HARVIE v. NEW YORK LIFE INSURANCE COMPANY (1983)

Donald M. Harvie (“Harvie”), as the named representative of the plaintiff class, appeals from a judgment in favor of respondent New York Life Insurance Company.   Vincent L. Ray (“Ray”), one of the members of the class, also purports to appeal from the judgment.

Harvie worked as an insurance salesman (“field underwriter”) under an agency agreement with respondent from 1962 to 1975.¹  In such capacity he was entitled to two forms of compensation.   The first was a commission based on a percentage of the annual premiums paid during the life of an insurance policy sold by him.   The right to such payments was vested upon the sale of the policy and would be paid to the salesman even if his contract with respondent was terminated.

The second form of compensation came under a plan called Nylic, which provided death and disability benefits and a current monthly income.   The monthly income in a given year was calculated on the basis of the amount of insurance which the salesman had sold five years earlier and which had remained in force for five years.   If the salesman's contract with respondent were terminated, then his membership in Nylic terminated automatically, and his entitlement to Nylic benefits, including the current income, also terminated.

Harvie voluntarily terminated his agency agreement with respondent on February 28, 1975.   On May 28, 1975, he filed a complaint on behalf of himself and all others similarly situated, alleging that the amounts he would have collected under Nylic during the five years after termination were wages, that such wages were forfeited when the agency contract was terminated, that respondent was unjustly enriched thereby, and that the plaintiffs were entitled to the Nylic compensation which they would have received had they maintained their agency contracts.

The action was certified as a class action, and notice was sent to members of the class, advising them that if they wished to be excluded from the class, they had to request exclusion by December 10, 1976.   Ray failed to request exclusion at that time but filed a motion to withdraw from the class in June 1978.   Ray's motion was denied.

Judgment was entered for respondent after a court trial.

The Ray Appeal:

Ray, who is a member of the class but not a named representative, filed a notice of appeal “from the judgment ․ and ․ more particularly from the ‘Order Denying Motion to Withdraw from Class' ․”  Respondent contends that the order was appealable at the time of its entry, that the time for appeal has passed and that Ray's separate appeal must be dismissed on that basis.   We dismiss Ray's purported appeal, but for other reasons.

 Ray's motion to withdraw was made pursuant to Code of Civil Procedure section 581, “Dismissal.”   It is a longstanding rule that an order denying a motion to dismiss is not an appealable order.  (Code Civ.Proc., § 904.1;  Semole v. Sansoucie (1972) 28 Cal.App.3d 714, 722, 104 Cal.Rptr. 897;  Writers Guild of America, West, Inc. v. Superior Court (1969) 273 Cal.App.2d 841, 843–844, 78 Cal.Rptr. 520;  Parker v. Owen (1948) 83 Cal.App.2d 474, 189 P.2d 81.)   Such an order may properly be reviewed in an appeal taken from the ensuing judgment.

 “Any party aggrieved may appeal” from an adverse judgment.   (Code Civ.Proc., § 902;  County of Alameda v. Carleson (1971) 5 Cal.3d 730, 736, 97 Cal.Rptr. 385, 488 P.2d 953.)   But, “it is a settled rule of practice in this state that only a party to the record can appeal.   [Citations.]”  (Eggert v. Pac. States S. & L. Co. (1942) 20 Cal.2d 199, 201, 124 P.2d 815.)   Ray was not named as a party to the action, nor did he take any appropriate steps to become a party to the record.   The facts that he was a non-representative member of the plaintiff class and that his name appeared in an exhibit attached to the complaint and the judgment did not make him a party to the appeal.  (Id., at pp. 199–201, 124 P.2d 815.)

 “Nevertheless, one [not a party] who is legally ‘aggrieved’ by a judgment may become a party of record and obtain a right to appeal by moving to vacate the judgment pursuant to Code of Civil Procedure section 663.   [Citations.]”  (County of Alameda v. Carleson, supra, 5 Cal.3d at p. 736, 97 Cal.Rptr. 385, 488 P.2d 953.)   An appeal would then lie from the order denying the motion to vacate.  (Ibid.;  Eggert v. Pac. States S. & L. Co., supra, 20 Cal.2d at p. 201, 124 P.2d 815.)   The judgment can in such a case be reviewed not only for excess of jurisdiction but also for error.  (Elliott v. Superior Court (1904) 144 Cal. 501, 509, 77 P. 1109.)

