FERRARO v. PACIFIC FINANCE CORPORATION

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Court of Appeal, First District, Division 1, California.

Pat FERRARO, Plaintiff and Respondent, v. PACIFIC FINANCE CORPORATION, a corporation, and William Steitz, doing business as Bill Steitz Motor Sales, Defendants and Appellants.

Civ. 25644.

Decided: January 21, 1970

Partridge, O'Connell & Partridge, Frederick J. Woelflen, San Francisco, for appellant, Pacific Finance Corp. Todisco & Capriola, Peter J. Capriola, Fresno, for appellant, Bill Steitz Motor Sales. William G. Clark, Rea, Frasse, Anastasi, Clark & Lewis, San Jose, for respondent.

Defendants Pacific Finance Corporation (Pacific) and William Steitz, doing business as Bill Steitz Motor Sales (Steitz), appeal from a judgment in favor of plaintiff Pat Ferraro, entered upon jury verdicts on July 12, 1968, nunc pro tunc as of January 31, 1968. The action was brought for damages resulting from the alleged conversion by Pacific and Steitz of Ferraro's automobile.

At an earlier trial the court directed the jury to return a verdict for Ferraro's compensatory damages. By the instructions they were also permitted to determine whether exemplary damages should be awarded, and if so, the amount. The jury fixed the compensatory damages at $2,812 and awarded exemplary damages of $15,000 against Pacific and $8,000 against Steitz. On Pacific's and Steitz' motions for a new trial, a limited new trial ‘solely on the issue of the amount of punitive damages to be assessed’ was granted.

The judgment from which this appeal is taken is based upon the verdict for compensatory damages of $2,812 returned by the first jury, and exemplary damages of $25,000 against Pacific and $8,000 against Steitz, returned by the second jury after the limited retrial. Pacific has also appealed from a ‘judgment’ entered August 30, 1967 by the clerk, pursuant to the directions of Code of Civil Procedure section 664, following the first jury's verdicts. The order granting a limited new trial had the effect of vacating the earlier judgment. (Love v. Wolf, 249 Cal.App.2d 822, 840, 58 Cal.Rptr. 42; King v. Goldberg, 159 Cal.App.2d 543, 544, 323 P.2d 1035; Universal Film Mfg. Co. v. Kerrigan, 47 Cal.App. 255, 190 P. 475.) Since an appeal obviously cannot lie from a vacated judgment the purported appeal from the ‘judgment’ entered August 30, 1967, must be dismissed.

Appellants' principal contention is that the awards of exemplary damages were so disproportionate to the award of compensatory damages as to be based upon passion and prejudice. We set forth the evidence tending to support the second jury's exemplary awards as it reasonably could have been, and presumably was, viewed by them.

In April 1966 one Howard Bowers bought a 1964 Cadillac automobile from defendant Steitz. The transaction took the form of a conditional sales contract under which Bowers made a $600 down payment and agreed to pay the balance in monthly installments. The contract was then sold, and assigned, to defendant Pacific. In preparing the necessary application for change of ownership with the motor vehicle department, an employee of Steitz neglected to indicate Pacific's security interest in, or ‘legal ownership’ of, the Cadillac. Because of this error, some weeks later the motor vehicle department forwarded to Bowers a negotiable ‘pink slip’ or certificate of ownership of the automobile, which showed him to be the owner and the vehicle to be unencumbered. Bowers met the first installment of his contract, but defaulted on the second payment which became due in June.

Plaintiff Ferraro was the manager of the Oasis Motel in Santa Clara County.

On July 19, 1966, Ferraro learned that Bowers, a guest of the motel, had a Cadillac automobile which he wanted to sell. Ferraro was interested. The ‘pink slip,’ designating Bowers as the owner was exhibited. Ferraro examined and drove the car and then offered Bowers $2,700. The offer was accepted and the price was paid. Bowers delivered the endorsed ‘pink slip’ and the automobile to Ferraro on July 20.

Around this time Steitz learned that Bowers had the ‘pink slip,’ that the car was located at Ferraro's motel, and that Bowers was trying to sell it. This information was passed on to Pacific. Steitz and Pacific then learned that the Cadillac was in Ferraro's possession at the Oasis Motel. A Steitz employee reported it to be parked at the north side of the motel and recommended to Pacific that it be picked up at ‘3 a. m.’ Pacific's branch operations manager admitted knowing that the car was in the possession of Ferraro. He said that it entered his mind that Ferraro might have purchased it; yet he did not consider inquiring what right Ferraro had to his possession. He explained that ‘the easiest way is to restore the automobile first and ask questions second to be quite frank, because we get in a lot of trouble with third party people figuring they have a legal right to the car.’ He stated that was his ‘policy’ and if it were not the company policy he was sure he would have been told ‘pretty fast.’

