Gamer v. Dupont Glore Forgan, Inc.

CourtCalifornia Court of Appeals
Writing for the CourtWHELAN; GERALD BROWN, P.J., and COLOGNE
Citation65 Cal.App.3d 280,135 Cal.Rptr. 230
Parties, 25 UCC Rep.Serv. 550 Peter P. GAMER, etc., Plaintiff and Appellant, v. duPONT GLORE FORGAN, INC., et al., Defendants and Respondents. Civ. 14578.
Decision Date24 December 1976

Page 230

135 Cal.Rptr. 230
65 Cal.App.3d 280, 25 UCC Rep.Serv. 550
Peter P. GAMER, etc., Plaintiff and Appellant,
v.
duPONT GLORE FORGAN, INC., et al., Defendants and Respondents.
Civ. 14578.
Court of Appeal, Fourth District, Division 1, California.
Dec. 24, 1976.
Hearing Denied Feb. 17, 1977.

[65 Cal.App.3d 282]

Page 231

Peter P. Gamer, White, Price, Peterson & Robinson, San Diego, for plaintiff and appellant.

MacDonald, Halsted & Laybourne, Peter Brown Dolan, Los Angeles, Hervey, Mitchell, Ashworth & Keeney and Thomas R. Mitchell, San Diego, for defendants and respondents.

[65 Cal.App.3d 283] WHELAN, Associate Justice. *

Peter P. Gamer, plaintiff, has appealed from a judgment entered February 7, 1975, in his class action against duPont Glore Forgan Incorporated (Glore Forgan), defendant, to recover allegedly usurious interest paid to Glore Forgan. The judgment followed the granting of Glore Forgan's motion for summary judgment.

The action was commenced on August 30, 1973.

Plaintiff is a California lawyer who in 1966, while practicing in Beverly Hills, arranged for a securities margin account with Walston & Co., Inc. (Walston) at the Beverly Hills office of that firm.

The agreement signed by plaintiff in opening the margin account was on a printed form prepared by Walston. It contained 20 numbered paragraphs, numbers 4, 18 and 19 of which were as follows:

'4. All securities and commodities or any other property, how or hereafter held by you, or carried by you for the undersigned (either individually or jointly with others), may from time to time and without notice to the undersigned, be carried in your general loans and may be pledged, repledged, hypothecated or rehypothecated, or loaned by you to either yourselves as brokers or to others, separately or in common with other securities and commodities or any other property, for the sum due to you thereon or for a greater sum and without remaining in your possession and control for delivery a like amount of similar securities or commodities.'

'18. The provisions of this agreement shall in all respects be construed according to, and the rights and liabilities of the parties hereto shall in all respects be governed by, the laws of the State of New York.'

'19. The provisions of this agreement shall be continuous and shall cover individually and collectively all accounts which the undersigned may open or reopen with you, and shall inure to the benefit of yourselves, your successors and assigns and shall be binding upon the undersigned, and/or the estate, executors, administrators and assigns of the undersigned.'

The agreement showed on its face that Walston was a member of the New York Stock Exchange and contained provisions covering the [65 Cal.App.3d 284] customs of stock exchanges for margin accounts (see 'Law of Stockbrokers and Stock Exchanges,' (1931) by Charles H. Meyer). Among such customs is the provision that the broker may use shares purchased for the account of the customer as collateral to obtain loans.

Page 232

Walston, on July 2, 1973, transferred to Glore Forgan all of its accounts and all contractual rights in connection with them, and thereafter was declared bankrupt.

The transfer agreement between Walston and Glore Forgan provided:

'In reliance upon the respective representations and warranties of the parties herein and in the Master Agreement and upon the terms and subject to the conditions hereinafter set forth, on the Closing Date, Walston sold, conveyed, assigned, transferred, delivered and set over to duPont, and duPont purchased, received and accepted from Walston, all of Walston's right, title and interest in and to all accounts and related securities positions on Walston's books at the opening of business on July 2, 1973 arising from the pledge, loan, borrowing, hypothecation, delivery or failure to make delivery of customer securities, and all other accounts, including all cash balances and securities positions relating to the purchase, sale, transfer and recording of customer transactions.'

Walston was made a party defendant, but proceedings against it were ordered stayed by a United States District Court in the State of New York, in bankruptcy.

From November 1966 throughout 1973, plaintiff maintained a debit balance in his margin account with Walston, on which he was charged interest at varying rates. From July 1973 through January 10, 1974, the margin account was financed by Glore Forgan. From July 1, 1973 to September 26, 1973, Glore Forgan charged interest at a rate which ranged from 9 1/2% To 12 1/4%.

California Constitution, Article XX, section 22, fixes a maximum interest rate that may be charged of 10% Per annum, except by certain classes of lenders, such as banks and personal property brokers.

On September 18, 1973, the California Legislature amended the Personal Property Broker's Act to permit stockbrokers to qualify thereunder. Glore Forgan was so licensed on September 26, 1973 and since then has been authorized to charge interest at rates up to 30% Per annum (Fin.Code § 22451).

[65 Cal.App.3d 285] Plaintiff's claim against Glore Forgan, therefore, is limited to interest paid between July 1, 1973 and September 26, 1973.

New York law at all times relevant has permitted the charging of interest at a rate higher than that charged by Glore Forgan.

