Court Opinion

ID: 9542741
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:38:01.935777+00
Date Added: 2024-06-11T15:08:50.211266
License: Public Domain

*839PETERS, J.
I dissent.
Plaintiff has sufficiently alleged against a general demurrer that he had fire insurance policies, that a fire occurred, that the insurers wrongfully refused to pay the fire loss, that as a result of the wrongful refusal he was forced into bankruptcy, and that as a result of the bankruptcy caused by the wrongful refusal to pay the fire loss he suffered damages in the amount of $1,500,00o.1 It is my view that such allegations state a cause of action and that this cause of action has not passed to the trustee in bankruptcy.
As I understand the opinion of the majority, it is not disputed that plaintiff has sufficiently alleged against a general demurrer that he had fire insurance, that the fire occurred, that the insurers wrongfully refused to pay the fire loss, or that as a result of the wrongful refusal he was forced into bankruptcy. The only dispute with regard to the sufficiency of the allegations is as to whether plaintiff has sufficiently alleged that as a result of the bankruptcy caused by the wrongful refusal to settle plaintiff suffered the loss.
Thus, the majority state, 1 ‘ plaintiff nowhere alleges that his bankruptcy caused the $1,500,000 damages which he seeks to recover. On the contrary, by plaintiff’s own allegations, the bankruptcy is not the cause of his loss, but like the loss, is the result of defendants’ alleged failure and refusal to perform under their contracts of insurance.” (Italics in the original. Ante, p. 831.) Or as stated earlier in the opinion: “Although the complaint contains allegations of bankruptcy, and that the adjudication thereof was ‘caused by the bad faith conduct on the part of the insurer,’ the fact of the bankruptcy, or the filing of the petition therein, is in no way alleged to have caused the $1,500,000 loss to plaintiff. According to the allegations, the bankruptcy is not a cause of plaintiff’s loss, but like the loss is a result of defendants’ alleged bad faith, oppressive and fraudulent conduct in failing to come to plaintiff’s aid as defendants were expressly or impliedly obligated to do.” (Italics in the original.) {Id. at p. 828.)
*840The quoted statements should not he interpreted as meaning that plaintiff has expressly alleged that “the bankruptcy is not a cause of plaintiff’s loss;” plaintiff simply has not expressly alleged what is the causal relation between the bankruptcy and the loss. To jump from the absence of express allegation of causal connection, in construing a complaint against a general demurrer, to the conclusion that plaintiff has alleged that there was no causal connection is, in the circumstances of this case, to repudiate almost one hundred years of progress in relegating the importance of pleading to its proper place in light of the fundamental consideration that causes of action should be determined on their merits and that the technical requirements of pleading should not constitute a trap for the unwary or be permitted to preclude the fair administration of justice.
Since 1872 the cardinal rule of construction of pleadings set forth in section 452 of the Code of Civil Procedure has remained unchanged. The section provides: “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties. ’ ’
“While orderly procedure demands a reasonable enforcement of the rules of pleading, the basic principle of the code system in this state is that the administration of justice shall not be embarrassed by technicalities, strict rules of construction, or useless forms.” (Buxbom v. Smith, 23 Cal.2d 535, 542 [145 P.2d 305].) The old common law rule that a pleading must be construed most strongly against the pleader has been abrogated and superseded by the rule of the statute. (Estate of Wickersham, 153 Cal. 603, 608 [96 P. 311] ; Menefee v. Oxnam, 42 Cal.App. 81, 96 [183 P. 379] ; see Clark on Code Pleading (2d ed. 1947) pp. 344-345.) Even as against a special demurrer, this court has established the rule that it should be overruled if the allegations of the complaint are sufficiently clear to apprise the defendants of the issues they are to meet. (Hudson v. Craft, 33 Cal.2d 654, 661 [204 P.2d 1, 7 A.L.R.2d 696] ; Lord v. Garland, 27 Cal.2d 840, 853 [168 P.2d 5].) A general demurrer should be overruled if the complaint upon any theory states a cause of action (Lord v. Garland, supra, 27 Cal.2d 840, 853), and the proper test is whether the pleading gives fair notice of the pleader’s position (see Clark on Code Pleading, supra, p. 346).
