author: SEAWELL, J.

text:
    [Sac. No. 5227.
    In Bank.
    March 14, 1939.]
    SIMON NEWMAN COMPANY (a Corporation), Respondent, v. ALICE TULLY, Appellant.

      Edward Bickmore and Thomas W. Firby for Appellant.
    Richard S. Goldman for Respondent.
   SEAWELL, J.

Defendant appeals from a judgment quieting plaintiff’s title to land in Merced County. Said land, and other property in San Luis Obispo and Alameda Counties, was transferred to plaintiff corporation in satisfaction of a promissory note and deed of trust theretofore executed in its favor.

Defendant contends that by reason of certain facts which she learned for the first time shortly after plaintiff corporation brought the present action, the indebtedness for which said promissory note and deed of trust were given had been discharged before execution of said instruments, with the result that they were without consideration. Since plaintiff has sold and transferred the San Luis Obispo and Alameda County lands deeded to it in satisfaction of the note and deed of trust, and has contracted to sell the Merced County land, which is the subject of the present action, defendant contends that as a condition to quieting its title to the Merced County land, plaintiff should pay her the proceeds realized by it from the lands theretofore sold and conveyed by it, and also the amounts realized from its contract to sell the Merced County lands.

In September, 1919, defendant ‘Alice Tully was the owner of the lands above referred to. Her brother, Ernest Tully, was indebted to plaintiff corporation in the sum of $86,736.90 on account of advances to him in connection with his farming operations. This indebtedness was secured by deed of trust on 160 acres of land near Los Banos, Merced County, owned by him, and by a chattel mortgage on livestock and farm equipment. On September 13, 1919, defendant executed a promissory note for $30,000 and a deed of trust to plaintiff corporation upon the Merced, San Luis Obispo and Alameda County property, as further security, according to her testimony, for the indebtedness of her brother to plaintiff, to the end that plaintiff would not “close out” her brother.

Thereafter, defendant paid $3,000 on the principal of said note. On December 27, 1924, a renewal note and deed of trust were executed by Mary A. Tully, mother of Alice Tully, in whom record title was vested by virtue of a quitclaim deed from Alice Tully. Said property, with the exception of a parcel in Alameda County upon which the mother and daughter resided, was, on February 17, 1927, conveyed by Mary A. Tully to plaintiff corporation, which had filed a notice of election to sell under the deed of trust, and accepted by it in satisfaction of the indebtedness. Prior to execution of the renewal note and deed of trust, Mary Tully had executed deeds retransferring to her daughter the property covered by the deed of trust, but said deeds were not recorded until after the conveyance to plaintiff in satisfaction of the debt, and it is conceded that plaintiff did not have notice.

It appears that on September 16, 1919, three days after execution of the $30,000 note and deed of trust by Alice Tully, her brother, Ernest Tully, deeded the 160 acres owned by him to plaintiff corporation, which thereupon canceled his indebtedness to it, and released the livestock and farming equipment covered by his chattel mortgage. Defendant contends that she was a surety for the debt of her brother to the plaintiff corporation, and that as she was not informed that her brother was to be released, the effect of canceling his indebtedness was to discharge her upon the $30,000 note. (Civ. Code, secs. 2819, 2840.)

The evidence supports the finding of the trial court that it had been agreed between plaintiff and Ernest Tully, that if he would procure the note and deed of trust of his sister, and convey to plaintiff the 160 acres near Los Banos, his indebtedness should be canceled and the livestock and farming equipment covered by chattel mortgage released to him. Conflicting testimony of Ernest Tully that plaintiff demanded the conveyance from him of the 160 acres for the first time after receipt of his sister’s note was rejected by the trial court. Mr. Wagenheim, vice-president and manager of plaintiff, testified that plaintiff wished to terminate all business relations with Tully, partly for the reason that a judgment had been entered against him in a suit for alienation of affections.

If defendant Alice Tully had knowledge of said agreement, and executed her note and deed of trust pursuant thereto, she would, obviously, be without right to claim that the release of her brother discharged her. By the testimony she denied all knowledge of such an agreement, and contended that lier understanding was that her note and deed of trust were to constitute additional security for a continuing indebtedness of her brother. But defendant executed the note and deed of trust at the request of, and for the accommodation of, her brother, who, if full credence is given to her testimony, failed to reveal to her the true nature of the agreement between him and plaintiff. The rule is well settled and generally followed that fraud of the principal debtor will not relieve the guarantor or surety who acted at the request of the debtor from liability, if the creditor did not have notice of the fraud and did not participate therein. (Standard F. Corp, v. G. Cole, Ltd., 9 Cal. App. (2d) 573 [50 Pac. (2d) 1054]; note, 71 A. L. R. 1278.)

Before defendant executed the note and deed of trust she, together with her attorney, John W. Gwilt, since deceased, called upon Mr. Wagenheim. The trial court rejected her testimony that Wagenheim represented to her that her note and deed of trust were to constitute further security for a continuing debt of her brother to plaintiff. It cannot be said that in the circumstances shown Wagenheim was not entitled to believe that Ernest Tully had fully explained to his sister the arrangement with plaintiff.

In considering defendant’s claim that she did not know her brother was to be released, it is significant that the deed by which Ernest Tully conveyed his 160 acres to plaintiff corporation, as well as the note and deed of trust executed by Alice Tully, were prepared on stationery of Mr. Gwilt, attorney for Alice Tully, and notarized before him. On September 16, 1919, the date of the deed from Ernest Tully to plaintiff, attorney Gwilt also notarized a bill of sale by which Ernest Tully transferred to his sister the livestock and farming equipment covered by the chattel mortgage theretofore held by plaintiff, and an assignment to her of a lease which he held upon 1700 acres of farming land. The bill of sale and assignment were recorded on May 7, 1920, at the request of Gwilt. Defendant claims that she did not learn of those two instruments until the fall of 1920. Then she took possession, and thereafter borrowed $10,000 from plaintiff, secured by chattel mortgage on the property assigned to her by the bill of sale. She testified that from 1920 to 1934 she was estranged from her brother.

The trial court did not expressly find that defendant Alice Tully had knowledge of the arrangement between plaintiff and her brother for cancellation of his indebtedness, although its findings inferentially have that effect. If she was, as she contends, deceived as to the agreement between plaintiff and her brother, plaintiff was in no way a party to this deception, and she cannot by reason thereof avoid liability to plaintiff. (Standard F. Corp. v. C. Cole, Ltd., supra.)

Furthermore, defendant’s claim to an accounting of the proceeds of the lands transferred in satisfaction of the deed of trust, and thereafter sold by plaintiff to purchasers, is, in effeet, for rescission of the deed of trust of 1919 and transactions subsequent thereto. The present action was brought in 1934. The evidence fails to show sufficient reason for failure to discover at a much earlier date the deception alleged to have been practiced upon her.

The judgment is affirmed.

Shenk, J., Curtis, J., Langdon, J., Waste, C. J., Houser, J., and Edmonds, J., concurred.


source: Caselaw Access Project

author: WASTE, C. J.

license: Public Domain

text:
    [L. A. No. 16681.
    In Bank.
    March 14, 1939.]
    S. B. WRIGHT et al., Appellants, v. SECURITY-FIRST NATIONAL BANK OF LOS ANGELES (a National Banking Association), Respondent.

      Morris Lavine for Movants.
    Homer C. Compton in Opposition to Motion.
   WASTE, C. J.

The plaintiffs and appellants have moved this court for a substitution of Morris Lavine as attorney in the place and stead of their present attorney, Homer C. Compton, who opposes such substitution. Franklin P. Bull, who appeared as cocounsel in the trial court for plaintiffs and appellants joined in a stipulation that substitutes Lavine as attorney for appellants in his place and stead. As the cause in which the substitution is sought is now pending on appeal in this court, this is the proper forum in which to seek such relief. (Jacobus v. Jacobus, 208 Cal. 562, 563 [282 Pac. 796] ; Estate of Cazaurang, 1 Cal. (2d) 712, 717 [36 Pac. (2d) 1069].)

The action in which the substitution is sought is one in ejectment to recover the possession of real property. Attorney Compton, whom it is here sought to oust, instituted the same on behalf of the plaintiffs under a written contract of employment by the terms of which he and his former associate herein (Franklin P. Bull who, as stated, voluntarily stepped aside), were to receive “as a consideration . . . for their services as attorneys . . . fifty per cent (50%) of whatever amount is recovered either by suit, judgment or compromise either of money, rent or property which may he recovered” and the plaintiffs “do by these presents assign and set over . . . fifty per cent (50%) of any interests which they may have or which they may recover in said litigation” and any advancements by said attorneys for costs and expenses of the litigation “shall be chargeable and deductible from whatever interest is recovered” by the plaintiffs and “in the failure to recover any valuable thing from the claims as above set forth, the said [attorneys] should not be entitled to compensation for their services and the [plaintiffs] shall not be obligated to pay for such services.”

Even the most cursory examination of the provisions of the contract of employment between plaintiffs and attorneys Compton and Bull discloses that such contract merely granted or assigned to the attorneys for any and all legal services performed an interest in and to the fruits or proceeds derived from such services. In other words, the contract represents nothing more than the ordinary contingent contract and does not give rise to or create a power coupled with an interest within the meaning of the authorities. In the language of Scott v. Superior Court, 205 Cal. 525, 532 [271 Pac. 906], attorney Compton’s “interest was only a right to share the proceeds which might result from the execution of his power. He did not have a power coupled with an interest.' ’ Hence, under well-established principles, plaintiffs and appellants are free to discharge him and to substitute new counsel in his place and stead. (Sec. 284, Code Civ. Proc.; Todd v. Superior Court, 181 Cal. 406, 413-420 [184 Pac. 684, 7 A. L. R. 938]; Kirk v. Culley, 202 Cal. 501, 505 [261 Pac. 994] ; Scott v. Superior Court, supra; Estate of Cazaurang, 1 Cal. (2d) 712, 714 [36 Pac. (2d) 1069] ; O’Connell v. Superior Court, 2 Cal. (2d) 418, 421 [41 Pac. (2d) 334, 97 A. L. R. 918].) In the case last cited the subject is briefly summarized in the following manner:

“Section 284 of the Code of Civil Procedure provides that the attorney in an action or special proceeding may be changed at any time upon consent of both client and attorney or upon the order of the court upon the application of either client or attorney, after notice from one to the other. By virtue of this code section, it is now settled in this state that in the absence of any relation of the attorney to the subject-matter of the action, other than that arising from his employment, the client has the absolute right to change his attorney at any stage in the action and the fact that the attorney has rendered valuable services under his employment, or that the client is indebted to him therefor, or for moneys advanced in the prosecution or defense of the action, does not deprive the client of this right. (Gage v. Atwater, 136 Cal. 170 [68 Pac. 581].) In the event his discharge is improper or without just cause, adequate remedies are available to the attorney by which he may seek reimbursement for such services and outlays on behalf of the client. (Kirk v. Culley, 202 Cal. 501 [261 Pac. 994].)”

