Boas v. Bank of America National Trust & Savings Ass'n

The appellants, Benjamin Boas and Larie K. Boas, husband and wife, appeal from a judgment entered in an action brought by them against respondents for the purpose of securing a judicial determination of the rights of the parties under a written agreement; in particular to have it decreed that appellants’ rights thereunder had been illegally terminated by respondents; also to restrain the sale of pledged corporate securities.

Respondents pleaded three separate defenses, each of which

The respondent H. H. Bechtel is the assignee and agent of the respondent bank. As such, and on May 25, 1936, he obtained a judgment against appellants in the sum of $6,871.76 based on a deficiency due after sale of real property under power of sale conferred by a deed of trust; and shortly after the foreclosure sale negotiations were initiated for a settlement of the judgment debt. The negotiations were conducted by Boas in behalf of himself and wife, and on the part of the bank by W. J. Kirkpatrick, an assistant cashier thereof, whose place of employment was at its main office, No. 1 Powell Street, San Francisco; and on August 12, 1936, the parties entered into the agreement in question which they denominated r<Stipulation for Compromise Settlement of Judgment.” It provided that if appellants paid to respondents $2,500 in the manner and at the times specified therein respondents would deliver to appellants a full satisfaction of said judgment; that appellants would pay the $2,500 as follows: $100 cash at the time of the execution of said agreement, $25 a month for three years, commencing October 1, 1936, with 3 per cent interest on deferred payments, and the balance of $1,500 at the end of the three-year period; that if appellants defaulted for 30 days in making any of the payments or the interest respondents were entitled to terminate the agreement, in which event the payments theretofore made would be applied in reduction of the judgment debt; that meanwhile the execution of the judgment would be stayed; and that time was of the essence of the agreement. The judgment for the deficiency was entered against Boas and his wife (the latter being sued therein as Sadie K. Boas, a name sometimes used by her) ; and both were made parties to the agreement of August 12, 1936, but it was

With respect to the making of the false representations the trial court found, and its findings are supported by Kirkpatrick’s testimony, that during the negotiations preliminary to the execution of the agreement and at the time it was executed Boas in response to questions propounded to him as to whether Mrs. Boas had any assets, stated and represented that she had nothing—that she was not possessed of any assets; and that when Boas returned the instrument to the bank for execution by the bank he was asked why his wife had not signed it, and in response thereto he stated and represented that she was ill and that he did not like to bother her with the matter, that she “did not have anything anyway.” The trial court

As contended by respondents, in effecting a composition agreement the law demands the utmost good faith on the part of the debtor and it will not permit him by pretending to be insolvent to induce his creditor to accept a small portion of the debt in lieu of the whole when in fact his property is amply able to pay the creditor in full; that good faith requires of the debtor, before he shall be permitted to profit by a composition agreement, to make a full and fair disclosure of his effects, and that no concealment, deception or fraud should be practiced. (Hefter v. Cahn, 73 Ill. 296 ; Dolsen v. Arnold, 10 How. Pr. [N. Y.] 528; Stafford v. Bacon, 1 Hill [N. Y.] 532 [ 37 Am. Dec. 366 ].) Furthermore, where in a suit for specific performance it appears that the plaintiff’s conduct in obtaining the agreement or acting under it has been unconscientious, inequitable or characterized by bad faith, the court of equity will refuse him relief (Pomeroy’s Equity Jurisprudence, 4th ed., § 400); and in dealing with the question of false representations it is held generally that even though one may be under no duty to speak as to a matter, if he undertakes to do

They contend, however, that since there is no specific finding that appellants made said representations with intent to deceive, one of the elements of fraud is lacking, and therefore that the judgment declaring the agreement null and void cannot be sustained on the ground of fraud. There is no merit in the contention. Where one makes false representations knowing them to be false, the law supplies the fraudulent intent (Benner v. Hooper, 112 Cal. App. 53 [ 296 Pac. 660 ], citing 12 Cal. Jur. 826), and he will not be protected from his fraudulent conduct by the fact that he did not intend to deceive the other party. Having actually deceived such other party and profited by the deceit, the law will not permit him to say that he acted without intent to deceive. (Spreckels v. Gorrill, 152 Cal. 383 [ 92 Pac. 1011 ]; Pohl v. Mills, supra.) On appeal a reviewing court is entitled to draw necessary inferences from the trial court’s express findings in order to support a judgment (Hulen v. Stuart, 191 Cal. 562 [ 217 Pac. 750 ]; Lomita Land & Water Co. v. Robinson, 154 Cal. 36 [ 97 Pac. 10 , 18 L. R. A. (N. S.) 1106 ]; Hamilton v. French, 78 Cal. App. 289 [ 248 Pac. 281 ]); that is to say, where from the facts found and the judgment ordered it is evident in the light of the entire record that if more complete findings had been made they would have been adverse to the contention of the appellant, it will be deemed that such inferences were drawn by the trial court, and in those circumstances the failure so to find is not a ground for the reversal of the judgment. (Hulen v. Stuart, supra; Krasky v. Wollpert, 134 Cal. 338 [ 66 Pac. 309 ]; Benner v. Hooper, supra.) Here fraud was charged; one of the legal grounds upon which the trial court founded its judgment that the agreement was void was that it was obtained by false pretenses; and the evidence shows and the trial court expressly found that the false representations were at all times known by the plaintiff to be false. It follows necessarily that if the trial court had made a finding covering the element of intent to deceive the finding would have been adverse to

