WEINROT AND SON INC v. JACKSON (1984)

In this appeal we are asked to decide whether California Civil Code section 49, subdivision (c), gives an employer a cause of action for damages resulting from injuries to a key employee caused by a third party's negligence.   We hold that it does.

Plaintiff, I.J. Weinrot and Son, Inc., a California corporation, appeals from a judgment entered on July 19, 1983, following an order sustaining without leave to amend a demurrer to a cause of action for damages under Civil Code section 49, subdivision (c).   We reverse.

FACTS

On August 18, 1982, I.J. Weinrot and Son, Inc. (plaintiff), was a closely held California corporation with Edwin Weinrot as its president, employee, and majority shareholder.   At 11 p.m. that evening, while walking his dog, Edwin Weinrot was struck and severely injured by an automobile driven by Mart Bailey Jackson and owned by Benjamin M. Jackson (defendants).

On December 22, 1982, a complaint for damages was filed on behalf of Edwin Weinrot, his wife Irene Weinrot, and I.J. Weinrot and Son, Inc.   In addition to causes of action seeking damages for Mr. Weinrot's personal injuries and Mrs. Weinrot's loss of consortium, the complaint contained a “Fifth Cause of Action,” seeking corporate recovery for salary paid to Mr. Weinrot while he was unable to perform his usual duties, lost business profits, and reimbursement for amounts paid for Mr. Weinrot's medical expenses.   The relevant portions of the “Fifth Cause of Action” alleged as follows:

“29. That at all times herein mentioned plaintiff I.J. Weinrot & Son, Inc., was and now is a California corporation duly organized and existing by virtue of the laws of said State.

“30. That at all times herein mentioned and specifically on or about August 18, 1982, Edwin Y. Weinrot was the president and an employee of plaintiff corporation.

“31. That at all times herein mentioned there existed a contract of employment between Edwin Y. Weinrot as president of plaintiff corporation pursuant to which plaintiff corporation agreed to pay to Edwin Y. Weinrot a monthly salary.   Pursuant to other written agreements between plaintiff corporation and Edwin Y. Weinrot, plaintiff corporation was obligated to continue paying Edwin Y. Weinrot's salary to him whether or not he was able to perform his usual duties on behalf of said corporation.   Said corporation did in fact make payments to Edwin Y. Weinrot and will continue to make payments pursuant to said agreements all to its damage in a sum the exact amount of which is unknown at this time but plaintiff will seek to amend this complaint when the exact amount has been ascertained.

“32. As a further direct and proximate result of the negligence, carelessness and recklessness on the part of the defendants, and each of them, and the injuries sustained by Edwin Y. Weinrot, Edwin Y. Weinrot was unable to perform the usual duties and functions as the president of plaintiff corporation.   As a direct and proximate result thereof plaintiff corporation lost profits all to its further damage in a sum the exact amount of which is unknown to plaintiff but leave will be sought to amend this complaint when the exact amount has been ascertained.

“33. Prior to August 18, 1982, plaintiff corporation had agreed with Edwin Y. Weinrot to pay certain medical expenses incurred by him.   As a direct and proximate result of the negligence, carelessness, and recklessness on the part of the defendants, and each of them, and as set forth in paragraph 7 hereof and the injuries sustained by plaintiff, Edwin Y. Weinrot, plaintiff corporation has been obligated to pay, has paid and will pay certain medical expenses incurred by plaintiff, Edwin Y. Weinrot, all to this plaintiff's damage in a sum the exact amount of which is unknown but the plaintiff will seek leave of court to amend this complaint when the exact amount thereof is known.”

Defendants filed a demurrer to the complaint on March 1, 1983, on the grounds that:  (1) the complaint was uncertain, ambiguous and unintelligible;  (2) I.J. Weinrot and Son, Inc., was not a proper party and had no legal capacity to sue for negligence and that, therefore, the court had no jurisdiction over the subject matter of plaintiff's fifth cause of action;  and (3) plaintiff did not state in paragraph 31 of the fifth cause of action whether the employment contract referred to was oral or written.

By minute order entered April 8, 1983, the court ruled:  “As to 5th cause of action the demurrer is sustained on grounds stated therein, without leave to amend.”

