Sunset-Sternau Food Co. v. Bonzi
| Decision Date | 05 August 1963 |
| Docket Number | SUNSET-STERNAU |
| Citation | 32 Cal.Rptr. 897 |
| Parties | FOOD CO., Plaintiff and Respondent, v. Rudy BONZI, Defendant and Appellant. Civ. 210. |
| Court | California Court of Appeals Court of Appeals |
Albert E. Levy, Goldstein, Barceloux & Goldstein, P. M. Barceloux, Burton J. Goldstein, San Francisco, Zeff, Halley & Price and E. Dean Price, Modesto, for appellant.
Cleveland J. Stockton, Modesto, Eisner & Titchell and Haskell Titchell, San Francisco, for respondent.
This is an appeal by defendant Rudy Bonzi from a judgment in favor of plaintiff Sunset-Sternau Food Co., a corporation, in the sum of $48,641.41, plus prejudgment interest and costs. The action from which the appeal arose is founded primarily upon the theory of the right of an agent to implied indemnity and reimbursement from a principal for a judgment in favor of a third party satisfied by the agent.
Viewing the evidence in the light most favorable to plaintiff and disregarding conflicts and contradictions, the facts are as follows:
Plaintiff is engaged in the business of processing and selling fruits and nuts. Prior to the transaction which is the subject of this controversy it had never acted as a broker or agent. Defendant is engaged in the industrial waste and drayage business. He had handled commercial waste from plaintiff's plant for some years. He had purchased wet apricot pits from plaintiff which he processed and sold for his own account. Apricot pits yield a small kernel which is ground into paste and is used as an almond substitute in the baking and confectionary industries. Defendant had acquired some nut cracking equipment with a view to converting it, setting up his own plant and entering into the business of cracking apricot pits to obtain kernels for resale. From sometime in the spring until the early summer of 1955, there were conferences between defendant, plaintiff's president, Sidney Sternau, and other representatives of plaintiff which culminated in an oral agreement that defendant would establish a pit cracking plant; that plaintiff would act as his selling agent for a 5 percent commission; and that, since plaintiff was well known in the fruit and nut industry and defendant was unknown, all contracts for the sale of kernels would be entered into by plaintiff as seller, but for the account of defendant as undisclosed principal.
In July 1955, Mr. Sternau arranged for the brokerage firm of Prince, Keeler & Company, Inc., hereinafter referred to as Prince, to act as brokers in New York on an agreed commission of 2 percent. Sternau, a representative of Prince, and Mr. Kaplan, a representative of American Almond Products Co., met in New York for the purpose of interesting American Almond in the purchase of apricot kernels. A small sample, which had been furnished by defendant, was left with Mr. Kaplan. On July 25, 1955, Prince wrote to plaintiff, advising that American Almond was interested in the kernels but wanted 200 pounds of kernels for a sample testing. Plaintiff contacted defendant and advised him of the request. Defendant had sufficient apricot pits cracked by another firm to yield 200 pounds of kernels and shipped the sample to American Almond on August 31st. On August 1, 1955, Prince advised plaintiff by wire that the price of kernels was 17 cents per pound and that American Almond would buy at that price, subject to the approval of the 200-pound sample. Steven Tarrico, plaintiff's assistant and plant manager, checked New York prices and found them to be 18 cents per pound. He telephoned defendant, advising him of the price and defendant agreed to make the price 17 1/2 cents. Further negotiations between plaintiff and Prince followed, culminating in an enforceable contract entered into September 1, 1955, showing American Almond Products Co., Inc. as buyer and Sunset-Sternau Food Co. as seller, covering approximately 75 tons of Sunset Regular Apricot Kernels, at 17 1/2 cents per pound for delivery one-half October 31st, balance November 30, 1955. Mr. Sternau testified that plaintiff was acting as agent for defendant; that title was to remain in Bonzi until the kernels were paid for by American Almond; that the kernels were to be transmitted by defendant to plaintiff and shipped east consolidated with plaintiff's other freight; and that payment was to be made to plaintiff who would deduct the 5 percent commission and remit the balance to defendant.
About September 19, 1955, fire destroyed a substantial portion of the apricot pit and kernel stock in California resulting in a short supply market. The price of kernels rose to 43 cents per pound.
