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

L. DURGIN, Plaintiff and Appellant, v. Leo I. KAPLAN, Defendant and Respondent.

Civ. 29468.

Decided: April 18, 1967

Harry A. Pines, Los Angeles, for plaintiff and appellant. Loeb & Loeb and John L. Cole, Los Angeles, for defendant and respondent.

Appeal by plaintiff from judgment entered upon a jury verdict in favor of defendant.

Plaintiff is the assignee of Ducommun Metals & Supply Company, a corporation, hereinafter referred to as Ducommun.   Defendant is a principal shareholder, officer and director of Poly Industries, Inc., a corporation, hereinafter referred to as Poly Turbo Products, Inc., a corporation, was organized sometime prior to the year 1949.   On or about March 10, 1959, the name of Turbo Products, Inc. was changed to Poly Industries, Inc.   For the sake of clarity and convenience Turbo will be referred to herein as Poly.

On May 2, 1949, Kaplan executed and delivered to Ducommun a continuing guaranty 1 to pay for the debts incurred by Poly to Ducommun in consideration of the latter extending credit to Poly.   The guaranty, by its terms, was to remain in full force and effect until a written revocation thereof was received by Ducommun.

From 1951 to 1962, Ducommun continuously sold merchandise to Poly, such sales amounting to approximately $5,000 per month.   Prior to January 31, 1963, Poly was indebted to Ducommun for merchandise sold and delivered in the aggregate amount of $11,600.20.   On March 20, 1963, the plaintiff, as assignee of Ducommun, filed suit alleging the indebtedness, the defendant's obligation under the guaranty, and sought recovery against the defendant for the full amount of the indebtedness plus interest and attorneys' fees.   After suit was filed Kaplan gave written notice of revocation of the guaranty to Ducommun.

In 1953, Poly (then Turbo) found itself in financial difficulties, being then indebted to Ducommun in the amount of approximately $10,600.   A creditors committee was arranged to run the business and Cecil A. Warnacutt, the then credit manager of Ducommun, served on such committee until 1955.   During 1955, to resolve its financial difficulties, Poly issued shares of its capital stock to its creditors subject to a voting trust, and the control of the business was turned over to the voting trustees.   This stock was issued to the creditors of Poly on the basis of the debt owed to each creditor.   Ducommon became a holder of voting trustee stock but ceased to be a stockholder in Poly when such stock was repurchased.   Both Warnacutt and Kaplan served as voting trustees until the stock was repurchased by Poly from its creditors in 1957 or 1958 and the voting trust was terminated.

Poly operated profitably between 1954 and 1959.   Being then primarily in defense work, it acquired a non-defense business known as Ador.   Poly sold and issued 200,000 shares of its capital stock to the public in June 1959.   Prior to this issue Kaplan owned between fifty and sixty percent of the issued and outstanding capital stock of Poly.   After the issue Kaplan owned thirty-five percent of such stock, and according to Kaplan, “the whole complexion of the company was changed.   The Board of Directors were then all outside people whereas prior to that they were all inside.   Q By ‘inside,’ you mean your personal associates and friends?   A That's right.”   Kaplan nevertheless continued as chairman of the board of directors and the largest stockholder of Poly.   He was president of Poly from 1950 to 1962.

After the acquisition of Ador, Poly's activity was divided approximately fifty percent in defense work and fifty percent in commercial activity.   Early in 1960 Poly again began to experience financial difficulties.   On July 18, 1963, pursuant to a petition filed by Poly in the United States District Court, a plan of arrangement, which it proposed under the provisions of Chapter XI of the national Bankruptcy Act, was approved by the bankruptcy court.   The plan, amongst other things, provided for a two for five reverse stock split of the outstanding shares of Poly, and the issuance of one share of its common stock to each creditor for each one dollar of indebtedness owing to such creditor to be in full satisfaction of the creditor's claim.   Ducommun had filed its claim in the bankruptcy court for the amount owed to it by Poly.   As a result of the plan Ducommun received a document evidencing that 11,723 presently non-transferable shares registered in its name were held in escrow subject to further order of the bankruptcy court.

