Wade v. Markwell & Co. (118 Cal. App. 2d 410, 1953)

FOX, J.

This is an appeal by defendant company from a judgment for defendant’s conversion of plaintiff’s coat.

At the outset of the trial, defendant objected to the introduction of any evidence on the ground that plaintiff’s first amended complaint failed to state facts sufficient to constitute a cause of action for the recovery of her coat or its value. After briefly taking testimony, plaintiff served on defendant her second amended complaint, and it was on the allegations of this pleading that the case was subsequently tried. There can be no quarrel with this procedure. A court may exercise great liberality to permit the amendment of a pleading at any and all stages of the proceedings in order to present adequately the necessary issues. (Redondo Imp. Co. v. Redondo Beach, 3 Cal.App.2d 299, 302 [39 P.2d 438]; 21 Cal.Jur., p. 183.)

In her second amended complaint, plaintiff made the following material allegations: That on March 23, 1949, she was the owner of a full length mink fur coat which, at that time, had a value of $4,800; that on said date, defendant orally represented to her that “if the plaintiff would permit the defendant to retain possession” of her coat, defendant would give her $300 as a loan thereon and send her written notification of the expiration date of the loan and that she need not be concerned about reclaiming the coat until such time; that plaintiff, relying upon these representations by defendant, through its agents, which representations defendant knew to ' be false, placed her coat in defendant’s custody, whereupon defendant delivered to plaintiff the sum of $270, withholding the sum of $30 as prepaid interest on the loan in violation of section 17, page 2675 of the 1939 Statutes of California; that at the time of this transaction defendant gave plaintiff a written receipt, reproduced in part as follows:

“Los Angeles, Calif.,

3-23, 1949 . . . F 16926

“I hereby pledge to Markwell & Co., the following described property, to wit:

1—Natural Eastern Mink Coat Anglefetzer Cleveland Label to secure the payment of a loan in the sum of

“Three Hundred . . . Dollars $300.00 (The receipt of which is hereby acknowledged) together with interest and charges as herein provided. It is agreed that said loan shall bear interest and/or other charges from date until paid at the maximum rate permitted by the statutes of California. . . .

“It is further agreed that the last day of redemption of this pledge shall be thirty (30) days after the date hereof. . . . In the event of default I expressly waive demand of performance and the giving of notice of time and place of sale and agree that said property may be sold at public or private sale and that pledgee may be a purchaser if the property is sold at such sale ... I agree that the fair market value of the above described pledged property is not more than 125 percent of the principal amount of the said loan. ...” that notwithstanding any valuation appearing in the written receipt, plaintiff and defendant agreed that the fair market value of the coat, as estimated by defendant’s agent, was between $4,500 and $5,000.

The complaint further recites that about November 23, 1949, defendant sent a written notification to plaintiff notifying the plaintiff of the expiration date of the loan and requesting plaintiff to repay the loan and reclaim the coat; that on the same day this notification was received, plaintiff telephoned defendant and orally represented to defendant’s agents that she had received the aforesaid notification and would recover the coat before the weekend, in response to which defendant’s agents represented that the coat would be available for plaintiff to reclaim within a week; that on or about November 25, 1949, plaintiff orally demanded of defendant the return of the mink coat, offering to defendant’s agents “the sum of $270 as repayment of the loan, plus any accrued interest or charges; that defendant’s agents refused to accept such tender and refused to return the coat; that defendant orally represented to plaintiff that it had sold the coat to a third person, whose name defendant’s agent refused to divulge, in violation of section 342 of the Penal Code; that defendant’s act of disposing of the coat was unlawful and was to plaintiff’s damage in the sum of $4,800.

The complaint prayed judgment “for the recovery of possession” of the coat or, in the event delivery could not be had, its value of $4,800.

