Fairchild v. Cartwright

This is an appeal from a judgment of the superior court of the county of Sacramento, sitting without a jury, in favor of plaintiff and respondent for the sum of two thousand one hundred dollars, with interest from June 1,1913, at the rate of seven per cent per annum, amounting to $502.25, and for costs in the sum of $42.

Appellant specifies as causes for said appeal that the evidence adduced at said trial does not justify the said findings of fact and conclusions of law in four particulars, namely:

A brief summary of the salient facts will suffice to show the nature of the controversy. It appears generally that an insurance corporation, known as the Pacific National Fire Insurance Company, was organized, having as an adjunct another corporation, called the Pacific States Holding Company. While the relation of these two companies does not very clearly appear from the record, it is reasonable to assume from the evidence that the purpose of the former corporation was the transaction of a general fire insurance business, while the function of the latter, as evidenced by its name, was the holding and handling of the corporate shares of the Fire Insurance Company.

Preliminarily, we may say that plaintiff sustained certain relations to said Pacific States Holding Company, either as its agent or employee, but such relations are not clearly indicated in the record. He further appears from the evidence to have been a promoter, stock salesman, and broker of corporate securities, and at various times engaged in interesting investors in the purchase of such collateral. Indeed, his resourcefulness in such capacity is evidenced from the correspondence with the defendant, wherein he communicates the various “deals” he is on the verge of consummating and, possibly, might have succeeded in effecting but for the failure to receive from defendant the unpaid balance, sued upon and made the basis of this action. However, no claim is made for such remote and speculative profits.

We may add that defendant, during the years 1912 and 1913, was president and director of said Pacific National Fire Insurance Company, and it is admitted by appellant in his brief that the parent corporation and its holding company had some business relations. It also appears from the evidence that said defendant was a man well and favorably known in state and financial circles, and that he intended to lend his recognized ability and financial resources to quite an extent in the promotion, and we may easily infer, to the salva

There is sufficient evidence in the record to justify the conclusion that respondent had a contract with the Holding Company for the payment of a large sum of money, which the directors of the Insurance Company considered themselves obligated to pay; that it was agreed that this contract should be rescinded and said directors would give respondent a written contract for the payment of some seven thousand dollars and guaranteeing him the privilege of selling for many years the stock of the company on a percentage basis; that the said directors declined to carry out their agreement and respondent insisted that his old agreement was still in force; that to compromise and settle this claim appellant promised to pay respondent the sum of six thousand dollars, three thousand dollars down, and the balance in sixty or ninety days, and that respondent accepted the agreement in satisfaction of all claims against the company or its directors.

There can be no doubt as to the sufficiency of the showing that appellant promised to be primarily responsible for the payment of said sum. Mr. Clarence E. Peters, an attorney at law, and apparently a disinterested witness, testified that he was present when the matter was discussed by the parties, and “Senator Cartwright said that he had been up in Humboldt County soliciting stock subscriptions for the company, and that in exchange for stock subscriptions he had taken a number of promissory notes in payment of stock, but that these notes would not be paid until fall or about the first of November and that some time in November, or early, or before the middle of November, the money would come in, the money owed him, he would then receive it and he would pay Mr. Fairchild in November, which was about six or seven weeks subsequent to the time. ... He said that he had invested his entire private fortune, in the sum of about eighty thousand dollars, in the company; that he was president of the com

As to the law of the ease there would seem to be no obstacle to the enforcement of the contract. The appellant wanted to avoid trouble, lawsuits, and unenviable notoriety in reference to the company in which he had such an interest, and the consideration was therefore beneficial to him. (Burr v. Cross, 3 Cal. App. 416 , [ 86 Pac. 424 ].) The compromise of even a doubtful right is a sufficient foundation for a promise to pay money. (Gardner v. Watson, 170 Cal. 575 , [ 150 Pac. 994 ].)

Where there is a valid consideration the law will not attempt to measure the amount thereof. (Whelan v. Swain, 132 Cal. 389 , [ 64 Pac. 560 ].)

The credit of a corporation, especially one dealing in matters of such public concern as fire insurance, is exceedingly sensitive to criticism of its management and is likely to be greatly affected by the exposition of the inner secrets of its creation, such as the agreement among the directors and promoters to collect and divide among themselves a large portion of the amount subscribed by the stockholders, and it may be that appellant had this in mind when he promised to pay six thousand dollars for an asserted claim of some twenty thousand dollars. At any rate, there was sufficient consideration to support the promise.

It is also true that such contract is not required to be in writing, as it comes within the terms of subdivision 3 of section 2794 of the Civil Code providing: “A promise to answer for the obligation of another, in any of the following cases, is deemed an original obligation of the promisor, and need not be in writing. ... 3. Where the promise, being for an antecedent obligation of another, is made upon the consideration that the party receiving it cancels the antecedent obligation, accepting the new promise as a substitute therefor ... or upon a consideration beneficial to the promisor, whether moving from either party to the antecedent obligation, or from another person.”

We may add that the conduct of the parties—which is, of course, a circumstance of moment where the written contract is of doubtful meaning—was strongly corroborative of respondent’s position. In this connection we may refer to the fact that in part payment of the debt appellant gave his personal check for two thousand one hundred dollars to respondent, upon the lower left-hand corner of which was written these words:‘ ‘ Compromise Agreement. ’ ’ Appellant also gave his personal check for nine hundred dollars and his promissory note for a certain sum to Mr. Meredith in part payment of the claim. In this correspondence in reference to the cancellation of the supposed contract between the plaintiff and defendant there seems to be, also, on the part of appellant a recognition of his personal obligation.

Upon a consideration of the whole record, we think it cannot be said that there is no substantial support for the finding against appellant upon this issue. The other findings, including the questions of rescission and counterclaim, are supported and we think the judgment should be affirmed.

It is so ordered.

Chipman, P. J., and Hart, J., concurred.