Ducommun's claim in the bankruptcy proceeding was in the amount of $11,722.84.   The amount of the debt claimed to be due under the guaranty according to the complaint in this action was the sum of $11,777.34.   It was agreed in the order dispensing with pretrial conference and pretrial order (Rule 222, Rules of Superior Court) that the amount of the indebtedness prior to July 31, 1963, was the sum of $11,600.20.

Poly has been in continuous operation since 1949, its activity not having been interrupted by the bankruptcy proceeding.   There is no existing market for Poly stock.

Kaplan, as the owner of Poly stock, was permitted to express his opinion as to its fair market value at the date of trial (December 21, 1964).   The escrow receipt for the 11,723 shares of Poly stock issued to Ducommon bears the date of July 3, 1964.   Kaplan testified that in his opinion Poly stock had a present fair market value of one dollar per share.   The reasons given for such opinion were (1) that Kaplan, as well as such firms as Reynolds Aluminum, Alcoa Aluminum and Sonken–Galamba, had decided that one share of Poly stock for each one dollar of debt ‘'was an appropriate amount to give for the bills owing.  * * * When the decision was made to make a two fifty [sic] reverse split, and give the creditors stock, they attempted to evaluate it because we had a great amount of arguments as to what the value should be put on the stock, and we had this reverse split to satisfy them.”  (2) That the corporation has shown a net profit for the past seven months of $20,000, that “we have a bigger prospect for business at this particular moment than we have had in several years.”  (3) “[W]e have a subsidiary down in El Cajon which is worth far in excess of what it is listed in the books * * * and * * * we have certain engineering developments” which are not carried on the books as an asset.  (4) The corporation has hired a salesman at a salary substantially less than what he had received in his previous employment and who has an option to purchase stock in Poly at $.25 per share.  (5) The corporation has also hired an engineer and a toolmaker who have taken over developments within the company and who have a 20,000 share option to purchase stock at $.25 per share.  (6) One employee, holding an option to purchase Poly stock at $.25 per share has orally indicated a desire to exercise his option.

The 1964 annual report of Poly issued to the shareholders over the signature of Kaplan as its president, reflecting the March 31, 1964, condition of Poly and its subsidiary, contains a consolidated balance sheet and statement of earnings.   The consolidated profit and loss statement for the year ending March 31, 1964, shows net earnings of $4,013.   According to the testimony of Kaplan the net value of the assets based upon book value, as shown by the consolidated balance sheet is “negative $704,000.”

The plan of arrangement approved by the bankruptcy court provided that receivers, attorneys and other persons entitled to fees as costs of administration had the option of accepting payment in whole or in part for their services in common stock of Poly, and that if they elected to accept stock in lieu of cash, the bankruptcy court would then determine the value of the stock.

It appears further that Mr. Romans, an employee of Ducommun in its credit department since 1951, and who was in charge of the Poly account, did not talk to the defendant about the guaranty at any time after it was executed in 1949, although he had read the guaranty, was aware that it was in the safe at Ducommon's office and that there was a notation on the Poly file referring to it.   Mr. Warnacutt, the credit manager of Ducommun, never discussed the guaranty with the defendant.   Kaplan testified that after he executed the guaranty he never discussed it with anyone, and no one from Ducommun ever called him about it.   He had forgotten that he had signed it.   Credit was extended to Poly continuously for about one year after the account became past due.   This additional credit was extended to Poly after discussion was had between Mr. Romans and some of his associates and superiors.   Romans did not recall whether the guaranty was discussed at the time the decision was made to extend further credit to Poly.

The jury returned its verdict in favor of the defendant and against the plaintiff after it had been instructed in substance, amongst other things, that it should return a verdict in favor of the defendant if it found that the value of the Poly stock, issued to Ducommun as a result of the Chapter XI proceedings, had a fair market value equal to or in excess of the debt owed by Poly to Ducommun;  that under such circumstances the indebtedness for which the guaranty had been given had been paid in full.

