This action was instituted to recover the purchase price of certain personal property sold by plaintiff to defendant, also to foreclose a chattel mortgage given to plaintiff by defendant. The defendant set up as a defense to said action certain so-called affirmative defenses and counterclaims. Judgment was rendered in favor of plaintiff upon the two causes of action set out in his complaint, and the court also rendered judgment in favor of the defendant upon four of the counterclaims set out in his answer, and deducted the amount found due on these four counterclaims from the amount found due plaintiff upon his two causes of action, and rendered judgment in favor of plaintiff for the difference. Plaintiff concedes that the action of the trial court in its finding upon one of said counterclaims was proper, but has appealed from that portion of said judgment in defendant's favor, upon the other three counterclaims, and contends that the evidence was not sufficient to justify the court in finding in defendant's favor upon these three counterclaims.
The three counterclaims, the allowance of which is objected to by plaintiff on this appeal, are designated as follows in defendant's answer: Third Affirmative Defense and Counterclaim, Defendant's Fifth Defense; and Sixth Affirmative *Page 147 Defense and Counterclaim. We will discuss them in the order named.
[1] Third Affirmative Defense and Counterclaim: Plaintiff sold to defendant a certain pool-hall in the city of Calexico, together with the fixtures and furniture contained therein, and the lease of the building in which the business was carried on. The consideration thereof was $15,000. Prior to said sale, plaintiff had leased to a subtenant, to be used as a barber-shop, a portion of the building covered by his lease. This fact was well known to defendant at the time of the purchase, and a copy of the lease from the plaintiff to the subtenant, assigned by plaintiff to defendant, in accordance with the agreement between the parties, was, at the time the sale was agreed upon, placed in escrow with a bill of sale of the property sold, and other papers necessary to consummate the sale. This lease in favor of the subtenant contained the following provision: "It is agreed at the time of the execution of this lease that the sum of $300.00 shall be deposited with said first party as a guarantee of faithful performance of the terms and conditions of this lease by said second party. In the event the said second party complies with the terms and conditions of this lease, then said deposit of $300.00 shall apply as payments of the last three months of said term, otherwise it shall be forfeited to said first party as liquidated damages for a breach of this agreement." Under this provision of the lease, there had been paid by the subtenant to the plaintiff, at the time of the execution of the lease to the subtenant, the sum of $300. Defendant by this counterclaim now seeks to compel plaintiff to pay this sum to him. The claim of defendant is resisted on the part of the plaintiff, upon the ground that the property sold, including the interest of plaintiff in the lease to the subtenant, was sold to the defendant for an agreed price, and as nothing was said or done regarding this sum of $300, it must be assumed that it was taken into consideration by the parties, at the time they agreed upon the price, and was included in and covered by the purchase price. As we have already seen, defendant knew of the lease to the subtenant, and either knew the terms thereof, or at least had ample opportunity to acquire this information. In his agreement to purchase the property, he had agreed to accept it subject to the terms of the lease to the subtenant. He agreed to pay for *Page 148 this property a certain fixed sum. If he expected this purchase price to be reduced to the extent of $300 on account of the above provision in the lease and the deposit of money thereunder with the plaintiff, then, in all fairness, he should have made known his claim at the time he agreed to the terms of the sale. Failing to do so, he must be held to have agreed to accept the property in the condition in which it was at the time of its delivery to him by the plaintiff, and for the price agreed upon at the time of delivery. His claim that he did not know of this provision in the lease until some eight days after the sale was consummated and the property delivered to him does not help his situation. He not only had every opportunity to examine the lease and know of its terms, but it was his duty to do so before he agreed to accept it as a part of the property he was purchasing from the plaintiff. His failure to do so was gross negligence on his part and if anyone is to suffer on account of this negligence, it should be defendant rather than the plaintiff. This is especially true, when we take into consideration the fact that the evidence shows that the plaintiff was perfectly frank and honest in the whole transaction, and did nothing to conceal from the defendant any information to which he was entitled, or to prevent him from learning all the facts regarding the property he was purchasing. In our opinion, the evidence fails to sustain the finding of the court in defendant's favor upon this counterclaim.