The proper judicial approach to the construction of pleadings is stated in Terry Trading Corp. v. Barsky, 210 Cal. 428, *841438 [292 P. 474], with regard to an answer and counterclaim: “Doubtless these pleadings could be improved upon, but it can hardly be said that they fail to apprise plaintiff of the defenses and demands for affirmative relief which defendant makes. It is sometimes a difficult task for the pleader to state enough facts to establish his cause of action or defense, and also to avoid the inclusion of confusing evidentiary matter. The code has provided adequate means for the correction of an error in either direction; the adverse party may move to strike out the evidentiary matter or demur specially to an inadequate statement of the facts on the ground of uncertainty or ambiguity. But to deny the party his right to a trial, there must be an obvious failure of the pleadings to state a cause of action or defense. This is not the ease here, and as against the general demurrers, they should stand. We are enjoined by statute to construe pleadings liberally (Code Civ. Proe., § 452) and such has been our practice.”
It seems clear that a plaintiff has no burden to anticipate a possible defense and to allege that his cause of action has not passed to a trustee in bankruptcy (see 2 Witkin, Cal. Procedure (1954), pp. 1172-1173, 1452) ; a contrary rule would mean that in almost every case the plaintiff must allege facts showing that he is not a bankrupt. I, as well as my associates I am sure, have drafted and read enough complaints to realize the trap with resulting injustice that would be caused by the contrary rule. Since there is no burden of allegation upon the plaintiff, a general demurrer should be sustained on the theory that the cause of action has passed to the trustee in bankruptcy only where it appears affirmatively from the allegations of the complaint, without regard to the necessity of inference, that upon any view of the complaint the cause has vested in the trustee and not the plaintiff. (Cf. Klopstock v. Superior Court, 17 Cal.2d 13, 19 [108 P.2d 906, 135 A.L.R. 318].)
In view of the rule that as against a general demurrer the complaint must be liberally construed and the further rule that a general demurrer should not be sustained on the ground that the cause of action stated is not vested in the plaintiff unless that fact affirmatively appears from the complaint, it seems clear to me that, in construing the complaint, it must be concluded that the complaint sufficiently alleges that' the' bankruptcy was part of the causal chain which caused loss.
*842First, the mere allegation of bankruptcy as part of plaintiff’s cause of action should mean that, as against a general demurrer, we should infer that the allegation is part of the cause of action and thus is one of the factors which related to defendant’s wrongful conduct and the injury sustained.
Second, even if the mere allegation of bankruptcy is not enough, plaintiff has alleged that defendant’s wrongful conduct in refusing to pay the fire loss caused “plaintiff to lose possession of the property.” Obviously, a refusal to pay money does not cause the loss of property unless there is some intervening event such as a foreclosure of a lien, a sale under a power of sale, or a bankruptcy. The only such act alleged to have occurred here is bankruptcy. To refuse to adopt the obvious inference from the facts alleged is a clear ease of strict construction, contrary to the rule established by the code and our eases.
In concluding that plaintiff has alleged that the bankruptcy was not a cause of the loss, the majority reasons that this conclusion appears because plaintiff has failed to specifically allege the contrary and has alleged that the bankruptcy is the result of defendants’ wrongful conduct, and that such conduct is the cause of the loss. The maxim expressio unius est exclusio alterius is widely used in the interpretation of statutes, which are ordinarily very carefully drafted and studied by numerous persons prior to enactment, but even as to statutes courts have refused to apply the maxim in appropriate cases where other rules of construction indicate that to follow it would be contrary to legislative intent. (See 45 Cal.Jur.2d 639-640.) In construing pleadings, which are ordinarily drafted by a single attorney with nowhere near the time, expense, or deliberation used by statutory draftsmen and legislators, the maxim should not be applied when to apply it would be contrary to the rule of liberal construction of pleadings.
The tragic result of strict construction of the pleadings is, of course, that a plaintiff having a just cause of action will be denied recovery because of his attorney’s ineptness or carelessness in setting forth the basis of the claim and because the defendant’s attorney has developed the art of picking apart a pleading when he is well aware of the nature and details of the claim, an art which should have no place in the Temple of Justice. The tragedy is accentuated where the issue as to sufficiency of allegation relates to a matter of record as to which there can be no substantial factual dispute, and, where from the pleadings and the undisputed facts stated in the briefs, *843the plain inference is contrary to the fact found by strictly construing the pleading.
