George v. Double-D Foods, Inc.

Decision Date30 April 1984
Citation155 Cal.App.3d 36,201 Cal.Rptr. 870
CourtCalifornia Court of Appeals Court of Appeals
PartiesJane Pauline GEORGE, Administratrix of the Estate of Clarence Patrick George, Deceased, Plaintiff and Respondent, v. DOUBLE D FOODS, INC., Defendant and Appellant. Civ. 69363.

Van Petten & Holen and H.O. Van Petten, Los Angeles, for plaintiff and respondent.

INTRODUCTION

SPENCER, Presiding Justice.

Defendant Double D Foods, Inc. appeals from a judgment entered in favor of plaintiff Jane Pauline George, as administratrix of the estate of Clarence Patrick George, deceased, after a jury trial. The matter was tried on a theory of quantum meruit, to recover the unpaid balance due on the reasonable value of decedent's services as an executive employee of defendant for a period of 28 months. The jury found the uncompensated reasonable value of decedent's services to be $96,000 and further found that plaintiff was entitled to interest on that sum from the date suit was commenced. By stipulation, the sum of $5,800 was subtracted from the judgment in settlement of defendant's cross-complaint. Defendant's motion for a new trial was denied.

STATEMENT OF FACTS

The defendant was engaged in a specialized branch of the food trade known as vegetable oil processing. The decedent served as defendant's vice president in charge of sales from October 1, 1972 to December 15, 1974, as well as from March 1 to May 17, 1975.

For 25 years prior to his employment by defendant, decedent had been engaged in the vegetable oil processing trade, both as an employee and an owner-entrepeneur. Immediately prior to his employment by defendant, decedent served as the institutional products sales manager for Wilsey Food Products, a large oil processor.

The year before decedent entered defendant's employ, defendant constructed a new plant with a production capacity well beyond its sales volume; as a consequence, defendant was operating at a loss in 1972. Decedent was socially acquainted with the principal executives of defendant and, for some products, defendant was a customer of Wilsey Food Products while decedent served as Wilsey's sales manager. Several months of negotiations with defendant's executives preceded decedent's employment.

According to the decedent, he and defendant's agents had orally agreed he would be compensated by payment of a salary, as well as regular bonuses of 10 percent of defendant's yearly profits in excess of $200,000 and an option to purchase 10 percent of defendant's stock at its book value at the time of decedent's employment. A written contract of employment was prepared and signed by defendant, but never was presented to or signed by decedent. Defendant denied the oral promises of bonuses and a stock purchase option, asserting instead that decedent had been fully compensated for the reasonable value of his services by the payment of salary and discretionary bonuses.

Decedent originally left defendant's employ due to defendant's failure to provide a written contract, but later returned upon receiving a promise to negotiate a new and similar written agreement. Decedent once again resigned, when defendant terminated contract negotiations upon announcing the company was being sold to Miami Margarine. The instant suit followed.

CONTENTIONS
I

Defendant contends the trial court erred prejudicially in permitting the introduction in evidence of the following oral promises, as admissions of the reasonable value of decedent's services:

A. The promise to sell decedent 10 percent of defendant's stock at its book value at the time decedent commenced employment; and

B. The promise to pay decedent regular bonuses equal to 10 percent of defendant's annual profits in excess of $200,000.

II

Defendant further contends the trial court erred in instructing the jury that the terms of an oral or written agreement constituted an admission, an out-of-court declaration by a party to the action; and further, that understandings and agreements between the party performing services and the party receiving services could be considered as evidence of the reasonable value of the performing party's services.

III

Defendant asserts the trial court committed the further prejudicial evidentiary error of permitting plaintiff's counsel to read into evidence changes and additions which the decedent made in his deposition, inasmuch as defendant had no opportunity to cross-examine decedent with respect to the changes.

IV

Defendant further asserts the trial court erred in instructing the jury that prejudgment interest could be awarded in the instant action, for the following reasons:

A. Prejudgment interest is not available in a quantum meruit action, in that the damages are unliquidated;

B. Prejudgment interest is not available under the authority of Civil Code section 3287, subdivision (b), for unliquidated damages, in that a proceeding in quantum meruit is not an action in contract;

C. The trial court erroneously and arbitrarily fixed as the date from which interest could be awarded the date suit was commenced; and

D. The trial court erred in confiding the awarding of prejudgment interest to the discretion of the jury, in that Civil Code section 3287, subdivision (b) expressly places the matter within the discretion of the court.

