Fomco, Inc. v. Joe Maggio, Inc.

• Decision Date: 27 October 1960
• Citation: 8 Cal.Rptr. 459,356 P.2d 203
• Court: California Supreme Court
• Parties: FOMCO, INCORPORATED (a Corporation), Respondent, v. JOE MAGGIO, INC. (a Corporation), et al., Appellants. L. A. 25514.

Page 459

8 Cal.Rptr. 459

356 P.2d 203

FOMCO, INCORPORATED (a Corporation), Respondent, v. JOE MAGGIO, INC. (a Corporation), et al., Appellants.

L. A. 25514.

Supreme Court of California, In Bank.

Oct. 27, 1960.

Rehearing Granted Nov. 25, 1960.

Opinion vacated 10 Cal.Rptr. 462.

Opinion, 6 Cal.Rptr. 82, vacated.

Musick, Peeler & Garrett and Bruce E. Clark, Los Angeles, for appellants.

McCarroll & McCarroll, Neil G. McCarroll, Los Angeles, and Louis W. Lawson, Santa Monica, for respondent.

McCOMB, Justice.

This cause was transferred to this court after decision by the District Court of Appeal, Second Appellate District, Division Two. Upon further examination of the record, we adopt the opinion of that court prepared by Mr. Justice Ashburn, with such omissions and additions as hereinafter appear, as and for the decision of this court. As modified, it reads:

Appeal from judgment for damages growing out of breach of a contract for sale of certain crops of carrots. The judgment runs against Joe Maggio, Inc., a corporation, and Joe Maggio, an individual, in the sum of $30,395.64, plus a $5,000 attorney fee assessed in favor of plaintiff against the corporate defendant only. It was held liable for breach of contract, and Joe Maggio individually for the inducement of said breach.

A written agreement was made on October 1, 1957, between Joe Maggio, Inc., as seller, and Fomco, Inc., as buyer, which provides that Joe Maggio, Inc., agrees to sell and Fomco agrees to buy, during the 1957-1958 carrot season in Imperial County, approximately 4,000 tons of carrots for the sum of $40,000, payable $20,000 down, $10,000 on or before November 1, 1957, and $10,000 on or before December 1, 1957; seller represents that it has the right of exclusive possession of all fields in said county which are to be harvested; agrees that the carrots shall be delivered by seller to buyer in the field unharvested, at a specified rate of delivery and that seller will notify buyer immediately upon the beginning of the harvesting season; that buyer shall have the right to enter any of seller's fields and to do harvesting therein; seller warrants and represents that it has title to all carrots to be delivered under the agreement; buyer shall cause the carrots to be harvested and shall pack and sell the same. It is develops that more than 4,000 tons have been delivered to buyer during the season, it shall pay for tthe additional tonnage at the rate of $10 per ton. If the crop proves to be less than 4,000, rebate shall be made to buyer at the rate of $10 per ton. Net proceeds shall be divided equally between buyer and seller; buyer to keep and submit itemized accounts. Packing charges are fixed and specified. Risk of loss on the crop shall rest with seller until same has been actually harvested; seller to share no losses incurred through sales of carrots. Provision is made for award of a reasonable attorney fee against the losing aprty in any action brought to enforce the terms of the agreement. This contract was signed on behalf of Joe Maggio, Inc., by Joe Maggio, who was president of the corporation. Carrots proved to be scare and the price very high that season (as high as $90 a ton for topped carrots) and Maggio deliberately refused to permit, and prevented, plaintiff from harvesting more than 2312.3 tons. The court awarded judgment for profits thus lost by plaintiff. Defendants make two points, (1) plaintiff cannot recover because it did not have a license as 'dealer' or 'cash buyer' as required by SECTION 1263, AGRICULTURAL CODE, (2)¹ the evidence is insufficient to support the finding that the written contract of October 1, 1957, signed by both parties, was in fact the contract agreed upon.

The court found: 'The only contract entered into between the parties hereto was the contract dated October 1, 1957, a copy of which is attached to plaintiff's complaint herein and marked Exhibit A.'

Upon motion for new trial the judge referred to Maggio as 'leading carrot grower in Imperial Valley' and the claim of insufficiency of the evidence as 'a last minute gesture to overthrow a case which was painstakingly tried and * * * I will say that the Court at first was inclined to give some credence to the Maggio position, but when Mr. Maggio testified, there isn't the slightest doubt in the mind of this Court that he never intended when market situations and weather situations changed his original idea as to what would happen, he never intended to go through with this contract and did the utmost that he possibly could to prevent these people from getting the carrots which they under their contract would be entitled to.' Defendant's claim that he could not read and did not know the contents of the contract was said to be one 'you have to take with a very large grain of salt' indicating 'that the justice on the part of the position of the defendant here is of minimal character if at all.'

