Lee v. Helmco, Inc.

• Decision Date: 05 February 1962
• Citation: 199 Cal.App.2d 820,19 Cal.Rptr. 413
• Court: California Court of Appeals Court of Appeals
• Parties: Harry LEE, Plaintiff and Respondent, v. HELMCO, INC., a corporation, Appellant, Maurice Scanlan and Helmco, Inc., a corporation, Defendants. Civ. 25675.

Page 413

19 Cal.Rptr. 413

199 Cal.App.2d 820

Harry LEE, Plaintiff and Respondent, v. HELMCO, INC., a corporation, Appellant, Maurice Scanlan and Helmco, Inc., a corporation, Defendants.

Civ. 25675.

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

Feb. 5, 1962.

Lawrence & Moacanin, Montebllo, for appellant.

Booth, Mitchel, Strange & Willian, Los Angeles, for respondent.

FOURT, Justice.

This is an appeal from the judgment entered upon a verdict of the jury in favor of the plaintiff and against defendant Helmco, Inc. ¹

On October 25, 1956, plaintiff filed a complaint for damages for fraud, wherein two causes of action were set forth. The first cause of action alleged that defendant Scanlan was the agent of defendant Helmco, inc. (hereinafter referred to as 'Helmco') and was acting within the purpose and scope of such agency; that Scanlan made certain promises and representations '* * * without any intention of performing them, or any of them, at the time said promises and representations were made and said promises and representations were not, in fact performed * * *.' and that '* * * Helmco knew that Scanlan made promises and representations without any intention of performing said promises and representations, and with such knowledge, Helmco allowed Scanlan to continue to do so.' The second cause of action incorporated most of the allegations contained in the first cause of action but charges that certain promises and representations were '* * * made by Scanlan at the time when Scanlan had no knowledge or information sufficient to give Scanlan any grounds for believing said promises and representations would or could be performed, and said promises and representations were not in fact performed * * *.' and '* * * that Helmco knew that Scanlan made promises and representations without any knowledge or information sufficient to give Scanlan any grounds for believing said promises and representations would or could be performed, and with such knowledge, Helmco allowed Scanlan to continue to do so.'

On November 9, 1959, the answer of defendant Maurice Scanlan was filed. Therein, among other things, Scanlan '* * * specifically denies that this defendant is now or ever has been the agent of HELMCO, INC.; alleges that at all times herein mentioned, defendant was a manufacturer's representative for HELMCO, INC., and as such, acted in the capacity of an independent contractor.' He further denied that he made the promises and representations contained in plaintiff's complaint.

On May 6, 1957, Helmco filed its answer to the complaint. In addition to denying that Scanlan was its agent and denying that promises and representations were made, the answer set forth an affirmative defense. Therein, among other things, the following was alleged in pertinent part:

'III

'On or about October 26, 1955, this answering defendant entered into a written agreement with codefendant, MAURICE SCANLAN, wherein it was agreed by and between these parties that the said MAURICE SCANLAN would act as 'an independent Manufacturers Representative engaged in the sale of Kitchenette units manufactured by HELMCO, INC.'; that he 'will always be an independent contractor and is not an employee in any sense of HELMCO, INC., or any of its Divisions'; and that he 'will not have authority to at any time, to obligate HELMCO, INC., or any of its Divisions or personnel, either financially or in any other way.' Said written agreement continued in full force and effect during all the times referred to in plaintiff's complaint. A full, true and exact copy of said written agreement is attached hereto marked exhibit 'A' and made a part hereof by reference. ²

'IV

'This answering defendant received a 'Purchase Order Agreement,' dated November 28, 1955, naming plaintiff as purchaser, and ordering the Kitchenette units as set forth in plaintiff's complaint. Said Purchase Order Agreement was solicited by codefendant MAURICE SCANLAN in his capacity as an independent contractor and was accepted and filled by this answering defendant in the ordinary course of its business. Said Purchase Order Agreement was signed by the plaintiff HARRY LEE as purchaser and contained the following express disclaimer: 'It is expressly agreed that the purchaser is an independent contractor in all relations with HELMCO, INC., and that HELMCO, INC., assumes no obligations other than as the manufacturer of the equipment ordered above.'

'V

'At no time was there made or was there any authorization to make by any officer, employee or agent of this answering defendant, any of the alleged representations set forth in paragraph III of the first cause of action of plaintiff's complaint, nor were any of the representations alleged in plaintiff's complaint to have been made by codefendant MAURICE SCANLAN ever ratified or adopted by act, word or conduct by this answering defendant.'

