*1 May 28, No. 1085. Fifth Dist. [Civ. 1969.] al., PAUL Respondents, DUNCAN et Plaintiffs and v. SUN MINERALS, SET AGRICULTURAL Defendant Appellant. *2 Appellant. H.
Merle Jenkins for Defendant and Respondents. Rex R. Mull for Plaintiffs and — STONE, appeals Defendant from an J. quiet adverse in an action to title to a-20-acre min ing County acquired by assignment in Kern which it claim proofs Although required 1963. of annual filed work on the claim from date of acquisition assessment through plaintiffs 1967, recordéd a notice covering of location September the same 30, They claim on commenced this quiet May began title action and 3, 1967, February the trial 23,1968.
During the trial introduced certifi- cate Secretary showing State that defendant’s corporate powers suspended January 3,1966, were on for fail- pay ure to Defendant did taxes. not move continuance, proceedings but informed the court that were pending significant to obtain a It is reinstatement. trial did not then rule court whether suspension barred defending action, defendant from but ruling proceeded testimony reserved a to take receive documentary evidence on all issues. After the trial was com- pleted, filing points time for the by counsel, authorities and took the case under advisement. April On 9, 1968, defendant noticed a motion for leave answer, accompanied by file an amended an affidavit to which by the of Revivor issued Franchise attached Certificate motion, 21, Tax Board on March 1968. Before on April 22, entered a minute order which reads court as follows: submitted; now, it is the Court Ordered
“Heretofore plaintiff, ground that based on the defendant’s of the standing in tax, for failure it has no its franchise to defend the action. ’ ‘‘ ’ prepare Counsel an amended May 10, 1968,
On the motion to file answer pursuant June certificate of revivor was denied. On findings Among and conclusions law were filed. fact corporate powers, rights things, other the court found that the and privileges suspended January 3, on were February 23, 1968, and had not been restored vacating date moved for an order of trial. Defendant denied, appeal which was and this followed. getting Before to the merits of the appeal appeal, by plaintiffs’ we are met contention timely. argument is that defend thrust ant’s motion to vacate the was void since was pursuant made rather to Code of Procedure section Civil *3 than a void motion Code of Civil Procedure section 3(b) appeal. cannot extend rule of the Cali the time to Since provides any fornia valid notice of inten Rules of Court that judgment any tion to move a will extend to vacate on question the is a taking appeal, time for an the whether merits can be made motion to set aside a pursuant Procedure, or to section 473 of the Code of Civil that section is whether, contend, relief under judgments by limited to entered default. Troxell, Troxell explored in
Precisely Cal.Rptr. 723], page 151 the Cal.App.2d At 147 [46 pursuant section held that a motion to aside set . the first sentence limited, 473 is so and that “. . only broad
above-quoted paragraph of section 473 is not and to encompass proceed to trial enough actions which Brackett adversary manner, in an but [Brackett There relief so held. Banegas, 34 P. it was 99 Cal. 473 after under section to a defendants, one against entered in his favor two ’’ way the after a full trial. of default and other County Francisco, San Garcia &City judg- Cal.Rptr. 760], holds a motion to vacate that 473 extends the time within ment on the merits under section days entry the appeal until 30 after which to file notice of hearing in was denied denying order the motion. A Garcia appeal was Supreme the conclude that defendant’s Court. We timely. appeal, therefore, is principal question denying
whether discretion in the trial court abused its reopen file certifi defendant’s motion to the case and to com cate the case had been of revivor and answer. Since have pletely by granting motion, could tried, court, of a than on the basis merits, decided the case on the rather technicality that resulted in a forfeiture. provides that in