 Since Ray was not originally a party and did not become one by moving to vacate the judgment, he has no standing to appeal.   This court may dismiss an improper appeal on its own motion.  (Eggert v. Pac. States S. & L. Co., supra, 20 Cal.2d at p. 201, 124 P.2d 815.)   The purported appeal of Vincent L. Ray is thus dismissed.²

The Harvie Appeal:

 Harvie's first contention is that the trial court committed reversible error in denying him a jury trial.   Harvie had originally demanded a jury trial.   Before trial, attorneys for Harvie and respondent met in chambers with the trial judge in an unreported discussion.   The accounts of the conversation contained in the attorneys' affidavits differ as to whether or not Harvie's attorney said that he would acquiesce in whatever ruling the judge made with regard to the propriety of a jury trial.

 The trial court, holding that there were no issues of fact to be tried, ruled against Harvie and ordered a court trial.   Harvie's counsel, however, failed both to object and to make a motion in open court for a jury trial.   An order denying a motion for a jury trial is not reviewable if no exception is taken to the ruling.  (Glogau v. Hagan (1951) 107 Cal.App.2d 313, 316, 237 P.2d 329.)   Such an exception can be either as an objection or as a motion at trial for jury trial.  (Ibid.;  Taylor v. Union Pac. R.R. Corp. (1976) 16 Cal.3d 893, 900, 130 Cal.Rptr. 23, 549 P.2d 855.)  “One who by his conduct accepts a ruling of the court under circumstances amounting to acquiescence therein, may not complain of it on appeal.   Exceptions serve the purpose of protecting the objector against the claim of acquiescence in adverse rulings․  Where affirmative action, consisting of noting an exception, or of conduct equivalent thereto is required, mere silence must be taken as acquiescence when, upon appeal, the ruling is assigned as error.”  (Allin v. Internat. etc. Stage Employes (1952) 113 Cal.App.2d 135, 138–139, 247 P.2d 857;  Code Civ.Proc., §§ 646, 647.)  “Thus, it is well established that ‘․ a party cannot without objection try his case before a court without a jury, lose it and then complain that it was not tried by jury․’  [Citations.]”  (Taylor v. Union Pac. R.R. Corp., supra, 16 Cal.3d at p. 900, 130 Cal.Rptr. 23, 549 P.2d 855.)

 Harvie next contends that the judgment of the trial court is “contrary to the weight of the evidence” and contrary to California law.   We note preliminarily that whether the judgment below is “contrary to the weight of the evidence” is something which we may not examine on appeal.  “ ‘When a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.’  [Citations.]”  (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881, 92 Cal.Rptr. 162, 479 P.2d 362, italics in original;  Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 921–922, 148 Cal.Rptr. 389, 582 P.2d 980.)   Harvie's contention should have been raised, if at all, in a motion for a new trial or a motion to set aside the judgment.  (Code Civ.Proc., §§ 657, 663.)

Harvie makes three points in support of his contention:  that the Nylic plan is a contract of adhesion;  that the Nylic compensation is wages and the plan works a forfeiture of them;  and that the “forfeiture” provisions are contrary to public policy as an illegal restraint of trade.

 With regard to the first point, Harvie challenges the court's conclusion of law no. 6:  “The Nylic Contract and the Field Underwriters' Contract are not unconscionable agreements or contracts of adhesion.”   Harvie requested that conclusion of law himself.  “It is settled that a party may not complain of error which he has himself invited.  [Citations.]”  (Pobor v. Western Pac. R.R. Co. (1961) 55 Cal.2d 314, 320, 11 Cal.Rptr. 106, 359 P.2d 474.)   We will not disturb that conclusion on appeal.

Harvie's second point rests on two assumptions:  that the compensation which he claims is due is wages, and that the nonpayment thereof because of the termination of his agency agreement works a forfeiture.

Harvie requested a conclusion of law that Nylic benefits were not wages as defined in Labor Code section 200, subdivision (a).   The court, in its conclusion of law no. 5, found that Labor Code sections 200, 201 and 202 (which deal with wages) were not applicable to the relationship between the class members and respondent.   Since the alleged error was invited by Harvie, we may not disturb the trial court's conclusion of law.  (Pobor v. Western Pac. R.R. Co., supra, 55 Cal.2d at p. 320, 11 Cal.Rptr. 106, 359 P.2d 474.)

 Although the compensation claimed is not wages, it is still possible that there was a forfeiture involved.  “In law the word ‘forfeit’ means ‘to lose and surrender to an individual ․ something that belongs to one for misconduct or breach of duty․’  [Citation.]”  (Kuhlemeier v. Lack (1942) 50 Cal.App.2d 802, 808, 123 P.2d 918, italics omitted.)   The trial court properly found that there was no forfeiture of rights.

