Ramey v. General Petroleum Corp.

This is an appeal from a judgment entered after the sustaining of demurrers without leave to amend. The plaintiff herein was injured in an accident on April 16, 1953, and filed a complaint against General Petroleum Corporation and Pacific Drilling Control Company, John Doe and Richard Roe, on March 27, 1958. The plaintiff, in effect, sought to excuse the delay and the bar of the statute of limitations of one year upon the ground of fraudulent concealment. Demurrers by General Petroleum Corporation and by Pacific Drilling Control Company were sustained, and plaintiff was given 30 days within which to amend. A first amended complaint was filed on June 20, 1958, and thereafter, on July 1, 1958, a second amended complaint was filed.

The second amended complaint, hereinafter referred to as “the complaint,” with which we are concerned, was titled “for damages and conspiracy to fraudulently conceal and defeat plaintiff’s common law action for damages,” and was in two counts, the first against Pacific Drilling Control Company, hereinafter called “Pacific,” and the second against General Petroleum Corporation, hereinafter called “General.”

A fair summary of the plaintiff’s allegations in the first count of the complaint is as follows: That General is a corporation and is doing business in California; that Pacific is a copartnership doing business in California; that plaintiff was employed by General in the oil fields on December 20, 1951, when he was 26 years of age, and had just completed five years in the United States Navy, and had no previous experience in or about oil fields; that on April 16, 1953, he was working with a General oil well drilling crew of five men which crew was under the immediate direction and control of Sam Young, the driller, working on the night shift at Santa Fe Springs, California; that in addition to the drilling crew of General a “directional” man employed by Pacific was already working on the well when plaintiff and

The plaintiff then alleges that he is in doubt as to whether he is entitled to redress from General or from Pacific and that both defendants have been joined with the intent that the question be determined in the action.

The second cause of action (against General) repeats the allegations contained in the first cause of action (against Pacific), and adds that General owed plaintiff a duty to disclose to plaintiff its financial interest in plaintiff’s cause of action against Pacific, but failed to do so, and thus caused plaintiff to lose his rights against Pacific; and further alleges that “the statute of limitations has run on his cause of action alleged herein against Pacific Drilling Control Company.”

Both defendants demurred to the complaint upon the ground that it did not state a cause of action. The matter was heard on July 18, 1958, and the minute entry shows that the “plaintiff states he cannot amend,” and thereupon the court sustained the demurrer of each defendant without leave

Appellant asserts that the complaint states a cause of action against each of the defendants. He relies mainly upon the ease of Kimball v. Pacific Gas & Electric Co., 220 Cal. 203 [ 30 P.2d 39 ], In the Kimball case the Pacific Gas and Electric Company was having some of its machinery repaired. The Pacific Gas and Electric Company engaged the General Electric Company to do a part of the work. The General Electric Company, in doing a part of the work, borrowed Dean Wilson, an employee of Pacific Gas and Electric Company, to assist in the work of the General Electric Company, the agreement between the two companies being in effect that Pacific Gas and Electric would pay Wilson and General Electric Company would reimburse Pacific Gas and Electric for the sums so expended. Kimball thought that Wilson was an employee of Pacific Gas and Electric and that he, Wilson, was therefore a fellow workman. Kimball was seriously injured through the negligence of Wilson on March 6, 1928. Kim-ball was in the hospital and had his brain operated upon and returned to work in October, 1928, as a watchman and he did odd jobs until the fall of 1929, and from that time until the trial he was unable to work. While he was in the hospital certain of the officers of Pacific Gas and Electric called upon him and discussed the accident but remained silent as to General Electric’s connection therewith. Mrs. Kimball, shortly after the accident talked with the claims adjuster of Pacific Gas and Electric about the accident and although he had full knowledge of the details of the accident he did not tell her of the connection of Wilson with General Electric nor of any arrangements between the companies. Kimball, thinking that Wilson was a fellow employee of Ms in the employ of Pacific Gas and Electric, accepted medical care and a cash settlement from Pacific Gas and Electric, without any knowledge of Ms claim against General Electric Company. Pacific Gas and Electric Company, in effect, acknowledged to Kimball the responsibility for the injuries to Kimball. That representation was false. Kimball did not know that he had in fact been hurt by the employee of General Electric Company until June, 1930, after he had settled with Pacific

The Supreme Court affirmed the judgment and said, among other things (p. 210) :

