Raddatz v. Hedgpeth

SALSMAN, J.

Appellant Raddatz attached personal property alleged to belong to the debtor Sancal Lumber Company, a corporation, hereafter referred to as Sancal. Hedgpeth and Daniel filed a third party claim, alleging ownership of the attached property. After hearing, the trial court entered its judgment in favor of third party claimants. No findings were made by the trial court, and none were required in this proceeding. (Code Civ. Proc., § 689.) Appellant attacks the judgment, however, on the

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ground that the evidence does not support it. We have examined the record and have concluded that appellant is correct in this contention and we therefore reverse the judgment.

The record shows that in 1958 Hedgpeth and Daniel owned land upon which they conducted a sawmill operation. On June 30, 1958, by conditional sales contract, they sold the land, mill and equipment to certain individuals who later, by consent of Hedgpeth and Daniel, transferred the property to Sancal. The items of property which comprised the mill were generally described in the conditional sales contract, and have been referred to in the record and briefs as the "conditional sales items.” After Sancal took possession of the property it converted the mill operation into a stud mill, and in so doing purchased and incorporated into the mill many new items of equipment and machinery consisting of electric motors of various sizes and horsepower, electrical wiring, air compressors, gang saws and other items necessary to the new operation. Sancal also erected a steel building, 42 feet by 64 feet, bolted to a cement foundation, for use in the mill business. These new items were not covered by the conditional sales contract between Hedgpeth, Daniel and Sancal, and are referred to in the briefs as the "appeal ’

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items.

It is not disputed that since 1959, Sancal has been indebted to appellant Raddatz in an amount in excess of $60,000.

The operations of Sancal were not successful. In addition to the debt due Raddatz, Sancal owed many others, and was also delinquent on payments due Hedgpeth and Daniel under their conditional sales contract. On September 19, 1960, Hedgpeth and Daniel exercised their right to terminate the conditional sales contract covering property sold to Sancal. At the time Hedgpeth and Daniel exercised their right to terminate, it was orally agreed that Sancal would turn over all of its assets to Hedgpeth and Daniel, who in turn agreed not to press certain claims for damages which they had against the corporation. Nevertheless, after Hedgpeth and Daniel gave notice of repossession, Sancal continued in possession of the property and continued to operate the mill on a limited basis. On October 17, 1960 Hedgpeth and Daniel agreed in writing with Sancal that the corporation could renew its operations at any time prior to April 1, 1961, or sell the mill if a buyer could be found. Under this written agreement Sancal was to pay Hedgpeth and Daniel $500 per month until such time as the mill was sold or reopened, and