Revenue and Taxation Code section except .corporation taxes, the event a fails to incorporation set purpose amending the articles of rights privi- corporate powers, forth a new name “the leges ’’ taxpayer suspended. of a shall be domestic intent as legislative found the trial court Apparently legis parallel 23301 to effect of a violation of section and Profes lative statutes of Business licensing intent thereof is is, sions a violation seq., Code section 7025 et resulting exposition irremedial. An the strict forfeiture Queen v. in Lewis & N. M. from a license is found violation pointed Sons, Ball It is there & 48 Cal.2d 713]. regulating the legislative out intent statutes behind providing of con contracting for the licenses business public dishonesty incom protect against tractors performance and in the petency contracting in the business Creamery Boyle v. Lakeview hand, contracts. On other Supreme Co., Court policy and Taxation Code legislative declared the of Revenue paj'' franchise provisions failure to imposing sanctions for delinquent corporation “clearly prohibit taxes to privileges going concern, enjoying ordinary from to force pressure brought order that will be bear some payment of taxes. an absolute defense Failure a license is to obtain plea 7025, but a section under Business and Professions Code an action corporation to maintain capacity of a lack of *4 nonpayment of corporate powers for suspension reason of a of favored in law. plea which is not taxes is a in abatement Inc., Service, Break (Traub v. Co. Coffee P.2d 790].) 846, erroneously inter conclusion that Our preted a violation of Revenue and Taxation Code the effect of Magyar House, supported by Schwartz section 23301 is Inc., at the case, In that judgment for of the trial outset moved were sus of the defendant defending the pended, which barred the defendant from in order that action. The moved continuance might the continuance was reinstatement; obtain paid then taxes, reinstated, and the defendant was was answers, participated in the leave to file amended trial, judgment. plaintiff appealed, and had The court, held reviewing court, affirming the action of the trial at the time the though that even was effect recog made, motion for was the trial court could continuance purpose making nize for the limited permissible motion was the court to continue and that it page “By said: the trial on its own motion. At procedure pass upon the merits the court was enabled to plaintiff’s alleged judgment and render cause of action accordingly, deprive rather than defendant of a meritorious upon purely grounds, not, defense which would technical situation, policy underlying instant advance the fiscal the tax involved. holding Plaintiffs where cite cases filed, entered is no abuse before a certificate of revivor is there Here, the cer- setting of discretion aside the and, entered tificate of was filed before was revivor raised trial significantly, when the circumstances, reserved a court, being fully advised of the thoroughly on the merits. proceeded try case no retrial revivor was filed Thus, after the certificate of the evidence simply a the case on required, submission of forfeiture, already presented. deem the court’s choice "We of discretion. against merits, an abuse 368.) Service, Inc., supra, Break 66 Cal.2d (Traub v. Coffee motion to argue that because defendant’s Plaintiffs had an amended answer set aside the and file simply revivor, and not attached to it the certificate of certificate not consider the answer, the court could nullity revivor; say, that is to the motion.was proposed amended answer. copy the failure to attach argument might validity have some in the case the usual to set aside a since default *5 494
default party the court cannot he moving certain that the a meritorious defense an is unless answer attached to the mov- ing papers. copy proposed But the failure to a attach a answer, deficiency created no here, hiatus; such the was in only, fully form because the had case tried submitted testimony and documentary already adduced. long
It has (1) been settled law that where a case is tried on the merits, (2) explored the issues thoroughly are during the theory course of the trial and (3) the of the trial is well counsel, known to court and the fact that the issues pleaded preclude were not an adjudication does such litigated issues and appeal. (Collison a review thereof on Thomas, Cal.2d ; 360 P.2d [11 Corp. Finance v. Foust, 44 Cal.2d P.2d Pacific Jonas, 632]; Vaughn 432].) having
The issues thoroughly litigated, no amended answer was needed to disclose whether defendant had a purpose valid defense the considering for the motion to set default; by completed aside the that was settled the trial. In circumstances, adopt plaintiffs’ the highly to techni argument cal accept form substance, would be over which is contrary present trend of the law. Hence we conclude that the failure a copy to attach amended answer to the set aside the was not fatal view of the minute order for which recited that “because of the of defendant’s for failure to pay its franchise it tax, standing has no court to defend the action. is reversed. J.,
