BROVELLI v. Stanley Mosk, Attorney General of the State of California, Real Party In Interest.*

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District Court of Appeal, Second District, Division 3, California.

Edmund F. BROVELLI, Donald O. McCall, E. A. Peterson, John R. Anderson, and Rocklite Products, a California Corporation, Petitioners, v. SUPERIOR COURT of the State of California, IN AND FOR the COUNTY OF LOS ANGELES and Gordon L. Files, Judge of Sald Court, Respondents, Stanley Mosk, Attorney General of the State of California, Real Party In Interest.*

Civ. 25304.

Decided: March 31, 1961

William T. Selby and Glenn C. Garman, Ventura, for petitioners. Stanley Mosk, Atty. Gen., William C. Dixon, Special Asst. Atty. Gen., Miles J. Rubin, George J. Roth, Vincent W. Thorpe and Otto J. Hetzel, Deputy Attys. Gen., for real party in interest.

We have under review here an order of the respondent court adjudging each of the petitioners in contempt of an order of that court and sentencing the individual petitioners to jail until they require the corporate petitioner to comply with the order, and sentencing the corporate petitioner to a fine.

The order of the respondent court with which petitioners are charged with having failed to comply, is one which ordered the corporate petitioner, hereinafter called ‘Rocklite’ to appear before the attorney general of this state at his offices in Los Angeles and produce there certain documents and records set forth in a subpoena duces tecum issued by a deputy of the attorney general, and which by its terms required the production of said documents before the attorney general at the place above stated.

The record certified to us discloses the following: Under date of October 19, 1960, the attorney general executed a statement entitled ‘Authority to Conduct Investigations and to Hold Hearings in Connection Therewith.’ By the terms of this statement he authorized his special assistant and three of his deputies to conduct an investigation into the concrete block industry and to hold such hearings in connection therewith as those persons deemed necessary. It further stated that the investigation concerned matters ‘relating to subjects under the jurisdiction of the Department of Justice and the office of the Attorney General.’ It contained no other specification of the subject matter of scope of the investigation. On December 14, one of the deputies named in the statement of the attorney general issued what purported to be a subpoena duces tecum. This document was entitled ‘In the Matter of the Investigation of The Concrete Block Industry.’ It contained no reference to the statement of the attorney general nor any statement or specification whatsoever as to the purpose, scope or extent of the investigation or of the authority of the deputy signing the subpoena to issue it. It required, under penalty of contempt proceedings, that Rocklite produce before the attorney general at the office at Los Angeles the originals or copies of 10 classes of books and records. It was limited in time to documents for the period commencing September 1, 1959, to the date of the service of the subpoena. The first class was all price lists issued as to concrete blocks sold or offered; class 2: all invoices, checks or other memoranda which relate in any manner to the printing or duplicating of price lists; class 3: all cost analyses, work sheets or other written documentary material used in computing the price lists; class 4: all purchase orders, invoices or other written material indicating the purchase of concrete blocks from other manufacturers; class 5: any and all written material indicating the delivery of concrete blocks purchased from other manufacturers; class 6: all checks issued to Cal-Lite Block Company or any other manufacturer of concrete blocks together with any written records showing the amount of such checks and the purpose for which they were issued; class 7: all correspondence or written memoranda of communications including telephone conversations between officers, directors or employees of Rocklite in relation to prices charged or to be charged by Rocklite or any other manufacturer of concrete blocks; class 8: all correspondence or written memoranda of communications between officers, directors or employees of Rocklite and any other manufacturer concerning prices charged or to be charged for concrete blocks; class 9: all invoices, memoranda or other written material that show the sale of concrete blocks at prices other than those set forth in the price lists published by Rocklite; class 10: all invoices, memoranda or other written material relative to the sale of concrete blocks delivered to the purchaser at prices other than set forth in the price lists. This subpoena was served upon one Fitzpatrick who was the ‘general sales manager’ of Rocklite and whose offices were in the county of Los Angeles.1 Rocklite did not respond to this subpoena. Thereupon the attorney general, through the deputies designated by him to investigate the concrete block industry, filed his petition in the respondent court to compel compliance and obedience by Rocklite to the subpoena ‘in Furtherance of an Investigation Authorized by the Attorney General of California.’ This petition was entitled ‘In the Matter of the Investigation of Restraints of Trade Including Unfair Trade Practices in the Concrete Block Industry.’

Upon the filing of this petition the respondent court issued its order to Rocklite requiring it to appear and show cause before the court on the 4th of January, 1961, why it should not be required to appear before the attorney general and produce the records described in the subpoena. This order to show cause together with the petition therefor were served upon Mr. Fitzpatrick at Los Angeles. Rocklite did not appear in response to said order to show cause.

