Shasta Water Co. v. Croke

• Citation: 128 Cal.App.2d 760,276 P.2d 88
• Parties: The SHASTA WATER COMPANY, a corporation, Plaintiff and Appellant, v. F. A. CROKE and William S. Wendeil, Defendants and Respondents. Civ. 15862.
• Decision Date: 17 November 1954
• Court: California Court of Appeals Court of Appeals

Page 88

276 P.2d 88

128 Cal.App.2d 760

The SHASTA WATER COMPANY, a corporation, Plaintiff and Appellant, v. F. A. CROKE and William S. Wendeil, Defendants and Respondents.

Civ. 15862.

District Court of Appeal, First District, Division 2, California.

Nov. 17, 1954.

Rehearing Denied Dec. 17, 1954.

William J. Connolly, San Francisco, for appellant.

Edwin Sprague Pillsbury, David C. Dunlap, San Francisco, for respondents.

NOURSE, Presiding Justice.

This is an action for breach of a written contract. The court sitting without a jury gave judgment for defendants and plaintiff appeals.

In the agreement of July 6, 1951, incorporated by reference in the complaint, plaintiff released all claims against defendants, their former employees, for shortages on inventories and operations occurred during their employment and for shortages occurred on a bottling contract between plaintiff and Ginger Beer Bottlers, Ltd. in consideration of $20,000 to be paid by defendants--$5,000 cash and $15,000 in installments to be secured by certain trust deed; in addition defendants agreed to pay $25 in settlement of miscellaneous bottles and to return an accumulating table. It was alleged that the agreement was breached by defendants by failure and refusal to fulfill any of these obligations except the return of the table. Defendants denied having caused shortages, admitted the signing of the agreement, but alleged that it was obtained through fraud, duress and intimidation, among which threats of criminal prosecution, that it lacked consideration and that defendants had notified plaintiff of their rescission.

At the end of the trial the court orally expressed its opinion that the defense of duress had not been made out by a preponderance of the evidence and that the only issue left was that of consideration. However, later the court found not only that there was no consideration for the purported agreement but also that said purported agreement was obtained from the defendants under threats of criminal prosecution, menace and duress. A motion for a new trial, made on most of the grounds specified in section 657, Code of Civil Procedure but argued mainly on the ground of irregularities preventing a fair trial, was denied.

Appellant urges that as a matter of law and of fact the agreement was supported by consideration and that the finding as to threats of criminal prosecution, menace and duress was contrary to the evidence and due to sympathy and prejudice of the judge shown by the irregularity of the proceedings.

That there was substantial evidence of threats of criminal prosecution and of menace in general cannot be denied. As to the background, it is undisputed that the defendants Croke and Wendell had been employed at the Los Angeles office of plaintiff which had been a losing operation for several years. Defendant Croke took his position with plaintiff in 1949 only and was then manager of the Los Angeles branch. Defendant Wendell had much longer service, among other positions as bookkeeper. Croke left his position with plaintiff in the latter part of 1950 and prepared to open a business of his own in San Bernardino. A few months after he left plaintiff's employment the Los Angeles plant was closed, and Mr. Wendell also left and joined Croke. In June, 1951, Mr. Gordon, the Los Angeles distributor of Ginger Beer Bottlers, Ltd., for whom plaintiff had rendered contract bottling services at the Los Angeles plant, complained of large shortages of crowns for ginger beer bottles provided by them to plaintiff, which, if they had been used in bottling would have shown that bottled products amounting to a value of some $30,000 had not been accounted for. Mr. Croke, informed of this claim, conceded that a minor part of the shortage of crowns was attributable to the fact that from the essence provided by Ginger Beer Bottlers, Ltd. more ginger beer had been produced than in accordance with the formula and that from this 'overrun' he had twice taken a small quantity (value a few hundred dollars) for his own account whereas larger quantities had gone into the stock of plaintiff. However he accepted responsibility in making an arrangement with Mr. Gordon whereby he agreed to pay $10,000 against a release of both himself and plaintiff from all responsibility for the shortage claim. (Mr. Croke testified that before he made said arrangement he had been told by Mr. Kennedy, the then San Francisco manager of plaintiff, that otherwise the matter would be turned over to the authorities and the bonding company, but the validity of the said agreement with Gordon is not in issue and Mr. Croke fully complied with it.)

With respect to the agreement in issue, Croke testified in substance that when Kennedy had received the release from Gordon he told defendants: 'Now I can put you two bastards behind the eight-ball.' In a later conference in San Francisco he charged them with the loss of truck loads of merchandise and machinery without any specification. When Croke denied responsibility he threatened criminal prosecution and reference to the bonding company. When Croke wanted to telephone counsel he threatened with the cops. The conference continued a whole day, Kennedy telling them that they would not get out of town before they had signed an agreement. There were repeatedly threats of the above kind and Kennedy also asked them how they would like to have the publicity about their being arrested in San Francisco in all the papers in San Bernardino. They were scared, afraid they would not get back home as they had nobody in San Francisco who could bail them out. Under such pressure they signed after dinner the alleged agreement after first much higher amounts had been demanded from them. Mr. Wendell corroborated the above evidence of Croke; Kennedy denied all threats and other witnesses for plaintiff testified that in their presence no threats had been uttered, but they had not been present during all of the...