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Hersh v. Garau

June 30, 1933

SARA F. HERSH ET AL., RESPONDENTS,
v.
AURELIO GARAU ET AL., APPELLANTS; ALLEN R. MACCONNELL, AS TRUSTEE IN BANKRUPTCY, ETC., ET AL., INTERVENERS.



APPEAL from a judgment of the Superior Court of Los Angeles County. Frank Lamberson, Judge Presiding. Affirmed.

Curtis

The facts are stated in the opinion of the court.

CURTIS, J. This action was instituted by plaintiffs, Sara F. Hersh and Samuel Hersh, Husband and wife, to recover damages in the sum of $150,000 for the refusal on the part of defendants, Aurelio Garau and Sarah Garau, husband and wife, to convey to plaintiffs certain real property in accordance with the terms of a written option to purchase said property given by defendants to one Morris Rauch and by him assigned to plaintiff Samuel Hersh.

The undisputed facts of the case, very briefly stated, are as follows: In November, 1922, Aurelio Garau and his wife, Sarah Garau, were the owners in fee simple of a piece of property consisting of approximately eight acres known as the "Garau Home Place" located near Culver City, which property is bounded on the south side by Washington boulevard, a major boulevard from Los Angeles to Venice, on the west side by National Boulevard, and on the north side by Venice Boulevard. During the month of November, 1922, Garau and his wife entered into an agreement leasing said property to the Green Mill Catering Company and in January, 1923, said company commenced the construction thereon of a large cafe and restaurant building. Thereafter the Green Mill, Inc., was formed, which assumed the rights, duties and privileges of said Green Mill Catering Company and completed said building, at a total cost in excess of $90,000. During this period of construction Morris Rauch secured from Garau and his wife a written option, dated March 26, 1933, for one year, to purchase said property for a consideration of $90,000 cash, or upon terms to be agreed upon by the parties. This option was given for the reason that Rauch stated that it was impossible for the Green Mill, Inc., to finance the construction of the building on leased property without an option to purchase the property during the life of the lease, and it was the understanding of Garau and Rauch that upon the satisfactory completion of the building Rauch should repurchase from Garau the stock

in the Green Mill, Inc., which Garau had theretofore purchased. Thereafter, Rauch interested Samuel Hersh in furnishing money for the completion of said building, and Hersh out of funds owned by his wife put into the construction of said building a substantial amount of money and Rauch assigned, by written assignment, to Samuel Hersh, the option upon said real property. The date of said written assignment was September 26, 1923, and two days later it was put on record in the office of the county recorder. At the same time another written agreement was entered into between Rauch and Hersh with reference to the purchase of stock in the Green Mill, Inc., by Hersh, and setting out certain conditions upon which Rauch would be entitled to a one-half interest in said option. On February 15, 1924, Hersh personally delivered to Garau and his wife a written notification of his election to exercise said option, agreeing unconditionally therein to pay the $90,000 in cash, or upon any terms of payment satisfactory to Garau. Garau informed Hersh that he should see his (Garau's) attorney, and thereafter Hersh received from the attorney for Garau a letter stating that Garau declined to accept the tender or offer of cash or terms "for the reason that no consideration of any kind was paid Mr. or Mrs. Garau . . . for the option mentioned in your letter". Subsequent to this rejection of the tender, Morris Rauch was killed in an accident, and was not available as a witness by either party. Thereafter the Green Mill, Inc., went into bankruptcy.

The case was tried by the court sitting without a jury and judgment was rendered in favor of plaintiffs and against the defendants for damages in the sum of $150,000. The complaint alleged that the consideration moving to said Morris Rauch for said assignment was furnished by and was the property of Sara F. Hersh, and that said assignment was taken in the name of Samuel Hersh, as the trustee of and for the benefit of Sara F. Hersh. Said judgment was, therefore, rendered in favor of the plaintiffs "for the benefit of Sara F. Hersh as her sole and separate property". From this judgment the defendants have appealed.

Appellants advance as the basis of the claim that respondents are not entitled to damages for the refusal of appellants to convey said property in accordance with the

terms of the written option the following reasons: (1) No consideration was paid by Morris Rauch to appellants for the option, and they, as optioners, were therefore not required to carry out the terms of the option; (2) at a time prior to the assignment of the option by Rauch to Hersh, the original parties, appellant Garau and Morris Rauch, by mutual consent and agreement, orally expressed, had abandoned the option and it thereafter ceased to have legal force or effect; (3) the tender of performance made by Hersh to Aurelio Garau was not effectual for the reason that, although Hersh was the legal owner of said option, he was holding it in trust for persons whose interest he did not disclose to the optioners at the time of said tender; (4) Hersh at the time of said tender did not have the present ability to pay the consideration of $90,000 cash for said real property; (5) the property had not increased in value and was not worth the value of $240,000 on February 15, 1924, the date of the tender by the optionee; that (6) the disinclination and refusal of the optioners to convey said real property was based upon an honest belief that said option was null and void and of no effect and not upon the fact that the value of the property had increased from $90,000 to $240,000, and that, therefore, the optioners were not acting in bad faith in making such refusal, and consequently the measure of damage is not that set out in section 3306 of the Civil Code.

It is apparent that every point raised by appellants has to do with a question of fact. The case, therefore, simply presents the question of whether there is sufficient evidence to support the findings of the trial court upon which the judgment is based. In brief, the trial court found that the option was given by the defendants for a valuable consideration; that it has never been revoked; that plaintiffs were ready, able and willing to pay the consideration as the purchase price of the property on February 15, 1924; that plaintiffs made a proper tender and thereupon exercised said option; that the defendants in bad faith refused to convey said property by reason of the increase in value of said property, and that the property had increased in value and was worth at said time not less than $150,000 in excess of the consideration set out in said option.

We have read and carefully examined the record and are of the opinion that the findings so made are supported by the evidence. There is a conflict of evidence it is true, but the rule is well established that in such a situation the determination of the trial court is conclusive unless the testimony is so obviously false or so inherently improbable as to require its rejection. Appellants argue that the evidence offered in favor of plaintiffs is unworthy of credence and should be rejected. There is nothing in the facts and circumstances as testified by plaintiffs and witnesses in behalf of plaintiffs so inherently improbable as to render such testimony unworthy of credence. Neither are there contradictions or inconsistencies therein which would indicate that the testimony was obviously false. The trial ...


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