Monday, November 17, 2008

Court Holds Association of Persons with Honest Intent Is Not Conspiracy

The association of persons with an honest intent is not conspiracy, and one of the tests on a conspiracy trial is, did the accused act in ignorance without criminal intent? In other words, did they honestly entertain a belief that they were not committing an unlawful act?

In People v. McLaughlin the charge was a conspiracy to violate the Penal Code. The court stated:

Appellants say they are innocent because they had no criminal intent, no corrupt motive, made no agreement to commit a crime. No doctrine is more universal or of more ancient vintage in the law than that ignorance of the law excuses no one. That doctrine still strides the world. One cannot avoid conviction if his sole defense to the indictment is his ignorance of the law. The guilt of those who conspire to do an act which is prohibited by law is measured by their intent with reference to the act to be performed and not by the amount of their knowledge or ignorance of whether such acts are contrary to statute. Knowledge of the law is imputed and need not be demonstrated by proof of the state of the inner consciousness of the actor. In other words, so long as an evil design filled the heart of a conspirator he is deemed to have known the legal consequences of his act. An unlawful intent is logically inferred from the doing of an unlawful act.

The gist of the crime of conspiracy is a corrupt agreement of two or more persons to commit an offense against the state. Whether the conspiracy is a crime depends upon the intention of the accused construed in connection with the purpose contemplated. If appellants intended to violate the law and agreed to abet others in doing so their purpose was corrupt; their intent was evil. Where several persons are accused of having conspired to abet others to violate the law, the only question for the trial court's determination is whether they violated the law; not whether they had knowledge of the law violated.

Trial Court Erred in Determination Regarding Jurisdiction

We are satisfied that the trial court was in error in holding that the state court had concurrent jurisdiction with the National Board in entertaining the controversy. If that question was at all of uncertain solution at the time the present action was commenced it was made certain by the recent decisions of the Supreme Court in the Garmon, the Amalgamated Meat Cutters and the Guss cases. It was held in those cases that in labor controversies affecting enterprises engaged in interstate commerce there is a conflict in injunctive relief which may be available under the National Act and that, available under the equity powers of the state court, and that in such a situation the federal law affords the exclusive remedy, thus depriving the state court of jurisdiction to issue injunctions.

The question of the power of the trial court to grant the injunctive relief awarded in this case is of vital importance. It goes to the jurisdiction of the court to proceed on that phase of the litigation. Apparently the status of the plaintiff's business, that is, whether it was engaged in interstate commerce and thus subject to the jurisdiction of the National Labor Relations Board pursuant to the Labor Management Relations Act, was not deemed of significance before the decision of this court establishing the constitutionality of the Jurisdictional Strike Act. The Labor Management Relations Act, however, as construed by the latest decisions of the Supreme Court of the United States, above cited, would be applicable if the jurisdictional facts were developed. If alleged and proved they would deprive the trial court of jurisdiction to proceed by way of injunction. On the present state of the record it seems desirable to permit the defendants to amend their answer to allege and prove, if they are able to do so, that the plaintiff is engaged in interstate commerce.

As to the award of damages there is substantial evidence in support of the judgment in the amount specified.

The judgment is reversed insofar as it awards injunctive relief, and affirmed insofar as it awards damages to the plaintiffs, with costs to neither party.

See Statute of Frauds, and Court Addressed Scope of General Laws of the State.

Logsdon v. Keogh

Logsdon v. Keogh, 156 Cal.App.2d 726, 320 P.2d 154 (Cal. App. 2 Dist. 1958).

This appeal is taken by plaintiff in propria persona on a clerk's transcript only; no reporter's transcript, settled statement or agreed statement having been filed. A jury trial was had resulting in a verdict followed by judgment for defendants. This appeal is limited to certain motions and orders preceding and during the trial.

There is a serious question whether the notice of appeal herein is sufficient to bring the case to this court, but respondents have not raised the point and we have concluded to discuss the matter on the merits.

Plaintiff's principal point seems to be that the judge presiding in the Law and Motion Department of the court erred or abused his discretion in granting the motion of H. Josephine Keogh, one of the two defendants, made under section 473, Code of Civil Procedure, to vacate and set aside a default which plaintiff had caused to be entered against her. Later, at the commencement of the trial and in the absence of the jury, plaintiff orally moved the trial judge for an order to set aside the answer and cross-complaint of said defendant on the ground that a default had heretofore been entered against her, and to set aside such pleadings as well as those of her husband co-defendant, Leo, J. Keogh, on the ground that a false affidavit had been used to secure the order setting aside the default. These motions were denied.

Plaintiff also complains of the order granting a motion by defendants for a continuance of the trial on the ground of the absence of a material witness. This motion was made on a date several weeks before commencement of the trial.

