Opinion
For Opinion on Hearing see, 74 Cal.Rptr. 908, 450 P.2d 284. Nagle, Vale & McDowall and William D. McDowall, San Mateo, for plaintiff and appellant.
Shacknove & Goldman and John J. Baer, Los Angeles, for defendant and respondent.
HUFSTEDLER, Associate Justice.
International Aerial Tramway Corporation ('International') brought suit against Artur Doppelmayr ('Artur'), individually, and against Konrad Doppelmayr & Sohn ('Konrad') for damages for alleged breach of contract, an accounting, and an injunction. International is a California corporation. Konrad is an Austrian limited partnership, known in Austria as Kommanditgesellschaft, of which Artur is a general partner. Artur is an Austrian resident. Artur's demurrer to the first amended complaint was sustained without leave to amend, and an order of dismissal was entered, from which International appeals. Konrad appeared specially to quash service of process upon it. Konrad's motion was granted, and International appeals from the order quashing service.
The notice of appeal states that it is 'from the order of dismissal'; the order of dismissal is deemed a final judgment. The order complies with section 581d of the Code of Civil Procedure as amended in 1963. (3 Witkin, Cal.Procedure (1954) § 17, p. 2160.)
Order Quashing Service
Konrad moved to quash service on two separate grounds: (1) It was not amenable to service in California because it was not doing business here, and (2) the mode of service upon it did not comply with section 410 of the Code of Civil Procedure. The trial court granted the motion to quash on the first ground; it did not reach the question whether the service complied with the provisions of section 410 of the Code of Civil Procedure. We hold that Konrad was amenable to service of process in California, but the cause must be remanded to the trial court to resolve the conflicts in the affidavits and to decide whether service was accomplished in a manner complying with section 410 of the Code of Civil Procedure. The following facts appearing in the affidavits filed both in support of and in opposition to Konrad's motion to quash service are uncontradicted: Konrad is a manufacturer of ski lifts. In 1956 a representative of Konrad entered negotiations with International in San Francisco for the appointment of International as Konrad's exclusive sales representative in North America. The last signature upon an exclusive distributorship contract was written by International in San Francisco in 1957. A bank account was opened in San Francisco for Konrad's account, in which during the period from 1956 through the latter part of 1965 International made deposits for Konrad's benefit in sums totaling over $500,000. The deposits were payments for the purchase of ski lifts and parts manufactured by Konrad. Five ski lifts were sold by Konrad to International during the years from 1959 through 1960 for a total value of approximately $46,300; of these, two lifts were sold for use in California. The balance of the purchase price of one of the ski lifts used in California was secured by a mortgage in Konrad's favor upon a leasehold, improvements, furniture, and fixtures of a ski lodge located in California. Periodic trips were made by representatives of Konrad to inspect equipment in California and to collect moneys due Konrad in California. Konrad provided International with promotional literature, sample ski lift equipment, and schematic drawings and pictures of such equipment to be shown to potential customers here. All of the equipment sold to International was delivered f. o. b. Hamburg, Federal Republic of Germany. Konrad did not file a designation of an agent for service of process in California under the provisions of section 15700 of the Corporations Code.
Artur was served with process in Los Angeles on March 10, 1966. He admitted that he was given the requisite notice informing him that he was being served individually and as agent for Konrad Doppelmayr & Sohn, a corporation. There is no evidence that a corporation so named existed. The affidavits are conflicting, however, on the question whether Artur was also served as agent for Konrad, a limited partnership.
Since the material facts relating to the business done by Konrad in California are not in conflict, the question whether Konrad is subject to jurisdiction in personam presents a question of law upon which the trial court's determination is not binding upon us. (Cosper v. Smith & Wesson Arms Co. (1959) 53 Cal.2d 77, 81-82, 346 P.2d 409; Long v. Mishicot Modern Dairy, Inc. (1967) 252 Cal.App.2d 425, 428, 60 Cal.Rptr. 432.)
