Opinion
Page __
__ Cal.App.2d __ 227 P.2d 904 CALIFORNIA HOME EXTENSION ASS'N v. HILBORN. Civ. 4133. California Court of Appeals, Fourth District Feb. 26, 1951.Hearing Granted April 26, 1951.
Robert E. Austin, John N. Helmick, Los Angeles, and Joseph Seymour, Riverside, for appellant.
Jerome L. Richardson, and George E. Jones, Riverside, for respondent.
MUSSELL, Justice.
Action for money had and received. Cross-complaint for an accounting.
Plaintiff and appellant filed an action in the Justice's Court of Riverside Township on February 7, 1945, for a money judgment against the defendant Bert Hilborn in the sum of $552.50. The complaint was verified by M. V. Hartranft, who was, at the time, the principal stockholder, president and managing officer of the plaintiff corporation. Six weeks later, Mr. Hartranft died and one year and four months after Hartranft's death, defendant Hilborn filed his answer and cross-complaint, by which he sought an accounting and claimed fifty per cent of the net profits on sales of real property made by the corporation. The action was transferred to the superior court for trial, where judgment was rendered in [227 P.2d 905] favor of cross-complainant Hilborn, and California Home Extension Association appeals from that portion of the judgment which awards cross-complainant Hilborn the sum of $36,513.76 and costs.
Appellant contends that the findings and judgment are not supported by the evidence and that the court committed reversible error in rejecting certain evidence offered by the appellant.
The determination of the controversy herein turns upon the terms of employment and the amount of compensation payable to defendant Hilborn for services rendered to the plaintiff in conducting and managing certain land selling programs for and upon behalf of the appellant corporation.
The corporation was organized by M. V. Hartranft, who controlled it, was its president and managing director and owned practically all of the stock therein until his death on March 26, 1945. The record indicates that Hartranft decided all matters of business and policy of the corporation, was in charge of all corporate matters and personally decided upon resolutions to be adopted by the directors without the formality of directors' meetings.
Hilborn became associated with Hartranft on or about June, 1940, and during the first six months thereafter worked at appellant's main office in Los Angeles in connection with a land selling program known as 'War Gardens'. For the next two or three months he worked on a land selling program at Crestmore, California. This project was a failure and was abandoned. Appellant then acquired land in the LaSierra district of Riverside county, opened an office at Arlington, near said district, and installed Hilborn as office manager in charge of the sales campaign. Sales of property in the LaSierra district apparently began in May of 1941 and Hilborn remained as manager of the Arlington office from that time until December 31, 1944, when his business relations with appellant terminated.
The trial court found that Hartranft and Hilborn became associated in a joint venture in a real estate sales campaign in June of 1940; that Hilborn was to receive fifty per cent of the net proceeds of all lands sold and a drawing account of $75 per month to be charged against his share of the net profits. The principal contention of appellant is that these findings are not supported by substantial evidence.
Defendant was first employed by Hartranft in 1940. It is admitted that the terms of his employment were not then reduced to writing. While Hilborn testified that he was to receive fifty per cent of the net profits, the corporate records are entirely silent as to any such agreement. Hilborn testified that his contract of employment was reduced to writing in May, 1941, when he received by mail from Hartranft a document and carbon copy, reading as follows:
'We hereby elect Bert Hilborn, a stockholder, in the California Home Extension Association, as a vice-president and assistant Secretary of Chea. He is also elected manager of the Arlington Branch of this corporation and will act as our sales manager for the La Sierra district land-selling camapign. On the same basis as the Crestmore campaign now being liquidated. He shall continue to receive a drawing acount plus actual expenses, of Seventy Five ($75.00) dollars per month and his compensation as sales campaign manager shall be on a fifty-fifty basis of the profits acquired by Chea. All titles of purchase and sale; all legal matters and determination of policy, as well as advertising, will be conducted cy Chea.
'Cal Home Extension Assn
'By M V Hartranft
Prst'
The original of this alleged contract was not produced at the trial and the carbon copy was admitted in evidence as defendant's 'Exhibit A'. The defendant relies upon this document to establish a written agreement entitling him to a percentage of the profits of the real estate sales. In this connection, Hilborn testified that when he received the original of the quoted document, he affixed his signature thereto and gave it to Hartranft; that he did not see the document until he received it in the mail; that the original was signed by Hartranft; [227 P.2d 906] that he was thoroughly acquainted with Hartranft's signature and that the signature on Exhibit 'A' was that of Hartranft. However, a handwriting expert produced by plaintiff, and whose qualifications were admitted, testified that in his opinion the signature of Mr. Hartranft on the questioned document was a tracing and that the instrument was typed on the same machine as other exhibits in the case, which were admittedly typed by Hilborn on his own typewriter. The instruments used as a basis of comparison, which were typed by Hilborn, and the questioned document, disclose an unmistakable common characteristic, namely, that the letters 'oo' rather than the figures '00' are used in typing sums of money. This and other numerous common characteristics furnish ample ground to support the opinion of the expert. It is apparent that the testimony of Hilborn as to the signature and the execution of the questioned document is not supported by the record.
