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in the testimony thus far before this committee, we find no indication that insurance companies have been used for such illegal purposes, nor even a hypothetical example of how they might be used. Furthermore, there has been no indication to date that the record-keeping practices of the insurance industry impede criminal investigation or prosecution.

The history of this legislation to date would give the Secretary absolutely no guidelines relating to the insurance industry, and provide no indication as to what records should be kept, or what reports should be required.

Insurance Company of North America is one of the oldest and largest insurance companies in the United States. It has historically been an international insurer, operating throughout the world through foreign branches of the U.S. corporation and through foreign subsidiaries. With our special knowledge of this field, and with our understanding of the purposes of this legislation, we can find no reason why insurance companies should be included among the other financial institutions enumerated in this proposed legislation, and no reason why insurance transactions should be included under the record-keeping requirements.

The inclusion of insurance companies creates ambiguities in the bill. For example, the authority of the Secretary under Title I to require maintenance of records extends to persons engaged in the business of transferring funds or credits domestically or internationally. In the absence of an exclusion, it is not clear whether this authority extends to insurance companies. Furthermore, there is no showing that the records customarily kept by insurance companies will not accommodate criminal investigation and prosecution.

Section 122 authorizes the Secretary to require uninsured institutions to make reports to the Secretary regarding the ownership, control or management of such institutions. Any such requirement in the case of insurance companies would duplicate existing laws and regulations regarding the regulation of ownership and control of insurance companies.

The monetary transactions of insurance companies are ordinarily conducted through banking institutions. Application of the provisions of this legislation to both the insurance companies involved, and to the banking institutions processing their transactions, would result in wasteful duplication.

The addition of insurance companies to the proposed legislation is without any public background or legislative history. We respectfully propose that insurance companies be deleted from the defirition of "financial institution" in Title II and that insurance companies be exempted from the record keeping and reporting requirements of the proposed legislation. If this proposal requires further support, it is respectfully suggested that additional hearings be scheduled to give the insurance industry and insurance regulatory agencies an opportunity to present their views.

I would like to reiterate our desire to contribute to the development of legislation appropriately directed to the express purposes of this bill. We would be happy to respond to any request by the committee or its staff for additional information.


Springfield, Mass., June 12, 1970. Senator WILLIAM PROXMIRE, U.S. Senate, Washington, D.C.

DEAR SENATOR PROXMIRE: While our organization represents only about ten percent of the registered securities dealers, they are small businessmen and are the first persons injured and the last to recover from any diminution in securities trading volume, any reduction in sales compensation, any lowering of underwriters compensation, etc. Therefore we have a serious and continuing interest in any action, private or public, which threatens to adversely affect the depth, continuity and liquidity of our securities markets, both listed and OTC.

We think it would be a serious mistake for Congress to enact the proposed amendment to Section 7(a) of the Securities Exchange Act of 1934, which would apparently stop American investors, American borrowers, American brokers, and foreign lenders and borrowers from obtaining credit to finance the purchase and sale of securities from foreign banks or other sources on more favorable terms than those permitted by U.S. margin requirements promulgated by the Federal Reserve Board. This will obviously stop a lot of trading in American securities, and have a ripple effect exerting downward pressure on securities prices and the volume of trading.

As we understand it, Section 7 authorizes the Federal Reserve Board only to establish margin requirements to prevent “excessive” speculation through the use of credit to finance securities transactions. We believe that domestic investors should be protected from the speculative fever, and securities markets should be protected from the destabilizing effect of speculation through a reasonable application of margin requirements.

However, the proposed amendment to Section 7, is wholly unrealistic. It will only deny to American borrowers the right to use more favorable foreign credit, but foreign borrowers, individual and corporate, can continue to speculate in American securities, and to the extent that more liberal foreign credit destabilizes American securities markets, the situation would be unchanged. The only way to meet this problem would be to prohibit foreigners from investing in American securities in U.S. securities markets. This would of course violate our national policy of encouraging international trade, the free flow of capital, and would shut off the inflow of capital affecting our balance of payments, etc.

