Widmer v. Leffelman

Decision Date30 October 1952
Citation196 Or. 401,249 P.2d 476
PartiesWIDMER et al. v. LEFFELMAN.
CourtOregon Supreme Court

Francis F. Yunker, of Portland, argued the cause and filed a brief for appellant.

John D. Galey, of Sweet Home, and Francis E. Harrington, of Portland, argued the cause for respondents and cross-appellants. On the brief were Galey & Galey, of Sweet Home, and Francis E. Harrington, of Portland.

Before BRAND, C. J., and ROSSMAN, LUSK, LATOURETTE and TOOZE, JJ. TOOZE, Justice.

This is the second appeal in this case. As disclosed by our former opinion, this is a suit for the rescission of a contract of sale and purchase of the KoZee Cafe, located at 5311 N.E. Sandy Boulevard, in Portland, Oregon Widmer et ux. v. Leffelman, 187 Or. 476, 212 P.2d 737.

The facts of the case are fully set forth in our opinion on the first appeal and will not be repeated here.

As disclosed at page 481 of 187 Or., 212 P.2d 737, the trial court, upon the first trial, in its decree canceled the written agreement of conditional sale by defendant to the plaintiffs of the appliances, furniture, and fixtures of the KoZee Cafe, effective as of December 7, 1946, and awarded plaintiffs judgment against defendant for $4,000, with interest thereon at 6 per cent per annum from December 7, 1946, until March 23, 1948 (that being the date of the decree), amounting to $310, less $1,217.50 for rental for the cafe from November 16, 1946, until March 23, 1948, at the rate of $75 per month, the net amount of such judgment being $3.092.50. From that decree the defendant appealed to this court.

We affirmed the trial court's finding of fraud and its decree of rescission. However, we were of the opinion that the profits realized by plaintiffs in their operation of the cafe after December 7, 1946, rather than the reasonable value of the use of the property, should be considered as the yardstick from measuring the amount of money to be credited to defendant against the said sum of $4,000, and we remanded the case for an accounting to determine the amount of such profits. In this connection, we said:

'In our opinion, after the date of the attempted rescission of the contract by plaintiffs, they operated the restaurant for the benefit of the defendant and they should therefore account to him for all the profits which they made during the time they operated it subsequent to December 7, 1946. In determining the amount of such profits the plaintiffs should be entitled to reasonable compensation for their services, in addition to the necessary expenses incurred in operating the restaurant.'

The matter came on for hearing in the trial court on April 21, 1950, and on September 18 and 19, 1950. In addition to the sum of $4,000 paid by them on the purchase price, with interest, plaintiffs claimed they were entitled to recover from defendant the full amount of net loss sustained by them from their operation of the cafe from December 7, 1946, until it was closed on January 3, 1948, together with the sum of $350 per month as reasonable compensation for services performed in the operation of the business by Wilfred H. Widmer, and the further sum of $48 per week as reasonable compensation for the services of Mrs. Widmer. A decree was entered in favor of plaintiffs, awarding them judgment against defendant for the sum of $4,000, with interest at the rate of 6 per cent per annum from December 7, 1946, until paid, and the further sum of $52.10, with interest, as costs on the first trial. The court dismissed plaintiffs' second cause of suit. Defendant appeals, and plaintiffs cross-appeal.

The record of the second hearing discloses that plaintiffs made a full and complete accounting of the operation of the business between December 7, 1946, and the closing thereof on January 3, 1948. The books and records kept by them in connection with such operation lack much of perfection, but they were sufficient to disclose a net operating loss, rather than a profit, in the sum of $584.37. This does not take into account a payment of $300 made by them after January 3, 1948, on account of rental of the premises, nor any compensation for plaintiffs' services.

The audit of plaintiffs' books and records was made by one C. W. Thomas, who testified in respect thereto. Before 1942, Thomas worked as a general clerk for an oil company in Texas. In June 1942, he entered the employ of a certified public accountant at Houston, Texas. In such employment, he prepared income tax returns, did junior and senior accounting, and auditing. On January 1, 1944, he opened his own office as an accountant, at Harlington, Texas, maintaining that office until September 15, 1949. At the time of the hearing he was in the employment of the Ponderosa Pine Lumber Company, at Elgin, Oregon, as a cost accountant.

From Thomas' audit, the net loss sustained by the plaintiffs in the sum of $584.37 (exclusive of the sum of $300 paid as rental after January 3, 1948, and compensation for plaintiffs' services) was determined. For several months prior to the date of the final hearing, defendant had all of plaintiffs' books and records in his possession for examination. He did not have them examined by a certified public accountant or other accountant, nor was any accountant called by him as a witness to testify on the hearing. The testimony of Thomas, therefore, stands...

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