AMERICAN STATES PUBLIC SERVICE CO v. RATH (1934)

The plaintiff, respondent herein, is a corporation organized under the laws of Delaware, and is authorized to do business in California. Defendant John C. Rath, during the dealings here involved, was its vice president residing at Los Angeles, Cal. One William E. Vogelback residing in Chicago, Ill., was president of the plaintiff, and was apparently the sole director of its policies and activities. Frank Gillelen was an engineer, who for many years had resided in Los Angeles, and who had acquired much data and information as to public utilities in and about the city of Los Angeles. One R. H. Nicholson was in control of all the capital stock of a corporation known as Southern California Utilities Inc., which last-named company owned a water plant supplying water to Vernon and Huntington Park, two areas near Los Angeles.

The grievances of plaintiff can best be stated in the language of its complaint, as follows:

“That during said year (1928) plaintiff was desirous of acquiring all of the issued and outstanding capital stock of Southern California Utilities Inc., a California public utility corporation furnishing and supplying water to certain areas in the County of Los Angeles; and that plaintiff instructed defendant John C. Rath to purchase said stock at the lowest price obtainable. That in the month of October of said year and prior thereto said stock was owned by R. H. Nicholson and plaintiff was informed by said defendant John C. Rath that he was unable to negotiate directly with the owner of said stock, and that it would be necessary to employ defendant Frank Gillelen to negotiate with the owner for the purchase of said stock. That on or about the 30th day of October, 1928, said defendant Rath advised plaintiff that said defendant Frank Gillelen had interviewed the owner of said stock, and that the owner would sell the same for the sum of $650,000.00, and that if such stock were purchased, it would be necessary to pay, in addition to the said sum of $650,000.00, the further sum of $25,000.00 as a commission to said defendant Frank Gillelen for his services in the transaction. That pursuant to such information and advice, and in reliance upon the verity thereof, plaintiff authorized and instructed defendant John C. Rath to acquire said stock upon said terms and conditions. That pursuant thereto said defendants received from plaintiff, in lawful money of the United States, the sum of $675,000.00. That $5,000.00 of said money was so received on or about the 31st day of October, 1928; that $20,000.00 of said money was so received on or about the 1st day of November, 1928; that $625,000.00 of said money was so received on or about the 18th day of December, 1928; and that $25,000.00 of said money was so received on or about the 11th day of February, 1929. That in said month of October, 1928, and prior to said 30th day thereof, the owner of said stock stated to defendant Frank Gillelen that he would sell said stock for $500,000.00, and that said defendants well knew on said 30th day of October, that said stock could be purchased for $500,000.00. That said defendants purchased and acquired said stock for plaintiff and paid therefor to the owner thereof out of the moneys so furnished and provided by plaintiff a sum of money not exceeding $500,000.00.

“III.

“That the said defendants and each of them, disregarding the rights of plaintiff, and for the purpose and with the wrongful and fraudulent intent of obtaining from plaintiff the difference between the amount of money so received by defendants from plaintiff as aforesaid and the amount of money paid by defendants for the purchase of said stock, to wit the sum of $150,000, entered into a conspiracy and agreement together, whereby said defendant John C. Rath represented to and advised plaintiff that the amount required to be paid to the owner of said stock was $650,000, while in truth and in fact the price at which the owner thereof had agreed to sell said stock was the sum of $500,000, which fact was well known to defendants, and that, pursuant to and in furtherance of such conspiracy and agreement, said defendants induced plaintiff, in reliance upon such false representations, to pay to them said sum of $675,000 for the purchase and acquisition of said stock. That plaintiff is informed and believes, and upon such information and belief alleges, that said defendants, in pursuance of said conspiracy and agreement, further agreed to divide between themselves the proceeds of said transaction, to wit the sum of $150,000.

“IV.

“That each and all of the foregoing acts and transactions were had and done with the full knowledge and consent of each and all of said defendants, and were had and done with the fraudulent intent and purpose on the part of said defendants and each of them to deprive plaintiff of said sum of $150,000, and to wilfully convert the same to their own use and benefit.”

To understand the points now raised by appellant it should be stated that as the complaint was originally filed $175,000 was claimed as the amount due plaintiff, but during the trial the complaint was amended on motion of plaintiff, and $175,000 was stricken out and $150,000 was inserted in lieu thereof.

To further clarify the matter we should state that the $175,000 is clearly shown to be made up of two items, to wit, $150,000 being the difference between $500,000, the price actually paid to R. H. Nicholson for the stock of the Southern California Utilities Inc., and $650,000, the price Rath and Gillelen represented had been paid therefor; and, in addition, $25,000, which Rath represented he paid to Gillelen for acting as agent to effect the deal.

The testimony of Vogelback disclosed that the only demand made on the defendants was for the return of $150,000. Vogelback further stated that he was perfectly willing for Gillelen to retain the $25,000 payment as a commission.

From the fact that the complaint was amended striking out $25,000 from the demand, we conclude that it meant that plaintiff did not intend to claim a return of the $25,000 which Rath had paid Gillelen as an agent's commission. The amendment could have meant nothing else.

Plaintiff contends that Rath and Gillelen were at all times agents of plaintiff, and that defendants fraudulently conspired to have it appear that Gillelen was a buyer of the stock of Nicholson's company, and that he sold this stock to plaintiff and fraudulently took the $150,000 as his own.

