Pomona Golf & Country Club v. Eaton

HERNDON, J. By this action the plaintiff, Pomona Golf and Country Club, a California corporation, seeks a judgment declaring that defendant Fred Eaton holds the lessee’s interest under a certain lease as a constructive trustee for plaintiff’s use and benefit. The gist of plaintiff’s complaint is that the defendant negotiated and obtained the lease while he was serving as plaintiff’s employee and agent, and that, in obtaining the lease for himself, defendant violated duties arising from a fiduciary relationship then existing between the parties.

The trial court found that during the term of an earlier lease under which plaintiff was the lessee of the land in question defendant was plaintiff’s sublessee, and that defendant was plaintiff’s agent or manager in the operation of a liquor bar located on the premises. The trial court found, however, that defendant commenced his negotiations to obtain the leasehold, which is the subject matter of this litigation, only after the termination of his relationship as plaintiff’s employee or agent, and that, in obtaining the new lease for himself, defendant violated no fiduciary duty owing to plaintiff.

On this appeal from the judgment, plaintiff’s principal contention is that there is no substantial evidence in the record to sustain the findings to the effect that any fiduciary relationship theretofore existing between the parties had been terminated when defendant negotiated for the lease in question. Plaintiff argues that the evidence is such as to compel a finding that defendant was its agent and manager in the operation of the golf club properties, and that defendant violated duties stemming from this fiduciary relationship when he sought to lease the premises on his own account.

In obedience to the well established rule, we have surveyed the record in a light favorable to the findings and conclusions [378]of the court below (see 4 Cal.Jur.2d 485 et seq., Appeal and Error, §606). We conclude that the challenged findings of the trial court are well supported and that the judgment must be affirmed.

In 1947 plaintiff acquired the lessee’s interest in a lease of a golf course and clubhouse located in the Pomona area. The owners of the property were Ealf and Lalla Goddard.

In October, 1952, defendant and his wife met with Dr. Joseph N. Reynolds, plaintiff’s president, and presented to him a written proposal setting forth terms under which defendant would take over operations of the club. An oral agreement was reached, providing that defendant would undertake the operation of the club properties, would keep all gross receipts therefrom and would pay plaintiff $1,000 per month, plus 8 per cent of the gross receipts in excess of $10,000 per month. It was agreed that the relationship would continue until the end of plaintiff’s lease, so long as defendant “honestly” reported the amount of rent due. Defendant further agreed to purchase the inventory of liquor and food then on hand, to maintain and repair the premises and facilities at his own expense and to pay all salaries, taxes, utilities, license fees and other expenses incident to the club’s operation.