On April 22, 1983, plaintiff filed a motion for reconsideration of the court's order sustaining the demurrer.   The motion was denied on June 10, 1983, but the trial court took under submission defendants' request for sanctions.   By minute order entered June 13, 1983, the court ruled as follows:  “Sanctions are awarded to defendants against the plaintiff Weinrot and son Inc. [sic] in the sum of $250.00 payable forthwith.”

On July 19, 1983, judgment was entered against the plaintiff corporation on the order sustaining the demurrer without leave to amend;  on July 25, a judgment was entered against plaintiff corporation on the order denying the reconsideration motion.   This appeal followed.

DISCUSSION

1. Timeliness of Appeal

Before reaching the merits of this appeal, we address defendants' preliminary contention that the notice of appeal was not timely filed and the appeal, therefore, should be dismissed.   Specifically, defendants argue that:  (1) the time for filing an appeal from the trial court's order sustaining defendants' demurrer began to run on April 8, 1983, when the court entered its minute order, but the notice of appeal was not filed until August 8, 1983, more than double the 60 days period permitted for the filing of a notice of appeal under rule 2 of the California Rules of Court;  (2) while not conceding the timely filing of plaintiff's motion to reconsider the order sustaining the demurrer, plaintiff failed to file the notice of appeal within 30 days of the order denying its reconsideration motion, as prescribed by rule 3 of the California Rules of Court and Blue Mountain Development Co. v. Carville (1982) 132 Cal.App.3d 1005, 1009–1010, 183 Cal.Rptr. 594;  and (3) the motion for reconsideration was not appealable because it was based on the same factual showing as was made in plaintiff's opposition to the demurrer.  (Blue Mountain Development Co. v. Carville, supra, 132 Cal.App.3d at p. 1011, 183 Cal.Rptr. 594.)   We reject all of these arguments.

 An order sustaining a demurrer without leave to amend is not an appealable order;  only a judgment entered on such an order can be appealed.   (Jackson v. Teachers Ins. Co. (1973) 30 Cal.App.3d 341, 343, 106 Cal.Rptr. 208;  see generally 6 Witkin, Cal.Procedure (2d ed. 1971) Appeal, § 64, p. 4078.)   Such a judgment was entered here on July 19, 1983, and the time period for the filing of a notice of appeal commenced to run on that date.   (Cal.Rules of Court, rule 2.)   Therefore, the August 8, 1983, filing of the notice of appeal was timely.

 The issues of whether plaintiff was required to, and did in fact, comply with the time requirements for filing a reconsideration motion under Code of Civil Procedure section 1008, and whether the same factual showing was made in that motion as had been made previously, need not be considered here because the order denying reconsideration is nonappealable for a more fundamental reason.  “If the original ruling is not final and appealable in its own right, then it is not a judgment and an order denying reconsideration cannot be appealable.  ‘[A]n appeal may not be taken from a nonappealable order by the device of moving to vacate the order and appealing from a ruling denying the motion.’  (Litvinuk v. Litvinuk (1945) 27 Cal.2d 38, 43–44 [162 P.2d 8].)”  (Blue Mountain Development Co. v. Carville, supra, 132 Cal.App.3d at p. 1010, 183 Cal.Rptr. 594.)   However, that portion of the June 13, 1983, order awarding sanctions of $250 to defendants is appealable “because it is a final order on a collateral matter directing the payment of money.   (Citations.)”  (O'Brien v. Cseh (1983) 148 Cal.App.3d 957, 960, 196 Cal.Rptr. 409.)   Therefore, only the order awarding sanctions and the judgment of July 19, 1983, are properly before this court on appeal.

2. Order Sustaining Demurrer Without Leave to Amend

 At the outset, we find that it was error to sustain the demurrer on the ground that plaintiff lacked legal capacity to sue;  “since a corporation may sue (Corp.Code, § 801, subd. (a)), the complaint shows on its face that plaintiff does have legal ‘capacity’ to sue.  (California Steam Navigation Co. v. Wright (1856) 6 Cal. 258, 261;  3 Witkin, Cal.Procedure (2d ed. 1971) Pleading, §§ 751, 752, pp. 2373, 2374.)”  (Friendly Village Community Assn., Inc. v. Silva & Hill Constr. Co. (1973) 31 Cal.App.3d 220, 224, 107 Cal.Rptr. 123.)