Unfortunately, this seems to be just such a case. From the complaint it would seem clear that the plaintiff’s property was lost because of the bankruptcy because there is no allegation that the property was lost by foreclosure of a lien, tax sale, or other such proceeding. Although plaintiff alleges that his title was subject to a trust deed, the complaint does not show when or if the trust deed was foreclosed, and in the briefs it appears undisputed that the trust deed was not foreclosed until a substantial period after the adjudication of bankruptcy. Never in the arguments before the trial court on the demurrers to the first and second amended complaints, or in the many briefs filed on appeal, have the insurers, or any of them, urged that the bankruptcy was not part of the causal chain in the loss of the property or that the complaint does not sufficiently allege that the bankruptcy was part of the causal chain. The absence of such claim is particularly persuasive in view of the fact that this court in its prior opinion characterized plaintiff’s claim in part as “bankruptcy caused plaintiff to suffer a loss that he would not have suffered otherwise” (Reichert v. General Ins. Co. of America (Cal.), 59 Cal.Rptr. 724, 732, 428 P.2d 860), and that after such characterization briefs were filed on rehearing in this court. In the circumstances, the silence of the insurers is deafening.
Finally, I must point up the anomaly of the majority’s position in this regard. The majority devotes its entire opinion, with the inferences drawn from the complaint and the lengthy discussion of legal principles, to establish that plaintiff’s cause of action passed to the trustee in bankruptcy. The majority refuses to conclude that the property passed to the trustee in bankruptcy although this is the obvious inference from the complaint when considered in the light of the legal principles applied by the majority. If we are to reason assiduously and with great inventiveness and fervor that a cause of action vested in the trustee, should we not reason equally as assiduously and with as great inventiveness and fervor that the property vested in the trustee, when the latter, but not the former, reasoning will further the statutory command of liberal construction ? An answer in the negative, as the majority in effect supplies, is not warranted either by policy or fundamental considerations of logic.
I also disagree with the majority’s conclusion that a cause of action to recover damages for a loss caused by bankruptcy *844passes to the trustee in bankruptcy. (Section 70 of the Bankruptcy Act (11 U.S.C.A. § 110) provides as follows: “ (a) The trustee of the estate of a bankrupt . . . shall ... be vested by operation of law with the title of the bankrupt as of the date of the filing of the petition initiating a proceeding under this title ... to all of the following kinds of property wherever located ... (5) property, including rights of action, which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him, or otherwise seized, impounded, or sequestered: ... (6) rights of action arising upon contracts, or usury, or the unlawful taking or detention of or injury to his property; . . .”
It is evident that the statute makes a fundamental distinction between assets and rights of action possessed by the bankrupt prior to the filing of the petition of bankruptcy and those acquired thereafter, and it is well settled that assets and rights of action acquired after bankruptcy with certain exceptions not relevant here do not pass to the trustee. (See e.g., Sparhawk v. Yerkes, 142 U.S. 1, 14 [35 L.Ed. 915, 918, 12 S.Ct. 104].) “Stated broadly, the general rule is that the bankruptcy trustee takes title to all the property of the bankrupt enumerated in § 70a, whether in possession or in action, as determined at the time the petition is filed, . . . Since the time of filing the petition is the date of cleavage, it may also be stated as a general rule that the trustee does not take title to property acquired by the bankrupt after such time. ’ ’ (Collier Bankruptcy Manual (1967) pp. 932-933; see also 3 Remington on Bankruptcy (1957) p. 316.)
In Wooten v. Central Mut. Ins. Co. (La. App.) 182 So.2d 146, it was held that, since the trustee is vested with rights of action which could be transferred or seized “prior” to the filing of the petition, he is not vested with a cause of action not vested in the bankrupt prior to the filing of the petition and that a cause of action for damages for impairment of credit and reputation caused by the bankruptcy due to defendant’s wrongful conduct prior to bankruptcy did not vest in the trustee since the damage was necessarily sustained after the filing of the petition. In that case, a man was forced into bankruptcy by a judgment rendered against him after his insurance company refused to settle a suit. The trustee in bankruptcy sued the insurance company for unreasonable refusal to settle the claim, seeking $10,000 for the amount of the judgment in excess of the policy limits, and in addition *845the trustee sought $150,000 for the impairment of credit and reputation caused by the bankruptcy. The court held that the trustee was vested with the claim for excess judgment but not with the claim for impairment of credit and reputation, since the latter claim had not vested in the bankrupt prior to the time that the petition was filed.
The same principle should apply here. The damages plaintiff is seeking are for the loss he suffered due to the filing of the bankruptcy, and that loss necessarily was not suffered prior to bankruptcy.
