Kozlowsky v. Westminster Nat. Bank

• Decision Date: 15 April 1970
• Court: California Court of Appeals Court of Appeals
• Parties: Edward KOZLOWSKY, Plaintiff and Appellant, v. WESTMINSTER NATIONAL BANK et al., Defendants and Respondents. Civ. 34087.

Page 52

86 Cal.Rptr. 52

6 Cal.App.3d 593

Edward KOZLOWSKY, Plaintiff and Appellant, v. WESTMINSTER NATIONAL BANK et al., Defendants and Respondents.

Civ. 34087.

Court of Appeal, Second District, Division 4, California.

April 15, 1970.

Brock & Rykoff and Richard L. Rykoff, Beverly Hills, for plaintiff and appellant.

Wenke, Marx, Kemble & Burge, Wenke, Kemble & Burge, Gary L. Taylor, Santa Ana, John E. Sisson and John E. Sisson, Jr., Los Angeles, for defendants and respondents.

FILES, Presiding Justice.

This is an action for damages allegedly sustained by plaintiff as a result of his discharge as president of defendant Westminster National Bank. Other defendants include Commercial National Bank, into which Westminster merged subsequent to the acts complained of, and two individuals, Ronald Caspers and Harry Klassman. ¹ The superior court sustained general demurrers to the fifth amended complaint without leave to amend, and dismissed the action. Plaintiff is appealing from that order of dismissal.

Action on the Contract

The first count in the complaint alleges in substance these facts: Plaintiff and defendant Westminster National Bank (hereinafter 'the Bank') entered into a written contract whereby plaintiff was employed to serve as its president for a term of one year commencing September 1, 1966. Plaintiff performed his duties under this contract until November 14, 1966, when the Bank wrongfully discharged him and prevented any further performance, whereby plaintiff has been damaged.

The Bank's defense to this cause of action is based upon a statute applicable only to national banks. Although the complaint shows that the defendant has a name using the word 'National,' a name which may lawfully be used only by a banking association chartered under federal law (see 12 U.S.C. § 22; 18 U.S.C. § 709), the complaint alleges that the defendant Bank 'is a California corporation.' To avoid any dispute over a matter which could not be the subject of any bona fide controversy, this court, prior to oral argument, notified the parties as follows:

'The parties are hereby notified that the court proposes to take judicial notice of the certificate of authority issued by the United States Comptroller of the Currency to Westminster National Bank (see Evid. Code, §§ 451, subd. (b), 452, subd. (b)) and of the fact of nonexistence of any California corporation authorized to do a banking a business under that name (see Evid. Code, § 452, subd. (g)).

'Any objections to such judicial notice shall be filed with this court in writing on or before January 5, 1970.'

No objection having been made, we deem it established by judicial notice that the Bank was at all times material a national banking association.

12 United States Code section 24 provides that a national banking association shall have the power

'To elect or appoint directors, and by its board of directors to appoint a president vice president, cashier, and other officers, define their duties, require bonds of them and fix the penalty thereof, dismiss such officers or any of them at pleasure, and appoint others to fill their places.'

This provision that the board of directors may dismiss officers 'at pleasure,' unlike some verbally similar statutes, has been construed as overriding any contract to employ for a fixed term. By virtue of this statute the board may dismiss an officer without liability for breach of the agreement to employ. (Cox v. First National Bank (1935) 10 Cal.App.2d 302, 305, 52 P.2d 524; see In re Paramount Publix Corp. (2d Cir. 1937) 90 F.2d 441, 443.)

Because of this statute plaintiff cannot state a cause of action for breach of his contract of employment. The demurrer to the first count was properly sustained.

Action for Deceit

The second count alleges in substance these additional facts: In August 1966 defendants Klassman and Caspers represented to plaintiff that Klassman had acquired the controlling interest in the Bank by purchasing the stock theretofore owned by Caspers.

It is further alleged that this representation was false, and known by said defendants to be false, and that they intended to deceive.

Plaintiff alleges the fact to be that Caspers at all times owned the controlling stock in the Bank; the defendants intended plaintiff's employment to be contingent upon Klassman's acquiring the control stock; and Caspers did not intend to retain plaintiff as president unless Klassman acquired control.

Plaintiff believed and relied upon defendants' representation, and he left his former employment because he believed that his position as president would be secure and stable employment with Klassman's group in control of the Bank. His subsequent discharge by the Caspers group left him unemployed, isolated from the banking community and unable to secure suitable employment for some time.

The pleading sets forth all of the elements of an action for deceit. (Civ.Code, §§ 1709, 1710; see 2 Witkin, Cal.Procedure, Pleading, § 348, p. 1326.)

Defendants argue that the alleged misrepresentation was of no consequence because plaintiff's employment was terminable at any time regardless of whether Klassman or Caspers controlled the voting stock. This argument entirely ignores the significance of the representation upon which plaintiff relied. To him it was not a matter of indifference who controlled the corporation. A person contemplating the presidency of a bank may anticipate that he can enjoy a long and harmonious relationship with a particular group of stockholders, but not with some other group. Plaintiff was willing to take the risk of leaving his former position and accepting the pesidency of a bank controlled by the Klassman group, who had offered him the position. Instead, plaintiff found himself under the control of a man who had never wanted him. Plaintiff alleges that the representation that Klassman had already acquired control was the material fact that induced him to change his position. He is entitled to an opportunity to prove it at a trial.

Klassman and Caspers are the defendants who are alleged to have made the false representations. Their demurrers to the second cause of action should have been overruled.

Interfering With the Contractual Relationship

The third cause of action alleges that defendant Caspers 'intentionally, wantonly, maliciously and without justification' caused the Bank to discharge plaintiff. This count incorporates by reference portions of the other counts, including the allegation that Caspers at all times owned and controlled a majority of the capital stock of the Bank and thereby controlled the Bank's actions.

Unjustifiable interference with contractual relations is an actionable tort. This is so even though the relationship is terminable at will, for 'the fact that a contract is 'at the will of the parties, respectively does not make it one at the will of others. '' (Speegle v. Board of Fire Underwriters (1946) 29 Cal.2d 34, 39, 172 P.2d 867.) Thus the fact that the Bank was privileged to discharge plaintiff at any time does not necessarily privilege a third party unjustifiably to induce the termination.

'The tort of interference with an advantageous relationship, or with a contract, does not, however, disintegrate because it relates to a contract not written or an advantageous relation not articulated into a contract. The nature of the tort does not vary with the legal strength, or enforceability, of the relation disrupted. The actionable wrong lies in the inducement to break the contract or to sever the relationship, not in the kind of contract or relationship so disrupted, whether it is written or oral, enforceable or not enforceable.' (Zimmerman v. Bank of America (1961) 191 Cal.App.2d 55, 57, 12 Cal.Rptr. 319, 320.)

The remaining question to be determined is whether the alleged interference by Caspers was privileged by reason of his relationship to the Bank. The pleading alleges that Caspers owned and controlled a majority of the stock and thereby controlled the actions of defendant Bank. In addition, we note that an earlier pleading, the fourth amended...