Opinion
2-27-1958
Pacht, Ross, Warne & Bernhard, Isaac Pacht, Harvey M. Grossman, Los Angeles, for appellant. Harold M. Heimbaugh, Los Angeles, Geo. W. Rochester, La Habra, for respondents.
Nick VANGEL and Ernest Vangel, Plaintiffs and Respondents,
v.
Charles VANGEL, Defendant and Appellant. *
Pacht, Ross, Warne & Bernhard, Isaac Pacht, Harvey M. Grossman, Los Angeles, for appellant.
Harold M. Heimbaugh, Los Angeles, Geo. W. Rochester, La Habra, for respondents.
DRAPEAU, Justice pro tem.
In 1944 three brothers purchased the Cascade Ranch in the mission district in the San Fernando Valley. There are about 360 acres in the ranch, 160 devoted to citrus orchards, and the rest rolling farming lands--all in the path of converging freeways and within the stupendous growth of population of the Los Angeles metropolitan area.
The three brothers agreed that title to the ranch was to be vested in their individual names; that each would own a one-third interest in it; and that they would hold and farm it as partners.
But the partnership resulted in unfortunate wrangles among the brethren, and in these protracted legal proceedings. For this case has been tried in the Superior Court four times. Two of the brothers are plaintiffs, and the other brother, Charles Vangel, is defendant.
The first trial was in 1947; but the trial judge granted a motion for a new trial.
In the second trial judgment of the Superior Court was affirmed in 1953 by the District Court of Appeal (Vangel v. Vangel, 116 Cal.App.2d 615, 254 P.2d 919) as to all of the issues among the partners, except that the case was sent back to the Superior Court for a new accounting only.
Among these issues affirmed was that Charles wrongfully caused dissolution of the partnership, because he prevented his brothers from participating in the management and operation of the ranch. Upon this finding the Superior Court adjudged dissolution of the partnership, and inflicted upon Charles the harsh and drastic penalty of forfeiture of his interest in the partnership. This included his one-third interest in the ranch. See section 15038 (2)(b) of the Corporations Code.
By this judgment Charles' brothers were given the right to purchase Charles' interest in the partnership, as provided in the code section referred to. The court fixed the value of this interest at $58,600.25.
No one petitioned the District Court of Appeal for a rehearing of this decision.
It is to be noted, however, that the District Court of Appeal also determined that Charles' right to share in the profits of the partnership could not be terminated prior to winding it up (116 Cal.App.2d at page 628, 254 P.2d at page 928). And that section 15042 of the Corporations Code provides that the retiring partner as against the partners continuing the business 'shall receive * * * an amount equal to the value of his interest in the dissolved partnership with interest, or, at his option * * * in lieu of interest, the profits attributable to the use of his right in the property of the dissolved partnership.' In this connection the District Court of Appeal comments: 'From the position defendant has taken on this appeal it is fair to say that he has elected to take profits rather than interest on the value of his share in the partnership.' 116 Cal.App.2d at page 629, 254 P.2d at page 928.
The third trial resulted in a judgment finding the amount due Charles, as directed by the District Court of Appeal. This judgment was affirmed by the District Court of Appeal; but the Supreme Court took over the case. Vangel v. Vangel, 45 Cal.2d 804, 291 P.2d 25, 55 A.L.R.2d 1385.
Reference is made to the opinions in these two cases--in the Supreme Court and in the District Court of Appeal--for more complete statements of the facts in this litigation.
The Supreme Court held that Charles was entitled to compensation for his services as manager of the property after the partnership was dissolved, and also to his share of the profits until its final winding up. The Supreme Court directed a new trial as to these issues only. In the opinion it is stated (45 Cal.2d at page 810, 291 P.2d at page 29), 'In all other respects the judgment is affirmed.'
The fourth trial was had in the Superior Court in 1956, and Charles appeals from the judgment in that trial finding the amount due him from the partnership.
Charles contends on appeal:
(1) That it was error to terminate his 'right to participate in profits or receive interest on the balance due him as of May 12, 1953.'
(2) 'The trial court erred in allocating to Charles only 23.96 per cent of the partnership assets and the post-dissolution profits.'
(3) 'The procedures set up in Section 15038(2)(b) of the Corporations Code were improperly invoked in the instant case.'
As we read the decisions of the District Court of Appeal and of the Supreme Court, there is only one issue that may now be considered in this case. That is whether or not the evidence on the fourth trial in the Superior Court supports the findings and judgment fixing the amount due Charles.
All of the other matters argued in the briefs were at the time of the fourth trial the law of the case.
Our Supreme Court states the rule in Penziner v. West American Finance Co., 10 Cal.2d 160, at page 169, 74 P.2d 252, at page 256, as follows:
'It is clearly established by the decisions in this state that when the precise question before the court has been decided in a former appeal in the same action and under substantially the same state of facts, the parties are estopped from again litigating this question in any subsequent proceeding either before the trial or appellate courts.'
Charles' argument that he has been unjustly deprived of his property by the infliction upon him of the forfeiture provisions of the Corporations Code has, in our opinion, great merit. But we are of the opinion that we are bound by the decisions of the District Court of Appeal and of the Supreme Court in this case; and that argument that the final result here is a manifestly unjust decision (England v. Hospital of Good Samaritan, 14 Cal.2d 791, 97 P.2d 813) must be addressed to our Supreme Court.
On the fourth trial the judge found that an accountants' report in evidence correctly sets forth the interests of the three brothers in and to their partnership assets. He also found $58,915.68 due Charles, plus compensation for his services 'allocable from the business,' $8,200; with a total of $67,115.68.
The trial judge properly refused to allow interest in computing the amount due Charles, for two good reasons: First, the case was not tried upon that theory, and, secondly, his claim against the partnership was unliquidated. In such circumstances interest is not allowed. Lineman v. Schmid, 32 Cal.2d 204, 209, 195 P.2d 408; Cox v. McLaughlin, 76 Cal. 60, 67, 18 P. 100.
But as we read the record here, we still do not have a judgment for Charles for his share of the profits since dissolution of the partnership. This measure is clearly set forth by the Supreme Court in Vangel v. Vangel, supra, 45 Cal.2d at page 810, 291 P.2d at page 29: 'The amount of profits attributable to the use of Charles' share of the assets and also those allocable to his services in the continuing business should have been considered in the apportionment.'
The accountants' determination of the shares of the partners in and to the assets of the partnership, received in evidence, was no more than the yardstick to use in apportioning the profits. As the Supreme Court points out, this is a case in which the principles of equity apply. In 'balancing the equities,' as the Supreme Court used the phrase, Charles is entitled to his share of the profits of the ranch for each year of its operation since the partnership was dissolved.
Charles is entitled to more than that. He is entitled to have the Superior Court determine how much, if any, the ranch has enhanced in value from the date of dissolution of the partnership until the next trial of the case, and to have his portion of that sum also apportioned to him.
It was error for the trial judge to sustain plaintiffs' objection to Charles' offer of proof in this respect.
Finally, the trial judge awarded Charles $200 a month for his services, rather than $750, which he claimed. It is true that one of Charles' brothers testified that in his opinion such services as he rendered could have been had for $100 a month. Another witness (for Charles) testified to the effect that Charles' services were reasonably worth $750 a month.
In view of the fact that the issues directed to be determined by the Supreme Court will have to be re-tried, we think both should be remanded for rehearing.
The judgment is reversed.
WHITE, P. J., and FOURT, J., concur. --------------- * Opinion vacated 327 P.2d 136.