The last sentence of the foregoing quotation presents the solution to attorney Compton’s argument herein that he should not be removed from the case until he has been reimbursed for the services and outlays on behalf of the plaintiffs and appellants. As stated in the quotation, if his discharge by his clients is improper and without just cause, “adequate remedies are available to [him] by which he may seek reimbursement for such services and outlays”.

Nor do we find it presently necessary to consider or pass upon the validity of the 1935 amendment to section 284, supra, or its effect in certain instances upon the settled principles herein stated as to the right of a client to discharge his attorney, for the very good reason that said amendment is without application to a case of this character. As indicated above, section 284 had long recognized that in the absence of the existence of a power coupled with an interest, an attorney “may be changed at any time. ... 2. Upon the order of the court, upon the application of either client or attorney, after notice from one to the other.” In 1935, however, said subdivision was amended by adding thereto an exception in the following language: “except that in all civil cases in which the fee or compensation of the attorney is contingent upon the recovery of money, in which case the court shall determine the amount and terms of payment of the fee or compensation to be paid by the party”. As stated earlier in this opinion, the action which is now in this court on appeal and in which the substitution is sought, is one in ejectment for the recovery of the possession of real property and it is not, therefore, one for the “recovery of money” within the meaning of the amendment to the code section. Upon the oral argument of this motion, attorney Compton admitted, and the transcript on appeal shows, that the action is one in ejectment. In fact, upon such oral argument, attorney Compton conceded, in response to a query of one of the members of this court, that he was not relying on the exception provided by the 1935 amendment to the code section but, in effect, was relying on other considerations of law and equity to reimburse him for his services and outlays prior to his removal as attornej'- for plaintiffs and appellants herein. But, as stated above, other remedies are available to him in the event his discharge herein by his clients is improper and without cause. Nor do we think it material that his contract of employment contemplated a possible recovery of money for and on behalf of plaintiffs and appellants. We cannot here concern ourselves with litigation that attorney Compton may have been authorized to but did not institute on behalf of his clients. Our inquiry is limited to the litigation that he has actually instituted under his contract of employment with the plaintiffs and appellants. The litigation actually commenced by him and in which he is to be replaced by another, as already shown, is an action in ejectment for the recovery of the possession of real property and is not an action for the “recovery of money” within the exception provided in section 284, supra, upon which exception we need not further dwell.

It is, therefore, ordered that Morris Lavine be substituted as attorney of record for the appellants herein in the place and stead of the attorneys now appearing of record for said appellants.

Curtis, J., Langdon, J., Houser, J., Seawell, J., Edmonds, J., and Shenk, J., concurred.


text:
    [S. F. No. 16103.
    In Bank.
    March 16, 1939.]
    JOHN K. GRUBER, Respondent, v. PACIFIC STATES SAVINGS AND LOAN COMPANY (a Corporation), Appellant.

      John L. Mace and Roy D. Reese for Appellant.
    Milo Ayer and Pierce & Sherwin for Respondent.
   WASTE, C. J.

In this action for the conversion of personal property the jury returned a verdict for the plaintiff in the sum of $1500, together with interest in the amount of $420. From the judgment entered thereon in the aggregate of said sums the defendant prosecutes this appeal.

The facts are not in serious dispute. However, a divergence of opinion does exist between the parties as to the application of legal principles to such facts. Briefly, it appears that in April, 1932, the plaintiff rented from the defendant a portion of certain premises known as the Bilger Quarry property located in Oakland and consisting, in the main, of a lot, barn and corral. The agreed rental was $15 a month. Plaintiff paid the first month’s rental and went into possession of the demised premises by storing certain road grading-equipment in the corral and certain halters, harness, collars and other horse fittings in the barn. In order to insure the safekeeping of the equipment last above mentioned plaintiff nailed and otherwise secured all doors" and windows to the barn with the exception of one door to which he retained the only key. Plaintiff failed to pay any rental for the second, third and fourth months of his tenancy, aggregating $45, whereupon the assistant cashier of the defendant lessor addressed a letter to the plaintiff on July 25, 1932, notifying him that unless the delinquent rentals were paid in full within two days thereafter all of plaintiff’s equipment located in the demised premises would be advertised and sold to discharge such indebtedness. The letter also stated that “the only way in which you can have your equipment released is by the payment of your rental in full. ...” On July 29, 1932, two days after the dead line specified in the letter for the advertising of such threatened sale the plaintiff called at the defendant’s Oakland office and requested of the author of the letter further time for the payment of the rent and objected to the threatened sale of his equipment. The request was refused and plaintiff was again informed that only the payment of the rent would obviate the sale of his personalty.

It appears from the plaintiff’s testimony upon the trial, that some time later he called at the quarry and requested the watchman or overseer maintained there by the defendant lessor (apparently to protect the entire property only a portion of which was leased by the plaintiff) to allow him to remove a portion of his equipment. This request was refused with the statement that plaintiff would have to see the defendant ’s assistant cashier who had written the letter referred to above. The denial or contradiction of this portion of plaintiff’s testimony by the defendant’s watchman was resolved against the defendant by the jury. Plaintiff thereupon telephoned to the defendant’s Oakland office and renewed his request for permission to remove a portion of his property. Again, he received an adverse reply. The ultimate fate of plaintiff’s equipment is not definitely disclosed by the record, but it does appear that the defendant lessor thereafter sold the real property to a third person, that the barn was torn down and that •whether then lost or destroyed or at some other time, no part of plaintiff’s equipment ever again reached his hands or possession. Plaintiff and experts called by either side testified as to the market value of the equipment at the conclusion of which a verdict in the amount above mentioned was returned for the plaintiff.

Throughout the trial and upon this appeal the defendant has maintained, in effect, that the equipment at all times remained in the plaintiff’s exclusive possession, that it did not through its agents seize or take said personalty to the exclusion of its owner and that, at best, the evidence merely discloses a threat to convert which is insufficient to support the jury’s implied finding of an actual conversion. The contention lacks merit.

The evidence discloses not only a written threat to convert plaintiff’s property but also repeated refusals of the agents of the defendant lessor, in the immediate proximity of the equipment and elsewhere, to permit the plaintiff to remove his equipment from the premises, a right which, as the owner thereof, he was entitled to enjoy without interference from the defendant or its agents. Plaintiff was not required to resort to physical violence to remove his property over the defendant’s opposition thereto. In a somewhat analogous situation, it was held in Donoghue v. Kremmel, 121 Cal. App. 208 [8 Pac. (2d) 918], that where a lessor told the lessee to keep out of the demised premises and refused him permission to enter, a constructive eviction resulted and that there was no real difference between physically removing the lessee and preventing his entry. It was further declared that the lessee was “not obliged, nor is he encouraged by law, to wage a deadly conflict to obtain entry to the demised premises ’ ’. The defendant’s refusal in the instant case to permit the plaintiff to have access to his equipment or to remove the same while an arrearage in rent existed constituted an improper and wrongful exercise of dominion over the plaintiff’s property in violation of his rights as owner and, as shall presently be shown, amounted to a conversion rendering defendant liable for whatever damage resulted therefrom—here, the market value of such equipment all of which, as indicated, was ultimately lost to the plaintiff.

As stated, the fact that plaintiff was in arrears in his payment of the rent of the demised real property did not warrant defendant’s exercise of dominion over plaintiff’s personal property located on the premises. Adequate remedies exist to protect a lessor in such a situation. But, it is definitely settled in this state that a landlord has no lien on the ■ tenant’s property for unpaid rent. (Citizens’ Securities Co. v. Hammel, 14 Cal. App. 564, 568 [112 Pac. 731] ; Hitchcock v. Hassett, 71 Cal. 331, 333 [12 Pac. 228].) It is not claimed that any was here reserved. Nor do we think that a manual taking or destruction is essential to a conversion. In 2 Tiffany, Landlord and Tenant, page 1673, the following appears •. ‘ ‘ The landlord is, it has been held, guilty of conversion if he refuses to allow the tenant to remove his goods during the tenancy, or at a subsequent time when the latter has a legal right to do so. ... ”

It is settled that conversion is any act of dominion wrongfully exerted over another's personal property in denial of or inconsistent with his rights therein. (Poggi v. Scott, 167 Cal. 372, 375 [139 Pac. 815, 51 L. R. A. (N. S.) 925] ; Byer v. Canadian Bank of Commerce, 8 Cal. (2d) 297, 300 [65 Pac. (2d) 67]; Aronson v. Bank of America, etc., 9 Cal. (2d) 640 [72 Pac. (2d) 548] ; Lindsey v. Commercial Discount Co., 12 Cal. App. (2d) 345, 349 [55 Pac. (2d) 896] ; Hull v. Laugharn, 3 Cal. App. (2d) 310, 315 [39 Pac. (2d) 478].) In the ease last above cited, the rule is thus stated: ‘ ‘ Conversion consists in the unwarranted interference by defendant with the dominion over the property of plaintiff, from which injury to the latter results. . . . Dominion is defined in law lexicons as ‘perfect or complete property or ownership in a thing’ (Bouvier’s Law Dict.); ‘complete ownership; absolute property ’ (Anderson’s Dict, of Law); and ‘ ownership or right to property ’ (Black’s Law Dict.) ” The acts of the defendant’s watchman and assistant cashier, in the immediate proximity of the equipment and elsewhere, in refusing to permit plaintiff to remove any portion thereof in furtherance of the written threat to sell all of the equipment, obviously precluded the plaintiff from using and enjoying his “complete property or ownership” of such equipment and definitely constituted an “interference” with plaintiff’s “dominion over the property” within the meaning of the authorities.

