134 P. 190 | Cal. | 1913
This is an original proceeding in prohibition to restrain respondents from further proceedings in pursuance of or for the enforcement of a judgment given, made and entered in April, 1912, in an action wherein one William G. Gallagher was originally plaintiff, Leon P. Lowe having been substituted as plaintiff during the trial, and the Los Angeles Suburban Gas Company, a corporation, Caroline W. Dobbins, and many others were defendants. An alternative writ of prohibition was issued. The matter has been submitted for decision upon the petition and a stipulation as to certain facts, and also upon the transcript on an appeal by said petitioners from an order refusing to set aside said judgment based upon the same grounds as the application for prohibition. (Leon P. Lowe, substituted for William G. Gallagher,plaintiff, v. Los Angeles Suburban Gas Co. et al., defendants, L.A. No. 3323.)
The claim of petitioners is generally that the judgment referred to is void as to the Los Angeles Suburban Gas Company, for the reason that the charter of said alleged corporation was forfeited on November 30, 1907.
The material allegations are as follows: Up to November 30, 1907, defendant Los Angeles Suburban Gas Company was a corporation organized and existing under the laws of the state of California. The action of Gallagher against said corporation et al. was commenced on December 3, 1906. It was an action brought by the plaintiff for the benefit of himself and all other holders of bonds of said corporation secured by a certain mortgage or deed of trust executed to the California Bank, to enforce payment of said bonds. The issue so secured was alleged to include six hundred bonds, each for the sum of five hundred dollars, of which the plaintiff alleged he owned one hundred and twenty. Defendant Caroline W. Dobbins was alleged to be the owner of one hundred of such bonds. The bonds were alleged to be due on account of default in the payment of interest. On January 14, 1907, defendant Dobbins filed her answer, setting up her claim of ownership of one hundred of said bonds, and asking that if the mortgage or trust-deed be foreclosed, she be paid her due proportion of the net proceeds. On January 21, 1907, the Los Angeles Suburban Gas Company filed its answer, the same being signed by C.S. Foltz as attorney for said defendant. On November *711
30, 1907, for failure to pay the tax for the fiscal year commencing July 1, 1906, required to be paid by the act of March 20, 1905, generally known as the corporation license-tax act (Stats. 1905, p. 493), its charter was forfeited and it ceased to be a corporation. (See Newhall v. Western Zinc Min. Co.,
On February 5, 1912, Judge Wilbur filed his written opinion, the same being in favor of cross-complainant and against *712 the plaintiff and the other defendants. Mr. Trippet subsequently learned that the corporation's charter had been forfeited, and notified the trial court and the attorneys for defendant Dobbins thereof. Nevertheless the court signed and filed its decision in writing (findings of fact and conclusions of law) and judgment was entered thereon on April 9, 1912. By the judgment it was decreed that plaintiff take nothing by his action; that the bonds held by him are invalid and void; that all bonds issued by said company except the one hundred bonds held by defendant and cross-complainant Dobbins are invalid and void; that she is entitled to an enforcement of the mortgage or trust-deed for the payment of the amount due on her bonds, being $78,684, that the property be sold by the sheriff to pay the same and costs, and that a personal judgment be docketed against said company for any deficiency after such sale.
In Crossman v. Vivienda Water Co.,
As is apparent from the quotation from Crossman v. ViviendaWater Co.,
At the time of the decision of the Crossman case (February 21, 1907), the only provision in the act of March 20, 1905, bearing upon this matter was section 10a, added by act approved June 13, 1906 (Stats. Ex. Sess. 1906, p. 22). This section provided that in all cases of forfeiture under the provisions of the act, the directors or managers in office of the affairs of any domestic corporation whose charter may be so forfeited, are deemed to be trustees of the corporation and stockholders or members, with full power to settle the affairs of the corporation, "and to maintain or defend any action or proceeding then pending in behalf of or against any of said corporations," and to take such legal proceedings as may be necessary to fully settle the affairs of the corporation, and that such directors or managers, as such trustees, may be sued by any person having a claim against such corporation. This, in substance, is very similar to section 400 of the Civil Code, *714 hereinbefore quoted. By act approved March 20, 1907 (Stats. 1907, p. 745), this section was amended by the addition of a proviso which reads as follows: "Provided always that no action pending against any corporation shall abate thereby, but may be prosecuted to final judgment, the same may be enforced by execution with the same force and effect and in like manner as though no forfeiture had occurred," and also by the addition of another proviso which is immaterial here.