The shipment due under the contract with American Almond on October 31, 1955, was not made. On November 3, 1955, plaintiff's attorney wrote to defendant, advising him that American Almond was going to file a suit for damages for breach of contract and plaintiff would join Bonzi as a cross-defendant in that action or would hold him liable for any damages sustained by plaintiff because of defendant's failure to deliver the kernels.
On November 15, 1955, Mr. Kaplan, his attorney, Mr. O'Connor, Mr. Sternau, Mr. Tarrico, defendant and his attorney, Mr. Price, met in Price's offices. Subsequently on the same day the same persons, except for the attorneys, met at plaintiff's plant. At one or both of these conferences Mr. Kaplan said his company needed the kernels and did not want to file a suit; that he would pay better than the contract price to get delivery; that he would pay for the expense of having the pits cracked by California Packing Company if defendant would deliver. Mr. Sternau offered to forego the price of 60 tons of apricot pits which he had sold to defendant that season but which were unpaid for and would also forego the agreed commission if defendant would deliver. At these meetings defendant did not question the contract or challenge plaintiff's authority to act as his agent. He said he would think it over and advise them the next morning. By letter dated November 16, 1955, his attorney, Price, advised that defendant would be unable to crack or deliver any apricot kernels that season.
At the time of the fire defendant had an inventory of 541 tons of dried pits which would product 108 tons of kernels, or more than sufficient to fill the contract. About a week after the fire, he sold 436 tons of dried pits to Continental Nut Company for $91.70 per ton. On November 16, 1955, he sold the remaining tons to Continental for $130 per ton. For his inventory of pits he received $52,602.71. If he had filled the contract he would have received $26,750, less the cost of cracking the pits.
At the trial defendant admitted the making and the terms of the oral contract of agency, and admitted that he knew of the contract entered into between plaintiff and American Almond. His testimony as to these matters conflicted in only one material part. He testified that he believed the contract with American Almond was for 7 1/2 tons instead of 75 tons of apricot kernels.
American Almond commenced an action in the United States District Court against plaintiff, which we shall refer to as the Federal action, and on May 2, 1957, obtained judgment which was affirmed on appeal August 18, 1958, and satisfied by plaintiff on October 6, 1958, by the payment of $41,309.10. Defendant was not made a party defendant; was not impleaded as a cross-defendant; was never served; and plaintiff neither gave him a copy of the complaint nor advised him of the pendency of the suit.
This action was filed on June 11, 1959. The complaint contains two counts. The first, based on the theory of indemnification and right to reimbursement, alleges that plaintiff, pursuant to oral authorization, acted as agent for defendant, as undisclosed principal, in selling 75 tons of apricot kernels to American Almond Products Co., Inc. of New York; that defendant failed to deliver; that American Almond sued plaintiff in the United States District Court (California) for breach of contract and recovered judgment, which was affirmed on appeal (Sunset-Sternau Food Co. v. American Almond Prod. Co., 9 Cir., 259 F.2d 93); that plaintiff then satisfied the judgment; and that defendant, as principal, is liable to plaintiff, as agent, for the amount of the judgment, plus interest, attorneys' fees and costs. The second court alleges a common count for money laid out and expended. Defendant answered, denying the material allegations of the complaint and raised four affirmative defenses, only three of which are relevant here: (1) unenforceability of the agreement of agency by virtue of the provisions of sections 1724, subdivision 1, and 2309 of the Civil Code; (2) the bar of the statute of limitations; and (3) another action pending between the same parties for the same cause.
On this appeal defendant restates the defenses just mentioned as grounds for reversal and adds that, since plaintiff failed to notify defendant of the pendency of the Federal action, plaintiff thereby waived any rights it may have had against defendant.
Basically, the question involved in defendant's first group of contentions and arguments is this: Do the provisions of the equal dignities rule (Civ.Code, § 2309) foreclose an agent who, acting pursuant to an oral authorization from, and in behalf of, his principal, enters into a contract with a third person for the sale in his own name of the principal's goods in an amount which brings the contract within the purview of the statute of frauds (Civ.Code, § 1724, subd. 1) and its counterparts (Civ.Code, § 1624a, subd. 1; Code Civ.Proc. § 1973, subd. 1) from looking to the principal for indemnity for all damages sustained by reason of the principal's failure to deliver the goods to the third party?
Defendant contends that, written authorization absent, there is no agency and therefore no right to...
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