California Gasoline Retailers v. Regal Petroleum Corp.

• Decision Date: 14 October 1958
• Citation: 330 P.2d 778,50 Cal.2d 844
• Court: California Supreme Court
• Parties: CALIFORNIA GASOLINE RETAILERS (a Nonprofit Corporation) and Philip M. Hudson, Plaintiffs and Respondents, v. REGAL PETROLEUM CORPORATION OF FRESNO, Inc. (a Corporation), et al., Defendants and Appellants. S. F. 19635.

Page 778

330 P.2d 778

50 Cal.2d 844

CALIFORNIA GASOLINE RETAILERS (a Nonprofit Corporation) and Philip M. Hudson, Plaintiffs and Respondents, v. REGAL PETROLEUM CORPORATION OF FRESNO, Inc. (a Corporation), et al., Defendants and Appellants.

S. F. 19635.

Supreme Court of California, In Bank.

Oct. 14, 1958.

A. E. Stebbings, C. Neil Ash, James D. Garibaldi, Los Angeles, Frank C. Lerrigo, Eckhart A. Thompson, Fresno, Martin J. Weil, Brewster L. Arms, Los Angeles, Robert R. Rosson and A. Hugo Pearson, Hanford, for appellants.

Eugene S. Clifford, Caspar W. Weinberger, Heller, Ehrman, White & McAuliffe, San Francisco, Philip C. Wilkins, Sacramento, Spencer E. Van Dyke, Smith Van Dyke & Hildreth, Los Angeles, David F. Crossen, Clayton, Mo., and Thomas B. Curtis, St. Louis, Mo., as amici curiae on behalf of appellants.

Rowell, Lamberson & Thomas, Milo E. Rowell, Richard Z. Lamberson and Breckinridge Thomas, Fresno, for respondents.

Edmund G. Brown, Atty. Gen., Clarence A. Linn, Asst. Atty. Gen., and Victor Griffith, Deputy Atty. Gen., as amici curiae on behalf of respondents.

CARTER, Justice.

The original plaintiff in this action for injunctive relief was California Gasoline Retailers, a nonprofit California corporation consisting of members distributing the products of the major oil companies, Standard Oil, Shell Oil, Union Oil and others. The defendants, too numerous to name individually, are members of three groups of independent service station operators. For convenience, they have been, and will be, referred to as the Regal Group, the Norwalk Group and the Beacon Group.

Plaintiff, some 60 of whose members were in the Fresno area where this case arose, brought suit against the defendants charging them with giving away their products in violation of the Unfair Trade Practices Act (Bus. & Prof.Code, §§ 17000-17101); with fraudulent and misleading advertising; and with conducting a lottery in violation of sections 320, 321 and 322 of the Penal Code. The trial court found in favor of defendants on the causes of action charging unfair trade practices and fraudulent advertising, but in favor of the plaintiff on the cause of action charging them with conducting a lottery. After the evidence had been concluded and both parties had rested, the plaintiff made a motion for leave to file an amendment to the complaint and to add one Philip M. Hudson as a party plaintiff. Hudson was president of plaintiff corporation and one of its members. Plaintiff's motion was denied with the court reserving the right to alter its ruling if it could be done without prejudice to the defendants. On the day the decision was rendered, the court granted plaintiff's motion to amend.

All defendants appeal, contending that (1) the plaintiff corporation was not a proper party plaintiff; (2) the court abused its discretion in permitting the amendment and joinder of Hudson as a plaintiff; (3) their advertising and merchandising program did not constitute a lottery as defined by section 319 of the Penal Code; (4) equity will not enjoin the commission of a crime unless the activities constitute a public nuisance, or direct pecuniary loss has been sustained by the plaintiff.

It is also contended that article IV, section 26, of the California Constitution evidences a strong public policy against lotteries in this state. That section, so far as is here pertinent, provides: 'The Legislature shall have no power to authorize lotteries or gift enterprises for any purpose and shall pass laws to prohibit the sale in this State of lottery or gift enterprise tickets or tickets in any scheme in the nature of a lottery.' While the section just quoted shows a legislative intention that lotteries are to be prohibited in this state, it is obvious from the language thereof that it is not a 'self-enforcing' or self-executing' provision such as is found in article I, section 14, of the Constitution (Rose v. State of California, 19 Cal.2d 713, 720, 721, 123 P.2d 505). The language shows that it was intended that the Legislature should have no power to authorize lotteries by legislation and that it was to enact legislation prohibiting lotteries. It is also apparent from a reading of the provisions that a lottery is not defined. Pursuant to the mandate of the just-quoted section, the Legislature has enacted legislation defining and prohibiting lotteries and these provisions are hereinafter discussed. Plaintiff Corporation as Proper Party Plaintiff; ¹ Joinder of Hudson as Party Plaintiff:

