Johnson v. Holmes Tuttle Lincoln-Mercury, Inc., LINCOLN-MERCUR

• Decision Date: 09 May 1958
• Docket Number: I,LINCOLN-MERCUR
• Citation: 325 P.2d 193,160 Cal.App.2d 290
• Court: California Court of Appeals Court of Appeals
• Parties: Willie Mae JOHNSON and Fletcher Jones, Plaintiffs and Respondents, v. HOLMES TUTTLEnc., a corporation, Defendant and Appellant. Civ. 22542.

Page 193

325 P.2d 193

160 Cal.App.2d 290

Willie Mae JOHNSON and Fletcher Jones, Plaintiffs and Respondents, v. HOLMES TUTTLE LINCOLN-MERCURY, Inc., a corporation, Defendant and Appellant.

Civ. 22542.

District Court of Appeal, Second District, Division 3, California.

May 9, 1958.

Rehearing Denied June 2, 1958.

Hearing Denied July 2, 1958.

Getz, Aikens & Manning, Thomas C. Murphy, and DeWitt Morgan Manning, Los Angeles, for appellant.

A. J. Blackman, Los Angeles, for respondents.

VALLEE, Justice.

Appeal from a judgment for plaintiffs as third party beneficiaries of an oral agreement to procure public liability and property damage insurance.

The agreement is alleged to have been entered into between Holmes Tuttle Lincoln-Mercury, Inc., called defendant, and Phillip R. Caldera and his wife, Ruth, in connection with the purchase by the Calderas of a new Mercury automobile from defendant on November 23, 1953.

On December 11, 1953, about three weeks after the Calderas purchased the car, Phillip Caldera was involved in an accident with the Mercury. Plaintiffs, Willie Mae Johnson and Fletcher Jones, a passenger, were injured and Johnson's car was damaged.

Separate actions were filed by plaintiffs against Phillip Caldera. Judgments were entered May 23, 1955 in favor of plaintiff Johnson for $4,413.89, and in favor of plaintiff Jones for $2,070. These judgments remain unsatisfied.

Plaintiffs allege defendant, by its salesman Harry Rozany, had agreed with Caldera at the time the Mercury was purchased to procure 'full coverage' insurance for Caldera, including public liability and property damage, for the operation of the Mercury; both Caldera and defendant understood the insurance was to be obtained for the usual term and for no less than the minimum legal limits; defendant failed to obtain the public liability and property damage insurance after Caldera had performed all of the terms of the agreement on his part. The prayer is for the amounts of the judgments obtained against Caldera with interest. In a jury trial the verdict was for plaintiffs as prayed. Defendant appeals from the judgment which followed.

On November 23, 1953 Caldera appeared with his wife, Ruth, at the showroom of defendant for the purpose of purchasing a new Mercury. One of defendant's salesmen, Harry Rozany, approached the Calderas and discussed with them the prospective purchase of a new Mercury like the one then in the showroom. After about five minutes Rozany took them to a 'closing room' where terms were discussed for about an hour and the purchase consummated. The Calderas told Rozany they had a 1948 Chevrolet as a trade-in and $900 cash as a down payment. They indicated they could not afford to make payments of over $80 a month on the balance. During the discussion Caldera told Rozany he wanted 'full coverage insurance,' and Rozany replied, 'Oh, yes, you are getting it.' Rozany made out the papers and sold them 'another insurance,' a policy by which the insurer engaged to pay the balance of the purchase price of the car in the event of the death or disability of Caldera. The premium of $2.50 to $3.00 a month was to be included in the installment payments. Rozany computed the figures in the transaction on 'scratch paper.' He had Caldera sign the car order and the conditional sale contract in blank. Rozany took the papers 'upstairs,' saying he was going to complete filling them out.

About December 2, 1953 Mrs. Caldera received by mail a copy of the conditional sale contract dated December 1, 1953 which showed fire, theft, comprehensive, and $50 deductible collision insurance thereon, but which made no reference to public liability and property damage insurance. Mrs. Caldera read only the figures. She called defendant to talk to Rozany but as he was not there she did not talk to him or to anyone. Caldera did not see this copy of the conditional sale contract received by Mrs. Caldera. Neither of the Calderas saw the original sales order until after the first of the year when Caldera went to put in the new certificate of registration and discovered the folded document with the stamped notation 'No liability insurance sold on this car,' which had been placed in the registration holster and fastened on the wheel by Rozany shortly after he had returned to the closing room with the approved order at the time of the purchase. Caldera first learned he had no public liability and property damage insurance after his wife went to the office of Olympic Insurance Company 'to find out about the insurance.' That company had issued the collision policy dated December 15, 1953, which the Calderas received December 17, 1953, four days after the accident.

