Royer v. Kelly , 174 Cal. 70 ( 1916 )

The plaintiff sued to recover the sum of twenty-two thousand four hundred dollars, claimed to have been owing to him from the decedent, Caroline M. Conn, at the time of her death, upon two agreements in writing between them, one executed on September 10, 1907, the other on October 6, 1911.

The answer alleged as a defense, among other things, that each of said agreements was executed without any consideration and was obtained by undue influence. The court found that there was no consideration for either of the contracts and gave judgment for the defendant. The plaintiff appeals. He claims that said finding is contrary to the evidence.

By the writing of 1907, Mrs. Conn agreed to furnish and establish a machine plant for light manufacturing, at a cost not to exceed twenty-five thousand dollars, to be located near Los Angeles, and to authorize Royer, as her agent, to buy the machinery therefor, ship the same to Los Angeles, secure a suitable location and set it up ready for operation, and she thereby appointed him as general manager of the plant. She was to have all the net profits of the operation of the factory until the "entire purchase price," with six per cent interest, was returned to her, whereupon the title to the plant should vest in Royer. He agreed to manage the plant and pay her the net profits, to be applied as first stated. It further provided that if she died before the net profits had fully paid for the plant, Royer should have the option either to take the plant as his own without further payment, or, in lieu thereof, to accept from the estate of Mrs. Conn, the sum of twenty-five thousand dollars. It further declared that the agreement was made to carry out the wishes of the deceased husband of Mrs. Conn, said wishes being that on the death of both Mrs. Conn and her husband, Royer "should, at his option, have said plant, or the sum of twenty-five thousand dollars, for services performed by said second party (Royer) for said first party (Mrs. Conn) and her husband."

The agreement of 1911 recited that whereas Mrs. Conn and Royer have had "numerous dealings with each other which have never been properly adjusted, now this agreement is made for the purpose of settling all differences now existing between the said parties." It then declared that the agreement of 1907 "is now in full force and effect," except as in the later agreement specified. It then provided that whereas Royer has not received the machine plant, as provided in the agreement of 1907, now, therefore, he is entitled to twenty-five thousand dollars out of the estate of Mrs. Conn, to be paid as a debt against her, and that all sums then owing by Royer to her on promissory notes shall be deducted from said twenty-five thousand dollars. At her death he was owing her two thousand six hundred dollars on a promissory note, which sum he deducted in the statement of his claim filed against her estate, leaving the balance of twenty-two thousand four hundred dollars.

The recitals of the two agreements furnish presumptive evidence of a valuable consideration. But the rule is that the parties are not estopped by recitals in an agreement with respect to its consideration. The true consideration, or the want of consideration, may always be shown by extrinsic evidence for the purpose of impeaching a contract, notwithstanding that it states facts which show a valuable consideration. (Chaffee v. Browne, 109 Cal. 220, [41 P. 1028]; National Hardwood Co. v. Sherwood, 165 Cal. 7, [130 P. 881]; Stanton v. Weldy, 19 Cal.App. 374, [126 P. 175].) The question must, therefore, be determined by an examination of the evidence.

In so far as the consideration recited in the agreements consisted of services performed by Royer for the deceased husband of Mrs. Conn in his lifetime, it was not sufficient to support the agreement. She was under no legal or moral obligation to pay for such services and her agreement to do so, made after his death, is to be regarded as purely voluntary and without binding force. (Rosenberg v. Ford, 85 Cal. 612, [24 P. 779]; Sullivan v. Sullivan, 99 Cal. 193, [33 P. 862];Chaffee v. Browne, 109 Cal. 220, [41 P. 1028].)

Under the first agreement Royer was to act as Mrs. Conn's agent to buy the machinery referred to therein, ship it to Los Angeles, secure a site and set up the machinery ready for operation. He was to be thereafter the general manager of the factory and to continue in that capacity until the net profits repaid the cost of the machinery. This was the entire consideration to be rendered by him.

The agreement of 1911 does not purport to express any consideration, except the settlement and adjustment of previous dealings and of all existing difficulties between them.

The finding being against Royer on this subject, every fact against him of which there is a reasonable inference arising from the evidence is to be taken as proven. Applying this rule, the finding of the court is supported by the evidence.

Frederick Conn, the husband of Mrs. Conn, died in August, 1907, only a few weeks prior to the making of the first agreement. Before his death he and Royer and several other persons were stockholders and directors of a corporation, known as the Electric Razor Company, which was carrying on a razor factory. Royer was general manager and president of this corporation. It continued to operate the factory, under the management of Royer, for several years after Frederick Conn's death. The plant referred to in the agreement of 1907 was never erected, established, or operated, no site therefor was ever secured, nor was Royer ever appointed manager of such a plant. After the execution of the agreement of 1907, this company needed more machinery, and Mrs. Conn, it appears, agreed to buy it and allow it to be used by said company under a lease. Royer, being general manager at that time, went to Chicago with one Brigham to buy this machinery. Brigham bought the machinery, it was shipped to California, and Mrs. Conn paid for it. The corporation paid Royer his railroad fare on the trip. The agreement of 1907 did not authorize him to buy machinery to be used in the plant of the Electric Razor Company. Obviously, this was not the machinery referred to in that agreement, and Royer in going east to buy it was not acting as her agent under that agreement. The court below might justly and reasonably have inferred that he was acting as general manager for the company. It is true, he testified that he bought it for Mrs. Conn to be leased to and to be used in the factory. As the machinery was apparently to belong to her, when purchased, he could truly say, in that sense, that it was bought for her, but it would not follow that she employed him to buy it. The fact that he was the manager of the Razor Company which paid his expenses raises a much stronger and more reasonable inference that he was acting for that corporation in the matter. The court below doubtless took this view of the transaction. No other proof of any services by him to her was given. The services contemplated by the agreement of 1907 were, therefore, wholly wanting, the enterprise there described was abandoned, or at all events was never begun, and no obligation from Mrs. Conn to Royer arose therefrom.

The evidence with reference to the second agreement tended to show that there was no differences to settle nor dealings to adjust between Royer and Mrs. Conn. There was no evidence that there had been any dealings between them which could be the basis of a claim by him upon her, except the first agreement, which, as we have said, furnished no foundation for such claim. The circumstances tend to support the theory that the second agreement was voluntary, if, indeed, it was not an attempt to obtain an unfair advantage of a feeble, decrepit, and ignorant old woman. The court below, however, exculpated Royer as to the charge of undue influence and rested the decision entirely on the fact of want of consideration. We see no reason for interfering with its decision.

There are no other points of sufficient merit to require mention.

The judgment is affirmed.

Sloss, J., and Lawlor, J., concurred.