We urge you to eliminate the proposed amendment of Section 7 of the 1934 Act from this legislation, because it denies to Americans the right to do business abroad under foreign laws in the securities field, while American shippers, manufacturers and others are permitted to compete by seeking out more favorable financing terms. More importantly, we think it can not achieve its purpose, and any law aimed at meeting a real problem that will fail to solve the problem should not be passed. It is simply a misguided grandstand gesture, and will only infringe on the laws of foreign nations and cause retaliation.

Will you please include our comments in the record, and we hope your staff will consider our thoughts seriously in working on these bills. Sincerely yours,



Van Nuys, Calif., June 9, 1970.
Committee on Banking and Currency,
Washington, D.C.

GENTLEMEN : It is hereby requested that the enclosed opinion in Summers v. Surety Savings and Loan Association, Court of Appeal of the State of California, Second Appellate District, Division Two, 2d Civ No. 34156, 1969, be made a part of the record in the hearings on secret bank accounts.

It is the view of our membership that so long as the law as announced by now Chief Justice of the California Supreme Court, Donald Wright, in the within decision, then there is a real reason for your committee to do nothing regarding the secret Swiss Bank Account situation. While it would seem that a Citizen ought to be able to rely on the integrity of his own courts to protect his privacy, this decision speaks for itself, when it styles a malicious disclosure of the contents of a bank account an inocuous (sic) action, page 8, line 11. Let this letter also be spread into the record. Sincerely yours,

JERRY B. RISELEY, Chairman, National League for Privacy in Bank Accounts.



2D CIV. NO. 34156



Appeal from a judgment of the Superior Court of Los Angeles County. William H. Rosenthal, Judge. Affirmed.

Jerry B. Riseley, for Plaintiff and Appellant.

Messrs. McKenna & Fitting, for Defendants and Respondents.

This is an appeal for a judgment of dismissal following an order sustaining a demurrer to plaintiff's third amended complaint without leave to amend.


We are bound by the well-settled principle that on appeal from a judgment sustaining a demurrer to a complaint, it must be assumed that the plaintiff can prove all facts as alleged. The facts herein are therefore merely a restatement of plaintiff's allegations.

On August 3, 1965, the plaintiff, Eleanor Ann Summers, deposited $3,871.12 with defendant Surety Savings and Loan Association (hereinafter called Surety): Plaintiff claimed these funds were her sole and separate property. At the time the deposit was made, plaintiff was having marital difficulties with her husband.

On January 27, 1966, plaintiff initiated a divorce action against her husband. The final decree granting the divorce was entered on February 15, 1967.

On February 7, 1966, immediately after plaintiff filed for divorce, plaintiff's husband obtained a restraining order directed to Surety which prohibited the withdrawal of any funds from the account which had been opened by plaintiff. On February 18, 1966, the restraining order was dissolved.

Shortly thereafter, plaintiff withdrew the balance of her account, amounting to approximately $4,800.00, and deposited the money with another financial institution. Upon the withdrawal of the funds by plaintiff, James B. Johnston, Assistant Vice-President of Surety and codefendant herein, notified plaintiff's husband's attorney that the funds had been removed. Johnston also disclosed the name and location of the institution where the money was ultimately deposited.

On November 15, 1966, plaintiff filed a complaint for damages against defendants, alleging breach of contract, invasion of privacy, and malicious injury. Defendants demurred on the ground, inter alia, that plaintiff had failed to allege facts sufficient to constitute a cause of action. The demurrer was sustained with leave to amend.

On March 2, 1967, plaintiff filed an amended complaint which was virtually identical with the original complaint. Defendants demurred, and again it was sustained with leave to amend.

Plaintiff's third complaint was filed on June 20, 1967. Except for the addition of a new cause of action entitled “tortious intermeddling in private litigation,” it was substantially the same as the two previous complaints. A demurrer was again sustained, this time without leave to amend.

A judgment of dismissal was entered from which plaintiff appeals.


Two issues are presented by this appeal :

(1) Whether plaintiff's third complaint alleged facts sufficient to constitute a cause of action, and

(2) If it did not, whether the trial court abused its discretion by not granting plaintiff further leave to amend.


In addition to the task of trying to interpret plaintiff's rambling complaint, our problem is complicated by the fact that the record does not contain the specific ground or grounds upon which the trial court sustained the demurrer. Section 472(d) of the Code of Civil Procedure provides in part: “Whenever a demurrer in any action or proceeding is sustained, the court shall include in its decision or order a statement of the specific ground or grounds upon which the decision or order is based ..

