Sweet v. Relis

FOURT, Acting P. J.

Plaintiffs Jack M. Sweet and Zisz, Inc., a California corporation (hereinafter sometimes referred to as Zisz), the defaulting purchasers of a snack shop, appeal from a judgment by the trial court, sitting without a jury, determining that the sellers, Thomas and Cynthia Relis, who resumed possession and operation of the business, are not liable to appellants, or either of them, for the payment of damages or restitution.

Appellants’ sole contention is that the trial court’s finding that “the value of the snack shop business had declined from $30,000.00 at the date of sale to $20,000.00 as of the date that the plaintiffs vacated the premises” is not supported by the evidence. Assuming that the trial court erred in so finding, appellants contend that respondents became obligated upon resuming operation of the business to reimburse appellants for all sums paid to or for the benefit of respondents in excess of their actual damages, and that since respondents in fact suffered no damages they should make restitution of the total amount of appellants’ investments and expenditures with respect to the snack shop purchase and operation on the theory of unjust enrichment. Appellants’ position is without merit.

The record on appeal consists of a partial clerk’s transcript, an engrossed settled statement on appeal (Cal. Rules of Court, Rules on Appeal, rule 7) and all exhibits introduced a,t the trial. The second amended complaint alleged, and respondents have admitted, that prior to December 4, 1964, Thomas and Cynthia Relis, husband and wife (hereinafter

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sometimes together referred to as Relis) were the owners and operators of the Don-Re Snack Shop. The business was conducted within the premises of the Don-Re Market and operated under a nine-year lease executed June 4, 1964, by and between Relis and their landlords, Irving A. and Daniel Wiggins. Relis had also purchased from their landlords under a conditional sales contract the snack shop fixtures and equipment. On or about December 4, 1964, Relis entered into a. written escrow agreement for the sale of the business, including the furniture, fixtures, equipment, good will, trade name, and leasehold interest, tó Jack M. Sweet “or corporate nominee to be formed” for the price of $30,000 plus merchandise at inventory value. According to the understanding and agreement between the purchaser and the sellers, Sweet formed Zisz, Inc., and on or about January 21, 1965, assigned thereto all of his right,- title and interest in and to the contract of purchase and the snack shop business. Sweet, who-assumed personal liability as a guarantor on the original lease and conditional sale contract executed by Relis and Wiggins, was at all times relevant to this action the president of Zisz, a California corporation, wholly owned and controlled by Sweet and his family. Sweet and Zisz further allege that during their five months of operation the business showed a substantial and continuing loss, and in June of 1965 appellants gave up the operation. Appellants then instituted the present action for damages and declaratory relief claiming, alternatively, that they were entitled to rescind their agreement on grounds of Relis’ fraudulent misrepresentations, or that a mutual rescission of the purchase contract and all obligations incurred relative thereto had taken place; in lieu thereof, and in the event the court should find willful default by appellants, they alleged a further claim for restitution on the basis of unjust enrichment.