Defendants contend that Gillelen was not an agent of plaintiff, but that he arranged for the purchase of the stock from Nicholson and then sold it to plaintiff. After the purchase was completed Rath did ask his company, plaintiff herein, for $25,000 as an agent's commission to be paid to Gillelen, which sum plaintiff paid. Rath explains this in the following manner: Rath says that he had “beat” Gillelen down in the price Gillelen had placed on the Nicholson stock from $700,000 to $650,000, and that Gillelen seemed to grow cold towards him, and, as Gillelen was in a position to aid Rath in many ways in the acquisition of other properties, he felt that to give Gillelen $25,000 as a further payment would be a good investment for the plaintiff.

With these facts before them the jury in the case gave to plaintiff a verdict for $25,000 and no more, and upon this verdict judgment was rendered for $25,000 against defendants.

Defendant Rath, appellant herein, now contends that this verdict and judgment is unsupported by evidence, is against law, and outside the issues of the case.

The original complaint as shown claimed two separate liquidated items; one for $150,000, and one for $25,000. There was no dispute as to these items. There was a claim that Gillelen had paid back to the plaintiff $4,571.82. It thus appeared that the $150,000 item might have been undisputed and liquidated in the full sum of $145,428.18, but for no less a sum.

The question now is, Can a jury render a verdict for part only of a claim, as to which the amount is unquestioned and liquidated?

We have been at some pains to examine the question presented, and we are of the opinion that the jury was not warranted in ignoring the pleadings and the evidence and in rendering a verdict for $25,000, when the verdict should have been rendered for $145,428.18, or for no amount whatsoever.

The following cases taken from appellant's brief, we think, illustrate the rule of law that should be applied to the situation here involved:

“In the case of Muller v. Jewell, 66 Cal. 216, 5 P. 84, being an action for replevin of certain cattle, the verdict of the jury was:

“‘We, the jury, find in favor of the defendants for one-half of the G O Cattle.’

“The court, in its decision, stated: ‘The verdict did not respond to the issues joined in the case.’ * * * ‘On this verdict a judgment was rendered in favor of the defendants, for one-half of that certain brand of cattle known as the G O brand, now in the county of Kern,’ etc. ‘On what theory this judgment could be entered on such a verdict, we cannot perceive. The jury should have been directed by the court, on its own motion, to retire and find as to the other half of the cattle sued for.’ ‘The verdict, in failing to respond to the issues raised by the pleadings, was a nullity, and should have been, after the discharge of the jury, so regarded by the court.’ ‘For the foregoing reasons the judgment should not be allowed to stand.”’

“In Koebig v. Southern Pacific Co., 108 Cal. 235, 41 P. 469, which was an action to recover $34,891.26 as damages for destruction of certain brandies, wines, liquors, and other personal property.

“‘The cause was tried by a jury, which rendered a verdict for plaintiff of five hundred dollars.’ * * *

“‘There is but one question necessary to be noticed. It is contended by plaintiff that there was no evidence to support the finding of the jury as to the amount of damages suffered by plaintiff.’

“‘The court instructed the jury, among other things: “It is conceded that the property described in the complaint as having been destroyed was of the value stated in the complaint.” * * *

“‘The verdict, however, not only ignores the admitted facts as to the amount of damages suffered, but plainly disregards the charge of the court upon that point. It is, therefore, in that regard, both unsupported by the evidence and contrary to law.’

“‘The judgment and order denying a new trial are reversed and a new trial ordered.”’

“Gundry et al., respondents, v. Atchison, Topeka & Santa Fe Railway Company, appellant, 104 Cal. App. 753, 286 P. 718.

“Action one for damages; verdict in favor of plaintiff; defendant appeals.

“The Court: ‘The only evidence as to the amount of damages shows that the trailer was damaged to the amount of $553.60, and that the loss of the use of the trailer amounted to $35, or a total of $588.60. The jury brought in a verdict for $500. While the defendant cannot ordinarily complain that the verdict is for an amount less than it might have been, if there is any evidence at all to sustain the verdict, a verdict may not be sustained which attempts generally to somewhat equalize financial conditions. Citing Driscoll v. Market Street Cable Ry. Co., 97 Cal. 553, 32 P. 591, 33 Am. St. Rep. 203. That would appear to have been the purpose of the jury, in this case, as the record contains no evidence to justify placing the damages at such an amount.”’

In the courts of other states this same rule has been followed. In Shoemaker v. Johnson, 200 Mo. App. 209, 204 S. W. 962, it was held that where the action was on a contract for $520 as a real estate broker's commission, the issue raised by an answer denying the contract was whether there was a contract; and, if plaintiff was entitled to recover, he might recover the specified sum, and a verdict for $150 was not responsive to the issues. In Martin v. Barnett (Mo. App.) 208 S. W. 278, the court held that where the only issue under the pleadings and evidence was whether there was a contract or no contract for $100 commission, a verdict for $50 cannot stand.

The judgment of the lower court is reversed, and a new trial is granted.

WEYAND, Justice pro tem., delivered the opinion of the court.

We concur: PULLEN, P. J.; R. L. THOMPSON, J.