Opinion
10-3-1951
KELLEY v. UPSHAW et al. Civ. 18266.
John M. Davenport, Los Angeles, for appellant. Sampson & Dryden and Jacob Swartz, all of Los Angeles, for respondent.
KELLEY
v.
UPSHAW et al.
Oct. 3, 1951.
Hearing Granted Nov. 29, 1951. *
John M. Davenport, Los Angeles, for appellant.
Sampson & Dryden and Jacob Swartz, all of Los Angeles, for respondent.
DRAPEAU, Justice.
February 5, 1947 defendants William A. Upshaw and Othelia A. Upshaw made, executed and delivered their promissory note to plaintiff. The principal amount was $17,900.00, due and payable in installments of $200.00 a week.
December 1, 1947, payments on the note were in default. On that date defendants above named, together with the remaining defendant, Cody W. Howarth, entered into an extension agreement with plaintiff. The agreement provided:
1. For payment by defendants of $1,200 on the note, receipt of which was acknowledged.
2. To pay $50.00 weekly on the note, together with interest computed and payable monthly.
3. If $8,800 was paid by defendants on or before June 1, 1948, such payment would be accepted in full payment of the note.
4. If $8,800 was not paid on or before June 1, 1948, 'the entire sum of $17,600, plus 6% interest from February 5, 1947 shall be due and shall be paid on the weekly basis of $50 per week, plus interest.'
$8,800 was not paid, the note was still in default, and plaintiff brought his action. Defendants Upshaw do not appeal from the judgment which followed.
Judgment was against defendant Howarth and the other two defendants for immediate recovery of $2,694.16 interest; also against the same defendants for $13,197.20 'principal damages,' with the following proviso: 'provided, however, that as to defendant Cody W. Howarth only said sum shall be payable as follows: $2,297.26 forthwith, and the balance of $10,899.94 at the rate of $50.00 per week, plus interest at 6% per annum, commencing July 1, 1950 and continuing until paid; that execution shall issue as against said defendant Cody W. Howarth only in accordance herewith.' The computation of $13,197.20 was made by crediting $4,402.74 paid on account of the $17,600 referred to in the extension agreement.
An answer on behalf of defendant Howarth was prepared and filed by a member of the bar. Before trial this lawyer retired from the case. Upon the trial defendant Howarth appeared and attempted to defend himself without benefit of counsel, with the usual results: The trial judge tried to help defendant, without much success; defendant tried to express himself with still less success; and this Court finds an unsatisfactory record.
After judgment defendant retained counsel, and perfected his appeal. First, defendant contends that it was error to render judgment for the entire balance due on the agreement, the agreement providing that payments on the balance due were to be in installments of $50.00 weekly. Defendant argues that if plaintiff is entitled to a judgment at all, such judgment must be limited to the amount of installments due at the time the action was commenced.
It is, of course, true that an action may not be maintained until a cause of action accrues. Gardner v. Shreve, 89 Cal.App.2d 804, 202 P.2d 322. But in this case the rights of the parties are measured by their contract. Defendant agreed that if $8,800 was not paid on or before a date certain, $17,600, with interest 'shall be due and shall be paid on the weekly basis of $50.00 per week, plus interest.' (Emphasis added.)
Defendant next contends that the findings of fact are not supported by the evidence, in that the consideration for the note was inadequate, because the maker received only $15,000 instead of $17,900 which he agreed to pay; also that the note was usurious for the same reason.
Mr. Upshaw, the maker, testified that $15,000 in money was put up at the time the note was made, and 'The other was prior to the $15,000 loan.' It is the province of the trial court to draw inferences as to consideration and usury. Bank of America Nat. Trust & Savings Ass'n v. McRae, 81 Cal.App.2d 1, 183 P.2d 385.
Defendant next contends that the evidence does not support the findings or the judgment. Defendant argues that upon a new trial it could well be found that plaintiff agreed with defendant to accept $2,500 for defendant's obligation.
The facts upon which defendant's argument that a different result might follow a new trial may be summarized as follows:
The money received from plaintiff was put into an enameling business called Coast Enameling Company, carried on by Mr. Upshaw. The business was running at a loss, its liabilities exceeded its assets, and bankruptcy was imminent, when a third party was brought into the picture--Mr. John Goodwin.
Mr. Goodwin, Mr. Howarth, and Mr. Upshaw agreed that Mr. Goodwin would operate the business for a time and endeavor to work out a reorganization which would put it in good shape. Pursuant to this agreement, a meeting was held at the company's office at which Mr. Kelley, the plaintiff, was present. Also present were Mr. Goodwin and Mr. Howarth. Mr. Goodwin's attorney was also there.
At that time and place the attorney prepared a document by which Mr. Kelley granted to Mr. Goodwin an option to purchase for $2,500 the chattel mortgage securing the note here in question. The document was in the attorney's handwriting and was signed by Mr. Kelley.
The attorney testified to the terms of the document from memory, the original having disappeared under the following circumstances: The original was taken by the attorney to his office to have typewritten copies made of it. He testified that shortly after arriving at his office, 'in walked Mr. Kelley and Mrs. Kelley. Mrs. Kelley said, 'I would like to see the agreement that Mr. Kelley signed this morning.''
So the lawyer handed it to her. Then she said: 'Well, I don't like to do this, but I am going to take this agreement with me.' 'And,' said the lawyer, 'she stuffed it down her neck, turned around and walked out.'
Mr. Howarth testified that Mr. Goodwin was his agent, and that they were working together to save the business; that he called Mr. Kelley on the telephone within a few days after the document was written, signed, and recaptured, and told him $2,500 was available, and that Mr. Kelley said he would not accept it. This testimony was corroborated by Mr. Upshaw.
Plaintiff argues that the option agreement was for the chattel mortgage and was not for defendant's obligation. However, this technical construction may not be put upon the document, as testified to by the attorney who prepared it. The record shows that the chattel mortgage had been released and assigned to Mr. Howarth a year or two before the meeting which resulted in the option agreement.
The vital point to consider centers upon the effect of the testimony as to the nature of the document. Was it a continuing offer, or was it an option? Was it supported by a consideration?
If it was an option, plaintiff could revoke it at any time, and did. Thomas v. Birch, 178 Cal. 483, 173 P. 1102; Podesta v. Mehrten, 57 Cal.App.2d 66, 134 P.2d 38. If there was a consideration for the agreement and it was an option contract, plaintiff had no right to revoke it for thirty days after it was made. Warner Bros. Pictures v. Brodel, 31 Cal.2d 766, 192 P.2d 949, 3 A.L.R.2d 691.
All of the testimony in the record as to the nature of the document is by the attorney, and is as follows:
'Q. (By the Court) To the best of your recollection what is your recollection of it? A. Well, the document was in the nature of an option executed by Mr. Kelley wherein he granted to John Goodwin an option to purchase the chattel mortgage then existing against the equipment at Coast Enameling for $2500 cash. He gave thirty-days' time in which to raise the $2500, and that was the option; that was the agreement.'
This testimony does not support the finding that the agreement was an option only. It would rather, as it stands in the record, compel a finding that for a consideration plaintiff granted defendant's agent an option contract which he could not revoke for thirty days. Other testimony would support a finding that defendant Howarth himself made a formal tender unnecessary. And consideration appears from the attorney's use of the word 'granted' in describing the agreement, and when he said 'that was the agreement.'
The judgment is reversed.
WHITE, P. J., and DORAN, J., concur. --------------- * Subsequent opinion 246 P.2d 23.