Sanfran Co. v. Rees Blow Pipe Mfg. Co.

• Decision Date: 26 February 1959
• Docket Number: No. 17589,17589
• Citation: 168 Cal.App.2d 191,335 P.2d 995
• Court: California Court of Appeals Court of Appeals
• Parties: SANFRAN COMPANY, a corporation, Plaintiff and Respondent, v. REES BLOW PIPE MANUFACTURING COMPANY, a corporation, Defendant and Appellant. Civ.

Page 995

335 P.2d 995

168 Cal.App.2d 191

SANFRAN COMPANY, a corporation, Plaintiff and Respondent, v. REES BLOW PIPE MANUFACTURING COMPANY, a corporation, Defendant and Appellant.

Civ. No. 17589.

District Court of Appeal, First District, Division 2, California.

Feb. 26, 1959.

Wallace & Parker, Henderson R. Wallace, Louis F. DiResta, San Francisco, for appellant.

Athearn, Chandler & Hoffman, Theodore P. Lambros, San Francisco, for respondent.

KAUFMAN, Presiding Justice.

Plaintiff corporation, Sanfran Company, as the purchaser of real property, filed this action against the vendor, defendant corporation Rees Blow Pipe Manufacturing Company, and the vendor's real estate brokers, Norris, Beggs & Simpson, and their employee, C. N. Gustafson. The complaint set forth two causes of action; the first, for wilful or negligent misrepresentation that the building at 340-7th Street, purchased from the defendant, was a Class 'C' building under the Building Code of the City and County of San Francisco, and that the building had side walls; the second for fraudulent concealment of the missing walls and the Building Code violations. Before trial, respondent dismissed the complaint as to the brokers and their employee.

The case was tried by the court without a jury. The court made findings of fact and concluded that the plaintiff was entitled to take nothing under the first cause of action, but was entitled to judgment in the amount of $20,000 on the second cause of action. This appeal is taken on the grounds that the judgment on the second cause of action is not supported by the findings, as the findings are inconsistent and are not supported by the evidence.

Plaintiff and Baydis Realty are connected with United Parcel corporation, which is in the parcel delivery business. The property which the plaintiff purchased from the defendant consists of two parcels; the first, at 340-7th Street, is comprised of a T-shaped lot and building, around the corner from the United Parcel property at 1144 Harrison Street in San Francisco the second, a smaller parcel of 1,600 square feet, fronts on Langton Street and is directly opposite the rear door of the first parcel and contiguous to the rear portion of the United Parcel property. This dispute centers on the first parcel, the building at 340-7th Street. In order to clarify the issues presented, it is necessary to describe first, the details of the construction of defendant's building and the significant provisions of the various building ordinances of the City and County of San Francisco in effect during the construction of defendant's building, and second, the series of events which led to the transaction between the parties.

Under the ordinances, buildings are classified as follows: those with concrete walls are called Class 'C' or Type 3, and those with wooden walls are called frame or Type 5 buildings. The building law imposes area limits according to these classifications. A frame or Type 5 building without an automatic fire alarm or sprinkler system is subject to an area limitation of 10,000 to 12,000 square feet. The building law also provides that no wall or part of a wall in any building shall be removed to produce a larger area than permitted. A permit must be obtained for the construction, alteration, repair, moving or demolition of any structure. A building must have side walls.

In 1907, in conformance with a building permit, defendant's predecessor erected a wooden frame corrugated iron covered building for use as a tin shop, on a small lot on the west side of 7th Street. (In 1909, Ordinance 1008, [New Series] known as 'The Building Law' was enacted and became effective on January 1, 1910.) In 1911 defendant was organized as a corporation and acquired the above mentioned property, which then had an area of 2,000 to 4,000 feet. Between 1911 and 1923, the defendant acquired additional lots adjoining the original one. Defendant made several successive additions, thus extending the original building over the additional lots acquired. Only some of these are of significance in this dispute.

In 1923, defendant made a 50 by 70 foot addition to the south end of the building. Under a 1922 amendment of the 1909 ordinance, frame buildings were limited to an area of 10,000 square feet. (Ordinance 5711 [New Series] effective October 19, 1922, and amending § 80 of Ordinance 1008; In 1939, Ordinance 1.075 enacting the San Francisco Municipal Code became effective.) The Building Code contained area limitations substantially the same as the prior law. Defendant's application was denied initially, but later granted upon the condition that a divisional wall be erected. The floor area of the building was thus extended to approximately 11,800 square feet, apparently in violation of the provisions of both ordinances.