As stated above, it is not necessary that there be an actual manual taking of the property. In McCaffey Canning Co. v. Bank of America, 109 Cal. App. 415, 424 [294 Pac. 45], it is stated, among other things, that “Any wrongful assumption of authority over chattels, inconsistent with another’s right of possession or subversive of his vested interest therein, amounts to conversion. . . . An unjustified claim of title may amount to conversion. ...”

In Dodge v. Meyer, 61 Cal. 405, 420, the rule is stated in the following form: “ ‘ The action of trover being founded on a conjoint right of property and possession, any act of the defendant which negatives or is inconsistent with such right amounts in law to a conversion. It is not necessary to a conversion that there should be a manual taking of the thing in question by the defendant; it is not necessary that it should be shown that he has applied it to his own use. Does he exercise a dominion over it in exclusion or in defiance of the plaintiff’s right! If he does, this is in law a conversion. . . , ’ It is contended that Meyer never had possession of the wheat, never handled it, and therefore did not convert it. Some of the cases just above cited expressly held that this is not necessary. To these we add Connah v. Hale, 23 Wend. (N. Y.) 462, where it was held that to constitute a tortious taking it was not necessary that there should be an actual manucaption of the goods. A mere claim of dominion, an intention intimated to interfere with goods under a pretense of right or authority, amounts to a constructive trespass, and no demand is necessary before bringing an action of trover. ’ ’

Lowe v. Ozmun, 3 Cal. App. 387, 394 [86 Pac. 729], quotes the foregoing as the rule in this state. We repeat that the acts and conduct of the defendant, operating through its agents, improperly and wrongfully interfered with plaintiff’s absolute ownership of and dominion over his equipment and constituted a conversion thereof which ultimately reacted to plaintiff’s financial detriment.

In our treatment of the case we have regarded the relationship between the defendant and plaintiff as one of landlord and tenant. The record indubitably points to such a relationship and not to one of bailor and bailee. The complaint was framed on the theory that the relationship was that of landlord and tenant and the answer of defendant ‘ admits that . . . plaintiff entered into an agreement with the defendant for the rental of a certain portion of that certain property known and designated as the Bilger Quarry”. The evidence, the statements of counsel throughout the trial, the instructions of the trial court, and the briefs on appeal were addressed exclusively to the theory of a landlord-tenant relationship between the parties. Among others, the trial court gave the following instruction: “You are instructed that a landlord who rents vacant land or a vacant building, has no lien or right to hold the personal property of his tenant as security for unpaid rent. If he does so, he is guilty of a conversion of that property. Any wrongful assumption of authority over another’s personal property inconsistent with the owner’s right of possession amounts to conversion.” No objection is here voiced against such instruction and none inconsistent therewith was requested by the defendant. Nor did the defendant ask that an instruction be given. on the theory of a bailor-bailee relationship. The agreement between the parties, as disclosed by the record, was not one of storage for hire which establishes the relationship of bailor and bailee but rather was one for the rental of real property which establishes the relationship of landlord and tenant even though, as here, it may be contemplated that the property will be used by the tenant solely for storage purposes.

In conclusion, it should be stated that there is ample evidence relating to value to sustain the verdict in the amount awarded. Any conflicts therein have been resolved against defendant by the jury. That plaintiff in his recital of the facts giving rise to this action disclosed that prior to the commencement thereof, he had stated, in an effort to persuade defendant not to sell his equipment to satisfy a $45 debt for rental, that said equipment represented “near one thousand dollars worth”, did not preclude him upon the trial from giving his opinion as to the actual market value of such equipment at the time of conversion. Moreover, there is other evidence on the subject.

The judgment is affirmed.

Langdon, J., Edmonds, J., Curtis, J., Seawell, J., Shenk, J., and Houser, J., concurred.


author: THE COURT. EDMONDS, J., Dissenting.

text:
    [L. A. No. 16971.
    In Bank.
    March 16, 1939.]
    ALBERT J. SIGNER, Petitioner, v. THE STATE BAR OF CALIFORNIA, Respondent.
    Albert J. Signer, in pro. per., for Petitioner.
    Philbrick McCoy for Respondent.
   THE COURT.

Petitioner was cited to appear before local administrative committee number four, of The State Bar of California, at the city of Los Angeles, on June 13, 1938, to then and there show cause why he should not be disciplined for professional misconduct by reason of certain acts committed by him during his membership of a copartnership with Thomas L. Nair, attorney at law. Said acts were designated by said citation as involving moral turpitude within the meaning of subdivision 5, section 287, Code of Civil Procedure. He appeared in obedience to said citation and the local committee recommended his suspension for a period of six months. The board of governors on a review of the record recommended to this court that petitioner be suspended from the practice of the law for a period of three years, and the matter has come to this court in due course.

Said acts were set forth in an affidavit verified by petitioner Albert J. Signer, on the behest of Thomas L. Nair, his former law partner, on June 5, 1936, approximately two years prior to the issuance of said citation. Said affidavit upon which the suspension proceedings were instituted was prepared by and acknowledged before Thomas L. Nair as a notary public. The last paragraph of the affidavit contains an averment that affiant, of his own free will, and without coercion or duress, declared that during his association with Thomas L. Nair, under the firm name of Nair and Signer, he appropriated to his use, without the knowledge of said Thomas L. Nair, funds of said office of Nair and Signer, as well as funds of various estates, aggregating $910.65, all of which is specifically set forth in said affidavit, in words and figures, to wit:

“I appropriated to my own use without the knowledge of Thomas L. Nair, funds of said office of Nair and Signer, as well as funds of various estates, as hereinafter set forth.” The recital of items follows: “Two hundred twenty-five dollars ($225) withdrawn from the Union Bank & Trust Company of Los Angeles, which sum was in said account as against outstanding checks in the sum of $179.50.” (The above item included two small estate accounts.) “I further drew from the clients’ account of Thomas L. Nair, during the time I had authority to draw upon same, the sum of $419.10 belonging to the Estate of Marrón; the sum of $100 received by me in the case of Hinton v. Walker from the office of William H. Moore, Jr., trustee; the sum of $154.55, rebate on taxes paid by Nair in the Estate of Eisenstock, prior to Nair’s departure from the state; the sum of $12 withdrawn from the clients’ account being moneys belonging to clients of said office.” The above sums aggregate $910.65. For some reason not described the amount was reduced to $900.

The period of time covered by the transactions as listed was approximately eight months. The misappropriations as set forth in the affidavit occurred more than two years before the matter was brought to the attention of The State Bar. The concluding paragraph of said affidavit recites that petitioner freely and voluntarily, in consideration of his release from the partnership agreement with Nair, made June 27, 1935, waived any right, title, claim or interest that he then had, or might acquire in the future or be entitled to by reason of said partnership agreement, or otherwise, in or to any moneys whatsoever that might be received by said Thomas L. Nair on and after the 28th day of May, 1936, by reason of his being an attorney practicing law in the State of California. Affiant also waived any interest in any fees that might be received by said Nair arising out of any matters that might have been instituted during the life of said partnership agreement, or while said Signer was conducting the business under the name of Nair and Signer. It was also agreed by way of averment that the former partnership agreement was null and void “as if never entered into”. By the last paragraph of the affidavit, affiant agreed to repay to said Thomas' L. Nair the sum of $900, instead of $910.65, and he executed his promissory note to Mr. Nair, payable on demand, with interest at the rate of six per cent per annum, payable at maturity.

At the time the affidavit taken by Mr. Nair was laid before the local committee in the form of a complaint, petitioner had paid on account of said promissory note the sum of $524.39, leaving due and unpaid, $375.61. The above sum of $900, which, it is charged, petitioner diverted from its proper channels, was made good by Mr. Nair.

The local administrative committee made exhaustive findings of fact, from which it concluded that the respondent was guilty of acts which involved moral turpitude, within the meaning of subdivision 5, section 287, Code of Civil Procedure. In making its recommendation that petitioner be suspended from the practice of the law for a period of six months, the committee considered the age of petitioner, his previous good record and his subsequent good conduct. In its findings it took occasion to say that it felt that the “unfortunate contract [this contract does not appear in the record] entered into between respondent and Mr. Nair was responsible in part for the desperate financial situation in which respondent found himself”, in that it had placed a very strong temptation before him to exceed his authority in his undertaking to keep the law office of Nair and Signer a going concern. It also felt that the voluntary withdrawal of Signer from the practice of the law for a period of fifteen months upon the demand of Mr. Nair -was a matter which should be taken in consideration in meting out punishment. Its reeommendation was, as heretofore stated, that petitioner be suspended from the practice of the law for a period of six months.

The matter came before the Board of Governors of The State Bar for review on the findings and recommendations of the local committee on August 19, 1938. The findings of fact made by the local administrative committee were approved and adopted as the findings of fact of the board of governors. The board, having adopted said findings as its own, passed a resolution by which it recommended to this court, by a vote of eight yeas as against three noes, that petitioner be suspended from the practice of the law in this state for a period of three years. Five of the eight members voting for said resolution stated that it was their desire that the record show that they “so voted although they believed the degree of discipline insufficient”. As to the opposing three, the record shows simply that they voted against the resolution suspending petitioner for a period of three years.

Petitioner appeared before the committee in propria persona, and filed an answer in which he admitted each and every matter as set out in the aforesaid affidavit, verified by him on June 5, 1936. Said affidavit, in haec verba, furnished the grounds on which the charges of professional misconduct were prosecuted.

In his answer petitioner alleged that all the moneys which he had used were used to sustain himself and maintain the office, including the $900 evidenced by his promissory note, which sum had been paid by Mr. Nair to the persons and for the uses for which it was held; that he"had since returned to the practice of the law, and had transacted matters involving considerable sums of money, and that his course of conduct both before and since the matters under investigation arose was without blemish. The local committee found this to be the fact.

He further alleges that he has substantial business contacts and reasonable prospects which insure his wife and himself a comfortable living. He also sets out the bitter humiliation and mental suffering he has endured, and the serious added consequences which would follow a suspension of three years.

