Bank of America National Trust & Savings Ass'n v. Superior Court

Petitioner, one of the defendants in an action pending in the Superior Court of Los Angeles County, seeks, by this proceeding in certiorari, to annul an order of the superior court permitting the plaintiffs in that action to amend the first two causes of action set forth in their complaint. The facts constituting the background of this proceeding are as follows:

In 1935, Aronson et al. filed an action against petitioner charging that in a series of transactions it had converted certain shares of stock belonging to plaintiffs. A general demurrer to the complaint was sustained without leave to amend, and a judgment of dismissal entered. This judgment was affirmed by this court in October of 1937. (Aronson v. Bank of America, 9 Cal. (2d) 640 [ 72 P. (2d) 548 ].) In November of 1936, before the affirmance above referred to, the same plaintiffs instituted another action against the petitioner and others, based upon the same transactions, by the filing of a complaint containing four counts. The bank demurred to this complaint as a whole and as to each count, generally and specially. The trial court sustained the demurrer without leave to amend, and subsequently denied plaintiffs’ motion for leave to amend. The demurrer

Upon the return of the cause to the trial court the plaintiffs moved for leave to file amendments to the first and second counts of their complaint. Over the objection of petitioner that the court had no jurisdiction, and that to grant such motion violated the law of the case as set forth in the appellate court opinion, the trial court granted the motion. Petitioner thereupon instituted the present proceeding in certiorari for the purpose of annulling the order granting leave to amend.

The basic question presented is, whether the trial court exceeded its jurisdiction in granting permission to plaintiffs to amend the complaint as to the first two counts. The answer to that question turns first, upon ascertaining just what the appellate court decided, and second, upon determining what legal effect the judgment of reversal had upon the power and jurisdiction of the trial court.

An examination of the appellate court decision discloses that that court held that the third and fourth counts set forth in the complaint stated a cause of action against the bank, but that counts one and two did not. In holding that the first two counts did not state a cause of action against the bank, the appellate court predicated its decision on the law stated by the Supreme Court in the prior appeal to the effect that an indispensable element of the cause of action was knowledge on the part of the bank as to what disposition the defaulting administrators intended to make of the converted stock, and the appellate court held that, since these two counts of the complaint (and the amendments contained in the request to amend) contained no such allegation, no cause of action was stated. Speaking of these two counts the appellate court stated (42 Cal. App. (2d) at p. 716):

“The important factor is knowledge on the part of the bank as to what disposition was to be made of the proceeds received on the transfer and whether any proceeds were to be forthcoming. As to this the complaint is silent and fails to show that the bank in question had any knowledge at the time of the transfers that the administrators intended to apply the stock or the proceeds of the transfer to their own use and benefit or to the benefit of any third party, or that, at the time, the bank was in possession of such facts as to amount to notice of any such plan or purpose.

‘ ‘ Since the transfers complained of in the first and second counts of appellants’ complaint occurred before distribution of the estate was decreed and since appellants have failed to charge the predecessor bank with the requisite knowledge of a wrongful purpose on the part of the administrators, those two counts still fall within the rule laid down in Aronson v. Bank of America, supra, and for the reasons there given the said counts fail to state a cause of action against respondent bank. ’ ’

The court then considered the third and fourth counts of the complaint, and held that those counts stated a good cause of action against the bank. It then stated (42 Cal. App. (2d) at p. 721):

“It should be mentioned in passing that the complaint is far from a model of pleading and is in no sense concise. It is clear, however, that no attempt has been made to set out more than one cause of action in each count.

“In view of the fact that the allegations of the first and second counts of the complaint reveal a situation wherein no cause of action would lie against respondent bank or its predecessor the trial court did not err in refusing to grant leave to plaintiffs to amend those counts, but for the reasons above given the court erred in sustaining the demurrer to the third and fourth counts and in dismissing the action.”

The amendments allowed by the trial court to be filed to the first two counts incorporated the very allegations for lack of which these counts were held defective by the appellate court.