Gargano, concurred. CONLEY, J., Concurring Dissenting P. I agree the end namely, result the opinion, reached main the in favor of should reversed. How ever, opinions destination, while the arrive at the the same paths two divergent impelled taken are so feel I express given majority reasons dissent.from recognizing giving the reversal. It seems to me full weight to the evidence received on behalf of defendant corporation unquestionably it the time that majority opinion suspended, flying in the face up by prerogative' Legislature; usurps law as set that, repeal given body modify applicable or statute. legal right concerning to a Briefly, this is contest period approximately years two mining before claim; pay had failed to its trial, suspended; was, consequently, counsel for tax and franchise respondents objected open in. trial of case proof defendant, made that it failed specific (Rev. that, tax under law and observed corporate powers, rights & Code, §23301), Tax. “the suspended. . . .” privileges of defendant had been] [the forthwith, granting Instead or on the matter Magyar House, continuance as Schwartz Inc.,. judge said he would the motion under advisement and continued to take receive evidence from each side to the conclusion of the hear *6 ing. right The have the ease tried in no judge presiding circumstances. The was incorrect immediately part recognizing right the lack of of the proceed suspended. defendant to as if it had Later, not been apparently gave judg became aware of its error and suspended ment to the on the sole did, right, defendant had no when it to contest the case. repeatedly corporation It has been held that a which suspended may not, for failure to franchise taxes suspension, (Reed during prosecute such or defend action Norman, v. 48 343 Schwartz v. ; Cal.2d [309 Magyar House, Inc., supra, Cal.App.2d 182,188), 168 or make Superior (Ransome-Crummey a new trial v.Co. Court, 446]), appeal (Boyle 188 393 take an Cal. P. or [205 Creamery Co., 968]), Lakeview 9 16 or file [68 proceedings appellate (Brown court mandamus Superior Court, Cal.App.2d Cal.Rptr. 633]). 242 519 In [51 short, may only power it exercise such as is it reserved to the statute.
Ransome-Crummey Court, Superior supra, Co. v. 188 Cal. opinion . . 393, 398, holds: “. we are of' the that the subse- quent corporate rights, powers, privileges revival of the validating attempted during did not have the effect of the acts period suspension. The revival is not made retroactive suspension rights, The statute. powers, corporation privileges disability imposed is a on a as a deprive penalty, and it would tend the statute of its force corporation postpone payment in default encourage indefinitely by subsequent of its that taxes if were held payment delinquent taxes all the benefits of the
attempted corporation acts denied to the be secured.” could
The defaulting corporation reinstatement of á franchise-tax through the issuance of a certificate revivor does not vali- corporation date period acts of the during suspension. (Smith v. Lewis, 294, 300 37]; Cal. P. Cleveland v. Bros., Gore Inc., Cal.App.2d P.2d 931].) 682-683 [58
In case, prior entry this the record shows that corporation paid delinquent franchise tax acquainted and the court became that fact. It would seem have the defend- should ant’s motion for leave file an amended answer and revivor, certificate of and then should have ordered that respective parties respective adduce of their basic rights. 23305a Section Revenue and Code Taxation specifically provides upon issuance of certificate of revivor taxpayer “the therein named shall become reinstated but such prejudice any reinstatement shall be without action, right defense or which has accrued reason of the original suspension or forfeiture. evidence received of defendant was a and, being nullity, so, judge was correct ordering judgment plaintiffs. for the However, court later should have the motion set the judgment, aside (Rules timely Court, 3(b); which was rules Civ. Code Proc., 12, 12a, 12b, Troxell, Cal.App.2d Troxell v. 473; §§ Francisco, 723]; San Garcia Cal.Rptr. 760]), court had made aware that the defendant was rehabili tated, wrong and it was then the status which continue previous resulted duty from the It became the *7 court, defendant, with a revived to set pleadings aside the earlier so that could then rights parties in accord and the ascertained relationship. ance their is for basic factual It that reason I believe favor should be respective rights parties set aside reconsidered by the trial court. rehearing denied petition
A June