Muller v. Swanton , 17 Cal. App. 232 ( 1911 )

This is an appeal by the plaintiff from a judgment in favor of defendant F. W. Swanton, and from an order denying plaintiff's motion for a new trial. A former judgment in the same action in favor of said defendant was reversed by the supreme court. (Muller v. Swanton, 140 Cal. 249, [73 P. 994].) The action is on a promissory note for $1,222, which was executed by the defendant to W. B. Fonville and indorsed by Fonville to the New York Life Insurance Company and by it in turn indorsed to the plaintiff merely for the purpose of collection. The answer does not deny the due execution of the note, nor that it was indorsed to the insurance company prior to maturity, but sets forth that there was no consideration for the note, that it was obtained by fraud, that the insurance company gave no consideration for the note and took it with notice of the circumstances under which it was made.

The facts are these: W. B. Fonville was sent to this state by the home office of the New York Life Insurance Company to solicit insurance independently of the local office, of which the general manager was one A. G. Hawes. In carrying out this object Fonville called on the defendant in Santa Cruz with a view to writing a policy of insurance on defendant's life or the life of some member of his family, and represented to defendant that if he could do so it would be a lead to others to apply for insurance in the company represented by him, as defendant's family was well known in that part of the state. He also told defendant that if he succeeded in writing a named amount of large insurance he would be installed in the position occupied by Hawes as the Pacific coast representative of the insurance company, a position carrying a salary of $20,000 a year. After much solicitation on the part of Fonville, Swanton finally consented to allow him to write a policy insuring the life of defendant's father for $10,000, with the understanding that the note given by the defendant to Fonville for the premium would not have to be paid. In accordance with this arrangement, Fonville procured the issuance of the policy by the insurance company, and the defendant made and delivered his promissory note for $1,222, the amount of the premium, and Fonville gave defendant a written agreement that one-half of the premium should be returned, and represented to him that when the other half became due he (Fonville) would be the Pacific coast agent of the company, and out of his salary could well afford to pay it, and would do so. When the note fell due, the company caused it to be presented for payment, whereupon the defendant called on Hawes and explained the circumstances under which the note was made; and, according to Swanton's testimony (which, however, is disputed by Hawes), the latter said that Swanton need give himself no further trouble about the matter, that he would take it up with Fonville and would look to him for a settlement.

The supreme court on the former appeal discussed at length the insufficiency of the evidence to support the finding in favor of defendant, and the court there held that the issuance of the policy was a sufficient consideration for the indorsement of the note by Fonville, and that there was no evidence showing that the insurance company took the note with the knowledge of the circumstances under which the defendant executed it, and that therefore those circumstances did not constitute a defense to an action on the note by the company or its assignee.

The defendant urges very strongly a point not made previously. He argues that even if the note were valid, and the defenses of fraud and want of consideration unavailing, nevertheless the insurance company and its assignee are estopped from enforcing the payment of the note by reason of what took place between him and A. G. Hawes when he called on Hawes and explained the circumstances of the transaction with Fonville. This argument is founded upon a finding of the court which reads that Hawes "then and there assured the said defendant F. W. Swanton that it would be all right, and that he, acting for said company, would take the matter up with said Fonville, and would look to him, Fonville, for a settlement, and would give said defendant, F. W. Swanton, no further trouble in the matter." There was considerable delay after the conversation between the defendant and Hawes, during which the defendant possibly could have proceeded against Fonville, and while the point does not lack plausibility, it has some serious defects which it will not be necessary to note, for the late Mr. Justice McFarland in the former opinion anticipated this point and effectually disposed of it in this language: "The finding [which is based upon conflicting and very slight evidence] that, after the note was due and its payment demanded, the managing agent at San Francisco told respondent, for the company, that he would look to Fonville for a settlement, and would give respondent no further trouble about the matter, is immaterial; for, in the first place, he had no authority to bind the company by such a promise, and, in the second place, the promise was without any consideration."

The evidence on the second trial was in no material particular different from that given on the former trial; there is nothing new in the case, and the views expressed by the supreme court upon the former appeal must control, and we perceive no reason why the trial court did not give effect to those views by permitting plaintiff to recover on the note.

For the foregoing reasons the judgment and order are reversed.

Hall, J., and Lennon, P. J., concurred.

A petition for a rehearing of this cause was denied by the district court of appeal on November 11, 1911.