Mauss v. Kato

BARNARD, P. J.

In December, 1924, the defendants sold to the plaintiffs a going business in Hollywood, including certain fixtures, stock in trade, and a lease of a space in a public market. This lease was a sublease from a party who in turn had leased the property from the owner. This lease was assigned to the plaintiffs, who obtained the consent of the sublessor to the assignment. The defendants had previously paid $600 to their lessor as advance payment of the rent for the last two months of the sublease. Plaintiffs paid to the defendants $2,900 for the business, including the stock in trade, the fixtures, the lease and the advance payment of rent. The defendants gave to the plaintiffs a “bill of sale” covering the lease, stock and fixtures in which they agreed to “warrant and defend the title to the said property, goods and chattels hereby conveyed, against the just and lawful claims and demands of all persons whomsoever”. The plaintiffs took possession, paid the rent to the sublessor, secured additional space, remodeled the fixtures, and continued in business for about two years and six months. They then received a letter from a referee in bankruptcy purporting to represent the original lessor of the premises, requiring them to vacate. They then went to the defendants offering to surrender the business as it then was, and demanding a return of the $2,900 paid. The offer not being accepted, they tore out the fixtures, sold what they had left, and brought

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this action to recover the $2,900. The complaint as filed was in two counts, the first of which was for money had and received. The second count, while inartificially drawn, attempted to set up a rescission. It failed, however, to allege that the plaintiffs had returned or offered to return what they had received. A demurrer to the second count was sustained and the action went to trial upon the first count, as answered, resulting in a judgment for the plaintiffs for $2,900. From this judgment the defendants have appealed.

It is apparent that the claim of respondents, if any they have, is for damages for a breach of the written warranty contained in the bill of sale. On the other hand, the complaint is not based upon a claim for damages, and counsel for respondents stated in open court that they were not seeking damages. An action for money had and received will lie when the property received is so entirely worthless that the law will imply a promise to repay the purchase price, but in order to bring a plaintiff within that rule, a total failure of consideration must appear.