“We are of the opinion, however, that independent of statute, a fraudulent concealment by the defendant of the facts upon which a legal common-law action is based, under the proper circumstances, tolls the statute until discovery and that upon discovery the statute applicable to that particular action (in this case § 340, subd. 3, of Code Civ. Proc.) then commences to run. There are cases from other jurisdictions, many of which are cited by appellant, which hold that in the absence of a statutory exception, the fraudulent concealment of the fact upon which the cause of action accrues does not toll the statute, but, in our opinion, the cases in this state and the weight of authority elsewhere support the rule that under such circumstances the statute is tolled. (See 37 Cor.Jur. 972, § 353, where many cases are collected.) ”

. .In Original Min. & Mill. Co. v. Casad, supra, ( 210 Cal. 71 [ 290 P. 456 ]), the court, after citing and quoting from the leading cases on the subject, summarized the rules applicable to such pleading as follows: ‘It will be discovered upon an analysis of the above eases that there are three major allegations that must be contained in the complaint before it will be held sufficient: 1. The complaint must allege when the .fraud was discovered; 2. The circumstances under which it was discovered and, 3. Pacts must be alleged to show that plaintiff is not at fault for failing to discover the fraud sooner, and that the plaintiff has no actual or presumptive knowledge of facts sufficient to put him on inquiry.’ ”

The Supreme Court went on to say that it was “particularly impressed” by the fact that General Electric conceded the agreement to reimburse Pacific Gas and Electric, and then said (at p. 217) :

.“We think that there was no duty on either company to volunteer the facts of the accident to plaintiff, but we think that when they began to negotiate between themselves as to the settlement of the claim, a positive duty existed to disclose those negotiations to plaintiff. Mere silence on the part of the two companies would not constitute, under well-settled principles, a fraudulent concealment, but when negotiations took place as to a settlement of the claim, a positive duty to disclose arose.”

We must, in considering this matter, assume that all of the matters alleged in the complaint are true (James v. Herbert, 149 Cal.App.2d 741 , 747 [ 309 P.2d 91 ]), and that if, upon a consideration of all the facts, it appears that the plaintiff is entitled to any relief the complaint will be held to be good. Furthermore, as said in Buxbom v. Smith, 23 Cal.2d 535 , 542 [ 145 P.2d 305 ] :

“While orderly procedure demands a reasonable enforcement of the rules of pleading, the basic principle of the code system in this state is that the administration of justice shall not be embarrassed by technicalities, strict rules of construction, or useless forms. (Rogers v. Duhart, 97 Cal. 500 [ 32 P. 570 ] ; Menefee v. Oxnam, 42 Cal.App. 81 [ 183 P. 379 ] ; Masero v. Bessolo, 87 Cal.App. 262 [ 262 P. 61 ].) Since the enactment of section 452 of the Code of Civil Procedure in 1872, it has been generally recognized that in the construction

of a pleading for the purpose of determining its effect, ‘its allegations must be' liberally construed, with a view to substantial justice between the parties. ’ (Estate of Wickersham, 153 Cal. 603 [ 96 P. 311 ]; Mix v. Yoakum, 200 Cal. 681 [ 254 P. 557 ]; Terry Trading Corp. v. Barsky, 210 Cal. 428 [ 292 P. 474 ] ; Von Schrader v. Milton, 96 Cal.App. 192 [ 273 P. 1074 ].) No error or defect in a pleading is to be regarded unless it affects substantial rights. (Code Civ. Proc., § 475.) ‘ Every person who suffers detriment from the unlawful act or omission of another, may recover from the person in fault a compensation therefor in money, which is called damages. ’ (Civ. Code, § 3281.)”

The action against General is a fraud action. General asserts that if sufficient facts have been alleged to connect Pacific with General’s fraud, then the statute of limitations has been tolled as to the plaintiff’s action against Pacific, and therefore General’s fraud did not damage the plaintiff; that fraud without damage is not actionable; and further that if the plaintiff has not alleged facts sufficient to connect Pacific with General’s fraud, that then the plaintiff has not stated a fraud action againset General. General also contends that under sections 3600 and 3601 of the Labor Code, the plaintiff can recover only workmen’s compensation benefits as against General.

It is perfectly proper for the plaintiff to plead inconsistent causes of action in one complaint. See 39 California Jurisprudence 2d 128, 129, where it is said:

“A plaintiff may plead inconsistent causes of action in one complaint, . . .

“ The plaintiff cannot be compelled to elect between inconsistent causes of action, . . . Even after the plaintiff’s evidence is in, he cannot be compelled to hazard a guess as to which of the causes of action pleaded is made out.