An agent's entitlement to Nylic compensation during a given year depended on his maintaining his membership in Nylic by satisfaction of several conditions.   Among these were that he operate under the respondent's agency contract, that he engage in no other business for compensation, that he not represent any other insurance company, and that he sell at least $50,000 of new insurance per year.   The amount of Nylic compensation which he would receive was based, generally, on the amount of insurance which he had sold during the fifth year preceding and which remained in force through the end of the preceding year.

Harvie did not accrue a vested right to Nylic payments five years in the future merely by virtue of his having sold a life insurance policy.   His entitlement to any Nylic compensation at all depended upon his maintaining his membership in Nylic.   An agent's membership in Nylic was terminated when he failed to meet any of the conditions of membership.   In Harvie's case, his Nylic membership was terminated when he voluntarily terminated his agency relationship with the respondent.   This in turn terminated all of Harvie's rights and benefits under Nylic.

The fact that Nylic compensation was calculated on the basis of insurance sold five years earlier does not turn the termination of his Nylic compensation into a forfeiture.  “The [fifth] preceding [year] serves as the test for the amount to be paid the agent.   It is a touchstone for one [year's] payment, not a cornerstone supporting a structure of payment on [policies sold] during the salesman's last [four years] of employment.”  (Neal v. State Farm Ins. Cos. (1961) 188 Cal.App.2d 690, 695, 10 Cal.Rptr. 781.)

We affirm the trial court's conclusion that there was no forfeiture of rights.

 Harvie's third point is that the court's conclusion of law no. 4, that the contract provisions did not constitute a restraint of trade, is incorrect.   We disagree.

“With certain exceptions not relevant here, section 16600 of the Business and Professions Code provides that ‘every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.’   This section invalidates provisions in employment contracts prohibiting an employee from working for a competitor after completion of his employment or imposing a penalty if he does so [citations], unless they are necessary to protect an employer's trade secrets.   [Citations.]”  (Muggill v. Reuben H. Donnelley Corp. (1965) 62 Cal.2d 239, 242, 42 Cal.Rptr. 107, 398 P.2d 147.)

The Nylic provisions “[do] not purport to regulate plaintiff's conduct after the termination of his employment.   The provision[s] [do] not restrain him from working for a competitor nor in any way overtly limit his freedom to seek other employment.   The loss of [Nylic compensation] comes about on the lawful termination of the agency contract, not, as in Muggill, on plaintiff's finding other employment.   Therefore, regardless of the motive underlying [the provisions regarding loss of eligibility for Nylic compensation upon termination of the agency contract], the provision[s] [do] not operate as a restraint on trade.”  (Bach v. Curry (1968) 258 Cal.App.2d 676, 681, 66 Cal.Rptr. 220.)

Appellant Vincent L. Ray's purported appeal from the judgment is dismissed.   The judgment is in all respects affirmed.

FOOTNOTES

1.   Though Harvie signed the Field Underwriter's Contract at the beginning of his relationship with respondent, he worked for the first two years as an employee of respondent pursuant to an Apprentice Field Underwriter's Agreement.   This fact is not, however, relevant to the issues in this appeal.

2.   Even if Ray had standing to appeal, we would have affirmed on the merits the order of the trial court.   The Consumers Legal Remedies Act, whose procedural prescriptions govern all class actions in California courts, requires members of a class to request exclusion by the date specified in the notice which is sent to them soon after the action is initiated.  (Civ.Code, § 1781, subd. (e);  Civil Service Employees Ins. Co. v. Superior Court (1978) 22 Cal.3d 362, 376, 149 Cal.Rptr. 360, 584 P.2d 497.)   Ray received the notice and did not so request exclusion.   His argument that Code of Civil Procedure section 581 gives him an absolute right to withdraw is incorrect.  Section 581, as a general statute, is superseded by Civil Code section 1781, a special statute, insofar as the two conflict.  (Agricultural Labor Relations Bd. v. Superior Court (1976) 16 Cal.3d 392, 420, 128 Cal.Rptr. 183, 546 P.2d 687.)   Since section 1781 specifically restricts the power of a non-representative class member to withdraw from the action, Ray could not have relied on section 581, subdivision 1, which grants an absolute power to withdraw to plaintiffs in general, as authority permitting his withdrawal in this case.

MILLER, Associate Justice.

ROUSE, Acting P.J., and SMITH, J., concur.