# DeGarmo v. Goldman > California Supreme Court · March 5, 1942 · 19 Cal. 2d 755 URL: https://www.frixlaw.com/law-library/cases/9575991 ## Case - **Full name:** G. C. DeGARMO, Respondent, v. A. GOLDMAN Et Al., Appellants - **Court:** California Supreme Court - **Decided:** March 5, 1942 - **Citations:** 19 Cal. 2d 755; 123 P.2d 1; 1942 Cal. LEXIS 406 - **Precedential status:** Published - **Opinion:** Dissent by Shenk - **Judges:** Edmonds - **Cited by:** 68 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9575991 ## Opinion text *770 SHENK, J., Dissenting. — I agree that this court has original appellate jurisdiction in this case but I dissent from the judgment of reversal as to the defendant Shenberg and the corporation and from the refusal to dismiss the appeal of the defendant Goldman. The defendant Shenberg’s brief is devoted to disputed evidentiary matter and other discussion not material to the real issue in the case. Section 310 of the Civil Code provides for removal of directors from office in case of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the corporation. The complaint charged btm and the defendant Goldman with certain fraudulent acts. The trial court found, among other things, that Shenberg, along with Goldman, was guilty of fraudulent practices in connection with dealings between the corporation and a certain labor union with which it had contractual relations; fraudulent practices in obtaining rebates from employees; fraudulent practices in dealing with its employees in connection with work being performed on Public Works Administration contracts; and fraudulent practices in keeping duplicate books in such a way that false reports were made to a trade association so that increased sales were made in violation of an agreement with that association. It was also found that as a result of the keeping of two sets of books, the rental for the premises occupied by the corporation which was based on the amount of sales, was fraudulently reduced to the minimum. In considering Shenberg’s appeal from the judgment of removal, the issue is simply whether the evidence supports the findings as to the alleged fraudulent acts. A review of the record discloses that there is overwhelming evidence to support those findings, and the majority opinion does not even intimate otherwise. As one of the acts of abuse of authority the complaint charged that on and after March 1, 1938, Goldman and Shenberg refused to permit DeGarmo to perform any of his duties as president of the corporation or to perform any services for or on behalf of the corporation and that they gave such instructions to the auditor as to cause the corporation to discontinue DeGarmo’s salary. As a defense or justification for the discontinuance of the salary, the defendants .offered evidence to show that since 1935 DeGarmo had been ill a great part of the time and had been so incapacitated that he could render no services to the corporation. The trial court sus *771 tained objections to this offer of proof yet found that De Garmo had performed his duties until March 1, 1938. Defendant Shenberg now urges that this finding is not supported by the evidence and that it was prejudicial error to sustain the objections to the offer of proof that DeGarmo had not performed the services. If the stopping of the salary payments by the corporation because of the activities of this defendant were the only act of misconduct charged against him and if the judgment of removal were based solely on this alleged act of misconduct there might be some merit in the contention. However, as previously stated, numerous acts of misconduct were found which were supported by the evidence. It therefore becomes immaterial whether this one finding is supported by the evidence. (Hertel v. Emireck, 178 Cal. 534 [ 174 Pac. 30 ]; Young v. Young Holdings Corp., Ltd., 27 Cal. App. (2d) 129, 154 [ 80 Pac. (2d) 723 ]; 2 Cal. Jur. 1028, 1029; 24 Cal. Jur. 942.) Assuming that the trial court erred in sustaining the objection and that the finding with reference to DeGarmo’s services is unsupported, such finding does not affect the judgment of removal and is not a ground for reversal. (Forestier v. Johnson, 164 Cal. 24 [ 127 Pac. 156 ]; Delannoy v. Quetu, 73 Cal. App. 627 [ 239 Pac. 71 ].) In answer to a question propounded by this court since the appeal was lodged here the defendant Shenberg now contends that the plaintiff DeGarmo was estopped from bringing the action for removal because of alleged acquiescence and participation in the alleged fraudulent acts. In other words, it is claimed that DeGarmo came into court with unclean hands. Assuming that the plea is available to Shenberg and that, as here, it may be raised without pleading and for the first time on appeal, this defendant is at once met with the conclusion of the trial court implicit in the findings and judgment that no basis in fact existed for the operation of such an estoppel. Whether it existed was a