Hilborn's testimony that there was an agreement pursuant to which he was to receive fifty per cent of the sales profits is not borne out by the corporate records and correspondence before us. The auditor's report, accepted by the court, shows that Hilborn received a salary of $1250.85 for the period from June 1, 1940 to July 31, 1941. This amount was exclusive of his expenses, which were paid for separately. Hilborn wrote many of the checks, which bear the notation 'Bert Hilborn-a/c salary-War Gardens', or a notation of similar import. Hilborn testified in this connection that he consented to the arrangement, indicating the payments to be salary only, because Hartranft insisted that for bookkeeping purposes they should be handled the same as salary paid to employees.
For the period beginning July 1, 1941, and ending on December 31, 1944, a different salary arrangement was made. On July 12, 1941, Wayne N. Graves, auditor for the appellant, wrote from Los Angeles to Hilborn, in part, as follows:
'Talking over with MVH the other day he thought it best to make a straight salary proposition for you instead of the way we have been going. Therefore starting the 1st of July you will be paid $200.00 per month, which includes the $30.00 car allowance. We will mail you checks from this office and you can then make you own payments.
'I will charge you for petty cash expenditures the 1st on until the 15th and then you should arrange to pay your own way out of your pay check. After that we'll make a settlement on the above amount due you.' On the same date the auditor instructed the company bookkeeper as follows:
'Starting the 1st of July you will pay out of Chea and charge same to Crestmore pay-roll account.
Bert Hilborn $200 per month
Make checks on the 15th and 30th of each month, deducting the 2% for Soc. Sec. and Calif. Unempl. Tax. First check July 15th. Above per instructions of M.V.H.'
The first checks received by Hilborn after July 1st, 1941, were issued twice each month and were for $100 payments, less two per cent deductions. Later, further deductions were made for withholding income taxes. Some of these checks were deposited directly in Hilborn's personal bank account in Los Angeles and duplicate deposit slips mailed to him. Other similar checks were prepared by Hilborn himself and drawn on the corporation's Arlington bank account. Letters written by Hilborn to the company bookkeeper show that Hilborn regarded the payments made by the corporation as salary.
On November 20, 1944, Hartranft wrote to Hilborn complaining about Hilborn's management of company business, stating, in part:
'I have got to make a new deal with you. Have been hoping that I could consolidate our work over to Arlington but it cannot be done.
'I have always hoped that I could lead you into a good position to operate directly upon your own on and as a Broker.
................................................................................
* * *
'We will close up our deal, December 31st. ........'
[227 P.2d 907] On January 3, 1945, Hilborn wrote to the company auditor, stating that he was sending a closing sheet showing that he, Hilborn, had advanced in all $1149.95 and had given Chea credit for '$600.oo' received from funds which he had handled and stating that there was a balance due him of $549.95. A careful examination of all the correspondence and records concerning payments made to Hilborn disclose the fact that nothing was ever said about amounts, if any, due Hilborn as his share of the profits realized from the sale of the corporate property, nor during the entire period of Hilborn's employment was any such alleged agreement mentioned.
The fact that Hilborn received and retained salary checks without objection for more than three years strongly indicates an acceptance of the salary as payment in full for his services.
Hilborn did not purchase any of the real estate which was sold by the corporation and it seems unlikely that Hartranft would under those conditions agree to pay him fifty per cent of the net profits of real estate sales in addition to a salary of $200 a month and the further sum of $4,230.91, which appears to have been paid Hilborn largely for this expenses, such as meals away from home, gasoline, and other expenses incident to trips made by him.
In this connection appellant offered to prove by the testimony of two witnesses that a few days after Hartranft's death, Hilborn stated that his claims against plaintiff corporation consisted of a claim for five or six hundred dollars for moneys advanced to appellant; that he had a claim against appellant for damages because it had attached his property; that he had been employed by appellants at a salary of $200 per month and expenses and that he wanted to be re-employed by the corporation on those terms. The offered testimony was admissible as admissions against interest and the court erroneously refused to consider it in determining the credibility of Hilborn's testimony.
