Diners Club, Inc. v. A. J. Bumb, Trustee of Dashew Business MacHines Inc.
Opinion
Opinion
Wright, J.
Appellee was appointed reorganization Trustee of Dashew Business Machines, Inc., pursuant to a petition filed August 16, 1965, in the District Court for the Central District of California. From that time until January, 1968, he carried on the debtor’s business, which consists of the manufacture and embossing of plastic credit cards.
On January 10, 1967, appellant Diners Club, Inc., entered into a written contract with the Trustee for the production and sale to appellant of 1,500,000 cards. The contract contained elaborate provisions designed to prevent theft of the blank credit cards and misuse of the secret name and number list of Diners Club members. On November 17,1967, Diners brought suit against the Trustee in the Superior Court of the State of California for the County of Los Angeles. It was alleged that the Trustee had breached the contract by negligently employing an untrustworthy employee, that 8,000 false credit cards had been put in circulation, and that Diners’ contracts bound it to reimburse merchants for unauthorized charges made on the false cards. Resulting damages to Diners are now said to be in excess of $600,000.