Ramey v. Myers

• Decision Date: 16 June 1952
• Citation: 111 Cal.App.2d 679,245 P.2d 360
• Court: California Court of Appeals Court of Appeals
• Parties: RAMEY et al. v. MYERS et al. Civ. 18888.

Page 360

245 P.2d 360

111 Cal.App.2d 679

RAMEY et al. v. MYERS et al.

Civ. 18888.

District Court of Appeal, Second District, Division 1, California.

June 16, 1952.

Rehearing Denied July 14, 1952.

Hearing Denied Aug. 14, 1952.

L. H. Phillips and Blase A. Bonpane, Los Angeles, for appellants.

Manasse & Crowley, Hollywood, Herbert Manasse, Hollywood, for respondents.

DRAPEAU, Justice.

Plaintiffs, mother and son, owned two parcels of real property: one in Indiana and the other located on Normandie Avenue in Los Angeles, Mr. Ramey and defendant Myers had been friends for a number of years. Mr. Myers was a licensed real estate agent and was associated with defendant Buckley, a Los Angeles realtor.

In March of 1948, plaintiffs were being evicted and Mr. Ramey telephoned defendant Myers to see if he could help to find them 'a place to live with income.' By appointment, the two men met at the Buckley office. Thereafter, Mr. Myers showed several pieces of property to Mr. Ramey, among them a rooming house and a property on Sunset Boulevard. The latter consisted of two separate buildings with a vacant lot to the west, and contained twenty apartments and six rooms which were being converted into living quarters.

On their first visit to Sunset, defendant Myers told Mr. Ramey that the unfinished rooms would be completed before delivery of the property; that the income was about $1200 per month, could be increased to $1600 with a small amount of work that the owner was asking $70,000 for the property and had it listed for sale with the Buckley Company. At a later visit, Mr. Myers told Ramey that Mrs. Rondeau was the owner and wanted $77,000. He also advised plaintiffs that an apartment house would be a better investment than a rooming house; that Sunset was a good buy and a wonderful investment.

Within a few days, plaintiffs agreed to trade in their Indiana and Normandie properties on the Sunset apartments, and Mr. Myers and his wife called at plaintiffs' home one evening with some papers for plaintiffs to sign. One was authority to borrow $40,000 on Sunset. Another was an agreement giving Buckley Company the right to sell the Normandie and Indiana properties. At this meeting, Mr. Myers assured plaintiffs that he would take care of everything and plaintiffs would get a good deal.

A day or two later, i. e., on March 11, 1948, an escrow was opened with the Wilshire Escrow Company in Los Angeles, defendant Myers dictating the instructions over the telephone. At this time Mr. Buckley told Mr. Ramey that Sunset was a good buy and produced a good income; and that Mrs. Rondeau, who was a very good business woman, was the owner.

By the terms of the escrow, the equities in the Indiana and Normandie properties were to be exchanged for the equity in Sunset. The equity of plaintiffs in their two properties was placed at $30,000 which was to be applied against the purchase price of $70,000 for Sunset, plaintiffs assuming two trust deeds aggregating $40,000 for the balance of the purchase price.

About a week after opening of the escrow, defendant Myers handed to Mr. Ramey a statement typed on a Buckley Company letterhead showing that the rentals of the Sunset property aggregated $1,116.00 per month.

When Mr. Ramey, accompanied by Mr. Myers, went to take possession of the Sunset apartments at the close of escrow on May 18, 1948, he discovered that the basement rooms had not been completed as promised; also that the city of Los Angeles would not permit occupancy of the rooms because of violations of the Health and Safety Code. Plaintiff complained of these matters to defendant Buckley, who told him that a lawsuit had been filed to protect his (Ramey's) rights and that everything would be taken care of. The suit referred to had been filed the day before the close of escrow, and the costs thereof were paid by defendant Buckley.

During the month of June, 1948, the rentals from the property were $600 instead of $1,116.00 as shown by defendants' statement.

Prior to the purchase of Sunset by the plaintiffs, to-wit, on February 20, 1948, the Rondeaus gave defendant Buckley an option to purchase said property for a stated price of $55,500. And during the pendency of the Wilshire escrow, defendant Buckley opened an escrow at Citizens National Bank in order to have his niece, defendant Helen M. Catherman, take title to Sunset for him in the exercise of his option. He also opened another escrow at the Hollywood State Bank to refinance the indebtedness against Sunset.

Both of plaintiffs' properties were conveyed to said Catherman, and she in turn conveyed them to third parties. She also executed the deed of the Sunset property to plaintiff Ramey.

Mrs. Catherman received no remuneration for acting as defendant Buckley's nominee in these and many other transactions. And it was not until after the Wilshire escrow was closed, i. e., sometime in 1949, that Mr. Ramey discovered who she was and that Mr. Buckley had, and exercised, the option to purchase Sunset.

By the instant action, plaintiffs sought to recover $30,000 damages resulting from the alleged fraud and double dealing of defendants.

There was evidence that Catherman conveyed the Normandie property to one Moore for a total consideration of $15,194.87; and that the sale of the Indiana property netted $14,654.84, a total of $29,849.71. This sum plus $40,000 in trust deeds assumed by plaintiffs, brought the total price of the Sunset property to $69,849.71. The Sunset property was conveyed to Catherman on behalf of Buckley for a total consideration of $48,825.00.

The trial court instructed the jury on two theories of the case: (1) agency, fiduciary relationship and plaintiffs' right to recover secret profits; (2) fraud on the part of the seller.

The jury brought in a verdict for $20,000 against defendants Myers and Buckley. Their motion for a new trial having been denied, they appeal from the judgment based on the verdict.

It is here urged that the issues of agency, fiduciary relationship and the right to secret profits were not with the scope of the pleadings, hence the admission of evidence in support thereof was erroneous.

At the start of the instant trial, defendant objected to the introduction of any evidence on the questions of secret profits and agency. This for the reason that the complaint sounded in fraud and did not allege that defendants were the agents of plaintiffs.

In overruling this objection, the trial court commented:

'Although plaintiffs do not directly plead agency, that is, that defendants were their agents, they do set forth in some detail the relationship between Myers and Ramey so as to show a confidential relationship, or agency. Of course, they have to prove agency. There is so much set forth in the complaint as to Myers being the adviser and personal friend of the plaintiff Ramey that I cannot say at this time whether or not he was the agent of plaintiff. I am going to permit the evidence to go in and overrule your objections. Was there any objection in the law and motion department to plaintiffs' pleadings?

'Mr. Bonpane: No, your Honor. We did not file any motion or demurrer. We...