Johnson v. Couch

• Decision Date: 03 March 1961
• Citation: 189 Cal.App.2d 687,11 Cal.Rptr. 645
• Court: California Court of Appeals Court of Appeals
• Parties: Leonard G. JOHNSON, Plaintiff and Respondent, v. Robert L. COUCH, Defendant and Appellant. Civ. 10049.

Page 645

11 Cal.Rptr. 645

189 Cal.App.2d 687

Leonard G. JOHNSON, Plaintiff and Respondent, v. Robert L. COUCH, Defendant and Appellant.

Civ. 10049.

District Court of Appeal, Third District, California.

March 3, 1961.

Rehearing Denied March 29, 1961.

Hearing Denied April 26, 1961.

Mossman & Ioakimedes, Vallejo, David Freidenrich and Leonard Ware, Palo Alto, for appellant.

Johnson & Harmon, San Francisco, for respondent.

WARNE, Justice pro tem.

The defendant appeals from a judgment entered against him on a jury verdict in favor of plaintiff in an action for fraud and for money had and received.

Stating the facts most favorable to the respondent the record shows: Appellant Couch was an experienced real estate operator in 1953 and had two service stations. That year appellant executed a five-year lease to respondent and one Winkelman on one of the service stations. The lease was upon a mimeographed form prepared for appellant by his own attorney. Parts of the lease were written by hand, among which was a provision fixing the rent at one cent per gallon of gasoline to 40,000 gallons, with a $300 minimum and a $500 maximum monthly rent, to be 'collected at time of gasoline delivery and taken from the wholesale price,' and a provision reading: 'This lease subject to all terms & conditions of Hancock Master Lease.' These handwritten provisions were dictated by the appellant. This lease was later replaced by an identical lease, predated, between appellant and respondent when Winkelman withdrew as a partner. From the date of this lease, February 25, 1953, through May 1955, a Mr. Lightle, an through May, 1955, a Mr. Lightle, an Company, became appellant's agent for collecting the gallonage rental payments. Lightle presented invoices for gasoline delivered which did not itemize the amount included for rent. Collected in rent was two cents per gallon rather than the one cent called for by respondent's sublease. Lightle remitted one cent directly to the appellant and the other to Hancock Oil Company to apply on an obligation of the appellant to that company. Any overage was returned to appellant. Concerning these transactions appellant, on cross-examination, testified:

'Q. And at the commencement of the lease with Mr. Johnson, Mr. Lightle, who was the distributor of gasoline, collected two cents per gallon for each gallon delivered there for you; did he not? A. That is right; yes, sir.

'Q. And he remitted one cent per gallon to you direct? A. That is right.

'Q. And he paid the other cent to the Hancock Oil Company for your account? A. That is right; yes, sir.

'Q. Now, the Hancock Oil Company applied the money on your note; is that right? A. That is right.

'Q. And any balance there was left out of each check would be paid by the Hancock Oil Company to you? A. That is right, yes.'

Neither respondent nor Winkelman knew that the two-cent collection was being made. It was their understanding, and neither Couch nor Lightle told them otherwise, that the invoices included only the one cent per gallon called for by their sublease. They testified that they would not have signed the lease had the rental been two cents per gallon.

In June, 1955, Hancock Oil Company took over deliveries of gasoline to the station itself and acted as appellant's agent for collection. At this time the invoices for the first time showed rental charges. The June invoices from Hancock Oil Company showed a two-cent rental charge and respondent testified that he immediately called the Oakland office of the oil company and asked for an explanation. He was told by an employee (Kelly) that one cent of the charge was rental and that he (Kelly) would check up on the other. Later Kelly told respondent that one cent was rental and the other one cent of the two-cent charge was just a bookkeeping entry between Hancock Oil Company and Couch which did not affect him, and that the total price he was being charged was the same as Lightle had charged. Respondent testified that he was fairly content when he checked and found he was not paying any more than he had to Lightle. However, at that time he did not know that Lightle had been collecting two cents per gallon for rental. A short time later respondent was told by Kelly that Hancock Oil Company would no longer collect for Couch and that he, respondent, should pay appellant directly instead of paying on delivery of the gasoline. The succeeding invoices showed a one-cent rental charge, and respondent again took the matter up with Kelly who told him that it was just a 'wash transaction' between Hancock Oil Company and Couch. At that time Kelly knew that respondent had started to pay the one-cent rental directly to the appellant.

Respondent continued to pay one-cent rental directly to Couch and the other one cent directly to the Hancock Oil Company until late in the fall of 1957 when Hancock's field man, a Mr. Dunn, told respondent his rental was actually two cents. This was incident to Hancock Oil Company reverting to the two-cent charge. Respondent investigated and stopped paying any rent directly to Couch but continued to pay the charges for gasoline delivered. He consulted an attorney in December, 1957, but it was not until February, 1958, that he actually knew there was an overcharge.

The gallonage sold justified a rent payment in excess of $300 (the minimum set) in only two months of the entire term of the lease. Appellant periodically collected a purported shortage between one cent per gallon and the $300 per month minimum. Therefore the actual total collected at two cents per gallon, plus the extra amount paid to appellant, exceeded the minimum monthly payment in 56 months and exceeded the maximum rental of $500 per month in 15 months of the term.

Appellant first contends that there was no evidence of fraud as charged in the complaint. He argues that the only fraud charged was the collection of more rental than was provided for by concealing the actual amount of rent collected and that Lightle and Hancock, not appellant, collected the rent. Appellant contends that since no conspiracy was charged or proved, and since no concealment or misrepresentation by Couch, the appellant, was shown, the evidence does not support the jury's implied finding of fraud. In support of his contention that there was no concealment on his part he claims Lightle and Hancock Oil Company were independent contractors. However he testified that they were his agents for collection. Whether a coconspirator or not, the Lightle invoices concealed the amount of rent being paid, and this amount was admittedly two cents per gallon. The evidence amply supports the jury's implied finding that Couch authorized this collection and later ratified Lightle's act by accepting the payments as rent. The same might be said for Hancock Oil Company. Furthermore, Couch himself collected the purported deficiencies between one cent per gallon and the $300 per month minimum and never mentioned the two-cent charge. Couch also knew of the overcharge, yet failed to mention it, and thus by actively collecting the purported deficiency he contributed to the concealment of the rental payments actually made. Such conduct constitutes actual fraud. Civil Code, § 1572, subds. 3 and 5.

Appellant next contends that the trial court erred in determining as a matter of law and instructing the jury that the lease fixed the rental at one cent per gallon of gasoline delivered each month and set a minimum rental of $300 per month and a maximum of $500 per month. Appellant argues that the provision in the sublease reading 'This lease subject to all terms & conditions of the Hancock Master Lease' raised an ambiguity in the meaning of the lease which resolved itself into a question of fact which should have gone to the jury. We do not agree with appellant. Here we are concerned with a sublease and not an assignment of...