The majority seek to distinguish Wooten and claim that the ease supports them because plaintiff assertedly has not alleged that his loss was caused by the bankruptcy, but, as demonstrated above, this construction of the pleading is improper. The majority also suggest that insofar as Wooten holds that the cause of action for impairment of credit and reputation did not vest in the bankrupt prior to bankruptcy and did not pass to the trustee, the case is wrong. Belianee is placed upon Patton v. Fidelity-Philadelphia Trust Co. (E.D. Pa. 1965) 246 F.Supp. 1015. Although Patton holds that a cause of action for impairment of credit and reputation caused by bankruptcy passes to the trustee, the judge did not discuss the question whether the cause of action vested prior to bankruptcy, and the ease furnishes no basis for rejection of Wooten. Moreover, an injury to credit and reputation caused by bankruptcy by its nature will affect the bankrupt’s earning power after bankruptcy and not before, earnings of a bankrupt after bankruptcy are after-acquired property and do not pass to the trustee (e.g., Hudson v. Wylie, 242 F.2d 435, 444), and I do not believe that the creditors of a bankrupt should benefit by permitting the trustee to recover damages for an injury which can only affect the bankrupt’s earning power after bankruptcy and does not affect the bankrupt’s estate or earning power prior to bankruptcy.
In concluding that plaintiff’s cause of action arose prior to. bankruptcy and thus passed to the trustee, the majority also rely upon the general rule that a plaintiff’s cause of action arises from the wrong inflicted on him and that “ ‘since the elements of consequential damage experienced by the plaintiff as the result of a particular wrongful act relate back to the injury itself, they cannot form subsequent bases, for new causes of action. ’ (14 Cal.Jur.2d, Damages, .§14, p. 644; as to damages for breach of contract see Abbott v. 76 Land & Water *846Co., supra, 161 Cal. 42, 47-49; Van Horne v. Treadwell, supra, 164 Cal. 620, 622-623; as to damages for tort see Wood v. Currey (1881) 57 Cal. 208, 210; Hawthorne v. Siegel (1891) 88 Cal. 159, 166 [25 P. 1114, 22 Am.St.Rep. 291].)” (Ante, p. 832.) The majority also rely on the closely related general rule that a party is bound to prove in a single action arising from a single wrong not only such damages as have been actually suffered but also such prospective damages by reason of the breach as he may be legally entitled to.
There are numerous exceptions to the general rule relied upon by the majority. Among the recent cases of this court which have applied exceptions to the rules that a cause of action accrues at the time of the wrongful conduct of the defendant and that all prospective damages must be recovered in a single action are Tu-Vu Drive-In Corp. v. Davies, 66 Cal.2d 435, 437 [58 Cal.Rptr. 105, 426 P.2d 505] ; Day v. Greene, 59 Cal.2d 404, 411 [29 Cal.Rptr. 785, 380 P.2d 385, 94 A.L.R.2d 802] ; Amen v. Merced County Title Co., 58 Cal.2d 528, 534 [25 Cal.Rptr. 65, 375 P.2d 33] ; Aced v. Hobbs-Sesack Plumbing Co., 55 Cal.2d 573, 583-585 [12 Cal.Rptr. 257, 360 P.2d 897] ; Bellman v. County of Contra Costa, 54 Cal.2d 363, 369 [5 Cal.Rptr. 692, 353 P.2d 300] ; Brewer v. Simpson, 53 Cal.2d 567, 593 [2 Cal.Rptr. 609, 349 P.2d 289] ; Comunale v. Traders & General Ins. Co., 50 Cal.2d 654, 662 [328 P.2d 198] ; Coots v. Southern Pac. Co., 49 Cal.2d 805, 806 et seq. [322 P.2d 460] ; Bennett v. Hibernia Bank, 47 Cal.2d 540, 559 et seq. [305 P.2d 20] ; see Alter v. Michael, 64 Cal.2d 480, 483 [50 Cal.Rptr. 553, 413 P.2d 153] ; 1 Within, California Procedure (1954) Actions, sections 119, 120, 123, 125, 132,133,153,156.
The above-cited authorities as well as many more that could be cited show that based on various considerations there are numerous exceptions to the general rules relied upon by the majority and that those rules are general only in the sense that they are applied where neither authority nor practical considerations warrant departure from them.