Defendant’s contention that the complaint does not state facts sufficient to constitute a cause of action is without merit. In support of this contention, defendant argues that there is no allegation that plaintiff has ever paid or tendered to defendant the sum for which her coat was pledged. It relies on the fact that the first amended complaint alleges an offer to pay the sum of $270 in repayment of the loan, which is the exact amount which the complaint alleges plaintiff received from defendant, and is insufficient because it does not include any of the accrued interest or charges from March 23, 1949. This insufficiency was cured in the second amended complaint, on which the issues were tried, by plaintiff’s allegation that to redeem her coat, she offered defendant’s agents the sum of $270 in repayment of the loan, plus any accrued interest or charges.

It is further argued that since, in the pledge agreement, which is recited in the complaint, plaintiff acknowledged the receipt of $300, plaintiff could not comply with her obligation to defendant without alleging a tender of $300 together with interest and charges. However, where the consideration recited in a contract is different from the consideration actually received, a party is not bound by the written recital, but may allege and prove the true consideration passing between the parties. (Code Civ. Proc., § 1962(2); Johnston v. Courtial, 216 Cal. 506, 510 [14 P.2d 771]; 6 Cal.Jur., p. 197 et seq.) This is precisely what plaintiff alleged in her complaint, along with her offer of payment of the amount due under the allegations. Having thus alleged a demand accompanied by sufficient tender, defendant’s refusal to restore her coat, and certain other facts tending to show defendant’s fraudulent dominion over the coat inconsistent with her right to immediate possession, the complaint contains all the requisites of a cause of action for conversion. (Baird v. Olsheski, 102 Cal.App. 452 [283 P. 321]; Gustafson v. Byers, 105 Cal.App. 584 [288 P. 111].) While it may be conceded that the complaint was somewhat ambiguous and uncertain in its allegations of an unlawful sale of the coat by defendant and greater particularity with respect to the transaction would have been desirable, the rule is that uncertainties in a complaint are waived by failure to demur on that ground. (Redondo Imp. Co. v. Redondo Beach, supra, p. 303.) An objection to the introduction of any evidence “does not serve the function of a special demurrer for uncertainty, and as no such demurrer was filed, any uncertainties that we find to exist are to be resolved in favor of the complaint’s sufficiency. (Citation.) None but a defect at an essential point will justify an order sustaining an objection to the receipt of any evidence.” (Bauer v. Neuzil, 66 Cal.App.2d Supp. 1020, 1023 [152 P.2d 47], See Gallagher v. California Pac. T. & T. Co., 13 Cal.App.2d 482, 486 [57 P.2d 195].)

Defendant makes the further point that the pledge agreement, as alleged in the complaint, fixes April 22, 1949, as “the last day of redemption of this pledge” and the pledgee had the statutory right (Stats. 1939, ch. 951, p. 2667) to sell the pledge upon the expiration of six months after the last day of redemption, viz: after October 22, 1949. Therefore, it is argued that the alleged oral representations made by appellant’s agents on November 23, 1949, that the coat “would be available for plaintiff to reclaim within a week” is not valid or binding on defendant because (a) neither the written pledge agreement nor the alleged written notification to plaintiff of the expiration date of her loan can be orally altered nor can the expiration date specified therein be extended orally, and (b) there was no consideration for the alleged extension of the time for plaintiff to reclaim her coat. These arguments are without foundation, since they misconceive the effect of plaintiff’s allegations with respect to her conversation with defendant regarding her redemption of the coat. Her pleading may well be construed as raising a promissory estoppel against defendant, which is well recognized either as a “species of consideration” (Porter v. Commissioner of Internal Revenue, 60 F.2d 673, 675) or as a substitute for consideration. (1 Williston on Contracts (rev. ed.) 139; 3 Pomeroy’s Equity Jurisprudence, 5th ed., § 808(b).)

According to the complaint, plaintiff received a notification from defendant requesting her to repay her loan and reclaim her property. Thereupon plaintiff orally informed defendant that she was ready to do so, and was advised by defendant’s agents that she had a week within which to reclaim the coat. Relying on this representation, plaintiff alleges that she appeared two days later with proper tender, only to be told that the coat had been sold. Assuming the truth of these facts, as we must when considering the sufficiency of her pleading after an objection to the introduction of evidence (Miller v. McLaglen, 82 Cal.App.2d 219 [186 P.2d 48]; Scott v. Cline Electric Mfg. Co., 104 Cal.App. 122 [285 P. 349]), a situation has been pleaded under which it would be proper to invoke the doctrine of promissory estoppel as embodied in section 90, Restatement of Contracts: “A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.”

