Raisch v. Warren

Injunction. Upon filing the complaint and executing a bond for $1,000, the court granted the prayer of the complaint for an injunction, further ordering that defendants show cause at a date named “why this order should not be continued in force until the further order of the court in the premises.” Before the hearing thus ordered, defendant, Charles A. Warren, Jr., served and filed his motion to dissolve and vacate said order of injunction, based on the complaint in said action and upon the ground that “said complaint does not state or show that any ground or cause exists or has existed for the making of said order or for the granting of any injunction in this action.”

At the hearing the court ordered: “ 1. That the demurrers to complaint be overruled ten days to answer; 2. Motion to dissolve injunction denied; 3. Motion to appoint receiver denied without prejudice to renewal of motion.” It appears from the record that ‘ ‘ Said order included the decision of said court upon motions of other parties, as well as said motion of said Charles A. Warren, Jr., and also decisions of demurrers.”

Defendant, Charles A. Warren, Jr., excepted to the order denying his motion “to dissolve said order of injunction and

The averments of the complaint are substantially as follows : That on March 1, 1903, Charles A. Warren, the defendant Buckman and plaintiff formed a partnership for the purpose of securing contracts from the United States government and performing said contracts when secured, relating to what is known as the Truckee-Carson Project of Nevada, and that said partnership continued until the death of said Charles A. Warren, which is alleged to have occurred on December 24, 1908; that defendant C. A. Warren Company now is and, since April 2, 1903, has been a duly organized California corporation, as also is and has been the San Francisco Construction Company, since January 8, 1900; that from the beginning of said partnership to its termination aforesaid “the two corporations last mentioned were controlled, operated and used by such partnership to facilitate, carry on and advance the affairs, work and business of said partnership, and acting for and under the direction of said copartners, did duly make to the Secretary of the Interior of the United States certain proposals for doing the construction work in connection with the aforesaid Truckee-Carson Project of Nevada”; that said proposals were accepted and pursuant thereto said corporation, C. A. Warren & Company, “for the purposes aforesaid and acting for and under the direction of said copartners, and as an instrument of said partnership to facilitate and carry on its business, did duly make and enter into a certain contract with the United States,” engaging to perform certain work relating to said project, for which the said United States agreed to pay said corporation certain sums of'money and that said corporation fully completed said work. Then follow averments that the said corporation, the said San Francisco Construction Company, for purposes as above averred, and acting for said copartnership as above averred, entered into another contract with the United States to further prosecute the work on said project, for which the said United States agreed to pay said corporation certain sums of money, and that “said

Plaintiff prays for an accounting of all matters relating to said copartnership; for judgment against said administrator for the amount that may he due plaintiff on such accounting; for a writ of injunction enjoining the sale of said capital stock; for the appointment of a receiver and such further relief as may be just.

At the hearing of the motion there were read the affidavits of plaintiff and one Church. Plaintiff’s affidavit is to like effect as the complaint in the action; he also deposes that the inventory returned by said administrator does not include said shares of said capital stock; that, in the transfer of said stock to said Haskell, “the said Warren did not part with all dominion over the same or pass the same beyond his control for all time, and, furthermore, that said gift was subject to defeasance in favor of said Warren’s creditors, and that as to this affiant, a creditor of said Warren, said gift of said capital stock is wholly void.” The affidavit of Church, used at the hearing of the motion, was to the effect that he was a director of the Charles A. Warren Company from its organization to the death of Charles A. Warren; that the affairs of the corporation were “controlled, directed and managed wholly and entirely by said Charles A. Warren”; that, with the exception of the five shares each issued to the directors, Warren controlled all the shares; that “the business, property and affairs of said Charles A. Warren were, from the time of the incorporation of said corporation to the twenty-fourth day of December, 1908, from time to time during said period, transferred from said Charles A. Warren to said corporation”; that “at all times from the date of the incorporation thereof to the time of his death, he, the said Charles A. Warren, received the entire income of said corporation and used and disposed of the same as his personal property and according to his personal will and wishes”; that no dividends were declared, but that all of the funds of the corporation and all its earnings were personally controlled by said Warren; that, “according to the best judgment and knowledge of this affiant, all the property owned by said corporation and all the stock thereof were a part and portion of the estate of Charles A. Warren at the time of his death, on or about December 24,1908.”

