Yamamoto v. Liberman

DORAN, J. This is an appeal by the defendants, sellers of the Fairfax Laundromat, from a judgment determining that the plaintiff buyer, Shigeru Yamamoto, was entitled to rescind the sale and recover the purchase price deposit less escrow expenses, and less commission paid to Wilshire Realty Company, broker making the sale. There was a cross-complaint by the sellers for declaratory relief, joining buyer, escrow holder and broker.

On October 8, 1954, an escrow was opened for the purchase by respondent Yamamoto of the laundromat in question for the sum of $25,000. The respondent paid into this escrow the amount of $10,000. Escrow instructions evidencing the agreement between the parties, contain the following provisions :

“17. The parties do hereby agree that this sale is subject to a trial period 14 working days, commencing on the opening of business October 18, 1954, and ending on the close of business Sunday, October 31, 1954.

“18. In the event the income of the business proves a gross ■ income of $665.00 average per week, with not more than a five per cent decrease, then in such event, the Buyer does hereby waive any further proof of income.

“In the event this sale consummates all of the income of the business, during the trial period, less the current operating expenses, shall be credited to the buyer at close of escrow.”

The escrow instructions further provide that,

“6. The sellers hereto agree to pay Broker’s Commission to Wilshire Realty Company in the amount of $2,250.00. The parties hereto authorize and instruct the Vista Escrow Company to pay said sum to the broker forthwith out of the funds deposited in escrow and charge same to the account of the seller.”

It was found by the trial court that the business had failed to make the stipulated gross income during the trial period; that this provision was a condition precedent to the sale, and that plaintiff had not waived such provision. The trial court further found that defendant James Donald Greenspan was a minor partner and a necessary party to the transaction but had never participated therein; and that Steven Sherman was [917]likewise a partner with Schmul Liberman but did not participate in the transaction. The judgment permitted the Vista Escrow Company to retain $601.54 which included the escrow fees and expenses, plus a $300 attorney fee and $25 court costs. The Wilshire Realty Company was held entitled to retain brokers’ fees in the sum of $2,250. Defendants’ cross-complaint was dismissed.