Plaintiff urges that she was entitled to a directed verdict in her favor because there were no factual issues to be determined by the jury.   The trial court refused to give an instruction requested by the plaintiff directing a verdict in her favor.   In this connection plaintiff asserts, amongst other things, that the judgment cannot be sustained upon the defendant's fifth affirmative defense which was that the plaintiff was paid in full by acceptance of Poly stock in the bankruptcy proceedings, for the reason that the plaintiff was entitled to a judgment as a matter of law subject to subrogation rights in favor of the guarantor, and furthermore, that the evidence on value offered by the defendant cannot support the verdict.

Plaintiff also urges that certain instructions given by the trial judge were erroneous and constituted reversible error and that plaintiff did not waive the error in the giving of such instructions, and that there was irregularity in the trial proceedings which prejudiced the rights of the plaintiff.

Defendant contends that the question of value of the Poly stock was properly before the jury and that the verdict of the jury as to such value was supported by substantial evidence;  that the plaintiff, having introduced evidence and propounded instructions on the subject of the value of the stock, may not now claim that the jury should not have considered the issue;  that the change in the capital structure of Poly and Ducommun's evident lack of reliance on the guaranty, support the verdict;  that the jury was fairly and properly instructed and that the trial proceedings were fair and regular.

 The guaranty upon which plaintiff extended credit to Poly, as heretofore pointed out, was a continuing guaranty and was very broad in character.   The acceptance by Ducommon of common stock in Poly pursuant to the proposed arrangement under Chapter XI of the national Bankruptcy Act did not have the effect of releasing the guarantor.  (Bloom v. Bender, 48 Cal.2d 793, 800 et seq, 313 P.2d 568.)   As heretofore shown, the guaranty was on behalf of Turbo Products, Inc., a corporation, whose name was changed to Poly Industries, Inc., a corporation.   In June of 1959, the capital structure of Poly was changed by the sale of 200,000 shares of its capital stock to the public.   The only other change in its capital structure occurred as a result of the Chapter XI proceedings.   It has been said that where the guaranty is on behalf of one conducting his business as an individual, and who thereafter forms a corporation and continues to conduct his business under the corporate name and form, such change of identify does not release the guarantor where it is shown that the corporation is but the alter ego of the individual.  (D. N. & E. Walter & Co. v. Zuckerman, 214 Cal. 418, 6 P.2d 251, 79 A.L.R. 329.)   The weight of authority appears to be that where the principal is a corporation, a mere change in its name, without a change in its business, does not discharge the guarantor, especially where such change is participated in by the guarantor as a stockholder in the corporation, or is not opposed by him.   Apparent changes in the character of the principal not amounting to a real change of identity will not discharge the guarantor.  (38 C.J.S. Guaranty § 71, p. 1233.)   It is clear from the record before us that Kaplan was the principal stockholder in Poly and was its president for many years and chairman of its board of directors.   He was cognizant of the sale of its capital stock to the public and of its acquiring a subsidiary corporation.   Kaplan was free at all times to revoke the guaranty by notifying Ducommun in writing of such revocation.   He did not choose to revoke it, but instead permitted Ducommun to continue to advance credit to Poly, despite the changes in its capital structure.   No credit was extended by Ducommun to the subsidiary of Poly which became the basis of the claim in the Chapter XI proceedings or which formed any part of the amount sued on in the within action.   The changes in the capital structure of Poly were not such as to change the character of the principal and therefore did not have the effect of revoking the guaranty.

There is no evidence in the record to sustain the charge that Ducommun did not rely upon the guaranty.   On the contrary, the testimony shows without contradiction that the employees of Ducommun in charge of the Poly account were aware of the guaranty at all times during the period that credit was extended to Poly.

 It is obvious, of course, that a creditor who obtained a cash dividend in partial satisfaction of his claim in a bankruptcy proceeding, or under a composition, may recover only the balance from the guarantor.   If the dividend under a composition is paid in securities the creditor, it seems, has a choice:  he may retain the securities and sue the guarantor for the difference, or, to avoid the difficulties of valuation, he may recover the full amount of his claim, and the guarantor will be subrogated to the rights of the creditor in the securities.  (Union Trust Co. of Rochester v. Willsea, 275 N.Y. 164, 9 N.E.2d 820, 112 A.L.R. 1175;  Martin Furniture Co. v. Massey, 135 Tenn. 338, 186 S.W. 451;  Collier on Bankruptcy [14th ed.], § 16, pp. 1530, 1531.)   Upon payment by the guarantor of the obligation he is subrogated to the rights of the creditor as a matter of law without assignment by the creditor of the latter's rights against the principal.  (See Civ.Code § 2787;  Meyers v. Bank of America, etc. Assn., 11 Cal.2d 92, 95, 77 P.2d 1084;  Civ.Code § 2848.)

