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


Civ. 16522.

Decided: November 24, 1948

Pauline Nightingale and Edward M. Belasco, both of Los Angeles, for appellants. Sanford I. Carter and Philip N. Krasne, both of Beverly Hills, for respondent. Gang, Kopp & Tyre, of Los Angeles, for James L. Saphier Agency.

Appeal from a judgment directing the issuance of a peremptory writ of mandate compelling appellants to sustain respondent's demurrer to the application of James L. Saphier before appellants for the purpose of adjusting Saphier's claims against respondent.

In May, 1942, Henry Garson, a script writer, entered into a five-year written agreement with James L. Saphier, doing business under the name of James L. Saphier Agency, whereby the latter agreed to provide employment for Garson in consideration of 10 per cent of his earnings. On August 13, 1945, the parties substituted for this contract a settlement agreement whereby the writer was to pay Saphier five per cent of his gross income for the remainder of the term of the original contract with the exception of the earnings from his existing engagements. On December 1, 1945, the parties made an oral agreement under which the agency subsequently procured employment for the writer who paid the agency 10 per cent of his earnings until September 25, 1946. On October 12, Garson discharged the agency. In August, 1947, Saphier petitioned the Division of Labor Law Enforcement for the arbitration of his rights against the writer pursuant to section 1647 of the Labor Code.*

Saphier's petition to appellants alleged two causes of action. The first, founded on the oral agreement, sought 10 per cent of the writer's receipts after September 25, 1946, as a result of employment obtained for him by the agency. The second count alleged that in the event of a denial of the first count he should receive from respondent five per cent of the latter's receipts ‘from all branches of the entertainment industry,’ after September 25, 1946. Such claim was based upon the original contract of 1942 as amended by the writing of August 13, 1945.

Garson demurred to each count of the agent's petition presented to appellants on the grounds (1) that the Labor Commissioner had no jurisdiction over either cause of action; (2) that neither count contained facts sufficient to state a cause of action. The demurrer was overruled by the commissioner, and the matter was set for hearing. The writer then obtained from the superior court an alternative writ of mandate ordering the commissioner to sustain the artist's demurrer and to grant the motion to dismiss or to appear at a specified time and show cause why he had not done so. After trial of the issues raised by such petition the court granted the peremptory writ directing appellants to sustain the demurrer and to dismiss the application.

This court is to determine whether (1) an artist's agent under section 1647, supra, may apply to the labor commissioner for an arbitration of his claim for commissions earned after the termination of the agency agreement; (2) or may apply to the commissioner for an arbitration of his claim for damages suffered by reason of an alleged unjust discharge.

Appellants contend that grave discrepancies have crept into the law as a result of prior decisions; that unnecessary technical distinctions have been engrafted upon section 1647 by the courts, thereby making the administration of the Private Employment Agency law completely unwieldy and unworkable. They urge, therefore, a reconsideration by this court of prior appellate decisions and the pronouncement of a rule for the enforcement of agency contracts, a rule that is not obscure, technical or expensive, but simple and expeditious. Conceding, arguendo, that the distinctions so engrafted upon the statute are unnecessarily technical as contended by appellants, the fact remains that the engrafted branches are still flourishing and now constitute the law whereby controversies arising under section 1647 and kindred sections of the Labor Code must be determined.

In order to avoid confusion that might arise from references to statutes in the decisions, it is here noted that prior to the codification of the labor laws in 1937 the employment agency law was enacted in 1913. Stats.1913, ch. 282. Section 19 thereof was so amended in 1923 as to include the same substance as now found in section 1647, supra.

Section 19 of the original act was held valid in Collier & Wallis, Ltd. v. Astor, 1937, 9 Cal.2d 202, 70 P.2d 171, 173, wherein the judgment of the superior court in an action by an agency to recover commissions was reversed for the reason that ‘statutes regulating employment agencies fall within the police power of the state. * * * the determination of the labor commissioner upon matters submitted to him is in no sense final or binding upon the parties as an adjudication of their rights. * * * The requirement [for arbitration] in question is simply an administrative measure, due to the peculiar and unusual nature of the business carried on by private employment agencies.’