In support of their contention appellants cite Hoffman v. Kirby, 136 Cal. 26 [ 68 Pac. 321 ], and Estate of Benton, 131 Cal. 472 [ 63 Pac. 775 ]; but unlike the present case, there was lacking in each of those cases the basic finding that the party-making the false representations knew they were false; hence there was no express finding from which it could be inferred that the representations were made with a fraudulent intent. In their brief appellants assert that at the time of the settlement of the findings the trial judge refused to find that the false representations were made with intent to deceive. But in the absence of anything in the record so showing, it cannot be so held on appeal. The issue of fraud constituted one of the principal issues the trial court was called upon to decide, and a great deal of evidence was introduced on that issue. It must be assumed, therefore, that if the trial court did not believe that appellants made the false representations with intent to deceive it would have so found. As said in Phillips v. Hooper, 43 Cal. App. (2d) 467 [ 111 P. (2d) 22 ], the findings of fact must be taken as embodying the conclusions of the trial court on all questions of fact submitted to it for decision; and no antecedent expressions of the trial judge can in any way restrict his power to declare his final conclusion in the only manner authorized by law, that is, by filing his decision containing his findings of fact and conclusions of law as provided in sections 632 and 633 of the Code of Civil Procedure (citing several cases).

In any event, this being a case where a trial by jury was not a matter of right, this court under the provisions of section 956a of the Code of Civil Procedure may make the additional finding providing there is evidence to support it, and in our opinion there is. Therefore, pursuant to the authority granted by said code section this court finds that said false representations, having been made with knowledge that they were false, were made with intent to deceive.

Nor does the record sustain appellants’ attack upon finding No. XII. While there was no direct testimony that the bank would not have entered into the agreement if it had not believed and relied upon the false representations, it is entirely clear from all the evidence and from the facts found that it would not have done so. Among other things it appears therefrom that at the time the agreement was made

Appellants contend also that the defense of fraud was barred by laches. The contention is based upon the premise that the corporate stock was pledged with the California-Montgomery branch of the bank on March 4, 1937; that at that time Mrs. Boas signed a promissory note for $10,000 which was thereafter renewed every 90 days, and that respondents did not rescind until April 19, 1939. The evidence shows, however, that all of the transactions relating to the obtaining of the judgment for the deficiency and to the execution of the agreement were conducted through and that the periodic payments made thereon were paid at the main offices of the bank at No. 1 Powell Street, where Kirkpatrick was employed; that Mrs. Boas was known to Kirkpatrick as Sadie K. Boas; that the deficiency judgment was obtained and entered against her in that name; that such was the name used in the negotiations leading up to the execution of said agreement and that she was named therein as such; whereas she carried on the transactions with the Calif ornia-Montgomery branch of the bank under the name Larie K. Boas. The pledged certificate of stock was issued to her in that name, and such was the name used by her in signing the promissory notes and the pledge agreement; and it was not until April 19, 1939, that the bank officials at the main offices discovered that Sadie K. Boas with whom they were dealing and Larie K. Boas with whom the branch bank was dealing were one and the same person. Thereupon the bank promptly rescinded. In view of the above facts there could be no justification for holding as a matter of law, contrary to the implied finding of the trial court, that respondents were guilty of laches.

Summarized, the points made by appellants relating to the matter of consideration are that the finding thereon is but a conclusion of law and must be disregarded; that irrespective of the absence of a specific finding the conclusion reached by the trial court on that issue cannot be upheld for the following reasons: (1) that having accepted periodic

The contentions urged by appellants against the soundness of the trial court’s conclusion that the agreement was breached by appellants and terminated by respondents are based largely upon evidentiary matters. In this regard they

The judgment is affirmed.

Peters, P. J., and Ward, J., concurred.

A petition for a rehearing was denied May 29. 1942.