A-Mark Coin Co. v. General Mills, Inc.

• Decision Date: 25 October 1983
• Docket Number: A-MARK
• Citation: A-Mark Coin Co. v. General Mills, Inc., 148 Cal.App.3d 312, 195 Cal.Rptr. 859 (Cal. App. 1983)
• Court: California Court of Appeals
• Parties: COIN COMPANY, Plaintiff and Appellant, v. GENERAL MILLS, INC., et al., Defendants and Respondents. Civ. 67252.

Page 859

195 Cal.Rptr. 859

148 Cal.App.3d 312

A-MARK COIN COMPANY, Plaintiff and Appellant, v.GENERAL MILLS, INC., et al., Defendants and Respondents.

Civ. 67252.

Court of Appeal, Second District, Division 5, California.

Oct. 25, 1983.

Hearing Denied Feb. 1, 1984.

Swerdlow, Miller, Seal & Swerdlow, Harry B. Swerdlow and James L. Seal, Beverly Hills, for plaintiff and appellant.

Robert S. Daggett, Timothy A. Meltzer, Brobeck, Phleger & Harrison, San Francisco, for defendants and respondentsGeneral Mills, Inc., Bowers & Ruddy Galleries, Inc., James F. Ruddy and Q. David Bowers.

Dolman Wolfe & Linden and Jay A. Woollacott, Los Angeles, for defendants and respondentsRare Coin Galleries, Inc., and Joel Rettew.

FEINERMAN, Presiding Justice.

A-Mark Coin Company(A-Mark) appeals from a judgment after a court trial denying it any relief in its suit against respondentsGeneral Mills, Inc.(General Mills), Bowers & Ruddy Galleries, Inc.(Bowers & Ruddy), Rare Coin Galleries (Rare Coin), James F. Ruddy(Ruddy), Q. David Bowers(Bowers) and Joel Rettew(Rettew).A-Mark's suit against respondents was based on allegations of intentional interference with a contractual relationship and with an advantageous business relationship.

There is no dispute as to the essential facts giving rise to the lawsuit, and, accordingly, we summarize those facts as found by the trial court.

FACTS

A gentleman named La Vere Redfield died in 1974, a resident of Nevada.He left a sizeable estate which included a collection of slightly less than 500,000 United States silver dollars, some in uncirculated condition and some having numismatic value to collectors and dealers in rare coins (the Redfield collection).Mr. Redfield's will was admitted to probate, and his estate, including the Redfield collection, became subject to probate administration under the supervision of the Second Judicial District Court of Nevada for the County of Washoe(the probate court).

A-Mark is, and was at the times pertinent, a corporation engaged in the business of buying and selling rare coins at wholesale.A-Mark is owned and controlled by Steve Markoff(Markoff), its president and chief executive officer and the sole stockholder of A-Mark Financial, Inc., a corporation of which A-Mark is a wholly-owned subsidiary.

In early 1975, Markoff learned of the Redfield collection and initiated efforts to purchase it from the Redfield estate.At first Markoff had little success in finding out anything about the collection.Stack's, a firm retained by the estate to appraise the coins, told the three executrices that general disclosure of information regarding the coin inventory might depress the market price.Later in 1975, Markoff persuaded the estate representatives to permit him to inspect the collection and negotiate for an agreement to purchase it on condition that he enter into an "Agreement Regarding Non-Disclosure of Confidential Materials."

On October 29, 1975, attorneys for the estate's three executrices filed a Petition for Instructions Regarding Sale of Personal Property in the probate court.The petition sought instructions authorizing either a public sale of the coin collection pursuant to NRS section 148.190¹ or a private sale pursuant to NRS section 148.170.²On November 4, 1975, the probate court entered an order authorizing the executrices to sell the coins at private sale pursuant to NRS section 148.170.³

A-Mark, through Markoff, then signed a written agreement with the executrices to purchase a portion of the Redfield collection for approximately $5,900,000.⁴The agreement was executed on December 17, 1975, and provided that "[t]he purchase and sale of the Coins shall be consummated at a Closing ... to be held at Reno, Nevada, at 10:00 a.m. ... on January 19, 1976...."

Respondent Rare Coin is, and was in 1975-1976, a corporation engaged in the business of buying and selling rare coins at retail.Respondent Rettew, a 50 percent owner of Rare Coin, learned of the existence of the Redfield collection in September of 1975 from a Reno physician who was also a coin collector.Rettew, in an attempt to learn more about the collection, contacted one of the executrices, Luana Miles.⁵Mrs. Miles advised Rettew to employ Nevada counsel and seek an opportunity to bid on the coins.

