Schoenberg v. Benner

Decision Date19 May 1967
Citation251 Cal.App.2d 154,59 Cal.Rptr. 359
CourtCalifornia Court of Appeals Court of Appeals
PartiesAxel SCHOENBERG and Mildred Schoenberg, Plaintiffs and Respondents, v. Mary Ellen BENNER, Defendant and Appellant. Axel SCHOENBERG and Mildred Schoenberg, Plaintiffs and Respondents, and Jack Casey and Hilda Casey, husband and wife, Defendants and Cross-Defendants in Certain Pleadings, v. ROMIKE PROPERTIES, a California corporation, Defendant, Appellant and Cross-Complainant in Certain Pleadings. Axel SCHOENBERG and Mildred Schoenberg, Plaintiffs and Respondents, v. Len Roy KOUTNIK and Barbara Koutnik, Defendants and Appellants, and Mary Ellen Benner, Defendant and Respondent. Civ. 29270, 30531.

Paul D. Holland, Beverly Hills, for appellant Mary Ellen benner.

F. Walter French, Santa Monica, and Ervin M. Roeder, Beverly Hills, for appellant Romike Properties.

Charles S. Leeds, Jr., Encino, and Robert M. Maslow, Beverly Hills, for appellants Koutnik.

Thomas Reynolds and John D. Gray, Los Angeles, for respondents schoenberg.

SHINN, Associate Justice. *

In this action Axel and Mildred Schoenberg were awarded $117,500.00 as damages for fraud and negligence in the sale of plaintiffs' real property to Jack Casey and wife Hilda. The judgment was against the Caseys, against Romike Properties, a corporation, a real estate broker, and George Albert Pratt, Mary Ellen Benner and Pauline Bell Witte who were salesmen of Romike Properties in its brokerage business. In addition plaintiffs were awarded judgment of $7,500.00 against Romike Properties, which the broker had received as a commission. Only Romike and Benner appeal from the judgment.

After entry of the judgment, upon application of plaintiffs, an order was issued directed to Len Roy N. Koutnik and Barbara Koutnik to show cause why they should not be joined as defendants; after a hearing they were ordered joined and subjected to the same judgment liability as Romike. The basis for this order was that the corporation was the alter ego of the Koutniks. Len and Barbara Koutnik appeal from the order. It will be appropriate to dispose of the separate appeals in a single opinion.

Romike Properties, Pratt, Mrs. Benner and Witte filed a cross-complaint against the Caseys for indemnity in the amount of any judgment plaintiffs might recover against them. The judgment denied a recovery on the cross-complaint. This feature of the judgment is reviewable on the appeal of the cross-complainants from the judgment.

The Caseys filed a cross-complaint against the Schoenbergs seeking damages for their alleged fraud and failure of consideration. The judgment denied recovery on the cross-complaint and the Caseys have not appealed.

By the pretrial proceedings and the uncontradicted evidence the following facts were established: Plaintiffs owned a spacious home in a section of the San Fernando Valley referred to as Encino. It was operated as a rest home. It was free of encumbrance and was valued in the transaction at $127,500.00. It was listed for sale for $135,000.00 with Romike and was sold through that broker to the Caseys. Casey and wife owned a property on Maple Avenue in a section of Los Angeles long since abandoned to 'skid row' buildings and other unproductive use. The building, which was constructed in 1908--1910, was known as the Old Labor Temple and was encumbered by a first trust deed of $169,000.00.

In January, 1962, through an escrow, plaintiffs receive $20,000.00 in cash, of which $10,000.00 was on account of the purchase price of their real property and $10,000.00 was the price paid for their furniture. They also received the note of Casey and wife for $117,500.00 payable at $1,250.00 per month for 7 years, when the unpaid balance would become due, and a trust deed, as security for the note, upon the Casey property in Los Angeles, subordinate to the existing trust deed encumbrance of $169,000.00. From the sum received by plaintiffs they paid Romike a commission of $7,500.00 as their broker. Casey made no payment on his note, defaulted in payments on the first encumbrance on the Los Angeles property and it was lost on a foreclosure sale. The second trust deed was obliterated. Casey did not put any money into the purchase of plaintiffs' property. Through the escrow he received $75,000.00 from a savings and loan association secured by the note of himself and wife and a trust deed on the Encino property.