The pre-trial conference order was filed August 31, 1960. A joint pre-trial statement was therein incorporated by reference and provides in pertinent part as follows:

'I NATURE OF THE CASE [Emphasis shown.]

'This is an action for damages for fraud in connection with the sale of certain vending machines which plaintiff purchased from Helmco., [sic] Inc. in reliance on the false representations of its agent Maurice Scanlan. Plaintiff seeks general damages in the sum of $3,027.39 and punitive damages of $10,000.00 against defendants.

* * *

* * *

'IV CONTENTIONS OF THE PARTIES [Emphasis shown.]

'1. Plaintiff contends:

'(1) That in November of 1955 defendant Scanlan was the agent of defendant Helmco, Inc., and at all times herein mentioned was acting within the actual control or ostensible authority of either of said defendants.

'(2) On or about November 15, 1955 Scanlan orally represented to plaintiff in connection with the sale of certain vending machines that (a) said machines would be delivered and installed in Beverly Hills and Hollywood, California by December, 1955, (b) that Scanlan would furnish plaintiff with locations for said vending machines which were similar to certain '(3) In reliance upon said representations plaintiff purchased 10 vending machines from defendant and paid the sum of $2,990.00 therefor.

designated restaurants in Los Angeles, and (c) that after installation of said vending machines in said locations would produce from $200.00 to $300.00 a month revenue and require only one day's time for service.

'(4) Plaintiff relied upon said representations and the representations were material to that transaction.

'(5) Each of said representations was false and was made by defendant Scanlan without any intention of performing said representations and further that said representations were made by Scanlan without any knowledge or information sufficient to give Scanlan grounds for believing the representations would or could be performed.

'(6) Said vending machines were without value and are worthless to plaintiff and plaintiff has suffered actual damage in the sum of $3,027.39.

'2. Defendant Scanlan contends:

'(1) Defendant Scanlan disputes and denies each of the contentions hereinabove set forth.

'(2) Scanlan contends that at all times he was acting as an independent contractor and not an agent of defendant Helmco, Inc.

'(3) Defendant contends that on or about November 28, 1955 plaintiff and defendant executed a purchase order agreement marked Exhibit 'A' and attached to said defendant's answer.

'3. Defendant Helmco, Inc., contends:

'(1) Defendant Helmco disputes and denies each of the contentions of plaintiff set out above.

'(2) Defendant Helmco contends that at all times herein mentioned defendant Maurice Scanlan was acting as an independent manufacturer's representative and not as an agent or employee of Helmco., [sic] Inc.

'(3) Defendant Helmco, Inc., contends that defendant Scanlan was not authorized to make the representations alleged in plaintiff's complaint.

'(4) Defendant Helmco contends that the relationship between Scanlan and Helmco, Inc., is set forth in that certain agreement entitled Manufacturer's Representative Agreement dated October 26, 1955 and attached as Exhibit 'A' to defendant Helmco, Inc. answer to complaint [i. e. see footnote 2].

V. FACTS AGREED UPON [Emphasis shown.]

',1. Defendant Helmco, Inc., is an Illinois corporation.

'2. * * *

'3. That on or about said date [i. e. November 28, 1955] plaintiff paid to defendant Helmco, Inc., [sic] the sum of $2,990.00.

'4. Said vending machines were delivered to plaintiff in Los Angeles, California on or about March 1, 1956.

VI. ISSUES TO BE DECIDED. [Emphasis shown.]

'1. Whether or not defendant Scanlan was the agent of defendant Helmco, Inc., and whether or not he was acting within the course and scope of said agency.

'2. Whether or not defendant Scanlan made the representations alleged.

'3. Whether or not plaintiff purchased said vending machines in reliance upon said representations and whether or not said representations were material.

'4. Whether or not said representations were false and unture.

'5. Whether or not said representations were made by defendant Scanlan without any intention of performing them or whether or not said representations were '6. Whether or not defendant Helmo [sic], Inc., knew that Scanlan made such promises and representations and with such knowledge permitted said defendant to continue said conduct.

made without any knowledge or information sufficient to give Scanlan grounds for believing said representations would or could be performed.

'7. The amount of damages, if any, suffered by plaintiff in reliance of said representations and lastly, whether or not plaintiff is entitled to punitive damages against defendants or either of them.'

When the case was called for trial defendant Scanlan was not present, nor was any appearance made on his behalf. The jury was selected and opening statements were made on behalf of plaintiff and defendant Helm...