Smissaert v. Chiodo

• Decision Date: 02 October 1958
• Citation: 163 Cal.App.2d 827,330 P.2d 98
• Court: California Court of Appeals Court of Appeals
• Parties: Harry SMISSAERT, Plaintiff and Appellant, v. Louis F. CHIODO, Chiode Candy Co., a corporation, et al., Defendants and Respondents. Civ. 17704.

Page 98

330 P.2d 98

163 Cal.App.2d 827

Harry SMISSAERT, Plaintiff and Appellant, v. Louis F. CHIODO, Chiode Candy Co., a corporation, et al., Defendants and Respondents.

Civ. 17704.

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

Oct. 2, 1958.

Rehearing Denied Oct. 31, 1958.

Ernest I. Spiegl, San Francisco, for appellant.

Lewis P. May, Andrew P. Costelli, Russell W. Federspiel, Oakland, for respondents.

BRAY, Justice.

In this appeal by plaintiff from an adverse judgment in an action (1) for specific performance, or, in the alternative, damages, and (2) for declaratory relief, plaintiff raises many questions which, however, become moot if the trial court's finding to the effect that there was no final contract between the parties is supported. This question, in turn, depends upon whether the purported contract shows on its face that it was not intended to be a final contract.

The Undisputed Facts.

Defendant Chiodo Candy Company, a corporation, owns the property in question. To raise additional capital it decided to offer the real property for sale subject to a lease back to it. In May, 1955, defendant Louis Chiodo, president, director and general manager of the company, admittedly acting with authority, employed real estate brokers McLean and Korematsu to sell the property. The sale price, which included 'equipment and chattels as per inventory to come,' was $550,000, all cash or 'Cash and trade acceptable to Seller.' 'No sale shall be made unless the Seller completes a satisfactory lease back * * * on terms and conditions acceptable to Seller.' The brokers called in a third broker, Jacobson, to help find a purchaser. Jacobson brought the property to plaintiff's attention. Plaintiff gave Jacobson a written offer dated June 16, 1955, in the form of a standard deposit receipt. In it Jacobson, 'agent,' acknowledged receipt from plaintiff of $2500 as a deposit on account of the purchase price of $250,000 for the real property alone, balance to be paid within 60 days from date of acceptance by seller. 'This offer is subject to a net net net lease for a period of twenty-five (25) years by sellers at a net net rent of $27,500.00 per annum * * *.' (Emphasis added.) The lease was to be secured by a chattel mortgage on personal property used in the operation of the plant. 'This offer is subject to satisfactory financing to be obtained by the purchaser at his own cost, effort and expense.' It was stipulated that Jacobson was plaintiff's agent for the purpose of submitting the offer. Plaintiff gave Jacobson a $2,500 check payable to California Pacific Title Company as a deposit. Jacobson retained the check and still retains it. He testified that it is customary on sales of industrial property for the broker to retain the deposit check until the offer is accepted. It is then placed in escrow with the seller's escrow instructions.

Before Chiodo accepted the offer the following addendum was attached to it: 'It is further mutually understood and agreed by and between the parties to this agreement that the validity of said proposed agreement is subject and conditioned upon the parties agreeing upon and reducing to writing all terms and conditions necessary and incidental to the validity of said proposed agreement; and that seller shall pay total real estate commission of 5% upon completion of said sale.' Plaintiff signed the addendum. Thereafter negotiations between the parties continued in relation to the price for the property and the security for the lease. A higher price with a correspondingly higher rent was suggested, as well as a cash deposit or bond in lieu of the chattel mortgage since there already was a chattel mortgage on the plant equipment. Eventually Chiodo notified plaintiff that the property was being taken off the market. Plaintiff notified defendants that he was ready, able and willing to complete the purchase, and then filed suit.

Was There a Final Contract?

The court found that the deposit receipt was not intended by the parties to be an expression of the meeting of their minds and was but one step in negotiations which ultimately failed; that the receipt is not sufficiently definite or certain to be capable of specific performance, and that it does not specify all the terms of the lease and chattel mortgage which the parties thereto intended be established before either party would be obligated; that its terms are not shown by the evidence to be capable of being established by custom or by reference to any other document. These findings are supported (1) by the document itself, and (2) by the fact that if the receipt does not show on its face that it was not final, then it is ambiguous, parol evidence was admissible to explain it, and such evidence although it might support conclusions to the contrary, fully supports the court's conclusions.

The Receipt Itself.

It provides that the offer is subject to a 'net net net' lease and that the 'validity of said proposed agreement is subject and conditioned upon the parties agreeing upon and reducing to writing all terms and conditions necessary and incidental to the validity of said proposed agreement * * *.' Whether a writing constitutes a final agreement or merely an agreement to make an agreement depends primarily upon the intention of the parties. In the absence of ambiguity this must be determined by a construction of the instrument taken as a whole. See Pacific Improvement Co. v. Jones, 1912, 164 Cal. 260, 263, 128 P. 404; Gavina v. Smith, 25 Cal.2d 501, 503, 154 P.2d 681. Where all of the essential terms of an agreement are definitely agreed upon in the writing there is a binding contract even though there is an intention that a formal writing will be executed later. See Pacific Improvement Co. v. Jones, supra; Gavina v. Smith, supra. The intent of the parties is to be determined by an objective standard and not by the unexpressed state of mind of the parties. King v. Stanley, 1948, 32 Cal.2d 584, 591, 197 P.2d 321. Where any of the terms are left for future determination or there is a manifest intention that the formal agreement is not to be complete until reduced to a formal writing to be executed, there is no binding contract until this is done. Store Properties, Inc., v. Neal, 1945, 72 Cal.App.2d 112, 116, 164 P.2d 38.

Having in mind these rules, the receipt, were it not for the addendum, probably shows mutual assent to all the essential elements necessary for a valid contract. ¹ There are primarily three parts to the agreement, namely...