The respondent court on January 4, 1961, issued its order requiring Rocklite to appear before the attorney general and produce the documents described in the subpoena in accordance with the terms thereof. This order was served upon Mr. Mullins, manager of the Rocklite office at La Puente, Los Angeles County. Rocklite did not comply with the order made by the court. The deputy attorney general then filed in respondent court his affidavit re contempt. This affidavit stated the authority of the attorney general to enforce the California anti-trust laws; that he had instituted an investigation of the concrete block industry and had authorized the affiant and an assistant and other deputies of the attorney general to make the investigation; that Rocklite was a California corporation engaged in the manufacture, sale and distribution of concrete blocks; that affiant had issued the subpoena duces tecum; that the documentary materials described in the subpoena were material to the investigation in that they indicated the prices charged by Rocklite and the manner in which Rocklite complied its prices and the business relationship between Rocklite and its competitors. It further alleged service of the subpoena upon Mr. Fitzpatrick as general sales manager of Rocklite and that Rocklite had failed to respond to the subpoena. It alleged the issuance by the respondent court of the order of January 4, 1961, requiring Rocklite to produce the documents described in the subpoena duces tecum before the attorney general and alleged that this order had been served upon Mullins, the office manager of Rocklite at La Puente but that Rocklite had failed to comply with the order. It alleged on information and belief that petitioner Brovelli was president, petitioner McCall, vice president, petitioner Peterson, vice president and petitioner Anderson secretary-treasurer of Rocklite and that each had the power to produce or direct the production of the documents described in the order and that each of them had knowledge of the order.

Respondent court then issued its order to show cause directed to Rocklite and the individual petitioners requiring them to show cause why they should not be held in contempt of the order of the court directing Rocklite ot produce the documents described in the subpoena.

On the return date stated in the order to show cause in re contempt, petitioners appeared by their counsel who objected to the taking of any evidence on the grounds that the affidavit on which the contempt proceedings were based did not state facts sufficient to state a contempt and also moved for a continuance of three weeks in order to prepare a defense. The court overruled the objection and denied the continuance.

The attorney general then called Mr. Fitzpatrick who testified in substance that he had been employed by Rocklite for five years; that his offices were in the City of Industry, Los Angeles county; that he was the general sales manager for Rocklite and that his duties were to produce sales, to direct the salesmen, seven in number, and the office personnel at La Puente, two in number including Mr. Mullins; that he had been served with the subpoena duces tecum and that he had mailed it to Mr. Selby, the attorney for Rocklite; that he was instructed to do so by Mr. Peterson who is the general manager and vice president of Rocklite; that he did not have the corporation minutes book, the contracts of employment between Rocklite and its officers or the by-laws of Rocklite; that at the time of service upom him of the subpoena he had in his possession the records described in class 1 of the subpoena, part of the records described in classes 2, 5, 7 and 9; that the material in his possession described in class 1 was a price list issued generally to the trade; that under class 2 he had certain purchase orders or memoranda to the printers for printing the price lists; that he had delivery sheets or bills of lading for goods handled through the Los Angeles office of Rocklite; that the Los Angeles office of Rocklite was not their main office for the maintenance of records; that an office was maintained at their main plant in Ventura and that records are also kept at Napa; that the petitioners Brovelli, McCall, Peterson and Anderson were respectively the president, vice presidents and secretary-treasurer of Rocklite; that none of them resided in Los Angeles county or within 50 miles of the attorney general's office; that petitioner Peterson was the general manager as well as vice president of Rocklite. That at the time of the service of the subpoena on him by the deputy attorney general, he asked Mr. Rubin what the accusation was and Mr. Rubin replied there was no accusation but that it was an investigation of the concrete block industry generally regarding restraints of trade and unfair trade practices; that at the instruction of Mr. Selby, counsel for Rocklite, he mailed the subpoena to Mr. Peterson at Ventura. That he received the order of January 4th from Mr. Mullins and at the telephonic instruction of Mr. Peterson, mailed it to Mr. Selby.

Mr. Mullins was called by the attorney general to testify and he stated he was the office manager for Rocklite at its office in the City of Industry (La Puente); that he received the order of the court which required Rocklite to produce the documents in question on January 4th and that he turned it over to Mr. Fitzpatrick but that he had been told he had no authority to accept service for any subpoena or other legal documents; that he was told this by Mr. Fitzpatrick; that he told the person who served him with the order that he had no authority to accept it.