Defendant's Fifth Defense was based upon the following facts: The furniture and the fixtures, sold by plaintiff to defendant, included a soft-drink bar. The evidence, however, shows that plaintiff was not the absolute owner of this bar, but held it under a conditional sale from the Maier Brewing Company. The conditions set forth in this contract of sale had never been performed by the plaintiff. The brewing company, up to the time of the trial, however, had not taken possession of said bar, nor had the defendant ever paid to the company anything on account of the purchase price of said bar. The defendant went into possession of said bar immediately upon the consummation of said sale, and has had the quiet and peaceable possession thereof ever since its purchase. [2] Defendant, therefore, had not, at the time of said trial, sustained any damage, and was not entitled to any recovery against plaintiff on account of his defect of *Page 149 title to said bar. "To recover damages for defect of title to personal property it must be alleged and shown that plaintiff has suffered damages thereby. The rule is the same where the claim for damages is based on breach of agreement to furnish good title as it is where the action is for breach of warranty of title. Indeed, an agreement to furnish a good title followed by a bill of sale of the property is in effect a warranty of title. This rule that the vendee cannot recover on such warranty while still retaining undisputed possession of the property has been frequently recognized in this state." (Barnum v. Cochrane, 143 Cal. 642-645 [77 P. 656, 657].)
Sixth Affirmative Defense and Counterclaim: This cause of action was based upon a claim assigned to defendant by one A. Katugios. The court found that Katugios acted as agent for the plaintiff in the sale of said pool-room, furniture, and lease to defendant for the sum of $15,000, and that plaintiff agreed to pay him a commission of five per cent, or $750, for said services. While the evidence is conflicting, we think it is sufficient to sustain such finding. [3] It is admitted that Katugios had no license to act as a real estate broker as required by section 2 of chapter 605 of the Statutes of California, 1919, page 1252. Plaintiff, therefore, claims that no recovery can be had for his services in effecting such sale. In support of this claim plaintiff relies upon said section 2 and section 20 of said act. Section 2 enumerates the acts which may be performed only by a duly authorized and licensed real estate broker or salesman, and section 20 provides that no action shall be brought or maintained by any such person for the collection of compensation for the performance of any of the acts enumerated in said section 2, without alleging and proving that such person was a duly licensed real estate broker or salesman. The services on account of which it was sought by said counterclaim to recover were performed by Katugios in acting as agent of the plaintiff in the sale of personal property and of a lease to real property. It will be observed that section 2 of said act, in its enumeration of the acts which only a duly licensed real estate broker may perform, does not specify either the sale of personal property or the sale of a lease to real property. It was, therefore, not necessary for Katugios to obtain a license under said section 2 to perform the services rendered *Page 150 by him to the plaintiff, and which forms the basis of this counterclaim. Katugios, therefore, had a good cause of action and the right to maintain the same against the plaintiff for his said services, and could, of course, assign it to the defendant. The action of the court, therefore, in awarding the defendant judgment on this counterclaim was proper and legal, and the judgment herein, in so far as it relates to defendant's Sixth Affirmative Defense and Counterclaim, is affirmed.
On account of the error of the court in awarding judgment in favor of the defendant on his Third Affirmative Defense and Counterclaim, and on Defendant's Fifth Defense, as set out in his answer, that portion of said judgment in defendant's favor upon said two last-named counterclaims is reversed and the case is remanded to the trial court, with directions that a new trial be had, but only as to the issues involved in Defendant's Third Affirmative Defense and Counterclaim and in Defendant's Fifth Defense.
Conrey, P. J., concurred.
Houser, J., dissented.
A petition by appellant for a rehearing of this cause was denied by the district court of appeal on August 8, 1924, and a petition by appellant to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on September 8, 1924.
All the Justices concurred. *Page 151