DISCUSSION
I

Defendant contends the trial court erred prejudicially in permitting the introduction in evidence of certain oral promises, as admissions of the reasonable value of decedent's services. For the reasons set forth below, we agree in part.

PROMISE TO SELL DECEDENT STOCK

Defendant first challenges as erroneous the introduction in evidence of defendant's promise to sell decedent 10 percent of defendant's stock at its book value at the time decedent commenced employment. It is settled that an agreed price set forth in an unenforceable or invalid contract nevertheless is relevant as some evidence, or a criterion, of the reasonable value of the services rendered. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 886, 92 Cal.Rptr. 162, 479 P.2d 362; Burgermeister v. Wells Fargo Bank etc. Co. (1961) 191 Cal.App.2d 624, 631, 13 Cal.Rptr. 123; Parker v. Maier Brewing Co. (1960) 180 Cal.App.2d 630, 635, 4 Cal.Rptr. 825.) In other words, the "oral stipulations of the parties as to compensation to be paid for services rendered ... are in the nature of admissions by them as to the reasonable value of such services ...." (Offeman v. Robertson-Cole Studios (1926) 80 Cal.App. 1, 13, 251 P. 830.)

To qualify as an "agreed price," a promise which does not state a sum of money must assign a dollar value to property with which the performing party is to be compensated or provide a formula by which an ultimate, agreed-upon sum of money is readily ascertainable. (See, e.g., Hanley v. Murphy (1924) 70 Cal.App. 157, 165, 232 P. 767; cf. Ferrier v. Commercial Steel Corp. (1956) 142 Cal.App.2d 424, 427, 298 P.2d 555; Offeman v. Robertson-Cole Studios, supra, 80 Cal.App. 1, 13, 251 P. 830.) There is a clear rationale for the limitation on viewing a promise to compensate in property as an "agreed price": if no dollar value is assigned to property intended as compensation, the property's value can be determined only by resort to extrinsic evidence proving value; since the fair market value of property is a matter of opinion upon which reasonable minds can differ, the parties have not, by virtue of the promise, agreed upon a price which admits the reasonable value of the services.

The promise to permit decedent to purchase 10 percent of defendant's stock at its book value on a certain date fails, in two fundamental respects, to qualify as an "agreed price." First, the promise is not to pay the decedent in shares of stock, but to permit him an opportunity to purchase shares as an added inducement to accept employment. Hence, the promise lacks the common characteristics of "compensation."

Second, and more importantly, were the promise to be viewed as conferring a right to a form of compensation, it sheds no light whatsoever on the value of the decedent's services to defendant. The promise provides indicia of the value attached to the decedent's services only upon the introduction of extrinsic evidence placing a monetary value on the shares in excess of the assigned book value (decedent's purchase price). Even then, the promise would bespeak an "agreed price" only if the parties shared a common perception of the dollar value of the shares.

Inasmuch as the parties well may have differed in their opinion of the value to be assigned to the stock purchase option, the promise is not evidence of an agreed price--ergo, an admission of the reasonable value of the decedent's services to defendant. Therefore, the trial court erred in admitting evidence of the stock option promise.

Although the jury clearly did not accept entirely plaintiff's counsel's argument as to how the evidence of the stock purchase option promise demonstrated the reasonable value of decedent's services, the size of the verdict indicates a reasonable probability the jury would have reached a different result had this evidence been excluded. Therefore, given the considerable emphasis plaintiff's counsel gave to this evidence, the error must be deemed prejudicial. (See Daly v. General Motors Corp. (1978) 20 Cal.3d 725, 746, 144 Cal.Rptr. 380, 575 P.2d 1162.)

PROMISE TO PAY A BONUS ON ANNUAL PROFITS

Defendant also challenges as erroneous the introduction in evidence of the promise to pay decedent a yearly bonus equal to 10 percent of defendant's annual profits in excess of $200,000. In contrast to the stock purchase option promise, the promise to pay a bonus is a promise to compensate decedent for his services. Defendant argues, nevertheless, that the promise contains no "agreed price." We disagree.

No dollar figure is used and...

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