 In the case at bench Ducommun received nothing on its debt by way of money in the Chapter XI proceedings, but was, by operation of law, compelled to accept capital stock in Poly which had no market and was presently non-transferable.   Under these circumstances Ducommun had the option to retain the stock and recover the amount due under the guaranty less the value of the stock or to sue for the full amount due under the guaranty.   Under the latter option, Kaplan, the guarantor, would become subrogated to the rights of Ducommun against Poly upon his payment of the amount due under the guaranty.

Ducommun's assignee brought suit for the full amount due under the guaranty.   The claim that Ducommun had received the equivalent or in excess of $11,600.20 by stock placed in escrow in its name as the result of the Chapter XI proceedings was raised by the fifth affirmative defense of the defendant's amended answer.   Defendant demanded a jury trial.   Nothing in the statement and order dispensing with pretrial conference and pretrial order indicates that plaintiff was suing for anything less than the full amount of the guaranty.

 At the commencement of the trial plaintiff undertook to show that the stock was considered to be valueless, that nothing had been paid on the Poly account, and that Ducommun was desirous of delivering the stock to Kaplan upon his payment of the debt of the principal.2  Although plaintiff's counsel might have been more persistent in attempting to assert the plaintiff's right to exercise her option to sue for the full amount due under the guaranty and thus subrogate the guarantor to the rights of the creditor against the principal, he was not obligated to do so at the risk of incurring the displeasure of the trial judge.   Under the state of the record it appears that plaintiff endeavored to exercise her option to sue for the full amount of the guaranty, but was prevented from doing so by the objections interposed by the defendant and the court's rulings thereon and was thus subjected to the risk and difficulties of valuation of the stock.   This was not a voluntary choice of remedies on the part of plaintiff.   Where a court has made its ruling, counsel must not only submit thereto but it is his duty to accept it, and he is not required to pursue the issue.  (Pastene v. Pardini, 135 Cal. 431, 433, 67 P. 681;  People v. Diaz, 105 Cal.App.2d 690, 696, 234 P.2d 300;  Caminetti v. Pacific Mut. Life Ins. Co., 23 Cal.2d 94, 100, 142 P.2d 741;  Foster v. Keating, 120 Cal.App.2d 435, 451, 261 P.2d 529.)   It is also settled that where a party is unable to induce the court to accept his view of the law, the fact that he requests instructions in accordance with the court's rulings does not preclude him from assigning error.  (Masterson v. Pig'n Whistle Corp., 161 Cal.App.2d 323, 336, 326 P.2d 918.)   As heretofore pointed out, plaintiff requested the trial judge to direct the jury to return a verdict in her favor which request was denied.   It appears from the foregoing that plaintiff had not abandoned her theory to compel subrogation.   On her motion for a new trial she again asserted her right to recover the full amount of the debt under the guaranty and to have the guarantor subrogated to the rights of the creditor against the principal.

Plaintiff had the right to elect to sue for and recover the full amount of the debt under the guaranty, and it was error to compel her to accept the valuation of the stock as a credit against or in payment of the debt.  (See United States, for Use and Benefit of Chemetron Corp. v. George A. Fuller Co. (D.C.Mont.1965), 250 F.Supp. 649, 656–658.)

The judgment is reversed.   In view of the conclusion herein reached we deem it unnecessary to discuss other points raised in the briefs.



