Leonard v. Gallagher

• Decision Date: 24 June 1965
• Citation: 235 Cal.App.2d 362,45 Cal.Rptr. 211
• Court: California Court of Appeals Court of Appeals
• Parties: Anna Hillar LEONARD, as Administratrix of the Estate of Petrea Hillar, Deceased, Plaintiff and Appellant, v. Kenneth A. GALLAGHER and Lovina E. Lund, Defendants and Respondents. Civ. 27683.

Page 211

45 Cal.Rptr. 211

235 Cal.App.2d 362

Anna Hillar LEONARD, as Administratrix of the Estate of Petrea Hillar, Deceased, Plaintiff and Appellant, v. Kenneth A. GALLAGHER and Lovina E. Lund, Defendants and Respondents.

Civ. 27683.

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

June 24, 1965.

As Modified on Denial of Rehearing July 20, 1965.

Hearing Denied Aug. 18, 1965.

Lascher & Bedworth, Van Nuys, for appellant.

Litwin & Joseph, Long Beach, for respondents.

KAUS, Justice.

Plaintiff, the administratrix of the Estate of Petrea Hillar, deceased, sued defendant Kenneth A. Gallagher and Lovina E. Lund on a common count for money loaned by the decedent to defendants in her lifetime in the sum of $5,850.00, plus interest. The complaint also alleges that Gallagher on June 17, 1961--about seven moths before decedent's death--promised to pay that sum to decedent and that he then was acting as agent of Mrs. Lund, his mother.

The evidence disclosed and the court made findings to the effect that Gallagher had borrowed $1,100.00 from decedent in 1946. He gave her a personal note as evidence of the debt and repaid about $130.00 in 1949 'to apply to interest.' There is really no question that at the time of the transaction described below Gallagher's debt was long outlawed. The court found that on July 12, 1960 Gallagher's debt amounted to $970.00 principal and $645.05 interest.

Gallagher's mother, Mrs. Lund, had also borrowed certain sums from decedent and given a note therefor. The exact amount of her loans is obscure. In any event the court found, and the finding is not attacked as to the amount, that on July 12, 1960 the amount owed by her, also found to be outlawed, was about $4,000.00.

On July 12, 1960 Gallagher delivered a document to decedent which is set forth in full herewith: 'AGREEMENT FOR ASSIGNMENT OF COMMISSIONS TO: MILT FELD NEVADA LAND & INVESTMENTS 5557 OLETA LONG BEACH, CALIF. THE UNDERSIGNED, KENNETH A GALLAGHER, UNCONDITIONALLY ASSIGNS A TOTAL OF FIVE THOUSAND EIGHT HUNDRED FIFTY AND NO/100 DOLLARS ($5850.00) TO PETREA HILLAR (MRS GEORGE HILLAR) OR ANNA HILLAR LEONARD, BOTH ARE NOW RESIDING AT 7327 RUFFNER AVE, VAN NUYS, CALIFORNIA. IT IS UNDERSTOOD THAT PAYMENTS ON THE ABOVE ARE TO BE AT $200.00 PER MONTH, OR MORE AT SUCH TIMES AS ANY OF THE ACCOUNTS DUE KENNETH A GALLAGHER ARE PAID IN FULL. IN THE EVENT OF PAYMENT IN FULL ALL WILL BE PAID TO ASSIGNEE, AND THE MONTHLY PAYMENT WILL DROP $15.00 ON EACH SUCH ACCOUNT. IT IS FURTHER UNDERSTOOD THAT KENNETH A GALLAGHER THIS DATE HAS APPROXIMATELY $9000.00 IN EARNED COMMISSIONS DUE FROM NEVADALAND AND INVESTMENTS, AND THIS IS RECEIVED ON AN AVERAGE MONTHLY INCOME OF ABOUT $300.00 PER MONTH. THIS ASSIGNMENT IS MADE IN TRIPLICATE. ORIGINAL TO BE HELD BY PETREA HILLAR, OR ANNA HILLAR LEONARD. DUPLICATE TO BE HELD BY MILT FELD. TRIPLICATE HELD BY KENNETH A GALLAGHER.'

In return for the document Gallagher received the two notes and tore them up.

When the document signed on July 12, 1960 was delivered to decedent, Gallagher represented to her that he had certain commissions coming from Mr. Feld, the person to whom it was addressed, the he felt responsible for his mother's inability to pay the outlawed debt and that such was the reason for his signing of the document.

It should be noted that at no time was it claimed below that Gallagher was in bad faith when making the representation concerning the debt of Feld to him and the trial judge specifically stated that there was no question of misrepresentation or fraud before the court. Furthermore, plaintiff in certain proposed findings of fact, which were not signed by the court, did not propose any finding pointing to bad faith, but merely proposed a finding that the debt from Feld to Gallagher was not absolute, but depended on certain contingencies.