In 1938, Lloyd Rees, defendant's present secretary took over the active management of defendant's San Francisco operation. In 1939, 1940 or 1941 the division wall required by the 1923 permit was removed under his supervision. Lloyd Rees testified that he did not know why the wall was removed, or that it had been required by the prior permit.

In 1941, section 265 of the Building Code was amended to allow frame buildings to have an area of 50,000 square feet under certain circumstances. (Ordinance 1318, [Series of 1939]) In 1941 defendant acquired a lot on the north side of its property, thus extending the area to its present shape. Defendant made an addition to the north end of the existing building. The plans and specifications showed that no wall was to be erected on the north where the addition would abut the solid concrete wall of the building of the adjacent property owner, nor on the south side where the addition would abut the existing building. The addition was built pursuant to a permit, which was apparently illegal because a frame building must have exterior walls.

Late in 1941, section 265 of the Building Code, relating to area limitations was amended to allow 12,500 square feet in frame buildings fronting on two streets. This amendment permitted a 50 per cent increase in area if the building is equipped with an automatic fire alarm system and a 100 per cent increase if equipped with automatic sprinklers. (Ordinance 1432, [Series of 1939] approved Nov. 12, 1941, effective Dec. 12, 1941.) Defendant's building was not equipped with either, and thus subject to the initial area limitation of 10,000 square feet.

In 1942, defendant acquired further property facing on 7th Street and adjacent to the city firehouse. Defendant applied for a building permit for the addition of a storage warehouse. The plans and specifications called for a wall on the southside, adjacent to the wall of the firehouse. This wall was not carried the full height of the building as required by the specifications, but the construction was approved. Defendant admits this violation of the permit. Upon completion of the warehouse addition, the building had an area of 24,825 square feet.

In 1947, the Building Code was completely revised. (Ordinance 4547 [Series of 1939], effective Sept. 11, 1947, known as 'The Building Code of 1947') Section 304 of the Building Code of 1947 made changes in the issuance of permits; Section 304 for the first time provided that '* * * Approval does not constitute approval of any violation of this code or of any other law or ordinance.' On September 22, 1947, defendant filed an application for a building permit for the erection of a second floor to the one story concrete wall office building first erected in 1921. The plans and construction were approved even though this addition brought the total area to 26,825 square feet.

In January 1954, defendant authorized the real estate brokerage firm of Norris, Beggs & Simpson to obtain a site for a new factory in Berkeley and exchange or sell the 7th Street and Langton Street properties therefor. Miller and Gustafson of Norris, Beggs & Simpson prepared two circulars listing defendant's property for sale. The first of these dated January 11, 1954 describes the property at 340-7th Street as follows: 'One story Class 'C' Building, containing approximately 26,825 square feet.' The second states, 'Improvements: One Story Class 'C' Concrete and Frame Building. Lot Size: 24,825 Square Feet, Total Building Area--26,825 Square Feet.' After finding a suitable site owned by San Francisco Sulphur Company (Stauffer Chemical Co.), defendant gave the broker an exclusive authorization to sell the 7th Street property.

At about the same time, United Parcel wished to expand its main garage and package-sorting facility at 1144 Harrison Street. United Parcel retained Frank P. Gomez as its real estate broker to acquire property for this purpose. As early as January 1954, Mr. Gomez had received the first of the above mentioned circulars and turned it over to Mr. Morton, the San Francisco Manager of United Parcel. Later, Lloyd Rees, defendant's secretary, prepared a plot plan for distribution to prespective customers. Mr. Morton and Mr. Schlinger (Vice-president in charge of West Coast Operations of United Parcel as well as vice-president of both Baydis Realty and Sanfran Company) used this plot plan. At a meeting in Los Angeles in May, Mr. Gomez, Mr. Gustafson and Mr. Schlinger discussed the acquisition of defendant's properties. At this meeting, the parties had a copy of the second circular and the above mentioned plot plan. At this time United Parcel was not interested in the defendant's properties, as there was some possibility of acquiring other nearby properties with the city's proposed South of Market Redevelopment. Sometime thereafter, it became apparent that United Parcel would not be able to acquire these other properties. Mr. Schlinger indicated to Mr. Gomez that it might therefore be desirable to obtain the only available property of large size in the block the defendant's.

C. Russell Rees and Lloyd Rees, defendant's...