The ease is quite unusual in its factual structure. Petitioner, now about 32 years of age, started his business career as a messenger in the First National Bank of Los Angeles, and ended his banking career as chief teller. He attended a southern California law school and was admitted to The State Bar at the age of 25 years. He had several hundred dollars at the time he left the bank and began to practice law. He married one year after he entered the practice at Los Angeles. His wife was a stenographer and worked for a short time after marriage, but her health became impaired by a heart ailment, and she became incapacitated for office work.

Petitioner estimated that his monthly earnings in the practice of the law in 1932 were $125 per month; in 1933, about the same as in 1932; in 1934, about $200 per month; and in 1935, not better than $100 per month. Mr. Thomas L. Nair appears to be an experienced lawyer practicing at the city of Los Angeles. The volume of business which his office transacted was evidently not large. He testified that he knew Mr. Signer a good many years before he passed the bar examination. He was a fraternity friend of his, and was employed by his brother-in-law before entering his office. He suggested to Signer that he come into his office. Nair was then contemplating opening a law office at Shanghai, and also making a tour around the world. He had petitioner come into his office early in June for the purpose of familiarizing himself with his business as he was preparing to and did leave on a long trip on the following October 5th.

The findings upon which the recommendation is made are, in' substance, that petitioner entered into a copartnership with Thomas L. Nair, who was contemplating engaging in the practice of the law at Shanghai; that the terms of the partnership were not clearly disclosed in the evidence, but it appears that petitioner was to pay Nair $50 per month and carry on the practice in the office occupied by said Thomas L. Nair as then equipped. Nair departed from Los Angeles in October, 1935, there then being in the bank to the credit of Nair and Signer approximately $200. The bills due October 1st for the operation of the office had been paid by Nair and said sum of $200 was to be applied to the payment of the bills which would fall due November 1st. It was thought by the partners that during the month of October and each month thereafter sufficient moneys would be earned by the copartnership through the efforts of Mr. Signer to pay the overhead of the office, which was slightly more than $200 per month, and likewise to pay Mr. Nair $50 per month and also to provide Mr. Signer sufficient money for living expenses. No new business had come to the office within ninety days prior to Nair’s departure.

The committee found that “Thomas L. Nair must have realized that the earnings which the office had made from June to October did not justify his thinking that sufficient money would be made to pay the items of expense heretofore set forth”.

The first misappropriation, in the sum of $100, occurred some week or ten days after Nair departed, which sum petitioner used for living expenses. During Nair’s absence abroad, Signer, at Nair’s request, sent him not less than $350, and most likely $400. Nair returned in May, 1936, sooner than he had anticipated. During his eight months’ absence the earnings of the law business were approximately $800. The overhead of the office was in excess of $200 per month. The committee found the testimony conflicting as to the use made by petitioner of the money misappropriated by him. He testified that he used a part of it to pay office overhead. Nair disputed this testimony, but the committee found that it would appear from the evidence that it would have been impossible to operate the office unless some of the money misappropriated was spent to pay office expenses. The committee found that petitioner had no money of his own and the only means by which the overhead and living expenses could have been met was by the use of the $200 left by Nair, the $800 earnings, and the $900 used as above set forth.

The committee found that upon the return of Mr. Nair petitionér became very much excited and afraid, and he drew $225 and left for St. Louis. At the request of friends he left St. Louis for Los Angeles the second day following his arrival in St. Louis, and upon arriving at Los Angeles signed the Nair affidavit. Nair demanded that he resign as a member of The State Bar. This he declined to do. He consented to and did withdraw from active practice of the law on the demand of Nair. This occurred in May, 1936. He sought and obtained precarious employment as a salesman for a clothing manufacturer, and also was occasionally employed as a bookkeeper.

During the fifteen months that petitioner refrained from the practice of the law upon the demand of Mr. Nair he was unable to earn sufficient wages as a salesman or in any other obtainable employment to furnish himself and wife with the common necessities of life. He lived alternately with his parents and with his wife’s parents. At all times he lived cheaply, and notwithstanding his impoverished condition he paid for a time a dollar a week on account of said promissory note. In August, 1937, he entered the practice of the law without notifying Mr. Nair of his intention to do so. Upon learning that he had entered the practice of the law, Mr. Nair sent for him and demanded that he withdraw from the practice. Mr. Nair said when petitioner entered the practice of the law without consulting him it caused him to feel that he was not being treated right. He felt that petitioner should have come first to him before doing so. Petitioner said to Nair that it was hard to make a living selling dress goods, and he thought he had been punished enough. Mr. Nair thereafter sent petitioner a prepared resignation from The State Bar, with a request to sign the same. Receiving no reply, the proceedings herein were instituted.

Neither the local committee, which was in close personal touch with petitioner and the subject-matter of the proceeding, nor the board of governors, recommended disbarment. Mr. Nair also expressed a personal desire that petitioner be not disbarred. The local committee in an extended review of the matter closed its findings and conclusions with the following recommendation:

“In making the recommendation hereinafter set forth, the committee has considered the age of respondent, his previous good record and his subsequent good conduct. The committee feels that the unfortunate contract between respondent and Mr. Nair was responsible in part for the desperate financial situation in which respondent found himself, which constituted a very strong temptation. The committee further feels that the voluntarity inflicted suspension from the practice of law for fifteen months should be considered, and it has taken these facts into consideration in arriving at its decision. The committee therefore recommends that respondent be suspended as an attorney and member of The State Bar of California for a period of six months. ”

We are of the opinion that a period of six' months, added to the fifteen months which were imposed in the manner set forth in the findings, aggregating twenty-one months, will serve as adequate punishment for the transgressions committed by petitioner in the light of the facts and circumstances shown by the findings herein.

It is therefore ordered that petitioner be and he hereby is suspended from the practice of the law in this state for a period of six months, effective thirty days from the filing of this order.

EDMONDS, J., Dissenting.

I can see no reason why this court should reduce the punishment fixed by the Board of Governors of The State Bar. The only point urged by the petitioner is that suspension for three years is “excessive punishment” for the offense with which he was charged. However, as stated in the opinion, five of eight members of the Board of Governors are on record as believing that suspension for that period of time is insufficient discipline for the conduct admitted by the petitioner. In my opinion the board erred, if at all, on the side of leniency and that its recommendation should be followed.

Rehearing denied. Edmonds, J., voted for a rehearing.


author: SHENK, J. THE COURT.

text:
    [L. A. No. 16748.
    In Bank.
    March 20, 1939.]
    LONG BEACH DRUG COMPANY (a Corporation), Respondent, v. UNITED DRUG COMPANY (a Corporation), Appellant.

      Joseph Scott and J. Howard Zieman for Appellant.
    Earl E. Moss and James E. Pawson for Respondent.
   SHENK, J.

The questions presented upon this appeal concern the validity and scope of a written agreement, and the right of plaintiff to permanently enjoin its violation by defendant, or to procure other relief. The word “defendant” is used to refer to both defendant United Drug Company, a Delaware corporation, and its predecessor, United Drug Company, a New Jersey corporation.

By the written agreement plaintiff was appointed the special and exclusive agent in Long Beach for the sale of defendant’s Rexall remedies and other drug products. The contract was made on April 16, 1908, and was performed by the parties until the fall of 1936, when defendant gave notice that it would no longer be bound. In October, 1936, defendant started, without plaintiff’s consent, to sell to other drug stores in Long Beach, and on May 10, 1937, it refused to make further sales to plaintiff. Plaintiff then brought this action and, upon trial of the cause, was awarded the relief for which it prayed, to wit: a decree which (1) permanently enjoined defendant from directly or indirectly selling Rexall products to any dealer in Long Beach other than plaintiff and certain sub-agents; (2) ordered an accounting to ascertain all damage suffered by plaintiff from sales made in violation of. the contract; and (3) ordered judgment for plaintiff for all sums found to be due it on the accounting, together with costs. Defendant appealed from this decree.

The written agreement is in words and figures as follows:

“Agreement made this 16th day of April in the year one thousand nine hundred and nine between the United Drug Company, a corporation organized under the laws of the State of New Jersey, and having its office and laboratory in the City of Boston and State of Massachusetts, party of the first part, and Long Beach Drug Co. of Long Beach, California party of the second part.
“Whereas, the party of the first part is in the business of making and selling the Rexall Remedies and other products.
“Whereas, the party of the second part has purchased from the party of the first part a portion of its Capital Stock, and desires to be appointed special selling agent of the party of the first part in the city of Long Beach.
“Now, therefore, this agreement witnesseth, that the parties hereto, in consideration of the sum of one dollar, by each to the other paid, the receipt whereof is hereby acknowledged, hereby agree as follows:
“First. The party of the first part hereby constitutes and appoints the party of the second part its special selling agent in above named place, and agrees not to sell its products to any other dealer in said place so long as the party of the second part shall perform the terms of this agreement.
“Second. The party of the first part hereby agrees that should the party of the second part become dissatisfied with the agency given him by this contract, or should the party of the second part feel that any misrepresentation has been made him by the party of the first part, or his representative, he can, by notifying the party of the first part, sell and the party of the first part hereby agrees to purchase, any capital stock of the United Drug Company that the party of the second part may hold, at its par value plus seven percent interest on the same since the date of issue, less any dividends that may have been applied, and the party of the first part furthermore agrees that in the event of the party of the second part notifying the party of the first part of his desire to sell his stock, the party of the first part will, in addition to buying his capital stock, take back any and all merchandise that the party of the second part may have on hand at the price such merchandise may have cost the party of the second part.
“Third. The party of the first part further agrees to keep a record of all advertising and other expenses directly charged to the territory of the party of the second part, and to credit said record with all purchases, said record to be open to inspection of the party of the second part.
“Fourth. The party of the second part agrees to uphold all of the products of the party of the first part to the full list retail prices set by the party of the first part, and further agrees never under any circumstances to sell or allow said products to be sold to the wholesale or retail dealers except at full retail price.
“Fifth. The party of the second part further agrees to confine the sale of the products of the party of the first part to his own retail store and to consumers only, and it is mutually understood and agreed that in the event of any violation of the terms of articles fourth and fifth of this agreement by the party of the second part or its servants or agents the party of the first part shall thereupon become entitled to and the party of the second part shall pay the sum of one hundred dollars as liquidated damages for each and every such violation.
“Sixth. In the event of the party of the second part owning the preferred stock in the United Drug Company, it is agreed by the party of the first part, if it is mutually agreeable, to waive the three years’ redemption clause inserted in the preferred stock certificate, so long as the territory controlled by the party of the second part shall prove profitable to the party of the first part, and so long allow him to control said stock.
“Seventh. It is further agreed that the party of the second' part will, in case he desires to sell the United Drug Company stock, first offer it to the executive committee of the party of the first part, giving ten days’ notice.
“ (Seal of Long
Beach Drug Co.)
“United Drug Company (Seal)
“Louis K. Liggett, General Manager
“Long Beach Drug Co. (Seal)
“All conditions that exist in connection with this agreement are above stated.”