Feld, for personal reasons, refused to make any payments directly to decedent, but made a few periodic payments to Gallagher. Gallagher, in turn, sent two checks totaling $600.00 payable to the order of plaintiff or decedent which were endorsed by both. Each check bore the notation: 'commission assignment.' The trial court found that Gallagher made these payments 'after he had received those amounts as commissions from Milt Feld . . . as the payor of such commissions.'

For reasons immaterial to any issue on this appeal Feld then stopped paying Gallagher and decedent received no further payments.

On June 17, 1961 Gallagher mailed a letter to decedent which is the instrument on which the action was brought. It is set forth in full below: 'June 17, 1961. Dear Mrs. Hiller: Since I saw you last things have gone from bad to worse on the commissions I had coming from Milt Feld. Darn near all the sales at Imlay have cancelled now as a result of the law suit we had up there. My other deal is in good shape however. I talked to mother last night and she passed on the word that you were quite unhappy about the whole deal we made. Can't blame you. To put your mind a little at ease I'll go down on record here in stating that I'm not about to leave you holding the bag. The source of where the money comes from is the only question. I'm leaving for Winnemucca Monday and will be gone at least a week. On my return I'll re-contact you as at that time I'm going to try to arrange to sell at least part of my interest in this new company. That should give enough cash to come darn close to paying you off in full. Best regards. Ken Gallagher.' (Emphasis added.)

No further payments were ever made either by Gallagher or his mother. Thus in spite of the promise to the contrary, decedent was left holding the bag and by this action the administratrix of her estate attempted to resolve the question of 'the source of where the money comes from.'

The court found: 1. Gallagher acted as the agent of his mother when the document of July 12, 1960 was delivered and payments were made pursuant thereto, but not when he wrote the letter of June 17, 1961; and 2. When the payments totaling $600.00 were made in August and October, 1960 'no application was made by the parties as to whose obligation said payments were to be applied.'

Relevant conclusions of law were that the document of July 12, 1960 was 'an assignment of commissions merely designating the source of funds from which payments were to be made,' that the parties 'understood payments pursuant thereto to be applied to the indebtedness of both defendants, but no specific agreement as to the method of application was made. The parties by agreement commingled the indebtedness of the two defendants,' that the said document of July 12, 1960 was 'not a new promise to pay' nor was it 'an acknowledgement of indebtedness which would start the statute of limitations running anew.' The court also concluded that the letter of June 17, 1961 was an acknowledgment by Gallagher 'to make good any indebtedness which he was legally obligated to pay, except for the bar of the Statute of Limitations,' that as to his own indebtedness of $970.00 principal and $645.05 interest, it 'started the statute of limitations running anew,' that Gallagher, on June 17, 1961, when the letter was written, was under no legal obligation to pay his mother's indebtedness and that the payments following the execution of the July 12, 1960 document, totaling $600.00, should be applied to the indebtedness of the mother 'since her indebtedness which is barred by the statute of limitations is the more tenuous.'

Judgment was given in favor of plaintiff against Gallagher in the amount of $1,615.05 and in favor of Gallagher's mother, Mrs. Lund, against the plaintiff. Only plaintiff appeals.

Plaintiff attacks the judgment on various grounds. Her first point is that the paper delivered by Gallagher to the decedent on July 12, 1960 which we have so far called a 'document' is in fact not merely an assignment of certain funds due to Gallagher from Feld but an unqualified promise to pay. ¹

In support of this contention plaintiff cites many principles and authorities to the effect that the instrument should be construed so as to make it lawful operative and capable of being carried into effect, that it should be given the construction placed upon it by the parties, that it should be construed against Gallagher, the draftsman, and that Gallagher should not be permitted to profit 'from his own wrong.'

Taking up the last contention first, we do not see where Gallagher committed any legal wrong. When the document was delivered to decedent he was in no way responsible for his mother's debt. Although the moral obligation of his mother to pay the outlawed debt was still alive, it is no reason for enlarging Gallagher's beyond what it appears to be. Plaintiff argues as if Gallagher had made fraudulent representations concerning the debt from Feld. As has been pointed out such a theory was neither pleaded nor proved. Nor did plaintiff purport to proceed against him on any of the implied warranties of an assignor, clouded though the subject may be in California. (See Cal.Jur.2d 'Assignments' § 62.)

Plaintiff also, by way of analogy, likens the instrument to a check and asks whether she would have been denied relief, had the check been dishonored for insufficient funds. The trouble with that argument is that a check, unlike an assignment, carries the general personal credit of the drawer and not only the credit of a particular fund. If the check is not honored, the drawer is personally liable. Civ.Code, § 3142; Charlotte Guyer & Associates v. Franklin Factors, 211 Cal.App.2d 690, 697, 27 Cal.Rptr. 575; cf. Civ.Code, § 3265e.)

Turning to the various canons of construction invoked by appellant, they are of course only applicable if there is anything to construe or interpret.

We cannot, under the guise of interpretation or construction, make the instrument of July 12, 1960 something which it obviously is not. It is entitled: 'Agreement For Assignment of...