Carrell W. BOWYER, etc., Plaintiff and Appellant, v. James BURGESS et al., Defendants, Andrew Waliga and Theresa Waliga, Defendants and Respondents.*
Plaintiff brought action against the defendant Burgess and defendants Waliga to recover the sum of $5,103.92. The complaint was in the form of common counts. The answer of the defendants was a general denial, and in addition thereto they alleged that a written contract signed by the defendants was void and unenforceable for the reason that it was given in consideration of the agreement of the plaintiff not to criminally prosecute the defendant James Burgess. A judgment was entered in favor of the defendants Waliga and against plaintiff, from which plaintiff appeals.
The facts involved are that the plaintiff was operating a business under the fictitious name of Bastanchury Water Company for the retail of bottled water in Fullerton, California. The defendant James Burgess was a route salesman. In April, 1956, the plaintiff discovered that Burgess was short in his accounts. There followed transactions between plaintiff and defendant Andrew Waliga, who is a brother-in-law of Burgess, which resulted in the execution and delivery to plaintiff of the following document:
‘Fullerton, Calif. April 21, 1956
‘It has been proven and is acknowledged by the undersigned that James Burgess has been for all of his employment period with Bastanchury Water Co. withholding for his own use certain funds which were the property of the company.
‘Subject to further audit, the exact amount is unknown but is acknowledged that the sum may be between $200.00 and $5000.00. It is desired by Burgess and his relatives that no legal prosecution be instituted to which the Bastanchury Co. agrees, subject to complete restitution immediately upon determination of the correct amount. Method and manner of payment to be determined by the Bastanchury Co.
‘Pending settlement of this account, Burgess agrees that he will not change residence and that he and his wife agree to guarantee payment of the money as determined by pledging their available cash plus equities in two or more residential properties, automobile, and any and all other assets. They further agree not to dispose of or involve in any way any of their assets.
‘/s/ James Burgess
‘/s/ Rose Burgess
‘Because of our desire to avoid prosecution of said Burgess, we guarantee availability of Burgess and also payment of this obligation.
‘/s/ Andrew Waliga
‘/s/ Theresa Waliga
‘Acknowledge for Bastanchury Water Company
‘/s/ Carrell Bowyer’.
Action was later brought and issue was taken by defendants Waliga. Mr. Burgess was then out of the state. A trial was had as to the defendant Waliga alone, resulting in a judgment in his favor and against the plaintiff. The plaintiff claims that there is no substantial evidence to support some of the findings and that the findings are insufficient as a matter of law to support the judgment in favor of the defendant. The judgment was based upon the proposition that the written instrument on its face was one which was void because its consideration was the agreement not to prosecute defendant Burgess for the commission of a felony. The controlling question upon this appeal is whether such defense was properly established.
By the provisions of section 153 of the Penal Code it is a crime to enter into an agreement for the purpose of compounding a felony. The section provides that ‘Every person who, having knowledge of the actual commission of a crime, takes money * * * or promise thereof, upon any agreement or understanding to compound or conceal such crime, * * * is punishable as follows: * * *’. It follows, therefore, that a contract entered into for such unlawful purpose is contrary to public policy and therefore void. See Morrill v. Nightingale, 93 Cal. 452, 28 P. 1068.
There was a conflict in the evidence as to the purpose of and the consideration for the document in question. The plaintiff claimed that there was no discussion concerning criminal prosecution and that he had no intent to bring about the arrest of Burgess, and no thought other than to bring civil action against him. He denied making threats. There is in the record, however, ample evidence to justify the finding that the ‘legal prosecution’ referred to in the contract had reference to a criminal prosecution. The defendant Waliga claimed that the plaintiff stated that a criminal prosecution would follow unless the instrument was signed. There is evidence sufficient to support the finding of the trial court that the consideration for the signature of defendants Waliga, whereby they guaranteed the debt of Burgess, was the agreement not to prosecute.
This finding is not, however, conclusive of the questions involved upon this appeal. There appears to have been some confusion concerning the rules governing the defense of duress and the defense of illegality of a contract because its consideration was compunding a felony. The defense of duress or menace is directed to whether the parties voluntarily entered into the contract. The invalidity of a contract given in consideration of compounding a felony arises from the illegality of the entire proceeding as being against public policy. In order that duress shall be a defense to a contract it must have been exercised upon the defendant or party signing the agreement, or upon the husband or wife or ancestor or descendant of the parties signing. See Civil Code, §§ 1569, 1570; Shasta Water Co. v. Croke, 128 Cal.App.2d 760, 276 P.2d 88. Duress or menace practiced upon the daughter of the party sought to be bound will therefore constitute a defense. Colby v. Title Ins. & Trust Co., 160 Cal. 632, 117 P. 913, 35 L.R.A.,N.S., 813.
In the case at bar the defendant Waliga was not of the relationship which entitles him to assert as a defense duress or menace practiced upon the person primarily liable. The undisputed fact appears to be that there was a shortage in the accounts of Mr. Burgess. That fact was discussed at the time of the execution of the contract and therefore, and was recognized by everyone concerned. That Burgess was indebted to the plaintiff was, of course, beyond controversy. Mr. and Mrs. Waliga, however, were not liable at all to the plaintiff and no duress or menace in a legal sense was exercised as against them. It is the general rule that duress exercised on the principal ordinarily will not avoid the obligation of a surety, unless the surety at the time of executing the contract was ignorant of such duress. 72 C.J.S. Principal and Surety § 17, p. 523.
If it be determined, therefore, that the contract was invalid as to defendants Waliga that invalidity must arise from a finding that it was contrary to public policy for the reason that it was given in consideration of compounding a felony. The appellant asserts that the judgment is contrary to law in that it is not supported by either evidence or findings to bring it within the rule. Appellant's attack upon the judgment arises from the fact that there is no finding to the effect that Burgess was guilty of a crime. This contention is well taken.
It is the general rule that, in order to establish such illegality where no criminal prosecution is pending, the actual commission of the crime alleged to have been compounded must be shown.
‘The reason is that if no criminal charge is actually pending for trial or prosecution, the public interest is, not that there should be a charge in any event, but only in case a crime has been actually committed; and proof, therefore, that the crime had been committed lies at the basis of the charge of illegality.’ 17 C.J.S. Contracts, § 228, p. 602. The rule thus stated is recognized in California in Woodham v. Allen, 130 Cal. 194, 62 P. 398; Hutchinson v. Hutchinson, 48 Cal.App.2d 12, 119 P.2d 214.
It appears to have been assumed by the trial court that the shortage in the accounts of Mr. Burgess was acknowledged by everyone and that, therefore, he was chargeable with the commission of a crime. That does not necessarily follow. Although it may be true that the shortage arose from embezzlement, it is entirely possible that a shortage might occur under circumstances where no criminal act was involved. Where, therefore, there was pending no criminal prosecution the defense of illegality would not be established in the absence of proof and finding that a crime had been committed. It follows, therefore, that the finding and judgment that the instrument sued upon was contrary to public policy and void is not supported by substantial evidence, and there being no finding of such fact the judgment is not supported as a matter of law.
MONROE, Justice pro tem.
GRIFFIN, P. J., and SHEPARD, J., concur.