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


Civ. 15164.

Decided: March 24, 1953

Robert H. Gerdes, San Francisco, Campbell. Hayes & Custer, San Jose, W. R. Dunn, Burlingame, of counsel, for appellant. James F. Boccardo, San Jose, Edward J. Niland, Santa Clara, of counsel, for respondent.

The plaintiff recovered a judgment against defendant pursuant to a jury verdict. The action was based upon breach of contract. The contract was alleged to be ‘an oral and written contract, whereby defendant agreed to furnish to plaintiff the necessary power for the operation of plaintiff's fish hatchery, and further agreed that in the event it was necessary to suspend temporarily the delivery of electric energy, said defendant would give a reasonable notice to plaintiff.’ It was further alleged that on July 4, 1948 ‘defendant without warning to plaintiff did cause an interruption in the supply of electrical power to plaintiff's fish hatchery’ thereby causing the death of 78,000 trout for lack of fresh water.

The evidence showed that about midnight the delivery of power to plaintiff's fish hatchery was interrupted by a short circuit in a piece of equipment on defendant's power line, that plaintiff was not notified of this by defendant, that the diffculty was not located and the supply of power not resumed until about 5 a. m. and that the fish died as a result of the lack of fresh water which was pumped into the tanks in which they were kept by an electric motor operated by the current supplied by defendant.

The plaintiff testified that when he made the first arrangement with an employee of defendant to purchase power from defendant he told this employee that the raising of trout was a hazardous business. ‘He said, ‘Yes, we understand.’ He said, ‘You couldn't very well leave 100,000 trout you propose to get without water.’ I said, ‘That is exactly what I want to find out, and I want to know if you people have a man here, or service, 24 hours a day, whereby I could receive notice in the event that there is to be a suspension of power’, and he said, ‘Now, let me see a minute’, and conferred with somebody across the lobby and came back and said, ‘We can take care of that for you.’ He said, ‘Now that is all right.’ I said, ‘I want to be sure. Otherwise I will put in a gasoline pump.’ He said, ‘That is all right.”

Later plaintiff testified of this same conversation: ‘I was assured they would notify me of any suspension of power.’

A written contract with defendant was introduced, executed in 1948 when plaintiff installed a larger motor, which expressly incorporated by reference ‘the applicable rules and regulations duly and regularly established * * * by or under authority of law and on file with the Railroad Commission of California.’ Rule and Regulation No. 14 of the Public Utilities Commission (the parties make no point of the designation ‘Railroad Commission’ in the contract) thus made a part of the written contract reads as follows:

‘Shortage of Supply and Interruption of Delivery

‘The Company will exercise reasonable diligence and care to furnish and deliver a continuous and sufficient supply of electric energy to the customer, but does not guarantee continuity or sufficiency of supply. The Company will not be liable for interruption or shortage or insufficiency of supply, or any loss or damage of any kind or character occasioned thereby, if same is caused by inevitable accident, act of God, fire, strikes, riots, war, or any other cause except that arising from its failure to exercise reasonable diligence.

‘The Company, whenever it shall find it necessary for the purpose of making repairs or improvements to its system, will have the right to suspend temporarily the delivery of electric energy, but in all such cases, as reasonable notice thereof as circumstances will permit, will be given to the customers, and the making of such repairs or improvements will be prosecuted as rapidly as may be practicable, and, if practicable, at such times as will cause the least inconvenience to the customers.’

