Campbell v. Bauer

BRAY, J

Defendants

*

appeal from a judgment granting specific performance of an agreement to transfer an on-sale general liquor license, pursuant to the terms of a limited partnership agreement.

Questions Pbesented

They are practically the same as those this day decided in

Michael Saso, Jr.

v.

Joe A. Furtado and Inez R. Furtado, post,

p. 759 [232 P.2d 583]. The main difference between the facts of this case and those of the Saso case is that here the license was pledged as security for the payment of a loan, while in the Saso case the agreement was to retransfer the license to the lessor upon the termination of a lease.

Facts

The facts are not in dispute. March 31, 1948, plaintiffs loaned $13,322.07 to Barbershoppers’ Redwood Lodge, Inc. Defendants as general partners operated a restaurant and bar in Palo Alto known as the Circus Room. Barbershoppers “went broke” and made an assignment for the benefit of creditors. Defendants bought its assets for $26,750. From this sum plaintiffs received $4,322.07 of the indebtedness due from Barbershoppers, leaving a balance of $9,000 owing. In order to enable defendants to pay off all Barbershoppers creditors, plaintiffs agreed to lend defendants certain moneys on the same terms and conditions as its original loan to Bar

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bershoppers, namely, a limited partnership agreement on the liquor license, a chattel mortgage on the fixtures, and a deed of trust on real property owned by a third party. As the Barbershoppers had defaulted, plaintiffs were entitled to a transfer of the liquor license to them. But to save having the license transferred by Barbershoppers to plaintiffs and then a transfer from plaintiffs to defendants, which would have cost an additional fee, Barbershoppers’ assignee for the benefit of creditors transferred the license directly to defendants. Defendants executed a promissory note to plaintiffs for $10,944. Plaintiffs took the same security as they held from Barbershoppers. Thus plaintiffs appeared as limited partners on the liquor license of both the Barbershoppers and defendants. Defendants were the general partners and plaintiffs the limited partners. This limited partnership was merely to secure the payment of the loan. The agreement provided that plaintiffs transferred to defendants their interest in the license and that a limited partnership should exist until all sums payable under the promissory note were paid. In the event of default defendants’ interest in the license should cease, and defendants “would execute and transfer all of their interest’’ in said license to the plaintiffs upon demand. In July, 1949, defendants defaulted. There is a conflict in the evidence as to when demand for a transfer was made. The court found that plaintiffs made demand by filing this action. The complaint was filed September 16, 1949, and the amended complaint on September 22. (The effective date of section 7.3 of the Alcoholic Beverage Control Act hereafter discussed was October 1.) On June 20, 1949, defendant Tussing signed an application for transfer of the license to plaintiffs. Defendant Bauer refused to sign it.