There is abundant evidence to support these views of the trial judge, and the argument of this question of sufficiency of the evidence is one looking toward a reweighing of the evidence, which requires no further consideration.

The fact of absence of a license was established, but the claim was first raised on motion for new trial by counsel newly substituted. Neither the pleadings nor the pretrial conference proceedings reflect it. Want of a requisite license of plaintiff was presented as newly discovered evidence. Confined to that narrow ground the action of the court in denying the motion is easily justified by the record. But the claim is one of illegality of a sort which must challenge the attention of the court whenever and however raised.

Superficially considered, Lewis & Queen v. N. M. Ball Sons, 48 Cal.2d 141, 148 (308 P.2d 713), seems to lend support to defendants' position. It deals with a statute, section 7031, Business and Professions Code, ² which forbids maintenance of an action for collection of compensation by a contractor who cannot allege and prove the possession of a license. The opinion treats this type of statutory noncompliance as one of illegality of the same quality as a corrupt bargain. But, as will presently appear, it recognizes, in the absence of legislative indication to the contrary, the propriety of different treatment of illegal acts which are malum prohibitum and those which are malum in se. Essentially the decision rests upon said section 7031, Business and Professions Code. The Agricultural Code contains no such penalty as that of said section 7031, and we hare deal with malum prohibitum only, that is to say, the failure to procure the license required by section 1263, Agricultural Code, is punishable as a misdemeanor or affords ground for a prohibitory injunction or for a civil penalty of $500 for each violation (Agr.Code, § 1273), but there is no inhibition upon maintaining an action upon transactions had by one who has failed to procure the required license.

Restatement of the Law of Contracts, section 600, page 1115: 'If neither the consideration for a promise nor the performance of the promise in an illegal bargain involves serious moral turpitude, and the bargain is not prohibited by statute, it is enforceable unless the plaintiff's case requires proof of facts showing the illegality, or they are pleaded by the defendant, and even in that event recovery may be allowed of anything that has been transferred under the bargain, or its fair value, if necessary to prevent a harsh forfeiture.' Comment a: '* * * If, however, the illegality is not serious, and neither public policy nor statute clearly requires denial of relief, courts refuse to give effect to facts showing illegality unless those facts are essential to establish a prima facie right of recovery or are pleaded by the defendant.' (P. 1115.) Illustration 3: 'A, a corporation, is prohibited by the law of State B from doing business in that State without securing a license. A does business therein by entering into a bargain with C for the sale of an automobile. A transfers the automobile to C in performance of the bargain, but C fails to pay as agreed. A can rescind the bargain and recover the automobile or its value.' (P. 1116.)

5 Williston on Contracts (rev. ed.), section 1630A, page 4567: 'Yet, if the illegality was not serious or if public policy does not clearly require denial of relief, the court may refuse thus to take notice of illegality which is not pleaded, but appears from the evidence given or offered. Such diversity of treatment would be inexplicable if all unlawful agreements were of necessity void.' Section 1632, page 4575: 'It should also be noticed that an executed illegal transaction though originating by agreement is effectual. If illegality made contracts void in a literal sense, it is hard to see how a transfer based on an illegal bargain could stand. Doubtless a statute may make an attempted contract or sale absolutely void, and instance of such statutes may be found, but such a construction will not be adopted unless plainly required by express language or public necessity.'

The Lewis & Queen opinion, supra, 48 Cal.2d 141, says at page 151, 308 P.2d 713, at page 719: 'In some cases, on the other hand, the statute making the conduct illegal, in providing for a fine or administrative discipline excludes by implication the additional penalty involved in holding the illegal contract unenenforceable; or effective deterrence is best realized by enforcing the plaintiff's claim rather than leaving the defendant in possession of the benefit; or the forfeiture resulting from unenforceability is disproportionately harsh considering the nature of the illegaility. In each such case, how the aims of policy can best be achieved depends on the kind of illegality and the particular facts involved. See Wilson v. Stearns, 123 Cal.App.2d 472, 481-482, 267 P.2d 59; John E. Rosasco Creameries, Inc. v. Cohen, 276 N.Y. 274, 278-280, 11 N.E.2d 908, 118 A.L.R....