MAYNARD GARRISON, as Insurance Commissioner, etc., Appellant, v. EDWARD BROWN AND SONS (a Corporation), Respondent.
S. F. No. 16724
In Bank
Dec. 26, 1944
25 Cal.2d 473
Dunne & Dunne, Arthur B. Dunne and Elden C. Friel for Respondent.
TRAYNOR, J.—Union Indemnity Company, hereinafter called Union, a Louisiana corporation licensed to do insurance
Defendants contend that the agency agreement under which Brown was a trustee of the premiums collected was so modified as to make the relation of Union and Brown one of creditor and debtor rather than of beneficiary and trustee, and that this modification has been conclusively determined by the trial court in its findings. If defendants undertook
This finding includes the finding of certain probative facts and the conclusion that these facts are sufficient under the law to create a contract. (See Baumgartner v. United States, 322 U.S. 665 [64 S.Ct. 1240, 1243, 88 L.Ed. 1525]; Holmes, The Common Law, 115; Green, Mixed Questions of Law and Fact, 15 Harv. L. Rev. 271, 272; Paul, Dobson v. Commissioner: The Strange Ways of Law and Fact, 57 Harv.L.Rev. 753, 822.) “It is, of course, well settled that a general and ultimate finding . . . which is drawn as a conclusion from facts previously found, cannot stand if the specific facts upon which it is based do not support it” (McKay v. Gesford, 163 Cal. 243, 246 [124 P. 1016, Ann.Cas. 1913E 1253, 41 L.R.A.N.S. 303]) that is, if the probative facts are not susceptible of a construction that will support the judgment. (Quinn v. Rosenfeld, 15 Cal.2d 486, 491 [102 P.2d 317]; Matter of Forrester, 162 Cal. 493, 495 [123 P. 283]; People v. McCue, 150 Cal. 195, 198 [88 P. 899]; Hammond Lbr. Co. v. Barth Invest. Corp., 202 Cal. 606, 609 [262 P. 31]; Loud v. Luse, 214 Cal. 10, 12 [3 P.2d 542]; Fitzpatrick v. Underwood, 17 Cal.2d 722, 727 [112 P.2d 3].) Nowhere in its findings has the trial court included probative facts that would indicate that Union and Brown ever modified the agency agreement by an express contract substituting a creditor and debtor relationship for the fiduciary relationship contemplated by the agency agreement. There is no reference to any writing or to any circumstances
Defendants also contend that plaintiff‘s claim is defeated by the following finding: “It is true that prior to January 6, 1933 defendant Edward Brown & Sons received moneys . . . as and for premiums . . . written in the months of October through December 1932, inclusive. It is not true that after deducting therefrom all return premiums on poli-
Even if it is assumed that this is a finding of fact rather than a conclusion of law, it must be read in conjunction with finding XVII, defining unearned premiums and excluding such premiums from Union‘s claims against Brown, and it is then clearly apparent that the court found that Union was entitled only to the “earned portion” of the premiums, namely that portion covering the period ending January 6, 1933. The basis of this finding is that Union had no right to remittance by the agent of any portion of the premiums paid by the insured to Brown allocable to the time after Union ceased to do business. In passing upon plaintiff‘s motion for a new trial, the trial court stated that the case was decided on the theory that when Union went into liquidation in Louisiana the funds in the hands of Brown “were frozen, and that it was his duty upon the termination of the contracts in the liquidation proceedings to return the money to the various insureds, over and above the amount of the earned premiums.” This theory is erroneous. It is not supported by
The question remains whether defendants’ claim for compensation for services rendered from October 1, 1932, to January 12, 1933, which forms one of the items of the computation in question, should be upheld. The trial court found that the reasonable value of such services, which were not compensated, was in excess of $20,000. The services include Brown‘s activities relative to the writing of policies before Union was declared insolvent, for which Brown did not obtain the commissions due because Union‘s insolvency intervened. Other uncompensated services relate to policies cancelled by the insureds before Union was declared insolvent, cancellations which defendants claim occurred, not in the ordinary course of business, but because Union‘s financial status was already disrupted. The question whether compensation is owed for these services is a question of law. Insolvency of an insurance company is as much a breach of contract with the agents as with the insureds. (See Caminetti v. Pacific Mutual Life Ins. Co., supra.) Insofar as Brown was deprived by Union‘s insolvency of commissions for policies written and not cancelled, Brown is entitled to compensation equal to the commissions as damages for the breach of contract committed by Union. Recognition of this claim does not include the recognition of any claim of the agent based on the loss of business for the time after Union‘s insolvency. No such claim is submitted on this appeal. There was, however, no breach of contract on the part of Union as to policies and bonds already cancelled when Union was declared insolvent. Brown assumed the risk under the agency agreement of losing compensation because of cancellations.