H. Josephine Keogh was served with summons and complaint on October 21, 1952. Her husband Leo was served on October 27. A request for entry of default as to Josephine was filed November 3, 1952. On November 18, 1952, Josephine filed a notice of motion to vacate the default and permit filing of answer, supported by an affidavit of the attorney for said defendant to the effect that because the defendants had been served seven days apart and he found it necessary to file a demurrer in behalf of both of them, he telephoned the residence of plaintiff and in his absence talked with his wife, explaining the situation and in order to avoid filing duplicate demurrers requested plaintiff to call him for the purpose of extending the time of Josephine for a few days to plead. Having received no response from plaintiff, affiant began on October 31, 1952, preparation of the demurrers, but because of press of business and the weekend intervening he did not complete them until Monday, November 3. Tuesday, November 4, was a holiday and in view of his telephone message and believing plaintiff would not enter any default he filed the demurrers on November 5. Other and detailed facts are also contained in the affidavit.

Certain affidavits were filed in behalf of plaintiff in opposition, and after a hearing, the law and motion judge granted the motion of defendant for an order vacating and setting aside the default and for permission to answer or plead on condition that she pay to plaintiff $20 within five days.

The provisions of section 473, Code of Civil Procedure, are to be liberally construed and sound policy favors the determination of actions on their merits. In the absence of a clear showing of abuse of discretion, the order setting aside default and permitting a trial on the merits should be affirmed.

The same rule applies to the objections and oral motions made to the trial judge as to the same subject matter. No abuse of discretion on the part of the trial judge is indicated in this respect.

The point as to granting of a short trial continuance seems without any merit whatsoever, as no prejudice of any kind to plaintiff is shown.

The judgment and the orders appealed from are affirmed.

Logsdon v. Keogh, 156 Cal.App.2d 726, 320 P.2d 154 (Cal. App. 2 Dist. 1958).

See Davis v. Meyer, and Miller v. Lawlor.

Plaintiff Filed Application of Membership Prior to Suit

Prior to the commencement of this action the plaintiff was regularly dispatched to work by the officials of Local 162. In January 1953 he filed with that local his written application of journeymen membership accompanied by one-half of the initiation fee, as required by its constitution. He was notified in writing to take the entrance examination conducted by the local. He passed it, filed a doctor's certificate showing a good physical condition, and appeared at a regular meeting relating to applications for memberships. His application failed to receive a favorable two-thirds vote of the members voting, as required by the local's constitution, and was rejected. The trial court found that the 'plaintiff meets all lawful and reasonable requirements for membership in Local 162; and that plaintiff has performed each and every act heretofore required of him under the constitution and by-laws of Local 162 as a condition precedent to admission to journeymen membership therein, save and except said membership vote.' After the rejection of his application Local 162 dispatched a newly-admitted journeyman to perform the work for which the plaintiff had been regularly employed and the plaintiff has since then been employed intermittently elsewhere.

The plaintiff contends, and rightly so, that a labor organization may not properly maintain a closed union and a closed shop at the same time. Furthermore, a reference to the opinion in the case of Garmon v. San Diego Building Trades Council discloses that under present law a state court has jurisdiction to grant both legal and equitable relief in disputes involving labor practices in violation of valid state laws where interstate commerce is not involved but may not grant equitable relief by way of injunction in controversies involving commerce between the states. The plaintiff contends that interstate commerce is not here involved and that the state court therefore has jurisdiction to grant both the equitable and legal relief sought by him.

See Statute of Frauds, and Court Addressed Scope of General Laws of the State.

Friday, November 14, 2008

Duty Owed By Insurance Company for Excess Liability

There are two basic problems involved. One relates to the nature and extent of the duty owed by an insurance company to its insured when excess liability may be involved, and whether that duty was here violated. The second question revolves around the legal effect of the covenant not to execute, and whether the securing of that covenant fulfilled the company's obligation to its insured.

