Warman Co. v. Redondo Beach C. of C.

The appeal in this case is taken by the defendant named in the title and by J. H. Cavanah and W. J. Hess from an adverse judgment, and from an order denying to appellants a new trial.

The Redondo Beach Chamber of Commerce was a voluntary organization of residents of the city of Redondo Beach. A set of by-laws, which constituted the only written evidence as to the purposes of the association and the obligation of its members, contained preliminarily this declaration: "The object of this organization shall be to secure attractions and public entertainments; to foster and encourage commerce; stimulate home trade; secure manufactures; improve and beautify streets and parks; attract tourists; induce immigration and to obtain the organized efforts of our citizens for the better promotion of the best interests of Redondo Beach." The plaintiff corporation was desirous of securing a site for a factory and the Chamber of Commerce of Redondo Beach was desirous of securing the factory to be located in its city. After a number of conferences, a written proposal was prepared by the Chamber of Commerce, which proposal was accepted in writing by the plaintiff. One of the offers contained in this proposal as made on behalf of the chamber was to pay a cash bonus to the plaintiff upon certain conditions being fulfilled. In this writing it was stated: "As you are aware, we represent the entire citizen body of Redondo Beach, and the fund we propose to raise must come from workers themselves, as our crop of capitalists is very small indeed." The agreement for the payment of the bonus was expressed by the following term: "The Chamber of Commerce agrees to give the Warman Steel Co. the sum of two thousand dollars in cash, payable as follows upon the completion of the plant and the operation thereof; $1000 to be paid by the trustee holding the fund of the Chamber of Commerce, upon the Warman Steel Co. furnishing proof that they have expended in wages to employees (exclusive of construction cost, salaries of officials and like expenses) the sum of $20,000, and an additional $1000 when they have paid out in like manner a second amount of $20,000. Both the Redondo Beach Chamber of Commerce and the Warman Steel Co. agree that before the execution of any agreement as hereinbefore proposed, they will show to the satisfaction of each other that the cash necessary to the erection and beginning of operation of the steel plant upon one side, and the payment of bonus and supplying of land upon the other have been provided in fact, and are in the hands of a reliable trustee or trustees, or in bank for the use and purposes contemplated in this agreement." This latter provision as to the fund, which would make up the amount of the bonus payment, being secured and deposited with a trustee in advance, was not complied with nor insisted upon by the plaintiff. Plaintiff corporation established its plant at Redondo Beach and after operating for some time made a demand upon the Chamber of Commerce that it be paid the bonus agreed upon. At the same time it made a showing by a statement of its secretary giving evidence that it had expended the required amount as wages to employees. The bonus fund had not at that time been collected, but one of the officers of the defendant association succeeded in collecting $1,297.25, which was turned over to the plaintiff, leaving, as alleged by the plaintiff, a balance due it in the sum of $772.44, that being the amount sued for and for which judgment was entered.

Appellants urge a number of points as sustaining their contention that the judgment should be reversed. It is cogently argued, and we see no escape from the conclusion proposed by the appellants, that the agreement as made was not an agreement binding the association defendant or its members to pay at all events the bonus of two thousand dollars upon compliance by the plaintiff with the conditions expressed in the writing, but that the agreement was an agreement to pay from a certain particular fund which was to be provided by solicitation and derived from contributions. The agreement in the parts we have referred to not only expressly stated the source from which the fund was to be derived, but also gave to the plaintiff the right to insist that the fund be collected and placed in the hands of a trustee before the plaintiff proceeded to erect and operate its plant. Where the plaintiff elected to waive its right to have such fund secured in advance, we think its right of action must be limited to recovery of any amount held by the defendant association or any trustee, for the purposes of the fund intended to be provided. Here the showing was that the plaintiff had received the full amount of money that had been collected. It appears to us that it would be utterly inconsistent with the recitals of the written agreement to hold that it was intended that the individual members of the association should have primary liability as to any unpaid part of the bonus. (Mechem on Agency, 2d ed., sec. 189.) Under the conclusion expressed the plaintiff was not entitled to the judgment awarded to it.

It will be noted that the plaintiff did not join as parties any of the individual members of the association. The two persons against whom judgment was entered were served with summons, notwithstanding that they were not joined as defendants in the action. The appellants insist that the association was not such an association as could be sued under its collective name, and that no judgment could be rendered against individual members served but not joined as defendants. The theory under which the plaintiff proceeded was that the association was such an association as is mentioned in section388 of the Code of Civil Procedure, in which case the associates may be sued by the common name and summons may be served upon the individual members and judgment taken against them as though they had been particularly named as parties. The argument of appellants that the association was not such an association as is described in section 388 of the Code of Civil Procedure, because it was not engaged in "any business," commends itself to us with much force. There seems to be a dearth of California decisions to that point, althoughSwift v. San Francisco Stock Exchange Board, 67 Cal. 567, [8 P. 94], is cited. Appellants also cite St. Paul Typothetae v.St. Paul Bookbinders' Union, 94 Minn. 351, [3 Ann. Cas. 695, 102 N.W. 725]. In the latter decision, under a statute almost identical with ours, the supreme court of Minnesota said: "The statute, it is clear, was not intended to include associations of this character. Its purpose was to authorize the courts to take jurisdiction over unincorporated associations engaged under a common name in some sort of business in which property is bought and sold, debts contracted — concerns owning and holding property, and incurring pecuniary liability — and not associations of the character of labor unions, having no property, engaged in no business occupation, in a proper sense of the term, and whose only function is the promotion of the interests and welfare of the persons who are members thereof." The association in this case was not one from which the members derived any specific individual profit or profit different from that which would accrue to the municipal community. Its purpose was to promote the common welfare, and it had no "business" in the sense of being engaged in a private commercial enterprise. To deny the application of section 388 of the Code of Civil Procedure, is not to say an aggrieved party may not enforce by suit a demand against such a noncommercial association. Such a party may have the right to sue the individuals composing the organization. The individuals then are entitled to be made actual parties to the suit and to have service of summons. The first proposition discussed is determinative of the appeal, but we think also that appellants' position is well taken upon the contention last adverted to.

The judgment and order are reversed.

Conrey, P. J., and Works, J., pro tem., concurred.