To Caldera, who was 36 years old, employed as a mechanic, and who had been through the ninth grade in school, 'full coverage insurance' meant everything that is supposed to be in insurance, including public liability and property damage. The public liability and property damage insurance on the 1948 Chevrolet automobile used as a trade-in had expired in August of 1953, and Caldera testified that since it was an old car and they intended trading it in on a new one any day he thought there was no use in renewing it.

Defendant had a licensed insurance department. Its salesman, Rozany, had been a new car salesman there about three years, during which time he had sold about 300 cars, and on at least one occasion the sale involved the purchase of public liability and property damage insurance. Rozany's experience as a new car salesman was continuous from 1937.

Plaintiffs' expert witness, James P. Bennett, an experienced insurance salesman, testified over objection of defendant that the term 'full coverage' when used by a layman meant in the automobile insurance business insurance against damage to his car and against damage caused by his car it would include a term of one year, basic limits of $5,000 for injuries to one person, $10,000 for injuries to all persons in one accident, and $5,000 for property damage, as well as $500 medical payments. ¹ The premium for such insurance by one using his car to travel to and from work in the particular territory in which Caldera drove would be $63. He also testified there was sufficient information on the purchaser's statement which was signed by Caldera to order the coverage, so long as he had the sales order to identify the car.

Defendant first asserts the evidence does not support the implied finding of the jury that there was a contract to procure public liability and property damage insurance between Caldera and defendant; nor does the evidence support the implied finding that plaintiffs were third party beneficiaries of a contract between Caldera and defendant. It is argued there was no consideration paid by Caldera for defendant's agreement to procure full coverage insurance, including public liability and property damage. The agreement alleged and proved was that in consideration of Caldera's purchasing the Mercury defendant would procure full coverage insurance, including public liability and property damage. Mutual promises constitute consideration. Civ.Code, § 1605; El Rio Oils (Canada) Ltd. v. Pacific Coast Asphalt Co., 95 Cal.App.2d 186, 193, 213 P.2d 1; 12 Cal.Jur.2d 498, § 266; Rest., Contracts, § 77. A single consideration may support several counterpromises. H. S. Crocker Co., Inc., v. McFaddin, 148 Cal.App.2d 639, 645, 307 P.2d 429.

It is interesting to note that the conditional sale contract which Caldera signed in blank recites a total contract balance due of $2,505.73. The policy received by Caldera shows the amount of the contract as $2,598.73, a difference of $93. The insurer must have obtained the contract figure from defendant. The uncontradicted evidence shows that the cost of public liability and property damage in basic limits plus $500 medical payments coverage was $63. Figuring the transaction with one year's premiums in advance as Rozany did with the other coverages, the total charges equal the $93 difference.

The evidence recited, contrary to defendant's claim, shows there was a meeting of minds. It is argued that because Rozany testified he did not know what the term 'full coverage' meant there could be no meeting of minds. The jury was not compelled to believe Rozany. He was thoroughly impeached. The jury may have inferred his knowledge from his experience. He had been a new car salesman since 1937, three years with defendant, and had sold around 300 cars 'or better.' Defendant was a licensed insurance broker with an insurance department operated in connection with its auto sales business. Rozany told Mrs. Caldera full coverage 'includes everything.'

Referring to the testimony of the witness Bennett, which was admitted over its objection, defendant argues it was erroneously admitted in that it was proof of custom and usage for the purpose of creating a contract, which may not be done. Custom and usage was not relied on to create a contract. It was admitted for the purpose of explaining and interpreting the phrase, 'full coverage,' and for that purpose it was admissible. Code Civ.Proc. § 1870(12). Furthermore, the testimony was in effect merely a statement of the law which every person is presumed to know and of which the court could take judicial notice. Veh.Code, § 415.

Defendant contends plaintiffs were not third party beneficiaries. 'A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.' Civ.Code, § 1559. Where one person for a valuable consideration engages with another to do some act for the benefit of a third person, and the agreement thus made has not been rescinded, the party for whose benefit the contract or promise was made, or who would enjoy the benefit of the act, may maintain an action against the promisor for the breach of his engagement. While the contract remains unrescinded, the relations of the parties are the same...