Guldstrand v. Johnson, Carvell & Murphy

California Court of Appeal Mar 4, 1940 No. Civ. No. 6321Published

Before: Thompson

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Holding. The court held that the defendant's agreement to "furnish" capital for the purchase of business materials constituted an advancement of funds rather than a contribution, entitling the defendant to credit for such expenditures in the final accounting.

Issues

Whether the defendant was entitled to credit for capital expenditures used to purchase stock and materials under the parties' written agreement.
Whether the term "furnish" in the contract required the defendant to contribute capital without reimbursement.

Disposition. reversed

Quotations verified verbatim against the opinion

“The word “furnish” as it is used in that paragraph merely means that the defendant agreed to supply or advance the money necessary to purchase the stock or materials for carrying on the business.”

“It does not mean that the defendant is required to contribute that money to the business without the right to receive credit therefor in the semiannual settlements.”

THOMPSON, J. The plaintiff recovered judgment for $1739.07 in a suit for an accounting in a business enterprise. From that judgment the defendant has appealed contending that it was not credited with money advanced by it for the purchase of stock and materials used in conducting the business.

The plaintiff represented certain manufacturers of gummed tape, cloth labels and stamp devices in Los Angeles where he was engaged in the business of preparing and marketing that merchandise. The defendant is a corporation with an established mercantile brokerage business in the same city. The plaintiff had neither the capital nor the business prestige to conduct a successful enterprise of that nature. He desired the benefit of defendant’s financial aid, experience, standing, advice, sales department, plant, equipment and organization to carry on his business. For that purpose the plaintiff and defendant entered into a written agreement on June 26, 1928, 'by the terms of which they were to operate plaintiff’s business at the plant of the defendant, as a joint adventure or a limited partnership, for an indefinite period of time. That agreement reads in part:

“Johnson, Carvell & Murphy are to furnish space in their offices for H. A. Guldstrand and any assistants that later on may be necessary; do all bookkeeping and stenographic work, pay all telegraph and telephone bills, postage, stationery and other items incidental to efficient conduct of the business.

“Johnson, Carvell & Murphy further agree to furnish the necessary capital and purchase the products covered by this agreement in sufficient quantities to obtain the lowest cost price, and to furnish storage space for such stock as good judgment dictates should be carried.

“Johnson, Carvell & Murphy will do all billing, collecting, buying and selling with the cooperation of H. A. Guldstrand and the proceeds derived from this business shall be allocated as follows:

[612]“1. A monthly payment to Johnson, Carvell & Murphy of Two Hundred and Fifty Dollars ($250.00).

“2. A monthly auto allowance to H. A. Guldstrand of Sixty Dollars ($60.00).

“3. The remaining gross profits to be credited to a reserve fund and to be divided equally between Johnson, Carvell & Murphy and H. A. Guldstrand on July 1 and January 1st of each year.

Guldstrand v. Johnson, Carvell & Murphy

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