The judgment is reversed.
Gibson, C. J., Shenk, J., Curtis, J., and Carter, J., concurred.
SCHAUER, J.—I dissent. This is a judgment roll appeal. We do not know what evidence was before the trial court. As shown in the findings of fact (quoted more fully in the majority opinion) the trial court found, among other things, that “Prior to January 6, 1933, it was agreed between Edward Brown & Sons and Union Indemnity Company that the relationship between Union Indemnity Company on account of premiums on its policies and bonds collected by and paid to Edward Brown & Sons should be that only of a debtor and creditor and that . . . the only obligation or duty of Edward Brown & Sons in respect of any money so received should be a personal obligation to pay monthly to Union Indemnity Company the balance, if any, due after allowing credit to Edward Brown & Sons for funds expended by it on behalf of Union Indemnity Company, including return premiums paid on account of cancellations, and, on January 6, 1933 said agreement was fully performed.”
The above quoted finding, standing alone, fully supports the judgment insofar as concerns that phase of the case upon which the majority opinion bases the reversal. To escape or overcome the effect of this finding of ultimate facts the majority opinion relies upon the proposition that (a) certain probative facts were found which, it holds, do not necessarily establish such ultimate facts and that (b) the findings do not set forth other probative facts which would establish such ultimate facts. From that proposition the inference is drawn, or presumption indulged, in favor of reversing the judgment, that no evidence was produced sufficient to support the finding of ultimate facts. I do not find such inference or presumption tenable upon the record before us.
It has been sound and long-established law, which I deplore
Here, the probative findings on which the majority relies to overcome the finding of ultimate facts are inadequate to that end. They may be insufficient in themselves to establish the ultimate facts but they are not inconsistent with them and do not preclude the existence of evidence which would support the finding of ultimate facts. “Any uncertainties in the findings are to receive such construction as will uphold rather than defeat the judgment” (2 Cal.Jur. 871, § 511) and upon a judgment roll appeal it will be presumed that competent evidence sufficient to sustain the findings was received without objection and “that there was no evidence before the court which in any respect qualified or limited the effect of the findings.” (2 Cal.Jur. 877-878, § 514.) See, also, Carpenter v. Froloff (1939), 30 Cal.App.2d 400, 407 [86 P.2d 691]; Stiles v. Bodkin (1941), 43 Cal.App.2d 839, 840 [111 P.2d 675]; Lamanet v. Lamanet (1937), 18 Cal.App.2d 402, 405 [63 P.2d 1195]; Whitney v. Redfern (1940), 41 Cal.App.2d 409, 413 [106 P.2d 919].
In the last cited case it was held that “Upon an appeal on the judgment roll alone, only the ultimate facts found by the court, not the probative facts which have no proper place in the findings, can be considered, and it is only in those cases where it clearly appears that the ultimate fact found is based upon and edduced from the findings of probative facts, and it is plain that the latter do not justify nor support the ultimate fact found, that the findings of probative facts will control that of the ultimate fact, and so deprive the judgment of support.”
In Perry v. Quackenbush (1894), 105 Cal. 299, 305 [38 P. 740], this court held that “Findings of probative facts will not, in general, control, limit, or modify the findings of the
The finding of ultimate facts in the record here appears to fully support the judgment. Since the findings do not preclude the existence of evidence to support the ultimate facts and do not establish probative facts which are essentially inconsistent with the ultimate facts found it seems to me that consideration for sound administration of justice demands that we affirm the judgment.
Edmonds, J., concurred.
Respondent‘s petition for a rehearing was denied January 22, 1945. Edmonds, J., Schauer, J., and Spence, J., voted for a rehearing.
Notes
“At all times after October 1, 1931, to the knowledge of Union Indemnity Company and with its consent all collections on account of premiums made by EDWARD BROWN & SONS were deposited by EDWARD BROWN & SONS in its own account or accounts and the same were not kept segregated, and all settlements between EDWARD BROWN & SONS and Union Indemnity Company were made on a net cash basis, and at all of said times in respect of all moneys due to Union Indemnity Company by agreement of EDWARD BROWN & SONS and Union Indemnity Company the relationship between EDWARD BROWN & SONS and Union Indemnity Company as to any moneys due to Union Indemnity Company from EDWARD BROWN & SONS was that of debtor and creditor. The relationship and modification as aforesaid was and has been fully performed.”
