Court Opinion

ID: 9863823
Source: CourtListenerOpinion
Date Created: 2023-09-25 05:54:46.86206+00
Date Added: 2024-06-11T12:04:21.061879
License: Public Domain

CARTER, J.
I dissent.
I agree with the first point in the majority opinion that it was not necessary to complete the building before defendant *387was obligated to transfer the property, but cannot agree that there was insufficient evidence to show bad faith on the part of defendant as used in section 3306 of the Civil Code quoted in the majority opinion. The trial court found that there was bad faith on defendant’s part in refusing to perform as pointed out in the majority opinion and, in my opinion, the evidence was sufficient to support that finding.
Assuming that advice of counsel, which is followed, shows good faith and there is evidence that such advice was given and followed, there is evidence in the record here which clearly shows bad faith. Mr. Ross, the real estate broker handling the deal for both parties, testified that during the 90-day period defendant refused to complete the deal unless plaintiffs paid for a rock fill in connection with the building which plaintiffs were not obligated to do; that plaintiffs would waive completion of the building; that defendant was not “particularly interested” in having a conference with his counsel and Ross; that he wanted a release from the tenant of his property under the lease and was told that the tenant was willing to accept the buildings; that defendant said he “woiddn’t close [the deal] in any event. He said, ‘There is not only the question of the rock fill which hasn’t been settled, but’ he said that he wasn’t going to do business with Mr. Fox [plaintiff], I asked Mr. Aced, ‘Well, is this just a grudge?’ and he said, ‘No, but I just don’t like Mr. Fox.’
“I asked Mr. Aced, ‘Would you close this transaction with anybody else?’ He said, ‘Anybody else but Mr. Fox.’
“We spoke on, and I asked Mr. Aced just what it was that he wanted at this time to close the deal with Mr. Fox, didn’t he have any idea of what he wanted. Re thought for a minute, and he wrote down seven points which he wanted to close the deal with Mr. Fox, and it amounted to approximately $5,000 or more.” (Emphasis added.) The latter things plaintiff was not required to do. Defendant knew that the liens on the property could be removed by instructing the escrow agent to withhold them from the money deposited in escrow by plaintiff. The evidence is clear that defendant deliberately refused to carry out the agreement. This evidence was weighed by the trial court against the evidence that defendant acted on the advice of counsel. Hence the judgment is supported by the evidence. The evidence that defendant acted on the advice of counsel obviously could have been disbelieved by the trial court.
It must be remembered that the test of bad faith under *388section 3306 of the Civil Code, supra, is whether there is a deliberate refusal to perform without just cause or excuse (Nelson v. Fernando Nelson & Sons, 5 Cal.2d 511 [55 P.2d 859]; Engasser v. Jones, 88 Cal.App.2d 171 [198 P.2d 546]; Pixley v. First Federal Sav. & Loan Assn., 110 Cal.App.2d 427 [243 P.2d 100]; Johnson v. Goldberg, 130 Cal.App.2d 571 [279 P.2d 131]; Rasmussen v. Moe, 138 Cal.App.2d 499 [292 P.2d 226]) and whether there is good or bad faith is a question of fact (Rasmussen v. Moe, supra, 138 Cal.App.2d 499).
As stated, proof that a party acted on the advice of counsel may be a factor in establishing the defense of good faith. However, in situations where the advice of counsel is a defense against punitive damages, malicious prosecution, and some other torts, there must be a full and fair disclosure of all the facts to counsel. For illustration it is said: “Advice of counsel, to be admissible evidence in mitigation of damages in any case, must appear to have been given upon a full and fair statement of the facts or of such of them as were material to the question on which counsel was consulted.” (15 Am.Jur., Damages, § 354.) And in regard to malicious prosecution: “The solicitation of advice of counsel and the fact that in instituting the action complained of one acted on the opinion and advice of counsel may constitute a complete defense to an action for malicious prosecution, provided the opinion was based on a full and fair statement of the facts or on knowledge derived from independent investigation, and was sought and acted on in good faith.” (Emphasis added; 32 Cal.Jur.2d, Malicious Prosecution, § 25.) “In order to establish the de-fence of advice of counsel, the defendant in an action for malicious prosecution must show that the advice relied on was given by counsel after a full and fair disclosure, without any suppression, evasion, or falsehood, of all the facts known to the complainant, or which he should have known, tending to prove or disprove his claim or the crime charged.” (Ibid, §29.) “The rule that advice of counsel is a defense to an action of malicious prosecution is qualified by the requirement that the element of good faith be present throughout. Advice of counsel, accordingly, affords no defense unless it is sought in good faith and not as a mere cloak to protect oneself against such an action or to refute the theory of malice. Such advice must have been based on the entire good faith of the defendant in the presentation of his facts. It must further appear, affirmatively, that the defendant acted on the *389advice in good faith.” {Ibid., §30.) It is clear that under the evidence in the instant case the trial court could find, as it did, that there was not a fair or full disclosure of the facts by defendant to his counsel in good faith. It certainly cannot be said that the evidence on this issue was undisputed. Indeed defendant’s main concern with his counsel was in connection with his dealings with his lessee rather than plaintiff. Moreover it should be observed that under section 3306 of the Civil Code, plaintiff is not being allowed punitive damages if there is bad faith; the damages recoverable are still actual damages suffered. Hence there is more reason why the advice of counsel factor in ascertaining good or bad faith should meet all the safeguards placed around it in other situations. Such is not the state of the record here.
I would, therefore, affirm the judgment.
Gibson, C. J., and Traynor, J., concurred.
Respondents’ petition for a rehearing was denied December 11, 1957. Gibson, C. J., Carter, J., and Traynor, J., were of the opinion that the petition should be granted.