French v. McCarthy

California Supreme Court Jul 29, 1899 No. No. 15551Published

Before: Harrison

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Holding. The court held that the agreement of December 30th was an enforceable contract for the purchase of the plaintiff's interest in a land contract, not a penalty, and that the release of one joint obligor did not discharge the appellant. The court further held that the trial court properly allowed an amendment to the complaint's prayer for relief and that the plaintiff was not required to tender stock held as collateral before maintaining the action.

Issues

Whether the agreement of December 30th constituted an unenforceable penalty or liquidated damages.
Whether the trial court erred in permitting an amendment to the complaint's prayer for relief after the trial had commenced.
Whether the release of one joint obligor operated to release the appellant from the contract.
Whether the plaintiff was required to tender stock held as collateral before maintaining the action.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The provision in the agreement for the payment of five thousand dollars in addition to the amount paid by the plaintiff was in no respect a penalty or liquidated damages.”

“The release of Joost did not have the effect to release the defendant from the same obligation.”

Synopsis

Vendor and Purchaser—Contract of Sale—Interest in Profits of Resale—Purchase of Vendee’s Interest—Consideration.— Under a purchase by the vendor and a third person of the interest of the vendee in a contract for the sale of land, upon which five thousand dollars had been paid by the vendee and which provided for an interest in the profits of the resale of the land by the vendor, out of which the remainder of the purchase money was to he paid, for which interest of the vendee, the purchasers paid five thousand dollars, subject to reimbursement out of the profits of the original five thousand dollars paid by the vendee, an agreement by the purchasers that whatever part of such original payment should not be repaid to the vendee out of the profits by a fixed date, should be paid by the purchasers to him, constitutes part of the consideration for the purchase of the contract, and is not an agreement for a penalty or liquidated damages.

Id.—Action upon Contract—Amendment op Complaint.—In an action upon the contract to make good the unpaid portion of the original five thousand dollars of purchase money paid by the vendor, where the terms of the contract are set forth in the complaint, and issue has been joined by answer, the court may permit an amendment of the complaint to correct an inconsistency between the prayer of the complaint and the facts stated therein.

Id.—Failure to Make Amendment Allowed—Correction op Record.—The failure to make the amendment allowed formally upon the record, does not necessitate a reversal of the judgment, but the record will be ordered to be corrected to conform with the order permitting the amendment.

Id.—Agreement to Substitute Stock por Land — Payment — Pledge—Finding as to Value Immaterial.—Where there was a supplemental agreement that the land should be conveyed to a corporation, and that the stock should take the place of the land, under an allegation in the answer that plaintiff had accepted stock in payment of his obligations under the agreement and under the claim of plaintiff that the stock was received by way of pledge or collateral security for the contract sued upon, there is no issue authorizing a finding as to the value of the stock.

Id.—Tender op Pledged Stock—Retention until Satisfaction of Judgment.—In an action upon a contract to pay a sum of money, stock held by way of pledge or collateral security for the obligation, need not be tendered by the plaintiff, but may be retained by him until satisfaction of the judgment in his favor; and it is not necessary that the judgment shall provide that the stock shall be surrendered, upon such satisfaction.

Id.—Joint Obligation—Release of Oodbfendant—The release of a codefendant who was a joint obligor with the other defendant does not release the other defendant from his obligation to pay so much of the debt as was not paid by the codefendant released.

HARRISON, J. The parties to this appeal entered into a contract December 23, 1890, by which the respondent agreed to purchase from the appellant an undivided twentieth of a tract of land in San Francisco for the sum of twenty thousand dollars, of which he paid five thousand dollars to the appellant. The appellant was to retain the title to the land and make sales thereof, and the other three-fourths of the purchase price was to be paid out- of the proceeds of these sales. On the 30th of December the defendants herein—the appellant and one Joost —made a contract with the respondent, by which, after reciting the aforesaid, agreement and that they “are desirous of obtaining an interest in said contract and the benefits to accrue therefrom,” they agreed with him that if he should not, within one year from January 10, 1891, receive back the money paid by him under said contract, they would pay or cause to be paid to him all sums of money 'that he had already paid, together with the sum of five thousand dollars in addition thereto. In consideration thereof the plaintiff agreed that the defendants should be entitled to receive all moneys to which he might oe entitled by virtue of said contract of December 23d, above the sum of five thousand dollars that he had already paid.

It maybe inferred from the record, although there is no direct evidence of that fact, that the land involved in the agreement was conveyed to the Sunnyside Land Company, and on or about January 27, 1891, the respondent, being about to convey his interest in the contract of December 23d to that company, at the request of the defendants, and to receive certain shares of stock in lieu of the contract, or of his interest in the land, the parties to the agreement of December 30th made a supplemental agreement providing that the said transfer should not affect their obligations thereunder, but that the stock should take the place of the contract, and thereupon a hundred shares of the capital stock of the company was issued to the plaintiff. The plaintiff, not having received back any of the money that he had paid under the contract of December 23d, brought the present [511]action March 17, 1892, upon the contract of December 30th, to recover from the defendants the amount therein agreed by them to be paid. The appellant in his answer thereto alleged that he had fulfilled all the obligations and conditions of the contract of December 23d to be performed by him, and that the plaintiff had received the above-named one hundred shares of capital stock for the amount paid by him thereunder, and had accepted said stock in “payment” of all obligations on the part of the defendants, or by virtue of the agreement of December 30th. After the action had been commenced, the plaintiff, under an agreement made by him with Joost, received the sum of four thousand five hundred dollars, and released him from the obligations of the agreement of December 30th, but provided in the release that it should not operate or be construed to release or in any way discharge the appellant. At the trial of the cause the court, upon the request of the plaintiff, granted him leave to amend his complaint by inserting therein the sum of ten thousand dollars, in the place of five thousand dollars, in the prayer for relief. The trial proceeded without any formal amendment having been made, and at its close the court rendered judgment in favor of the plaintiff and against the appellant for the sum of five thousand five hundred dollars.

French v. McCarthy

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