Great Western Furniture Co., Inc., of Oakland v. PorterCorp.

• Decision Date: 03 December 1965
• Citation: 48 Cal.Rptr. 76,238 Cal.App.2d 502
• Court: California Court of Appeals Court of Appeals
• Parties: GREAT WESTERN FURNITURE CO., INC., OF OAKLAND, a corporation, and Great Western Furniture Co., Inc., of San Francisco, a corporation, Plaintiffs and Respondents, v. The PORTER CORPORATION, a corporation, and Louis Porter, Defendants and Appellants. Civ. 22071.

Page 76

48 Cal.Rptr. 76

238 Cal.App.2d 502

GREAT WESTERN FURNITURE CO., INC., OF OAKLAND, a corporation, and Great Western Furniture Co., Inc., of San Francisco, a corporation, Plaintiffs and Respondents, v. The PORTER CORPORATION, a corporation, and Louis Porter, Defendants and Appellants.

Civ. 22071.

District Court of Appeal, First District, Division 1, California.

Dec. 3, 1965.

Rehearing Denied Dec. 27, 1965.

Hearing Denied Jan. 26, 1966.

Carl Hoppe, John R. Murtha, San Francisco, for appellant.

Carroll, Davis, Burdick & McDonough, San Francisco, for respondent.

SULLIVAN, Presiding Justice.

In this action for declaratory relief and indemnity, defendant The Porter Corporation (Porter) appeals from a judgment after a nonjury trial in favor of plaintiff Great Western Furniture Co., Inc. of San Francisco (Great Western) and against Porter in the sum of $15,227.91 and costs.

On August 26, 1955, Great Western and Porter entered into a written contract pursuant to which Porter agreed to install, manage and supervise a so-called Thrift Club in Great Western's stores and to employ, manage and supervise all personnel employed by Great Western for the operation of the Thrift Club departments. Upon execution of the contract Porter installed the Thrift Club in Great Western's San Francisco store and appointed a manager to operate it. Eventually Edward McDowell, who had been associated with Porter for a number of years, was appointed manager. Under the terms of the contract Porter had charge of the complete operation of the club, including the selection, training, supervision, disciplining and discharge of the personnel employed by Great Western for the operation of its Thrift Club department. Although Great Western had the privilege of talking to these employees and of making suggestions to Porter if dissatisfied with anyone, it had nothing whatsoever to do with their selection, training or discipline. As to the relationship between Great Western and the employees selling Thrift Club memberships, Sidney Porter, executive vice-president of Porter, testified that it was 'McDowell's job to handle those without giving any problems to the store [Great Western].' ¹

One of these employees was Albert Gorges, who was selected and hired by McDowell. Sometime later, McDowell learned that Gorges was not performing satisfactorily his duties as a collection agent for the Thrift Club. In substance the complaints were that Gorges was 'a little hard to keep track of'; that he had some drinking problems; that he was 'rough,' 'a little rough in his language' and 'insistent' in making collections; and that he had failed to account for the full amount collected. There was evidence that McDowell informed Mr. Porter of Gorges' failure to remit collections but at no time brought to Great Western's attention any of the complaints he had received about such employee.

On November 15, 1956, while making a collection for the Thrift Club, Gorges assaulted and injured Alexander Nizuk. On December 5, 1956, Nizuk commenced an action for damages against Gorges Great Western Furniture Company, Inc. of Oakland ² and Porter in the San Francisco Superior Court (action No. 464221). In that action, after all amended pleadings were filed, Nizuk alleged that at the time of the assault Gorges was the servant, agent and employee of Great Western and Porter and was acting within the course and scope of said agency and employment. ³ On February 17, 1958, Nizuk filed a second amended complaint naming as defendants Gorges, Great Western of Oakland, Great Western of San Francisco and Porter, and containing the allegation previously noted as to the agency and employment of Gorges. On February 28, 1958, Porter filed an answer to said second amended complaint denying the material allegations thereof, and an 'Amended Cross-Complaint for Recoupment' against Gorges, Great Western of Oakland and Great Western of San Francisco. On March 12, 1958, Great Western of Oakland alone filed an answer to said cross-complaint denying all the allegations thereof. ⁴

On April 18, 1958 Porter moved for a summary judgment. ⁵ On the hearing of the motion, one of the counsel then representing Great Western and now representing it on this appeal appeared and opposed the motion. ⁶ On July 15, 1958, the superior court entered a summary judgment in favor of Porter, which by its terms not only dismissed Nizuk's complaint and amended complaints as against Porter but also dismissed the cross-complaint and the amended cross-complaint of Porter against Gorges and Great Western. This was in accord with Porter's motion that 'Concurrently only with the dismissal of said action' against Porter, the court 'dismiss its Cross-Complaint and its Amended Cross-Complaint on the ground that the issues therein pleaded will have become moot.' On May 9, 1960 the summary judgment was affirmed on appeal by this court in Nizuk v. Gorges (1960) 180 Cal.App.2d 699, 4 Cal.Rptr. 565. ⁷