Both authority and practical considerations show that a cause of action for damages caused by bankruptcy resulting from a defendant’s wrongful conduct accrues at the time of bankruptcy, the time of injury, rather than the time of the defendant’s wrongful conduct. As we have seen, it was so held in Wooten v. Central Mut. Ins. Co., supra, 182 So.2d 146, the only ease cited or found which determined the point. California authorities in analogous situations have also held that *847the cause of action accrues at the time of injury, not at the time of wrongful conduct. In Comunale v. Traders & General Ins. Co., supra, 50 Cal.2d 654, 662, an insurance company wrongfully denied coverage of an automobile accident and on that basis refused a settlement within the policy limits. A judgment in excess of the policy limits was subsequently recovered against the insured, and it was held that a cause of action to recover damages for wrongful refusal to promptly settle the claim accrued at the time of injury, the time when the judgment in excess of the policy limits became final. It was not held that the cause accrued at the time of the wrongful conduct of the insurer in denying coverage and refusing the settlement. The same rule as to accrual of the cause of action was applied in Brown v. Guarantee Ins. Co., 155 Cal. App.2d 679, 690 [319 P.2d 69], which also involved an insurer’s refusal to settle within the policy limits.
The Comunale and Brown cases are, of course, not squarely in point, but they are analogous because, as in the instant case, the essence of the cause of action is to recover damages for an insurer’s refusal to promptly settle a covered claim.
Although not as closely in point but still analogous is tin-ease of Walker v. Pacific Indem. Co., 183 Cal.App.2d 513, 515 et seq. [6 Cal.Rptr. 924], where a broker agreed to purchase a truck liability insurance policy with a $50,000 limit for bodily injury but negligently secured a policy with a $15,000 limit. An accident subsequently occurred, and a judgment was recovered against the insured in the amount of $100,000. It was held that the action against the broker for the $35,000 difference did not accrue at the time the broker procured the wrong policy or at the time the accident occurred but that the cause of action accrued at the time the verdict for $100,000 was returned.
Certainly in Comunale, and probably in Brown and Walker, a cause of action accrued at the time of the wrongful conduct of the defendant, but at that time it was uncertain whether a judgment would be entered in excess of the policy limits. (Cf. County of Santa Clara v. Hayes Co., 43 Cal.2d 615, 617-619 [275 P.2d 456].) In other words, although injury may have been sustained at an earlier time, it was uncertain at that time whether another injury different in character ■would be subsequently suffered. This is true in the instant ease. At the time of the insurer’s refusal to pay the fire loss, it was clear that plaintiff had suffered an injury, and an *848action would lie. But it was uncertain whether plaintiff would become a bankrupt as a result of the refusal to.pay'.
In my view, it is apparent'that great mischief would be caused to the law of. the state if we were to apply the general rules relied upon by the majority to cases like this and Comunale. Under those general rules,, a plaintiff may recover for prospective damages to be caused by bankruptcy in a single action which accrues at the time of the wrongful conduct. Thus, had plaintiff in the instant ease sued and gone to trial prior to July 24, 1964, the date of the bankruptcy, he could recover, if we are to apply the general rule literally, for any . damages he could show that were likely to occur by the imminent bankruptcy, and his recovery, if based on substantial evidence, would have to be upheld on appeal. Thus, if plaintiff’s allegations are true, he would he entitled to recover in such an action not only the $424,000 for the fire loss but also the $1,500,000 damages which would result from the bankruptcy which, although it had not occurred, was imminent. Similarly, in the Comunale situation, a plaintiff on the basis of evidence to the effect that the insurer’s refusal to settle within the policy limits would result in a judgment against him in excess of the policy limits, could recover the amount of the anticipated judgment, and, so far as I can see, such recovery, if we are to apply the general rules urged by the majority, would be valid whether or not there was a subsequent judgment equal to or in excess of the policy limits against the insured. .Under the general rules relied upon by the majority, I should think that plaintiffs would always seek recovery before bankruptcy or before judgment in excess of the policy limits because' in the event of a quick recovery they could "avoid bankruptcy by paying their creditors or avoid a judgment in excess of the policy limits by settling with the injured party and thus retain the prospective damages while at the same time avoiding the prospective injury. To reject application of rules which would result in such nonsense citation of authority is unnecessary.
