Irving Tier Co. v. Griffin

• Decision Date: 16 September 1966
• Citation: 53 Cal.Rptr. 469,244 Cal.App.2d 852
• Court: California Court of Appeals
• Parties: IRVING TIER COMPANY, Inc., Plaintiff and Respondent, v. John L. GRIFFIN and Edna Griffin, Individually and doing business under the firm names and style of Cherryland Convalescent Hospital and Aloha Convalescent Hospital, Defendants and Appellants. Civ. 22230.

Page 469

53 Cal.Rptr. 469

244 Cal.App.2d 852

IRVING TIER COMPANY, Inc., Plaintiff and Respondent, v. John L. GRIFFIN and Edna Griffin, Individually and doing business under the firm names and style of Cherryland Convalescent Hospital and Aloha Convalescent Hospital, Defendants and Appellants.

Civ. 22230.

District Court of Appeal, First District Division 1, California.

Sept. 16, 1966.

Arnold Laub, Oakland, for appellants.

MacDonald, Brunsell & Walters, by William Walters, Oakland, for respondent.

MOLINARI, Justice.

This appeal involves two separate actions which were consolidated for trial. In each plaintiff sought damages for breach of contract involving the alleged sale by plaintiff to defendants of various items of convalescent hospital equipment and furniture. The first, action 324854, was predicated upon an alleged written contract; the second, action 324854, upon three alleged oral contracts. From the judgment entered in favor of plaintiff as to the action upon the written contract and as to two of the three causes of action in the action upon the oral contracts defendants appeal, contending that (1) as to the two oral contracts upon which recovery was allowed the trial court erred in finding that the statute of frauds was not a valid defense and that defendants were estopped to deny these contracts; and (2) the trial court erred in applying former Civil Code section 1784, subdivision (4), as the measure of damages for defendants' breach of each of the contracts upon which recovery was allowed.

Pleadings and Findings

In its first amended complaint in action 324854 plaintiff set out one cause of action based on a purported written conditional sales contract between plaintiff and defendants by the terms of which defendants agreed to purchase certain convalescent hospital furniture and equipment from plaintiff for a total purchase price of $20,444.42. Plaintiff then alleged that, after plaintiff and defendants subsequently agreed to delete one of the items from the contract thereby reducing the total contract price to $17,693.62, plaintiff ordered and prepared the remaining items included in the contract and tendered them to defendants, who refused to accept these goods and failed to perform their duty under the contract. Accordingly, plaintiff prayed for damages in the amount of $17,693.62 and for reasonable attorneys' fees, as provided for in the contract, in the amount of $5,000. Defendants' answer to this complaint denied that they ever entered into a contract with plaintiff and alleged that the document upon which plaintiff sought recovery was merely a memorandum which, by agreement of the parties, was to form the basis for a conditional sales agreement only in the event that the parties could subsequently reach an agreement as to various terms of the sale.

In action 326574 plaintiff, by means of three separately pleaded causes of action, alleged that plaintiff and defendants entered into three oral contracts by which defendants agreed to purchase various items of convalescent hospital equipment and furniture from plaintiff; ¹ that plaintiff ordered and prepared the items included in the subject contracts, but that defendants refused to perform their duty under the contracts; and that since defendants had led plaintiff to believe that they intended to rely on these three contracts as binding and valid agreements, defendants were estopped to deny the validity of the contracts. On the basis of these allegations plaintiff prayed for damages based on the total contract price of the goods which were the subject matter of the three alleged contracts. Defendants, by their answer to this complaint, denied the alleged oral contracts, denied that they were estopped to deny the validity of the oral contracts, and, as a separate and affirmative defense, pleaded that plaintiff's recovery on these alleged contracts was barred by the statute of frauds.

