231 Cal. App. 2d 538 | Cal. Ct. App. | 1964
Lead Opinion
Cross-appeals are here presented, the controversy involving seven asserted causes of action against defendants in which damages are asked “for conspiracy to commit fraud and deceit and malicious interference with business relations of bank customer.” Demurrers to the third, fourth and seventh counts of the first amended complaint having been sustained without leave to amend, the action was dismissed as to said counts; as to the first and fifth counts, defendants’ motion for summary judgment was granted and the action likewise dismissed as to these counts. Plaintiff’s appeal is from the adverse portions of the above judgment. A motion by defendants for summary judgment as to the second and sixth counts, however, was denied; the cross-appeal is from such portions of the same judgment.
The litigation centers around three business transactions between plaintiff and defendant Farmers & Merchants Bank (referred to hereinafter as “Farmers”) during the course of 1958 while plaintiff was a customer of Farmers. In April of that year, according to count one, plaintiff was indebted to Farmers in the sum of $214,500 evidenced by unsecured notes; he was also indebted in other amounts to other creditors. On or about that date Farmers made arrangements with Republic National Bank of Dallas (referred to hereinafter as “Republic”) for an additional line of credit. The credit later extended by Republic was in the sum of $350,000 conditioned upon his use of such funds for the purchase of first trust deed notes on California property and their subsequent sale to investors. A further condition imposed was that plaintiff have such notes on deposit with Farmers, as agent for Republic,
The next business transaction, covered by count two of the complaint, involved a $125,000 unsecured loan at 5 per cent interest obtained by plaintiff from Farmers in May of 1958. The loan was assertedly made upon the fraudulent representation of one of Farmers’ officers that if plaintiff would use this money to purchase all of the stock of California Pacific Mortgage Company and if plaintiff would then cause California Pacific to purchase a certificate of deposit, bearing 3 per cent interest, and would endorse such certificate to Farmers and allow the latter to hold the same in trust for California Pacific, Farmers would not redeem or negotiate the certificate within one year or in any manner employ it as security for plaintiff’s loan. Upon borrowing the above sum and using it to purchase the stock (as promised), plaintiff thereafter purchased the certificate of deposit and delivered it to Farmers with the endorsement requested. Less than one year later, Farmers redeemed the certificate and used the money for repayment of plaintiff’s personal loan. As a result, California Pacific was deprived of its reserve assets and was forced to and did cease doing business; as a further result, plaintiff’s stock in the company became worthless. Damages, both compensatory and punitive, were sought.
The next transaction between the parties also oc
The above three counts were against all the defendants save Linda Vista Development Company and were predicated upon defendants’ fraud and deceit and a conspiracy to that end. Count four is against all the defendants (including Linda Vista); it incorporates the allegations of count three and also alleges that defendants fraudulently caused plaintiff to become bankrupt. Linda Vista, it is stated, had purchased the notes given Republic by plaintiff and was plaintiff’s largest creditor.
The remaining counts were predicated upon an asserted interference with plaintiff’s business relationship with Republic (count five), California Pacific (count six) and Continental Escrow (count seven). As to these counts, however, Linda Vista was not joined as a defendant. Damages, both compensatory and punitive, were demanded.
We first examine the merits of the appeal as it relates to counts three, four and seven, all of which concern the Continental Escrow transaction. It appears that plaintiff requested permission to file a proposed second amended complaint in which the infirmities appearing in its predecessors
We next examine the merits of the appeal relating to counts one and five (the Republic transaction) as to which summary judgment in defendants’ favor was granted. The trial court stated in its opinion that the $350,000 borrowed by plaintiff from Republic constituted funds held in trust by plaintiff under the trust receipt deposited with Republic;
Preliminarily, no appeal lies from an order denying a motion for summary judgment. (Stanton v. Andrews, 170 Cal.App.2d 269 [338 P.2d 529].) But in the present ease, it appears, the two steps contemplated by the statute (Code Civ. Proc., § 437c) were properly taken, namely, an order followed by a judgment thereafter duly entered in the judgment book.
As done in the instance of their companion motion (counts one and five), defendants invoke the doctrines of res judicata and collateral estoppel (citing Teitelbaum Furs, Inc. v. Dominion Ins. Co., Ltd., 58 Cal.2d 601 [25 Cal.Rptr. 559, 375 P.2d 439]) as a further defense to the recovery sought by plaintiff in counts two and six. Reference is made to the bankruptcy proceeding where the special master found that the stock of California Pacific was valueless on December 4, 1958—hence plaintiff suffered no damage as a result of defendants’ acts; other adverse findings of the special master are also pointed out. The Teitelbaum case involved a criminal proceeding, which the bankruptcy proceeding was not; while
The effect of the above determination is that with the affirmance of the judgment of dismissal (counts three, four and seven) and the affirmance of the denial of the summary judgment (counts two and six), there is an affirmance of a partial summary judgment in defendants’ favor (counts one and five). While the summary judgment procedure, a creature of statute, makes provision for a partial judgment in plaintiff’s favor, it does not authorize a partial judgment for the defendant. (Code Civ. Proc., §437e; 2 Witkin, Cal. Procedure 1717 (1954) § 80.) As was done in de Echeguren v. de Echeguren, 210 Cal.App.2d 141 [26 Cal.Rptr. 562], the matter as it pertains to counts one, two, five and six must be reversed for further proceedings not inconsistent with the views herein expressed. In this connection, it should be noted that the federal courts have held that rule 56, after which the California statute is patterned (at least in part), does not authorize “a partial summary judgment” (40 Cal.L.Rev. 204, 222). Continuing: “The Advisory Committee has stated that the partial adjudication is ‘merely a pretrial adjudication that certain issues shall be deemed established for the trial of the ease. This adjudication is more nearly akin to the preliminary order under Rule 16, and likewise serves the purpose of speeding up litigation by eliminating before trial matters wherein there is no genuine issue of fact.’ The facts so found are binding upon the parties in all subsequent proceedings,” citing cases. (Italics added.) The trial court should be governed by the above observations, with which we are in agreement.