The issues before us are whether the choice of law provision set out in paragraph 18 of the margin account is invalid as a matter of law because contained in a contract of adhesion; and, if not, whether it is invalid because (a) there was insufficient relationship with the State of New York between the parties to the contract and the subject matter of the contract; or (b) the application of the choice of law provision would do violence to the declared policy of California against usurious transactions; and finally, whether Glore Forgan has the benefit of the choice of law provisions, if it is valid.

Plaintiff states the choice of law provision amounts to a waiver of his rights under the California usury laws. It is clear, however, that the margin account contract is not couched in terms of waiver and that it is not directed toward an evasion of California's laws against usury.

Civil Code section 3513 provides:

'Anyone may waive the advantage of a law intended solely for his benefit. But a law established for a public reason cannot be contravened by a private agreement.'

That section refers to an expressed waiver of the benefits of a statute, such as the statute of limitations, or any other statute specifically mentioned or made identifiable.

The concept of a choice of law provision,...

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42 practice notes
  • Nedlloyd Lines B.V. v. Superior Court
    • United States
    • United States State Supreme Court (California)
    • August 31, 1992
    ...v. Provence (1982) 129 Cal.App.3d 790, 794-795, 181 Cal.Rptr. 340 [no explicit reference]; Gamer v. duPont Glore Forgan, Inc. (1976) 65 Cal.App.3d 280, 287, 135 Cal.Rptr. 230 [explicit reference to Restatement section 187].) We reaffirm this approach. In determining the enforceability of ar......
  • Application Group, Inc. v. Hunter Group, Inc., No. A071528
    • United States
    • California Court of Appeals
    • February 23, 1998
    ...11 Cal.Rptr.2d 330, 834 P.2d 1148; see also S.A. Empresa, supra, 641 F.2d at p. 749, citing Gamer v. duPont Glore Forgan, Inc. (1976) 65 Cal.App.3d 280, 287-288, 135 Cal.Rptr. 230 [explicit reference to Restatement § The Nedlloyd court elaborated: "[T]he proper approach under Restatement se......
  • Washington Mutual Bank v. Superior Court, No. S070418.
    • United States
    • United States State Supreme Court (California)
    • January 25, 2001
    ...Handling, Inc. v. Crown Controls Corp. (1982) 137 Cal.App.3d 99, 108, 186 Cal. Rptr. 740; Gamer v. duPont Glore Forgan, Inc. (1976) 65 Cal.App.3d 280, 286-287, 135 Cal.Rptr. 230; Windsor Mills, Inc. v. Collins & Aikman Corp. (1972) 25 Cal.App.3d 987, 995, fn. 6, 101 Cal.Rptr. 347.) More imp......
  • Fox v. Peck Iron and Metal Co., Inc., Complaint No. C80-0253-M
    • United States
    • United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — Southern District of California
    • December 22, 1982
    ...at least when viewed in the choice of law context. 227 Cal.App.2d at 20, 38 Cal.Rptr. 376. But see Gamer v. DuPont Glore Forgan, Inc., 65 Cal.App.3d 280, 287, 135 Cal.Rptr. 230 Then in 1970, in a case involving a sale/leaseback situation, it appears that California law was applied based on ......
  • Request a trial to view additional results
42 cases
  • Nedlloyd Lines B.V. v. Superior Court
    • United States
    • United States State Supreme Court (California)
    • August 31, 1992
    ...v. Provence (1982) 129 Cal.App.3d 790, 794-795, 181 Cal.Rptr. 340 [no explicit reference]; Gamer v. duPont Glore Forgan, Inc. (1976) 65 Cal.App.3d 280, 287, 135 Cal.Rptr. 230 [explicit reference to Restatement section 187].) We reaffirm this approach. In determining the enforceability of ar......
  • Application Group, Inc. v. Hunter Group, Inc., No. A071528
    • United States
    • California Court of Appeals
    • February 23, 1998
    ...11 Cal.Rptr.2d 330, 834 P.2d 1148; see also S.A. Empresa, supra, 641 F.2d at p. 749, citing Gamer v. duPont Glore Forgan, Inc. (1976) 65 Cal.App.3d 280, 287-288, 135 Cal.Rptr. 230 [explicit reference to Restatement § The Nedlloyd court elaborated: "[T]he proper approach under Restatement se......
  • Washington Mutual Bank v. Superior Court, No. S070418.
    • United States
    • United States State Supreme Court (California)
    • January 25, 2001
    ...Handling, Inc. v. Crown Controls Corp. (1982) 137 Cal.App.3d 99, 108, 186 Cal. Rptr. 740; Gamer v. duPont Glore Forgan, Inc. (1976) 65 Cal.App.3d 280, 286-287, 135 Cal.Rptr. 230; Windsor Mills, Inc. v. Collins & Aikman Corp. (1972) 25 Cal.App.3d 987, 995, fn. 6, 101 Cal.Rptr. 347.) More imp......
  • Fox v. Peck Iron and Metal Co., Inc., Complaint No. C80-0253-M
    • United States
    • United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — Southern District of California
    • December 22, 1982
    ...at least when viewed in the choice of law context. 227 Cal.App.2d at 20, 38 Cal.Rptr. 376. But see Gamer v. DuPont Glore Forgan, Inc., 65 Cal.App.3d 280, 287, 135 Cal.Rptr. 230 Then in 1970, in a case involving a sale/leaseback situation, it appears that California law was applied based on ......
  • Request a trial to view additional results

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