Upon consummation of the transaction plaintiffs received for their home and furniture a net amount of $12,500.00 and a worthless trust deed for $117,500.00; Casey received title to the property of plaintiffs and about $55,000.00 in cash, for which he gave to plaintiffs only the note and the second trust deed. By its findings and conclusions the court determined that this extraordinary transaction would not have been consummated without the active participation of the defendants Pratt, Benner and Witte.

The complaint was in six causes of action. It was alleged that for more than five years a close business and friendly relationship existed between plaintiffs and Mary Ellen Benner and that she and defendants Pratt and Witte enjoyed the full trust and confidence of plaintiffs. It was alleged that the defendants represented to plaintiffs: (1) That the Casey property had an actual value of $895,000.00 although its actual value did not exceed $150,000.00; (2) a second trust deed for $117,500.00 in the Casey property would be ample security for that amount; (3) that Jack Casey was a prominent and wealthy business man, the owner of large properties and a man of excellent credit and financial standing, and (4) plaintiffs relied upon the said representations, and the advice, information and assurances of the agents and were persuaded thereby to sell their property to Casey.

A confidential relationship between plaintiffs and the salesmen existed by virtue of the employment of Romike as plaintiffs' broker. No issue was created by the pleadings as to the consideration plaintiffs received for their property. Therefore, the court was required to determine whether the defendants were guilty of the several acts alleged in the complaint as the elements of the charge of fraud and negligence. Thus, it was the duty of the court to make findings upon four ultimate factual issues. Appropriate findings would have been: (a) That the salesmen misrepresented the value of the Casey property; (b) that in violation of their fiduciary and contractual duties the salesmen represented to plaintiffs that a second trust deed on the Casey property would be ample and safe security for $117,500.00; (c) the salesmen were negligent in the performance of their duties as plaintiffs' agents, and (d) that plaintiffs were deceived and damaged thereby.

It was the duty of plaintiffs' attorneys to prepare for the assistance of the trial court and for the record, findings upon the ultimate factual issues. Apparently unaware of the fundamental rule that findings should be confined to the determinative factual issues, the findings as prepared by the attorneys consist almost entirely of a recital of the evidence. They occupy eleven closely typed pages of the clerk's transcript.

The findings consist of forty separate, numbered paragraphs. They amount to a condensed statement of the reporter's transcript. To make the matter even more confusing, additional or duplicating findings were made by reference to seventeen paragraphs of the complaint and to fifteen paragraphs of other pleadings. Poring through this mass of superfluous verbiage we have been able to discover sufficient findings upon the ultimate factual issues to support the judgment. A check of the thirty-two findings which adopt paragraphs of the pleadings discloses a number of obvious mistakes. The practice is a poor substitute for findings of ultimate facts and frequently results in conflicting and inconsistent findings, and other errors. The practice also imposes an undue burden upon the reviewing court.

We do not imply that the trial judge should have discarded the findings proposed by the attorneys and drafted his own. The busy trial judge has a right to expect that the attorneys will prepare suitable findings. If his confidence is misplaced he runs the risk of a reversal. Fortunately the errors we have discovered do not affect the general result.

Having determined that the judgment is supported by the findings we turn to the next question on the appeal, namely, whether the findings have support in the evidence.

The brief of Romike asserts there was no evidence that the salesmen made any representation as to the value of the Casey property, or used any pressure upon plaintiffs to induce them to sell their property to Casey. The brief contains no statement of the evidence upon these issues. The obvious reason for this fatal omission is that a fair statement of the evidence would defeat the attack upon the findings. The blunt statement by Romike of the absence of evidence to support the findings merits only an equally abrupt denial. As to Romike we shall consider only the contention that the representations, if made, were mere statements of opinion.

In the brief of Mrs. Benner it is contended that she did not personally make any representation as to the value of the Casey property, was not guilty of negligence or breach of duty, and that the findings and conclusions of the court to the contrary were without support in the evidence. Mrs. Benner contends also, as so does Romike, that if any representations as to value were made they were mere expressions of opinion and not actionable. Unfortunately, we cannot agree with her contentions.

Upon the basis of sufficient expert testimony the court found that the Casey property had a value of $85,000.00 and the finding must be regarded as conclusive.

The idea of inflating the value of the Maple Avenue property to ten times its worth originated with...

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