Roth v. Department of Veterans Affairs

• Decision Date: 04 September 1980
• Court: California Court of Appeals Court of Appeals
• Parties: Previously published at 110 Cal.App.3d 14 110 Cal.App.3d 14, 110 Cal.App.3d 622 Amil W. ROTH, on behalf of himself and all others similarly situated, Plaintiff and Appellant, v. DEPARTMENT OF VETERAN AFFAIRS of the State of California, Defendant and Respondent. Civ. 57155.

Page 552

167 Cal.Rptr. 552

Previously published at 110 Cal.App.3d 14

110 Cal.App.3d 14, 110 Cal.App.3d 622

Amil W. ROTH, on behalf of himself and all others similarly situated, Plaintiff and Appellant, v. DEPARTMENT OF VETERAN AFFAIRS of the State of California, Defendant and Respondent.

Civ. 57155.

Court of Appeal, Second District, Division 5, California.

Sept. 4, 1980.

As Modified on Denial of Rehearing

Sept. 25, 1980.

Hearing Denied Nov. 12, 1980.

Amil Roth and Earl H. Greenstein, Beverly Hills, for plaintiff and appellant.

Howell Y. Jackson, Sacramento, for defendant and respondent.

DOWDS, Associate Justice. ^*

Plaintiff brought this class action on behalf of himself and others similarly situated who, since 1968, have purchased homes or farms from defendant ("Cal-Vet purchasers" ) under written contracts which did not expressly provide for an additional charge in the event a payment under the contract was not timely made (a "late charge" ). Plaintiff alleged that defendant had assessed and was continuing to assess late charges against plaintiff and some members of the class and the complaint sought damages for breach of contract, declaratory relief, an injunction and an accounting. The complaint pointed out that since about November 1974, defendant had been using a form contract which expressly provided for the assessment of late charges and that persons entering into such contracts with defendant were not members of the class. The action was certified as a class action and plaintiff was appointed class representative by order of the superior court. He requested that he be relieved of the necessity of giving notice to the class. That request was denied and the court ruled that defendant should print the notice and bill plaintiff for the cost of the printing, defendant should give notice (at its expense except for printing the notice) to all present Cal-Vet purchasers by inserting a copy of the notice with the monthly statements mailed to such purchasers and that defendant should determine from its records the names and addresses of and other pertinent information respecting class members who were not current Cal-Vet purchasers and mail notice to them. Defendant was authorized to charge plaintiff its costs in ascertaining the pertinent information respecting class members who were not current Cal-Vet purchasers and in giving notice to them, but not in excess of $11,815. According to defendant these expenses ended up totaling $13,670. Thus plaintiff was required to pay for the printing of the notices and not to exceed $11,815 of expenses in connection with notice to the inactive Cal-Vet purchasers and defendant bore the expense, except for printing, of giving notice to active Cal-Vet purchasers and any costs in excess of $11,815 in respect of the inactive ones. The order also required plaintiff at his expense either to publish notice or to take certain follow-up procedures concerning Cal-Vet purchasers whose notices were returned by the post office. The order further provided that if plaintiff prevailed in the lawsuit he could obtain reimbursement of his notice expenses from the funds recovered but that such expenses should not be taxable as costs.

Pursuant to an order of court, the action proceeded to a non-jury bifurcated trial on the issue of liability only. Plaintiff had not by the date of trial paid the notice expenses billed to him by defendant, which moved for dismissal of the action or, in the alternative, for revocation of the certification as a class action. Plaintiff's counsel responded that plaintiff was able, ready, and willing to make payment of the amounts that may be required under the court order at such time as it became clear that he must do so and displayed a savings account book showing a balance of $12,704. After argument by counsel as to whether defendant had adequately established that it had incurred the costs for which it billed plaintiff, the court ordered plaintiff to pay $11,815 to defendant by 4 p. m. of the following day and otherwise denied defendant's motions. That sum was paid and the trial proceeded to a judgment for defendant.