Accordingly, I conclude that plaintiff has sufficiently alleged as against a general demurrer that he.suffered a loss caused by the bankruptcy, that a .right of action to recover damages for such joss does not...accrue, at the time of the wrongful conduct of "the defendant, hut at the .time of injury, the filing of the petition' in bankruptcy, "and..that since the right’ of action does,"hot. arise until the.filing of the petó*849tion, it is not a right of action arising prior to bankruptcy and has not vested in the trustee.
The remaining question in the view I take of the matter is one with which the majority does not deal, namely, whether plaintiff may recover damages caused by bankruptcy which resulted from the wrongful conduct of insurers in failing to pay a fire loss.
An insurance policy is, of course, a contract. (Ins. Code, § 22.) For breach of contract the usual measure of damages is all detriment flowing from the breach which the breaching party contemplated or should have contemplated at the time of contracting as likely to result from his failure to perform. (Civ. Code, § 3300; Weaver v. Bank of America, 59 Cal.2d 428, 434 [30 Cal.Rptr. 4, 380 P.2d 644] ; Ely v. Bottini, 179 Cal.App.2d 287, 294 [3 Cal.Rptr. 756].)
Where the owner of a heavily mortgaged motel or other business property suffers a substantial fire loss, the owner may be placed in financial distress, may be unable to meet his mortgage payments, and may be in jeopardy of losing his property and becoming a bankrupt. A major, if not the main, reason why a businessman purchases fire insurance is to guard against such eventualities if his property is damaged by a fire. Certainly, the property owner who purchases fire insurance may reasonably expect that if a fire occurs, the insurance proceeds will be promptly available to protect him from those eventualities. The business of the fire insurer is to provide such protection. Insurers are, of course, chargeable with knowledge of the basic reasons why fire insurance is purchased, and of the likelihood that an improper delay in payment may result in the very injuries for which the insured sought protection by purchasing the policies.
The question whether a particular kind of damages is within the reasonable contemplation of the parties is not one which ordinarily can be resolved on demurrer. (Weaver v. Bank of America, supra, 59 Cal.2d 428, 434.) Certainly this court cannot say, as a matter of law, that at the time of contracting the defendants should not have contemplated that plaintiff would be in very serious financial trouble if a fire destroyed one-third of his motel and'the insurers refused to perform their contractual obligations. (Cf. Venturi v. Zurich General etc. Co., 14 Cal.App.2d 89 [57 P.2d 1002] ; Henkel v. Pacific Employers Ins. Co., 140 Cal.App.2d 301; 305-307 [295 P.2d 80].)
*850The insurers’ liability is not limited to the amount specified in the policy (Ins. Code, § 2071). (See Crisci v. Security Ins. Co., 66 Cal.2d 425 [58 Cal.Rptr. 13, 426 P.2d 173] ; Comunale v. Traders & General Ins. Co., supra, 50 Cal.2d 654; Venturi v. Zurich General etc. Co., supra, 14 Cal.App.2d 89.) “The policy limits restrict only the amount the insurer may have to pay in the performance of the contract . . . they do not restrict the damages recoverable by the insured for a breach of contract by the insurer.” (Comunale v. Traders & General Ins. Co., supra, at p.659.)
It is clear that plaintiff has alleged sufficient facts to show detriment which, within the meaning of section 3300 of the Civil Code, the breaching party contemplated or should have contemplated at the time of contracting as likely to result from his failure to perform.
The fire insurers urge, however, that the ordinary measure of damages for breach of contract set forth in section 3300 of the Civil Code is not applicable, that the damages recoverable here are set forth in section 3302 of the Civil Code, and that the latter section provides the exclusive measure of damages for breach of an obligation to pay money.
Section 3302 of the Civil Code provides: “The detriment caused by the breach of an obligation to pay money only, is deemed to be the amount due by the terms of the obligation, with interest thereon. ’ ’
An analogous problem was presented in Royer v. Carter, 37 Cal.2d 544, 550 [233 P.2d 539], Royer held that section 33072 of the Civil Code does not provide the exclusive measure of damages for breach of an agreement to purchase an estate in real property and that a seller can recover not only the excess of the amount due under the contract over the value of the property to him but also additional expenses, such as escrow charges, title charges, and broker’s fees, borne by the seller because of the breach. The court reasoned that injustice would result if the seller could not recover such additional expenses when they were the natural consequences of the breach. Royer was followed in Honey v. Henry’s Franchise Leasing Corp., 64 Cal.2d 801, 805 [52 Cal.Rptr. 18, 415 P.2d 833] ; Allen v. Enomoto, 228 Cal.App.2d 798, 803-804 [39 Cal.Rptr. 815] ; *851and Pasteur Realty Corp. v. La Fleur, 154 Cal.App.2d 5, 9 [315 P.2d 374]. Similarly, it has been held that former section 3311 of the Civil Code did not establish the exclusive measure of damages for breach of an agreement to buy personal property. (King v. Globe Grain etc. Co., 58 Cal.App. 105, 114 [208 P.166].)
