Continental Ins. Co. v. Crockett

• Decision Date: 20 December 1985
• Citation: 223 Cal.Rptr. 772,177 Cal.App.3d Supp. 12
• Court: California Superior Court
• Parties: 177 Cal.App.3d Supp. 12 CONTINENTAL INSURANCE COMPANY, Plaintiff, Cross-Defendant and Respondent, v. Donald CROCKETT, Defendant, Cross-Complainant and Appellant; Larry Chambers et al., Defendants and Respondents. Civ. A. 16545. Appellate Department, Superior Court, Los Angeles County, California

Page 772

223 Cal.Rptr. 772

177 Cal.App.3d Supp. 12

CONTINENTAL INSURANCE COMPANY, Plaintiff, Cross-Defendant and Respondent, v. Donald CROCKETT, Defendant, Cross-Complainant and Appellant Larry Chambers et al., Defendants and Respondents.

Civ. A. 16545.

Appellate Department, Superior Court, Los Angeles County, California.

Dec. 20, 1985.

Certified for Partial Publication ^*

Condie, Lee & Gee and R. Stevens Condie, for defendant, cross-complainants and appellant.

Anderson, McPharlin & Conners and James L. Trachy, for plaintiff, cross-defendant and respondent.

No appearance for defendants and respondents.

COOPERMAN, Presiding Judge.

On September 11, 1984, plaintiff Continental Insurance Company (hereinafter Continental) filed a complaint ¹ in interpleader, for declaratory relief, for indemnity, and for reimbursement based on the following pertinent allegations: Plaintiff is a New Hampshire corporation authorized to conduct and conducts a general insurance and surety business in California. Defendants Richard V. Stanton, Donald E. Crockett, Larry Chambers, and Howard Mandel are California residents. Defendant J & T Trucking Company is a California Corporation. Defendant Stanton, dba Motor Truck Transport, was duly licensed as and was doing business as a trucking and hauling business pursuant to the laws of California.

On or about February 5, 1979, defendant Stanton executed and delivered to plaintiff a written application for a surety bond pursuant to which Stanton agreed to reimburse and indemnify plaintiff from any and all damages, expenses, etc., including attorney fees, that arose by reason of its suretyship obligations under the applied-for surety bond. Exhibit "1" to the complaint was a copy of the application.

On or about April 4, 1979, plaintiff, as surety, and Stanton, as principal, executed and delivered Sub-Hauler's Bond No. 2151656 in favor of the People of the State of California in the penal sum of $10,000 and conditioned as required by sections 3575 and 1074 of the California Public Utilities Code. Exhibit "2" to the complaint was a copy of the bond. The bond was to be effective as of February 20, 1979, and to remain in effect until it was cancelled.

On or about July 12, 1979, the bond was amended to change the name of the principal under the bond from Richard V. Stanton to Richard V. Stanton, dba Motor Truck Transport. Exhibit "3" to the complaint was a copy of the bond amendment, which was effective as of June 28, 1979, until cancelled.

Plaintiff sought to interplead the penal sum of the bond, i.e., $10,000, for the reason that defendants Crockett, Chambers, Mandel, and J & T Trucking Company each had asserted claims against plaintiff on the bond for losses or damages claimed to have been suffered by them on account of Stanton's actions during the period the bond was in effect, which claims aggregated to a sum substantially in excess of the $10,000 limit of the bond. In conjunction with the interpleader cause of action, plaintiff requested an award of attorney fees.

Plaintiff also sought a declaration concerning the duties plaintiff may owe defendants and defendants' respective rights as to the bond. As for Stanton, plaintiff requested recovery of costs, including attorney fees, on the alternative theories of express indemnity and statutory reimbursement pursuant to Civil Code section 2847.

Crockett answered by denying that plaintiff's liability on the bond was limited to the penal sum of $10,000 and that plaintiff was entitled to recover its costs and attorney fees.

Crockett's cross-complaint, which is dated February 25, 1983, alleged in paragraph 6 that "[w]ithin one year last past [he] performed subhaul services for [Stanton] with a total aggregate value of $10,305.31. [He] demanded that sum from [Stanton] on or about June 1, 1982, but [Stanton] has failed and refused to pay [Crockett] anything but the sum of $600 in cash and property worth $900, leaving due and owing the sum of $8,805.31." Crockett sought recovery of $8,805.31 plus interest from Stanton and plaintiff for the performed but unpaid subhaul services and for a declaration that Crockett was entitled to receive the full value of that claim against the bond. It was alleged in pertinent part that plaintiff/cross-defendant Continental was a surety on a bond issued pursuant to California Public Utilities Code sections 1074 and 3575 in the amount of $15,000 for the benefit of subhaulers engaged by Stanton, dba Motor Truck Transport.