The allegations indicate that at the time plaintiff telephoned, the coat was available for redemption and plaintiff was induced by defendant’s representations to forbear from immediately redeeming under the assurance that it would be held for her for at least another week. In the interim, while plaintiff refrained from exercising her right to redeem in reliance on a promise calculated to induce such forbearance, defendant sold the coat so that it was not available when plaintiff made her alleged tender. Under such circumstances, it lies not in the mouth of the party making a promise which induces forbearance of a substantial character (here the loss of a right to redeem a pledge) to maintain that his promise cannot be enforced by the party aggrieved since it was unsupported by consideration, for the principle of promissory estoppel does not rest upon a consideration moving to the party estopped. (Carpy v. Dowdell, 115 Cal. 677, 687 [47 P. 695].) In the case last cited the court states: “The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted. Such a change of position is sternly forbidden.” The court goes on to cite the case of Van Syckel v. O’Hearn, 50 N.J.Eq. 173 [24 A. 1024], in which defendant purchased property encumbered with a mortgage lien upon the strength of a promise made by plaintiff mortgagee that he would withhold enforcement for a year. Plaintiff commenced foreclosure within the year. In holding plaintiff to his promise, the court, after conceding that normally a consideration must be shown to support a promise, said: “But a court of equity will sometimes prevent parties from disregarding their promises, even when no consideration has accrued to them upon the making of such a promise. If a party . . . waive strict performance of his contract and makes promises to the defendant upon which the latter acted and altered his position, and it should appear to the court to work a hardship on the defendant to allow the complainant to withdraw his waiver, a court of equity always applies the doctrine of estoppel. In such a case, although no consideration or benefit accrues to the person making the promise, he is the author or promoter of the very condition of affairs which stands in his way; and when this plainly appears, it is most equitable that the court should say that they shall so stand. (Citations.)” See, also, Hunter v. Sparling, 87 Cal.App.2d 711, 725-726 [197 P.2d 807], for a discussion of the doctrine of promissory estoppel and a partial citation of the eases applying the principle.

Defendant’s contention that plaintiff is precluded by section 1698 of the Civil Code from attempting to vary the terms of the pledge agreement is without force in light of the facts already discussed, which establish an estoppel to rely upon section 1698. This is illustrated by the language of the court in Wilson v. Bailey, 8 Cal.2d 416, 421-422 [65 P.2d 770]: “And likewise, while it is settled in view of section 1698 of the Civil Code which provides that a written contract may be altered by a contract in writing, or by an executed oral agreement and not otherwise, . . . nevertheless, it is also true that the facts of a particular case may give rise to an equitable estoppel against the party who denies the verbal modification.” In Panno v. Russo, 82 Cal.App.2d 408 [186 P.2d 452], a case involving an oral extension of the time fixed in a written sales-contract for payment of the price by the buyer, the court reiterates the rule that section 1698 is subject to the exception that a party to the contract may be estopped by his conduct or representations from denying an oral modification. In D. L. Godbey & Sons Const. Co. v. Deane, 39 Cal.2d 429, 432 [246 P.2d 946], where the entire problem is reviewed, the court cites both the Wilson and Panno cases, supra, in recognizing that an oral modification of a written agreement may be shown when the facts establish an estoppel to rely on section 1698. So here, the allegations, which we must accept as true, are that plaintiff was misled into believing, at a time when she was ready to redeem her coat, that she was being given an extra week in which to repay the loan, during which time the coat was sold by defendant. In effect, plaintiff alleges she was induced by oral representations of defendant’s agents not to exercise her rights under the contract while performance was still possible; this is sufficient to bring plaintiff within the rules heretofore discussed. Nor is the complaint fatally defective in that there is no allegation that defendant authorized its agents to alter the terms of the written pledge agreement or to make the alleged extension. Whether the defendant corporation did or did not authorize its agents to make the representations alleged involves evidentiary facts constituting a matter of defense, “which it would be contrary to the very first rules of good pleading to aver in the complaint. ’ ’ (Union Trust Co. v. Dickinson, 30 Cal.App. 91, 97 [157 P. 615]; Malone v. Crescent City Mill & Trans. Co., 77 Cal. 38, 42 [18 P. 858].)