“Where the complaint contains inconsistent counts, the plaintiff is entitled to present evidence on both and leave it to the trier of fact to decide which count the evidence sustains.” (See also Code Civ. Proc., §§ 379a and 379c.)

In Kraft v. Smith, 24 Cal.2d 124 , 130-131 [ 148 P.2d 23 ], it is said:

“The facts that defendants are not joint tort feasors but independent wrongdoers, and that their negligence operated successively rather than concurrently in time to produce the injury, are not vetitive of the right of joinder. The salutary

The plaintiff has alleged that he is in doubt as against which of the defendants he is entitled to recover. The question can only be determined by the evidence which will be produced at a trial. We are of the opinion that the plaintiff is entitled under the circumstances of this case to join the defendants, to allege inconsistent counts and to have the questions determined in a trial. (See Smith v. City of Los Angeles, 66 Cal.App.2d 562 , 575-576 [ 153 P.2d 69 ] ; Morris v. Duncan, 14 Cal.App.2d 635 , 639 [ 58 P.2d 669 ]; Lawler v. Gleason, 130 Cal.App.2d 390 , 394 [ 279 P.2d 70 ]; Dallman Supply Co. v. Sweet, 86 Cal.App.2d 780 , 784 [ 195 P.2d 864 ]; Joerger v. Pacific Gas & Electric Co., 207 Cal. 8 , 20 [ 276 P. 1017 ]; and Sareussen v. Lowe, 125 Cal.App.2d 288 , 290 [ 270 P.2d 27 ].)

General should not be permitted at the pleading stage under the circumstances in this case to assume that a jury will make any specific finding of fact including one that Pacific conspired with General to conceal from the plaintiff his cause of action against Pacific and to reason that, therefore, no cause of action has been stated against General.

Whether Pacific was a party to the fraud of General is a question of fact and it can only be determined by a trier of fact. And, whether the statute of limitations is a bar to this action will depend upon what the jury finds with reference to whether Pacific conspired with General, as alleged.

It is possible that the jury might find that Pacific was not a party to the fraud of General. In such event, the fraud, if there was such, would be entirely that of General’s. If the jury did find that there was no conspiracy between Pacific and General, then it would follow that the one-year period of limitations has run on plaintiff’s action against

General’s next argument is, in effect, that if the plaintiff has not sufficiently pleaded a conspiracy against Pacific so as to toll the statute of limitations on his action against Pacific, that then and in such event he has not pleaded sufficient facts to state a fraud action against General. We do not believe that for the plaintiff to state and prove a cause of action for fraud against General that he must necessarily allege and prove that Pacific was a party to a conspiracy. If there was no conspiracy, General could still be held liable because of the false representations of its employees in the course of their employment which caused the plaintiff to fail to timely sue Pacific. (Pashley v. Pacific Elec. Ry. Co., 25 Cal.2d 226 , 235-236 [ 153 P.2d 325 ].)

Insofar as General is concerned, one false representation, properly pleaded, would make the pleading sufficient as against the attack of a general demurrer. (Merchants Ice etc. Co. v. Globe Brew. Co., 73 Cal.App.2d 828 , 835 [ 167 P.2d 503 ] ; Neff v. Engler, 205 Cal. 484 , 490 [ 271 P. 744 ]; Harris v. Miller, 196 Cal. 8 , 16 [ 235 P. 981 ].)

If the plaintiff cannot convince the jury that they should, as the jury did in the Kimball case, draw the inference that there existed a “tacit agreement—between the two companies —that the liability of (Pacific) should be kept concealed,” then Pacific will be free from the charge of conspiracy and at the same time will establish its defense of the one-year statute of limitations. That would not necessarily eliminate General from its liability for its fraud. It might even tend to prove that the fault of General damaged the plaintiff.

General also asserts that the plaintiff should not have relied on the fraudulent statement of its employees, that its concealment was not enough to toll the statute and that, despite what General told the plaintiff and its fraud, the plaintiff should be required to “show why diligence would not have lead to the discovery of the right of action.” We believe that General, having voluntarily undertaken to advise plaintiff at a time when he was still in an extremely critical condition and without legal representation concerning the

“When facts are susceptible to opposing inferences, whether a party had notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, and whether by prosecuting such inquiry he might have learned such fact, are questions of fact. (Tognazzini v. Tognazzini, 125 Cal.App.2d 679 , 687 [ 271 P.2d 77 ].)”