On September 19, 1960, counsel representing Great Western of Oakland and Great Western of San Francisco in action No. 464221 demanded in writing that Porter 'appear for and defend them in the said litigation and pay any judgment which might be rendered against them,' stating that in the event of Porter's failure or refusal to do so, said defendants 'will look to you for all of their damage * * * including * * * all attorneys' fees and court costs * * *.' The demand was based on Porter's alleged liability under the contract of August 26, 1955. ⁸ Upon Porter's rejection of the demand, the instant action (San Francisco Superior Court action No. 504482) was commenced on October 13, 1960 by Great Western against Porter. ⁹

Action No. 464221 proceeded to trial against Great Western in May 1961 and, after four and a half days of trial but before its conclusion, was settled by Great Western. On June 12, 1961 a dismissal with prejudice signed by Nizuk and his counsel was filed.

The complaint for declaratory relief filed by Great Western in the instant action (No. 504482) is in two counts. The first count, after referring to the contract of August 26, 1955 and to the commencement of Nizuk's action for damages (No. 464221), alleges in substance that as a result of such action Great Western was required to retain defense counsel and that if Great Western should be held liable to Nizuk therein 'then all of said damage will result solely by reason of the negligence and carelessness' of Porter in their management and supervision of the Thrift Club and its employees, including Gorges. The second count, after incorporating by reference most of the allegations of the first, alleges in substance that, in the event Great Western should be held liable, 'all the said damage will result solely from the failure of said defendants to properly perform their undertakings to employ, manage and supervise the said Albert Gorges, all in breach of their contractual undertaking so to do.'

The trial court found, in substance so far as is here pertinent, that, pursuant to the contract entered into between Great Western of San Francisco ¹⁰ and Porter on August 26, 1955, the latter took complete charge and management of the Thrift Club; that, although McDowell was paid by Great Western, his management and supervision of the club was conducted under the direction and on behalf of Porter; that Great Western at no time managed or supervised the Thrift Club but relied on Porter; that McDowell and Mr. Sidney Porter hired Gorges, and McDowell subsequently became aware of the latter's short-comings heretofore mentioned; that they decided nevertheless to retain him in the employ of the Thrift Club; that at no time did McDowell discuss with anyone in Great Western the information he had received about Gorges; that the Nizuk action (No. 464221) was commenced and proceeded to final disposition as we have outlined above; and that by reason thereof Great Western suffered specified damages.

From such findings the court concluded that Porter was negligent in retaining Gorges in its employ; that such negligence was a breach of its duties to Great Western under the written contract; that implied in said contract 'was a promise by the Porter Corporation to perform its managing agents' functions in a reasonable and non-negligent manner and to hold the Great Western Furniture Co., Inc. harmless from any damages it may be required to pay because of any breach of contract by the Porter Corporation'; that Porter's defense of res judicata and the statute of limitations were without merit; and that Great Western was entitled to judgment against Porter in the sum of $15,227.91. Judgment was entered accordingly.

Porter contends that the summary judgment entered in the first action (No. 464221) and affirmed on appeal by this court (Nizuk v. Gorges, supra, 180 Cal.App.2d 699, 4 Cal.Rptr. 565) is res judicata on the issue of liability in the present action. We cannot agree. Whether the doctrine of res judicata is considered in its primary aspect as a merger or bar, or in its secondary aspect as a collateral estoppel (see Panos v. Great Western Packing Co. (1943) 21 Cal.2d 636, 637-638, 134 P.2d 242; Dillard v. McKnight (1949) 34 Cal.2d 209, 214, 209 P.2d 387, 11 A.L.R.2d 835; McDougall v. Palo Alto, etc., School Dist. (1963) 212 Cal.App.2d 422, 428, 28 Cal.Rptr. 37; Saunders v. New Capital for Small Businesses, Inc. (1964) 231 Cal.App.2d 324, 330, 41 Cal.Rptr. 703), the general rule is that there must be an identity of the parties to the actions before the doctrine can become operative. (Code Civ.Proc. §§ 1908, ¹¹ 1910; Rest. Judgments §§ 68, 79; 3 Witkin, Cal.Procedure, p. 1955; see Standard Oil Co. of California v. J. P. Mills Organization (1935) 3 Cal.2d 128, 139, 43 P.2d 797.) Code of Civil Procedure section 1910 provides: 'The parties are deemed to be the same when those between whom the evidence is offered were on opposite sides in the former case, and a judgment or other...