Lewis v. Protective Security Life Insurance

BURKE, P. J.

This is an action for damages by plaintiff Arthur Lewis (Lewis) for $10,625 for breach of a written contract of employment with defendant Protective Security

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Life Insurance Company (Protective). Protective counterclaimed for $24,279 for expense money allegedly withdrawn from the company’s funds by Lewis. The case was tried without a jury and judgment was rendered in favor of the plaintiff for $10,535 plus interest. The court ruled against the defendant on its counterclaim. Protective appeals from the judgment.

The trial court found that Protective was formed largely through the efforts of Lewis who personally advanced all or a substantial part of the costs of incorporation; that it was agreed by the incorporators and subsequent members of the board of directors that Lewis be and he was fully reimbursed for such expenses and that the amount paid him represented the amount which was owing to him; that the amount paid was approved by Protective and the Insurance Commissioner of the State of California; that the repayment of the total of these advances was subsequently approved and ratified by the corporation.

With reference to the claimed improper withdrawal by Lewis of expenses aggregating $24,279, the court found that there was no merit in Protective’s counterclaim; that Lewis’ expense accounts were filed regularly, monthly and were subject to and under the control of Protective’s auditors for action or inaction; and that Lewis was properly credited or reimbursed therefor. The court further found that Protective’s board of directors chose to relieve Lewis of the presidency of the corporation, which was its privilege, and then saw fit to enter into a new written contract of employment of Lewis as executive vice president and director of agencies. The latter contract also gave Lewis authority to incur reasonable expenses for promoting the business of the company, including entertainment, travel and similar items plus vacation and sick leave. The contract of employment was drawn by the chief counsel of the corporation and was approved by the board of directors.

On May 21, 1959, Lewis wrote a written memorandum to the man who succeeded him as president of Protective advising him that he was taking his sick leave and of necessity his vacation pay, for surgery, commencing June 8, 1959. Lewis’ employment was terminated by letter from Protective June 11, 1959, “for legal cause” while Lewis was in the hospital for surgery.