To ‘restore’ the Cadillac, Pacific called a professional automobile repossessor who, anticipating trouble since ‘there was a pink slip’ outstanding, stated, ‘I would just like to pass this assignment and not get involved. It might cause me some problem.’ Pacific then, in writing, authorized a Steitz employee ‘to repossess our 1964 Cadillac [describing it], contract in the name of Howard Bowers.’ The car was picked up at the motel July 28, 1966.

After reporting to the police that his automobile was stolen, Ferraro was advised that it had been repossessed by Pacific. On August 1, 1966, Ferraro's attorney wrote Pacific as follows: ‘This office represents Patrick F. Ferraro who purchased the above-described automobile on July 20th 1966, from one Howard Bowers. Mr. Bowers had the pink slip to the car in his possession, showing him to be the legal owner. On July 28, 1966, Mr. Ferraro found his car missing and reported it stolen. We discovered that your company picked up this car off the street and drove it to Fresno. We are demanding immediate return of this car and giving you an opportunity to avoid litigation. If we are forced to litigate this matter, we will not only seek reimbursement for conversion, but we will ask for exemplary damages for this outlandish act. We suggest you reply immediately.’

Pacific's counsel replied: ‘Your letter of August 1 was handed to me for response. The contract we held in the name of Howard Bowers has been repurchased by the selling dealer and Pacific Finance no longer claims any interest or control over the Cadillac described in the caption. * * * I suggest you communicate with [the dealer's attorney] to discuss what rights, if any, your client has to possession of the Cadillac. Incidentally, the selling dealer, through its agents, repossessed the Cadillac as a result of default on the part of the purchaser, Howard Bowers. Do not hesitate to drop me a line if you wish to communicate further with Pacific Finance in this matter.’ The statement of the letter, ‘The contract we held in the name of Howard Bowers has been repurchased by the selling dealer and Pacific Finance no longer claims any interest or control over the Cadillac described in the caption,’ was untrue; Steitz had not at that time repurchased the contract.

Thereafter Steitz, who held possession of the Cadillac, refused to return it to Ferraro. On September 15, 1966, Steitz did repurchase the Bowers contract for the amount Pacific had paid for it. Steitz then located Bowers and induced him to sign a ‘power of attorney’ with which a duplicate ‘pink slip’ for the Cadillac, in Bowers' name, was obtained on the false representation that the original had been lost, mutilated or stolen. (See Veh.Code, §§ 4459, 5752.) This was done, Steitz explained, ‘because the other ownership certificate was tied up in litigation.’ Bowers then endorsed the duplicate ‘pink slip’ and Steitz sold Ferraro's automobile to some third person.

In California, as is well known to anyone engaged in the business of selling or lending money on the security of automobiles, a prospective purchaser of a motor vehicle without knowledge of any defect of title may rely exclusively on the information disclosed by the statutory certificate of ownership. (See Veh.Code, §§ 4450–4453.) As is stated in First Nat. Bank of Hays City v. Sprigg, 209 Cal.App.2d 258, 259–260, 25 Cal.Rptr. 838, 839, ‘California is known as a ‘full title’ State insofar as registration of motor vehicles is concerned. This means that anyone transacting business with the owner of a motor vehicle can rely upon the title as reflected by the registration certificate, without further inquiry. * * *'

Civil Code section 3294 provides ‘In an action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, express or implied, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.’ (Emphasis added.)

Exemplary damages are properly awardable in an action for conversion, given the required showing of malice, fraud, or oppression. (Haigler v. Donnelly, 18 Cal.2d 674, 681, 117 P.2d 331.) Although such damages ‘are not a favorite of the law and the granting of them should be done with the greatest caution’ (Gombos v. Ashe, 158 Cal.App.2d 517, 526, 322 P.2d 933, 939), nevertheless, the determination whether such damages should be awarded, and, if so, the amount, is the exclusive function of the trial jury. It was said in Brewer v. Second Baptist Church, 32 Cal.2d 791, 801, 197 P.2d 713, 719, ‘A plaintiff, upon establishing his case, is always entitied of right to compensatory damages. But even after establishing a case where punitive damages are permissible, he is never entitled to them. The granting or withholding of the award of punitive damages is wholly within the control of the jury, and may not legally be influenced by any direction of the court that in any case a plaintiff is entitled to them. Upon the clearest proof of malice in fact, it is still the exclusive province of the jury to say whether or not punitive damages shall be awarded. A plaintiff is entitled to such damages only after the jury, in the exercise of its untrammeled discretion, has made the award.’ And it has been said, ‘It is in those cases where the defendant has been guilty of oppression or fraud, or of a malice akin to oppression and fraud, that punitive damages may be awarded. But throughout the whole history of the law, whatever may be the mode of proving the existence of malice in fact, it is only upon some showing regarded by the law as adequate to establish the presence of malice in fact, that is the motive and willingness to vex, harass, annoy, or injure, that punitive damages have ever been awarded. And this, the adjudications abundantly and without controversy establish.’ (Wolfsen v. Hathaway, 32 Cal.2d 632, 647, 198 P.2d 1, 10–11.)