1.   “In consideration of your extending credit to TURBO PRODUCTS INC., 12177 Montague Street, Pacoima, California which we hereby request and with whom or in which company we are financially interested and for value received, we hereby jointly and severally guarantee the punctual payment to you at maturity of all his, its or their indebtedness together with the interest thereon as said indebtedness may bear, now, heretofore, and/or hereafter incurred or due.“Notes and other evidence or indebtedness and things of value may be received by you on account or in adjustment or as security or in settlement of said indebtedness or any portion thereof and the same (and/or the original indebtedness) may be renewed, extended, relinquished, substituted, modified, and/or enforced as you think advisable, all without notice to us or any of us, and without impairing the liability under this guaranty, and the same, and all renewals, extensions, substitutions, and/or modifications thereof are hereby expressly included hereunder until finally paid in cash.   Liens, statutory or otherwise, and security of any kind for the payment of any of said indebtedness together with interest thereon and of any renewals, extensions, substitutions or modifications thereof, may be effected, received, renewed, extended, relinquished, substituted, modified, and/or enforced, as you think advisable, all without notice to us or any of us, and without impairing the liability under this guaranty.“Procedure against said debtor or upon any lien or other security shall not be required as a precedent to enforcing this guaranty.“This guaranty may be enforced either by a single proceeding against all of us, or any proceedings against us separately, as you may deem advisable.“We hereby jointly and severally agree to pay you such reasonable costs, expenses and attorneys' fees in the agreed reasonable sum of 10% on the amount then due by the principal debtor as may be incurred by you in collecting or attempting to collect, whether by action at law or otherwise, any of he [sic] indebtedness together with interest thereon hereby guaranteed, and/or enforcing, or attempting to enforce, this guaranty, whether by action at law or otherwise.“We hereby jointly and severally waive notice of the acceptance of this guaranty, notice of sales and/or indebtedness incurred, notice of credit given and of the form thereof, and notice of default, together with demand and presentment for payment.“This guaranty is a continuing one and shall remain in full force until written revocation is received by you.   Such revocation shall only affect indebtedness thereafter incurred and shall only affect the person giving said notice.“This guaranty shall be effective and shall be deemed to be delivered to you upon the signing thereof, such signing to constitute full delivery;  and if this guaranty is signed or proposed to be signed by more than one person, nevertheless it shall be effective and shall be deemed to be fully delivered as to each of said signers immediately upon his or her signing the same.   In the event it is proposed that more than one person shall sign this guaranty, the failure of such additional person or persons to sign the same shall not affect the liability of any person or persons whose signatures are affixed or subscribed hereto, but such liability shall be absolute, fixed and unconditional upon the signing thereof, it being the intention of the undersigned person or persons hereto that concurrently with the signing of this guaranty by such person or respective persons said guaranty shall instantly be unqualifiedly and unconditionally in full force and effect as to all of its terms without any oral or other reservation, modification or collateral agreement or understanding whatsoever.“The undersigned, for themselves and each of them, and on behalf of their and each of their heirs, executors, administrators, successors and assigns, hereby waive for the period of ninety-nine years from the date hereof every defense, now, heretofore or hereafter arising of estoppel, laches or any statute of limitations to any obligations or liabilities covered by this guaranty or of the undersigned, or any of them, past, present or future, under this guaranty.   The undersigned as Guarantor expressly waives the extension of the obligation of this Guaranty arising by reason of the institution of proceedings by or against the principal under and pursuant to Chapter X or Chapter XI or any other provision of the Bankruptcy Act as it now or hereafter may exist, or by reason of any other provision of law which might extend the maturity of the obligation as to the principal;  or by reason of the provisions of any moratorium laws or statutes extending the obligation of the principal.“This guaranty shall inure to the benefit of yourself, your successors and assigns.“Leo I. Kaplan 8429 Grenoble Sunland, California.”

