Sunset Mill. & Grain Co. v. Anderson

• Citation: 249 P.2d 24,39 Cal.2d 773
• Court: United States State Supreme Court (California)
• Decision Date: 24 October 1952
• Parties: SUNSET MILLING & GRAIN CO. v. ANDERSON. L. A. 22396.

Page 24

249 P.2d 24

39 Cal.2d 773

SUNSET MILLING & GRAIN CO. v. ANDERSON.

L. A. 22396.

Supreme Court of California, in Bank.

Oct. 24, 1952.

Forster & Gemmill, Los Angeles, Stickney & Stickney, Edward Strop, San Diego, and Robert L. Meyer, Los Angeles, for appellant.

Charles B. De Long, San Diego, for respondent.

EDMONDS, Justice.

The Sunset Milling and Grain Company sued to recover the amount of principal and interest due upon a series of nine promissory notes executed and delivered to it by O. E. Anderson, doing business as Anderson Feed Store. Its appeal from a judgment of nonsuit challenges the correctness of the trial court's determination that an agreement pleaded by Anderson was a complete defense to the action.

By his answer, Anderson admitted the execution and delivery of the notes and alleged that they were made without consideration. The pleader then alleged the following facts:

Ralph Bangenter was field representative for Sunset Milling, C. Trevor Sawday its local salesman and representative. These men told Anderson that Milton Morgan was selling a feed business operated by him and from which Charles J. Brust had been buying Sunset Milling's feed. According to them, Morgan had taken Brust's promissory notes and given them, with duplicate notes of his own, to Sunset Milling for the feed sold. Bangenter and Sawday also represented to Anderson that the notes given, and to be given, by Brust were and would be secured by a chattel mortgage upon chickens which he was raising. As a bookkeeping procedure, they said, Sunset Milling would desire a promissory note from Anderson to be sent with each note taken from Brust, but Anderson would not be personally responsible for any of Brust's bills or notes or for his own notes in like amount.

On August 1, 1949, the date of the first note in the series, Sawday, on behalf of Sunset Milling and as its agent, executed and delivered to Anderson a written instrument which reads as follows: 'To Whom It May Concern: I, C. Trevor Sawday, am an official representative of Sunset Milling and Grain Co., * * * I have informed O. E. Anderson, owner of the Anderson Feed Store * * * that he will in no way be responsible for the collection of the feed bills incurred by C. J. Brust, * * * and that all shipments of feed are covered by a chattel mortgage made out in favor of Morgan's Feed Store, * * * and the Sunset Milling and Grain Co. The Sunset Milling and Grain Co. will accept all notes and issue a credit for the amount of the note to the Anderson Feed Store without any financial responsibility to the Anderson Feed Store. Signed: C. Trevor Sawday, Representative of Sunset Milling and Grain Co.'

The representation that Brust's notes were secured by a chattel mortgage was untrue, the answer continued. Anderson believed the representation and was deceived thereby into selling Sunset Milling's feed to Brust and taking his promissory notes, which he sent, together with his own notes of equal amount, to Sunset Milling. Each of the notes sued upon is a duplicate of one executed by Brust and representing a sale of feed to him. Sunset Milling recovered a judgment in an action against Brust upon the promissory notes given by him.

No affidavit denying the genuineness and due execution of the written instrument pleaded by Anderson was filed by Sunset Milling.

Upon the trial, Anderson's promissory notes were admitted in evidence. The credit manager of Sunset Milling testified that the notes had not been paid although payment had been demanded. On cross-examination, he stated that Sunset Milling also received notes executed by Brust in the same amount and bearing the same dates as Anderson's notes. None of Brust's notes had been paid and none was secured by a chattel mortgage. According to the credit manager, there was no written agreement concerning the arrangement whereby Brust's notes were received 'in support of' Anderson's notes.

Following the presentation of this evidence, Sunset Milling rested its case and of the writing. Several other defenses Thereafter, Sunset Milling moved to re-open the case to present further testimony and made a formal offer of proof. The motion to re-open was denied and a nonsuit granted upon the ground that the agreement pleaded in the answer was a complete defense to the action.