It has been repeatedly held that after a jury award of exemplary damages, it becomes the province of the trial court on motion for new trial to say whether such damages should have been awarded. (See Finney v. Lockhart, 35 Cal.2d 161, 164, 217 P.2d 19; Zimmerman v. Boughton, 197 Cal.App.2d 842, 847, 18 Cal.Rptr. 119; Lawson v. Town & Country Shops, Inc., 159 Cal.App.2d 196, 204, 323 P.2d 843.) ‘After an award has been approved by the trial court the reviewing court will hesitate to declare the amount excessive unless upon consideration of the entire record including the evidence it must be said that the award was the result of passion or prejudice.’ (Finney v. Lockhart, supra, 35 Cal.2d p. 164, 217 P.2d p. 21.)

The exemplary awards here were certainly substantial and they bore a large ratio to the compensatory damages allowed. But even though this court may feel that had it been the trier of fact, such awards, or their amount, would have been different, we are nevertheless bound by the rule that we may not disturb them unless they appear to have resulted from passion or prejudice. (See Gruner v. Barber, 207 Cal.App.2d 54, 58, 24 Cal.Rptr. 292.)

The jury were properly instructed that if they found oppression or malice on the part of defendants they were permitted to return an exemplary damage award ‘for the sake of example’ and by way of punishing the defendants.

We believe that the evidence before the jury was reasonably susceptible of a finding that defendants were guilty of oppression and malice. Defendants knew that because of Steitz' negligence, Bowers had the pink slip to the Cadillac, and was accordingly able to pass a good title. They were aware of Ferraro's possession of the car and suspected that he had become its owner by purchase from Bowers. Without any inquiry and in utter disregard of Ferraro's probable rights, both defendants gave effect to Pacific's ‘policy’ by seizing the automobile first and asking questions second. This conduct was compounded when Pacific untruthfully disclaimed power to restore the automobile, and later when Steitz also refused to return the car and then placed it beyond Ferraro's reach in the manner we have related. No claim was then made that Ferraro was not a bona fide purchaser.

We cannot say that the jury was wrong in its conclusion that for the sake of example punitive damages should be returned against Pacific and Steitz. We may presume that the jury not only found defendants' conduct here to be oppressive but also that it was pursuant to a policy in such cases of taking the automobile by stealth, thus giving its owner the choice of forfeiting his property or engaging in expensive litigation to recover his wrongfully con verted automobile. And, obviously, smaller punitive awards would less likely have the effect of curtailing defendants' high-handed practices as here shown by the evidence.

It is noted that the trial court on motion for a new trial refused to upset the exemplary awards. (See Finney v. Lockhart, supra, 35 Cal.2d 161, 164, 217 P.2d 19.) And we cannot say, after our consideration of the entire record including the evidence, that these awards were the result of passion and prejudice.

We recognize, of course, that the exemplary awards here under discussion, at least after payment of all litigation expenses, constitute a windfall to Ferraro. Legal writers have criticized this result, some saying that such awards should be made to the state. But California law is clear; in a proper case ‘the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.’ (Civ.Code, § 3294.) Any change must be made by the Legislature, not the courts.

Defendants place some reliance on Luke v. Mercantile Acceptance Corp., 111 Cal.App.2d 431, 244 P.2d 764. In that case (p. 438, 244 P.2d p. 769) an automobile was erroneously converted with ‘some basis for holding that defendant[s] exhibited a malicious purpose.’ When complaint was made the finance company recognized the owner's rights and offered to return the car. Apparently because of that offer, the appellate court considered that ‘there does not appear to have been any oppression to the detention [as distinguished from the initial conversion] of the car.’ The court also found that the trial jury had been erroneously instructed on the question of exemplary damages. It was concluded (p. 439, 244 P.2d p. 770): ‘In view of the erroneous instruction given the jury and the unreasonable proportion borne by the excessive exemplary damages to the actual damages sustained [$2500 to $580.80 respectively], there should be a retrial of the issue of exemplary damages * * *.’ In Luke, when the conduct of their agents was brought home to defendants, they endeavored to rectify the situation. In the case before us both defendants knew Ferraro to be the owner of the subject Cadillac; he had the ‘pink slip’ and no contention of bad faith or collusion was then made. When Ferraro demanded his property, Pacific at first untruthfully denied any control over the vehicle, and then later, after being made whole, turned the car back to Steitz. Although similar demand was made on Steitz, that defendant connived with Bowers to fraudulently secure a duplicate ownership certificate, by virtue of which the wrongful conversion continued, with Ferraro being forever denied his property. Aggravated malice and oppression by Pacific and Steitz could here be found by the jury; defendants' reliance on Luke is misplaced. (Cf. Cunningham v. Simpson, 1 Cal.3d 301, 310, 81 Cal.Rptr. 855, 461 P.2d 39.)