Section 3302 provides that the detriment caused by a breach “is deemed to be” the amount due plus interest. Section 3307, which was construed in Royer, also contains that quoted phrase, but, as pointed out above, Royer rejected the view that section 3307 set forth the exclusive measure of damages. Other cases have expressly recognized that while “deemed” can create a conclusive presumption, “deemed” may also raise only a rebuttable presumption. (Board of County Comrs. of County of Logan v. Morris, 147 Colo. 1 [362 P.2d 202, 205] ; Brimm v. Cache Valley Banking Co., 2 Utah 2d 93 [269 P.2d 859, 863-864] ; Zimmerman v. Zimmerman, 175 Ore. 585 [155 P.2d 293, 300] ; Erickson v. Erickson, 167 Ore. 1 [115 P.2d 172, 178], and cases cited; In re Barbour’s Estate, 185 App.Div. 445 [173 N.Y.S. 276, 280] ; Kleppe v. Odin Tp., McHenry County, 40 N.D. 595 [169 N.W. 313, 314-315].) The code commissioners in their annotation to section 3302 indicated that they were cognizant of a statute that created a conclusive presumption. (See 2 Haymond & Burch, Civil Code of the State of California (1872) p. 391 which refers to section 1929 of the Louisiana Civil Code of 1825.)3 Nevertheless the commissioners and the Legislature did not use such language.
In two situations it has been held in this state that damages for the breach of an obligation to pay money are not limited to the sum specified in the contract plus interest. Thus consequential damages have been permitted for failure to make a loan, and where the contract called for the payment to be made to a third party. (Hunt v. United Bank & Trust Co., 210 Cal. 108 [291 P. 184] ; Venturi v. Zurich General etc. Co., supra. 14 Cal.App.2d 89.)
It is true that the general rule at common law is that the damages for breach of a contractual obligation to pay money are the amount due plus interest thereon. (Lally v. Wise, 28 Cal. 539, 543-544; Heyman & Co. v. Landers, 12 Cal. 107, 111; Guy v. Franklin, 5 Cal. 416, 417.) The rule is based on three *852theories. First, money is always available in the market at the lawful rate of interest. (Lowe v. Turpie, 147 Ind. 652 [44 N.E. 25, 33, 37 L.R.A. 233].) Second, consequential damages are too remote to be proximately caused by the delay in pay-, ment. (Friend & Terry Lbr. Co. v. Miller, 67 Cal. 464, 467 [8 P. 40].) Third, the rule provides “a measure of damages of easy and certain application.” (5 Williston, Contracts (1937) § 1410, p. 3926.)
Those reasons are not convincing. The facts of this case demonstrate that money is not always available in the market. (See also Venturi v. Zurich General etc. Co., supra, 14 Cal. App.2d 89; Hunt v. United Bank & Trust Co., supra, 210 Cal. at p. 117; 5 Corbin, Contracts (1964) § 1078, p. 447.) Nor are consequential damages always so remote that the defendant should not be held responsible for them. (Weaver v. Bank of America, supra, 59 Cal.2d 428, 432-435.) The claimed simplicity of determining damages by limiting the damages to the sum due plus interest should not justify the great hardship that such simplicity may cause. As Jessel, M.R., said in Wallis v. Smith (1882) 21 Ch.D. 243, 257, “Now it may well be that the Courts thought that it was absurd to make a man pay a larger sum by reason of the non-payment of a smaller. It has always appeared to me that the doctrine of the English law as to non-payment of money—the general rule being that you cannot recover damages because it is not paid by a certain day, is not quite consistent with reason. A man may be utterly ruined by the non-payment of a sum of money on a given day, the damages may be enormous, and the other party may be wealthy. However, that is our law. If however, it were not our law the absurdity would be apparent. ’ ’
In view of the injustice which could otherwise result, section 3302 of the Civil Code should not be construed as establishing the exclusive measure of damages for breach of an obligation to pay money Or to limit the damages recoverable under section 3300 of that code, and that the word “deemed” in section 3302 creates only a rebuttable presumption that interest will compensate a non-breaching party for all the detriment which he suffers and which the breaching party did or should have contemplated at the time of contracting as likely to flow from the breaching party’s failure to make timely delivery of the money he had contracted to pay.