Although such failure by the trial court was error (Mack v. Hugh W. Comstock Associates, 225 Cal. App. 2d 583, 590) plaintiff in this case may not benefit from it. When ever a plaintiff fails to call the trial court's attention to the failure to state specific grounds for sustaining a demurrer, the error is waived. (Mack v. Hugh W. Comstock Associates, supra, at page 590; Cohen v. Superior Court, 244 Cal. App. 2d 650, 655.) There is nothing in the record to enlighten us as to whether plaintiff interposed any objection. Even if we assume that proper objection was made, nevertheless, for such error to justify a reversal there must be an affirmative showing of prejudice. “The burden is on an appellant to establish the existence of prejudicial error affecting the merits of the appeal." (Pactor Corp. v. Manpower Inc., 252 Cal. App. 2d 1032, 1034.) It will suffice to say that plaintiff has made absolutely no attempt to show any prejudicial effect of the trial court's error.

Since the order sustaining the demurrer was general in its terms, impliedly the ruling was made either without consideration of the special grounds urged by defendants, or on a determination that they were not well taken. In order to give plaintiff the benefit of every possible doubt, we will therefore assume that the demurrer was sustained on the broad ground that the complaint did not state a cause of action. (See Cohen v. Superior Court, supra, at page 655.)

The third complaint is in four causes of action: (1) breach of contract; (2) invasion of privacy; (3) malicious injury; and (4) tortious intermeddling in private litigation. Plaintiff's entire case is based upon the allegation of defendant Johnston's disclosure to her husband's attorney that she had withdrawn the funds from defendant Surety.

Breach of contract. A complaint which attempts to state a cause of action for breach of contract is defective if it fails to allege facts showing that the damages recited were a result of defendant's breach. (See generally, 2 Witkin, California Procedure, $ 262.) Plaintiff's allegations of general damages, which occur in two separate paragraphs of the complaint, are as follows:

"That defendants did achieve the result intended by them; the result intended by them [sic]; that as a proximate cause of their actions above alleged in invading the marital privacy of plaintiff and in intermeddling in the divorce litigation and in hampering the reconcilation [sic] prospects of plaintiff, the the [sic] defendants did hamper and destroy the reconciliation prospects of plaintiff; that the present value of plaintiff's reconciliation prospects was $40,000 at the time of destruction based on the total value of the continuation of her marriage adjused by computer for hazard from other sources and divided by other difficulties inherent in matrimony; that accordingly, plaintiff was damaged in the sum of $40,000; the defendants intended to cause plaintiff serious mental suffering and bodily harm by so invading her marriage privacy and by so intermeddling in her litigation; that defendants intended to cause plaintiff agony [sic] and anguish; that as a proximate cause of the actions above alleged plaintiff was caused serious mental suffering and bodily harm and agony and anguish, all to her damages in the sum of $100,000. . . . That as a further proximate cause of the breach of confidence of the Defendant Savings and Loan Association by the unauthorized disclosure of facts concerning the Plaintiff's financial condition to her opponent in the litigation, that it to say to her husband, by disclosing this matter to her husband's attorney, the Plaintiff did suffer detriment in that when she went to trial, the burder [sic] of her litigation was measurably increased in this : that prior to the disclosure of these confidences to the husband, the state of the litigation was such that it was probable that the Plaintiff, who had been married to her husband, some thirty-odd years would be awarded the family home, and said family home was at that time, of a reasonable fair-marked market value of $28,000.00 and was not encumbered ; that as a proximate cause of the breach of the agreements mentioned above by the Association in its disclosure to the Attorney for the husband, the litigation went in such a way, because of the added increased burden put upon the Plaintiff by the disclosure, that the Plaintiff was only awarded an undivided one-half interest in the proceeds of the sale of the family home, and accordingly, the Plaintiff was damaged by the breach of said contract, in the amount of $14,000.00."

Such statements are patently defective. Nothing in the complaint shows any causal connection between defendants' act and plaintiff's so-called “damage.” Indeed, defendants' innocuous action appears totally unrelated to the catastrophic consequences alleged by plaintiff. In regard to plaintiff's claim that the disclosure destroyed her reconciliation prospects, it is worthy of note that plaintiff herself was the one who initiated the divorce litigation. Her contention is incongruous to say the least.

