Rice v. Navarro

SHINN, P. J. Frank B. Navarro, to be referred to as defendant, entered into a conditional sales agreement for the sale to Paul R. Rice and Eileen B. Rice, to be referred to as plaintiffs, of 20 automatic phonographs (“juke boxes”) for the sum of $19,885, payable $5,500 down and the balance in monthly payments of $680. Title to the property remained in the seller, who had the right upon default in payment to declare the whole unpaid amount immediately due, or to declare the purchasers’ rights terminated, take possession of the property, “and hold the same, together with the title thereto.” It was provided that if the seller should take possession all rights of the purchaser under the contract should immediately terminate and all payments theretofore made should belong to the seller, “purchaser remaining liable for the unpaid balance” etc. It was also provided that the seller could, but was not obligated to, sell the property and apply the proceeds first to the expenses of retaking, reconditioning and selling the property, including attorney’s fees; if the unpaid balance exceeded the net proceeds of the sale, the purchasers were obligated to pay the difference, with interest from date of the sale at 7 per cent per annum. The purchasers paid down $3,500, and gave their promissory note for $2,000, made one payment of $20, and 30 days after date of purchase gave notice of rescission upon the ground of alleged fraud and surrendered the machines to defendant. Defendant took possession of the machines, left some of them where they were then located, and stored others. He sued for the balance due on the contract in the amount of $16,311.65 and attorney’s fees. On the following day the purchasers instituted an action for rescission, alleging fraud of defendant and his agents, consisting of alleged false representations and promises with respect to the property sold. They also answered Navarro’s complaint. The two actions were consolidated for trial and were tried on the same evidence. The court found that neither Navarro nor his agents made any false representations or promises, denied relief to Paul R. and Eileen B. Rice, and rendered judgment in favor of Navarro for the sum of [235]$16,291.65, plus attorney’s fees of $750 and the costs in each action. The court made separate findings, conclusions and judgments in the consolidated actions. Paul R. Rice and Eileen B. Rice appeal from each judgment. The appeals are presented on a single set of briefs.

The allegations of fraud were the following: That all the machines were new; that each was producing an average weekly income of $15 for the owner and would continue to produce that amount; that all the machines were located in Hollywood and defendant would, at plaintiffs’ request, substitute other locations; that one machine had a guaranteed weekly return of $15 to the owner; that Paul R. Rice would be able to service the machines in two half days per week and that plaintiffs would earn enough from the machines to meet the installments of the purchase price and have an additional profit of $500 per month. It was alleged that each machine had not been producing a net income of $15 per week but there was no allegation as to the amount they had been producing. It was alleged that during the time plaintiffs operated the machines, some six or seven weeks, the average weekly return to the plaintiffs was the sum of $6.88 or approximately $555 per month. It was alleged that all the machines were not located in Hollywood but six were located elsewhere and defendant refused to substitute other locations. It was also alleged that no machine had a guaranteed weekly return to the owner of $15 or any other amount; also, that it was necessary for Paul R. Rice to devote full time each day to servicing the machines.