Schneider v. Standard Oil Co.

Opinion

EMERSON, J.* Plaintiff appeals from a summary judgment entered in favor of respondent Standard Oil Company of California (hereafter referred to as Standard). In her complaint, plaintiff alleged that she was the owner of certain shares of Standard stock which her deceased husband (hereafter Schneider) had acquired under a “Stock Plan” created by Standard for the benefit of its employees. This stock had been sold by Standard and the proceeds of the sale had been distributed to Schneider (and through him to certain of his creditors) prior to his death.

Schneider had been employed by Standard for some 26 years. Toward the end of his career, Standard became aware that Schneider had borrowed several thousand dollars from Standard customers with whom [1020]he had had contact, and that he had failed to repay these sums. Since this practice was in violation of certain company rules, Schneider was asked to resign. His resignation was tendered and accepted, and he was considered an early retiree with his retirement date set at November 1, 1970.

In November 1970, Standard was served with an order to show cause and a temporary restraining order in an action brought by Fletcher Oil & Refining Co., one of Schneider’s creditors, restraining Standard from distributing any funds from the stock plan to Schneider, his agents or representatives. All such payments were then stopped.

Standard then learned that Fletcher Oil actually represented five of Schneider’s creditors who were making claims against his employment benefits, totaling $45,000. At about this time Standard also realized that Schneider had received from it over $5,000 in advances for travel expenses which he had never incurred.

Negotiations took place between the attorneys for the creditors, for Standard, and for Schneider in an attempt to reach a settlement of the claims against him. In December 1970, an agreement was reached whereby Schneider was allowed to retain certain other employee benefits consisting of life insurance, an annuity plan, some of the stock and an amount in cash. The remainder of the proceeds of his interest in the stock plan was to be distributed among his creditors in proportion to their claims. Under this plan, each creditor received approximately $.45 on the dollar.

Schneider, with the approval of his attorney, wrote to the administrator of the stock plan requesting that his shares be sold and that seven separate checks be issued. The trustee sold the shares and issued the checks, and on January 20, 1971, Schneider endorsed six checks over to the five creditors and Standard, respectively. He retained the seventh check, which represented the remainder of the stock and the cash to which he was entitled. Plaintiff was unaware of the negotiations just related and of the settlement described. On learning of the facts after her husband’s death she demanded of Standard the proceeds of the stock sale and thereafter filed the within action.