The judgment as to counts three, four and seven is affirmed ; as to all remaining counts it is reversed. Respondent Linda Vista Development Company will recover its costs; the remaining parties will bear their own coste.
Wood, P. J., concurred.
Financial Code, section 17414, subd. (a) : "Any person subject to this division or any director, officer, agent, or employee of any such person who does any of the following is guilty of a felony:
" (a) Knowingly receives or possesses himself of any property of the escrow otherwise than in payment for a just demand, and with intent to defraud omits to make or to cause or direct to be made a full and*544 true entry thereof in the escrow books and accounts, or knowingly concurs in omitting to make any material entry. ’ ’
Financial Code, section 17409: “ All money deposited in escrow to be delivered upon the close of the escrow or upon any other contingency, shall be deposited in a bank and kept separate, distinct and apart from funds belonging to the escrow agent. Such funds, when deposited, are to be designated as ‘ trust funds, ’ ' escrow accounts, ’ or under some other appropriate name indicating that the funds are not the funds of the escrow agent.”
Financial Code, section 17411: “No person shall knowingly keep or cause to be kept any funds or money in any bank under the heading of ‘trust funds’ or ‘escrow accounts’ or any other name designating such funds or money as belonging to the clients of any escrow agency, except actual escrow or trust funds deposited with such agency.”
Said instrument reads in pertinent part: “Received from Republic National Bank of Dallas, Dallas, Texas, the items or documents enumerated in the following schedule, which items or documents are the property of said Bank and shall be kept separate and apart from all other items or documents, and are received and held in Trust, subject always to the order of said Bank . . .
“The following is the schedule of the items or documents as received and held in Trust by us:
“Various First Trust Deeds aggregating $350,000 covering property located in Los Angeles County, California, or in lieu thereof cash on deposit with Republic National Bank of Dallas.”
It appears that plaintiff, apparently without funds to make such purchase, thereafter deposited several forged or fictitious notes with Farmers for the account of Republic.
Sueh admissions are admissible not necessarily on the defendants’ theory of res judicata, the right to assert which defense is challenged by plaintiff, “but as the deliberate declaration or admission against interest that the fact is so . . . and under pain of penalty, when his every interest lay in stating to the contrary, were it not for the pains of perjury.” (Langensand v. Obert, 129 Cal.App. 214, 218 [18 P.2d 725].) In accord: Vaughn v. Jonas, 31 Cal.2d 586 [191 P.2d 432],
Dissenting Opinion
I dissent as to that part of the judgment which affirms the trial court in dismissing the third, fourth and seventh causes of action.
I concur in the judgment insofar as it reverses the trial court in granting a summary judgment in the first and fifth causes of action.
I would affirm the judgment of the trial court in denying summary judgment as to the second and sixth causes of action.
A reading of the record in this case (which includes many of the bank’s own documents) indicates without any question that the bank was engaged in chicanery and deceit in many of the transactions in question. Further, it is indicated that some perjured testimony was given by the bank’s representative at the criminal trial of plaintiff (and even that the prosecutor at that trial knew or had good reason to believe that some of the oral testimony of the bank’s officer witness was in direct contradiction to the official records of the bank then in the possession of the prosecutor) and, consequently, the rule in Teitelbaum Furs, Inc. v. Dominion Ins. Co., Ltd., 58 Cal.2d 601 [25 Cal.Rptr. 559, 375 P.2d 439] should not apply. I am convinced that under the particular and peculiar circumstances of this case, the plaintiff should have been permitted to amend his complaint as requested, and the demurrer thereto should not have been sustained without leave to amend, and judgment entered accordingly in the third, fourth and seventh causes of action. In the first and fifth causes of action, the motion for summary judgments should not have been granted.
In the interests of sound administration of justice and particularly so where semi-public businesses such as banks and other financial institutions (which ought to have the confidence of the public) have been formally charged with illegal, false and dishonest practices, every reasonable opportunity should be afforded to the litigants to establish their pleadings in proper form to the end that the disputes and charges in such cases will be settled and disposed of in accordance with the merits and the facts of the cases and not on hyperteehnical rules of pleading.
The petitions of all parties for a hearing by the Supreme Court were denied February 24, 1965. Peters, J., was of the opinion that the petitions should be granted.