People v. Cornett reviewed here. supra, 25 901 [13-17], 131-132 Cal.2d (1951), (1953), supra, 40 698] *1 832, 36 Cal.2d [1-4] Honeycutt ; People 837-839 (1948), ; People In the 768, [20] v. Valentine Cal.2d [1-4] [264 33 Cal.2d 84-87 (1946), 29 777-778 light v. Thomas 876, [11], of the cited eases and the record P.2d [11-12] [228 33, 901 [26]; (1946), supra, Cal.2d 7]; People (1945), [15]) [3] People People P.2d 60-61 and need not be Cal.2d v. Holt 281] Cal.2d v. Carmen Daugherty [3-4] ; People (1944), 877] 898- ; us, before we conclude of conviction reached the trial court is on a based reasonable view of the evidence and a understanding application correct law.
For the stated, reasons above is affirmed. Gibson, J., Traynor, C. J., McComb, J., concurred. Spence, J., judgment. concurred 12, 1959.] In Bank. Mar. No. 24825. A.
[L. al., Respondents, et R WARD MARSHALL WILLIAM W. Appellants. al., et TAGGART *3 Appellants. Felix James Blackstock and H. for C. McGinnis Respondents. Chandler P. Ward for At plaintiff TRAYNOR, request J. William in R. Ward’s LeRoy February, 1955, Thomsen, a real broker, estate under properties might took to look for be of interest to Ward purchase. During for a conversation about unrelated mat ters, defendant Marshall Taggart, W. real estate broker, told agent Thomsen that as Company exclusive for Sunset Oil he Angeles County several acres land in Los for sale. might Thomsen said that he had client who interested acquiring property. this When Thomsen Tag mentioned gart that another broker named Dawson had a “For Sale” sign property, Taggart replied on the that Sunset had taken listing away from Dawson. With Ward’s authorization Thomsen an Taggart submitted offer on his behalf to Taggart promised acre. to take the offer to Taggart Sunset. later told Thomsen that Sunset had refused the offer and would not property take less for the than $5,000 an acre, one-half in conveyed cash. Thomsen this information Ward, who directed Thomsen to make an offer on those terms. Thom writing. sen did so in Taggart’s At direction, Thomsen provision payment inserted the offer a Sunset of a cent commission, Taggart which agreed Thomsen equally. divide following day On the Thomsen informed provision Ward of the for the agreed commission and Ward to accepted Subsequently, Taggart it. told Thomsen that Sunset had Ward’s proposed offer and to him escrow naming Taggart’s instructions business associate, defendant H. M. Jordan, acting Taggart. as seller stated designation that his principal as would enable him to “clear up the listing” Dawson exclusive as well as certain blanket mortgages property. Thomsen told Ward of this arrangement when he submitted the escrow instructions why him. When Ward payee asked was to Jordan be the beneficiary the notes and the deeds, trust Thomsen replied arrangement had said the prompted was problems certain tax and other Company the Sunset Oil *4 that and after the trust deeds would be turned over to Sunset paid
the escrow. Plaintiffs $360,246 for the 72.0492 conveyed acres to them. they Plaintiffs not purchased did learn until after had the
property Taggart given that listing never been presented to Sunset and that he had never never and Sunset ’ $4,000 per present plaintiffs $5,000 offers of to intended $4,000 per acre, offer of Instead, he his own aere. represented plaintiffs accepted. falsely He which Sunset property $5,000 take for the was that the least Sunset would purchase property per the from acre, because he intended plaintiffs $1,000 at a resell it to Sunset himself and handling gave for unusual All the reasons he the acre. fabrications. He never disclosed Ward’s of the sale were papers signed. until after the escrow were offer Sunset purchase price money pay the the he Sunset All of came from the Ward escrow. used brought charging an action in tort fraud on the Plaintiffs part The ease was tried without and Jordan. against jury, judgment entered both defendants and the court $72,049.20 compensatory damages, exemplary damages. enjoined also transferring trust defendants from notes and deeds received plaintiffs discharge from thereby and ordered them to these and judgment.
reduce the amount of the Defendants appeal. that must
Defendants contend
the
be reversed on
ground
recovery
that,
there can be no
in a tort action for
proof
“out-of-pocket”
of the actual or
fraud without
losses
plaintiff
present
and that
case there
sustained
property
plain
that
than
was no evidence
tiffs
was worth less
paid
for it. Defendants invoke section 3343 of the Civil
provides
purchase,
that
Code, which
one “defrauded
exchange
property
is
sale or
entitled
recover the differ
ence between
actual value
that with which the defrauded
person parted
the actual
that
received,
value of
which he
Although,
admit,
.
clearly
as defendants
is
.
evidence
support
finding
only
sufficient to
of fraud,
prop-
submitted on the issue of
was that the
evidence
$5,000 per
erty
price plaintiffs
at least
acre,
was worth
paid
proof
plaintiffs
for it.
