Hyperlawhypertext legal databasebeta Hallidie v. Enginger 175 Cal. 505

← Cases

Hallidie v. Enginger

175 Cal. 505 Court Department Two. Decision date 1917-06-21 Docket S. F. No. 7269 English

Delivered by HENSHAW, J.

Contents

Majority

p. 505
[S. F. No. 7269.
Department Two.
June 21, 1917.]
MARTHA E. HALLIDIE, as Trustee, etc., Appellant, v. VICTOR ENGINGER, Respondent.

Headnote

Attachment — Fraudulent Procurement of Sale of Corporation Stock—Recovery for Stockholders—Action Ex Delicto.—In view of section 537 of the Code of Civil Procedure, which limits writs of attachment to actions arising on contracts, express or implied, for the recovery of money only, an attachment cannot be issued in an action brought by the plaintiff as trustee for the stockholders of a corporation which had forfeited its charter to recover a sum of money received by the defendant from dividends and as proceeds from the sale of stock which the defunct corporation had been induced to sell to defendant by false representations, since the action is an action ex delicto for fraud, and not one upon an implied contract for the direct payment of money.
APPEAL from an order of the Superior Court of the City and' County of San Francisco discharging an attachment. J. M. Seawell, Judge.
The facts are stated in the opinion of the court.
Osgood Putnam, Wm. C. Crittenden, and Chas. C. Boynton, for Appellant.
Cushing & Cushing, William H. Gorrill, and Wm. S. McKnight, for Respondent.

The following statement of this cause of action is plaintiff’s own: “The plaintiff sues as the trustee for the stockholders of a certain »corporation, California Wire Works, which has forfeited its charter. The complaint alleges facts showing in brief that the defendant while acting in a fiduciary capacity, by means of certain grossly fraudulent misrepresentations and acts, induced said California Wire Works to sell to defendant seventy-five shares of stock in another corporation known as the California Wire Cloth Company for a mere fraction of its real value. That the total amount paid by defendant for said stock was $35 per share, viz., $2,450 for said seventy-five shares. That within seven years thereafter defendant received $47,950 as dividends on said stock

p. 506
and sold said stock for a further sum of $54,250, making a total of one hundred and two thousand two hundred dollars received by defendant on said seventy-five shares of stock so fraudulently obtained from said California Wire Works. Applying the rule of compound interest at the legal rate of seven per cent per annum swells the total amount due from defendant to something in excess of $190,000.”

Under this complaint plaintiff levied a writ of attachment. Respondent moved to discharge the attachment; the motion was granted and this appeal followed. Section 537 of our Code of Civil Procedure provides that an attachment may issue (subdivision 1) “In an action upon a contract, express or implied, for the direct payment of money.” Appellant here contends that her action is upon an implied contract for the direct payment of money; that even if the action be considered an action in equity, still as it is upon an implied contract for the direct payment of money, the attachment was legal.

The fact that appellant seriously maintains this position shows the necessity for certain general observations to clear the way for a true comprehension of the matter. The first of these general observations is that the writ of attachment as now employed was unknown to the common law, is a creature of legislative enactment, and has the scope, and only the scope, which the legislature has chosen to accord to it. In some states an attachment may issue in all cases, in some states it may be issued in actions ex delicto, in some states it may be issued against the property of the perpetrator of fraud, but in every state the limit of the right to the writ is found in the language of the statute itself. Therefore, adjudications of sister states are valueless in a consideration of the question unless it be shown that their statutes are in terms substantially identical with our own. The next general consideration is that legislatures in establishing the simplified code pleading and in thus abolishing the forms of common-law actions did not destroy, and even if it had desired could not destroy, the essential characteristics of those actions so long as the common law remains the basis of our jurisprudence. Anciently, no action at law could be brought without the permission of the king’s writ, breve originalis, and the writ itself limited with rigidity the controversy over which the plaintiff was permitted to sue. If in a material respect his