None of the petitions, orders to show cause or affidavits hereinbefore referred to were offered or received in evidence at the contempt hearing. The only documentary evidence received, relevant to the matters before us, was a copy of the subpoena served upon Mr. Fitzpatrick.

The petitioners did not offer any evidence and upon the close of the hearing the court made and entered written findings of fact by which it found that Rocklite was a corporation doing business in the state of California and county of Los Angeles, with a place of business located in the county of Los Angeles; that petitioner Brovelli was president, petitioner McCall, vice president, petitioner Peterson, vice president and petitioner Anderson, secretary-treasurer; that they were in charge of the management of the affairs of Rocklite and that each had the power and ability to produce or direct the employees of Rocklite to produce the documents set forth in the subpoena; that each had knowledge prior to January 11, 1961, (the date fixed for the production of the documents described in the subpoena by the court's order of January 4th) of the issuance of the subpoena duces tecum and of the order of the court ordering the production of the documents in accordance with the terms of the subpoena; that Fitzpatrick and Mullins were each a general manager of Rocklite within the meaning of section 411, Code of Civil Procedure, and that the subpoena issued by the deputy attorney general and the order to show cause of December 20, 1960, were duly served upon Rocklite by serving Fitzpatrick and that the order of the court dated January 4, 1961, requring the production of the documents specified in the subpoena was duly served upon Rocklite by service upon Charles Mullins, and it decreed that petitioners and each of them were guilty of contempt, fined Rocklite the sum of $500 and stayed execution upon judgment until February 8, 1961; it ordered that the individual petitioners be confined in the county jail until Rocklite Products appeared before the attorney general at his office in Los Angeles county and produced the documents described in the subpoena duces tecum. It ordered a warrant of commitment to issue and stayed execution of the warrant until February 8th.

We have reached the conclusion, for the reasons hereinafter set forth, that the judgment of contempt must be annulled. Proceedings to punish for contempt are stricti juris, quasi criminal in character and the record supporting a judgment of contempt must show upon its face all the facts upon which the court's jurisiction and power to sentence for contempt depend and no intendments or presumptions may be indulged in to uphold the adjudication of contempt. Batchelder v. Moore, 42 Cal. 412, at pages 414–415; Schwarz v. Superior Court, 111 Cal. 106, at page 112, 43 P. 580, at page 582; Lapique v. Superior Court, 68 Cal.App. 407, 411, 229 P. 1010; Hotaling v. Superior Court, 191 Cal. 501, at page 506, 217 P. 73, at page 75, 29 A.L.R. 127. In order that a party, whether a corporation or an individual, may be held in contempt for failure to obey a subpoena duces tecum or an order of the court enforcing that subpoena, the affidavit upon which the order to show cause re contempt is founded and the evidence received at the trial must show a valid service of the process upon the person required to produce the documents described in the subpoena.2

There is no statute in this state expressly providing for the service of a subpoena, or an order of the court enforcing it, upon a corporation or the manner in which said service may be made. The attorney general has, however, expressly stated to this court that such service must be made in accordance with the provisions of section 411 of the Code of Civil Procedure. He contends, however, that service of the order enforcing the subpoena upon the manager of one of the offices of the corporation, constituted service upon a general manager of the corporation within the meaning of section 411, Code of Civil Procedure. We cannot agree.

It is to be assumed that the Legislature intended the language used in the statute to have its ordinary meaning. Muscolino v. Superior Court, 172 Cal.App.2d 525, 526, 341 P.2d 773; Pacific Gas & Electric Co. v. Shasta Dam, etc., Dist., 135 Cal.App.2d 463, 468, 287 P.2d 841; 45 Cal.Jur.2d § 140, p. 647. The common meaning of the word ‘manager’ is ‘one who manages; * * *’ The common meaning of the adjective ‘general’ is ‘of or pertaining to the whole of a body, society, organization or the like; * * *’ (Italics ours.) Webster's New International Dictionary, 2d ed. Unabridged. One may be the manager of a part of the business but he may only be the general manager when he manages the whole of the business and certainly, one who has management of sales only, or a single office only, and has no control over the other business of the corporation, cannot be held to fall within the term ‘general manager’ without entirely perverting the meaning ordinarily given to the two words used. The distinction between a managing agent of a corporation and a general manager thereof is well stated in Fletcher Cyclopedia Corporations, volume 2, pages 845–846: ‘* * * a managing agent of a corporation is one who has charge and control of the company's business with the right to exercise his judgment and discretion. It is not essential that such an agent be in charge of all the company's business. It is sufficient if he has entire charge of it in a certain section, but to be a general manager he must have general management of the company. The very term is said to imply ‘a general supervision of the affairs of a corporation in all departments.’' See also Anderson, A Dictionary of Law, 1893 ed. pp. 650–651; Robert E. Lee Silver Min. Co. v. Omaha & G. Smelt. & Ref. Co., 16 Colo. 118, 26 P. 326; Kansas City v. Cullinan, 65 Kan. 68, 68 P. 1099; Stearns-Roger Mfg. Co. v. Aztec Gold Min. & Mill. Co., 14 N.M. 300, 93 P. 706; Manross v. Uncle Sam Oil Co., 88 Kan. 237, 128 P. 385, at page 387.