A primary question is that of the validity of this agreement. Is it void for uncertainty? If not, then is it capable of enforcement by a court of equity? “That a greater degree or amount of certainty is required in the terms of an agreement which is to be specifically executed in equity than is necessary in a contract which is the basis of an action at law for damages” has often been declared. (Durst v. Jolly, 35 Cal. App. 184 [ 169 Pac. 449]; Noble v. Reid-Avery Co., 89 Cal. App. 75, 79 [264 Pac. 341] ; Long v. Sacramento Valley etc. Co., 127 Cal. App. 715, 723 [16 Pac. (2d) 337] ; Pascoe v. Morrison, 219 Cal. 54, 58 [25 Pac. (2d) 9] ; Janssen v. Davis, 219 Cal. 783, 787 [29 Pac. (2d) 196].) The contract may be valid and yet because of its inherent nature or because it lacks the necessary, degree of definiteness may be unenforceable either by a direct decree of specific performance, or indirectly by means of a prohibitory injunction.

Testing first for validity, we find that the contract made by these parties was valid. By its terms plaintiff was appointed the special selling agent for defendant in Long Beach. Plaintiff expressly agreed to uphold all of defendant’s products to the full list retail prices and to confine sales to its own retail store and to consumers only. Defendant agreed not to sell to any other dealer in the city so long as plaintiff should perform. Clearly implied in these express provisions was a covenant on the part of defendant to sell, and upon the part of plaintiff to purchase and keep on sale a supply of defendant’s products sufficient to meet the demands of the retail trade for these particular remedies. (Civ. Code, secs. 1655, 1656.) At the time this agreement was made, plaintiff’s drug store afforded a desirable outlet for defendant’s products. Long Beach had a population of only about 18,000 inhabitants, and the store was well and centrally located. Furthermore, defendant was then endeavoring to effect a refinancing project, the success of which was vitally important to it, and to aid the plan plaintiff had purchased some '$200 worth of defendant’s corporate stock. To support the market for such stock it was essential that as little as possible be put up for public sale. Hence the provision of the agency agreement which required plaintiff, in event of dissatisfaction, to give defendant an opportunity to repurchase, and the covenant of defendant that in the event of such repurchase it would also take back at cost price any merchandise held by plaintiff. By the agreement as a whole defendant not only insured that so much of its stock as was held by plaintiff would be kept off the market during the life of the agency, but it also procured an advantageous outlet for the sale of its products in Long Beach. This was a good and sufficient consideration in the year 1909, and it is immaterial to the validity of the contract that by reason of the rapid growth of Long Beach and other factors, the agency later became so burdensome to defendant that it repented of its bargain and sought to repudiate it. The sufficiency of a purported consideration for a contract must be determined from the facts of the transaction as they existed when the contract was made rather than by subsequent developments. (Parsons v. Cashman, 23 Cal. App. 298 [137 Pac. 1109]; Johnson v. Studley, 80 Cal. App. 538, 560 [252 Pac. 638] ; Gosnell v. Lloyd, 215 Cal. 244 [10 Pac. (2d) 45] ; 6 Cal. Jur., sec. 116, p. 167.)

It is the general rule that a contract is not fatally defective merely because it does not specify a time presently definite for its termination. (13 C. J., p. 271.) While the agreement here does not state a definite term, it is not wholly silent with respect to its duration. It provides that the exclusive selling right of plaintiff is to endure so long as plaintiff “shall perform the terms of this agreement”; that is, so long as plaintiff shall, in addition to observing the covenant with respect to sale of stock, etc., “uphold all of the products” of defendant to the full list retail prices, confining the sale thereof to its “own retail store and to consumers only”. Provisions such as this for the duration of an agreement are sufficiently certain and have frequently been declared valid. In Sutliff v. Seidenberg, 132 Cal. 63 [64 Pac. 131, 469] ; the agreement was to remain in force “as long as our goods find ready sale on this Coast”, and the court said it was not so vaguely expressed as to be wholly unascertainable.' In Noble v. Reid-Avery Co., supra, plaintiff agreed to “handle the output” of defendant’s “welding-rod's”, it being understood at the time of the first order that plaintiff ‘ ‘ should have the exclusive right to sell the goods and represent (defendant) in that part of California known as Southern California, as long as they were able to give faithful service and a business management to the trade and produce the trade that was warranted in the territory allotted to them, and no longer”. Upholding the validity of the contract, the court said: “Such provisions for the duration of the contract are sufficiently certain and valid. As a general proposition the failure of an executory contract to state a time presently definite for its termination does not render it void for uncertainty.” This holding was approved in Great Western D. Products v. J. A. Wathen D. Co., 10 Cal. (2d) 442 [74 Pac. (2d) 745], where there was an agreement “that as long as the plaintiff purchases and continues to purchase from the defendant all of its John A. Wathen Distillery Company warehouse receipts for whiskey that it may require and sells and exploits in California said warehouse receipts, and refrains from selling and exploiting warehouse receipts from any other distillery, the defendant will not sell in California any of the said warehouse receipts (for resale to investors) to any other person except one in San Francisco”. The court held that the failure to specifically limit the duration of the contract did not fatally affect it and did not give rise to a right to terminate it at will without a liability for damages. (See, also, Gallagher v. Equitable Gas Light Co., 141 Cal. 699 [75 Pac. 329] ; Wittmann v. Whittingham, 85 Cal. App. 140 [259 Pac. 63] ; Ehrenworth v. Stuhmer & Co., 229 N. Y. 210 [128 N. E. 108].)

A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if this can be done without violating the intention of the parties. (Civ. Code, sec. 1643.) An interpretation which gives effect is preferred to one which makes void. (Civ. Code, sec. 3541.) Moreover, the construction placed upon the instrument by the parties themselves is persuasive; the law recognizes that the practical construction made by them is cogent evidence of what they intended. (Tennant v. Wilde, 98 Cal. App. 437, cases cited pp. 453, 454 [277 Pac. 137]; Burns v. Peters, 5 Cal. (2d) 619, 623 [55 Pac. (2d) 1182] ; Retsloff v. Smith, 79 Cal. App. 443, 452 [249 Pac. 886]; Moore v. Superior Court, 114 Cal. App. 333 [299 Pac. 760].) The undisputed facts of the present case leave no doubt as to the manner in which the parties construed the contract. They performed under it for a period of twenty-seven years without complaint of its lack of definiteness or intimation that it was void for uncertainty. At all times plaintiff carried a stock of defendant’s products and sold them at full list price in its retail store. Defendant, on its part, filled plaintiff’s orders and expressed no dissatisfaction with the representation it was receiving. The corporate stock which plaintiff held was never offered for sale or sold by it. The existence of plaintiff’s exclusive agency was recognized and on occasions definitely ratified. It was recognized in 1925 in connection with the establishment of a subagency in Orange Center, Long Beach. On December 29, 1930, defendant wrote plaintiff saying: “This letter is for the purpose of giving you written assurance that in permitting the United Drug Company to place certain Sub-Agencies within the city of Long Beach, this act does not in any way abrogate your present Rexall Franchise.” In January, 1931, a subagency was granted to L. E. Stucker. Appended to the subagency agreement was the following supplementary provision, executed by the subagent and also by both plaintiff and defendant: This Sub-Agency Agreement with L. E. Stucker and the United Drug Company is given with the understanding, and can be terminated upon thirty days notice if at any time the Long Beach Drug Company, the authorized agent, feels the said Sub-agency is detrimental to its business.” Later two other subagencies were created.

From the year 1909 until 1923, the record shows there was a substantial yearly increase in the sales by plaintiff of defendant’s products, whereas from 1923 until defendant’s repudiation of the contract in 1936, there was a gradual decline. As against $1639 for the year 1909, the 1923 sales totaled $19,927.07. Sales for the year 1934 declined to the low mark of $2,829.44. Between 1910 and 1920, according to the official census, the population of Long Beach rose from 18,809 to 55,593. Outside communities were included within the city area, and by 1930 there was an estimated population of 142,032. This rapid growth of the city, combined with the declining sales by plaintiff after the year 1923, made the agency contract increasingly disadvantageous to defendant. When defendant later acquired or became affiliated with the Owl Drug Company, and desired to use the four Owl Drug stores in Long Beach as outlets for its products, it simply notified plaintiff that it would no longer recognize the 1909 agreement. Between October, 1936, and December, 1937, it sold $10,604.70 worth of its products to the four Owl stores. It continued to sell to them and to some of the other stores until the date of judgment herein.

This recital of undisputed facts shows that the construction of the agreement as lawful and operative accords with the recognition which was given to it by the parties themselves for some twenty-seven years. The further fact that during the latter portion of that period the obligation became burdensome to defendant does not alter the purport and effect of the writing. We hold that the contract is valid.

The next question is whether plaintiff is entitled, under this valid contract, to the equitable remedy of prohibitory injunction. Plaintiff, by its complaint herein, did not ask the court for a direct decree compelling defendant to specifically perform the contract, but sought such relief indirectly by means of the injunction, the assumption being that if defendant were permanently restrained from selling to other dealers in Long Beach, it would continue to sell to plaintiff rather than abandon so lucrative a territory.

