Continental Bank v. Phoenix Insurance

Opinion

DUNN, J.

Plaintiff bank sued for money allegedly owing from defendant, based upon defendant’s issuance of a surety bond to plaintiff. From a judgment for defendant after a non jury trial, plaintiff appeals. Appellant contends the court’s findings VHI and IX are unsupported by evidence and, additionally, that such findings are “erroneous as a matter of law.”

We must view the evidence in a manner tending

to

sustain the judgment, resolving all conflicts in its favor and drawing from the evidence all favorable inferences reasonably deducible.

(Estate of Bristol

(1943) 23 Cal.2d 221, 223-224 [143 P.2d 689];

Hicks

v.

Reis

(1943) 21 Cal.2d 654, 660-661 [134 P.2d 788].) The record shows that Leon Chabot, Joseph Chabot and Fred Nestroyl were partners doing a custom picture framing business in Los Angeles as “Framecraft.” Ben Wilks was employed by Framecraft as an artist. Sometime before September 27, 1963, the three partners created C.C.N. & W. Co., Inc., a corporation, to manufacture picture plaques; its place of business was in West Los Angeles. Although Framecraft continued in business, Ben Wilks started to work for C.C.N. & W. Co., as an artist. (The initials, of course, stand for Chabot, Chabot, Nestroyl and Wilks.) He received a salary of $150 per week. Although Wilks was given the title of vice-president, he was never a director or shareholder of the corporation.

In October 1963 the Chabot brothers, Leon and Joseph, sought to borrow money from plaintiff bank on behalf of the corporation. The bank customarily required the principals of a borrowing corporation to submit financial statements, also signing individual loan guaranties signed additionally by their wives. Since Framecraft was owned by the three partners, Continental was furnished a financial statement of that partnership, together with the personal statements of Nestroyl and both Chabots. Framecraft’s statement showed a net worth of $117,451.34 as of December 31, 1962. The net worth of the others, as of July 1, 1963, was: Joseph Chabot—$103,350, Leon Chabot—$140,570 and Nestroyl—$44,900. A statement of Wilks also was furnished. It showed assets of $46,300 but did not show his net worth. Wilks’ statement was further incomplete since it did not identify any