Had Konrad been a foreign corporation, rather than a foreign partnership, its amenability to in personam jurisdiction in California would have been beyond challenge. It was 'doing business' here, and its contacts with the state substantially exceeded the minimums prescribed by the requirements of due process. Konrad's manufacturer's representative, International, was a California domiciliary maintaining an office here. Konrad sent a substantial flow of merchandise into the state. The realities of its merchandising practices were not substantially affected by the fact that delivery of its products was made in Germany or that title may have passed to its products outside of California. It had a bank account here, and it owned a security interest in property located in California. Visits by Konrad's agents cannot be described as either fitful or insignificant. The action grew out of two contracts executed in California and performable, at least in part, here. (E.g., International Shoe Co. v. State of Washington (1945) 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95; Borgward G.M.B.H. v. Superior Court (1958) 51 Cal.2d 72, 330 P.2d 789; Space Chemicals, Inc. v. Sprayon Products, Inc. (1966) 241 Cal.App.2d 680, 684-686, 50 Cal.Rptr. 746; Waco-Porter Corp. v. Superior Court (1963) 211 Cal.App.2d 559, 563-564, 27 Cal.Rptr. 371.) Konrad was a partnership. It was not a 'person,' separate from the partners who composed it. The partners, like other natural persons, was subject to in personam jurisdiction only if they were domiciled or were physically present in the state, or if they consented to service, or if they had such contacts with the state that subjecting them to jurisdiction does not offend 'traditional notions of fair play and substantial justice.' (International Shoe Co. v. State of Washington, supra, 326 U.S. at 316, 66 S.Ct. at 158; Owens v. Superior Court (1959) 52 Cal.2d 822, 831, 345 P.2d 921.) None of the partners, except Artur, was physically present in California at the time of service. None of the partners was a resident. None of them had appointed Artur as his agent for service. But each of the partners had been doing business through the firm and the action related to that business. The Legislature has evidenced its intent to subject foreign partnerships to jurisdiction in California if the firm is doing business here. (Corp.Code, § 15700; Lewis Mfg. Co. v. Superior Court (1956) 140 Cal.App.2d 245, 250, 295 P.2d 145.) We have no difficulty in holding that the partners of Konrad were amenable to service of process in California with respect to the partnership business conducted here.
Section 15700, as it read at the time of attempted service upon Konrad, provided in part: 'Every partnership * * * which is domiciled without this State and has no regular place of business within this State, shall, within 40 days from the time it commences to do business in this State, file in the Office of the Secretary of State a designation of some natural person residing within the State upon whom process issued by authority of or under any law of this State directed against the partnership may be served, which designation shall include the complete business or residence address of the person designated. * * * Such process may be served by personal delivery to the person so designated, or, in the event that no such person has been designated, * * * then service may be made by personal delivery to the Secretary of State * * *.'
Rudimentary concepts of due process require not only amenability to suit, but the service of process of a kind calculated to give actual notice of the pendency of the action and an opportunity to be heard. Only service upon the body of a natural person within the state is personal service. All other kinds of service upon a natural person, within or outside of the state, are forms of substituted service. (Allen v. Superior Court (1953) 41 Cal.2d 306, 259 P.2d 905.) Artur was personally served, and even if he had not consented to jurisdiction by making a general appearance in the action, an in personam judgment could have been rendered against him, which would have been enforceable in California against his individual assets, as well as against his interest in partnership assets here. Service upon Artur as an agent of Konrad or of his fellow partners was substituted service. Service upon a general partner is calculated to give actual notice of the action to the partners who were not personally served. Substituted service upon foreign partners does not offend constitutional standards, at least if jurisdiction is not extended to actions unrelated to the partnership business done in the state and if execution of the judgment is confined to the nonresident partners's joint assets within the state. (Cf. FAZZI V. PETERS (1968) 68 Cal.2d ---- , 68 CAL.RPTR. 170, 440 P.2d 242 .)
68 A.C. 614.
Assigned by Chairman of the Judicial Council.
There remains the question whether service upon Artur was made in a manner complying with our statutes. International sued the partners under their common name, pursuant to section 388 of the Code of Civil Procedure. At that time Cf. Zak v. State Farm etc. Ins. Co.
Section 388 as it read at the time of service on Artur, prior to its 1967 revision, in pertinent part is as follows: 'See. 388 Associates sued under common name; service; judgment When two or more persons, associated in any business, transact such business under a common name, * * * the associates may be sued by such common name, the summons in such cases being served on one or more of the associates; and the judgment in the action shall bind the joint property of all the associates, and the individual property of the party or parties served with process, in the same manner as if all had been named defendants and had been sued upon their joint liability.'