The history of section 411, we believe demonstrates that the Legislature did not intend to provide for service of process upon any agent of a corporation who had some managerial function, but only upon one whose functions are to manage the corporation's affairs in general. Prior to 1931, the statute provided for service upon a ‘managing agent’ and in 1930 the appellate courts of this state had occasion, in the case of Roehl v. Texas Co., 107 Cal.App. 691, 703, 291 P. 255, 260, to determine the meaning of the term ‘managing agent’ and whether it included a person holding a minor managerial position. It held: ‘We do not think that the words ‘managing agent’ appearing in section 411 of the Code of Civil Procedure, can in the case of a corporation formed under the laws of this state, * * * be confined to its ‘general manager,’ or that they mean the managing agent rather than a managing agent.' At its next session, the Legislature in 1931 amended section 411, and among other things, substituted for the words ‘managing agent’ the words ‘general manager.’ We must assume that in amending the statute the Legislature knew of the interpretation placed upon the words ‘managing agent’ by the court in Roehl v. Texas Co., and that the court had there held that one in charge of an office of a corporation was ‘a managing agent’ of that corporation and that the words ‘managing agent’ were not confined to a general manager of the corporation, and that it amended the statute for the purpose of limiting a manager upon whom service could be made to a general manager rather than a manager of a department or office, whom the court in the Roehl case had held to come within the meaning of the term ‘managing agent.’ See Clements v. T. R. Bechtel Co., 43 Cal.2d 227, 231–232, 273 P.2d 5; Oakland Pav. Co. v. Whittell Realty Co., 185 Cal. 113, 195 P. 1058; Prager v. Isreal, 15 Cal.2d 89, 98 P.2d 729.

The attorney general relies upon Cosper v. Smith & Wesson Arms Co., 53 Cal.2d 77, 346 P.2d 409 and Eclipse Fuel Engineering Co. v. Superior Court, 148 Cal.App.2d 736, 307 P.2d 739. These cases are not in point. Each of them involve foreign corporations which were not qualified to do business in this state and which had no officer or person designated as agent for the service of process in this state. In each of them the defendant was held to be doing business in this state and service of process was made upon the person through which it did its business and had its contacts within this state and in each case the court held that that person being the person through whom the foreign corporation's business was transacted in this state, was ‘the general manager in this State’ within the meaning of section 6500 of the Corporations Code.

In the matter before us the petitioners are charged with the violation of the January 4th order of the court which commanded Rocklite to produce its records before the attorney general. The only service made of this order was upon Mullins, the office manager at the Rocklite plant in Los Angeles county and the evidence received at the hearing shows that he had no other functions than to manage that office. The evidence clearly establishes that Rocklite's officers were all within the state and that petitioner Peterson was not only the vice president but the general manager of the corporation. The situation is thus entirely different from the case of foreign corporations whose only contact with the state is through an agent within the state and who in a real sense is the manager of its business within the state, for here, all of the persons designated by the statute were in this state and available for the service of process upon the corporation. To hold under these facts that an office manager of a domestic corporation is a general manager of the corporation and thus a person upon whom process may be served, would be purely judicial legislation under the guise of interpretation. Certainly, when the Legislature specified in addition to named officers of a corporation, a ‘general manager’ as one upon whom process might be served, it intended to limit the persons upon whom such process might be served and not to permit service upon any employee of the corporation who might have a limited and local managerial function.

We may point out further that in so far as the petitioners Brovelli, McCall and Anderson are concerned, there is absolutely no evidence that they had knowledge of the court's order of which they have been held in contempt, even though we should assume, which we do not, that service upon Mullins was adequate service upon the corporation.

While the conclusion we have reached, that the order under which the petitioners are held in contempt was not served upon the corporation and therefore constituted no basis for either the order for the production of the documents or the judgment of contempt, requires that the judgment of contempt be annulled, there is another matter which in our opinion also compels its annulment.

