Bowmer v. H. C. Louis, Inc.

[502]

PERLUSS, J. pro tem.

*

This is an appeal by plaintiffs Amos Y. Bowmer and his wife, Leah, who recovered a judgment in the trial court based on quantum meruit in the amount of $8,522.57 against defendant H. C. Louis, Inc. The Bowmers have appealed from the remainder of the judgment which rejected their claim of entitlement to a $30,000 interest in a trailer court. The trial court held that fraudulent misrepresentations on the part of Mr. Bowmer constituted a defense to his claim. The issues presented, accordingly, are whether fraud is an appropriate defense to an action based on contract and, if it is, whether the findings of fraud by the trial court are supported by the evidence.

In 1960 Mr. Bowmer first contacted Stephen Engle, President of H. C. Louis, Inc., for the purpose of securing a ground lease of property owned by the corporation. Mr. Bowmer informed Mr. Engle at that time that he was a builder of trailer parks and a manager; that the property involved “was uniquely situated for the development of a good trailer park;” untruthfully, that he was a general contractor and that he could build a trailer park for 50 cents on the dollar of what the normal cost would be.

It appears that Mr. Bowmer could not finance the proposed project alone and, after discussions were had concerning a partnership arrangement, a partnership agreement was signed. Because of Mr. Bowmer’s inability to finance even his partnership share on April 3, 1961, a second agreement was entered into under which Mr. Bowmer was hired as manager of the trailer park for a period of five years. He was required also under the contract to supervise the construction of the facility. His compensation for services rendered was to be $600 a month plus a subsistence allowance of $125 a month, together with 20 percent of the gross monthly receipts. It was also agreed that after completion of the trailer park Mr. Bowmer would receive an interest of $30,000 in the property. Funds were then borrowed and construction commenced and the park was opened in October 1961, about six months after construction commenced. On January 22, 1962, defendant gave Mr. Bowmer 60 days’ notice of termination of the employment agreement.

On February 9, 1962, the parties entered into a third and substitute contract. It was denominated “Agreement to Terminate Employment Contract and Purchase Agreement.” Under this agreement, the corporation contracted to purchase