Kaneko v. Okuda

• Decision Date: 28 August 1961
• Citation: 15 Cal.Rptr. 792,195 Cal.App.2d 217
• Court: California Court of Appeals Court of Appeals
• Parties: Henry KANEKO, Plaintiff, Appellant, and Respondent, v. Hanko OKUDA, Paul Uyemura, Harry Oshiro, Harley Kusumoto, Arnold M. Schwartz, Holiday Bowl, Inc., a corporation, California Bank, Defendants, Hanko Okuda, Paul Uyemura, Harry Oshiro, Harley Kusumoto, and Holiday Bowl, Inc., a corporation, Appellants and Respondents. Civ. 24658.

Page 792

15 Cal.Rptr. 792

195 Cal.App.2d 217

Henry KANEKO, Plaintiff, Appellant, and Respondent, v. Hanko OKUDA, Paul Uyemura, Harry Oshiro, Harley Kusumoto, Arnold M. Schwartz, Holiday Bowl, Inc., a corporation, California Bank, Defendants Hanko Okuda, Paul Uyemura, Harry Oshiro, Harley Kusumoto, and Holiday Bowl, Inc., a corporation, Appellants and Respondents.

Civ. 24658.

District Court of Appeal, Second District, Division 3, California.

Aug. 28, 1961.

Rehearing Denied Sept. 14, 1961.

Hearing Denied Oct. 25, 1961.

Samuel W. Blum, Arnold M. Schwartz, and Merle H. Sandler, Los Angeles, for appellants and respondents.

Edward S. Cooper and Ronald Harrison Cooper, Los Angeles, for appellant and respondent.

VALLEE, Justice.

Cross-appeals from a judgment of specific performance of a contract for the sale of corporate stock.

The judgment orders the transfer of 250 shares of common stock of Holiday Bowl, Inc., to plaintiff, 75 shares by each of defendants Hanko Okuda, Paul Uyemura, and Harry Oshiro, and 25 shares by defendant Harley Kusumoto. Holiday Bowl, Inc., is a party defendant. Defendants appeal from the judgment and plaintiff appeals from that part of the judgment which denies specific performance against Harley Kusumoto for an additional 50 shares.

The individual defendants formed a corporation named Holiday Bowl, Inc., on July 24, 1957 for the purpose of establishing and operating a bowling alley. The corporation applied for and received a permit from the Commissioner of Corporations: to sell and issue 500 shares of common stock to the individual defendants, 125 shares to each, in cancellation of a $50,000 corporate indebtedness to them, the stock to be held in escrow; to sell and issue to the public 2,000 shares of preferred and 500 shares of common in units of four preferred and one common at the price of $500 a unit on a subscription basis, the total purchase price to be impounded until all the units were sold and paid for. The corporation took over a lease of certain premises and various contracts including contracts for the construction of a building and the installation of equipment and fixtures.

On March 5, 1958 plaintiff and the individual defendants went to the office of defendants' attorney and there was then prepared and signed by the individual defendants an application to the Commissioner of Corporations to transfer in escrow to plaintiff a total of 100 shares of defendants' escrowed stock, each defendant to transfer 25 of his 125 shares. The consideration for such transfer was to be the full par value of $100 per share, or a total of $10,000. Following the preparation and execution of the application, plaintiff and Okuda, Uyemura, and Oshiro went to the office of the commissioner, and after some discussion filed the application.

Later that day this instrument, prepared by plaintiff's attorney, was read and signed by defendants Okuda, Uyemura, and Oshiro and by plaintiff:

'Agreement made this 4th day of March, 1958, by and between Hanko Okuda, Paul Uyemura, Harry Oshiro and Harley Kusumoto, hereinafter called party of the first part, and Henry Kaneko hereinafter called party of the second part, Witnesseth:

'The party of the first part hereby agree and covenant that they own 500 shares of Common Stock of Holiday Bowl, Inc., located at Crenshaw Blvd., Los Angeles, California. Said shares of stock are now held in escrow by Arnold M. Schwartz, Attorney at Law, at 6505 Wilshire Blvd., Los Angeles 48, California.

'Whereas, the party of the second part is desirous of purchasing Three Hundred Shares of Common Stock of aforementioned corporation at $30,000.00 @ $100.00 per share, under the terms and conditions hereinafter set forth:

'First: One Hundred Shares (100) of Common Stock to be purchased by the party of the second part for a total consideration of $10,000.00 upon the execution of this contract.

'Second: An Option to purchase Two Hundred Shares, of Common Stock of the party of the second part for a total consideration of $20,000.00. Said Option to be exercised, if at all, on or about 180 days from the execution of this contract.

'It is Mutually Agreed, that there is no default of payment of the corporation to any of its creditors. Upon the existence of any default this contract is null and void.