It will be seen that this Rule, thus made a part of the written contract, covers the duties of the defendant in case of all interruptions of the supply of electrical energy. This being so that portion of the parol evidence rule as applied to integrated written contracts which prohibits recovery on a collateral oral agreement upon a matter expressly covered by the written contract is applicable. Kunz v. Anglo & London Paris Nat. Bank, 214 Cal. 341, 346–347, 5 P.2d 417; Pacific States Securities Co. v. Steiner, 192 Cal. 376, 220 P. 304; Heffner v. Gross, 179 Cal. 738, 742, 178 P. 860; United Iron Works v. Outer Harbor, etc., Co., 168 Cal. 81, 84–85, 141 P. 917; Germain Fruit Co. v. J. K. Armsby Co., 153 Cal. 585, 594, 96 P. 319. There is a recognized exception to this rule that a collateral oral agreement may be proved as to a matter outside of the terms of the written contract and upon which it is silent. Crumley v. Walter M. Ballard Corp., 100 Cal.App.2d 698, 703, 224 P.2d 455. This exception can have no operation in this case, because the contract itself through Rule 14 makes provision for the very contingency which is the basis of the cause of action.

The court instructed the jury that if they found that this collateral oral agreement was made and was breached they should find for plaintiff. This was clearly error.

There is a theory upon which plaintiff might have recovered. Rule 14 above quoted imposes upon defendant a liability for interruption of supply ‘or any loss or damages of any kind or character occasioned thereby, if same is caused by * * * its failure to exercise reasonable diligence.’ Defendant would limit the reference of ‘same’ to ‘interruption etc. of supply’. Naturally construed it refers also to ‘loss or damage’. If in the exercise of reasonable diligence, knowing what it did, defendant should under its written contract have notified plaintiff of the interruption of service and the loss or damage to plaintiff resulted from its failure to do so plaintiff would be entitled to recover for the breach of this contractual duty.

Defendant argues that the only provision for notice is in the second paragraph of Rule 14, that is where it becomes necessary to suspend service for repairs or improvements. The only express provision for notice is in that paragraph, but the duty to use reasonable diligence to prevent loss or damage from other interruptions might carry with it the duty of giving notice as we have indicated. The jury was instructed on this theory, but since they were also instructed on the theory of a binding oral agreement to give notice absolutely we cannot tell on which theory the jury acted. The error in such a situation is prejudicial. Starr v. Los Angeles Ry. Corp., 187 Cal. 270, 280, 201 P. 599; Sebrell v. Los Angeles Ry. Corp., 31 Cal.2d 813, 817, 192 P.2d 898; Rackson v. Benioff, 111 Cal.App.2d 124, 129, 244 P.2d 9.

In construing Rule 14 to determine whether or not the contractual duty to use ‘reasonable diligence’ to prevent ‘loss or damage’ from a suspension or interruption of power would include the duty to give notice of such suspension or interruption to plaintiff evidence of the prior oral negotiations of the parties would be relevant to acquaint the jury with the facts known to the defendant which would bear on the question whether in view of those facts the exercise of reasonable diligence would require the giving of such notice. We are further of the opinion that the contractual duty assumed by defendant to ‘exercise reasonable diligence’ is sufficiently uncertain and indefinite to permit such evidence in aid of the construction of that language. Decter v. Stevenson Properties, Inc., 39 Cal.2d 407, 416, 247 P.2d 11. ‘This rule of evidence is invoked and employed only in cases where upon the face of the contract itself there is doubt and the evidence is used to dispel that doubt, not by showing that the parties meant something other than what they said, but by showing what they meant by what they said.’ United Iron Works v. Outer Harbor, etc., Co., supra, 168 Cal. at page 84, 141 P. at page 920.

Plaintiff's theory of estoppel to deny the oral contract, Hunter v. Sparling, 87 Cal.App.2d 711, 197 P.2d 807, was neither pleaded nor submitted to the jury and cannot avail him on appeal.

Since plaintiff must recover, if at all, solely on the written contract the complaint must be amended in the event of a second trial. We need not therefore notice defendant's attacks on the complaint as drawn nor the claim of variance. Also since plaintiff is limited to the written contract embodying Rule 14 we need not notice the question of discrimination among customers argued by defendant as invalidating the collateral oral agreement since Rule 14 applies to all customers.

The judgment is reversed with directions to the trial court to permit plaintiff to amend his complaint if he so requests.

DOOLING, Justice.

NOURSE, P. J., and GOODELL, J., concur.

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