Plaintiff corporation is composed of members who sell gasoline and other related products. Some 60 odd members reside in Fresno County and there are others elsewhere in the state. Plaintiff argues that it is a proper plaintiff by virtue of section 382 of the Code of Civil Procedure which provides that '* * * when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impractical to bring them all before the Court, one or more may sue or defend for the benefit of all.' Defendants contend that there was no authorization to the plaintiff corporation to bring the suit; that plaintiff corporation is not, itself, engaged in selling gasoline; that there are more defendants than plaintiffs and that it would not be impracticable to bring them before the court. It is true, as stated by defendants, that the complaint does not allege that plaintiff was authorized to bring the suit on behalf of its members. It is alleged that plaintiff's members have suffered loss of customers and loss of sales of gasoline and other products and related commodities and 'have been injured in their property and businesses * * *'; that plaintiff will also suffer injury and loss by 'reason of the inability of said members to pay dues and assessments and to participate as members of Plaintiff Corporation.'

In Haggerty v. County of Kings, 117 Cal.App.2d 470, 477, 256 P.2d 393, 398, the court noted: 'In the present case it is alleged in the complaint that plaintiff is the secretary of the California State Federation of Labor and has been authorized to bring this action in a representative capacity; that the Federation and its members are engaged in peaceful picketing; that the defendants have threatened to institute and are instituting prosecution of such pickets and members under the provisions of the two ordinances involved and that the members of the Federation constitute a class similarly situated with respect to the matters alleged. These allegations must be accepted as true where, as here, the demurrer to the complaint was sustained without leave to amend.' (Emphasis added.) It would appear that the court in the Haggerty case considered an allegation as to authorization to bring the suit necessary as well as an allegation to the effect that the members represented constituted a class similarly situated. There are no such allegations in the complaint under consideration. It appears that the interest of plaintiff corporation and its members may fall within the rule of Parker v. Bowron, 40 Cal.2d 344, 352, 353, 254 P.2d 6, 10: 'The statutory provision (Code Civ.Proc. § 382) is based upon the doctrine of virtual representation and is an exception to the general rule of compulsory joinder of all interested parties. Weaver v. Pasadena Tournament of Roses Ass'n, 32 Cal.2d 833, 837, 198 P.2d 514. It is a codification of 'the common law theory of convenience to the parties when one or more fairly represent the rights of others similarly situated who could be designated in the controversy.' Fallon v. Superior Court, 33 Cal.App.2d 48, 50, 90 P.2d 858. '(R)egardless of which of the alternative conditions of the statute is invoked as authorizing a class proceeding, it has been uniformly held that there must be a well-defined 'community of interest' in the questions of law and fact involved as affecting the parties to be represented.' Weaver v. Pasadena Tournament of Roses Ass'n, supra (32 Cal.2d 833, 198 P.2d 517); Jellen v. O'Brien, 89 Cal.App. 505, 509, 264 P. 1115.

'No facts have been alleged to bring Parker within this well established rule regarding class suits. He does not claim to be a member of the interested class, and there is nothing to indicate that he is 'similarly situated' with those whom he pretends to represent. There can be no 'common or general interest' in the subject matter of the controversy, Weaver v. Pasadena Tournament of Roses, supra, 32 Cal.2d at page 842, 198 P.2d at page 518, between Parker, who is not employed by the city, and city employees. Parker cannot give himself standing to sue by purporting to represent a class of which he is not a member.' In other words if the rule of Parker v. Bowron, supra, 40 Cal.2d 344, 352, 353, 254 P.2d 6, is strictly applied, there is no community of interest between plaintiff and its members and they are not 'similarly situated' since plaintiff is complaining of the inability of its members to pay dues and assessments, and the members are alleged to have been injured by defendants through loss of business. It would thus appear that plaintiff corporation is not a proper party plaintiff.

The amendment to the complaint and the inclusion of Hudson as a party plaintiff have the effect of curing the original defective pleading. Hudson is a member of plaintiff corporation and therefore 'similarly situated' with the other members. Section 473, Code of Civil Procedure, provides that 'The court may, in furtherance of justice, and on such terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party. * * *' In Feigin v. Kutchor, 105 Cal.App.2d 744, 747, 748, 234 P.2d 264, it was held that a court may, in its discretion, permit amendment of pleadings after the evidence is all in, pending argument of counsel, and even after submission of the cause. The statutory provision relating to amendments to the pleadings in the furtherance of justice...