Lasry v. Lederman

• Decision Date: 10 January 1957
• Court: California Court of Appeals Court of Appeals
• Parties: Samuel H. LASRY, Plaintiff and Appellant, v. Charles LEDERMAN and Benjamin Lederman, Defendants and Respondents. Civ. 21746.

Page 663

305 P.2d 663

147 Cal.App.2d 480

Samuel H. LASRY, Plaintiff and Appellant, v. Charles LEDERMAN and Benjamin Lederman, Defendants and Respondents.

Civ. 21746.

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

Jan. 10, 1957.

Hearing Denied March 5, 1957.

Albert E. Marks, Beverly Hills, for appellant.

Alfred S. Gainsley, Nathan April, C. Bernard Kaufman, Los Angeles, for respondents.

SHINN, Presiding Justice.

Plaintiff appeals from a judgment of nonsuit in an action for declaratory relief, an accounting, and other equitable relief, based upon an alleged oral agreement whereby plaintiff and defendants formed a partnership or joint venture for the purpose of purchasing, exploiting and reselling certain real property.

The complaint alleges that plaintiff and defendants entered into an oral agreement in September 1954 whereby they formed a joint venture for the purpose of acquiring title to a building at 11th and Santee Streets in Los Angeles; that each of the parties agreed to pay one-third of the purchase price for said building and that each should own an undivided one-third interest in the joint venture and its assets. It also alleges that during October 1954, without plaintiff's consent and contrary to said agreement, defendants purchased said building and acquired title thereto as tenants in common; that defendants paid $155,000 for the building, with a down payment of one-third of the purchase price, and a deed of trust for the balance. It further alleges that on October 22, 1954, plaintiff tendered to defendants the sum of $30,000 to cover one-third of the down payment and other incidental expenses in connection with the purchase of the building; plaintiff agreed to assume one-third of the obligation due under the trust deed; such tender and agreement were refused by defendants; and that defendants deny that plaintiff has any interest in the joint venture or in the building. Plaintiff alleges on information and belief that defendants have leased a portion of the building for occupancy and are collecting rentals, but that they refuse to account to him for said rentals. He also alleges that he has performed all of the conditions of said oral agreement, save as he has been prevented by defendants, and that he is ready, willing and able to perform those conditions whose performance has been prevented by them. He further alleges that an actual controversy exists with respect to the rights of plaintiff and defendants under their oral agreement. The prayer is for a declaratory judgment that plaintiff and defendants entered into the joint venture and that the building is the property of the joint venture; that title to the building be conveyed to the joint venture; that plaintiff be ordered to pay to defendants one-third of the down payment and to assume one-third of the balance of the trust deed obligation; that defendants be required to account for all rentals and income received from the building, and that a receiver be appointed to take possession of the building and collect the rentals.

The answer admits that defendants purchased the building and hold title thereto as tenants in common. It denies all the other allegations of the complaint. It was pleaded, as a separate defense, that the alleged oral agreement was for the purchase and sale of an interest in real property and that there was no agreement or memorandum of an agreement subscribed by either defendant.

Trial was to the court. At the commencement of the trial defendants made a motion to exclude evidence on the grounds that the agreement was barred by the Statute of Frauds and that the complaint did not state a cause of action. Their motion was denied.

