Valdez v. Taylor Auto. Co.

• Decision Date: 28 December 1954
• Citation: 129 Cal.App.2d 810,278 P.2d 91
• Court: California Court of Appeals Court of Appeals
• Parties: Modesto VALDEZ, Walter C. Danielson and Constance Danielsen, Plaintiffs and Respondents, v. TAYLOR AUTOMOBILE COMPANY, a corporation, and Robert Drobnis (substituted in place and in stead of John Doe Ozoff), Defendants, Taylor Automobile Company, Appellant. Civ. 20259.

Page 91

278 P.2d 91

129 Cal.App.2d 810

Modesto VALDEZ, Walter C. Danielson and Constance Danielsen, Plaintiffs and Respondents, v. TAYLOR AUTOMOBILE COMPANY, a corporation, and Robert Drobnis (substituted in place and in stead of John Doe Ozoff), Defendants Taylor Automobile Company, Appellant.

Civ. 20259.

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

Dec. 28, 1954.

Rehearing Denied Jan. 24, 1955.

Hearing Denied Feb. 24, 1955.

Potruch, Fredricks & Lerten and Erwin Lerten, Los Angeles, for appellant.

Dreher & McLeod, Robert H. Dreher, Oakland, and Richard B. Levitt, Los Angeles, for respondents.

VALLEE, Justice.

Modesto Valdez, referred to as plaintiff, brought this action for damages for the alleged failure of defendant Taylor Automobile Company, referred to as defendant, to obtain public liability and property damage insurance on the sale by the latter of a used automobile to plaintiff. The complaint, in several counts, alleged: breach of an oral contract to procure insurance; negligent failure to procure insurance; fraud and deceit in promising to procure insurance; estoppel. The Danielsens were joined a parties plaintiffs on the theory they were third party beneficiaries of the contract between plaintiff and defendant. The cause was tried by a jury which returned a verdict in favor of plaintiff against defendant for $18,465. Defendant appeals from the judgment which followed.

Defendant is a dealer in used automobiles in Los Angeles. At the time in question it was licensed as an insurance broker. On April 1, 1950, and prior thereto, defendant in a large advertisement of used cars in the Los Angeles Times and other Los Angeles newspapers gave the monthly payments of various makes of cars and stated: 'Monthly payments below are based on 1/3 down and include insurance & sales tax.' On its used car lot defendant had a large sign which said, 'Free Payment Guarantee Accident Policy.' One Drobnis was in defendant's employ as credit manager and 'closer.' On April 1, 1950, plaintiff visited the lot, talked to a salesman, selected a car, and was turned over to Drobnis by the salesman. The sale was made under a conditional sales contract. It was the duty of Drobnis to write up a purchase order, a credit statement, a conditional sales contract, and other papers. It was also his duty, when a sale was made under a conditional sales contract, to see that defendant's interest in the car was covered by insurance. He obtained from plaintiff the information necessary to write the insurance. Plaintiff told him that he (plaintiff) wanted 'full coverage insurance to protect myself'; he told Drobnis, 'Well, I want the kind that covers up the next party in case you have an accident,' that he wanted 'full coverage insurance to cover the other man.' Drobnis said 'O.K.' Plaintiff testified Drobnis 'told me he'd get it for me. He didn't tell me how much it would be.' Plaintiff also testified, '[T]he way I understood full coverage insurance, the way--the kind of insurance I wanted was insurance that would protect me and protect anybody else if I ever had an accident or anything on the road with my car, and I wanted to be protected, fully protected, and protect any other party, * * * I just wanted to be sure that insurance would back me in case I ever had an accident.' Drobnis figured the down payment and the monthly payments on a piece of scratch paper, and showed the paper to plaintiff. The paper indicated the insurance premium was $141. Plaintiff said to Drobnis, 'How come so much?', to which Drobnis replied, 'That's the kind of insurance you are asking for. That's why we are charging you that much.'

The conditional sales contract, the purchase order, and the credit statement were printed forms with blanks to be filled in to fit the particular case. Plaintiff signed the conditional sales contract in blank. A filled-in copy was mailed to him later. The conditional sales contract and the purchase order stated that plaintiff made application to defendant to insure the car, 'Comprehensive 18 mos: Prem. $21.00 $50.00 Deductible Collision 18 mos: Prem. $120.00' On the purchase order the word 'None' was written over the words 'Vendor's Single Interest Fire and Theft' and over the words 'Vendor's Single Interest Collision.' Under the latter words there appeared 'B. I. & P. D. Ins.,' and opposite these in the column headed 'premium' the symbol " was placed by Drobnis in the presence of plaintiff. 'B. I. & P. D. Ins.' means bodily injury and property damage insurance. Plaintiff did not read the purchase order before he signed it, nor until after the accident to be later described. He did not read the conditional sales contract until after the accident.

