Baker v. Philbin

California Court of Appeal May 8, 1950 No. Civ. 17389Published

Before: Drapeau

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Holding. The court held that a good-faith compromise agreement regarding a disputed contract claim constitutes sufficient consideration to be enforceable, even if the underlying contract might have been legally unenforceable or subject to defenses.

Issues

Whether a compromise agreement is supported by sufficient consideration when the underlying claim is asserted in good faith.
Whether the underlying contract was void for illegality due to the plaintiffs' lack of professional licenses.
Whether the trial court erred in dismissing the tort claim for inducing a breach of contract after finding a valid compromise agreement.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The trial court found that the claim was asserted in good faith. This was a finding of good consideration for the compromise, even though the claimant might not have prevailed in a lawsuit based on the contract.”

“It is established law in this state that a valid compromise agreement has many of the attributes of a judgment, and in the absence of a showing of fraud or undue influence, is decisive of the rights of the parties thereto.”

DRAPEAU, J.

Edward Schulz made an offer to buy Camp Anza from the War Assets Administration, and deposited $2,500 to bind the bid. The purchase price was $510,000. He had to have $99,500 to make his down payment. He was a man of limited finances, and quite likely was greatly surprised when the government notified him that his bid was to be accepted. Most certainly he was exceedingly disturbed. For, unless he could raise the down payment he stood to lose $2,500. So he immediately commenced a search for capital.

[395]

In his search he met plaintiffs, who told him they would raise the money for a 5 per cent commission, and if he would employ them as engineers on the disposal of the property. None of the plaintiffs was licensed as a business opportunity broker, or registered as a civil engineer.

Mr. Schulz agreed to the proposal, and one of the partners typed up a memorandum of agreement, the construction of which will determine the basic issues in this ease. The writing provided for payment of $250 by Mr. Schulz, by way of a retainer. Mr. Schulz didn’t have $250, and so the partners sent him out to get it. He dug it up in a day or two, whereupon the document was signed and delivered, and is as follows:

“This an agreement between Mr. Edward P. Schulz of Pontana, California and the firm of Weikel and Mahony of Los Angeles, whereby the two parties to this agreement agree to the following, to wit,

“1) Weikel and Mahony agree to use their best efforts to raise sufficient monies for Mr. Schulz so he can complete the purchase of the property known as Camp Anza, California from the War Assets Administration, upon which he has already made a down payment, and

“2) for this and other services to be rendered in conjunction therewith, Mr. Schulz on his part agrees to pay the firm of Weikel and Mahony the sum of $250.00 upon the signing of this agreement, as a retainer fee, upon a best performance basis, without any further guarantees or warranties, and further if

“3) the firm of Weikel and Mahony are successful in raising any monies to complete the purchase as stated above, Mr. Schulz agrees to pay Weikel and Mahony an additional fee of $25,000.00, or on a basis of five per centum, for any part of the monies so raised, it being understood that the fee of $25,000.00 is only payable if the property is turned over to Mr. Schulz so he can proceed with his intended operations, and if only a part is raised, then the five per cent rule only, shall apply, and further if the project is completed

Baker v. Philbin

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DRAPEAU, J.

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