It is the theory of petitioner that, after the reversal, the trial court had jurisdiction for the sole purpose, so far as permitting amendments to the pleadings was concerned, of allowing the third and fourth counts to be amended, and was 'without jurisdiction to permit the first two counts to be

The only judgment here entered was a judgment of dismissal and that judgment was reversed. What was the legal effect of such reversal ? It is well settled that when a judgment is reversed, on retrial the parties have the same right to apply for permission to amend as though the judgment had never been entered and reversed. (Ellis v. Witmer, 148 Cal. 528 [ 83 Pac. 800 ]; Armstrong v. Adams, 102 Cal. App. 677 [ 283 Pac. 871 ]; First Nat. Bank v. Stansbury, 118 Cal. App. 80 [ 5 P. (2d) 13 ].) In other words, after the judgment of reversal here, limited only by any direction contained in the order of reversal, the trial court had the same power over the complaint as if no judgment of dismissal had ever been entered. It is the same as if the trial court had entered an order sustaining the demurrer (no" judgment of dismissal having been entered) and the plaintiff requested leave to amend. The law is well settled that in such a situation the trial court, at any time prior to final judgment, may reconsider its ruling on the demurrer, and this is so even though no request to amend has been made. (See cases collected 21 Cal. Jur. p. 124, § 80; People v. Lucas, 78 Cal. App. 421 [ 248 Pac. 691 ]; Frantz v. Mallen, 204 Cal. 159 [ 267 Pac. 314 ]; Howe v. Board of Supervisors, 118 Cal. App. 306 [ 5 P. (2d) 28 ].)

Of course, what was said in the opinion of the appellate court in reversing the judgment became the law of the case, and the trial court was bound thereby. But, subject only to that limitation, the trial court had complete power to allow amendments to the pleading, or to reconsider and change its ruling on demurrer, at any time before entry of judgment.

Petitioner, in apparent recognition of these principles, urges that the appellate court ruled the first counts did

It follows from what has been said that the trial court acted well within its jurisdiction in permitting the challenged amendments to be filed. Even were this not so, and had the trial court exceeded its jurisdiction in permitting the amendments to be filed, certiorari would not lie to annul its order. This is so because the order granting leave to amend, while not directly appealable, is subject to review on appeal from the final judgment. (Collins v. Bridge Investment Co., ante, p. 52 [ 123 P. (2d) 436 ].) Certiorari will not lie if the effect of the order sought to be annulled can be reviewed and nullified on an appeal from the final judgment, even though the order itself is not appealable. (Hughson v. Superior Court, 120 Cal. App. 658 [ 8 P. (2d) 227 ]; Booth v. Superior Court, 81 Cal. App. 709 [ 254 Pac. 617 ]; Manoogian v. Superior Court, 48 Cal. App. 609 [ 192 Pac. 168 ]; Postal etc. Co. v. Superior Court, 22 Cal. App. 770 [ 136 Pac. 538 ]; Bryant v. Superior Court, 16 Cal. App. (2d) 556 [ 61 P. (2d) 483 ].) The rule of these cases is sound, and is in no way qualified by Bottoms v. Superior Court, 82 Cal. App. 764 [ 256 Pac. 422 ], or Stanton v. Superior Court, 202 Cal. 478 [ 261 Pac. 1001 ], relied upon by petitioner. In the Bottoms case a petition for hearing was denied, the order reciting that such denial was made “on the sole ground that the question . . . has become moot.” (82 Cal. App. at p. 778.) In the Stanton case, supra, there was no proceeding by which the order could be reviewed on appeal. The decision was so explained in Ivory v. Superior Court, 12 Cal. (2d) 455 [ 85 P. (2d) 894 ], at p. 460.

Petitioner argues that the rule is here inapplicable be

This argument is unsound for several reasons. It is predicated upon an unsound interpretation of the appellate court opinion. Moreover, it would apply in some degree in every case where a trial court erroneously overruled a demurrer and compelled a defendant to proceed to trial. No one would contend that such order could be reviewed on certiorari. Moreover, the argument assumes that it is proper to dispose of some of the counts of the complaint by a final judgment, prior to a trial on the other counts. This would sanction more than one final judgment in the action. As has already been pointed out, there can be but one final judgment regardless of the number of counts in the complaint.

From what has been said, it follows that petitioner must fail in its attempt to annul the order here involved, first, because the trial court had jurisdiction to make the order, and second because, even if it exceeded its jurisdiction, certiorari does not lie to review an order of the nature here involved. For these reasons the order sought to be reviewed is affirmed.

Gibson, C. J., Shenk, J., Curtis, J., Edmonds, J., Carter, J., and Traynor, J., concurred.

Petitioner’s application for a rehearing was denied September 10, 1942.