Raichart v. Phillips

California Court of Appeal Oct 16, 1953 No. Civ. No. 4806Published

Before: Barnard

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Holding. The court held that the written agreement for the transfer of corporate stock was a valid, enforceable contract supported by sufficient consideration, and that the defendant failed to prove the agreement was void or subsequently rescinded.

Issues

Whether the written agreement was intended to be a binding contract or was void for lack of intent and consideration.
Whether the parties entered into a subsequent oral agreement to cancel the written contract.
Whether the trial court erred in admitting evidence of the defendant's other business transactions.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The evidence as a whole, including appellant’s testimony, justifies and sustains the court’s findings and conclusion with respect to the purpose and intent with which this agreement was executed.”

“The evidence is sufficient to support the court’s finding that a sufficient consideration here existed.”

“The trial judge did not believe appellant’s evidence in this regard, and the circumstances support him in that conclusion.”

BARNARD, P. J. This is an action for breach of contract, with a second count for conversion, involving the right to 320 shares of corporate stock.

The defendant Phillips promoted three oil companies, being president of each, the Phillips-Ramsay Oil 'Company in 1946, the Nelson Phillips Oil Company in 1947, and the Gordon Oil Company in 1949. He became acquainted with the decedent, Dr. Raichart, in 1946, they saw each other frequently, and Dr. Raichart bought stock in all three companies. Phillips organized the Gordon Oil Company in January, 1949. A permit was issued in March, 1949, authorizing the issuance of 13.000 shares of stock to Phillips and the sale of an additional 13.000 shares at a par value of $10, and providing that all shares should be held in escrow and that Phillips should receive no dividends on his shares until the purchasers of shares for cash had been reimbursed for the full purchase price.

In August, 1949, Phillips and Dr. Raichart executed an agreement reading as follows

[647]“San Diego, Calif.

“August 18th 1949

“For promotional services rendered by G. W. Raichart I, N. Gordon Phillips hereby agrees to give when received from escrow, or order of the Corporation Commissioner, and G. W. Raichart hereby agrees to accept as payment in full for his promotional services, a total of 320 shares of Capitol stock of the Gordon Oil Company when issued to N. Gordon Phillips as authorized under the terms of its permit, with the corporation Department of the State of California and pursuant to all covenants, conditions and terms of said permit, governing all stock when issued to N. Gordon Phillips.

“The undersigned hereby certifies that he further agrees to accept and be bound by all the provisions of the order of the Commissioner of Corporations of the State of California, contained in said permit when the stock is issued to

‘ ‘ Signed N. Gordon Phillips

“Accepted G. W. Raichart”

Dr. Raichart died suddenly on December 27, 1950. Shortly thereafter, Phillips put through a transaction by which one Kline purchased all of the stock of the Gordon Oil Company. The deal was closed in March, 1951, and Phillips received about $2,000,000 for his shares of stock

Raichart v. Phillips

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