there was no
Since
suffered
“out-of-pocket”
recovery
loss, there can be no
in tort for
(Bagdasarian
Gragnon,
fraud.
recovery
contend, however, their
Plaintiffs
is not
damages,
ground
limited to actual
that section 3343 does
apply
profits. They
to a tort action
not
to recover secret
rely principally
Crogan
on
Metz,
741 Cal.App.2d Bender, 143 198 119]; McKee, P.2d Simone v. [300 Cal.App.2d 142 667]; Ramey 307 P.2d Myers, v. 111 [298 P.2d Cal.App.2d 360]; 679 and Adams v. Harrison, 34 [245 Cal.App.2d 288 P.2d These all cases involved situ [93 237]. ations in which agent the defendant was the of the defrauded person or in a fiduciary relationship which confidential or parties. They theory existed between the “the rest on the that principal’s right depend upon any to recover does not agent, upon deceit of the but is based the duties incident to agency relationship upon the resulting profits the fact that all relationship belong from that principal.” to the (Savage Mayer, supra, present v. 33 Cal.2d at In the case, however, there is agency no evidence of an or other fiduciary relationship plaintiffs Tag between and defendant gart or length defendant Jordan. Plaintiffs dealt at arms Taggart through agent with their Thomsen. At no time did Taggart purport plaintiffs. to act for There is no evidence any prior dealings parties any acquaint between the or anceship special relationship or fiduciary that would create a duty plaintiffs. of defendants to In the absence of a fiduciary relationship, recovery in a tort action for is fraud limited plaintiff. to the actual suffered (Crogan Metz, v. 47 Cal.2d Bagdas P.2d [303 arian Oragnon, supra, 744, 762-763.) 31 Cal.2d though Taggart plaintiff’s Even was not agent, the public policy permit of this state does not one to “take advan tage wrong” (Civ. of his Code, own 3517), law § provides quasi-contractual a remedy prevent being one from unjustly expense enriched at the of another.1 Section provides gains thing Civil Code that one “who wrongful fraud ... or other and act, is, unless he has some other right involuntary thereto, thing
better trustee of the gained, person for the benefit of the who would otherwise have ” Taggart duty it. As a broker, real estate had Bus. & Prof. (See dealings. be honest and truthful in his Code, Rattray 10176; Scudder, §§ 371,164 1356].) A.L.R. The evidence clearly support is finding sufficient to that violated duty. Through misrepresentations this fraudulent he re money plaintiffs ceived Thus, would otherwise have had. involuntary is an plaintiffs trustee for the benefit of provides “nothing 1Section 3343 herein shall contained be deemed deny any person having any to legal a cause of action for fraud or deceit equitable person may remedies to which such entitled.” the secret acre that he made from on his dealings with them.
Although theory recovery this was not advanced by plaintiffs change it court, in the trial is that a settled theory permitted appeal question only when “a of law is on appearing . is on facts in the record. . .” (.Panopulos Maderis, ; 47 Cal.2d 738] Surety Co., Cal.App. Auto. American Ins. Co. Seaboard general rule 192, 200 con 2d parties appeal theory fining upon to the advanced below *6 opposing party on that the should not is based the rationale appeal against a required first be to defend for the time on theory “contemplates the that a factual situation conse new put not open controversy were quences of which are Maderis, (Panopulos trial.” in issue or at the Al 341.) at is not the case here. stipra, 47 Cal.2d Such not pleaded proved by plaintiffs sus though facts do the theory they sufficient to judgment tort, the the of are tain on theory recovery unjust of quasi-eontraetual uphold the under any theory contemplate since that does not factual enrichment by in the different from that established the evidence situation given opportunity ample were trial court. Defendants involved, and the present their version of the transaction fraud actions was whether or not their constituted issue of adversely trial the to them court. decided represent for Accordingly, $72,049.20, the profit, ing Tag the acre secret defendant judgment against gart must be affirmed. The defendant however, Although permitted reversed. Jordan, must be she escrows, to be in the dual she not her name used did share in illicit obtained. One cannot something trustee of he has to be a constructive not be held acquired. theory recovery is that if based of contends exemplary damages enrichment, judgment for unjust must theory argument The runs under this reversed. money wrongfully implies promise a return the ob- law plaintiff assumpsit the tort and sues in tained, that the waives implied contract, and that such an action an since is on exemplary not of the nature, it does admit “contractual” 3294 of the Code. That damages allowed under section Civil exemplary “in an action authorizes section arising obligation contract, where the an not from of breach guilty oppression, fraud, malice....” has been defendant
743
The
“contract”
is used in this section in its ordi
word
nary
agreement
parties,
sense to mean
between the
not an
imposed by
despite
obligation
any
law
absence of
such
agreement.
Taggart’s obligation does not arise from
plaintiffs.
any agreement
him
between
It arises from his
statutory
fraud and violation
duties. His fraud is not
very
implied-in-law
it is the
foundation of the
waived, for
promise
disgorge.