'It is further mutually agreed that upon each payment to the party of the first part, the shares of common stock now held in Escrow will be changed as to its ownership so that the name of the party of the second part shall appear thereon.

'In Witness Whereof, we have hereto signed our names hereto.

Hanko Okuda

Hanko Okuda

Paul Uyemura

Paul Uyemura

Harry Oshiro

Harry Oshiro

________

Harley Kusumoto

Henry Kaneko

Henry Kaneko'

It will be noted Kusumoto did not sign the instrument. He departed on an out-of-town trip after he had signed the application for permit and before the instrument was signed by Okuda, Uyemura, and Oshiro. He had previously orally agreed to sign the instrument. He was absent from Los Angeles from March 5 to 10. The instrument was signed by Okuda, Uyemura, and Oshiro in the office of plaintiff's attorney. It was not delivered to any of them on the day it was singed. The original and all copies remained in the hands of plaintiff. On March 18, 1958, after Kusumoto had returned to Los Angeles, a copy was delivered to him.

On March 7, 1958 plaintiff delivered a check for $10,000 to Okuda, Uyemura, and Oshiro payable to them as payment for the 100 shares. On April 9 Okuda, Uyemura, and Oshiro returned the $10,000 check to plaintiff and refused to proceed on the ground the contract did not express the full agreement of the parties. On April 7, 1958 plaintiff sent to each of the four individual defendants a cashier's check for $7,500 each, a total of $30,000 as payment in full for the 300 shares referred to in the instrument. Accompanying each check, plaintiff sent each individual defendant a letter stating, 'The enclosed check will replace the check dated March 7, 1958,' and demanding that each transfer to plaintiff 75 shares. Two of the letters with the $7,500 checks were not accepted. The other two checks were returned to plaintiff's attorney by defendants' attorney also on April 9, 1958 with a statement that 'no basic agreement exists between the payees and your client with respect to which there is any obligation to accomplish the transfer requested in your letter.' This suit was filed April 21, 1958.

The court found the instrument dated March 4, 1958 was a contract; it was executed; there was a basic agreement between plaintiff and Hanko Okuda, Paul Uyemura and Harry Oshiro for the delivery by said named defendants to plaintiff of 75 shares each of the common stock of Holiday Bowl, Inc., for $100 a share; no basic agreement existed between plaintiff and Harley Kusumoto as to the option set forth in the contract signed March 5, 1958 and dated March 4, 1958 for 50 shares of the common stock owned by said defendant Harley Kusumoto; plaintiff has duly performed and offered to perform and is ready and willing to perform the terms of the contract dated March 4, 1958 on his part, and exercised the option contained therein; defendants prior to the commencement of the action repudiated the contract on their part and wholly refused to accept any performance thereof and prevented performance thereof by plaintiff and notified plaintiff that they would not perform the same.

Appeal of Defendants

Defendants contend the contract was not executed but remained incomplete and inchoate, creating no rights in plaintiff, because it was not signed by Kusumoto. It is argued that inasmuch as Kusumoto did not sign the contract, it is not binding on Okuda, Uyemura, and Oshiro. The court found the contract and option to purchase dated March 4, 1958 for 100 shares of the common stock, or 25 shares each of Okuda, Uyemura, Oshiro, and Kusumoto, is a valid and binding contract; and the option to purchase the additional shares of each of said defendants has been duly exercised by plaintiff but is only binding on Okuda, Uyemura, and Oshiro, but not on Kusumoto. The court concluded plaintiff was entitled to judgment that the contract be specifically enforced, that on payment of $2,500 to each of the individual defendants, each of them cause to be transferred in escrow and on the books of the corporation 25 shares to plaintiff, and that Okuda, Uyemura, and Oshiro apply for a permit to transfer to plaintiff in escrow 50 shares owned by each of them on payment of $5,000 to each of them by plaintiff and that each of them cause to be transferred 50 shares to plaintiff.

It is not the rule that a contract, which on its face purports to be between the parties named in the instrument, must invariably be executed by all whose names appear in the instrument before it will be binding on any. In the absence of a showing that a contract is not to be deemed complete unless signed by all parties, the parties signing may be bound though others have not signed. (12 Cal.Jur.2d 247, § 49.) In determining whether the promises were joint of joint and several, when uncertainty arises concerning the meaning of a contract the language used by the parties is to be considered in the light of the surrounding circumstances and of the practical and mutual construction placed thereon as shown by their acts and conduct before any controversy has arisen between them. Douglas v. Bergere, 94 Cal.App.2d 267, 270, 210 P.2d 727.

We construe the court's findings and conclusions as determining that defendants' obligations were joint and several. As stated by the learned trial judge in his memorandum opinion, the discussions between the parties prior to the signing of the contract 'embraced the immediate purchase by the plaintiff of 25 shares of the common stock from each of the defendants for a total consideration of $10,000, in order to meet the then due installment to the Continental Bowling Corporation, as...