Plaintiff was the only witness. The following is the substance of his testimony. Defendants Charles and Benjamin Lederman are brothers and plaintiff had had previous business dealings with them. Around the 1st of September, 1954, plaintiff saw a sign in front of a vacant building at 11th and Santee Streets in Los Angeles indicating that the building was for sale. After obtaining information about the building from a real estate broker, he met defendants at their office on September 12th or 13th. The conversation which took place at that time is the basis of the alleged oral understanding between the parties. Without first disclosing the identity of the property, plaintiff told defendants that he had information about an unoccupied building which could be renovated, leased and eventually resold at a considerable profit. He told them it would be an excellent investment both for income and capital gain purposes and offered to take defendants in on a fifty-fifty basis. Defendants said that they preferred to go into the venture on a one-third basis. This was agreeable to plaintiff, who then divulged the location of the building and stated that it could be purchased for $175,000 or less. Benjamin Lederman said that the building had been offered to defendants during the previous year for over $300,000 and plaintiff then explained to them that the difference in price was due to the fact that the building was now completely untenanted. Defendants told him to buy the property at the best price for the three of them and each agreed to pay one-third of the purchase price. Plaintiff told defendants that the building was badly run down and would require the expenditure of a good deal of money before it would be suitable for leasing. He said it would be necessary to remodel, paint and decorate it; the elevator would have to be renovated and a new store front would have to be put in. Defendants each agreed to pay one-third of the cost of repairs and one-third of the operating expenses when requested to do so by plaintiff. Defendants told plaintiff to handle the repairs and the leasing of the renovated building himself. Plaintiff learned several weeks later that defendants had purchased the building for their own benefit. He saw defendants in their office on October 8th. Charles Lederman told him that he and his brother had bought the building so as to put it in the estate of the Ledermans. Plaintiff protested to defendants that they had violated their agreement. They did not deny this. Defendants told him that they paid only $155,000 for the building, with a down payment of only thirty percent, and that those terms were better than the terms which plaintiff had said he could obtain. On October 22nd plaintiff tendered defendants a check for $30,000, representing one-third of the down payment on the building, and his estimate of one-third of the cost of repairs and one-third of the operating expenses until the building was completely leased and operating at a profit. Plaintiff told defendants that he would assume one-third of the remaining trust deed balance. The tender and agreement were refused. Charles Lederman told plaintiff that he had no claim whatsoever against defendants, but Benjamin told him that they would discuss the matter at a later time and that plaintiff would hear from them. When plaintiff heard nothing further from defendants he sent them a letter containing a formal demand.

Defendants' motion for a nonsuit was granted. The court ruled that, apart from the question of the Statute of Frauds, no joint venture had been created by the parties, that their September conversation amounted to no more than preliminary negotiations with a view to a later, more detailed agreement, and that the complaint did not state a cause of action upon any theory.

The sole question presented on the appeal is whether the court erred in granting a nonsuit upon the ground that the evidence was insufficient to warrant a finding that the parties entered into a joint venture. Interpreting the evidence and the reasonable inferences therefrom in the light most favorable to plaintiff, we are persuaded that the court erred in granting defendants' motion.

A joint venture is an undertaking by two or more persons jointly to carry out a single business enterprise for profit. Nelson v. Abraham, 29 Cal.2d 745, 749, 177 P.2d 931. There must be a community of interest in the enterprise; a sharing of rofits and losses; and joint participation in the conduct of the business. (28 Cal.Jur.2d 478-480.) The existence of a joint venture depends upon the intention of the parties, Universal Sales Corp. v. Cal. etc. Mfg. Co., 20 Cal.2d 751, 764-765, 128 P.2d 665; it may be created by an express agreement or its existence may be inferred from their acts and conduct. Martter v. Byers, 75 Cal.App.2d 375, 171 P.2d 101; Nelson v. Abraham, supra, 29 Cal.2d 745, 177 P.2d 931; 28 Cal.Jur.2d 484-486. As there was no evidence in the instant case of any acts or conduct from which the court could infer the existence of a joint venture, we must look exclusively to the oral agreement.

The trial court expressed the conclusion that the oral understanding between the parties was no more than an agreement to enter into a joint venture at some future date on terms which would be mutually satisfactory to plaintiff and defendants. We are of the opinion that plaintiff's testimony, if believed, would support a finding that a joint venture for the purpose of acquiring, exploiting and selling the building was created by the September agreement. The parties agreed to purchase, renovate, lease and eventually resell the building in the expectation of substantial profit. Each was to have a one-third interest in the property and to share equally in the rentals and in the proceeds of a resale. Each was to contribute one-third of the purchase price and to share equally the expenses of renovation and operation. It is true that there were matters upon which they reached no agreement. Nothing was said respecting the terms of purchase or the cost of repairs. But plaintiff stated the building could be obtained for $175,000 and the parties knew that extensive repairs would be necessary to put the building in tenantable condition. Plaintiff...