Sufficiency of the Complaint
International's complaint alleged that it had entered a written contract with each of the defendants, by which it was granted exclusive sales rights for Konrad ski lifts in North America. There were annexed to the first amended complaint and incorporated into it two written documents. The first document, executed February 1, 1957, was entitled 'Lincense [sic] and Sales Contract.' Konrad granted exclusive sales rights to International 'for the term of this agreement.' Konrad agreed to manufacture lifts and parts upon International's order and to sell them at prices listed in a schedule attached to the contract. No schedule was attached to the contract. International agreed to use its best efforts to promote the sale of lifts within the area and further agreed to order four ski lifts per year during the life of the contract. Konrad covenanted that 'all material and equipment and parts sold by him hereunder will be produced in a good workmanlike manner * * *' and Konrad 'guarantees that he will repair or replace (or be responsible for costs of repair and replacement if International considers it more appropriate) any item sold by him hereunder which within one year from date of delivery develops any defect.' The second document recited the agreement of the parties that 'all such claims, whether real or otherwise, made by either party for moneys owing by the other for materials and services between the dates as stated above be declared paid in full under the following conditions; International * * * shall pay to [Konrad] * * * the sum of $20,000.00, payable $5,000.00--March 28, 1963[;] $5,000.00 on or about April 10, 1963[;] $10,000.00, 60 to 90 days after April 10, 1963.' The document further recited that the license agreement dated February 1, 1957, between the parties 'will remain in force and all payments between the parties shall be made in accordance with that document.'
International alleged in general terms that it had performed all acts and things required of it under the terms of its contract, excepting only that it had not paid Konrad $4,000 due under the terms of the second document because 'defendants, and each of them, have become indebted to plaintiff for commissions and amounts due subsequent to the signing' of the agreement and that 'said amounts are far in excess of the balance of $4,000 and they have continuously refused to account or to pay said sums of money.' It alleged that the defendants breached 'said agreement' by setting up another sales agent in western Canada and by making direct sales on the North American continent at times and at Artur filed both general and special demurrers to the first amended complaint. The principal grounds for the demurrers were (1) the complaint alleged no facts to support the claim that Artur was chargeable as a principal upon the contracts pleaded; (2) the complaint did not allege any actionable breach of contract; (3) there were no adequate allegations of damage flowing from the claimed breach of contract; and (4) no facts were alleged to sustain a claim for equitable relief.
The complaint alleged generally that 'defendants and each of them' entered into written agreements annexed and incorporated by reference. The 1957 agreement does not mention Artur by name and he did not sign the contract. The letter agreement of March 28, 1963, is signed by Artur beneath the heading, 'Accepted for Konrad Doppelmayr & Sohn.' The complaint also alleged that Artur was 'a partner and/or managing agent of defendant Konrad.' The allegations were not adequate to charge Artur as a party to the contract. There were no allegations even hinting that Artur was an undisclosed principal of the person who signed the 1957 contract; and there are no allegations that he was a disclosed principal. Were he an agent signing the second contract on behalf of a disclosed principal, as one of the quoted allegations ambiguously states, he would not be personally liable upon it. (Easton v. Ash (1941) 18 Cal.2d 530, 538, 116 P.2d 433; Hayman v. Shoemake (1962) 203 Cal.App.2d 140, 159, 21 Cal.Rptr. 519.) The same allegation also says that Artur was a 'partner' of Konrad, but the complaint nowhere directly alleges that Konrad was a partnership.
The affidavits filed in support of Konrad's motion to quash stated that Artur was a general partner of Konrad, a limited partnership. The fact that the court can judicially notice the contents of its own records (Evid.Code, § 452(d); Witkin, Cal. Evid. (1966) § 169, p. 155) does not mean that the court can judicially notice and accept as true facts stated in affidavits filed by one of the parties in the action, even though it judicially notice the fact that the statements were made. Even if the fact that the statements were made might be relevant in ruling upon the sufficiency of a pleading, judicial notice cannot be used to supply omitted averments from the face, of a complaint in order to defeat a demurrer. The court can add judicially noticeable facts omitted from the face of a pleading to support a demurrer. (Flores v. Arroyo (1961) 56 Cal.2d 492, 496, 15 Cal.Rptr. 87, 364 P.2d 263; Oeth v. Mason (1967) 247 Cal.App.2d 805, 810, 56 Cal.Rptr. 69.) The rules are different because the purpose and effect of judicial notice in sustaining a demurrer are different from the purpose and effect of judicial notice in overruling a demurrer. No purpose is served by prolonging the life of an action which must expire as soon as facts which cannot be controverted are brought to light. Permitting uncontrovertible facts to be added to the complaint to aid a demurrer allows the court to give a hopeless action an early and decent interment. A demurring party who invokes judicial notice in support The court did not err in sustaining the demurrer on this ground, but had it denied leave to amend to cure such a readily remediable defect, it would have abused its discretion. The demurrer was nevertheless properly sustained without leave to amend if the remaining grounds of demurrer defeated the complaint. If the complaint stated no cause of action against Konrad, it stated none against Artur.
