BROCK v. FIDELITY DEPOSIT CO OF MARYLAND

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District Court of Appeal, First District, Division 2, California.

BROCK, State Director of Agriculture, v. FIDELITY & DEPOSIT CO. OF MARYLAND.†

Civ. 10374.

Decided: June 07, 1937

Thomas E. Davis, of San Francisco, for appellant. U. S. Webb, Atty. Gen., and Frank English, Deputy Atty. Gen. (C. J. Carey and John Selby, both of San Francisco, of counsel), for respondent.

From a judgment in favor of the plaintiff the defendant has appealed. The plaintiff alleged, and the trial court found, the facts that follow.

The plaintiff is the Director of Agriculture of the State of California and as such is authorized to administer the provisions of chapter 860 of the Statutes of 1927 (page 1812), which is commonly known as the Produce Dealers Act of the state of California. Henry A. Bonzagni and A. G. Johns are copartners doing business under the name of Central Fruit Distributors, and as such are produce dealers within the meaning of said statute. The defendant Fidelity & Deposit Company of Maryland is engaged in issuing corporation surety bonds. Heretofore Central Fruit Distributors applied for, and was granted, a produce dealer's license. Before said license was issued, it obtained a surety bond from Fidelity & Deposit Company of Maryland in the penal sum of $5,000 running in favor of the state of California in accordance with the provisions of said statute. During the season of 1931 Central Fruit Distributors received from various consignors large quantities of farm produce to be sold on commission. In particular, under certain written contracts, it received from C. G. De Raad a large quantity of apricots––some under a guaranteed contract and some under contracts not guaranteed. For the fruit so purchased and received the Central Fruit Distributors paid $1,500 and did not pay the balance, $3,252.98. On July 28, 1933, C. G. De Raad filed a verified statement of his claim with the plaintiff. On July 29, 1933, the plaintiff made a demand in writing on Fidelity & Deposit Company for the payment of the claim, but it refused, and still refuses, to pay the same. Thereafter the said C. G. De Raad assigned his claim to Robert H. Lee. There are no other unpaid claims of consignor creditors upon said bond. In his complaint the plaintiff set forth as exhibits the license and bond. He also set forth in hæc verba the contracts to purchase. In making its findings the trial court in finding No. II made specific findings regarding said contract not necessary to be set forth herein because no point is made thereon. The trial court made findings of fact and conclusions of law that the plaintiff was entitled to judgment against Fidelity & Deposit Company of Maryland for $3,252.98 with interest from August 1, 1931, and cost.

The defendant claims that the judgment lacks evidentiary support. It states that claim in three different forms. Each one rests on allegations of facts brought into the case by the answer filed by the defendant. With many expressions having an evil connotation such as “scheme concocted,” “collusive scheme,” “mulcting security,” “fraudulently,” etc., the defendant alleged that after the 1931 season had closed C. G. De Raad filed suit in the superior court in Fresno against Central Fruit Distributors and Nash–De Camp Company; that Henry A. Bonzagni and A. G. Johns, copartners doing business as Central Fruit Distributors, were adjudged bankrupt in December, 1931; that said suit in the superior court resulted in a judgment against Nash–De Camp Company for $2,084.23; that said judgment was appealed by Nash–De Camp Company and was affirmed by the District Court of Appeal (De Raad v. Nash–De Camp Co., 23 P. (2d) 68); that by a stipulation of the parties said cause was transferred to the Supreme Court; that the latter court reversed the judgment and said suit was dismissed. Pointing to the facts just recited and using many expletives, the defendant vigorously proclaims fraud. Before answering that contention, it becomes necessary to take into consideration some findings of fact made by the court, some of which were the following: That C. G. De Raad on July 28, 1933, filed his claim with the State Director of Agriculture; that thereafter he assigned his claim to Robert H. Lee, who now holds the same as assignee for the benefit of Nash–De Camp Company to the extent of $2,453.47 and for the benefit of C. G. De Raad to the extent of any recovery beyond said sum; that Nash–De Camp Company furnished the money, $2,453.47, to purchase said assignment; that Nash–De Camp Company never paid any judgment in favor of C. G. De Raad; that it never paid C. G. De Raad directly for any of the fruit above referred to, but that it did pay Central Fruit Distributors promptly for all of the fruit; that at the time C. G. De Raad made demand upon Nash–De Camp Company there did not remain in the hands of the latter any of the proceeds of the sales of said fruit; that Nash–De Camp Company did not make any agreement to pay C. G. De Raad the judgment entered in the superior court in Fresno and never paid said judgment.

