Richards v. Oliver

• Decision Date: 04 August 1958
• Citation: 162 Cal.App.2d 548,328 P.2d 544
• Parties: , Blue Sky L. Rep. P 70,394 H. W. RICHARDS, Plaintiff and Appellant, v. Margaret S. OLIVER, Robert H. Oliver, Vista Escrow Company, Winfield D. Little, Henry A. Bickler, Defendants and Respondents. Civ. 22923.
• Court: California Court of Appeals Court of Appeals

Page 544

328 P.2d 544

162 Cal.App.2d 548, Blue Sky L. Rep. P 70,394

H. W. RICHARDS, Plaintiff and Appellant, v. Margaret S. OLIVER, Robert H. Oliver, Vista Escrow Company, Winfield D. Little, Henry A. Bickler, Defendants and Respondents.

Civ. 22923.

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

Aug. 4, 1958.

Rehearing Denied Aug. 28, 1958.

Jesse M. Allen, Long Beach, for appellant.

Lewis, Signer & Burns, and Emanuel Cowitt, Los Angeles, for respondents, Margaret S. Oliver and Robert H. Oliver.

Dreizman & Corfman, Santa Ana, for respondent, Henry A. Bickler.

No appearance, for respondents, Vista Escrow Co., and Winfield D. Little.

WHITE, Presiding Justice.

In the latter part of September, 1954, plaintiff, who had just recently returned from Arabia and taken up his residence at Van Nuys, in Los Angeles County, although he had no previous experience with or in the operation of a food or cocktail business, conceived the idea of acquiring and engaging in the operation of such an enterprise. To that end plaintiff contacted defendant Winfield D. Little, a business opportunity salesman working out of the office and under the license of A. J. Maragos, a business opportunity broker, regarding an advertisement which plaintiff had observed in a Los Angeles daily paper, concerning the offer for sale of a bar or cocktail lounge in the city of Long Beach, in Los Angeles County. However, the advertised business was not available because another deal in regard thereto was in progress. Accompanied by defendant Little, plaintiff looked at several other places, and finally became interested in 'The Corsican Room', a cocktail lounge and restaurant in the city of Long Beach, upon which Mr. Maragos, the aforesaid broker, obtained a listing, and which establishment, according to plaintiff, defendant Little represented to him was a 'fabulous place that was opening up. It was doing a terrific business and he (defendant Little) wanted me to see it * * *'. The Corsican Room was owned by defendants Margaret S. Oliver and Robert H. Oliver, her son. When the broker, Mr. Maragos, on October 12, 1954, obtained a listing on the Corsican Room he made it available to his salesman, defendant Little, to work upon and sell for the sum of $39,500 cash. It appears that the Corsican Room had been open for about a month prior to October 12, 1954, the date Mr. Maragos obtained the listing, and the latter testified that he told plaintiff that 'approximately $14,000 was the gross business done from the day of opening to the date of listing'. Plaintiff testified that defendant Little told him that he (Little) had been informed that 'there was about $3,000 off the top' (i. e., not entered in the books of account). The making of such a statement was denied by both defendant Little and the broker, Mr. Maragos.

It appears that defendant Little advised plaintiff that the latter would need the assistance of someone experienced in the food business if he bought a type of business such as the Corsican Room. Defendant Little, according to plaintiff, led him to believe that the former possession such experience, and plaintiff informed defendant Little that he would not buy the business unless he had such an experienced man with him as a co-buyer. After further conversation between plaintiff and defendant Little, it was agreed that the latter would become a buyer with the former in the purchase of the Corsican Room and that defendant Little would invest some $6,000 as capital in the operation.

In the late afternoon of October 20, 1954, plaintiff Richards, broker Maragos and defendant Margaret Oliver signed a document entitled 'Agreement of Purchase and Ratification'. This agreement provided for the purchase of 'The Corsican Room' for the sum of $42,500. It provided that the terms were to be '$15,000.00 in escrow on or before possession, the balance to be paid at rate of $1,000.00 or more monthly including 6% interest. Food and liquor stock to be inventoried above $42,500.' The signatures appear on the document as follows:

'A. J. Maragos Broker, License No. 628

'By A. J. Maragos Broker or Salesman.

'Winfield D. Little

'I agree to purchase the above described business and/or property on the terms and conditions herein stated.

'Purcharer H. W. Richards

'I agree to sell the above described business and/or property on the terms and conditions herein stated and agree to pay the above signed broker as a commission the sum of 2125 or $2750 TD Dollars, or one-half of the part payment in the event that purchaser shall fail, refuse or be unable to complete this purchase as set forth herein, provided that said one-half shall not exceed the full amount of broker's commission.