p. 507
declaration which followed departed from the terms of the original writ, the variance was fatal, as the litigant was endeavoring to sue without the permission and sanction of the original writ. This inevitably resulted in the grouping of actions into kinds and classes whose limitations were defined by the precedents of the original writs. The narrow range of these original writs forced the adoption of the statute of Westminster II, allowing the issuance of such writs in eases similar to those in which they had previously been issued, thus giving rise to a great number of new forms of action, though in well nigh all, being actions at law, the redress sought was damages. One of the great divisions of these common-law actions was the division known as personal actions, including all those brought for specific recovery of goods and chattels, for damages or other redress for breach of contract, for wrongs or injuries of whatever description, and these personal actions in turn were divided into actions ex contractu and ex delicto, the former having to do with the redress for violations of contracts, the latter having to do with compensation for an infinite variety of personal wrongs which might be inflicted. “It is clear that before one is able to distinguish between an action ex contractu, or upon contract, and ex delicto, or in tort, he must understand the essential elements of each of these causes of action and their distinguishing feature. This distinguishing feature is not found in the means of accomplishing an injury, nor in the nature of the harm or damage inflicted, nor indeed is it indicated by the presence or absence of a contractual relation, because it may be necessary that a certain contractual relation exist between the parties in order that a particular course of conduct, e. g., a degree of care or negligence, be unlawful. The distinguishing feature of a tort consists in the nature of the obligation which is violated. A tort, in contemplation of English law, consists in a violation of a duty imposed by the general law upon all persons occupying the relation which is involved in a given transaction or res gestae.” (Andrews’ Stephen’s Pleading, sec. 61.) The remedies and recoveries in a common-law action varied greatly, depending on whether the action was ex contractu or ex delicto, and partly for this reason there grew up a series of legal fictions at common law under which in a limited class of cases the suitor was allowed to select his form of action. The development of these fictions led to the creation and recog
p. 508
nition of what are known as implied contracts. In some instances the action on implied contract does not in truth rest upon contract at all. In others, the contract may lie at the base of the wrong or may have enabled the perpetrator to have accomplished his wrong. Thus, where A delivers goods to B at B’s request, even though B never meant to pay for them, the law erects the legal fiction that he promised to pay, and he will not be heard to deny it in the action for quantum valeiat in assumpsit. But, upon the other hand, if B stole A’s watch, A could treat the theft as a contract of sale and sue in like manner ex contractu, though in fact there was no foundation whatsoever for the fiction other than the need of broadening A’s remedies. (Downs v. City of Baltimore, 111 Md. 674 , [19 Ann. Cas. 644, 41 L. R A. (N. S.) 255 , 76 Atl. 861 ].) Or again, if B, in the employ of A, misappropriates his money or property, ‘while A could sue ex delicto for the wrong, he could, on the other hand, waive the tort and sue, again depending upon the nature of the property converted, either for the value, for goods sold and delivered, or for money had and received. (Lipscomb v. Citizens’ Bank, 66 Kan. 243 , [ 71 Pac. 583 ]; Farmers’ Nat. Bank v. Fonda, 65 Mich. 533 , [ 32 N. W. 664 ].) Nevertheless, while in these limited kinds of cases the suitor might do either, he could not do both. He had to elect his remedy and stand upon his election. If he waived the tort and sued in contract, his writ and declaration charged upon contract only. If he waived his contract and sued in tort, the writ and declaration charged in tort only. Next, let it be remarked, that .the common-law distinctions between actions ex contractu and actions ex delicto have not been changed by the permission to file rambling pleadings containing averments pertaining to both classes of actions, and even averments addressed to equity alone. And, finally, let it be remembered that our statute and statutes like ours grant a writ of attachment only in cases ex contractu, and therefore deny it, both in actions ex delicto and in actions where equitable relief as such is sought. (Elliott v. Jackson, 3 Wis. 571 ; Thorington v. Merrick, 101 N. Y. 5 , [ 3 N. E. 794 ]; Ebner v. Bradford, 3 N. Y. Abb. Pr. (N. S.) 248.)