A finding of the trial court upon conflicting evidence will not be disturbed upon appeal if there is evidence of a substantial character which reasonably supports the judgment. However, if the evidence is so slight and tenuous that it does not create a real and substantial conflict, the finding may be set aside. Fewel & Dawes, Inc., v. Pratt, 17 Cal.2d 85, 89, 109 P.2d 650. In Herbert v. Lankershim, 9 Cal.2d 409, 471, 71 P.2d 220, 251, the court, after stating the rule that an appellate court will not interfere with the judgment entered by a fact finding body when there exists a substantial conflict in the evidence, said:
'This rule, however, does not relieve an appellate court of its duty of analyzing the evidence in the light of reason and human experience and giving consideration to the motives and propensities which tend to influence or prompt human action, in an effort to solve the question as to whether the judgment is reasonably and substantially sustained by the evidence.
'* * * There must be more than a conflict of mere words to constitute a conflict of evidence. The contrary evidence must be of a substantial character, such as reasonably supports the judgment as applied to the peculiar facts of the case. The rule announced in Morton v. Mooney et al., 97 Mont. 1, 33 P.2d 262, 266, correctly states the rule which has been approved by this court in a number of our decisions. It is thus stated: 'While the jurors are the sole judges of the facts, the question as to whether or not there is substantial evidence in support of the plaintiff's case is always a question of law for the court (Grant v. Chicago etc. Ry. Co., 78 Mont. 97, 252 P. 382), and, in determining this question, 'the credulity of courts is not to be deemed commensurate with the facility or vehimence with which a witness swears. 'It is a wild conceit that any court of justice is bound by mere swearing. It is swearing creditably that is to conclude the judgment.''''
Applying the rules announced in the foregoing decisions to the evidence before us, we conclude that there is no substantial evidence to support the finding of the trial court that there was an agreement between Hilborn and plaintiff corporation [227 P.2d 908] for a division of profits. The finding that there was a joint venture between the parties is likewise without substantial evidentiary support. One of the necessary elements of a joint enterprise is an agreement between the parties to share jointly in the profits and losses. Freedman v. Industrial Acc. Comm., 67 Cal.App.2d 629, 631, 154 P.2d 922.
In Beck v. Cagle, 46 Cal.App.2d 152, 161, 115 P.2d 613, the court held that to constitute a joint enterprise, the parties must have a community of interest in the purposes of the undertaking and equal authority or right to direct the movements and conduct of each other in connection therewith; they must share in the losses, if any, and there must be a close and even fiduciary relationship between them.
The land selling campaign conducted by the parties hereto at Crestmore, California, on which Hilborn worked for two or three months, resulted in a loss of $11,097.78. This loss was borne entirely by appellant and it does not appear that there was any agreement to share profits or the loss which might result from it or any other such selling campaign. It is significant to note that even the claimed contract of May, 1941, states that Hilborn is to act as sales manager for the new project 'on the same basis as the Crestmore campaign now being liquidated.'
The trial of the instant action was in two parts, the first being on the issue of whether or not Hilborn was entitled to an accounting. At the conclusion of this phase of the action, the court entered an interlocutory decree in favor of Hilborn and appointed a referee to take an account of the business of plaintiff corporation. The second part of the trial was devoted to a consideration of the referee's report and after numerous hearings thereon, the court filed its amended findings of fact, which, in part, were that the total gross sales and income derived by cross-complainant (cross-defendant intended) was the sum of $254,767.50; that the total cost of said land so sold, together with all expenses in connection with the sale thereof, is the sum of $159,181.37, leaving a net profit of $95,586.13, consisting of $49,133.73 cash earned profits and $46,452.40 unearned profits represented by eighty-four outstanding contracts; that cross-complainant is entitled to and there is due to him unde the terms of said contract one-half of said net profits, to wit, $47,793.06, less the sum of $11,279.30 advanced to cross-complainant as a drawing account and other cash advances, leaving a balance of $36,513.76 due cross-complainant from cross-defendant under the terms of said contract. In its findings, the court approved the recommendation of the referee that the amount due cross-complainant be settled by paying him $6,688.25 cash and transferring and assigning to him forty-two of the outstanding contracts on which there was due and unpaid the sum of $29,825.21. The judgment, however, was for the sum of $36,513.76 and contained no provisions as to its payment.
Hilborn alleged that according to the agreement he was to receive fifty per cent of the net profits derived from the sale of lands when final payments had been made by the purchasers. The unpaid balances due on these executory contracts were not due at the time of the judgment and may never be collected in full. Furthermore, the judgment is for an amount arrived at on the basis of all sales made over the entire period from June, 1940, to April, 1949, and the record shows that Hilborn's employment terminated in 1944. Under these conditions, the evidence does not support a judgment in the sum of $36,513.76.
Judgment reversed.
BARNARD, P. J., and GRIFFIN, J., concur.