Rare Coin, lacking ready funds to purchase the collection, approached respondents Bowers & Ruddy ⁶ with the idea of forming a joint venture to investigate, bid for and purchase the Redfield collection.Bowers and Ruddy made it clear to Rare Coin that General Mills and Bowers & Ruddy could not participate formally or be named in any bid until authorization had been received from General Mills committing General Mills' funds to purchase the coins.A written joint venture agreement between Rare Coin and Bowers & Ruddy was entered into on December 23, 1975.

An attorney representing the joint venture wrote a letter to the attorney for one of the executrices expressing the joint venture's interest in the possible purchase of the coins and suggesting "some possibility that an exchange can be entered into for General Mills stock which might result in favorable tax consequences for your clients."At the time, General Mills had not authorized anyone to offer its stock to purchase the Redfield coins nor was it the custom or practice of General Mills to purchase inventory in exchange for stock.In fact, however, this letter was unavailing, and the estate's attorneys refused to give the joint venture's attorney any information regarding the Redfield collection.

On December 22, 1975, Rettew contacted Harvey Stack, a principal in Stack's, the firm retained by the estate, to appraise the Redfield collection.Although Stack refused to give Rettew any information about the collection, Rettew did learn of a dispute between Stack's and the estate concerning the $250,000 appraisal fee claimed by Stack's.In December 1975, Bowers of Ruddy & Bowers also contacted Harvey Stack in an attempt to gain information about the collection, knowing that Stack had already refused Rettew.

On December 31, 1975, Rettew for Rare Coin, and Bowers for Ruddy & Bowers, signed a letter agreement addressed to Stuart Jackson, the attorney for Stack's, which provided, in part, as follows: "For providing a professional opinion as to the value of and for giving us the method of evaluation of the coins in the Nevada estate of La Vere Redfield, without specifying specific dates and mintmarks of the coins in question, Bowers and Ruddy Galleries, Inc. and/or Rare Coin Galleries, Inc.(Joel Rettew) will pay in total to Stack's a consultation fee of $250,000.00 if either Bowers and Ruddy Galleries, Inc. or Rare Coin Galleries acquires the coins in the Redfield estate from the Nevada court, heirs, attorneys, or executors of the estate.Should such estate not be purchased by us, then no fees of any kind are due or payable."Stack's then provided Bowers & Ruddy and Rare Coin with certain information about the collection which Stack's had not furnished to anyone else.Bowers and Ruddy used this information to persuade General Mills to authorize funding a bid for the Redfield collection.

On December 18, 1975, the joint venturers filed a petition for Order to Inspect Personal Property (the Redfield collection) and For Leave Thereafter to Bid Thereon.At that time, Rettew of Rare Coin knew that the Redfield estate had already signed an agreement to sell the Redfield collection to A-Mark.

On December 22, 1975, Rare Coin filed a petition to enjoin the private sale to A-Mark and a conditional bid to purchase the collection for 10 percent more than the A-Mark price, assuming the A-Mark price was six million dollars.At the time that Rare Coin and Rettew submitted this conditional bid, Rare Coin did not have a commitment of funds sufficient to enable it to honor the bid had it been accepted.This fact was not disclosed either to the estate representatives or to the probate court.

On December 31, 1975, Rare Coin sent mailgrams offering to pay up to 6.6 million for the Redfield collection and removing the six written conditions included in its prior offer.At the time, Rare Coin still did not have a commitment of funds sufficient to enable it to honor this bid.As of December 31, 1975, the board of directors of General Mills had not yet adopted a formal resolution authorizing the submission of any bid or offer to purchase the coins, but such authorization was then contemplated, and, in fact, was later given.

On January 2, 1976, Rare Coin and Bowers & Ruddy filed an amended bid offering, on certain conditions, to purchase the Redfield collection for a sum 10 percent in excess of the bid received from A-Mark.On January 9, 1976, the joint venturers filed a second amended bid which was unconditional, in the amount of $6,501,156 and was accompanied by a bank cashier's check in that amount.⁷

The executrices of the Redfield estate attempted to stop respondents' attempts to put in a bid for the purchase of the Redfield collection.On December 29, 1975, the executrices filed a motion to dismissrespondents' petition for order to inspect personal property, and on January 8, 1976, they filed a motion for order rejecting bid to purchase personal property.

On January 9, 1976, the probate court held a hearing on all these matters.The respondents' unconditional bid in the amount of $6,501,156 was presented to the court.The probate court vacated and set aside its order of November 4, 1975, authorizing the private sale of the Redfield collection, and declared the purchase agreement of December 17, 1975 between A-Mark and the estate to be void ab initio and of no force and effect.⁸

The probate court's order was based on expressed findings which are in part as follows:

"3.No sale under the Agreement of December 17, 1975 has taken place.The terms and conditions of the Agreement have not, as yet, been performed by either party, and...