Lyon v. Giannoni

• Decision Date: 03 March 1959
• Parties: Lee LYON, Plaintiff and Appellant, v. Anthony H. GIANNONI; Louis D. Giannoni; Dixon Real Estate Company, a copartnership; Oscar Graeser; and H. E. Rattenbury, Defendants and Respondents. Civ. 9546.
• Court: California Court of Appeals Court of Appeals

Page 690

335 P.2d 690

168 Cal.App.2d 336

Lee LYON, Plaintiff and Appellant, v. Anthony H. GIANNONI; Louis D. Giannoni; Dixon Real Estate Company, a copartnership; Oscar Graeser; and H. E. Rattenbury, Defendants and Respondents.

Civ. 9546.

District Court of Appeal, Third District, California.

March 3, 1959.

Pierce & Brown, Sacramento, for appellant.

G. Douglas Thompson, Vacaville, for respondents Giannoni.

Joseph W. Raftery, Dixon, for other respondents.

WARNE, Justice pro tem.

Appellant appeals from a judgment of dismissal in favor of respondents entered after the sustaining of general demurrers to the second amended complaint (hereinafter referred to as the complaint) without leave to amend. On the date set for presenting oral argument herein, appellant by a written stipulation dismissed the appeal as to the purchasers Giannoni.

The complaint sets forth three causes of action, the first of which is an action on the contract against Anthony H. Giannoni and Louis D. Giannoni for the purchase price of certain land. The material facts alleged are as follows: Through respondent, Dixon Real Estate Company, a copartnership composed of respondents Oscar Graeser and H. E. Rattenbury, hereinafter referred to as the 'realtor,' Anthony H. Giannoni and Louis D. Giannoni, hereinafter referred to as the 'purchasers,' offered to purchase a ranch owned by appellant for the sum of $64,000 and made a deposit of $6,400 with said realtor to be applied on the purchase price thereof. The offer was not acceptable to appellant, but after further negotiations carried on through the realtor the parties executed a contract in the form of a 'deposit receipt' which recited that the purchasers agreed to purchase and the appellant agreed to sell the described property for the sum of $80,000. The receipt of $6,400 was acknowledged. The balance was to be paid within 30 days as follows: 'An additional $25,600.00 upon acceptance of deal. The balance or $48,000.00 to be paid in 10 equal annual payments of $4,800.00 or more plus interest at 5%. Purchaser to have right to have well tested by a reliable pump company to determine amount of water available. If test is not satisfactory to buyers their deposit of $6,400.00 will be returned to them.' Plaintiff alleges repudiation by the purchasers and offer to perform by plaintiff after breach.

The second cause of action is directed against the respondent realtor and alleges that contemporaneously with the repudiation of said contract by the purchasers and their notification thereof the appellant had demanded of the respondent realtor the $6,400 which had been deposited with said realtor, but which deposit the realtor without authority or consent of appellant had returned to the purchasers. Appellant therefore claims that said realtor is indebted to appellant for said sum.

A third cause of action seeking damages against the realtor alleges that the realtor in breach of its agency contract with appellant to use its best efforts to sell appellant's property persuaded the Giannonis to purchase other property; and as a result of the realtor's failure to perform the obligations of said agency contract, appellant suffered damages. The trial court sustained general demurrers to each cause of action stating: 'that there is no contract here; that it was simply an option * * *' The plaintiff appealed, as heretofore stated, from the judgment of dismissal. Apparently the trial court interpreted the contract to be an option only because of the satisfaction clause giving the purchasers the right to have the well tested by a reliable pump company to determine the amount of available water and the right, if the test was not satisfactory to the purchasers, to refuse to go ahead with the deal and to have their deposit of $6,400 returned to them. That provision in the contract does not constitute a condition to the existence of a contract. The whole purchase receipt, and the particular clause, must be read as merely making plaintiff's performance dependent upon the obtaining of 'satisfactory tests for water available.' Here we have an agreement whereby the purchasers agreed to purchase, and the seller agreed to sell, certain land upon the terms and conditions therein stated. It was more than a mere option to purchase. A contract arose and the buyers were given the privilege to terminate it in the event that the tests for water available were not satisfactory. The general view is that deposit receipts are binding and enforceable contracts. Mattei v. Hopper, 51 Cal.2d 119, 330 P.2d 625. Furthermore, the clause giving the purchasers the right to have the well tested by a reliable pump company to determine the amount of water available and specifying that the $6,400 deposit will be returned to the buyers if the test is not satisfactory to them, being contained in an otherwise enforceable contract to buy and sell, did not make the purchasers' obligation illusory. As stated in Collins v. Vickter Manor, Inc., 47 Cal.2d 875, at page 882, 306 P.2d 783, at page 788: '* * * the buyer could not withdraw from the contract at his pleasure. (Cf. Shortell v. Evans-Ferguson Corp. (1929), 98 Cal.App. 650, 659 et seq. (5, 6), 277 P. 519; 12 Cal.Jur.2d 317, § 114.) A contractual provision for performance to the satisfaction of one of the parties ordinarily calls for such performance as would be satisfactory to a reasonable person. (Thomas Haverty Co. v. Jones (1921), 185 Cal. 285, 296(7), 197 P. 105.)' As also held in Collins v. Vickter Manor, Inc., supra, if acceptance or rejection of the result of a test made by a reliable pump company for water available depended upon the purchasers' uncontrolled caprice, then they would be the sole judges of their own satisfaction and could withdraw from the contract without regard to the reasonableness of their decision. See...