This interpretation of section'3302 is not' inconsistent with prior California case law. Heyman & Co. v. Landers, supra, 12 Cal. 107, and Lally v. Wise, supra, 28 Cal. 539, denied interest *853in excess of the statutory rate, and Gray v. American Surety Co., 129 Cal.App.2d 471 [277 P.2d 436], held that the market rate of interest was irrelevant. When the damages sought are only interest, the convenience of a fixed rate may outweigh the hardship caused by awarding a larger or smaller sum than the actual damages. Knight v. Marks, 183 Cal. 354, 357 [191 P. 531], and Ricker v. Rombough, 120 Cal.App.2d Supp. 912, 917 [261 P.2d 328], used section 3302 to invalidate clauses in leases that provided for defaulting lessees to pay more than the rent due. Section 3302 was not needed for that purpose, and Civil Code section 3308 now governs the situation. Hartford v. All Night & Day Bank, 170 Cal. 538, 540-541 [150 P. 356, L.R.A. 1916A 1220], and Conner v. Bank of Bakersfield, 174 Cal. 400 [163 P. 353], held that a bank was not liable for a drawer’s arrest or other damage caused by the bank’s wrongful refusal to negotiate the drawer’s check. Holdings of that type were disapproved in Weaver v. Bank of America, supra, 59 Cal.2d 428, 435, and Commercial Code section 4402 is now the applicable law. (See also Sixth Progress Report to the Legislature by Senate Pact Finding Committee on Judiciary (1959-1961) The Uniform Commercial Code, pt. 1, pp. 481-482, quoted in West’s Commercial Code Ann., § 4402 at pp. 637-638.) Guy v. Frankin, supra, 5 Cal. 416, and Friend & Terry Lbr. Co. v. Miller, supra, 67 Cal. 464, contain dicta that the sum due under a contract plus interest is the maximum amount of damages. However, Guy is a pre-code case and Miller makes no reference to section 3302.
It is true that Baumgarten v. Alliance Assur. Co., 159 F. 275, 277, held that section 3302 prevents an insurance company from being liable for more than the face value of a policy, plus interest from the time the insurer should have paid the claim. Baumgarten’s interpretation of section 3302 is simply incorrect.
Moreover, even if section 3302 of the Civil Code is a limitation on the recovery of damages under section 3300 of that code, the former section by its own terms is not applicable here. Section 3302 speaks of obligations “to pay money only.” In the instant case the fire insurers had the alternatives of either repairing the motel or paying for the loss, and, since the obligation thus was not “to pay money only,” section 3302 does not immunize them from liability for consequential damages caused by their alleged breach of contract.
It may be that on the trial plaintiff will not be able to prove that he suffered a loss as the result of the bankruptcy; the *854amount of the liabilities discharged by the bankruptcy may exceed the value of assets lost by the bankruptcy. However, plaintiff has expressly alleged that the bankruptcy did cause loss, and such a loss is a detriment which a breaching party contemplated or should have contemplated at the time of entering into the insuring agreements as likely to result from a failure to perform.
I would reverse the judgment of dismissal, direct the trial court to overrule the general demurrer, and to pass on the issues presented by the special demurrers.
Tobriner, J., and Mosk, J., concurred.

 These allegations are found in causes of action five through nine of the second amended complaint. In my view, plaintiff states a cause of action by alleging merely that tlie wrongful conduct in refusing to pay the fire loss caused damages, and it would be unnecessary to allege further that the bankruptcy was a causal factor in the loss. The importance of the allegation that the bankruptcy was part of the causal chain resulting in the damages is that this allegation, as will appear hereinafter, prevents the cause of action from vesting in the trustee in bankruptcy.

Seetion 3307 of the Civil Code provides: 1 ‘ The detriment caused by the breach of an agreement to purchase an estate in real property, is deemed to be the excess, if any, of the amount which would have been due to the seller, under the contract, over the value of the property to

"The damages due for delay in the performance of an obligation to pay money are called interest. The creditor is entitled to these damages ■without proving any loss, and whatever loss he may have suffered he can recover no more. * ’