It might be that General can convince the jury that their employee, the plaintiff, should not have believed their agents and representatives and that he should have been on his guard with respect to whatever they might have said to him with reference to the accident.

In cases involving confidential relationships, the rule requiring allegations stating the circumstances, which circumstances are relied upon by the plaintiff as excusing prior discovery of fraud, is relaxed. (Bainbridge v. Stoner, 16 Cal.2d 423 , 430 [ 106 P.2d 423 ].) In Hobart v. Hobart Estate Co., 26 Cal.2d 412 [ 159 P.2d 958 ], the court points out that it is recognized that in cases involving a fiduciary relationship facts which would ordinarily require investigation may not incite suspicion, and that the same degree of diligence is not required. (See also Rutherford v. Rideout Bank, 11 Cal.2d 479 , 486 [ 80 P.2d 978 , 117 A.L.R. 383 ]; Lee v. Hensley, 103 Cal.App.2d 697 , 704 [ 230 P.2d 159 ].) Schaefer v. Berinstein, supra, 140 Cal.App.2d 278 , 296.

In this case General sought out the plaintiff and voluntarily assumed a position of trust and confidence towards the plaintiff, and plaintiff reposed trust and confidence in General.

General places great reliance upon sections 3600 and 3601 of the Labor Code which, in effect, provide that liability for the compensation provided shall be in lieu of any other liability (with certain exceptions) against an employer and

“In all cases where the conditions of compensation do not occur, the liability of the employer is the same as if this division had not been enacted.”

It is a matter of defense for the employer to allege and prove that the conditions set forth in section 3600 existed. (See Robbins v. Yellow Cab Co., 85 Cal.App.2d 811 [ 193 P.2d 956 ] ; Conway v. Globin, 105 Cal.App.2d 495 [ 233 P.2d 612 ]; Carter v. Superior Court, 142 Cal.App.2d 350 , 354 [ 298 P.2d 598 ]; also see Popejoy v. Hannon, 37 Cal.2d 159 , 173-174 [ 231 P.2d 484 ]; Gillespie v. Rawlings, 49 Cal.2d 359 , 361 [ 317 P.2d 601 ].)

In San Francisco Unified School Dist. v. California Building Maintenance Co. (1958), 162 Cal.App.2d 434 [ 328 P.2d 785 ], the school district brought action against the maintenance company to recover amounts paid by the school district in satisfaction of judgments against it in favor of the eompanys’ window washer, who was injured in a fall while washing a defective window in the school, and for the amount expended by the school district in defending action against it, on the ground that the company breached the contract with the school district providing that the company was responsible for payment of any damages resulting from its

The maintenance company contended that it could not be liable to the school district because the workmen’s compensation act provided the exclusive remedy of an injured employee against his employer and that if the employer were compelled to pay the school district the damages paid by that district to the injured employee, then the employee would be indirectly recovering from his employer in a tort action. The court said (p. 443) :

“Thus, we come to the basic problem here involved. The school district, as a matter of law, was negligent in failing to supply a safe place in which Dubay was to work. The maintenance company contracted and agreed to wash the windows in a certain way. The windows were washed in a manner in direct violation of this contract. Was the trial court correct in holding that, as a matter of law, the maintenance company is not liable for damages for breach of its contract, the damages obviously being the amount that the school district was obligated to pay to Dubay and to the workmen’s compensation insurance carrier?”

It was held that the school district could seek indemnity from the maintenance company, even though the exclusive remedy of the injured employee against the company was under the compensation act even in spite of the fact that the effect of permitting the school district to recover from the company was indirectly to permit the injured employee to recover from the company in a tort action. By analogy, we think the workmen’s compensation act should not be available as a defense in a fraud action instituted by an employee against his employer under the peculiar circumstances alleged herein, to wit: where the fraud consists of misrepresentations by the employer to the employee which induced the employee to fail to discover that his personal injuries were sustained by reason of the wrongful conduct of a third party against whom the employee had recourse, and where the fraud further consists of misrepresentations by the employer to the employee to the effect that he did not have to sue until he no longer needed medical care, and to the effect that he had only one claim which was for medical expenses which he would incur in the future.

Surely, the Legislature never intended that an employer’s

Pacific asserts, in effect, that there is no allegation that Pacific did anything other than remain silent, and that silence alone is not a fraud. Considerable is also said by Pacific in attempting to distinguish this case from the Kimball case and thereby avoid being in the position in which General Electric found itself in the Kimball case. We think a close reading of the Kimball case and a comparison thereof with the allegations in this case lead to the conclusion that the Kimball case is not distinguishable from the present case to Pacific’s advantage.