Notwithstanding the foregoing facts the defendant states: “The creditor in the present case was DeRaad. When Central Fruit Distributors failed to pay DeRaad for his fruit, he, of course, was entitled to resort to the statutory bond involved in this action. As a creditor he was therefore charged with the duty of acting in the utmost good faith toward the surety and of protecting the interest of the surety as well as his own. * * * And if the surety had paid DeRaad's claim against the Central Fruit Distributors, then, under section 2849 of the Civil Code, it would have become entitled to be subrogated to the rights of De Raad against Nash–DeCamp Company and in the judgment which he had obtained in Fresno County against that company.” Hence the entire burden of the defendant's grievance is that the Fresno judgment was allowed to be vacated. We find no merit whatever in the contention. The clear facts are that C. G. De Raad, a producer, entered into certain contracts to sell his fruit through Central Fruit Distributors; that the latter intrusted that function to Nash–De Camp Company as its agent; that the latter sold the fruit and thereafter promptly paid Central Fruit Distributors, and still later C. G. De Raad, the producer and owner, not having been paid, sought his remedy. He had paid no moneys to Nash–De Camp Company and therefore was not seeking to reclaim moneys paid. He therefore had no standing to invoke that doctrine. 2 Am. Jur.Agency, § 335; 2 C.J. 822; Bogart v. Crosby & Van Haren, 80 Cal. 195, 22 P. 84; Allen v. Globe Grain & Milling Co., 156 Cal. 286, 104 P. 305. As it is not claimed that Nash–De Camp Company departed from its contract with Central Fruit Distributors in any respect whatever, but, on the contrary, without notice of the claim of any third person, promptly paid over to Central Fruit Distributors, its principal, all moneys received, De Raad had no claim against Nash–De Camp Company unless he could make a showing under the provisions of sections 2342–2345 of the Civil Code. That, under the facts stated, he did not and could not do. After Nash–De Camp Company had paid in full to Central Fruit Distributors, the latter had no enforcible claim. 17 Cal.Jur. 634. De Raad, the creditor of Central Fruit Distributors, stood in no better position. Therefore we think it is clear that after June 25, 1931, the date on which Nash–De Camp Company made the last payment owing Central Fruit Distributors, neither the latter nor De Raad had any cause of action against said company. The defendant cites and relies on Bills v. Schliep (C.C.A.) 127 F. 103, and Union Stock Yards Nat. Bank v. Gillespie, 137 U.S. 411, 11 S.Ct. 118, 34 L. Ed. 724. It is sufficient to state that the facts in each of those cases are quite different from the facts in the instant case.

As a corollary of the foregoing proposition it follows that Nash–De Camp Company was, at all times after June 25, 1931, a free lance. There was no legal impediment preventing it from taking a direct assignment from De Raad of his claim and proceeding to enforce it in any appropriate proceeding. Instead of being guilty of fraudulent practice, the acts of Nash–De Camp Company were highly commendable and tended to place the responsibility where, under the statute, it belonged. As De Raad had no cause of action against Nash–De Camp Company, no duty rested on him to sue that company and he violated no duty owing to this defendant when he dismissed the action inadvertently commenced.

The defendant contends that the proceeds of the fruit delivered by De Raad to Central Fruit Distributors under a guaranteed contract of consignment were improperly included in the claim sued on by the Director of Agriculture. The question is not an open one in this state. It has been decided against the contention of the defendant. Moulton v. Williams Fruit Corp., 218 Cal. 106, 21 P.(2d) 936.

Finally, the defendant complains because the trial court included interest in the judgment. That complaint, as we understand the defendant, is to the effect that no principal should have been allowed and therefore no interest. But, as we have shown above, we think the trial court did not err in computing the principal and therefore did not err in computing the interest. That in cases of this kind interest is properly allowed, the rule is statutory. Const. art. 20, § 22 (see Stats.1933, p. 3159).

The judgment appealed from is affirmed.

STURTEVANT, Justice.

I concur: SPENCE, J.

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