Defendant contends that the prohibitory injunction will not lie, citing section 3423, subdivision 5 of the Civil Code, and section 526, subdivision 5, of the Code of Civil Procedure, both of which provide that “an injunction cannot be granted . . . to prevent the breach of a contract . . . the performance of which would' not be specifically enforced”. In Anderson v. Neal Institutes Co., 37 Cal. App. 174 [173 Pac. 779], this provision was construed and the doctrine was declared that where a contract contains both affirmative and negative stipulations, equity will not interfere to prevent a breach of the negative covenant when the affirmative covenant is of such a nature that it cannot be specifically enforced by a judicial decree. While this declaration is contrary to the rule of the Restatement (Restatement, Contracts, sec. 380, p. 704), it is, by reason of the express statutory provision, the settled law of this jurisdiction.

The facts of the Anderson case are similar to those of the case at bar. There by written contract the defendant Neal Institutes had granted to plaintiff for a term of ninety-nine years the exclusive right to advertise and use the Neal remedies and method of treatment in the northern half of this state, and to use the name “Neal” in connection with such institutes as might be established in that territory. Defendant had further agreed to supply to plaintiff such medicines and advertising literature as he might require. Plaintiff established a Neal institute in San Francisco and thereafter by extensive advertising and personal care built up a valuable Neal business and good will. After both parties had performed under the contract for several years, defendant established a rival Neal institute in the same city, and refused to furnish any of its remedies to plaintiff. Plaintiff sought relief by way of prohibitory injunction and an accounting. A general demurrer to the complaint was sustained without leave to amend on the ground that an injunction could not properly be granted. Affirming this ruling, the District Court of Appeal declared that as the contract contained affirmative and implied negative covenants, and as it was of such a nature that specific performance could not be decreed, an injunction to prevent its breach would not lie. Said the court: “Where, as here, a contract contains both affirmative and negative stipulations, the authorities are in irreconcilable conflict upon the question whether equity will interfere to prevent a breach of the negative covenant when the affirmative covenant is of such a nature that it cannot be specifically enforced by a judicial decree. (2 High on Injunctions, sec. 1164.) . . . But in this state the question was put at rest at the time of the adoption of the Civil Code by the terms of subdivision 5 of section 3423 (since incorporated in the Code of Civil Procedure [section 526]) . . . Subdivision 5 of section 3423 is free from ambiguity or uncertainty. It clearly declares as the law in this state the rule laid down in one of two opposing lines of authority. If there could be a doubt as to the intention of the legislature in this regard, it is removed by an examination of the notes to section 1912 of Field’s Proposed Draft of the Civil Code of New York, which section was practically adopted in this state; and by an examination of the notes to subdivision 5, section 3423, of the Civil Code Annotated, 1874, where the following authorities, cited as the foundation of that provision, declare that the court will not interfere by injunction to prevent the violation of an agreement of which, from the nature of the subject, there could be no decree of specific performance. (Newbery v. James, 2 Her. 446 [35 Eng. Repriní, 1011] ; Williams v. Williams, 3 Her. 160 [36 Eng. Reprint, 62] ; Hamblin v. Dinneford, 2 Edw. Ch. (N. Y.) 529; Sanquirico v. Benedetti, 1 Barb. (N. Y.) 315.) References in the case of Peterson v. McDonald, 13 Cal. App. 644 [110 Pac. 465], and of Farnum v. Clarke, 148 Cal. 610, 615 [84 Pac. 166], tend to support the view here taken.”

The above holding was approved in Poultry Producers, etc., v. Barlow, 189 Cal. 278 [208 Pac. 93]. That case concerned a contract whereby the defendant agreed to “sell and deliver” to plaintiff, and the latter agreed “to purchase and market” such of the eggs produced by defendant’s poultry during the years 1917, 1918, and 1919, as he intended to sell or market in any event, and further plaintiff agreed “to use its best efforts to resell said' eggs at the best prices obtainable under market conditions”. In May, 1917, in violation of this contract defendant sold to others than plaintiff all of the eggs produced by his flocks. Plaintiff sued for damages for breach of contract by reason of the sale of eggs to other purchasers, for specific performance of the covenant to sell and deliver eggs to it during the unexpired term covered by the contract, and for an injunction restraining defendant from making sales of his product to other persons. This relief was granted by the trial court. On appeal the judgment for recovery of damages was affirmed, but a reversal was ordered as to injunction and specific performance. This court, after an exhaustive review of the subject, affirmed the doctrine of Anderson v. Neal Institutes, supra. (See, also, O’Brien v. O’Brien, 197 Cal. 577, 588 [241 Pac. 861] ; Richfield Oil Co. v. Hercules Gasoline Co., 112 Cal. App. 431 [297 Pac. 73] ; Engemoen v. Rea, 26 Fed. (2d) 576.)

Seeking to distinguish the present case and to avoid application of the doctrine, plaintiff asserts that the instrument here contains only negative covenants. We cannot so view it. Clearly the contract is not wholly negative in character. In addition to the negative covenant of defendant to refrain from selling to dealers other than plaintiff, there are express and implied material affirmative covenants, notably an implied affirmative covenant on the part of defendant to sell to plaintiff as its special agent, and on the part of plaintiff an,implied affirmative covenant to purchase from defendant and have available for resale a sufficient supply of its drug products to meet the demands of the retail trade, with the express covenant to “uphold all of the products . . . to the full list retail prices” set by defendant.

Unless these affirmative covenants are of such a nature that they could be specifically enforced by a judicial decree, the trial court erred in granting the prohibitory injunction. (Code Civ. Proc., sec. 526, subd. 5; Civ. Code, sec. 3423, subd. 5, and cases, supra.) That specific enforcement would not be allowed has already been intimated in the foregoing discussion, and it becomes evident upon a consideration of the nature of the stipulations. It is, as stated in Poultry Producers, etc., v. Barlow, supra (189 Cal., at p. 289), “the cognate rule that courts of equity will not decree the specific performance of contracts which by their terms stipulate for a succession of acts whose performance cannot be consummated by one transaction, but will be continuous and require protracted supervision and direction. (Stanton v. Singleton, 126 Cal. 657, 665 [59 Pac. 146, 47 L. R. A. 334] ; Pacific etc. Ry. Co. v. Campbell-Johnston, supra (153 Cal. 106 [94 Pac. 623]); Crane v. Roach, 29 Cal. App. 584, 587 [156 Pac. 375] ; Anderson v. Neal Institutes Co., supra.) ‘Courts of equity,’ says the court in Pacific etc. Ry. Co. v. Campbell-Johnston, 153 Cal. 117 [94 Pac. 623, 628], ‘only decree specific performancex$vhere the subject-matter of the decree is capable of being embraced in one order and is immediately enforceable. It will not decree specific performance when the duty to be performed is a continuous one extending possibly over a long period of time, and which, in order that the performance may be made effectual, will necessarily require constant personal supervision and oversight of it by the court. ’ ” (See, also, Pacific Elec., etc., v. Campbell-Johnston, 153 Cal. 106 [94 Pac. 623]; Sheehan v. Vedder, 108 Cal. App. 419 [292 Pac. 175] ; Moore v. Heron, 108 Cal. App. 705 [292 Pac. 136] ; Chandler v. Hollingsworth, 96 Cal. App. 472 [274 Pac. 581]; Richfield Oil Co. v. Hercules Gasoline Co., supra; Engemoen v. Rea, supra; 23 Cal. Jur., p. 480, sec. 43; Restatement, Contracts, sec. 371, p. 675.)

So, in the present case, to undertake to compel defendant to sell to plaintiff, and plaintiff to purchase from defendant and to uphold all products to the full list retail price set by defendant, over an indefinite term, would impose upon the court a duty well nigh impossible of performance. For this reason, if no other, the court would be constrained to deny equitable relief and to leave the parties to assert their legal rights under the contract. Further grounds urged in support of the contention that the contract is not susceptible of specific performance, to wit: that it is unfair and lacks sufficient certainty, a definite term, adequate consideration, and mutuality of remedy need not be discussed. It is clear that the contract is specifically unenforceable, and that therefore plaintiff is not entitled to a prohibitory injunction.

This disposes of all points to be determined by the appeal on the merits. There are also under submission two proceedings, one a petition for supersedeas to stay operation of the prohibitory injunction pending the appeal, the other a motion to dismiss the temporary stay issued upon the hearing of the order to show cause. The determination of the appeal on the merits renders moot all questions presented in these proceedings.

The two proceedings must therefore be, and they are hereby, dismissed. The decree of the trial court is reversed.

Curtis, J., Langdon, J., Edmonds, J., Seawell, J., Houser, J., and Waste, C. J., concurred.

A petition for a rehearing was denied on April 19, 1939, and the following opinion then rendered thereon:

THE COURT.

On petition for rehearing it is urged that this court should permit relief by way of accounting to determine the damages, if any, which the plaintiff claims to have suffered by the alleged breach of the contract. The plaintiff has apparently misconceived the effect of the decision. It holds that equitable relief is not appropriate, as entailing well nigh impossible supervision of performance of the contract by the court. “For this reason ' it is said, “if no other, the court would be constrained to deny equitable relief and to leave the parties to assert their legal rights under the contract.”

Although the equitable remedy is not available to plaintiff, nevertheless the contract sued upon is valid and sufficiently certain to warrant the trial court in entertaining a plea for the recovery of damages (see cases cited in opinion). The complaint, while praying for “all just and proper relief”, was not framed in the alternative to seek the legal remedy for breach of the contract as a whole. It does ask, in connection with the prayer for injunctive relief, that an accounting be had and that an award be made to cover damages suffered over a specified period by plaintiff because of defendant’s breach of the negative covenant of the contract. This, however, is not an assertion of plaintiff’s full legal right, i. e., the right to seek damages not only for breach of the negative covenant (the covenant not to sell to other stores in Long Beach), but also for breach of the affirmative covenant (revocation of the exclusive agency and refusal to sell to plaintiff).