The second ground of the demurrer was a challenge to the sufficiency of the pleadings to plead breach of contract. The allegations relating to breach of contract fall into two categories: (1) breach based upon Konrad's sending International the cancellation notice, and (2) breach based upon claimed failures of Konrad to perform certain covenants in the 1957 contract.
The notice of cancellation was neither a breach nor a repudiation of the contract. It was simply a notice. A notice of termination takes on no independent significance unless the allegations of the complaint show that the refusal of performance was made when the terminating party was contractually bound to render some further performance at a future fixed or determinable time. A refusal to perform that which one is not bound to perform is not a breach of an obligation. The notice of cancellation, therefore, would be a breach of contract only in the event that the notice was given before the life of the contract had expired. What was the life of the contract? The parties agreed that the contract was for an indefinite term. Artur argued that the contract lasted only so long as it was performed, because it was an employment contract terminable at will by either party at any time. It was not strictly an employment contract. It was a sales distribution agreement, combining some of the features of an employment contract and some of the features of a contract for the sale of goods. The sales aspect of the contract predominates over the personal service features. A sales distribution contract for an indefinite term is not terminable strictly at will, but endures for a reasonable time. What is a reasonable time depends upon all of the circumstances of a particular case, including the terms of the contract and the conduct of the parties under it. The failure of Konrad to continue performance of the 1957 agreement is not a breach of contract if a reasonable time had elapsed before Konrad refused further performance. The contract had been performed for more than nine years. The agreement contained no provision permitting either party to cancel the relationship upon giving a specified notice. International did not build up or maintain any
If it were an agency or employment contract for an indefinite term which was neither coupled with an interest nor supported by independent consideration, it would have been terminable at will. (Ruinello v. Murray (1951) 36 Cal.2d 687, 689-690, 227 P.2d 251; Speegle v. Board of Fire Underwriters (1946) 29 Cal.2d 34, 39, 172 P.2d 867; Levy v. Bellmar Enterprises (1966) 241 Cal.App.2d 686, 690-692, 50 Cal.Rptr. 842; Marin v. Jacuzzi (1964) 224 Cal.App.2d 549, 553, 36 Cal.Rptr. 880.)
International attempted to allege breaches of contract by reason of sales to persons other than International, failure to deliver orders obtained by International on 'the specified delivery date,' failure to reimburse plaintiff for the costs of repair and replacement of defective parts, and failure to pay commissions which 'are long since due and owing.' No dates are alleged with respect to any of these claimed defaults. None of the averments of breach are adequate to withstand Artur's demurrers.
It is elementary that there can be no breach of contract in absence of specific pleading that the defaults of which the plaintiff complains occurred during the life of the contract. The life of the contract extended from the date of its execution, February 1, 1957, to the date of termination, February 17, 1966, but the period during which International could successfully assert a claim for breach of contract was far more restricted. The letter agreement of March 28, 1963, was a settlement of all claims between Konrad and International for the period February 1, 1957, to April 1, 1962. The effect of the second agreement was to limit any recovery for claimed defaults in the performance of the contract to the period from April 2, 1962, until February 17, 1966. International made no pleading effort at all to show that the breaches occurred during that period of time. (Cf. Moore v. Besse (1866) 30 Cal. 570, 571-572; Hege v. Worthington, Park & Worthington (1962) 209 Cal.App.2d 670, 682, 26 Cal.Rptr. 132.) International cannot avoid these manifest pleading deficiencies by claiming that the facts of breach lie in the knowledge of Artur. A further deficiency exists with respect to the claim that Konrad failed to pay for the cost of repairing defective parts. The 1957 contract contained a limitation provision whereby liability for such costs was restricted to a period of one year from the date of the delivery of the parts and equipment. International pleaded no facts stating that its claim was within the period of express limitation.
