Friedman v. Bergin

[536]

TRAYNOR, J.

In a contract executed April 4, 1937, the Del Mar Turf Club granted defendant Thomas Bergin the right to dispense all food, liquors, soft drinks, cigars, cigarettes, and other commodities, and to operate a cafe for employees, at a race track at the San Diego County Fair Grounds, at Del Mar, California. On April 24, 1937, Bergin signed an instrument reading as follows: “Received of William J. Friedman and Alex Charles Goodman, the sum of two thousand dollars ($2,000) in consideration for the following concessions at the Del Mar Turf Club: Cigarettes, cigars, candy, checking, including all lavortories (sic); for the term of five years commencing with the 1937 season and ending with the season for the year 1941. This agreement is to be followed by a formal contract on the same basis as that between the Del Mar Turf Club and the undersigned concessionaire.” A formal contract was twice tendered plaintiffs Goodman and Friedman, but according to their testimony they rejected it because it contained no clauses covering their understanding that they were to receive an option to renew for five years, and that Bergin would return the $2,000 to plaintiffs if racing were discontinued during the term of the contract. Although no formal contract was executed, plaintiffs operated the concession at the track for three years, making a profit of $4,198.61. The greater part of plaintiffs’ sales were made in stands built by Bergin in the grandstand, and operated by Bergin’s employees. Plaintiffs’ sole function in connection with these stands was to provide the goods that were sold there. Bergin accounted to plaintiffs each night for the sales of such goods, and paid the proceeds to plaintiffs, less 16 2/3% of the candy sales, which he retained, and 3% of plaintiffs’ total sales to cover the sales tax. Plaintiffs’ sales in other parts of the track were made by girls who circulated through the crowd. Plaintiffs relied on Bergin to make all necessary arrangements for retail licenses, social security and unemployment insurance payments, industrial accident insurance, and sales tax.

During part of this period, Bergin acted through the Del Mar Caterers, to whom he had assigned his general concession from the Del Mar Turf Club. On April 24, 1940, the. Del Mar Caterers assigned this concession to defendants Anderson and Van Steen, informing plaintiffs accordingly. Anderson and Van Steen were unwilling to continue the previ