Plaintiff contends that defendants "admit the breach, admit the damages,” relying on the rule that on appeal from a judgment sustaining a demurrer, the allegations of the complaint are deemed admitted. Plaintiff, however, overlooks one of the qualifications to this rule that a demurrer does not admit conclusions of fact or law. (Page v. Insurance Co. of North America, 256 Cal. App.2d 374, 377.) It is clear that plaintiff's allegations of damage are mere conclusions, and not facts from which these conclusions could be deduced.

1 Accordingly, defendants' claims that portions of the complaint were uncertain, unintelligible and ambiguous, claims which can only be raised by special demurrer, will not be considered.

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The remainder of plaintiff's claims are so frivolous that they warrant little discussion.

Invasion of Privacy. Plaintiff and her husband were involved in divorce litigation at the time of the disclosure. It is apparent from the fact that the husband sought a restraining order against Surety that he not only knew that plaintiff had a savings account but knew in which institution such funds were deposited. The status of an account in either party's name would be relevant and material to the divorce action. Since the husband had a legitimate interest in knowing the location of and the amount of such funds, and since in any event he could have compelled the disclosure by judicial process, we cannot perceive how defendants' actions constituted an intrusion into plaintiff's private life.

Malicious Injury. Plaintiff's third "cause of action" is as follows: "That in the making of the above-mentioned disclosures, the Defendants did act maliciously and willfully and with the intent to injure the plaintiff, and their conduct towards [sic] the Plaintiff was malicious and oppressive and accordingly, punitive damages should be assessed the Defendants and each of them in the sum of $100,000.00. Such allegations amount to no more than conclusions of law. (See 2 Witkin, California Procedure, § 165.) Plaintiff claims that "the malicious intent of defendants is well admitted.” Once again, plaintiff overlooks the fact that conclusions of law, like those of fact, are not admitted by a demurrer. (Page v. Insurance Co. of North America, supra, at page 377.)

Tortious Intermeddling in Private Litigation. The pertinent part of the complaint is as follows: "That as a proximate cause of the defendants' actions in intermeddling in plaintiff's private litigation for the purpose of punishing Plaintiff, the Defendants did willfully and maliciously invade the right of Plaintiff to make a free choice among Savings and Loan Associations, all to her damage in the amount of $50,000.00; that defendants acted maliciously and oppressively and $50,000 punitive damages should be assessed.” If we assume that such a cause of action exists, no facts are stated showing how the alleged malicious invasion of plaintiff's right caused her $50,000 damage or any damage whatso




Since we have concluded that plaintiff's third complaint did not allege facts sufficient to constitute a cause of action, we now reach the question of whether the trial court abused its discretion by not granting plaintiff further leave to amend.

The fact that plaintiff did not make a formal request for leave to amend is not fatal. Section 472c of the Code of Civil Procedure provides that: “When any court makes an order sustaining a demurrer without leave to amend the question as to whether or not such court abused its discretion in making such an order is open on appeal even though no request to amend such pleading was made; ..."

As a reviewing court, we will not reverse the order refusing leave to amend unless the abuse of discretion was manifest, and the burden of showing such abuse is on the plaintiff. (Schultz v. Steinberg, 182 Cal.App.2d 134, 140.) Plaintiff, however, has made no attempt whatsoever to show that the ruling below was an abuse of discretion. She did not indicate to the trial court nor has she indicated to this court the manner in which the complaint could be amended. It appears from the nature of the defects and the previous unsuccessful attempts to plead that the complaint cannot be amended to state a cause of action. As such, there was no abuse of discretion in refusing to allow further amendment after sustaining the demurrer to the third complaint. (Vater v. County of Glenn, 49 Cal. 2d 815, 821.)

The judgment is affirmed. Not only was the suit brought by appellant completely without merit, but the appeal is strictly frivolous. In addition to the usual costs on appeal, appellant's counsel shall personally pay to respondent the sum of $100.00 as a penalty for taking a frivolous appeal.

We concur:

The COURT: This opinion is not for publication pursuant to the provisions of Rule 976, California Rules of Court.

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