2.   “GEORGE ROMANS, called as a witness by and on behalf of the Plaintiff, having been first duly sworn, was examined and testified as follows:“Q. BY MR. PINES:  Are you employed by Ducommun?   A. Yes, sir.   Q. And how long have you been so employed?   A. Since 1947.   Q. What department are you in?   A. the credit department.   Q. How long have you been affiliated with the credit department at Ducommun?   A. Approximately since 1951.   Q. Since 1951.   In 1949, then, you weren't in the credit department at Ducommun?   A. No, sir.   Q. Among the many accounts that you have had assigned to you, did that include an account of Poly Industries?   A. Yes, sir.   Q. How far back have you been handling the Poly Industries account?   A. Approximately since 1951, time and again, not continuously.“MR. GOLDBERG:  I have seen it.   It is a guarantee, isn't it?“MR. PINES:  Yes.“Q. BY MR. PINES:  I hand you a document dated May 2, 1949, entitled ‘Guarantee to Ducommun Metals and Supply Company’ and purporting to have the signature of Leo I. Kaplan, and ask you whether or not that comes out of the credit department file of Ducommun or Poly Industries?   A. This is a document that did come out of the credit department file at Ducommun, Inc.  Q. Was that document in the file at the time you took over the Poly Industries account?   A. I was aware of it.   Q. And is this—“THE COURT:  You haven't answered the question.   Was that a part of the file;  do you know?“THE WITNESS:  Sir, that was in a safe.“THE COURT:  What is that?“THE WITNESS:  That was in a safe.“Q. BY MR. PINES:  Did you have any notation in the file referring to this document?   A. Yes, sir.“MR. PINES:  Do you have any objection to our introduction of this?‘'MR. GOLDBERG:  No objection.“MR. PINES:  We will offer this as Plaintiff's Exhibit A, if the Court please.“THE CLERK:  This is Defendant's 1.“MR. PINES:  Defendant's 1.“Q. BY MR. PINES:  Mr. Romans, it has been stipulated here that Poly Industries was indebted to Ducommun Metals and Supply Company in the amount of $11,600.20 as of January 31, 1963.   Have you received any payments whatsoever from Poly Industries on this account since January 31, 1963?“MR. GOLDBERG:  One moment please.   I think the question might call for a conclusion of this witness.   When you are talking about cash payments—“THE COURT:  Qualify your question.“Q. BY MR. PINES:  Have you received any money on this account?   A. On this old claim?   Q. On the account of Ducommun against Poly Industries?   A. No, sir.   Q. Reference has been made to the fact that Ducommun has received certain shares of stock in connection with this account.   Are you familiar with the receipt of 11,723 shares of Poly Industries stock in July of 1964?   A. It came to my attention.   Q. Do you have an opinion as to the value of that stock, Mr. Romans?   A. It would be an opinion and based on—Q. Do you have an opinion?   A. Yes, sir.   Q. In your opinion, what is that stock worth—“MR. GOLDBERG:  Just a moment.   If the Court please, I don't think there is a sufficient foundation.“THE COURT:  I will sustain the objection.“Q. BY MR. PINES:—in ownership?“THE COURT:  Lay your foundation.“Q. BY MR. PINES:  Are you employed by Ducommun?   A. Yes.   Q. And you are one of the credit managers of Ducommun?   A. Yes, sir.   Q. As the representative of Ducommun which owns this stock, do you have an opinion as to the total value of the stock?   A. Yes, I do.   Q. What is your opinion of value of this stock?“MR. GOLDBERG:  If the Court please, I don't see—“THE COURT:  That doesn't qualify him to give the value of them.“MR. PINES:  Ownership does under the case.“THE COURT:  You are coming in on a different situation.“MR. PINES:  The burden is on the other side but reference has been made to the receipt of payments.“THE COURT:  Lay a foundation upon which he bases it on.“Q. BY MR. PINES:  I will withdraw the question and ask you this.   Mr. Romans, are you willing to deliver these shares of stock to Mr. Kaplan upon payment of the account?“MR. GOLDBERG:  Just a moment.   Again I don't think that is relevant.“THE COURT:  You are not giving the qualifications.   As to the reasonable value of this stock, I think you ought to lay a foundation as to his qualifications.   He is not an expert in the value of the stock.   Do you withdraw your question?“MR. PINES:  Yes, I have.“Q. BY MR. PINES:  Are you willing to deliver these shares of stock to Mr. Kaplan upon payment of the stock?