Farr & Stone Insurance Brokers, Inc. v. Lopez

Opinion

FLEMING, J.

Defendant Gus Lopez appeals the judgment for $5,899 plus interest and costs in favor of plaintiff Farr & Stone Insurance Brokers, Inc. in an action for insurance premiums. The trial court heard the cause without a jury and found that Lopez promised to pay past-due insurance premiums owed by Apex Auto Products Company to Farr & Stone and that his promise was an original obligation supported by valid consideration. Lopez contends the evidence shows no promise to pay the premiums, and, if there was a promise, it lacked consideration.

The evidence, which must be viewed in a light most favorable to the judgment

(Crawford

v.

Southern Pacific Co.,

3 Cal.2d 427, 429 [45 P.2d 183]), shows that from 1969 to 1973 Farr & Stone provided comprehensive business and workmen’s compensation insurance to Apex. In 1973 Apex fell into financial difficulties and behind on premium payments. Farr & Stone advanced $6,099.03 to insurance carriers on behalf of Apex.

In January 1974 Lopez’s children assumed management of Apex on the promise that they would share in the ownership of the company. To help his children, Lopez agreed to assist Apex with its financial problems. As Lopez testified, “If we got the company out of a mess, then everybody would benefit.” Apex sent a letter to its creditors, including Farr & Stone, which stated that the Lopez children were new Apex officers and Lopez was “elected chairman of the board.”

In March 1974, Lopez and his daughter Carolyn met with Lawrence Stone and Michael Poland of Farr & Stone to discuss Apex’s insurance obligations. Stone explained that quick agreement was required because if the insurance policies were immediately cancelled Farr & Stone could obtain substantial rebates on prepaid premiums advanced on behalf of Apex. It was agreed that Apex would pay $500 monthly on past-due

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premiums and pay all future premiums when due. Stone testified that Lopez promised if Apex could not pay the premiums he would pay them out of his own checkbook and that Farr & Stone relied on Lopez’s promise in not cancelling the insurance policies. Michael Poland and Carolyn Lopez testified that Lopez said he would personally take care of the premiums. Lopez testified that he said Apex would try to make the payments.