Mercola v. Chester

California Court of Appeal Apr 24, 1950 No. Civ. 17349Published

Before: Wilson

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Holding. The court held that the plaintiffs were entitled to recoup their investment costs from the proceeds of a partition sale of the leasehold before any remaining profits were divided with the defendant, consistent with a prior final judgment.

Issues

Whether the defendant is entitled to a share of the proceeds from a partition sale before the plaintiffs have recouped their investment costs for the lease and building.
Whether the prior final judgment and reformed agreement require the plaintiffs to be repaid their investment costs from the proceeds of a judicial sale.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Chester is not entitled to share in the profits of the lease “howsoever derived” until the Mercólas have been repaid the entire amount of their investment.”

“The terms of an agreement or of a judgment cannot always be stated in one sentence or even in one paragraph. The document must be read as a whole and its terms'correlated to one another.”

WILSON, J.

Action for partition of a 99-year leasehold interest in real property, together with a building thereon, the lease having been made in favor of plaintiff Thomas D.

[141]

Mercóla for the benefit of himself, plaintiff Archie A. Mercóla, and defendant Frank B. Chester. The-Mercólas subsequently-assigned one half of their interest to plaintiff Joseph V. Quinn. An interlocutory judgment of partition was entered in which it was decreed that (1) the parties to the action

are the owners of an undivided interest in lessee’s interest as follows: Plaintiffs Thomas D. Mercola and Archie A. Mercóla 12% per cent each, plaintiff Quinn 25 per cent, and defendant Chester 50 per cent; (2) a referee be appointed to sell the property; (3) from the proceeds of the sale the expenses and costs of sale and plaintiffs’ attorneys’ fees be paid, the sum of $97,-026.92 be paid to the Mercólas representing the amount of their investment in the building, and the balance, if any, be divided among and paid to the parties in the respective proportions above mentioned.

Defendant Chester has appealed from the interlocutory judgment, his contention being that after paying the costs of the sale and the attorneys’ fees the balance should be divided among plaintiffs and defendant without first deducting and paying to the Mercólas the sum above mentioned.

Prior to January, 1946, Chester and the Mercólas entered into a joint venture agreement with reference to a lease which Chester was to procure. Under date of February 21, 1946, the parties purported to reduce their joint venture agreement to writing by a letter signed by the Mercólas addressed to Chester in which it was stated “you [Chester] are to share equally with ns in all net profits received after investment, investment costs, and expenses of every kind and character have been recouped by ns.’’ On February 22 a further agree-3nent in the form of a letter was signed with reference to profits that might be received by Chester from a lease and building adjoining the property in question in this action.

The lease was procured by Chester and the building was erected by the Mercolas. Their total expenditure in connection with the acquisition of the lease and the construction of the building amounted to $101,097.23. From the operation of the

Mercola v. Chester

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WILSON, J.

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