It will be observed that the proviso quoted above contains no provision similar to that contained in section
It is claimed that the proviso is not applicable here for the reason that the only relief granted was upon the cross-complaint of defendant Dobbins, which was not filed until after the forfeiture, the theory being that she instituted a new action by the filing of such cross-complaint, an action not "pending" against the corporation at the time of the forfeiture. We are of the opinion that this claim is based upon an utterly unwarranted construction of the term "action" as used in the proviso and in our statutes, and one that would be productive of much confusion in practice. As a matter of fact there is but one "action" here, that commenced by the filing of Gallagher's complaint on December 3, 1906 (Code Civ. Proc., sec. 405), wherein the corporation, Caroline W. Dobbins and many others were made parties defendant, and it unquestionably was thenceforth and to the time of forfeiture an action pending against such corporation. Any person thus made a defendant was authorized by express provision of statute to set up by cross-complaint in such action his right to affirmative relief against any party to the action, relating to or depending upon the contract or transaction upon which the action was brought, or affecting the property to which the action related (Code Civ. Proc., sec. 442), just as he might in a case provided for by statute set up in his answer a cause of action constituting a counterclaim against the plaintiff (Code Civ. Proc., secs. 437, 438), and as he is compelled to do in certain cases or lose his right of action thereon. (Code Civ. Proc., sec. 439.) The filing of a cross-complaint, although for some purposes treated as the commencement of a new action, is a proceeding in the action commenced by the filing of the plaintiff's complaint which is expressly authorized by statute, the design of the statute being to enable all matters in dispute between the parties "relating to or depending upon the contract or transaction upon which the action is brought, or affecting the property to which the action relates," to be *716 determined in a single action, and by a single judgment which shall give to a defendant seeking it such affirmative relief as he is entitled to (Code Civ. Proc., sec. 666). It must be assumed that the word "action" was used in the proviso before us in the sense in which it is used in the sections of our Code of Civil Procedure which constitute our Practice Act and with the meaning ordinarily attributed to it when used in connection with legal proceedings. So taken we entertain no doubt that the proviso added to section 10a of the act of March 20, 1905, in 1907, is applicable here, and completely answers the claim of abatement of the action by reason of the forfeiture of the charter of the corporation.
It cannot be questioned, of course, that the matters set forth in the cross-complaint of defendant Dobbins were of such a nature as to entitle her under section 442 of the Code of Civil Procedure, to claim affirmative relief thereof by cross-complaint.
It cannot be disputed in view of the facts that we have hereinbefore set forth, that the directors in office at the time of the forfeiture did in fact present their amended answers both to the complaint and the cross-complaint in the name of the corporation, by their attorney employed by them to represent the corporation in the action, and did control and manage the defense of the action throughout. Any question of insufficiency of service of the cross-complaint is therefore immaterial.
We are of the opinion that not only has no excess of jurisdiction on the part of the superior court been shown, but also that upon the facts appearing there was no error in the refusal of such court to set aside the judgment. The persons charged by law with the control of the defense for the corporation and its stockholders in the event of forfeiture of charter did in fact appear and present such defense with the aid of their learned attorneys who are now prosecuting this proceeding, and there is absolutely nothing to indicate that any right of those interested in the corporation was not fully protected.
The alternative writ of prohibition heretofore issued is vacated and the proceeding dismissed.
Shaw, J., Sloss, J., Lorigan, J., and Henshaw, J., concurred. *717