Sunset Milling contends that, regardless of the admission of genuineness and due execution which resulted from failure to file an affidavit in denial thereof, Code Civ.Proc. § 448, the judgment of nonsuit was erroneously granted. There is nothing in the writing or the evidence, it argues, which connects the writing to the notes which are the basis of the action. In addition, it contends that failure to file the affidavit did not admit the authority of Sawday to bind Sunset Milling to the contents of the writin. Several other defenses to the writing were open to it, according to Sunset Milling, despite its failure or file an affidavit. Finally, it asks this court, upon reversal, to permit the filing of an affidavit under the provisions of section 473 of the Code of Civil Procedure for relief from a judgment taken against a party through his mistake, inadvertence, surprise or excusable neglect.

Anderson disputes each of these contentions. He argues that the trial court, by implication, construed the writing as being related to the notes in controversy and that this construction is binding upon the appellate court. He also contends that failure to file the affidavit admitted the authority of Sawday to bind Sunset Milling. The suggested defenses to the instrument, he says, are without merit and there is no authority for permitting the filing of an affidavit at this time.

Despite the admission of 'the genuineness and due execution' of the instrument which results from failure to file an affidavit 'denying the same' in accordance with section 448 of the Code of Civil Procedure, the instrument may be controverted by evidence of fraud, mistake, undue influence, compromise, statute of limitations, estoppel, and like defenses, but neither its due execution nor its genuineness may be contested. Crandall v. Schnouser, 207 Cal. 772, 777-778, 279 P. 778; Garcia v. California Truck Co., 183 Cal. 767, 768, 192 P. 708; Moore v. Copp, 119 Cal. 429, 432, 51 P. 630; Sparks v. Sparks, 101 Cal.App.2d 129, 134-135, 225 P.2d 238; Miller v. McLaglen, 82 Cal.App.2d 219, 224-225, 186 P.2d 48. However, although many defenses to the instrument are permissible, it has been held repeatedly that the admission of genuineness and due execution necessarily includes an admission of the authority of the agent to sign the name of his principal to the document. Reynolds v. Pennsylvania Oil Co., 150 Cal. 629, 636, 89 P. 610; Knight v. Whitmore, 125 Cal. 198, 200, 57 P. 891; Bank of America, etc., Ass'n v. Richardson, 29 Cal.App.2d 554, 558, 85 P.2d 139; Siple v Knapp, 39 Cal.App. 638, 639, 179 P. 537; Quartz Glass & Mfg. Co. v. Joyce, 27 Cal.App. 523, 525-526, 150 P. 648.

Sunset Milling argues that this rule is inapplicable here because Sawday did not sign its name by himself as agent, but signed his on name, followed by a description of himself as its representative. For this proposition, it relies upon the rule that a deed executed by 'A, attorney in fact for B' does not convey B's interest in the described property. This is the common-law rule of conveyancing, Morrison v. Bowman, 29 Cal. 337, 352, which has been made a part of the code. Civ.Code, § 1095; Mitchell v. Benjamin Franklin Bond & Indemnity Corp., 13 Cal.App.2d 447, 448, 57 P.2d 185. However, the code section refers only to instruments transferring an estate in real property and is inapplicable to other writings. California Pacific Title & Trust Co. v. Crocker First Nat. Bank, 131 Cal.App. 487, 493, 21 P.2d 475.

In the case of a simple contract, section 2337 of the Civil Code provides: 'An instrument within the scope of his authority by which an agent intends to bind his principal, does bind him if such intent is plainly inferable from the instrument itself.' 'While some confusion and uncertainty existed in our early cases, it is now definitely settled in this state that a disclosed principal may be held liable on a contract made solely in the name of the agent.' Bank of America, etc., Ass'n v. Cryer, 6 Cal.2d 485, 488, 58 P.2d 643, 644; Pacific Ready-Cut Homes, Inc., v. Seeber, 205 Cal. 690, 695-698, 272 P. 579; Geary St., etc., R. R. Co. v. Rolph, 189 Cal. 59, 64-68, 207 P. 539. Even before this principle was established, it was held that no particular form of signature was required to bind the principal so long as it appeared from the instrument itself that such result was intended. McCormick v. Stockton, etc., R. R. Co., 130 Cal. 100, 104-105, 62 P. 267; Southern Pac. Co. v. Von Schmidt Dredge Co., 118 Cal. 368, 371, 50 P. 650. From the face of the instrument under consideration here, it is plainly inferable that Sawday, as representative of Sunset Milling, intended to bind it to the promises which it is pledged to fulfill.

Sunset Milling contends that the writing does not purport to bind it...