Productions, Inc. was engaged in the business of producing Tarzan feature motion pictures for distribution to theatres; it also owned old feature motion pictures and some such pictures produced specially for television, and generally sought other production opportunities. Banner Films, Inc., its wholly owned subsidiary, was engaged in distributing old feature motion pictures of Banner Productions, Inc., for exhibition on television and in distributing television motion pictures for Banner Productions, Inc. Plaintiff and defendant each owned 50 per cent of the capital stock of the last named company. Plaintiff was vice president and defendant was president. Plaintiff was in complete charge of the business with headquarters in Los Angeles, and for about two years preceding the auction agreement defendant spent most of his time outside of California, principally in Africa and England supervising the filming of a Tarzan picture; he returned in May, 1960. Plaintiff had a brother named Marvin Hayutin, whose activities in the company and with respect to its moneys were particularly obnoxious to defendant. The court found that 'about the latter part of May, 1960, disputes, controversies and differences arose between plaintiff and defendant; that subsequently, and on July 6, 1960, plaintiff and defendant entered into a written agreement under the terms of which the parties agreed to an auction whereby they would bid for each other's stock in Banner Productions, Inc., and the highest bidder would acquire from the other all of his shares of stock in Banner Productions, Inc.' Said agreement was orally modified at the time of the auction in particulars not here pertinent.

The action is one for rescission for fraud. Appellant's principal claim of fraud is concealment and it stems from conversations resulting in an arrangement that the auction be held on July 15, 1960, so that plaintiff's brother Marvin could go to New York and talk with Mr. McGregor, president of Banner Films, Inc., in order to acquire information about the assets and prospective assets of that company. It is claimed by appellant that both parties were 'required to submit a list of any activities in which we had spent any time or knew about; that would be activities for either Banner Films or Banner Productions.' The opening brief says that 'the parties agreed to deliver letters to each other and to Leon Kaplan, Esq., ¹ setting forth all asserts, activities, potential deals and negotiations of Banner Productions and Banner Films not reflected in the books and records of the corporation, so as to enable the parties to better evaluate the worth of the company.' But defendant testified: 'This letter was one that I gave to Leon Kaplan and one that Mr. Hayutin was to give to Leon Kaplan, which each of us would read to explain which deals we were working on for the company at that time, which deals had been submitted to us individually.' The letters were furnished and are in the record. The one furnished by plaintiff says: 'Per my understanding with Mr. Weintraub, listed below are the projects that have not been consummated that I have worked on for the company'; that of Weintraub: 'The following are proposals submitted to the company which I have discussed on behalf of the company with the persons indicated * * *.' No commitments have been made on behalf of the company on any of the foregoing. I believe that either through conversation, correspondence, agreement or contract, all liabilities or obligations of the company of which I have knowledge are also known to Harvey Hayutin.' The practical construction thus placed upon the oral understanding falls short of plaintiff's claim as to its purport for the letters square with defendant's testimony and reflect only an agreement to furnish information as to deals or prospective deals in which the respective parties had participated.

The auction proceeded on July 15, 1960; the bidding started at $37,500 and worked up to a $225,000 bid made by defendant, whereupon plaintiff stated that the bidding was over and defendant was declared to be the buyer. Plaintiff then delivered his stock certificates duly endorsed to attorney Leon Kaplan to be held by him in escrow pending full consummation of the sale pursuant to the terms of the agreement. Defendant immediately gave to Kaplan his check for $56,250, 25 per cent of the bid, as required by the agreement. ² Thereafter, on July 19th and within the time prescribed in the agreement, defendant delivered to Kaplan a certified check for the balance of the purchase price, $168,750. But plaintiff and his brother had on Sunday July 16 searched the office files thoroughly for some evidence upon which to base a rescission. Then plaintiff on July 17th had served a notice of rescission of the auction agreement and 'the so called auction,' assigning among others the ground of fraudulent concealment by defendant. In effect plaintiff admitted on the witness stand that at the time he prepared, signed and delivered the notice of rescission he had no facts other than suspicion. ³ Defendant promptly rejected this attempted rescission.

On August 26, 1960, plaintiff's present action for rescission was filed through Messrs. O'Melveny & Myers, his then attorneys. The cause of action as alleged in the original complaint was fraud perpetrated through nine specified misrepresentations and concealments on the part of defendant. The prayer sought to have the contract declared null and void, also that the parties be ordered to resume the auction at the point where defendant had made his bid of $225,000, that plaintiff be allowed to make a higher bid and that the auction thereafter continue pursuant to the terms of the contract until the party making the next to last bid should fail or refuse to make any further bid. The cause was fully at issue by August 26, 1960.

Pre-trial conference was had on May 4, 1961. It was there admitted that plaintiff had tendered and offered to restore everything of value that he received. The pre-trial order says: 'No law or motion matters are pending. All discovery proceedings have been completed and no further depositions or discovery shall be had. The case is ready for trial before the court sitting without a jury'; also that the trial date of June 7, 1961, 'shall remain in full force and effect.' A joint pre-trial statement which was incorporated by reference into the order says: 'This is an action for rescission, based upon alleged misrepresentations and concealments, of a private auction held between plaintiff and defendant for the sale of corporate stock * * *. By this action, plaintiff seeks to reopen the bidding at the auction. Neither plaintiff nor defendant seeks to set aside the Auction Agreement * * *. There are no further pleadings to be filed. Discovery matters have been completed.' (Emphasis added.) An affidavit of Herbert A. Bernhard, one of plaintiff's attorneys, made on June 1, 1961, and submitted in support of a motion for continuance (later discussed herein) says that he told the judge at the pretrial conference 'that amendments to the complaint were likely in the event that a settlement was not consummated.' A counter-affidavit of defendant's attorney Benjamin J. Goodman says: 'Mr. Bernhard, in his affidavit, states that he objected to the Pre-Trial Judge adding to the statement that 'no law or motion matters were likely.' Mr. Bernhard made such a statement but I immediately stated to the Court that I would object to any amended or supplementary pleadings unless they were applied for and filed prior to the Pre-Trial Order, with which statement the Court agreed.' The discovery mentioned in the pre-trial order included eight depositions comprising nearly a thousand pages, plus numerous exhibits, documents and other written memoranda. No effort to amend the pre-trial order was made at any time.

The trial had been set for June 7, 1961. On May 29, 1961, nine days before the trial was to begin, plaintiff substituted Sidney Fischgrund as his attorney in the place of the law firm of O'Melveny & Myers, who had been his attorneys from the outset. On May 31, plaintiff's new counsel noticed a motion for continuance for June 2 which was placed off calendar because of inadequate notice. On June 2, a new motion for continuance was noticed for hearing on June 7, the day of trial. The motion was granted and the case continued to June 19. However, the court imposed the following conditions: 'The matter may go to trial upon the present pre-trial order and upon the present pleadings without prejudice upon the plaintiff's right to urge his position for a jury trial and without prejudice to such application as may be made to the trial judge in the course of the trial with respect to amendments. MR. FISCHGRUND:...