It is obvious that in case where excess liability may be involved the insurance company is in an anomalous position. The attorney for the insurance company then owes allegiance to two clients whose interests may be conflicting. He owes a high duty of care to both clients. Under the terms of the policy the insurance company retains control of the litigation. This conflict of interest and its effect have been discussed in many cases. It usually arises in connection with offers of settlement, but, however it may arise, the problem is the same. All of the cases agree that the insurance company owes a duty to its insured, and if it violates that duty it may be liable to the insured for damages suffered by the insured in excess of its policy limits. There is some conflict as to whether liability in such cases is predicated on negligence or upon bad faith. California has recently aligned itself with the jurisdictions that apply the bad faith test. In that well-reasoned opinion, prepared by Acting Presiding Justice Turney Fox of the Second Appellate District, Division Two, the court collects and discusses most of the pertinent authorities on the subject, rejects the negligence test, and applies the bad faith test. Under that test, when the interests of the insurance company and of the insured conflict, the insurance company must act in good faith to protect the insured, and must take into account and give fair and objective consideration to the insured's interests. The insurance company has the legal right to try and protect its own financial interests, but when those interests conflict with those of the insured, the company must in good faith, give consideration to the interests of its insured. It has no right to sacrifice the interests of the insured in order to protect its own interests. This duty to act in good faith, while not expressly set forth in the policy, is necessarily implied as a correlative duty growing out of certain rights and privileges which the insurance contract gives to the insurer. By the terms of the insurance policy the control of the defense of the action is turned over to the insurer, and the insured is precluded from interfering in any settlement procedure. But when liability in excess of the policy limits in involved the insured's interests become directly involved. It is then the duty to act in good faith becomes important. In order to avoid liability under the bad faith rule the insurance company must give at least as much consideration to the financial well being of the insured as it does to its own interests. These principles are all discussed at length in the Brown case, supra, and the cases announcing them collected and commented on at some length. What was there said need not be repeated in this opinion. All of the cases agree that in order to act in good faith the company, as a minimum, must make a diligent effort to ascertain the facts upon which a good faith judgment may be predicated, where possible excess liability is involved, must communicate the result of such investigation to the insured, and must inform him of any settlement offers that may affect him, so that the insured may take proper steps to protect his own interests.

In the present case the insurance company, through its attorney Cohn, clearly violated the duty it owed to Ivy. The insurance company assumed complete control of the defense of the Smith-Sawatzke action. Without investigation of the facts, and without informing Ivy, it stipulated that Sawatzke was the agent of Ivy, personally, that one of the corporate defendants was the alter ego of Ivy, and then stipulated to a judgment in excess of the policy limits. It even had the findings amended so as to stipulate that Pestgo and East Bay Refinol Company were solely owned enterprises of Ivy and were operated by him under the name of 'Ivy Enterprises.' This was all done in an obvious attempt to save itself money by trying to saddle most of the liability on the Guarantee Insurance Company. The record in this case indicates that the possible liability of Guarantee was questionable. All of this was done without informing Ivy or without even communicating with him. The findings that this was done 'in good faith,' and that 'the evidence available for introduction at the trial of the Smith action justified and supported the finding that Sawatzke was the agent, of this plaintiff at the time of said accident' are simply not only not sustained by the evidence but are contrary to the evidence. It may be assumed that Cohn honestly believed that Sawatzke was negligent and that there was no contributory negligence. It may also be assumed that Cohn honestly believed that Sawatzke was the agent of Pestgo Manufacturing Company at the time of the accident. But Cohn, according to his own admissions, had no facts justifying the admission that Sawatzke was the agent of Ivy, personally, or that Ivy was the alter ego of Pestgo, or that Ivy Enterprises was even then in existence. These stipulations were entered into in the attempt to fasten liability on Guarantee Insurance Company. That company had insured Ivy under the name of Earl Ivy dba as 'Ivy Enterprises.' The only possible way that Guarantee could be held liable would be if Ivy were held personally responsible for the acts of Sawatzke, and then by trying to establish that at the time of the accident Pestgo was in fact nothing more than Ivy dba as 'Ivy Enterprises.' Thus, the only possible way to hold Guarantee was to stipulate that Sawatzke was the agent, personally, of Ivy. Cohn had no information at all upon which to base this stipulation. This was clearly a breach of the duty the insurance company owed to its insured, and was bad faith closely akin to a fraud on Ivy.

For further case law see Persons Affected by Law Do Not Know When It Applies; Court Addressed Scope of General Laws of the State; and Statute of Frauds.

Persons Affected by Law Do Not Know When It Applies

A further consideration is that this ordinance is so vague and indefinite that the persons to be affected thereby could not reasonably be expected to know whether or not it was intended to apply in a given situation. A man of common intelligence would necessarily have to guess at its meaning as applicable to any contract act or activity. While the express intention of the ordinance is to prohibit only such closed shop agreements as are neither prohibited nor authorized by state laws, that provision in itself is most confusing and uncertain. Whether any particular act or activity is or is not covered by state law, or whether any such act is or is not allowed in view of the effect of certain federal laws, and many other questions which would normally arise, are left with no standard by which the ordinary man could know whether or not his acts were lawful within the meaning of the ordinance. This uncertainty and vagueness is accentuated by the criminal provisions of the ordinance. Under well settled principles a criminal statute must be sufficiently explicit to inform those who are subject to it as to what conduct on their part would render them liable to its penalty. In this respect this ordinance violates one of the first essentials of due process of law. While the ordinance contains a clause declaring its provisions to be severable, it is so indefinite as to give no adequate warning as to the circumstances under which any particular act or activity will subject a person to criminal punishment. As the court said Smith v. Cahoon: 'The Legislature could not thus impose upon laymen, at the peril of criminal prosecution, the duty of severing the statutory provisions and of thus resolving important constitutional questions with respect to the scope of a field of regulation as to which even courts are not yet in accord.'