Appellant contends that, “under section 1504, Code of Civil Procedure, in an action of this nature, the court has no jurisdiction to provide for the payment of any judgment, and hence no jurisdiction to make any investigation as to what property may belong to an estate, or to make an order enjoining the disposition of, or appointing a receiver of, any property.” The argument seems to be that, under section 1504, supra, the judgment only establishes the claim in the same manner as if allowed by the administrator, and the judgment must be that the administrator pay in due course of administration ; “that there is no administration running its course in the city and county of San Francisco, where this action is, and it is only the superior court in Alameda county, in which the estate is being administered, that can make application of the assets of the estate so as to pay in the due course of administration”; that the superior court of the city and county of San Francisco “has no jurisdiction to take action, even after judgment, to enforce payment of any judgment; and surely has no jurisdiction .to issue an injunction before judgment to restrain the disposition of property”; that a judgment upon a rejected claim is no more effective than a claim allowed by an administrator or the judge; citing Hall v. Cayot, 141 Cal. 13 , 16, [ 74 Pac. 299 ]. Appellant then takes up the general proposition, to which the brief is mainly devoted, that “it is contrary to all the authorities to attempt to interfere, by injunction or otherwise, with the disposition of property before judgment is obtained, unless the plaintiff has some lien on the property or interest therein,” and none is here alleged. In support of this contention, adjudicated cases and opinions of text-writers are cited from which the general rule is deducible that a simple contract creditor, or a creditor at large, whose claims are not yet reduced to judgment, cannot maintain a creditor’s bill. (Citing 2 High on Injunctions, 4th ed., sees. 406, 1403; 6 Pomeroy’s Equity Jurisprudence, sec. 882; Ohm v. Superior Court, 85 Cal. 545 , [ 20 Am. St. Rep. 245 , 26 Pac. 244 ] [approved in Field, Admr., v. Andrada, 106 Cal. 107 ,

On the question of jurisdiction generally, the code provides that superior courts “have' original jurisdiction in all cases in equity” (Code Civ. Proc., sec. 76); and their process extends “to all parts of the state.” (Id., sec. 78.) The superior court of the city and county of San Francisco has the same jurisdiction as the superior court of Alameda county, and if the action can be maintained in the latter court, we can see no reason why it may not be prosecuted in the former. The suggested difficulty of enforcing a judgment, should plaintiff recover, -in the San Francisco court, is fanciful rather than real. If, on the trial, anything is found to be due plaintiff "by the estate of Warren, deceased, it is to be presumed that the court would be guided by section 1504, Code of Civil Procedure, in formulating its judgment, whereupon “a certified transcript of the original docket of the judgment” would be “filed among the papers of the estate in court,” i, e., in the Alameda county court, as the said section provides. Precisely the same course would be pursued if the action were to be tried in the superior court of Alameda county. The suggestion that there “is no administration running its course” in the San Francisco court, where this action is pending, and that it is only the Alameda court “that can make application of the assets of the estate so as to pay in due course of administration,” does not, in our opinion, complicate the case or strengthen appellant’s position. The superior court as now constituted has jurisdiction, as we have seen, in all cases in equity (Code Civ. Proc., subd. 1, sec. 76), and, by the same section, it is given jurisdiction in civil actions of the class therein described (subdivision 2); in all cases at law as defined (subdivision 3); of still other actions mentioned and “of all matters of probate” (subdivision 4). In exercise of its jurisdiction “in cases in equity,” such as the one here, and its jurisdiction in “matters of probate,” such as administering the Warren estate, the proceedings of the superior court are as distinct and as dissociated as if there were two separate and different courts exercising these powers. So far, therefore, as the question of jurisdiction is concerned, the superior courts * of the two counties stand on the same footing. The right to have the case transferred for trial to the Alameda court, if

In his reply brief, appellant complains that respondent has not pointed out any way of escaping the supposed dilemma in which he may find himself should he secure judgment for some amount which, when secured, the court cannot enforce; that counsel should have explained “what would be the fate of the injunction in this case when such judgment would be made, inasmuch as the court’s power to act in the case would terminate on-making such judgment; and have explained what would or could have been accomplished by the issuing of an injunction restraining the disposition of the property.” As these supposed difficulties are advanced in aid of the argument that the court had no power to make the order, we cannot overlook them, though unnoticed by respondent.

