People v. Hedderly

EDMONDS, J.

William D. Hedderly was found guilty on all counts of an indictment which charged that, on ten different occasions, “in Violation of Section 487, subdivision 1, of the Penal Code . . ; [he] did willfully, unlawfully and

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feloniously take . . . [specific sums of money], the personal property of Pacific Mutual Life Insurance Company, a corporation.” He now challenges an order which suspends the imposition of sentence and admits him to probation, a final judgment for the purpose of an appeal (Pen. Code, § 1237), and an order denying his motion for a new trial.

Hedderly, a licensed insurance agent, was a copartner in Group Consultants of California, which specialized in selling and administering group insurance. Under one plan for such insurance, a master policy is issued to a trustee appointed to act on behalf of the members of an organization. The premium is computed according to the number of members and their classifications. A trust indenture authorizes the trustee to collect a specific amount from each insured person and to pay the total of such premiums to the insurer.

The present prosecution arises out of Hedderly’s administration of two policies written by Pacific Mutual for the Associated Plumbing Contractors of California and the Western States Meat Packers Insurance Fund. The policy for the plumbing contractors originally had been administered by one Sullivan, but Hedderly was substituted for him and thereafter collected the required amounts. However, the record does not clearly show whether Hedderly acted as trustee or as agent for Sullivan.

Both this policy and the one held by the meat packers were handled by Hedderly under a written agreement with Pacific Mutual to pay, in addition to his sales commission, an administration fee. The amount of this fee was based upon a percentage of the premiums collected plus an amount equal to one-half of the cost of certain office expenses. Whether similar arrangements were made with regard to the administration by Group Consultants of other policies written by Pacific Mutual is in dispute.

The premiums for the two policies administered by Hedderly were collected by him and deposited in a single unsegregated trustee’s account, from which only he was authorized to draw. Bach month he would prepare a statement summarizing the number and classifications of members, and send it to Pacific Mutual with the amount shown to be due the insurer.