Gorman v. Steinke

THE COURT. Plaintiff sued for damages arising out of the alleged fraudulent representations of the defendant in the sale of an insurance agency business, and had judgment upon the verdict of a jury. The principal ground urged by the defendant on appeal from the judgment is that the .evidence is insufficient to support the verdict.

The sale of the business was made in January, 1930, under a written contract executed after negotiations extending over several days. By the contract “the said E. J. Steinke agrees to set over to Í). A. Gorman the good will of said insurance agency and to use his best efforts to place the said D. A. Gorman in profitable contact with all customers of said insurance agency and E. J. Steinke represents that he has not withheld any contract or understanding had with others or with salesmen, brokers and/or customers which would be prejudicial to the proper and profitable conduct of said insurance agency by D. A. Gorman and that all business, renewals and confidential data of said insurance agency belongs to said office and no salesman, broker or customer has any right, title or interest therein. ’ ’ In his complaint respondent alleged “that the said defendant did not use his best efforts to place the plaintiff in proper and profitable contact with all customers of said defendant and did not intend so to do at the time said promise was made so to do, and the statements of the defendant and the representations of the defendant that he had not withheld any contract or understanding had with others, or with salesmen, brokers and/or customers which would be proper and profitable to the conduct of said insurance business, and that all renewals, business and confidential data of said insurance business belonged to said defendant, and that no salesman, broker or customer had any right, title or interest therein, were false and fraudulent; ...” The contract also provided that the appellant would not engage in the insurance business in Long Beach for a period of ten years, and in a second count of the complaint it is alleged that appellant violated that agreement and respondent has been damaged thereby. Only one verdict was returned, which was in general terms for the respondent in the sum of $5,000, and for the appellant in an amount of $136.08 on his cross-complaint for commis[509]sions on new business he placed with the respondent after the sale.

Most of the controversy arises over the claim of the respondent that appellant represented- to him that practically all of the business of the agency was direct business, that is to say, secured from the insured directly and not through brokers, and that this was untrue. However, the evidence fails to support respondent's contention. Respondent testified that appellant represented to him that the gross premiums of the insurance agency had amounted to $180,000 in the previous year, and that this business produced $23,674 in commissions for the agency after paying all brokerage and commissions to which others were entitled. Some months after respondent purchased the business he had an audit made which showed that the commission income of the agency for the year was $22,875. Respondent testified that at the time of giving him the amount of commissions, appellant had stated that the bookkeeping was not quite up to date, and an annual audit was in progress, consequently tentative figures only could be given at that time. In view of these explanations by appellant, his figures were as accurate as could reasonably be required in representing the gross profits of the business.