The action proceeds on the assumption that the estate of plaintiff’s copartner, Warren, will be shown to be indebted to him, on a fair accounting, in a large sum of money; that the property of the estate returned by the administrator in his inventory is wholly insufficient to meet this claim; that certain of the defendants, among them the administrator himself, hold certain property, to wit, the alleged shares in the Warren corporation, which rightfully belongs to the estate and should be applied to discharge the debts of the estate, and should be turned over to the estate for the benefit of its creditors, plaintiff among others. The administrator is a party defendant in the action, and also in his individual capacity; so also are all the persons having any claim upon the subject of the action—the said corporation shares. The court may or may not find it necessary to appoint a receiver, but should such appointment be made, we can see no such dire result ensuing as appellant predicts—that, upon the court’s allowing plaintiff’s claim, “the whole scheme would collapse . . . , as the power of the court under section 1504 (Code Civ. Proc.) would thereupon be exhausted; and the receiver would be left stranded with the stock in his possession without having a court to protect him. . . . The court would be without power to make any disposition of the stock to satisfy the claim.” Appellant’s error is in assuming that the power of the court is limited by section 1504, Code of Civil Procedure. “When a court of equity has once obtained jurisdiction, it will do com

We pass to the proposition advanced by appellant, to wit: That plaintiff cannot maintain the action because he has not yet reduced his claim to judgment. It may be conceded at once that the general rule as to a creditor’s bill is as claimed by appellant. But, like many, other salutary rules, it has its exceptions, and, we think, the present case presents an example where other rules, firmly established by the courts, come into play and remove it from the operation of the general rule. Indeed, the action cannot strictly be called a creditor’s bill; it is an action primarily for an accounting and incidentally to cause property belonging to a deceased partner to be subjected to administration for the benefit of creditors. The case here is that of an administrator who is administering the estate of a deceased partner of a copartnership; he has no power as such administrator to settle the affairs of the partnership; the surviving partners are charged with that duty (Code Civ. Proc., sec. 1585); averments in the complaint show the necessity for an accounting, a suit in equity (Smith v. Smith, 88 Cal. 572 , [ 26 Pac. 356 ]); and it cannot be affected by an action at law; the third partner, Buekman, has assigned to plaintiff all. his interest in any claim against their copartner’s estate; it is alleged that there is valuable property belonging to the estate of the deceased partner which the administrator refuses to recognize as such or to include it in his inventory— property which by gift causa mortis, deceased caused to be

In Case v. Beauregard, 101 U. S. 690 , [ 25 L. Ed. 1004 ], the court had the rule contended for by appellant under consideration. Said the court: “But, after all, the judgment and fruitless execution are only evidence that his legal remedies have been exhausted, or that he is without remedy at law. They are not the only possible means of proof. The necessity of resort to a court of equity may be made otherwise to appear. Accordingly, the rule, though general, is not without many exceptions. Neither law nor equity requires a meaningless form, ‘Bona, sed impossiiilia non cogit lex.’ ”

“Where the claim of complaint is purely equitable, and such as the chancellor will take cognizance of in the first instance, he will go the entire extent and inquire into obstructions in the road of enforcing the demand; and the complainant, therefore, when he goes into equity to assert and liquidate his claim, may, in addition to the assertion of his claim, ask relief against the fraudulent acts of the debtor in attempting to place his estate beyond the reach of creditors.” (5 Ency. of PI. & Pr., p. 463.) The rule “is not so strict as to deny to a party the interposition of the equity power of the court when, the situation is such as to render impossible the aid of a court of law in taking the preliminary steps ordinarily treated as a condition precedent to the application for equitable relief.” (20 Cyc., pp. 692, 701.)

The superior court, sitting in probate, cannot go into an accounting of the copartnership, nor determine the ownership

The facts, in our opinion, warranted the issuing of the injunction. By no other means could the property have been preserved to await the result of- the accounting. (Code Civ. Proc., sec. 526; Civ. Code, sec. 3422; 3 Pomeroy’s Equity

The order is affirmed.

Hart, J., and Burnett, J., concurred.

A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on June 6,1912.