 Although the order sustaining the demurrer here was based on the grounds of the court's lack of subject matter jurisdiction, corporate plaintiff's lack of capacity to sue, and failure to state whether the employment contract was oral or written, the underlying issue addressed by the parties and the trial court is whether a corporate employer plaintiff can state a cause of action for damages under Civil Code section 49, subdivision (c).¹

Section 49, subdivision (c), enacted in 1872 and last amended in 1939, provides:

“The rights of personal relations forbids:

“․

“(c) Any injury to a servant which affects his ability to serve his master, other than seduction, abduction or criminal conversation.”

It has been presumed by a number of our courts, though never squarely held, that section 49, subdivision (c), gives rise to a cause of action by an employer for damages resulting from injuries to a key employee caused by a third party's negligence.  (Offshore Rental Co. v. Continental Oil Co. (1978) 22 Cal.3d 157, 162, 148 Cal.Rptr. 867, 583 P.2d 721;  Knowlton v. Pacific Southwest Airlines (1980) 113 Cal.App.3d 152, 153, 169 Cal.Rptr. 668;  Ventura County Employees' Retirement Association v. Pope (1978) 87 Cal.App.3d 938, 953–954, 151 Cal.Rptr. 695;  Darmour Prod. Corp. v. H.M. Baruch Corp. (1933) 135 Cal.App. 351, 353, 27 P.2d 664.)   Such a construction was impressed upon section 49, subdivision (c), even before that statute's last amendment by the Legislature in 1939.  (See Darmour Prod. Corp. v. H.M. Baruch Corp., supra, 135 Cal.App. 351, 27 P.2d 664.)  “When the Legislature amends a statute without altering portions of the provision that have been previously judicially construed, the Legislature is presumed to have been aware of and acquiesced in the prior judicial construction.  (Marina Point, Ltd. v. Wolfson (1982) 30 Cal.3d 721, 734, [180 Cal.Rptr. 496, 640 P.2d 115].)”  (Hale v. City of Santa Paula (1984) 159 Cal.App.3d 1233, 1240, 206 Cal.Rptr. 265.)

Plaintiff corporation contends that:  (1) its fifth cause of action properly states a cause of action against defendants under section 49, subdivision (c), and, therefore, (2) it has the legal capacity to sue, and (3) the court has subject matter jurisdiction to hear the action.   We agree.

Defendants' contention that section 49, subdivision (c), can and should be disregarded or invalidated because the California Supreme Court has referred to it as “archaic,” “obsolete” and “outmoded” (Offshore Rental Co. v. Continental Oil Co., supra, 22 Cal.3d at p. 168, 148 Cal.Rptr. 867, 583 P.2d 721;  Knowlton v. Pacific Southwest Airlines, supra, 113 Cal.App.3d at p. 153, 169 Cal.Rptr. 668) is unpersuasive.   By referring to that statutory provision as “archaic” and “outmoded,” the California Supreme Court in Offshore Rental Co., supra, was not passing on its legal validity but rather was merely characterizing California's interest in that statute as less compelling than Louisiana's interest in its own, similar statute for the purpose of resolving a conflict of laws issue.

California courts do not run roughshod over its statutes merely because they were enacted before the automobile age.   Among the reasons for this, as correctly pointed out by plaintiff, are that:  (1) “Courts do not sit as super-legislatures to determine the wisdom, desirability or propriety of statutes enacted by the Legislature” (Estate of Horman (1971) 5 Cal.3d 62, 77, 95 Cal.Rptr. 433, 485 P.2d 785;  (2) “The determination as to whether social concepts have changed and whether a law should be modified to conform with social developments is a legislative, not a judicial, prerogative” (People v. Russell (1971) 22 Cal.App.3d 330, 335, 99 Cal.Rptr. 277);  and (3) “[I]n the absence of constitutional objection, legislation is not repealed by changed conditions” (People v. Harmon (1960) 54 Cal.2d 9, 26, 4 Cal.Rptr. 161, 351 P.2d 329).

