Lewis v. Firestone

• Decision Date: 04 May 1959
• Citation: 338 P.2d 953,170 Cal.App.2d 129
• Parties: R. E. LEWIS and Vera M. Lewis, Plaintiffs, Cross-Defendants and Respondents, v. E. E. FIRESTONE and Olive Firestone, Defendants, Cross-Complainants and Appellants, Irving S. Kravitz, Edith Z. Kravitz and Hardy W. Wallen, Defendants and Appellants, Harry Rogers and Eleanor A. Rogers, Defendants, Cross-Defendants, and Respondents. Civ. 5663.
• Court: California Court of Appeals Court of Appeals

Page 953

338 P.2d 953

170 Cal.App.2d 129

R. E. LEWIS and Vera M. Lewis, Plaintiffs, Cross-Defendants and Respondents, v. E. E. FIRESTONE and Olive Firestone, Defendants, Cross-Complainants and Appellants Irving S. Kravitz, Edith Z. Kravitz and Hardy W. Wallen, Defendants and Appellants Harry Rogers and Eleanor A. Rogers, Defendants, Cross-Defendants, and Respondents.

Civ. 5663.

District Court of Appeal, Fourth District, California.

May 4, 1959.

Dorsey, Bultman & Bianchi, Bakersfield, for appellants.

Borton, Petrini, Conron & Brown, Bakersfield, for respondents.

GRIFFIN, Presiding Justice.

Originally, this was an action against other makers, under sections 1431, 1432 of the Civil Code, for contribution by some of the joint and several makers of a note who, allegedly, were compelled to pay said note. The complaint of R. E. Lewis and Vera M. Lewis, husband and wife, hereinafter referred to as plaintiffs. sought 7/9 contribution, there being nine makers and two payers. By stipulation it was agreed that defendants, cross-complainants and appellants E. E. Firestone and Olive Firestone, and Irving S. Kravitz, Edith Z. Kravitz and Hardy W. Wallen (hereinafter referred to as appellants) all makers of the note, were actually combined for a one-third interest; that cross-defendants and respondents Harry Rogers and Eleanor A. Rogers, husband and wife, were combined for a one-third interest, and that plaintiffs R. E. Lewis and Vera M. Lewis had a like interest.

Non-appealing defendants, Rogers and wife, answered by general denial, and set up as a defense a joint venture, as evidenced by a written agreement of July 22, 1954 (Exhibit 2) and contended they had sold their entire interest to plaintiffs Lewis. Appellants Firestone, et al., answered and pleaded a long cross-complaint, the essence of which was to allege a joint venture by a claimed oral agreement which was ratified by a subsequent written agreement (Exhibit 2). They alleged breach of the agreement by plaintiffs and cross-defendants Lewis, and prayed for judgment terminating the joint venture, distribution of the assets, and for an accounting. The same matter was pleaded as an affirmative defense to the complaint.

There is considerable dispute as to the facts established. The principal contention on this appeal is the insufficiency of the evidence to support the facts found; that the findings are incomplete; and that the judgment is not supported by the findings and is contrary to the evidence and the law.

The Ranch Income Shares, Inc., was adjudicated a bankrupt in May, 1953. Defendant Firestone had been farming its real property and leased land under a lease executed by the trustee in bankruptcy. Firestone had purchased a sprinkling system and new pump on contract. He was indebted to one Bonaventura for fertilizer in the sum of $3,250; to Pacific Gas & Electric Company for power in the sum of $5,200; and owed one Kemble $11,626.12 on an unsecured note given to purchase a one-half interest in a trust deed hereinafter mentioned. During this time Firestone had acquired options to purchase the following claims against the bankrupt: (1) a judgment lien in favor of one Bowline in the sum of $17,000, which he claimed could be purchased for $5000, and a mechanic's lien in favor of one Freeborn for $4,000, which could be purchased for $3,500. Firestone and his wife claimed they then owned an undivided one-half interest in a promissory note secured by a trust deed in the principal sum of $22,575, dated February 1, 1952, and executed by Ranch Income Shares, Inc., and certain assignments of agricultural leases. Just prior to June 24, 1954, plaintiffs, appellants, and respondents had some form of oral agreement to purchase the assets of said bankrupt. On June 24th, all joined in signing a joint and several note for $15,000, payable to Security First National Bank at Bakersfield (hereinafter referred to as Security Bank), which was due on October 1, 1954, or on demand at the option of the holder. The money was paid over on July 22, 1954. On July 6, 1954, an agreement in writing was entered into between R. E. Lewis and Harry Rogers as first parties and E. E. Firestone, as second party, reciting:

'Whereas: First parties contemplate making a bid to the Trustee in Bankruptcy in the matter of 'Ranch Income Shares, Inc., a Corporation Bankrupt' for all of the land and agricultural leases held in the name of said bankrupt. * * *

'Whereas, Second Party has outstanding certain obligations and indebtedness incurred in connection with the operation of a portion of said property as lessee from the said Trustee in Bankruptcy during the year 1953 and,

'Whereas, Second Party has joined with First Parties in procuring a loan in the sum of $15,000 from the Security First National Bank, * * *.

