Citations
- 51 Cal. App. 3d 267
Full opinion text
Opinion
GOOD, J.
Lemat Corporation, owner of the National Basketball Association (NBA) franchise for the Golden State Warriors (formerly San Francisco) and Charles E. (Pat) Boone, part owner in 1967 of the then newly formed American Basketball Association (ABA) franchise for the Oakland Oaks, appeal from adverse judgments in actions they had separately filed against the ABA that were consolidated for trial. Lemat and Boone sought enforcement of an alleged indemnity agreement resting upon proceedings at an ABA trustees’ meeting held in Denver on August 18 and 19, 1967, and a resolution contained in the minutes thereof. An understanding of the issues involved in the appeal requires a somewhat lengthy statement óf the background of that meeting and both prior and subsequent events.
ABA was formed and incorporated as a Delaware corporation early in 1967. NBA had been the sole pro basketball league until that time. ABA intended to become a “major league” and envisioned a super-bowl type playoff between NBA and ABA champions. ABA’s management was vested in a board of trustees, one member designated for each of the 11 franchises that had been issued. In June 1967 ownership of the Oakland franchise had vested in S. Kenneth Davidson and appellant Boone with Davidson as trustee therefor. At the time, Richard F. Barry III, now the outstanding super-star of pro basketball, had completed his first season (1965-1966) under contract to the Warriors with great success. He signed with the Warriors for 1966-1967 and the contract contained an option for 1967-1968 and perhaps options for several years thereafter.
There was uncontradicted evidence that during the formative period (spring-summer 1967) ABA and its franchised teams were experiencing the vicissitudes of any new league whose teams were unable to contract the services of any pro stars whose mere presence might draw a reasonable gate because those stars were all under contract to NBA teams. If ABA had to wait a year or two to develop its own stable of such from high school and college talent ready to turn pro, there was serious doubt that its teams could secure the kind of money necessary to finance a season. Further, its ability to recruit amateur players of potential star status was limited by NBA’s established position. There were background noises about possible anti-trust violations and a player’s serf or chattel status that resulted from the renewal clause (cf. fn. 11 post).
In March 1967, ABA, at an Oakland meeting, held a draft, open or public as to college and high school talent and secret as to pros. Davidson, Oakland’s trustee, drafted Barry for Oakland. Such draft created an exclusive right for Oakland among ABA teams to attempt to sign the drafted player. Again without contradiction, the evidence shows that at this meeting, Davidson was assured by George Mikan, ABA commissioner (an attorney and former Minneapolis star) and by William J. Erickson, ABA’s attorney, that it would be proper to sign an NBA player if such player made the first advances—apparently a situation similar to “no raid” clauses of union contracts. The selection of Bariy was made upon the advice of Bruce Hale, Barry’s father-in-law, who became Oakland’s coach and part owner of the franchise.
Until the incorporation of Oakland Basketball, Inc., to which the franchise was eventually transferred, the business arrangements of the partners owning the Oakland franchise was rather loose and depended upon oral agreements between Davidson and Boone. Sometime in the spring of 1967, Commissioner Mikan called Boone and asked him to assume the responsibilities of putting a team together and getting the show off the ground. Mikan thought Davidson was dragging his heels. Thereafter, while Boone was performing in Reno, Barry and his wife came backstage after the performance and Boone asked Barry if he was available and interested