Richion v. Mahoney

Opinion

HANSON, J.

Charles Wm. Richion and eight other individuals (hereinafter referred to collectively as Richion), cross-complainants and interveners in the original action between Windsor Sales, a partnership formed by Richard and Robert Mahoney (the parties hereinafter referred to collectively as the Mahoneys) and defendants New Life Management, Inc. (hereinafter referred to as New Life) and Union Bank (hereinafter referred to as Bank), appeal from orders of the trial court awarding payment of the funds in dispute to the Mahoneys.

The instant appeal arises out of the conflicting claims of Richion and the Mahoneys to the same fund, an account at Bank standing in the name of New Life.

The Facts

On April 24, 1973, the Mahoneys entered into a written contract whereby they agreed to act as nonexclusive sales agents for New Life in the solicitation and sale of commodity option contracts to the general public. Under the terms of this agreement, the Mahoneys were to deposit funds obtained from their customers as the proceeds of their sales into an account designed by New Life at Bank’s Lake Street, Pasadena, branch. These funds were to be used by New Life to purchase commodity option contracts to complete the transactions for the Mahoneys’ customers.

On or about June 11, 1973, the Mahoneys filed a complaint for breach of fiduciary duty and imposition of constructive trust against New Life and Bank attaching thereto as an exhibit a copy of the written agreement. The Mahoneys alleged, inter alia, that New Life had made unauthorized withdrawals from the Bank account for purposes not

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specified in the written agreement, as a result of which the Mahoneys were damaged in the sum of approximately $70,000, said sum being due to their customers. The Mahoneys further alleged that Bank still held in the New Life bank account funds which belonged to the Mahoneys and their customers, and that Bank had refused to return said funds despite their formal demand. On or about June 22, 1973, the Mahoneys filed a first amended complaint, together with a declaration and points and authorities seeking, in addition to damages, a preliminary injunction to prevent Bank from releasing any of the funds being held in the New Life account. On July 13, 1973, the court issued a restraining order against all parties to prevent disbursing any funds from that account until conclusion of the Mahoneys’ action. On July 18, 1973, a cross-complaint in interpleader was filed by Bank against the Mahoneys and New Life requesting that those parties be required to litigate between themselves their claims to the funds being held in the New Life account.