'Now therefore, in consideration of the premises and the mutual covenants and agreements hereafter set forth and be performed by the parties, it is agreed:

'1. The proceeds of said $15,000.00 loan are to be paid to the legal firm of Mack, Bianco, and King of Bakersfield with instructions by the parties as to the disbursement thereof.

'2. Second party agrees to sell, assign, transfer and set over to First Parties two thirds of his right title and interest in and to the following described property to wit:

'(a) His equity in the pump and sprinkler system purchased by him under conditional sales contract during the year 1953 while operating a portion of said property as lessee.

'(b) That certain Deed of Trust dated February 2, 1952 executed by Ranch Income Shares, Inc., * * *

'(c) Those certain agricultural leases acquired by said Second Party on February 27, 1952 from Louis S. Kemble and Esther Kemble * * *

'(d) His option to purchase that certain judgment in the matter of Arnold Bowline * * * and any monies due thereunder.

'(e) Any and all other claims against said Bankrupt Corporation which said party may now have.

'3. That in the event said property, when acquired, is sold or leased the receipts therefrom shall apply first, to the retirement of said $15,000.00 note to Security First National Bank * * * Second to the retirement of a note to Louis Kemble in the sum of $11,626.12. * * * Third the power bill due Pacific Gas & Electric Company in the sum of $5200.00 and incurred by Second Party during his said farming operations in 1953.

'4. It is agreed that First Parties will transfer to Second Party by proper deed and assignment an undivided one-third of the interest acquired by them from the Trustee in Bankruptcy by virtue of the bid referred to in the first paragraph of this agreement.

'It is the intention of the parties hereto that said property shall be held in equal shares by the three persons whose names are signed hereto, and that each of them will execute all necessary deeds, transfers and assignments to effect and carry out the provisions of the agreement.

(Signed) 'R. E. Lewis

'Harry Rogers

'First Parties

'E. E. Firestone

'Second Party'

A letter of July 6, 1954, from the law firm mentioned in paragraph 1 was directed to Lewis and Firestone. It recites, in part:

'I have for acknowledgment Cashiers Check No. 138965 of Security-First National Bank of Los Angeles, Bakersfield Branch, dated July 6, 1954, payable to you gentlemen, and endorsed to Mack, Bianco & King, in the amount of $15,000.00. This money is to be deposited in our Trustee Account and used as follows:

Paid. 1st: Pay Bonaventura judgment in the amount

                      -----                   -----------
                                          of $3,250.00, plus interest, etc
                Pd. 1000 July 14:  2nd:   Pay Bowline for assignment of claim, as
                                          per option in your hands.
                      Pd. Fr.
                        Pd         3rd:   Pay Freeborn claim in the amount of
                       ---                $4,000.00 or less.
                                   4th:   $2,000.00 is to be used to 'back up' a bid
                                          for all of the assets of Ranch Income
                                          Shares in bankruptcy, which bid is to be
                                          made for the assets, subject to the following
                                          secured claims:
                                            Firestone-Kelly Trust Deed,
                                              approximate amount               $24,000.00
                                            Bowline claim                       17,000.00
                                            Freeborn claim                       4,000.00
                                                                             ------------
                                                                               $45,000.00
                

'We are authorized to prepare such bid in the name of R. E. Lewis and submit the same to the bankruptcy court.

Yours Very Truly,

Mack, Bianco & King,

(Signed)

By Henry Mack

'The foregoing is satisfactory.

'Dated: July 6, 1954.

'(Signed) E. E. Firestone

'(Signed) R. E. Lewis' Lewis and Rogers, in their own names, purchased all the trustee's right, title and interest in the real property and leases of the bankrupt estate, subject to Kemble's note and trust deed, for the sum of $3,000. They purchased the Bowline judgment for $5,000, the Freeborn lien for $3500, and paid the fertilizer bill in the sum of $3,200, plus incidental transfer charges.

According to the evidence, it appears that the Firestone interests, at the time of the written joint venture agreement, did not own the sprinkler or pump. Each had been previously repossessed by the owner and taken from the property, with some claimed oral understanding that it might be repurchased if not previously sold. It further developed, at that time, the note given by Firestone for the one-half interest in the trust deed was in default, suit had been instituted thereon, and an attachment levied; that the leases Firestone was to transfer to the joint venture were never owned by him and were not transferred, but had already expired and were subsequently renegotiated to Lewis; that the Bowline judgment and Freeborn claim were...