Defendants also contend that the first trial court erred in directing a verdict that Ferraro was entitled to compensatory damages. This point may not now be raised on appeal from the judgment following the second trial for reasons we shall now relate.

Code of Civil Procedure section 938 (reenacted 1968 as § 902) provided that ‘Any party aggrieved may appeal in the cases prescribed in [Code of Civil Procedure § 963 (reenacted 1968 as § 904.1)] * * *.’ Section 963 (now § 904.1) allowed an appeal ‘From an order granting a new trial * * *.’ One who moves for a new trial on all issues and obtains a new trial only on limited issues is an aggrieved party who has a right of appeal from the new trial order. (Spencer v. Nelson, 30 Cal.2d 162, 164–165, 180 P.2d 886; Stegmann v. Holder, 223 Cal.App.2d 531, 537, 36 Cal.Rptr. 1; Danielson v. Stokes, 214 Cal.App.2d 234, 237, 29 Cal.Rptr. 489; Garcia v. San Gabriel Ready Mixt, 173 Cal.App.2d 355, 357, 343 P.2d 327; but see Universal Film Mfg. Co. v. Kerrigan, supra, 47 Cal.App. 255, 190 P. 475.) Code of Civil Procedure section 956 (reenacted 1968 as § 906) provided: ‘The provisions of this section do not authorize the court to review any decision or order from which an appeal might have been taken.'1 Giving effect to section 906, Woodman v. Ackerman, 249 Cal.App.2d 644, 648, 57 Cal.Rptr. 687, 690, states: ‘The law of this state does not allow, on an appeal from a judgment, a review of any decision or order from which an appeal might previously have been taken.’ (See also Mohn v. Tingley, 191 Cal. 470, 492, 217 P. 733; West v. Parker, 97 Cal.App.2d 286, 291, 217 P.2d 473; Weber v. Marine Cooks' & Stewards' Assn., 93 Cal.App.2d 327, 339, 208 P.2d 1009; Weygandt v. Larson, 130 Cal.App. 304, 310, 19 P.2d 852.) It follows that defendants, having failed to appeal from the order granting only a limited new trial, may not now complain that the first trial judge erred in directing a verdict on the issue of compensatory damages.

Finally, defendants contend that the court in the second trial erred in directing the jury that they were to determine only the amount of exemplary damages, and not whether such damages should be allowed. This contention also we find to be without merit.

In the earlier trial, as we have pointed out, the jury returned a verdict against defendants for compensatory and exemplary damages. As to the exemplary damages the verdict had not been directed. The new trial being granted on the issue of the amount of exemplary damages only, the question whether there should be such damages was disposed of by the first jury. And, for the reasons we have indicated, the order granting the limited new trial is now beyond appellate review (see authorities cited, ante). Accordingly, it was without error that the court at the second trial instructed that the jury was to determine only the amount of exemplary damages.

We find a motion of Ferraro to dismiss defendants' appeal from the judgment entered July 12, 1968, nunc pro tunc as of January 31, 1968, to be without merit, and a discussion thereof unnecessary to our disposition of the cause.

The judgment entered on July 12, 1968, nunc pro tunc as of January 31, 1968, is affirmed; the motion to dismiss the appeal from that judgment is denied. The appeal from the ‘judgment’ entered August 30, 1967, is dismissed.

FOOTNOTES

1.  The full text of section 956 follows:‘Upon an appeal from a judgment the court may review the verdict or decision, and any intermediate ruling, proceeding, order or decision which involves the merits or necessarily affects the judgment, or which substantially affects the rights of a party. The court may also on such appeal review any order on motion for a new trial. The respondent, or party in whose favor the judgment was given, may, without appealing from such judgment, request the court to and it may review any of the foregoing matters for the purpose of determining whether or not the appellant was prejudiced by the error or errors upon which he relies for reversal or modification of the judgment from which the appeal is taken. The provisions of this section do not authorize the court to review any decision or order from which an appeal might have been taken.’

ELKINGTON, Associate Justice.

MOLINARI, P. J., and SIMS, J., concur.