Defendant’s answer denied generally all of the allegations in the complaint not expressly admitted. It alleged the making of the pledge agreement and plaintiff’s receipt of the $300 loan pursuant thereto (except for the retention of $3.50 to pay for fumigation and demothing of the coat) and plaintiff’s default in repayment. The answer further alleged that defendant sold the coat at public auction after proper notice of sale more than six months after the last date to redeem; that it became owner of the coat by making the highest bid, applying the proceeds in satisfaction of plaintiff’s debt with no surplus remaining and that it thereafter resold the coat. It alleged that plaintiff made no demand for return of the coat until after the resale.

After trial of the issues, the court made findings of fact which furnish a concise summary of certain salient aspects of the transactions between the parties. The findings are that on March 23, 1949, plaintiff delivered her coat to defendant as security for a loan to her of $300 “together with interest and other charges. ’ ’ The coat was a full length, natural dark mink and was acquired by plaintiff in November, 1948, at a cost of $3,750, to which was added a luxury and sales tax, making the total price paid by plaintiff $4,612.50. At the time the coat was delivered to defendant it was in first class condition and defendant requested that it be demothed prior to being placed in storage, for which a charge of $3.50 was made by defendant and deducted from the amount of the loan. It was also agreed that the coat would be cleaned and glazed by defendant at a cost of $15, which plaintiff was to pay at the time of the redemption of her coat.

At the time the coat was delivered in pawn, a written pledge agreement was entered into, which truthfully set forth the amount of the loan as $300, a description of the pledged property, interest rate, and redemption date. The court found, however, that a statement in fine print in the instrument reading: “I agree that the fair market valué of the above pledged property is not more than 125 per cent of the principal amount of the said loan” was untrue, was not negotiated between the parties, and was not in keeping with the valuations communicated between the parties at the time of the pledge. The court found, instead, that counsel stipulated facts fixing the valuation as above described, namely, that the purchase price was $3,750, plus taxes. Simultaneously with the making of the pledge contract and loan, defendant delivered to plaintiff an envelope in which to enclose the agreement upon which was printed: “We suggest that you phone us 24 hours in advance of redemption. ’ ’ Thereafter, plaintiff’s account was charged $4.00 per month interest, as well as $15 for defendant’s cleaning of the coat. It was found that when the loan expired in 30 days, plaintiff had not repaid the principal, interest, or cleaning charges and that defendant continued to charge $4.00 interest for nine months, up to and including December 22, 1949.

On or about November 22, 1949, plaintiff informed defendant by telephone that she intended to redeem her coat and asked if the 24-hour notice was necessary, at which time she was told that such notice was required and was further informed that she could make her payments and redeem her coat at any time within the succeeding week. The court found that plaintiff presented herself at defendant’s office “within the period of time fixed, to wit, a week, and in fact within the month of November, and was informed that her account had been closed.” On demanding to know what disposition had been made of her account, she was informed that the coat had been sold and the amount received at the sale credited to, paying off, and closing her account. The findings state “it was not true that the account was closed and that the coat had been sold, and the court finds that at the time of the declarations of Markwell & Co. that such had taken place, Markwell & Co. had charged interest on the loan up to and including December 22, which was many days thereafter, and that the coat was in the possession of Mark-well & Co., and that Markwell & Co. had conducted a fictitious proceeding in which a purported sale had purportedly been made, which sale consisted of nothing more than one member of Markwell & Co. declaring the coat for sale and another member of Markwell & Co. then declaring that the coat was sold to itself for the amount due on the loan . . . that no effort was made to find a buyer at a fair value, that the interest was charged at the time, and that the purported sale was fictitious, and that the seizing of the coat and the declaration of the closing of the account for the amount of the loan was wrongful.”

The court further found that subsequent t