Plaintiff purports to appeal from the judgment and from the order requiring notice to be given to members of the class. Although the latter order is not appealable (Code Civ.Proc., § 904.1), we can review it on appeal from the judgment (see 2 Witkin California Procedure (2d ed. 1971) pp. 4048-4049). He makes three contentions on appeal: (1) the collection of late charges is authorized neither by the contract nor by statute; (2) the late charge provision was invalid because it was a regulation within the meaning of the Administrative Procedure Act (Gov.Code, § 11370 et seq.) and the provisions of that Act were not complied with; and (3) the requirement that plaintiff pay part of the expenses of notice to the class was a violation of his constitutional right to petition for redress of grievance (U. S. Const., Amend. I).

The trial court made findings of fact and conclusions of law in which it determined, insofar as pertinent to the issues on appeal, that the collection of late charges was authorized by the contract in question and by Military and Veterans Code section 986.9 and that the late charge provision was not a rule, regulation, order or standard of general application as defined in Government Code section 11371 requiring compliance with the Administrative Procedure Act.

Turning first to the merits of the judgment, we note that so far as the record on appeal discloses, no extrinsic evidence was offered or received as to the meaning or interpretation of the contract or the statutes. Under these circumstances we are not bound by the trial court's determination and must independently ascertain the meaning of the pertinent statutes and contractual provisions (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866, 44 Cal.Rptr. 767, 402 P.2d 839; Estate of Madison (1945) 26 Cal.2d 453, 456, 159 P.2d 630).

The Veterans' Farm and Home Purchase Act of 1943 (Mill. & Vet.Code, § 984 et seq.) provides, in general, for the acquisition by defendant of farms and homes from the owners thereof and the resale of the same to certain persons who are or have been in the military, naval, or air service of the United States. Section 987.1 of such code provides that, with an exception not here pertinent, "the department (defendant) in each individual case may specify the terms of the contract entered into with the purchaser . . .." Section 986.9, which the trial court cited in its Conclusions of Law as authorizing the late charge, reads in pertinent part as follows:

"The department shall then enter into a contract with the veteran for the sale of the property to the veteran. The department shall fix the selling price of the property by adding to the purchase price thereof, to the total cost of improvements constructed, or to the value of such property as determined by the department when such property is acquired by the department in a manner other than by purchase, all expenses incurred and estimated to be incurred by the department in relation thereto, inclusive of interest, administration, appraisals, examination of title, incidental expenses, and the sum deemed necessary to meet unforeseen contingencies . . .."

We have no quarrel with the proposition that defendant could have, if it wished, provided in its contract with the veteran for an additional reasonable charge if a periodic payment on the purchase price were not made within the time provided by the contract, and, as heretofore indicated, it apparently expressly did so in contracts entered into after November 1974. We doubt, however, that section 986.9 adds much, if anything, to the authority conferred by section 987.1 in this connection.

Plaintiff's argument based on a comparative and historical analysis of various statutes, that the legislative scheme does not envision a late charge is unconvincing. We look to the language of the contract to see if in fact it has provided for such a late charge.

The contract states that it "is made by the Department and accepted by the Purchaser on each of the following terms and conditions, and not otherwise . . . ." (Emphasis added.) The terms and conditions which follow do not mention late charges. The only provision of the contract urged by defendant as authorizing the late charge is paragraph 1 reading as follows: "The selling price for said property shall be the sums of Dollars () and all expenses incurred and estimated to be incurred by the Department in relation thereto, as provided in Section 986.9 of the (Military and Veterans) code . . . ." Defendant argues that this provision authorizes it to assess an additional charge at any time during the existence of the contract to cover additional expenses resulting from late payments. Plaintiff, on the other hand, views this language as only permitting defendant, at the inception of the contract, to include in the selling price an amount to cover expenses theretofore incurred or estimated to be incurred in the future.

We consider the proper interpretation of the contract in the light of well-recognized principles. Any uncertainty in the contract must be construed against the drafter, even if the drafter is a public body. (Weeshoff Constr. Co. v. Los Angeles County Flood Control Dist. (1979) 88 Cal.App.3d 579, 587-588, 152 Cal.Rptr. 19.) All contracts, whether public or private, are to be construed by the same rules (Civ.Code, § 1635; Oberg v. City of Los Angeles (1955) 132 Cal.App.2d 151, 158, 281 P.2d 591). The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other (Civ.Code, § 1614). The law does not favor penalties or forfeitures and provisions in a contract are construed strictly against them (see Cantlay & Tanzola, Inc. v. Ingels (1939) 31 Cal.App.2d 553, 556-557, 88 P.2d 141; Civ.Code,...