Morris v. Zuckerman
| Decision Date | 24 May 1968 |
| Court | California Court of Appeals Court of Appeals |
| Parties | B. R. MORRIS, Petitioner and Appellant, v. E. K. ZUCKERMAN, Defendant and Respondent. Civ. 31017. |
Eddy S. Feldman, Los Angeles, for petitioner and appellant.
Musick, Peeler & Garrett and Edward J. Riordan, Los Angeles, for defendant and respondent.
The dispute arose out of a contract executed on September 18, 1952, between two corporations: Mutual Housing Association, Inc. ('MHA') and Grandview Building Company ('Grandview'), relating to the development of a large parcel of real property in Brentwood. In October 1956, MHA assigned all of its right, title and interest in the 1952 agreement to Mutual Withdrawees, Inc. ('MWI'). Grandview commenced dissolution proceedings in December of 1962, and its assets were distributed to its sole stockholders, Morris and Zuckerman. As part of Grandview's dissolution, its interest in the Brentwood property was conveyed on January 2, 1963, to Morris and Zuckerman, who each received an undivided one-half interest in that property as tenants in common. Morris and Zuckerman each agreed to be personally bound by the 1952 agreement in Grandview's place. MWI gave its consent in writing in January of 1963 to Morris's and Zuckerman's assumption of Grandview's rights and duties under the 1952 agreement.
The 1952 agreement was an elaborate contract drawn by Grandview, in which Grandview, designated as 'Buyer,' undertook among other things to subdivide the parcel and to record not less than twelve lots per calendar year after December 12, 1952, to make payments on the trust deeds encumbering the property, and to make payments to MHA, the 'Seller,' out of sales proceeds on a schedule set forth in the agreement. The clause of the 1952 contract which is central to the dispute which provoked the arbitration is paragraph 11: 'ELEVENTH: If Buyer does not record twelve (12) lots during any calendar year beginning January 1, 1953, Seller at its option at any time thereafter, but before such default is cured, may demand that Buyer put the remaining unrecorded property up for sale, and Buyer hereby agrees, upon receipt of such demand, so to do at such prices as are determined by Seller.'
As of 1955 Grandview stopped subdividing and was in default of the requirement that at least twelve lots per year be recorded. On November 24, 1959, MWI gave written notice to Grandview declaring the default and exercising its rights under paragraph 11 by demanding that Grandview place all of the remaining unrecorded property on the market for sale at a total price of $1,640,000. Grandview acknowledged its default in writing on February 1, 1960, and advised MWI that it had complied with the demand by placing the property on the market. During the next four years several prospective buyers for the property or some part of it had discussions with MWI about the property, and at least some offers were made for it, but none of them ever reached fruition. Zuckerman never made a written offer to buy the entire property for himself at any time.
On February 14, 1964, Dayton Realty Co. ('Dayton'), a corporation wholly owned by Morris and his wife and controlled by Morris, made a written offer to buy the entire parcel for $1,700,000, upon terms spelled out in the offer. On February 18, 1964, MWI wrote Zuckerman and Morris a letter stating that the Dayton offer had been received and had been accepted by MWI. MWI enclosed a copy of the sale agreement between Dayton and MWI, signed by both of them. MWI demanded that Morris and Zuckerman both sign the agreement as successors in interest of Grandview.
Zuckerman replied by letter dated February 28, 1964, in which, among other things, he said: Zuckerman enclosed a copy of a letter he wrote to Morris on the same date with his letter to Grandview. In his letter to Morris he said: 'I hereby give consent to your purchasing the Brentwood property for our mutual benefit and interest, and I am enclosing my check made payable to the Title Insurance and Trust Company covering my 50% of the fund provided in said contract to be placed in escrow, and I hereby agree to further pay my 50% of the balance due under said contract as and when required.'