Defendants argue that because subsequently enacted statutes providing an employer with subrogation rights under the workers' compensation laws (Labor Code, §§ 3850–3864) have adequately protected and, therefore, supplanted one possible purpose of section 49, subdivision (c), that statute ought to be abrogated.   We disagree.

We note first that the workers' compensation laws do not apply to the case before us because Mr. Weinrot, while walking his dog at 11 p.m., was not acting in the course of his employment and the accident did not arise out of the employment.  (See 2 Witkin, Summary of Cal.Law (8th ed. 1973) Workmen's Compensation, § 29, p. 874;  County of San Diego v. Sanfax (1977) 19 Cal.3d 862, 872, 140 Cal.Rptr. 638, 568 P.2d 363.)   Thus, in the present context, the employer appears to have no remedy for its economic loss if not under section 49, subdivision (c).

 Although the courts have sometimes invoked the doctrine of implied repeal to abrogate a statute, that doctrine is inapplicable here.   The doctrine of implied repeal has been defined and the rules governing its application have been set forth as follows:  “When two or more statutes concern the same subject matter and are in irreconcilable conflict the doctrine of implied repeal provides that the most recently enacted statute expresses the will of the Legislature, and thus to the extent of the conflict impliedly repeals the earlier enactment.   Repeals by implication, however, are not favored and there is a presumption against operation of the doctrine.   (Cal. Drive-in Restaurant Assn. v. Clark (1943) 22 Cal.2d 287, 292, [140 P.2d 657].)  ‘They are recognized only when there is no rational basis for harmonizing the two potentially conflicting statutes [citation], and the statutes are “irreconcilable, clearly repugnant, and so inconsistent that the two cannot have concurrent operation.   The courts are bound, if possible, to maintain the integrity of both statutes if the two may stand together.” ’   (In re White (1969) 1 Cal.3d 207, 212 [81 Cal.Rptr. 780, 460 P.2d 980].)”  (In re Thierry S. (1977) 19 Cal.3d 727, 744, 139 Cal.Rptr. 708, 566 P.2d 610.)

The presumption against use of the implied repeal doctrine with respect to the workers' compensation laws was invoked by the California Supreme Court in Saala v. McFarland (1965) 63 Cal.2d 124, 130, 45 Cal.Rptr. 144, 403 P.2d 400, where the court held that enactment of Labor Code section 3601, making workers' compensation the exclusive remedy against an employer for injuries to an employee sustained in the course of employment, did not impliedly repeal the employee's common law right of action against a coemployee which was preserved by Labor Code section 3852.

 Even aside from the presumption against use of the doctrine, however, we do not believe that the workers' compensation subrogation provisions of the Labor Code are inconsistent with section 49, subdivision (c).

“․ California, through section 49, expresses an interest in protecting California employers from economic harm because of negligent injury to a key employee inflicted by a third party.”  (Offshore Rental Co. v. Continental Oil Co., supra, 22 Cal.3d at p. 164, 148 Cal.Rptr. 867, 583 P.2d 721.)   This interest, which may be vindicated by a direct action against the tortfeasor by the employer pursuant to section 49, seems fundamentally different from the subrogation interest of an employer under the workers' compensation laws.   (Labor Code, §§ 3850–3864.)   The purpose of subrogation, which is an equitable principle, is to reimburse the employer for amounts it is legally obligated to pay either directly to the employee or on the employee's behalf, such as salary and medical expenses, because of the employee's injuries.   (Lab.Code, § 3852;  2 Witkin, Summary of Cal.Law (8th ed. 1973) Workmen's Compensation, § 29, p. 874;  7 Witkin, Summary of Cal.Law (8th ed. 1974) Equity, §§ 124–125, pp. 5342–5344.)   However, the subrogation provisions of the Labor Code do not provide a remedy for the employer's damages in the form of lost profits or lost business opportunities caused by the loss of the key employee's services.

“․ Such a cause of action is separate from one in tort for personal injuries, and the tortfeasor may become liable in damages both to the victim for personal injuries (Christy v. Herbert M. Baruch Corp. (1933) 135 Cal.App. 355, 27 P.2d 660) and to the producer for loss of the victim's personal services.  (Darmour Prod. Corp. v. H.M. Baruch Corp. (1933) 135 Cal.App. 351, 27 P.2d 664.)   The action for loss of services is a proprietary cause of action, i.e., one for damages for wrongful interference with a contractual right to services, and constitutes a claim for damages for injury to a property right rather than one for injuries to the person, even though the injury to the property right arises out of injuries to the person.   At common law the distinction has long been recognized․”  (Ventura County Employees' Retirement Association v. Pope, supra, 87 Cal.App.3d at pp. 953–954, 151 Cal.Rptr. 695.)