Under present code procedure, which permits a party to litigate his right to legal and equitable relief in the same action, and by amendment to ask a change of remedy, there appears to be no reason why plaintiff, if so advised, should not apply for permission to amend its pleading. (Farnsworth v. Hunter, 11 Cal. (2d) 27 [77 Pac. (2d) 840] ; Peters v. Binnard, 219 Cal. 141 [25 Pac. (2d) 834; Pascoe v. Morrison, 219 Cal. 54 [25 Pac. (2d) 9] ; Ahlers v. Smiley, 163 Cal. 200 [124 Pac. 827] ; 10 Cal. Jur., p. 10, sec. 7; note, 22 C. L. R., p. 208.) Whether the plaintiff is entitled to damages, or to what extent, is not here intimated. That is a matter to be proved upon trial of the issue. If such trial be permitted, under amended pleadings, evidence may be adduced as to the extent of plaintiff’s alleged damage, if any, by reason of defendant’s refusal to sell to it, and also by reason of defendant’s sales to other stores; likewise as to defendant’s damage, if any, by reason of plaintiff’s alleged failure to support its products.

It would seem that so far as the right to seek this additional relief is concerned, it is immaterial whether in the final analysis the contract be construed as a contract of agency, or as a contract of sale and purchase. (Kelly-Springfield Tire Co. v. Bobo, 4 Fed. (2d) 71; Reiter v. Anderson, 87 Cal. App. 642 [262 Pac. 415].) Construed as a contract of agency, even though it is patently not an agency coupled with an interest and is therefore revocable, nevertheless the power to revoke does not necessarily confer the right to revoke, and in the event of a wrongful exercise of the power, the principal must answer in damages. (Boehm v. Spreckels, 183 Cal. 239, 248 [191 Pac. 5] ; Roth v. Moeller, 185 Cal. 415 [197 Pac. 62]; Capital Nat. Bank v. Stoll, 220 Cal. 260 [30 Pac. (2d) 411] ; Stoll v. Stoll, 5 Cal. (2d) 687 [56 Pac. (2d) 226] ; Kelly-Spring field Tire Co. v. Bobo, supra.) Construed as a contract of sale and purchase, a breach thereof gives rise to an action for damages. (Hacker Pipe etc. Co. v. Chapman Valve Mfg. Co., 17 Cal. App. (2d) 265 [61 Pac. (2d) 944]; Pease v. Lindsey, 129 Cal. App. 408 [18 Pac. (2d) 717].) The fact that the amount of damage may not be susceptible of exact proof or may be uncertain, contingent, or difficult of ascertainment does not bar the recovery. (Hacker Pipe etc. Co. v. Chapman Valve Mfg. Co., supra; Caspary v. Moore, 21 Cal. App. (2d) 694 [70 Pac. (2d) 224].)

The petition for a rehearing is denied.

Curtis, J., Houser, J., and Edmonds, J., voted for a rehearing.


author: THE COURT.

text:
    [S. F. No. 16022.
    In Bank.
    March 21, 1939.]
    F. C. DOUGHERTY, Respondent, v. CALIFORNIA KETTLEMAN OIL ROYALTIES, INC. (a Corporation), Appellant.

      William M. Abbott, William M. Cannon, Joseph F. Leonard, Michael F. Shannon and Thomas A. Wood for Appellant.
    Sullivan, Roche & Johnson and Rogers and Clark for Respondent.
   THE COURT.

California Kettleman Oil Royalties, Inc., appeals from an order of the superior court denying its motion for an order directing the clerk of the court to enter satisfaction of a certain final judgment secured by Dougherty against appellant. The motion to enter satisfaction was predicated upon the fact that after respondent Dougherty, in an action against appellant, had secured a judgment that he was the owner of certain oil royalties, and that appellant held them in trust for respondent, and while that judgment was on appeal, respondent entered into a written agreement settling his dispute with another claimant to a portion of the royalties—the administratrix of the estate of Washington H. Ochsner. It is appellant’s position that Ochsner and its predecessor were joint tort feasors; that the agreement between respondent and the administratrix of Ochsner’s estate constituted the compromise and settlement of a tort action with one joint tort feasor and a release from further liability of that tort feasor; that under elementary principles a release of one joint tort feasor releases all. Based on these premises it is urged that appellant has been released from all liability under the judgment. The incongruous nature of appellant’s claim is disclosed by the fact that were appellant to prevail on this appeal it would result in appellant securing title to about 58 per cent of certain accrued and to be accrued oil royalties after it has been finally determined by this court that appellant has no lawful claim to any portion of these royalties, and that they are the property of respondent.

The facts giving rise to this controversy, including an analysis of the pleadings, have been fully set forth in the opinion of this court on the appeal from the judgment. (Dougherty v. California Kettleman Oil Royalties, Inc., 9 Cal. (2d) 58 [69 Pac. (2d) 155].) So far as pertinent here the facts are as follows: In 1920 Dougherty and Ochsner entered into a written but unsigned contract whereby in return for certain valuable services to be rendered by Dougherty in securing for Ochsner a certain oil permit, Ochsner agreed that Dougherty should be entitled to 10 per cent of all oil or gas produced under the-permit. Dougherty fully performed his part of the agreement, and as a result of his efforts Ochsner secured the permit. Ochsner, although frequently promising to do so, failed to sign the written agreement which admittedly embodied the full agreement between the parties. In 1923, Dougherty, after some negotiations with Ochsner, voluntarily reduced his 10 per cent interest to 5 per cent. In August of- the same year, Ochsner, who, under his agreement with Dougherty, had full control over the permit, assigned the permit to the Coast Land Company, reserving to himself an overriding royalty of 7% per cent of all oil or gas produced from the so-called discovery area, referred to as the “A” royalties, and 2% per cent from the balance of the area, referred to as the “B” royalties—a percentage mathematically less than the 5 per cent owned by Dougherty under his contract with Ochsner. Later on the same day, Ochsner assigned 6% per cent of the “A” royalties and 2 per cent of the “B” royalties to Universal Oil Land Company, a corporation organized and owned by Ochsner and two of his friends. Several months later Ochsner assigned to the same company the 1 per cent of the “A” royalties and the % per cent of the “B” royalties still retained by him. The Coast Land Company assigned the permit to the General Petroleum Corporation, both it and its assignor being without knowledge of Dougherty’s interest in the proceeds of the permit.

Upon discovering the true facts, Dougherty immediately notified all concerned of his claims, and commenced an action against Ochsner, Coast Land Company, General Petroleum Corporation, and the Universal Oil Land Company. The original complaint was predicated on the theory that as a result of a joint enterprise between Ochsner and Dougherty each owned one-half of the reserved royalties, a theory adopted by Dougherty’s then counsel for the reason that he apparently felt that the unsigned written contract would be difficult to prove. After several amendments to the original complaint, and after all the defendants were fully informed that Dougherty’s claim was predicated on the 10 per cent contract later reduced to 5 per cent, Ochsner died and the administratrix of his estate was substituted as a defendant. In 1928, pendente lite, Ochsner’s two associates in Universal, organized appellant corporation—The California Kettleman Oil Royalties, Inc., and caused Universal to assign to it the per cent “A” royalties and the 2½ per cent “B” royalties. Ochsner’s estate received some of the stock of this new corporation. Dougherty thereupon joined appellant as a party. Appellant cross-complained, seeking to quiet its title to the royalties. In his answer to this cross-complaint Dougherty clearly alleged the existence of his 5 per cent contract. Prior to trial, the action was dismissed as to all defendants except appellant. After a protracted' trial judgment was entered in favor of Dougherty, the trial court holding that all royalties assigned to appellant were held in trust for respondent. On the appeal from that judgment, as already stated, the judgment was affirmed, the opinion being filed in May of 1937. (Dougherty v. California Kettleman Oil Royalties, Inc., supra.)

While the appeal was pending, the appellant, the administratrix of Ochsner’s estate, and Universal, entered into a written agreement concerning the division of the royalties among themselves. From that agreement it appears that Ochsner’s estate owned some of the stock of Universal, and that the corporation was desirous of securing that stock; that Universal and appellant had never claimed title to the 1 per cent of “A” royalties and ½ per cent of “B” royalties assigned to Universal by Ochsner, but had in fact executed an agreement declaring these were held in trust for Ochsner; that appellant had borrowed $800,000 from the General Petroleum Corporation and had assigned to that company as security by way of pledge the 6½ per cent of “A” royalties and 2 per cent of “B” royalties held by it; that a large sum of money had accrued on these royalties; that the three contracting parties were desirous of segregating their respective interests in these royalties. The agreement recognizes that of the original 7½ per cent-2½ per cent royalties, Ochsner’s estate is the owner of 1 per cent of the “A” royalties and % per cent of the “B” royalties. In addition, in consideration of the estate transferring to Universal the stock owned by the estate in Universal, that company and appellant agreed to transfer to the estate 27 per cent plus of the total “A” royalties, and 25 per cent plus of the total “B” royalties, subject to a proportionate amount of the indebtedness owed to General Petroleum Corporation. Under this agreement, as among the three contracting parties, there was transferred to the Ochsner estate 40 per cent plus of the “A” royalties and 45 per cent of the “B” royalties, both accrued and to accrue. This is roughly 42 per cent of the total royalties. The Ochsner estate recognized that the balance of the royalties—roughly 58 per cent—as against the estate were the property of appellant. The agreement also recognized the existence of Dougherty’s judgment then on appeal, and provided that in the event it finally should be determined that Dougherty owned any portion of these royalties, then each of the contracting parties should transfer and assign to Dougherty a proportion of the royalties, reserving to the administratrix the right to contest the application of that judgment to the portion of the royalties owned by her. This agreement was duly submitted by the administratrix qf Ochsner’s estate to the superior court sitting in probate and that court on September 2, 1936, made and entered its order authorizing and directing the administratrix to make, execute and perform the agreement.

It should be mentioned that the estate of Oehsner at all times claimed the 1 per cent royalty on the “A” area and the ½ per cent on the “B” area adversely to both appellant and respondent, and was contending that the judgment in the pending case, even if affirmed, would not be binding as to these royalties.

After the agreement above described had been entered into, and while the appeal was still pending, Dougherty and Ochsner’s estate entered into a written agreement whereby they settled their dispute by agreeing to divide the total royalties claimed by the estate between themselves. This agreement, is the contract upon which appellant herein relies as constituting the release of one joint tort feasor, which legally released it from any liability to respondent.