question of fact and the plaintiff is entitled to the intendments in his favor arising from the judgment. Unless the record shows as a matter of law that he actively participated in the fraudulent and dishonest acts or had knowledge of those acts and negligently failed to take any steps to remedy the situation this court is bound by the conclusions of the trial court. DeGarmo denied any knowledge whatsoever of the fraudulent activities of Shenberg and Goldman until after the same were committed. He admitted acquiring information *772 that false sales reports had been made to the Biddle Sales Corporation so that the defendant corporation could make more sales in violation of its agreement to the lessor bank to reduce rent; and to the state to reduce sales taxes. But he did not remain inactive after learning of these activities. He made strenuous and frequent objections to such a method of conducting the affairs of the corporation. He reprimanded Shenberg, Goldman, the bookkeeper, and the auditor, and demanded that the methods of reporting sales be changed. These efforts to correct the dishonest practices within the corporation were effective. In August, 1936, DeGarmo caused the corporation to withdraw from the glass association, thus terminating the false sales reports to that association. At the end of 1937 a new lease was made which provided that the rent was to be paid on a flat basis instead of being based on the amount of sales. There is little testimony in regard to the payment of sales taxes, but it clearly appears from the record that that difficulty had also been corrected before the commencement of the action. There is no evidence whatsoever that DeGarmo actively participated in the fraudulent practices of Shenberg and Goldman. There is evidence that when DeGarmo obtained knowledge of such practices he protested against the continuance of the same. He received assurances that they would be discontinued and they were discontinued with the results above indicated. There is no basis in the record for the contention that the plaintiff was or is estopped from maintaining the action. Appeal of A. Goldman The defendant Goldman, through his own attorney, filed a separate notice of appeal from the judgment removing him as a director of the corporation. He has filed no brief. He was charged with the same acts of misconduct and gross abuse of authority alleged against Shenberg and since he has filed no brief he may well be deemed to have abandoned his appeal. Furthermore, Goldman has presented to this court a written stipulation to dismiss his appeal with the request that an order of dismissal be made in accordance therewith. The stipulation is signed by his counsel of record and is approved by his own signature. It is also signed by counsel for the plaintiff. Rule XXIV governing the practice and procedure in this court provides: “An appeal may be dismissed by the court *773 at any time, upon and in accordance with the written stipulation of the attorneys of record of the respective parties.” Notwithstanding the foregoing rule the defendant Shenberg objects to an order of dismissal of Goldman’s appeal on the ground that he would be prejudiced thereby. There is no merit in the objection. It may be assumed that under some circumstances an appellant should not be permitted, as of right, to dismiss his appeal when such dismissal would prejudice the rights of a co-defendant on a joint appeal. But Goldman’s appeal is not of that character. It is a separate appeal which he had the right to take or not to take regardless of Shenberg’s wishes. Having taken it he should have the right to control it under the circumstances here presented and to dismiss it under the rule. The corporation is not a party aggrieved by this judgment. The judgment does not purport to adjudicate any of the corporation’s rights. It is silent on that subject. It would not constitute a bar to any subsequent action the corporation might desire to bring against the plaintiff. Section 938 of the Code of Civil Procedure provides that “Any party aggrieved may appeal. ...” Unless a party is aggrieved he has no right of appeal (Maxwell Hardware Co. v. Foster, 207 Cal. 167 [ 277 Pac. 327 ]), and if taken it should be dismissed. (Youle v. Thomas, 146 Cal. 537 [ 80 Pac. 714 ]; 2 Cal. Jur. 217.) A party agrieved is one “having an interest recognized by law in the subject matter of the judgment, which interest is injuriously affected by the judgment.” (Estate of Colton, 164 Cal. 1 [ 127 Pac. 643 ].) In my opinion the judgment removing the defendant Shenberg as a director of the corporation should be affirmed and the separate appeals of the defendants Goldman and the corporation should be dismissed. Curtis, J., and Carter, J., concurred. Respondent’s petition for a rehearing was denied April 2, 1942. Shenk, J., Curtis, J., and Carter, J., voted for a rehearing. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9575991. Public record. Not legal advice.