 Finally, we note that the California Supreme Court has conceded in a similar factual context that “expressions in the California cases, although chiefly dicta, support the present plaintiff's assertion that California Civil Code section 49 grants a cause of action against a third party for loss caused by an injury to a key employee due to the negligence of the third party.”  (Offshore Rental Co. v. Continental Oil Co., supra, 22 Cal.3d at p. 162, 148 Cal.Rptr. 867, 583 P.2d 721.)   Since that is what the plaintiff here alleged in its fifth cause of action, and since there has been no intervening act of the Legislature to repeal, modify or otherwise change section 49, subdivision (c), we must find that such a cause of action does exist and that the trial court, therefore, abused its discretion by sustaining the demurrer to the fifth cause of action of plaintiff's complaint without leave to amend.

Defendants' concern that permitting plaintiff to maintain a cause of action under section 49, subdivision (c), will result in double recovery by virtue of amounts recoverable by an employer under the subrogation provisions of the Labor Code is unfounded.  “The general rule of compensatory damages bars double recovery for the same wrong.”  (Krusi v. Bear, Stearns & Co. (1983) 144 Cal.App.3d 664, 673, 192 Cal.Rptr. 793;  see generally, 4 Witkin, Summary of Cal.Law (8th ed. 1974) Torts, §§ 844, 874, pp. 3139, 3162.)

 Having found that a cause of action under section 49, subdivision (c), was properly alleged in the complaint, we proceed to determine whether it was nevertheless subject to a special demurrer for failure to allege whether the employment contract was oral or written.   We find that it was not.   The employment relationship, or “personal relations” of “master” and “servant,” whether or not that relationship is governed by contract, is the basis for an action under section 49, subdivision (c).  (Darmour Prod. Corp. v. H.M. Baruch, supra, 135 Cal.App. at pp. 353–354, 27 P.2d 664.)   As such, it is not “an action founded upon a contract” within the meaning of Code of Civil Procedure section 430.10, subdivision (g), and, thus, not subject to a special demurrer on that ground.

 In light of the above discussion, the award of $250 in sanctions against plaintiff for seeking reconsideration of the order sustaining the demurrer was improper.  “Until entry of judgment a ruling upon a demurrer is not res judicata and may be changed in the discretion of the trial court.”   (Collins v. Marvel Land Co. (1970) 13 Cal.App.3d 34, 45, 91 Cal.Rptr. 291;  3 Witkin, Cal.Procedure (2d ed. 1971) Pleading, § 836, p. 2443.)

DISPOSITION

The judgment of July 19, 1983, is reversed.   The trial court is directed to vacate the minute order entered April 8, 1983, sustaining the demurrer without leave to amend and to enter a new and different order overruling the demurrer.   The trial court is further directed to vacate its minute order of June 13, 1983, and the judgment of July 25, 1983, entered thereon.   The cause is remanded for further proceedings consistent with the views expressed in this opinion.

FOOTNOTES

1.   “A judgment of dismissal after a demurrer has been sustained without leave to amend will be affirmed if proper on any grounds stated in the demurrer, whether or not the court acted on that ground.   [Citations.]”  (Carman v. Alvord (1982) 31 Cal.3d 318, 324, 182 Cal.Rptr. 506, 644 P.2d 192.)   The demurrer here did not allege failure to state a cause of action as one of its grounds.   Nevertheless, this is a pure question of law that is not waived by defendants' failure to raise it by demurrer or answer and is, therefore, properly before us.  (Code Civ.Proc., § 430.80;  Carman v. Alvord, supra, 31 Cal.3d at p. 324, 182 Cal.Rptr. 506, 644 P.2d 192.)All statutory references are to the Civil Code, unless otherwise indicated.

ARGUELLES, Associate Justice.

KINGSLEY, Acting P.J., and BYRNE, J.*, concur.