It was said in Greenwood v. Mooradian, 137 Cal.App.2d 532 , 537 [ 290 P.2d 955 ]:

“The argument is that acts constituting the conspiracy, as well as those inflicting a wrong pursuant thereto, must be alleged. The cases are to the contrary. In California Auto Court Assn. v. Cohn, 98 Cal.App.2d 145 [ 219 P.2d 511 ], the allegation of fact of the conspiracy itself was no more detailed than the one at bar. At page 149 this division of this court rejected the claim of insufficiency of the allegation, saying: ‘As to the necessity of interference by unlawful action respondents contend the complaint contains a bare allegation of conspiracy and is therefore insufficient. The elements of an action for civil conspiracy are the formation and operation of the conspiracy and damage resulting to plaintiff from an act or acts done in furtherance of the common design. The cause of action is the damage suffered. . . . The complaint contained allegations of acts of the respondents in detail and was not confined to a “bare” allegation of conspiracy. ' The last quoted language referred to acts alleged to have been done pursuant to the conspiracy and in effectuating an actionable wrong.”

“ The view that defendant—must be shown to have done some overt and independently tortious act in order to be liable as a conspirator is a mistaken one. In California Auto Court Assn. v. Cohn, supra, 98 Cal.App.2d 145 , at page 149, the court also said: ‘Each participant in the wrongful act is responsible as a joint tort feasor for all damages ensuing from the wrong, regardless of whether or not he was a

In Agnew v. Cronin, 148 Cal.App.2d 117 , 129 [ 306 P.2d 527 ], it was said:

“. . . each participant is responsible as a joint tortfeasor for the ensuing damage regardless of whether he was a direct actor or the degree of his activity.”

The allegations of conspiracy are to be aided by the other allegations of the complaint. (Schessler v. Keck, 125 Cal.App.2d 827 , 832-833 [ 271 P.2d 588 ].) In this case the allega-' tions of conspiracy are aided by the hold harmless agreement, by facts showing Pacific’s responsibility for the accident, and by the fraudulent statements of General’s employees, and by the failure to present full information to the Industrial Accident Commission. Inferences need not be pleaded. (Code Civ. Proc., §426, subd. 2.) The ‘‘tacit agreement” giving rise to the conspiracy is a matter of inference. (Kimball v. Pacific Gas & Elec. Co., 220 Cal. 203 , 218 [ 30 P.2d 39 ].) The law recognizes that persons who are engaged in a conspiracy do not by the nature of things leave a recognizable trail of their activities if they can avoid it. As said in Johnstone v. Morris, 210 Cal. 580 , 590 [ 292 P. 970 ] :

. . In cases of conspiracy to defraud it is not to be expected that direct evidence of the conspiracy can be secured, because such evidence could usually only be secured

“ ‘The law recognizes the intrinsic difficulty of proving a conspiracy. The allegations with reference to conspiracy are treated as matters of inducement leading up to a more particular description of the acts from which conspiracy may be inferred. . . . The conspiracy may sometimes be. inferred from the nature of the acts done, the relation of the parties, the interest of the alleged conspirators, and other circumstances. . . ” (See also Biggs v. Tourtas, 92 Cal.App.2d 316 , 322 [ 206 P.2d 871 ] ; Dandini v. Dandini, 120 Cal.App.2d 211 , 214 [ 260 P.2d 1033 ]; Schessler v. Keck, supra, 125 Cal.App.2d 827 , 833; James v. Herbert, supra, 149 Cal.App.2d 741 , 747, 750.)

The statute of limitations does not begin to run in the case of a conspiracy to conceal until a disclosure of the cause of action is made, thereby terminating the wrongful concealment.

In our view there should be no reward to General for its alleged fraud. The statute of limitations was adopted in the first instance to protect defendants against the stale claims of dilatory plaintiffs. It would be unconscionable under the alleged facts of this case to hold that plaintiff is unable to proceed with his action, against the very parties who affirmatively misled him, because his action was not commenced within the time prescribed by statute.

The judgment is reversed and the matter is remanded to the trial court with instructions to overrule the demurrer and allow the respondents a reasonable time within which to answer the second amended complaint on file herein.

White, P. J., and Lillie, J., concurred.

The petition of respondent Pacific Drilling Control Co. for a rehearing was denied September 24, 1959, and its petition for a hearing by the Supreme Court was denied October 20, 1959. White, J., did not participate therein.