In view of such holding section 1647 might reasonably have been construed as a legislative mandate that all ‘matters in dispute’ arising under this chapter Ch. 1, Div. 2, Part 6, Labor Code are to be first referred to the labor commissioner for arbitration. But such was not the conclusion reached by this court in Friedlander v. Stanley Productions, Inc., 24 Cal.App.2d 677, 76 P.2d 145, 146. A hearing on such decision having been denied by the Supreme Court, it is properly deemed to be the prevailing expression of the law concerning the procedure of claimants under Chapter 1. Supra. Having employed the Stanley Productions in January, 1936, to be his agent for seven years in consideration of ten per cent of all moneys received by plaintiff, the latter, pursuant to a termination clause of his contract with the agency, terminated the agreement four months after its date. The defendant having asserted commissions to be due him, Friedlander filed his action for declaratory relief with reference to the contract. The court determined that the agency had been fairly discharged and was therefore entitled to no damages; but upon finding $150 to be due as a commissions on the artist's earnings, prior to the discharge, judgment in that sum was awarded the defendant. On appeal the agency contended that the superior court had no jurisdiction of the cause since it had not been first referred to the labor commissioner as required by the holding of Collier & Wallis v. Astor, supra. Such contention was rejected upon the hypothesis that the Astor case ‘was tried and decided upon the assumption by all parties that the contract of employment was still in force and effect, and it does not appear that the nonexistence of the contract or its termination was involved in any way.’ The implications of the Friedlander decision are: (1) Jurisdiction of an action for damages arising under chapter 1, supra, by an agency for damages caused by an unjust discharge by his artist client is vested in the superior court without the necessity of a prior reference of such dispute to the labor commissioner; (2) in an action in the superior court for declaratory relief upon the termination of an agreement under chapter 1, supra, by the artist, he may be adjudged to pay the agency any commissions earned prior to the discharge without a previous arbitration by the commissioner; (3) an agency after discharge may sue the artist in the superior court for damages suffered by reason of the discharge without first having submitted the controversy to the commissioner.

If the foregoing implications are a fair summary of the holdings of the Friedlander decision, it established that the proper interpretation of section 1647 warrants the superior court's originally entertaining an action for declaratory relief or for damages by either party when the contract of employment has been terminated.

Such construction of the statute was followed by this court (Division 3) in Abraham Lehr, Inc. v. Cortez, 1943, 57 Cal.App.2d 973, 135 P.2d 684, 685. The corporate plaintiff having been employed by Cortez to be his sole representative for seven years was ‘without cause discharged’ after seven months. It then sued in the superior court for commissions on the artist's earnings prior to the termination of the contract (count 1); and for damages by reason of an unwarranted discharge. (count 2). Judgment was awarded plaintiff on both counts. On appeal that part of the judgment for commissions on the artist's earnings prior to discharge was reversed, the court holding that under the Astor case recovery of such commissions in the superior court cannot be allowed without a prior submission of the cause to the labor commissioner. But as to the second count, on the authority of the Friedlander decision, the court held that in a situation where a valid contract has been repudiated, the repudiatee may treat the repudiation as a termination of the contract for all purposes of performance and sue for the profits he would have enjoyed upon its full performance. Upon his election so to treat the repudiation on principle authority, the court held that, ‘the rights of the parties are to be regarded as then culminating, and the contractual relation ceases to exist, except for the purpose of maintaining the action for the recovery of damages.’ King Features Syndicate v. K M T R Radio Corp., 29 Cal.App.2d 247, 249, 84 P.2d 322, 323. The Lehr decision following in part Friedlander v. Stanley Productions, Inc., supra, is a clear holding against the contention of appellants, and is conclusive upon this court. Eisenberg v. Superior Court, 193 Cal. 575, 578, 226 P. 617; Masonic Mines Association v. Superior Court, 136 Cal.App. 298, 300, 28 P.2d 691; Bridges v. Fisk, 53 Cal.App. 117, 122, 200 P. 71.

The judgment is affirmed.

MOORE, Presiding Justice.

McCOMB and WILSON, JJ., concur.