Opinion
Oct. 27, 1971.
Editorial Note:
This case has been marked 'not for publication' by the court.
Page 99
Dufford, Ruland, Uhrlaub & Williams, Grand Junction, for plaintiff in error.
Albin Anderson, Grand Junction, for defendants in error.
DWYER, Judge.
This case was transferred from the Supreme Court pursuant to statute.
The parties appear here in the reverse order of their trial court positions and will be referred to by their trial court designations or by their names.
This writ of error is directed to a judgment ordering rescission of a contract of sale of an automobile.
Abel Romero commenced this action by filing a complaint against Les Shellabarger Chevrolet, Inc., an automobile dealer. In his complaint, Romero alleged that on May 29, 1968, he purchased a motor vehicle from the defendant dealer; that he paid $1,600 in cash; and that he delivered to defendant his promissory note secured by a chattel mortgage for the balance of the purchase price. He alleged that after the car was delivered on May 31, 1968, it was damaged in a collision; that the car was repaired in defendant's shop; and that defendant had submitted its bill for repairs in the amount of $472. He further alleged that the defendant had agreed to procure collision insurance on the car; that defendant had failed to procure such insurance; and that in failing to procure such insurance defendant was negligent and had breached its contract with plaintiff. He further alleged that he had defaulted in the payments required by his promissory note and that defendant had foreclosed its chattel mortgage. He alleged as damages and demanded judgment for the amount of the repair bill ($472) and the amount of his down payment ($1,600).
Defendant filed its answer denying that it had agreed to procure collision insurance, denied that it was negligent in failing to procure such insurance, and counterclaimed for the amount of its repair bill.
The case was tried to the court. Romero presented his evidence in support of his claim that defendant had negligently, and in breach of its contract, failed to obtain property damage insurance on the car. It was also developed in the presentation of Romero's case in chief that Romero had purchased the vehicle as an accommodation to his foster son, Joseph Sisneros, a minor and a disabled veteran of the Viet Nam conflict. It was also disclosed by the evidence that the down payment of $1,600 was not paid by Romero; rather the $1,600 was paid to defendant by the Veterans Administration to assist Sisneros in purchasing the automobile.
At the close of his evidence, Romero moved to amend the pleadings, '* * * to describe the plaintiff as Abel Romero, who brings this action individually and also in behalf of Joe (S)isneros * * * a minor.' The defendant objected to the motion, and the court reserved its ruling. Defendant then presented its evidence which was in direct conflict with plaintiff's evidence on the issue of defendant's obligations to obtain the insurance.
At the close of the evidence, the court found that defendant was negligent and that it had breached its contract with Romero. Such findings, although based upon conflicting evidence, are supported by the record. Upon such findings, the court should have entered judgment for damages in favor of Romero on the amount of $472. The measure of damages for breach of an agreement by a mortgagee to insure mortgaged property is limited to the amount of loss which would have been subject to indemnification by the insurer had insurance been properly obtained. Valdez v. Taylor, Automobile Co., 129 Cal.App.2d 810, 278 P.2d 91; 4 J. Appelman Insurance Law and Practice s 2272.
Upon the basis of the plaintiff's own evidence, he was indebted to the defendant for repairing the car, and the court should have entered judgment in favor of defendant and against plaintiff on the counterclaim.
The court did not enter these judgments. Instead, the court, after the trial was concluded, granted plaintiff's motion to add Sisneros as a party plaintiff. It then entered judgment rescinding the contract and ordered that defendant be constituted a constructive trustee of the sum of $1,600 had and received from the Veterans Administration for the use of Joseph Sisneros. The court also denied the defendant's counterclaim.
It was error for the court to permit Sisneros to be added as a party plaintiff and to inject the theory of rescission into the case at the conclusion of the trial. The defendant was given no opportunity to defend against the claim which Sisneros may have for rescission. Any claim which Sisneros may have to the $1,600 which the defendant received from the Veterans Administration may be asserted by Sisneros in an appropriate action, and the defendant must be given an opportunity to defend.
The judgment is reversed, and the cause is remanded for entry of judgments in conformity with this opinion.
SILVERSTEIN, C.J., and COYTE, J., concur.