The attorney general as the head of the department of justice is authorized by section 11180 of the Government Code, to make investigations concerning all matters relating to subjects under the jurisdiction of that department and we assume for the purpose of this decision, without so deciding, that the investigation instituted by him of the concrete block industry was one within the purview of section 11180. We further assume, although we have some doubt as to the validity of the assumption,3 that a subpoena issued by the attorney general which does not show on its face or by some supporting document served with it the purpose of the investigation in relation to which it is issued has some vitality and that he may, for the purpose of the investigation, require a corporation to bring its books from any part of the state and deposit them with him.

By the provisions of section 11181 of the Government Code, the attorney general as the head of the department of justice, is empowered in connection with investigations, to inspect books and records, hear complaints, administer oaths and issue subpoenas for the attendance of witnesses and the production of documents in ‘any inquiry, investigation, hearing or proceeding pertinent or material thereto in any part of the State.’ (Emphasis ours.) In the event a subpoena issued by him requires the production of documents before him at a hearing, he may, under the provisions of sections 11186, 11187, apply to the superior court of the county ‘in which the hearing is pending’ or held for an order requiring compliance with the subpoena but he may only apply to the superior court of the county in which a hearing is being held or is pending, for such an order, and only a superior court in the county in which a hearing is being held or is pending, is given any jurisdiction, by the statute, to issue an order requiring compliance with the subpoena. The record here is devoid of any evidence that the attorney general was conducting a hearing in Los Angeles county at the time he issued the subpoena or at the time the court's order requiring compliance with that subpoena was made. All it shows is that he was investigating and in that investigation was attempting, not to inspect the books and records of Rocklite in the place of business of Rocklite, but to have them for the purposes of his investigation, deposited with him.

The statute under which the attorney general claims to act clearly by its own terms, contemplates that an investigation or inquiry may be made without a hearing but impliedly gives the attorney general the right to hold hearings; however the statute does not, by its terms, grant to the attorney general the right to enforce his subpoenas through proceedings invoking a court's power to punish for contempt except in the cases where he does exercise his implied power to hold hearing as a part of his investigatory proceedings. Certainly, if the Legislature had intended that the attorney general, without holding hearings, might enforce compliance with his subpoena, such as that issued here, by proceedings for contempt, it would not have as it did by express language, limit the court to which he could apply to one of the county in which a hearing was being held or pending but would have, as it has done in other cases (see Gov.Code, §§ 15612–15614) given him the right to apply to any court of competent jurisdiction to enforce through the contempt process, a failure to produce records pertinent to the matter under investigation. A hearing has been defined as ‘a ‘hearing’ is any oral proceedings before a tribunal.' See Davis, Admin.Law Treatise, vol. 1, p. 407. While ‘hearings' that are not judicial in character are not circumscribed by the restrictions applicable to judicial or quasi judicial adversary proceedings they do contemplate the right of a party affected to question witnesses and produce evidence. Franchise Tax Bd. v. Superior Court, 36 Cal.2d 538, at page 549, 225 P.2d 905, at page 911; see also § 11190, Gov.Code.

There is a sound reason why the Legislature should have limited the right to enforce a subpoena issued by an administrative or executive officer of the state to subpoenas issued by him for the appearance of witnesses or the production of documents at a hearing conducted by him. When a hearing is held the parties affected have a right to appear, to examine witnesses and to explain the entries in books. The hearings are public and the parties have some protection from arbitrary action by the investigating officer. On the other hand, where the officer seeks only to investigate and to examine the books and those examinations can be made at the office or place of business of the individual or corporation whose books are sought to be examined, it would seem that the Legislature might well have deemed it wise to leave the officer to his remedy to compel his right to inspect through a writ of mandate under the provisions of section 1085, Code of Civil Procedure.

There being no valid service of either the subpoena or the order of the court compelling compliance therewith and no showing of the facts which would give the respondent court jurisdiction to enforce it, the orders adjudging the petitioners in contempt are annulled.

FOOTNOTES

1.  Rocklite is a California corporation having its offices and principal place of business as Napa, California. It maintains a manufacturing plant at Ventura and one in Los Angeles County, California.

2.  In reviewing the judgment here we cannot take into consideration facts stated in any petition or affidavit not received in evidence at the trial of the contempt order. Collins v. Superior Court, 145 Cal.App.2d 588, at pages 594–595, 302 P.2d 805, at pages 808–809; Collins v. Superior Court, 150 Cal.App.2d 354, at page 364, 310 P.2d 103, at page 109.

3.  See Watkins v. United States, 354 U.S. 178, 77 S.Ct. 1173, 1 L.Ed.2d 1273.

NOURSE, Justice pro tem.

SHINN, P. J., and FORD, J., concur.