The agreement recites that the Oehsner estate claims an interest in the oil royalties payable from General Petroleum Corporation; that Dougherty claims a 5 per cent royalty interest in all oil or gas produced under the permit (which claim is larger than all royalties reserved by Oehsner); that as against appellant the superior court has decreed that Dougherty owns all of said royalties; that said judgment is pending on appeal; that the estate claims that the judgment in that action, if affirmed, would not affect the estate’s claim to 1 per cent of the “A” royalties and % per cent of the “B” royalties; that the estate and Universal and Kettleman have settled their dispute by dividing the royalties; and then state that:

“it is the desire of the parties hereto (the estate and Dougherty) to adjust their interest as between each other ... so that each may hold and own separate and apart from any claim of the other a definite royalty interest in and to all oil or gas and other hydro-carbon substances produced from said lands or allocated thereto, and in and to all accumulated royalties and moneys, now in the possession of said General Petroleum Corporation of California”.

Next follows the provisions for the division between these two parties of the royalties transferred to the estate under its agreement with Kettleman and Universal. The estate agreed to transfer to Dougherty 16 per cent plus of the “A” royalties and 18 per cent plus of the “B” royalties, leaving in the estate 24 per cent plus of the “A” royalties and 27 per cent plus of the “B” royalties. The contracting parties recognized and confirmed each other’s ownership of the royalties as so divided, and each agreed to assume a proportion of the indebtedness due General Petroleum Corporation. It was expressly provided that the agreement should have no effect upon the then pending litigation between Dougherty and Kettleman. This agreement was also submitted to the superior court sitting in probate by the administratrix of Ochsner’s estate, and that court made and entered its order authorizing and directing the administratrix to make, execute and perform the agreement.

A few days after the decision of this court on the appeal had become final, the appellant, on July 8, 1937, filed its motion under section 675 of the Code of Civil Procedure asking the trial court to make an order directing the clerk to enter satisfaction of the final judgment on the ground that the judgment had been satisfied in fact. Upon denial of the motion this appeal was taken.

On this appeal it is the theory of appellant that the action prosecuted to final judgment by Dougherty against appellant was upon a cause of action ex delicto; that Ochsner and Universal, appellant’s assignor, were joint tort feasors; that when Dougherty settled with the Ochsner estate and released the estate from liability, he was releasing one of two joint tort feasors; that under the law of California the release of one of two or more joint tort feasors releases all, and that Dougherty is now estopped from claiming that the estate was not in fact at fault and not liable for the injury; that the legal effect of the agreement was to release appellant from the judgment.

The rule that a release of one of two or more joint tort feasors operates as a release of all is well settled in this state. The rule and the reasoning upon which it is based have frequently been stated. (Tompkins v. Clay Street R. R. Co., 66 Cal. 163 [4 Pac. 1165]; Chetwood v. California Nat. Bank, 113 Cal. 414 [45 Pac. 704] ; Flynn v. Manson, 19 Cal. App. 400 [126 Pac. 181] ; Hawber v. Raley, 92 Cal. App. 701 [268 Pac. 943]; Bee v. Cooper, 217 Cal. 96 [17 Pac. (2d) 740].) These and other eases that could be cited, disclose that the theory behind the rule is that there can be but one compensation for the joint wrong; that each joint tort feasor is responsible for tbe whole damage, and that once the injured party is paid for the injury he has suffered by any one of the wrongdoers, his cause of action is satisfied and his right to proceed against the others is at an end; or, stated in another way, if the payment is, in law, a satisfaction of the claim against one, it is a satisfaction of the entire claim and necessarily releases all. Several of the cited cases emphasize, and properly so, that the claim against joint tort feasors is unliquidated, and, therefore, the payment of any sum, however small, in consideration of a release of that claim, operates as full compensation for that wrong. Basically, the rule is intended to prevent double compensation for the injury.

These principles were clearly stated and properly applied by this court in Bee v. Cooper, supra,—a case strongly relied upon by appellant on the present appeal. In that case, seven former directors of a corporation and other participating parties were sued for their alleged fraudulent disposition of the assets of a corporation pursuant to an alleged fraudulent conspiracy. The complaint alleged the fraud in detail, and it was further alleged that as a result of such fraud each of the defendants secured a portion of the diverted assets. The plaintiffs were not seeking restitution of specifically described diverted assets, but were seeking damages for the fraud.

The complaint also alleged that after the commencement of the action five of the seven directors had returned the respective amounts each had received out of the fraudulent deal, and that, in return, plaintiffs had agreed to settle and dismiss the action as to them. On appeal this court held that all the original defendants were joint tort feasors; that the agreement to release five of tbe defendants constituted the release of all of the joint tort feasors; that the release of one 'or more releases all; that the basis of the rule is that a plaintiff can have but one compensation for the wrong suffered; that when a plaintiff releases one or more joint tort feasors he announces that he has received satisfaction for the injury complained of, and he cannot secure double payment for the single wrong. After pointing out that the joint tort feasor rule has no application to joint contract debtors (sec. 3543 of the Civil Code), the court held that the particular aetion was not one in equity to recover corporate assets, but one predicated upon a charge ex delicto for damages for fraudulently conspiring to divert corporate assets.

In our opinion, the rule and theory of Bee v. Cooper, supra, and the other cases cited by appellant, have no application to the facts of the instant case, for the reason that the allegations of the complaint, the theory of the parties on the trial and on appeal, and the rationale of the opinion of this court, clearly demonstrate that basically the action sounds in contract and not in tort. Dougherty was not seeking damages based upon the fraud of appellant, but was seeking to have it determined that the appellant held the title to the royalties in trust for him. That action was basically predicated upon respondent’s written but unsigned contract with Ochsner. The contract was the sine qua non of the cause of action.

A reading of this court’s opinion on the prior appeal conclusively demonstrates that the cause of action sounds in contract. In that opinion, after discussing the findings and complaint, and after holding that the action was not one for the recovery of possession or quieting title to real estate within the meaning of article VI, section 5 of the state Constitution, and after holding that the action was (p. 80) “an equitable action to enforce a trust”, it is pointed out that the main question involved (which is discussed at length) was whether the written but unsigned contract was unenforceable because of the statute of frauds. It was held that the appellant, under the facts, was estopped to plead the statute of frauds, and that the contract was enforceable. One of the main arguments of appellant on that appeal was that even if the contract was enforceable against Ochsner, the covenant contained therein to pay Dougherty 5 per cent of the oil or gas produced under the permit was a mere personal covenant not binding on the assignees of Ochsner. It was held that this covenant, i. e., this contract, was enforceable in equity as against assignees with notice. The entire emphasis of the opinion is that the contract between Dougherty and Ochsner was enforceable as against appellant.

Again (p. 82) the court points out that under the contract Ochsner had the legal right to deal with the permit, except that under the terms of that contract he was legally bound to reserve and protect the percentage he had already assigned to Dougherty; that when “Oehsner assigned the permit to the Coast Land Company reserving a percentage that is mathematically less than the percentage he had already assigned to Dougherty, the percentage reserved was the property of Dougherty”. In other words, at that moment Oehsner became trustee of a trust—an express trust—predicated upon the terms of the contract. The transfer of the trust property to Universal and by it to appellant constituted clear breaches of the contractual duty owed Dougherty, and the assignees took subject to the terms of that contract.

It is true that under the facts of the case Oehsner and appellant acted fraudulently in concealing the existence of the Coast Land Company deal from Dougherty, and in the manner in which they dealt with the royalties. These facts are alleged in the complaint and recounted in the opinion of this court as part of the facts of the case. The cause of action, however, was not predicated on that fraud. It would have existed whether or not such actual fraud was present. It is also true that under the pertinent provisions of the Civil Code (sec. 2228 et seq., see particularly sec. 2234) if is a fraud upon the beneficiary for a trustee to transfer trust property to another without protection and in violation of the beneficiary’s rights. There can be no doubt that Dougherty could have sued Oehsner and appellant for damages for this and the other frauds, but the point is he did not, but elected to sue for the enforcement of his contract with Oehsner. It is elementary that a person injured under circumstances where he may sue in either tort or contract, may waive the tort and sue on the contract. (Stanford Hotel Co. v. M. Schwind Co., 180 Cal. 348 [181 Pac. 780] ; Philpott v. Superior Court, 1 Cal. (2d) 512 [36 Pac. (2d) 635, 95 A. L. R. 990].) These same cases establish that the mere fact a pleading contains allegations of fraud does not convert a contract action into a tort action.

There are other factors involved which conclusively demonstrate that the joint tort feasor rule has no application to this ease. Under the cause of action here pleaded, Oehsner, Universal and appellant were not each jointly liable for the entire claim of Dougherty. Appellant, as the sole defendant, was liable only for those royalties to which it had the legal title. If the true facts were, as contended by Oehsner’s estate, that Oehsner had assigned but 6y2 per cent of the “A” royalties and 2 per cent of the “B” royalties to appellant, and had reserved the balance of the royalties in himself, in the action against appellant, under the cause of action as pleaded, the court could only have decreed that appellant was trustee of the portion of the royalties assigned to it. There would have been no possibility of Dougherty recovering his full claim against appellant. Under the supposed state of facts, each defendant would be liable only for the portion of the royalties claimed by it. This obviously demonstrates that the action was not one for damages for fraud, but was predicated upon an express contract. All that respondent was seeking to recover from appellant were the royalties claimed by it. Under the form of action actually brought there was no possibility of double compensation toDougherty. Respondent was merely seeking to establish his claim, based on contract, to specific property. In substance and effect it was an action to quiet title to the royalties, the respondent using the mechanism of an action in equity to establish a trust as to specific property to accomplish that result.

Appellant concedes, as it must, that during the trial it strenuously urged that the action was one based on contract; that on the appeal, down to the denial of the petition for rehearing, it was urged by both parties that the action sounded in contract. It contends that it was not until the opinion was filed that it learned for the first time the action was in fact one in tort. But as already pointed out, the gravamen of the action was the breach of the contract between Ochsner and Dougherty, and that is what the opinion heretofore filed clearly and unequivocally holds.

Appellant advances many other ingenious and highly technical arguments in support of its contention that the cause of action sounds in tort. These need not be separately considered. They are all answered by the holding that the action sounds in contract.

The order appealed from is affirmed.

Rehearing denied.