Other phases of this problem need not be considered at length, including the effect of this ordinance in connection with certain federal legislation such as the Railway Labor Act, the Labor Relations Act, and the Taft-Hartley Act; the probable effect on interstate commerce in many cases and in varying circumstances; and the effect on intrastate business with its many implications and problems involving agreements made outside of the city and activities carried on both in and out of the city. It is clearly apparent that under the complicated and interrelated conditions of modern business and industrial life, this should be and is a matter of widespread rather than local interest and concern, and that a contrary conclusion, permitting hundreds of varying and inconsistent local ordinances, would lead to indescribable confusion.

We are here concerned solely with the validity of this particular ordinance and not with the wisdom or desirability of legislation of this nature in a wider field. Because this ordinance conflicts with existing state public policy and law, and because of its vague and indefinite terms, we conclude that the demurrer to the complaint was properly overruled.

The judgment is affirmed.

For further case law see Court Addressed Scope of General Laws of the State; Miller v. Lawlor; and Promissory Estoppel.

Court Addressed Scope of General Laws of the State

The main question here presented is as to whether this ordinance is in conflict with the existing law and the declared public policy of the state, and as to whether this field of legislation has been sufficiently covered by the state to make such local legislation invalid. The appellants argue from certain cases involving such matters as licenses, permits, filing of claims, eminent domain and compensation of elective officers, that there is no occupation of the field by the state unless the legislature has adopted a detailed scheme completely covering the entire field; that this state has adopted no detailed or comprehensive regulation of collective bargaining or of relations between unions and management; that the holding in the Shafer case, supra, is based on the common law rather than on statute; and that it follows that the field of right to work legislation has not been occupied by the general laws of this state. There are many statutes in this state regulating collective bargaining and governing the relations between unions and management, in addition to the Labor Code. All of those statutes and provisions should be considered in determining whether the state has so occupied the field as to make this local ordinance invalid. As the court said in Wilson v. Beville:

Determination of the question whether the Legislature has undertaken to occupy exclusively a given field of legislation depends upon an analysis of the statute and a consideration of the facts and circumstances upon which it was intended to operate. Where the Legislature has adopted statutes governing a particular subject matter, its intent with regard to occupying the field to the exclusion of all local regulations is not to be measured alone by the language used but by the whole purpose and scope of the legislative scheme.

There is a direct conflict between the public policy of the state as declared in section 923 of the Labor Code and the public policy of the city, as declared in this ordinance. The public policy of the state as thus declared is to leave the negotiation of terms and conditions of labor entirely to voluntary agreement, and that individual workmen shall have complete freedom in negotiating with respect to such terms and conditions of employment. The public policy of the city as so declared is to do away with voluntary agreement insofar as a closed shop is concerned, and to limit the workman's freedom in negotiating with respect to that part of the terms and conditions of employment. Some of the provisions of this ordinance would appear to be similar in effect to some of the provisions found in the Labor Code, but when viewed as a whole the ordinance clearly is an attempt to cover in a different way the same field as that covered by the statutes. As interpreted by the Supreme Court in Shafer v. Registered Pharmacists Union, those sections of the Labor Code do not place any restraint upon the efforts of workers to secure a closed shop contract from an employer. It was also held in that case that the validity of closed shop contracts has been recognized by the courts of this state for many years, and that the legislature by its enactment of other provisions of the Labor Code has shown its approval of the propriety of such contracts. It would reasonably seem that decisions of the Supreme Court, and the law of the state thereby established, are a part of the facts and circumstances which should be considered by a lower court in determining whether a particular field of legislation has been occupied by the state. While there is no statute in this state expressly authorizing or prohibiting a closed shop agreement it rather clearly appears from the decision in the Shafer case and in other cases that this particular field has been sufficiently covered by state law, and no room is left for such local legislation as that here in question with respect to that particular subject and field of activity. In view of the now existing state law it would be mere sophistry to say that, because the state has not by statute expressly declared closed shop contracts to be unlawful or expressly authorized them, it has not covered that field and that this city is therefore free to make such contracts illegal. The statutory declaration of public policy by the state that negotiations of terms and conditions of labor shall be left to a voluntary agreement between the parties has an affirmative effect, and it cannot reasonably be said that the state has taken no action with respect to the matter of closed shop agreements, leaving that field open for local legislation. Under state statutes, as presently interpreted by the Supreme Court, the public policy and laws of the state permit the making of closed shop contracts and the efforts of workers or their representative to secure such contracts from employers, and in a real and practical sense this local legislation forbidding the making of such contracts conflicts with and is contrary to existing state public policy and law.

For related case law see Invalid Municipal Law Would Be Valid if State Law; Statute of Frauds; and Friedman v. Tappan Development Corp.