With the foregoing in mind we may approach the consideration of our question with some hope of clear elucidation. Drake (Attachments, see. 10, note) well says in discussing statutes limiting attachments to actions arising oh contracts,

p. 509
express or implied, for the recovery of money only, as does ours, that this language “leaves no room for using it in actions founded in tort,” and this most manifestly is true and is so declared in this state. (Babcock v. Briggs, 52 Cal. 502 ; Walker v. McCusker, 65 Cal. 360 , [ 4 Pac. 206 ]; Mudge v. Steinhart, 78 Cal. 34 , [ 12 Am. St. Rep. 17 , 20 Pac. 147 ]; Bechtel v. Chase, 156 Cal. 711 , [ 106 Pac. 81 ].)

In stating as we have done that the writ is unauthorized where the foundation of the action is a demand for equitable relief, we do not mean to be understood as saying that where some exercise of equitable powers, as in settling accounts and striking a balance, is incidentally involved in the action, the attachment may not issue, if, in other respects, the pleadings warrant it. Our rule of decision is to the contrary. (De Leonis v. Etchepare, 120 Cal. 407 , [ 52 Pac. 718 ]; Kohler v. Agassiz, 99 Cal. 9 , [ 33 Pac. 741 ].) Therefore, in this complaint we will hold that the facts that an accounting as to the amount of money which the defendant received by way of dividends and from the sale of the stock is necessary to do justice between the parties, and that the plaintiff is suing as trustee for the benefit of those between whom another accounting of the funds of the judgment must be had, will not thereby transform the action into one purely in equity. Having thus declared what this action is not, it is extremely easy to state what it is. It is an action ex delicto for fraud. At common law it would have been an action of trespass bn the case for damages for deceit, and all the matters pleaded touching moneys derived from dividends and from the sale of property would have been by way of proving special damage in the particular case. That it is such an action no doubt can be entertained. (Kerr on Fraud, p. 330, note; Chitty on Pleading, *p. 137.) True, there are allegations, and pertinent allegations, touching the contract of sale of the stock, but these allegations are useful and valuable only as showing the relationship of the parties by virtue of which the fraud was perpetrated and not as establishing the nature of the action itself. So, too, the complaint charges the defendant, because of his fraud, as being in equity a trustee; but apart from the consideration that it requires a decree in equity to impose this trusteeship, by the very terms of its equitable designation it is a trusteeship arising in tort. That equitable designation is trustee ex delicto or trustee ex maleficio, which in reality

p. 510
means no trustee at all and is merely a convenient equitable description of the exactions with which equity will force such a wrongdoer to comply.

A passenger to recover for injuries inflicted by a common carrier must plead the contract of carriage to establish the relationship, but for the injuries inflicted upon him his action is ex delicto and not ex contractu, precisely as here the contract of sale is pleaded only to show the method employed to accomplish the fraud. And it may be added that if appellant will not have it so, then has she pleaded herself entirely out of court, because, if she insists that this is an action ex contractu, the statute of limitations has long since run against it, for it is to be noted that our statute extending the time for the commencement of an action to within three years after the discovery of a fraud does not extend the time for enforcing contracts, express or implied, but extends the time for commencing actions “for relief on the ground of fraud.” Anciently, while equity relieved and entertained bills where fraud and its recent discovery were pleaded, the common law was more slow to do so, and the rules and statutes limiting the time for the commencement of the action were enforced with much rigor, so that if the discovery of the wrong was delayed, no action ex contractu -would be entertained, and' so it is that Chitty says: “And again, where there has been a fraud and it is supposed that the statute of limitations will be set up as a defense, an action for the fraud is preferable to the action of assumpsit as there is reason to contend that the statute only begins to run from the time the fraud is discovered.” (Chitty on Pleading, *p. 144.)

Wherefore, it follows that the attachment was properly discharged. The order appealed from is therefore affirmed.

Melvin, J., and Lorigan, J., concurred.

Hearing in Bank denied.

Cases cited