Phillips v. Beilsten
| Citation | 164 Cal.App.2d 450,330 P.2d 912 |
| Court | California Court of Appeals |
| Decision Date | 21 October 1958 |
| Parties | Robert W. PHILLIPS, Plaintiff and Appellant, v. Harry L. BEILSTEN and Helen L. Bellsten, his wife, Defendants and Respondents. Harry L. BEILSTEN and Helen L. Beilsten, his wife, Plaintiffs and Respondents, v. Robert W. PHILLIPS, also known as R. W. Phillips, Defendant and Appellant. Civ. 22962. |
Chas. I. Rosin, Los Angeles, for appellant.
Rodney F. Williams, North Hollywood, Ralph V. DeVoto, and Philip C. Crump, Lakeport, for respondents.
The judgment at bar adjudicates the issues tendered in two actions which were consolidated for trial pursuant to stipulation: (1) an action brought by Robert W. Phillips (appellant) against Mr. and Mrs. Harry L. Beilsten (respondents) seeking specific performance of a certain contract whereby the parties agreed to an exchange of their respective interests in certain parcels of real property, and (2) an action brought by respondents Beilstens seeking rescission of the same contract upon the ground of fraud in the inducement. The trial court decreed a rescission and granted Beilstens a money judgment in the sum of $28,476.91.
In February, 1955, Phillips, a real estate broker, owned certain real property located near Kelseyville, Lake County, California, consisting of a resort hotel and cabins, generally known as The Lakewood Resort, which was encumbered in the amount of approximately $75,000. The Beilstens owned a residential property located in Los Angeles County referred to in the briefs as the Lemona property which was subject to an encumbrance in the amount of $6,925.67.
By written contract dated February 12, 1955, the parties agreed to an exchange of the above mentioned properties. It was provided that Beilstens were to receive the Lakewood Resort with all its furniture, furnishings and equipment, subject to the encumbrance thereon. According to the original agreement Phillips was to receive the Lemona property free and clear, but it was subsequently agreed orally that he would take it subject to the encumbrance and that Beilstens would pay him an equivalent amount in cash from the proceeds of a loan to be obtained upon the security of other property.
The parties promptly executed their respective deeds and deposited them in escrow. Beilstens' deed conveying the Lemona property to Phillips was recorded. It appears, however, that Phillips withdrew from the escrow the deed to the resort property and that this deed was never delivered. Nevertheless, Beilstens went into possession of the resort property in the latter part of March, 1955. In April, 1955, Phillips sold the Lemona property to one John M. Morehart.
Shortly after taking possession of the Lakewood Resort, Beilstens discovered the falsity of numerous representations made by Phillips and upon which they had relied in agreeing to the exchange of properties. On May 24, 1955, Beilstens gave Phillips written notice of rescission offering to restore to him the ownership and possession of Lakewood Resort and demanding that he return to them all monies and things of value which he had received and that he pay all damages suffered by them. By reason of these circumstances, Beilstens refused to take any further steps to clear the Lemona property and declined to pay Phillips the amount of the encumbrance thereon.
On July 18, 1955, Phillips filed in the Los Angeles County superior court his action for specific performance. From the allegations of the complaint, it appeared that the only promise of Beilstens then unfulfilled was their promise to pay Phillips the amount of the encumbrance on the Lemona property.
On August 24, 1955, Beilstens filed in the Lake County superior court their complaint for rescission and damages. This complaint charged Phillips with numerous false representations material to the quality, condition and value of the resort property and set forth all the essential elements of a conventional action for rescission on the ground of fraud. It alleged the giving of the notice of rescission and the offer of restoration in May of 1955; it repeated the offer to restore to Phillips all that the complaining parties had received under the agreement and offered 'to do equity in the premises as the Court may require.' The rescission complaint further alleged: that Phillips had deeded the Lemona property to a third party; that the reasonable and agreed value of the Lemona property was $27,000; that Beilstens had made numerous outlays in the form of payments to Phillips, payment of taxes on the resort property, payments on the encumbrances and for improvements and other expenses incident to the transaction. The total of these outlays added to the alleged value of the Lemona property amounted to the sum of $35,866.69. The prayer of the complaint sought cancellation and rescission of the agreement and recovery of the indicated sum.
On December 7, 1955, (a little over three months after filing their rescission action in Lake County) Beilstens filed an answer to the complaint in the specific performance action in Los Angeles. This answer admitted the execution of the agreement and the taking of possession of the resort property but denied the other material allegations of the complaint. It affirmatively alleged that Phillips had failed and refused to perform various conditions of the agreement and that he had removed from the premises furniture, furnishings and equipment which were to have been delivered with the resort property.
On May 1, 1956, Beilstens filed in the Los Angeles specific performance action their notice of motion for leave to file a cross-complaint and an amendment to their answer. This proposed cross-complaint was essentially a duplicate of the complaint in the Lake County action. The motion for leave to file the cross-complaint was denied. Shortly thereafter, and pursuant to stipulation, the rescission action was ordered transferred from Lake County to Los Angeles County.
On May 16, 1956, the parties, through their counsel, presented to the presiding judge of the Los Angeles County superior a written stipulation which, after reciting the pendency of the specific performance action and the transfer of the rescission action from Lake County, provided: that said court might make its order consolidating said causes for the purposes of trial; that in lieu of Phillips filing an amended answer and cross-complaint, each and all of the allegations of the complaint in the rescission action would be deemed denied, and that Phillips might be granted such affirmative relief by way of accounting and otherwise as might be 'equitable in the premises.'
An order for consolidation was made in conformity with the terms of the foregoing stipulation and the consolidated actions were set for trial. On June 15, 1956, Phillips filed an amended answer which amounted to a general and specific denial of most of the material allegations of Beilstens' complaint.
The consolidated actions came on for trial on July 13, 1956, and after a lengthy trial, the court rendered its decision finding Phillips guilty of fraud substantially as charged in the Beilsten complaint. The judgment decreed a rescission of the contract and awarded the Beilstens a money judgment in the sum of $28,476.91. The computation of the monetary award was set forth in the trial judge's memorandum of decision as follows:
(1) Reasonable value Lemona property $27,000.00
Less unpaid lien 6,925.00
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Net value Lemona property .................................. $ 20,075.00
(2) Moneys expended for improvements and
reasonable value of equipment
necessarily purchased ..................................... $ 3,957.80
(3) Escrow expenses, moving expenses
commission, fixture tax, liquor
inventory on hand upon abandonment
and cash down payment ..................................... $ 2,989.53
(The Court has disallowed the item
of $1203.87 for inventory and
supplies as they were used by
plaintiffs in their operation of
the resort.)
(4) Taxes paid ................................................. $ 462.58
(5) Trust deed payment ................................. $ 992.00
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$ 28,476.91
On this appeal from the judgment Phillips expressly concedes the sufficiency of the evidence to sustain all of...
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Griffin, In re
...Cal. 332, 333, 50 P. 425; Hoshour v. County of Contra Costa (1962) 203 Cal.App.2d 602, 605, 21 Cal.Rptr. 714; Phillips v. Beilsten (1948) 164 Cal.App.2d 450, 457, 330 P.2d 912; Munns v. Stenman (1957) 152 Cal.App.2d 543, 557--558, 314 P.2d 67; Blue v. Superior Court (1956) 147 Cal.App.2d 27......
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