(See
Corbin, Waiver
Tort and Suit
promise
Assumpsit,
221, 243-246.)
In
19 Yale L.J.
is
purely
originally implied
unintentional,
fictitious and
to cir
rigid
pleading.
common law
It was
cumvent
invoked not to
deny
purpose
remedy,
bringing
but to create one “for the
’’
justice
parties.
about
without reference to
intention
(rev. ed.) p.
Desny
Williston,
9;
Wilder,
Contracts
see
Taggart’s
Since
obligation for his
not
from
fraud does
arise
contract but is
imposed
law,
exemplary damages clearly
(See
Coates,
falls within section 3294.
Brown v.
F.2d
Briggs
Rodriguez,
39-40;
(Tex.
236 S.W.2d
Civ.App);
Crogan
Metz,
Tex.L.Rev.
In
only
1029],
Cal.2d 398
action sustainable under
pleadings
agent’s
was an action for
of an
breach
contrac
In
Rowley,
tual duties.
Steiner v.
Lockhart,
164
Cal.2d
State Bullish
[217
Siliznoff,
340-341
;
Assn. v.
etc.
[240
282]
supra;
Keating,
Myall,
supra;
Hartzell v.
Foster v.
see 14 Cal.
813-818.)
Jur.2d
finally
that he is
contends
entitled to a de
except
of the cost to him of the transaction
duction
those
accomplish his
items incurred to
fraud. He seeks to reduce
compensatory damages by $25,563.10, representing
$15,012.30 paid
$5,900
Thomsen;
to
com
commission
paid Harvey
manager
Nelson, former land
mission
to
Sunset
Company;
escrows,
$616
cost
two
one of which
Oil
title from
to
the other from
channeled
Sunset
Jordan and
paid
plaintiffs;
$4,034.80
to Dawson,
and
who
Jordan
agency
property,
an
to cancel his contract.
exclusive
paid
The
to Nelson and the cost of the
escrow
Jordan
accomplish
they
expenses
fraud;
were
incurred to
would
necessary
legitimate
It is
not have been
transaction.
clear
entirely
expenses
it is
these
must be disallowed. Since
paid
speculative
the commissions
whether
Thomsen and
paid
and the cost of the second escrow
Dawson
would have been
by plaintiffs
legitimate
had the transaction been a
Sunset
inequitable
permit Taggart
one,
any
it
would be
to deduct
.
expenses
plaintiffs’ recovery
(See
from
of these
Kinert v.
Cal.App.2d
Wright,
P.2d 364];
Title Insur
Co.,
Trust Co.
Dev.
ance &
Gibson, J., Shenk, J., Carter, J., Spence, J., MeComb, C. J., concurred. SCHAURE., Concurring J., Dissenting. I concur affording justice because it comes as close to wronged plaintiffs appears possible pres
to the as under the ently interprets established decisional law of this state as it applies section 3343 of the Civil Code. In fact this ingenious decision, application its innovation and of a trust-unjust enrichment-quasi-contractual theory constructive support exemplary damages award as one of defendants, majority avoids much of the evil effect of the holding Bagdasarian Gragnon (1948), 31 Cal.2d 935], and is therefore to that extent de *8 sirable. subject interpreted But because the section as now and applied still constitutes of a for, more shield than a sword against, proper fraud I it perpetrators, deem to once more hope in Legislature—if direct attention to it the that the not by forthright overruling Bagdasarian—may this court pro- of remedy. vide amply supported by the of trial court is clearly supported by evidence against and would the law as both were it defendants not the conclusion in reached Bagdasarian that the in case addition 1935 of section 3343 (Stats. p. to the 536, operated Civil Code ch. 1612, 1)§ repeal supplant previously existing to governing law my of in then, measure fraud cases. It was view is, by Legislature still section 3343 was intended provide alternative, not exclusive, measure dam- ages in such cases. pointed
As out Professor Williston, under the construc- adopted tion majority statute in the Bagdasarian person “a case, fraudulent anything by can no event lose his making fraud. He runs the chance of if he suc- cessfully plan carries out his brought and is not afterward it; brought account for if account, he is at he least nothing by will lose (5 his misconduct.” Williston on Con- (rev. ed.), 3886, tracts § In this it legislation connection is to be noted that the as adopted (Stats. p. California 1612, 1) ch. § expressly ‘‘Nothing declares that herein contained shall be deny any person having deemed a cause of action any legal equitable or fraud deceit remedies to which such person may prefer be entitled.” I would to reconsider the ruling Bagdasarian remedy in the ease and hold that the added by the statute of 1935 is in truth an to, addition rather than a person on, restriction the remedies defrauded. So holding, court, I would affirm the of the trial includ- ing exemplary damages award as both de- fendants.
Appellants’ petition rehearing April for a was denied 1959.