Davis v. Perry

This is an action to quiet title to real estate situate in San Diego County. A large number of defendants were brought in, but the real controversy was between plaintiffs and the appellant above named. From a decree in favor of plaintiffs, defendant William H. Perry has appealed.

The complaint is in the usual form, setting up the ownership in fee by plaintiffs and that defendants claim some right, title or interest adverse, wholly without right and a prayer for a decree adjudicating those claims and such other relief as usually follows. Defendant William H. Perry alone answers. The answer is brief. It denies title in plaintiffs; admits the claim of defendant and alleges that each and every claim of plaintiff is subsequent and inferior to his interest and asks that his title be decreed.

All parties claim title through a common source. The property here involved was owned by one Clarence D. Hill-man and it is agreed that the fee rested in him on October 14, 1916. We will therefore commence from that date. The title is, as indicated, in Hillman. About this time a person named Durbin instituted an action in the Superior Court of Los Angeles County against Hillman and sued out a writ of attachment. This writ was levied against the interest of C. D. Hillman in and to the property in which we are now interested.

On May 4, 1917, judgment was entered for plaintiffs in the action and on May 12, 1917, a transcript thereof was recorded in San Diego County. An appeal was taken from the judgment and on August 20, 1917, the appealing defendants filed a supersedeas bond, not only staying the execution but by its terms obligating the sureties to pay the amount of the judgment in case of affirmance or dismissal of appeal.

The title of appellant is based on the Durbin judgment and the sale thereunder. No question is raised as to the regularity of the proceedings.

From the foregoing it is apparent that the legal title is in respondents. The appellant sets up no equitable defenses. His answer sets up his title to the property without qualification or without reliance upon any equitable interest. The record indicates, beyond dispute, that at a time when the property stood free and clear from any lien or claim of appellant and at a time when the fee rested in Hillman, the latter vested the title in Estrella Ranch Corporation. From that time on Hillman was out. The corporation, for a good and sufficient consideration, transferred to Davis and Ford, and the respondents acquired title through these last named.

But appellant contends that the Estrella Ranch Corporation was in fact the alter ego of Hillman and that the transfer between them was actually no transfer at all and that, therefore, at all times the property and the title thereto was in Hillman and that the recording of the abstracts of judgment prior to the recordation of the conveyance from the corporation to Davis and Ford gives appellant the priority and consequent higher title. This, of course, does involve an equitable defense, the contention of appellant being that the corporation was a trustee for Hillman. Under the practice well recognized in this state such a defense must be specifically pleaded. (Robinson v. Muir, 151 Cal. 118 [ 90 Pac. 521 ]; Reilly v. Wright, 117 Cal. 77 [ 48 Pac. 970 ] Milliken v. Valencia, 47 Cal. App. 16 [ 189 Pac. 1049 ].) That no such defense was pleaded appears from the record herein.

Appellant urges in this connection that the trial court refused permission to amend the answer and assigns this refusal as error. The nature or extent of the proposed amendment is not set forth in the briefs of appellant. Notwithstanding, we have gone carefully over the entire record and we find nothing to indicate that there was presented to the trial court any definite motion to amend: True, there seems to have been some discussion, noted in the record only as “argument of counsel”, but what the argument was we must infer. To repeat, the record completely fails in showing in what respects appellant desired to amend and therefore we cannot say that the court erred in refusing its permission.

In any event, the rule of law regarding a so-called “one man corporation” or as sometimes called a “corporate alter ego” is now definitely announced. The law is well settled that, in order to cast aside the legal fiction of a distinct corporate existence, it must appear that the corporation is the business conduit and alter ego of its stockholders, and that to recognize it as a separate entity would aid in the consummation of a wrong. In other words, not only must

The facts as detailed herein negative fraud, and, indeed, no claim of fraud is urged. The sole claim of appellant is that the rendition of a judgment against Hillman became a lien upon lands standing in the name of the corporation. This, in the absence of any further showing, is tantamount to a claim that a judgment against Smith liens the real estate of Jones. Yet this is practically the claim of appellant as disclosed by the pleadings. If it was, as it seems to be, the contention that the corporation was but the alter ego of Hillman the answer should set that up, as required by the authorities hereinbefore cited. And no such defense having been urged, evidence on the point was properly rejected. Considering, in passing, the equities present, the deed from the corporation to Davis and Ford was in consideration of the release and satisfaction of a judgment against Hillman and for a valuable consideration. The appellant still had the undertaking with sufficient sureties to discharge the judgment held by him and there is no showing here that the undertaking was insufficient. Let us assume that it could be shown, under appropriate amendments, that the corporation and Hillman were one and the same, that the corporation was only another name for Hillman and that in all respects the “alter ego” theory could be maintained. The most that could be deduced therefrom would be that the deed from the corporation was the deed of Hillman. At the time of its execution there were no liens existing in favor of appellant and no fraud or injustice resulting to

One who conveys property by an unrecorded deed conveys title which is good as against the grantor and everyone claiming under him, except a purchaser or encumbrancer who in good faith and for a valuable consideration acquired a title or lien by “an instrument first duly recorded”. But neither an attachment nor a judgment is an instrument within the meaning of section 1107 of the Civil Code. An unrecorded deed takes precedence over a subsequent judgment against the grantor. (Hoag v. Howard, 55 Cal. 564 ; Iknoian v. Winter, 94 Cal. App. 223 [ 270 Pac. 999 ].) The law is well settled that the lien of a judgment does not attach to a naked title but only to the judgment debtor’s interest in the real estate; and if he has no interest, though possessing the naked title, then no lien attaches. (Iknoian v. Winter, supra.) The cases from many jurisdictions are cited in the dissenting opinion of Preston, J. (Parsons v. Robinson, 206 Cal. 386 [ 274 Pac. 528 ].) While referred to as a dissenting opinion, yet on this point there was no division. The main opinion recognized this to be the law, but the holding was that the debtor held more than the naked title. Applying the foregoing to the case at bar, it' would make no difference whether plaintiffs’ grantors received the deed from Hillman or the corporation in the absence of any claim of fraud.

At the trial it was disclosed that plaintiff Liberty Mortgage Company, a corporation, had not filed its articles of

Inadvertently, it seems, there was a neglect to have the deed formally put in evidence. Therefore appellant contends there is no evidence upon which to base a decree of title in the corporation. We cannot see how this affects appellant. If the title is not in the corporation it remains in Ford and in no event would it reach appellant.

The judgment is affirmed.

Preston, P. J., and Plummer, 3"., concurred.