Following trial, the court below entered its findings of fact and conclusions of law. In action 324854 the court found essentially according to the ultimate facts pleaded in the complaint, i.e., that the parties had entered into a written agreement for the purchase of the items therein listed, that plaintiff had tendered delivery thereof to defendants who refused to accept and pay therefor, and that as a result of defendants' breach of this contract, plaintiff suffered damages in the amount of $2,492.05, this sum representing plaintiff's total loss of anticipated profits on all of the items of the sale transaction which were not stock items. ²

As to action 326574, the trial court found that defendants had entered into three oral contracts to purchase various items of convalescent hospital furniture and equipment; that 'Plaintiff relied upon the oral agreement(s) of the defendants to purchase these items and in reliance changed its position by the rendering of services, ordering of the merchandise, payment of freight and incurring the obligation to pay its suppliers for this merchandise within a certain specific time after delivery to plaintiff's warehouse'; that although plaintiff tendered delivery of the items to defendants, defendants refused to accept the goods and indicated that they would not be bound by the oral contracts; that as to the two contracts involving the sale of furniture and laundry equipment, which contracts were the subjects of the first and third causes of action, respectively, of said complaint, the items which defendants agreed to purchase thereunder were not stock items but were custom-made for defendants and therefore had no ready market, so that as to these two contracts defendants' breach caused plaintiff damages in the amount of $1,487.73 loss of anticipated profits (see fn. 2); ³ and that as to the third oral contract involving the sterilizer, which contract was the subject of the second cause of action of said complaint, no damages resulted from defendants' refusal to accept this item since it was not custom-made but was a standard model with a ready market for resale. Finally, as to the two oral and the one written contract on which the court allowed plaintiff to recover, the court specifically found that substantially all of the goods which defendants had agreed to purchase under these contracts were ultimately resold by plaintiff prior to trial at substantially the same price which defendants had agreed to pay, but that since plaintiff's right to recover damages from defendants, measured by the difference between the cost to plaintiff of the items ordered and the sale price to defendants, arose immediately upon defendants' repudiation of the various contracts and since plaintiff was not required to mitigate its damages, the court had refused to consider the resale of these items as mitigation of plaintiff's damages.

From these findings the trial court, by way of conclusions of law, concluded that based upon plaintiff's loss of profits it was entitled to judgment against defendants in the sums of $2,492.05 and $1,487.73 in actions 324854 and 326574, respectively; that the measure of damages in each case was fixed by Civil Code section 1784, subdivision (4); and that plaintiff's damages became fixed upon defendants' refusal to proceed with the contracts.

The Statute of Frauds

As already indicated, the three contracts upon which recovery was sought in action 326574 were oral. In addition, according to the allegations in this complaint, each of the three contracts was for the sale of goods of a value in excess of $500. Accordingly, as recognized by plaintiff, recovery upon such contracts would be barred by former sections 1624a and 1724 of the Civil Code and former section 1973a of the Code of Civil Procedure, which, as in effect at the time of the transactions involved in the instant case, ⁴ required such contracts to be in writing. However, to avoid the bar of the statute of frauds, plaintiff further pleaded that defendants were estopped to deny these oral contracts. As is apparent from the finding of fact with respect to the two oral contracts upon which plaintiff prevailed, the trial court found that defendants were estopped to deny these contracts. It is with these findings of fact specifically and with the trial court's determination as to the applicability of the estoppel doctrine generally that defendants take issue on appeal.

The concept of estoppel to assert the statute of frauds and the requisites for applying this doctrine are discussed in the case of Monarco v. Lo Greco, 35 Cal.2d 621, 623--624, 220 P.2d 737, 739, as follows: 'The doctrine of estoppel to assert the statute of frauds has been consistently applied by the courts of this state to prevent fraud that would result from refusal to enforce oral contracts in certain circumstances. Such fraud may inhere in the unconscionable injury that would result from denying enforcement of the contract after one party has been induced by the other seriously to change his position in reliance on the contract (citations), or in the unjust enrichment that would result if a party who has received the benefits of the other's performance were allowed to rely upon the statute. (Citations.) In many cases both elements are present. Thus not only may one party have so seriously changed his position in reliance upon, or in performance of, the contract that he would suffer an unconscionable injury if it were not enforced, but the other may have reaped the benefits of the contract so that he would be unjustly enriched if he could escape its obligations. (Citations.)'

Although there are numerous cases in California which have discussed the applicability of the doctrine of estoppel to assert the statute of frauds, we have found only a handful which did so in the context of a contract involving the sale of goods. In Booth v. A. Levy & J. Zentner Co., 21 Cal.App. 427, 131 P. 1062, the plaintiff sought to recover damages for the defendant's refusal to accept and pay for a...