I. E. S. Corp. v. Superior Court of Los Angeles County

• Decision Date: 10 May 1955
• Citation: 283 P.2d 700,44 Cal.2d 559
• Court: California Supreme Court
• Parties: I. E. S. CORPORATION et al., Petitioners, v. SUPERIOR COURT OF COUNTY OF LOS ANGELES et al., Respondents. Max Gold and Republic Aircraft Parts, Inc., Real Parties in Interest. L. A. 23536. . In Bank

Page 700

283 P.2d 700

44 Cal.2d 559

I. E. S. CORPORATION et al., Petitioners, v. SUPERIOR COURT OF COUNTY OF LOS ANGELES et al., Respondents Max Gold and Republic Aircraft Parts, Inc., Real Parties in Interest.

L. A. 23536.

Supreme Court of California. In Bank.

May 10, 1955.

Combs & Hoose, Lee Combs and Harned Pettus Hoose, Beverly Hills, for petitioners.

No appearance for respondents.

Leo K. Gold, Beverly Hills, for real parties in interest.

TRAYNOR, Justice.

Petitioners, ¹ plaintiffs in an action pending in the Superior Court of Los Angeles County, seek a writ of mandate directing respondent court to set aside an order sustaining defendant's refusal to answer ceratin questions in a pretrial deposition and to enter an order compelling defendant to answer these questions and any other similar questions that may be asked.

The complaint in the pending action alleges that plaintiff ¹ entered into a series of contracts and options for the purchase of war surplus engines, machinery, and equipment from defendant in reliance on defendant's representations that he possessed sufficient funds and organizational capacity to perform, that the engines were new and serviceable, and that he would obtain them for plaintiff at below market rates. It is charged that these representations were fraudulent, that plaintiff's former president exceeded his authority in negotiating and signing the contracts on plaintiff's behalf, and that defendant breached the contract by failing to deliver 750 engines. It is also alleged that plaintiff and defendant reduced the contracts and options to a single integrated option, but when plaintiff attempted to acquire certain machinery by exercising a separate and divisible part of the option, defendant refused to perform; that plaintiff issued a notice of rescission as to all contracts and options except those pertaining to certain items of machinery that already had been delivered and accepted; and that although defendant continues to demand payments, plaintiff owes nothing to defendant but is itself entitled to damages because the accepted goods were inferior in quality and higher in price than represented.

The complaint also contains extensive allegations concerning a conspiracy by defendant, various sellers of war surplus engines, and plaintiff's former president. It is alleged that 'the defendants and each and every one of them did conspire and agree that they would purchase and give option for and purport to sell to the plaintiff certain war surplus and other machinery and equipment at extremely high and unfair prices; that defendants and each of them did further onspire to defraud the plaintiffs by misrepresenting to the plaintiffs the true condition of said machinery and equipment, by obtaining secret rebates and secret profits by reason of the plaintiffs' purchase of said machinery and equipment, by the delivery to the plaintiffs by the defendants and each of them of machinery and equipment of an inferior type which was represented to the plaintiffs as unused machinery or machinery and in good condition (sic), and by doing and conspiring to do each and every one of said acts.' The complaint charges that pursuant to the conspiracy, defendant and plaintiff's former president made an extensive buying trip together during which they got in touch with sellers of war surplus machinery and conspired with them to 'lure the plaintiffs into numerous purchases of non-existent machinery, inferior machinery, highly overpriced machinery, machinery as to which the defendants and each of them had no right to grant options or to sell, * * * and to extract huge secret profits and rebates from plaintiffs and to sell to plaintiffs inferior and unmerchandiseable machinery at a vast profit.' Numerous fictitious persons are joined as defendants, and it is alleged that they are the unknown conspirators who will be served with summons as soon as their identities are divulged. The complaint requests declaratory relief as to the contracts and options between plaintiff and defendant, restitution of deposits paid to defendant, recovery of damages caused by defendant's misrepresentations, and the recovery of secret profits and rebates from defendant and his co-conspirators.

In giving his deposition, defendant answered questions concerning his negotiations with plaintiff's former president, the execution of the integrated option, his delivery of goods to plaintiff and plaintiff's subsequent refusal to pay him or to accept further deliveries. He admitted making the buying trip with plaintiff's former president and said that he had offered to sell him engines that they had inspected together. He refused, however, to reveal from whom, in what manner, and at what prices he had acquired his engines. He was asked about the nature of his business with Green Bros. Trucking Sales Company of Chicago, Illinois, whether he had purchased 650 to 750 engines from them, and whether he had resold these engines to plaintiff, but he refused to answer. Nor would he reveal the identities of any sellers of war surplus machinery with whom he dealt during the buying trip or the nature of his transactions with them, or answer the questions: 'Who in it (the surplus business) do you know?' 'What other companies besides Green Brothers did you interview in Chicago?' 'Prior to this information that someone else had bought stock in the I. E. S., you had a conversation with Tom Benevides about buying into the company yourself, didn't you?' 'By the way, did your lawyer tell you before this hearing, or prior to today, not to name the yards or the people on your trip?' He also refused to answer questions concerning his knowledge of engines and their prices. Asserting that the questions were irrelevant and immaterial, that no foundation for them had been laid, that communications by his counsel were privileged, and that he was not required to reveal the sources of the goods that he sold, defendant refused to answer fifty-five questions. Of these, the superior court ordered him to answer only three.

In the interest of full disclosure, the witness in a deposition taken pursuant to section 2021, subd. 1, of the Code of Civil Procedure must answer all questions seeking nonprivileged information that is material to the subject matter of the pending action. McClatchy Newspapers v. Superior Court, 26 Cal.2d 386, 395, 159 P.2d 944; San...