Procedural Posture
Plaintiff purchasers appealed the judgment of the Superior Court of Los Angeles County
(California), which held that defendants, underwriter, insurance brokerage corporation,
employee of the insurance brokerage corporation, and the president of the manufacturer,
were entitled to a nonsuit in the purchasers' fraud and breach of contract action.
Overview
The purchasers bought vending machines that sold accident insurance policies. The
principals of the manufacturer told the purchasers that the underwriter would supply the
insurance, and the purchasers were to work through the insurance brokerage corporation to
obtain insurance. The president of the manufacturer was present when the principals of the
manufacturer made fraudulent representations to the widows. The president of the
underwriter wrote a letter which was presented to the purchasers which stated that the
underwriter looked forward to doing business with the manufacturer. The lower court granted
a nonsuit to defendants, and the court reversed in part. The court held that the insurance
brokerage corporation and its employee were not liable to the purchasers because they had
no knowledge of fraudulent statements. The court ruled that the president of the
manufacturer could be liable to the purchasers because his silence while fraudulent
statements were made was tantamount to a positive fraudulent assertion. The underwriter
could have been liable to the purchasers because there was evidence of an ostensible
agency.
Outcome: employment defense lawyer
The court affirmed the lower court's judgment that the insurance brokerage corporation and
its employee were entitled to a judgment of nonsuit in the purchaser's fraud and contract
action against them. The court reversed the lower court's judgment that the underwriter and
the president of the manufacturer were entitled to a nonsuit.
Procedural Posture
Defendants, a corporation, a partnership, and two partners, challenged the judgment of the
Superior Court of the City and County of San Francisco (California), which granted the relief
sought by plaintiff buyer in its action to confirm an arbitration award against the several
defendants for breaches of several contracts to deliver raisins.
Overview
The two partners owned the partnership through which they sold raisins under contract to
the buyer. After the partners established the corporation and became its shareholders and
officers, the assets of the partnership were sold to the corporation. The corporation then
entered into a contract to sell raisins to the buyer. When the buyer failed to receive the
raisins, it filed a breach of contract action against the corporation, the partnership, and the
partners. The parties entered into an agreement to arbitrate that was signed by the two
partners on behalf of the corporation. An arbitration award in favor of the buyer was entered
by the trial court, and defendants filed an appeal. The court affirmed, holding that it was
obvious from the facts leading up to the submission to arbitration that the parties intended
the arbitration award to bind all of the parties and that no question of liability or nonliability as
among the several defendants or between the partnership and the corporation was involved.
Although the partners had signed on behalf of the corporation, the court found that to allow
the partners to avoid the contract would be countenancing a fraud against the buyer.
Outcome
The court affirmed the judgment.