On March 5, 1964, an escrow was opened at Title Insurance and Trust Company concerning the proposed agreement, and copies of the escrow documents were mailed to Zuckerman for his signature. By letter dated March 27, 1964, MWI again demanded that Zuckerman sign the proposed agreement and further demanded that he sign the escrow instructions. Morris signed the documents. Zuckerman refused to sign either one.
On April 2, 1964, MWI demanded that the dispute be arbitrated, referring to the clause in the 1952 agreement stating: 1
Although the demand for arbitration was initiated under paragraph 21 of the 1952 contract, the controversy was submitted to arbitration pursuant to a written submission agreement, dated August 7, 1964, executed by all of the parties. The submission agreement defined the dispute to be decided by the arbitrators as follows: 'Whether Mr. E. K. Zuckerman, as one of the successors to Grandview Building Co., is required under the terms and conditions of the agreement between Mutual Housing Association, Inc., and Grandview Building Co., dated September 18, 1952, to execute that certain proposed agreement of sale and set forth in a document dated February 14, 1964, entitled 'Agreement of Sale' and other documents necessary or convenient to carry out its terms.'
Three arbitrators were appointed, and the arbitration hearing commenced on August 11, 1963. At the arbitrators' request, MWI and Zuckerman each filed written contentions of fact and law concerning the submitted question at the threshold of the arbitration.
Zuckerman's contentions of fact were as follows: (1) Morris controls Dayton; (2) Zuckerman did not receive notice of the negotiations between Morris and MWI until after the latter had signed the sale contract; (3) Zuckerman was not given an opportunity to make or secure a better offer for the property after Dayton's offer was submitted to MWI; (4) the Dayton-MWI agreement is 'upon terms and conditions, including purchase price, less favorable to the seller's interests as a whole than probably could have been obtained from third persons'; (5) after the Dayton offer, neither MWI nor Morris made any effort to secure a more favorable offer; (6) MWI 'was induced by B. R. Morris to enter the Proposed Agreement upon terms, including price, less favorable to the sellers' interest as [a] whole than could have been obtained from other propective purchasers by reason of B. R. Morris offering and agreeing to special terms and considerations which would benefit MWI at the expense of E. K. Zuckerman.' His contentions of law were: (1) Paragraph 11 of the 1952 agreement is 'ambiguous' because it does not expressly specify the respective rights and duties of the parties after the property has been put up for sale; (2) paragraph 11 should be given a reasonable construction in a manner that protects and promotes the respective interests of the parties thereto; (3) a reasonable interpretation of the 1952 agreement requires that Zuckerman be given notice and opportunity to participate in negotiations for the sale of the property and that he should be given an opportunity to make or to secure a better offer before any offer is accepted by MWI; (4) the 1952 agreement implies a duty upon the part of each of the parties to sell the property at the best price and upon the best terms reasonably available; (5) the 1952 agreement authorizes MWI to dictate the minimum price, but not the other terms and conditions of the sale; (6) the proposed agreement is unfair to Zuckerman, and he is not required under the terms of the 1952 agreement to execute the proposed agreement or other documents related thereto.
MWI submitted three contentions: (1) Zuckerman must sign the sale and escrow agreements 'because the plain language of the [1952] contract gives him no discretion to do otherwise'; (2) a party to a contract is required to act reasonably, and there are no reasonable grounds for Zuckerman's withholding his signature; and (3) Zuckerman is 'quasi-estopped to say that the agreement should not be signed when he is taking the position that he is the buyer under the agreement.'
The parties to the arbitration estimated the time necessary to complete the arbitration as four hours. The arbitration actually consumed the equivalent of more than five days of trial time, resulting in a reporter's transcript consisting of 721 pages. The reporter's transcript of the arbitration hearings was made an exhibit accompanying the petition to vacate the award and is likewise designated as a part of the record on appeal. The exhibits introduced during the course of the hearing consisted of hundreds of documents. Of those documents only those made a part of the record before the trial court...
To continue reading
Request your trial