Continental answered the cross-complaint by generally denying the material allegations. By way of affirmative defenses, it asserted that the cross-complaint failed to state a cause of action against it and that the bond in question was limited on its face to the penal sum of $10,000, which sum could not be increased or altered since to do so would violate the contracts clause of article I, section 9, of the California Constitution. ²

The settled statement reflects the following transpired at trial:

Present at trial were James Trachy, attorney for plaintiff and cross-defendant Continental Insurance Co.; R. Stevens Condie, attorney for interpleader defendant and cross-complainant Donald Crockett; Donald Crockett; Gerald Gress, attorney for interpleader defendant Larry Chambers; and interpleader defendant Howard Mandel, dba Mobile Body & Paint, in propria persona. There was no appearance by defendant Richard V. Stanton.

No testimony was received.

Condie advised the court of the issues and positions of the parties as follows:

Plaintiff and cross-defendant Continental Insurance Company had submitted the sum of $10,000 to be divided by interpleader among the four "sub-haul" truckdrivers who had not been paid for their work by cross-defendant Stanton and who were the interpleader defendants in the case. The indebtedness of Stanton to the four truck drivers exceeded $50,000.

Crockett brought a cross-complaint alleging that the bond obligation of Continental Insurance Company is not $10,000 but $15,000. No other party joined in the cross-complaint.

In the event Crockett prevailed, he asserted a right to enjoy sole payment from the additional $5,000, which would reduce the value of his claim on the rest of the bond.

Condie then advised the court of the following stipulations:

All parties agreed that defendant J & T Trucking should receive $800 from the bond, in satisfaction of its claim thereon.

Of the remaining truckers, the following amounts were stipulated as the full value of each party's claim:

1. CHAMBERS: $47,000.00

2. CROCKETT: $8,000.00

3. MANDEL (MOBILE BODY & PAINT): $2,535.05

In the event that Crockett's claim for $5,000 was denied, the proportionate interests of the remaining three truckers would be:

1. CHAMBERS: .806

2. CROCKETT: .151

3. MANDEL: .043

On the other hand, if Crockett's claim for $5,000 was upheld the proportionate interests of the remaining three truckers would be:

1. CHAMBERS: .881

2. CROCKETT: .071 (in addition to the $5,000)

3. MANDEL: .048

After Trachy and Condie briefly argued their respective legal positions concerning the merits of the cross-complaint, they agreed to submit the matter on their trial briefs and the evidence supplied by Continental's Evidence Code section 1511 Notice and Code of Civil Procedure section 98 Notice. ³ Trachy also argued briefly in support of Continental's request for attorney fees payable from the interpleaded amount of the bond pursuant to Code of Civil Procedure section 386.6.

All parties present agreed to submit the matter.

The court's minutes reflect that the trial took place on May 16, 1984, and that after the matter was submitted, the trial court on the same day rendered judgment for the interpleader defendants on the complaint. It ordered plaintiff to pay $10,000 less $1,000 attorney fees and costs and declared that after such payment plaintiff would be discharged from further liability to defendants and cross-complainant. Specifically, the judgment, as entered, reveals that J & T Trucking Company was awarded the sum of $800, Crockett the sum of $582.20, Chambers the sum of $7,224.20, and Mandel the sum of $393.20. Plaintiff/cross-defendant Continental prevailed against Crockett on the latter's cross-complaint but was given no award for costs or attorney fees in that regard.

On appeal from the judgment Crockett complains that the court erred in limiting his recovery on the complaint to the sum of $582.20 and in failing to award him any relief on his cross-complaint. Essentially, his position is three-pronged: (1) the amount of the bond is $15,000, not $10,000; (2) it was error to award $1,000 in costs and attorney fees to Continental from the amount of the bond; and (3) the court made an arithmetical error in computing the respective amounts of the judgment in favor of each defendant, except J & T Trucking.

We find no merit to Crockett's first and second claims. We agree, however, that the judgment in favor of each defendant, except J & T Trucking, does in fact reflect arithmetical errors. We therefore affirm the judgment as modified to reflect the correct amounts.

I. ⁴ SURETY'S AGGREGATE LIABILITY ON THE BOND

Crockett concedes that the face amount of the bond in question is $10,000. Nonetheless, he asserts that the actual amount of the bond is in fact $15,000. The keystone of his position is his assertion that $15,000 was the amount of bond required under Public Utilities Code sections 1074 and 3575 and Public Utilities Commission General Order [G.O.] No. 102-H at the time the claims in question arose.

Pointing to the fact that the bond agreement here expressly states that the amount of the bond "has been determined by the Commission in its General Order No. 102 series to secure the payment of the claim of subhaulers, [etc.] (emph. added)" and to the fact that the bond has no expiration date, Crockett contends that the significance of those facts is to render the amount of the bond at issue flexible,...