“MR. GOLDBERG:  I object.   I don't think it is relevant whether he is willing to deliver the shares of stock at this point.“THE COURT:  I don't see where it is compelling.   It is incompetent at this point.“Q. BY MR. PINES:  Would you be willing?   Have you made any effort to sell this stock?   A. No, sir.   Q. You have not?   A. No, sir.   Q. Do you know whether there is a market for the sale of this stock?   A. No, sir.   Q. Would you be willing to accept one cent a share for this stock?“MR. GOLDBERG:  Just a moment.   Your Honor, that question is completely incompetent and irrelevant.“THE COURT:  I will sustain the objection.“Q. BY MR. PINES:  Is this—let me show it to counsel first.“MR. GOLDBERG:  Do you want to use the photocopy?“MR. PINES:  Yes, I think I would prefer it.   Let's use this.“Q. BY MR. PINES:  I hand you Certificate No. 149 representing 11,723 shares and ask you whether you have seen this document before?   A. Yes, I have.   Q. Does it have a legend in red written across the document?   A. It does.   Q. How does it read?   A. ‘not transferable.’“MR. PINES:  May I offer this as Plaintiff's Exhibit B?“THE CLERK:  Plaintiff's 2, sir.“Q. BY MR. PINES:  Have you received any dividends as a stockholder of Poly Industries?   A. No, sir.   Q. Do you know whether any dividends have been paid to the stockholders of Poly Industries since the issuance of Certificate No. 149?   A. No, sir.   Q. Have you seen any financial statement of Poly Industries, Inc. for its operation during the past year?   A. Yes, sir.   Q. And do the assets of the company exceed its liabilities?“MR. GOLDBERG:  Just a moment.   That calls for a conclusion of this witness and obviously hearsay, your Honor.“THE COURT:  I will sustain the objection.“Q. BY MR. PINES:  I hand you a document, Mr. Romans, and ask you will you please take a look at it and see if you remember ever having seen it before?   A. Yes, sir.   I have.   Q. And what is it?   A. It appears to be the 1964 annual report of Poly Industries.   Q. What date does it bear?   A. As of March 30th, 1964.   Q. There is a report to the stockholders on the back, is there?   A. Yes, sir, there is.   Q. What date is that?   A. July 13, 1964.   Q. Who is it signed by?   A. By Mr. Frank K. Mills, Chairman of the Board of Directors and Mr. Leo I. Kaplan, President.   Q. All right.   Now, does this stock contain a consolidated balance sheet of Poly Industries Inc. and its subsidiaries of March 30th, 1964?   A. Yes, it does.   Q. Can you from that statement tell us what the book value of that stock is?“MR. GOLDBERG:  Just a moment, if the Court please.   The statement is here and it is certainly the best evidence and we have no objection at this time, but to use this witness as an interpreter is certainly on the side—“THE COURT:  I will sustain the objection.“Q. BY MR. PINES:  Did you deem this as an official record of Poly Industries, Inc.?“MR. GOLDBERG:  If the Court please, we have just indicated I have no objection to the statement going in.   My objection goes to this witness' interpretation of it.   He is not qualified to do so.“MR. PINES:  We wish to offer this balance sheet and stockholders report as Plaintiff's next in order.“THE CLERK:  Plaintiff's 3.“MR. GOLDBERG:  No objection, your Honor.“Q. BY MR. PINES:  Is the account of Ducommun against Poly Industries, Inc. still carried by Ducommun at $11,600.20?“MR. GOLDBERG:  Objection, your Honor.   Again it is irrelevant that Ducommun's unilateral intention may enter in at this point.   The question also calls for hearsay.“MR. PINES:  We haven't been given any payment or any credit for the stock, and we have tendered it to you time and again and we don't think it is worth the paper it is written on.“THE COURT:  What consideration did your company give for this 11,000 some odd shares of stock?“MR. PINES:  May I interrupt, if the Court please?   This was forced on us by operation.“THE COURT:  It is a matter of record you have accepted.“MR. PINES:  I am sorry.   I will withdraw my comment.“THE COURT: You shouldn't have made the comment.   Let's not get things mixed up.   You have a jury here.   You may not confuse the jury.   You may confuse the Court, but you don't confuse the jury.   Do you want—“MR. PINES:  I will withdraw the question.”

FRAMPTON,* Associate Justice Pro Tem. FN* Retired judge of the Superior Court sitting under assignment by the Chairman of the Judicial Council.

FORD, P.J., and COBEY, J., concur.