Suller Margaret S Oliver

Seller Robert H. Oliv' On October 22, 1954, escrow instructions were signed whereby defendant Vista Escrow Company, a corporation, was designated as escrow holder and stakeholder; Margaret and Robert Oliver as sellers, and plaintiff Richards and defendant Little as buyers.

By the terms of these escrow instructions the aforesaid 'Agreement of Purchase and Ratification' of October 20, 1954 was modified. Under the escrow instructions, the purchase price was reduced to $40,375. Instead of the buyers purchasing the Corsican Room, however, the sellers agreed to sell certain capital stock in Margo, Inc., a corporation not yet formed. Such corporation was to be formed by the sellers. All of the assets of the Corsican Room, including the lease, license, fixtures and inventory, would be transferred to this corporation, and all of the stock would be owned by Margaret and Robert Oliver. Margaret and Robert Oliver would then convey all of the stock in this corporation, which would own the property Richards originally agreed to buy. The escrow instructions further provided that the buyers would pledge the stock of Margo, Inc. back to the sellers until the total purchase price was paid; and, that the purchase was to be under a conditional sales contract and that the balance due after the down payment was made would be secured by a personal note from Richards and Little to the Olivers.

On October 22, 1954, Richards deposited $5,000 with the Vista Escrow Company and obtained a receipt. On October 25, 1954, Richards deposited $9,600 in escrow and obtained a receipt therefor. On this same date a trust deed and note in the face value of $2,755.32 executed by Joseph R. Parris and Myrtle Parris payable to H. W. Richards and Catherine B. Richards, on which a balance was then unpaid of the sum of $2,742.46, was deposited in escrow for which plaintiff received a receipt.

On October 26, 1954, an inventory of stock was taken and Richards and Little accepted the keys, took possession of the assets and the premises of the Corsican Room, and opened for business on the following day.

During the succeeding two weeks, according to the testimony of plaintiff Richards, he became aware that the Corsican Room was not doing anywhere near the business claimed for it, that defendant Little had been unable to raise the $6,000 or any capital which he had previously represented he would be able to raise, and that working capital was necessary for the survival of the business.

Plaintiff Richards then consulted with the broker Maragos to see if Maragos could find someone to buy Richards' interest in the business.

A listing agreement, dated November 8, 1954, was signed by Richards, Little, and Maragos.

Maragos then informed Richards that another salesman in his office, defendant Henry A. Bickler, who had been in the Corsican Room on several occasions after Richards and Little had commenced operations, and who had extensive experience as a bar operator, had expressed an interest in the business and that Bickler had enough money to work out a deal on terms which would be satisfactory to Richards.

Negotiations ensued between defendant Bickler and plaintiff Richards. It was agreed that Bickler would buy Little's interest in the business on an 'as is' basis, and would raise any monies that were necessary in the business.

On or about November 15, 1954, defendant Bickler entered into the operation and management of the Corsican Room in place of Little.

An amendment to the previous escrow instructions dated November 18, 1954, was signed, whereby defendant Little withdrew from the escrow and defendant Bickler was substituted in his place 'as is', whereby Bickler assumed all of Little's liabilities and obligations arising out of the transaction.

Bickler paid Little $3,000 outside of escrow for Little's interest in the business.

During the next three weeks, according to plaintiff's testimony, he concluded that defendant Bickler was unable to manage and operate the business and also, that the latter had failed to contribute any working capital. On December 24, 1954, defendant Bickler and plaintiff, as sellers, and defendant Little, as salesman, signed a listing authorizing broker Maragos to sell the respective interests of plaintiff and defendant Bickler in the Corsican Room. Two days later plaintiff consulted for the first time with attorney Jesse M. Allen concerning the legal status of the former in the foregoing transactions.

On January 3, 1955, a Notice of Rescission was served on Patrick Phelan, as attorney for Margaret Oliver, and also upon her personally and the broker Maragos and defendant Bickle. On the following day a similar notice of rescission was served upon defendants Little, Robert Oliver and Vista Escrow Company. The notice of Rescission reads in part:

'You and each of you please take notice that H. W. Richards does hereby rescind that certain agreement contained in escrow instructions under Escrow number 1597-LB of the Vista Escrow Company, at 6029 Atlantic Avenue, Long Beach, California, to which reference is made for further particulars.

'That said agreement is rescinded on the ground that Margaret S. Oliver by herself and through her agents made material...