About May 1, 1950, plaintiff's wife received an insurance policy through the mail. She told plaintiff it had come. He did not see it until after the accident when he discovered for the first time that he did not have public liability and property damage insurance. The policy covered only 'Comprehensive-Loss of or damage to the Automobile, except by Collision or Upset but including Fire, Theft and Windstorm' and 'Collision or Upset.'

An expert in the automobile insurance field gave testimony, without objection, from which it may be inferred that in the trade 'full coverage,' when expressed by a layman, includes public liability and property damage insurance. He testified that if a layman asks for 'full coverage' or 'the kind of insurance that protects me or the other fellow,' it would be understood that he meant the basic limits: '5,000.00 bodily injury liability for one person, $10,000.00 for all persons in one occurrence; $5,000.00 property damage,' which were the minimum amounts written for bodily injuries and property damage in 1950. See Veh.Code, § 415.

About October 29, 1950, plaintiff was involved in a collision between the car purchased from defendant and one owned by the Danielsens. The Danielsens brought an action against plaintiff for personal injuries and property damage arising out of the collision. Plaintiff notified defendant of the action and demanded that defendant defend it. Defendant refused to do so. Judgment was rendered in that action against plaintiff for $15,000 for injuries sustained by Walter Danielsen, for $3,000 for injuries sustained by Constance Danielsen, for $450 for property damage, and for $15 costs, a total of $18,465. That judgment became final before this action was commenced.

After both sides had rested, a conference was had between the trial judge and counsel. The judge stated that 'all counsel have indicated complete agreement on all of the instructions.' The judge further stated that he had modified some of them and asked counsel to examine them. Counsel did so and said they had 'all agreed that they are proper and may be given to the jury subject to the Court's approval.' The court asked counsel whether they would stipulate 'that all the instructions, other than those stipulated to yesterday, that had been proposed by respective counsel were withdrawn by the proposing counsel.' Each counsel so stipulated. The court gave this instruction:

'The instructions I am giving you have been prepared and agreed to between the Court and counsel for all of the parties as fairly representing the issues of the case, and in order to simplify and assist you in arriving at a fair and just verdict.

'For the purposes of determining a verdict in this case it is agreed between all parties in this case that verdicts will be either for Valdez, as plaintiff, or Taylor Automobile Company, as defendant, so that the following instructions are not to be considered by you as prejudicial to the defendant or the plaintiff because of the fact that the Danielsens are not mentioned herein by name.

'I instruct you that if you believe the plaintiff's evidence in this case you may then find for the plaintiff on one of two theories, but not on both, as follows:

'1. The first theory is based on contract. If you find that there was a contract for insurance between the plaintiff and defendant you will then bring in a verdict for plaintiff for $8,450.00. I further instruct you that in order for you to find that a valid and binding contract of insurance was entered into between the plaintiff, Valdez, and the defendant, Taylor Automobile Company, that you must first determine that the essential elements of a contract existed at the time; these are: 1. Parties capable of contracting, 2. Consent, 3. A lawful object and 4. A sufficient cause or consideration.

'2. The second theory is based on fraud, deceit, negligence or estoppel, and if you find that plaintiff has proved any one of these, you will then return a verdict for plaintiff for $18,465.00.' The terms fraud, deceit, negligence, and estoppel were then defined for the jury.

Since the verdict was for $18,465, it is patent that it was not predicated on a finding that there was a contract of insurance between plaintiff and defendant, and that it was based on a finding of either fraud, deceit, negligence, or estoppel. Defendant first contends the evidence was insufficient to support the verdict on either of these grounds. As to a finding of fraud, it is argued that plaintiff did not justifiably rely on the representations; that he did not read the purchase order, the sales contract, or the policy; that if he had, he would have known immediately he was not receiving liability insurance.

Plaintiff was 23 years of age, with the education of a 15 year old child; he went as far as the tenth grade and can read and write English. Drobnis graduated from high school, junior college, and had several years of law school. He represented to and promised plaintiff that he would procure 'full coverage' for him, insurance that would protect him if he ever had an accident. A fair inference is that Drobnis knew what 'full coverage' meant--defendant was an insurance broker, he was the credit manager and 'closer,'...