None of the cases cited by International to support its argument that no greater specificity was required are in point. Smith v. Kern County Land Co. (1959) 51 Cal.2d 205, 209, 331 P.2d 645, was a personal injury case founded on a negligence theory. Nothing in that case concerns the specificity required in averring a breach of contract. The opinion does not suggest that the plaintiff would not be required to set forth the date of an accident in stating a cause of action for personal injury. Dumm v. Pacific Valves (1956) 146 Cal.App.2d 792, 799, 304 P.2d 738, concerned the sufficiency of a complaint for declaratory relief. The pleadings have no resemblance to those in the case at bar. Merlino v. West Coast Macaroni Mfg. Co. (1949) 90 Cal.App.2d 106, 202 P.2d 748, was an action for breach of an alleged agreement to divide corporate profits. The complaint was both elaborate and detailed. The court held that the complaint was neither uncertain nor unintelligible.
The pleading of damages was also inadequate, and the deficiencies were appropriately raised by Artur's special demurrer. International alleged no special damages. It lumped together all compensatory damages in a single allegation that it suffered at least $100,000 damages by reason of each and all of the defendant's acts. No compensable damage flowed from the termination of the contract. The damage averments, therefore, must be read with the allegations of other claimed defaults. Some may give rise to general damages because some loss would necessarily flow from them. But others would give rise solely to special damages. The loss of profits on sales made by Konrad in International's territory during the life of the contract is encompassed within a general averment of damages; International had alleged enough facts to show that it had an established business. (Brunvold v. Johnson (1939) 36 Cal.App.2d 226, 230, 231, 97 P.2d 489; see also Grupe v. Glick (1945) 26 Cal.2d 680, 691-694, 160 P.2d 832; Friedman v. McKay Leather Co. (1919) 179 Cal. 566, 569-570, 178 P. 139; Caspary v. Moore (1937) 21 Cal.App.2d 694, 699, 70 P.2d 224; Hacker Pipe & Supply Co. v. Chapman Valve Mfg. Co. (1936) 17 Cal.App.2d 265, 268-271, 61 P.2d 944.) On the other hand no damages would have necessarily flowed from Konrad's 'setting up other sales agents' in North America; therefore, if any damages were claimed to have resulted from that act, International was required to allege with specificity both the amount of the damage and the facts establishing a causal connection between the claimed wrong and that damage. (Shook v. Pearson (1950) 99 Cal.App.2d 348, 351-352, 221 P.2d 757; 2 Witkin, Cal.Procedure (1954) § 262, pp. 1238-1239; § 477, pp. 1463-1464.)
The remaining claims of breach, assuming the defaults occurred during the term of the contract, could have been proved under a general allegation of damages. Because at least some of the claims of breach would have naturally produced some damages, a general demurrer on the ground that no damages had been properly alleged could not have been sustained, but the special demurrer for uncertainty did properly lie. Artur was entitled to know what portion of its damages International attributed to the various breaches. Without a segregation of damages, the pleading would offer little practical guidance in ascertaining the appropriate scope of discovery and only a slight clue to the issues which Artur would have had to meet if the cause were tried.
The trial court correctly ignored International's claim for punitive damages, because such damages cannot be recovered in an action based upon breach of contract. (Civ.Code, § 3294; Crogan v. Metz (1956) 47 Cal.2d 398, 405, 303 P.2d 1029.)
The allegations were not sufficient to support International's claims for equitable relief for the same reasons heretofore discussed in considering its claim for damages, and for the further reason that from the facts alleged, the conclusion does not follow that the remedy at law was inadequate. (2 Witkin, Cal.Procedure, supra, § 428, pp. 1408-1409.)
International's final contention is that the trial court abused its discretion in refusing further leave to amend. In furtherance of justice, courts must be liberal in permitting amendments to cure defects Thon v. City of Los Angeles
Cf. Tudor v. City of RialtoThe order granting Konrad's motion to quash is reversed; the judgment dismissing the action against Artur is affirmed. Artur shall recover his costs on appeal from International. Konrad and International shall each bear its own costs on appeal from the order quashing service.
KAUS, P. J., and AISO, J. pro tem. * , concur.
The provisions of section 15700 substantially parallel the statutes relating to the service of process upon foreign corporations. (Corp.Code, §§ 6400-6403, 6500-6502.)