Murphy v. Davids

This is an appeal by the defendants from an order denying their motion to offset, against the plaintiff’s judgment herein, certain judgments now owned by the defendants against the plaintiff. The judgment in this action recovered by the plaintiff against the defendants in the sum of $15,000 was entered on the seventeenth day of November, 1916. Thereafter the plaintiff assigned this judgment one-fourth to Anderson & Anderson, one-third to the San Bernardino National Bank, and the balance to Elizabeth A. Murphy. This assignment was filed with the clerk of the superior court of Los Angeles County on November 29, 1916, and notation thereof was made in the register of actions in this case. On December 5th following notation of the assignment was made in the judgment-book, at the place of entry of the judgment. By subsequent assignment the interests of Anderson & Anderson and of Elizabeth A. Murphy passed to the San Bernardino National Bank. Notice that this judgment had been assigned and transferred to the San Bernardino National Bank was served on the defendant Davids on the twenty-first day of January, 1920, and on defendant Lindsay the next day thereafter. It is also claimed by the plaintiff and by the bank that the defendants, prior to May 14, 1917, had notice of the assignment of the judgment as made by Murphy, in this, that one Joseph Citron, an attorney of the defendants, was and became familiar with that assignment as shown through the aforesaid filing and notations thereof, and by reason of the further fact that he communicated this information to Paul W. Schenck, who also was an attorney of the defendants in this action. But the

The defendants appealed, from the judgment. The judg. ment having been affirmed by the supreme court, remittitur thereon was issued on January 19, 1920. On that day four judgments against the plaintiff Murphy, duly rendered and entered in the superior court of the city and county of San Francisco, were assigned and transferred to the defendants. Three of these judgments were entered in May, 1913, in favor of the Equitable Protection Company, plaintiff in those actions. The fourth judgment was em tered October 23, 1914, in favor of the Western Pacific Railroad Company, plaintiff therein. The aggregate amount of these four judgments, exclusive of the interest thereon, was $11,466.55. At the time of the assignment of those judgments to the defendants, and at the time of the motion to offset those judgments against the judgment in this action, the said four judgments were wholly unpaid. On the twenty-first day of January, 1920, in each of said four actions in the superior court of the city and county of San Francisco, an order was made that execution issue “and that the plaintiff or its assign or assigns may proceed to enforce said judgment in the manner provided by law.” On the same day, and in accordance with said orders, executions issued in said several actions. Thereafter, upon notice duly given, defendants presented their motion in this action for an order offsetting, against the judgment herein, the said judgments held by them. Opposition to the motion was duly made by the plaintiff and by the San Bernardino National Bank, which was allowed to intervene for that purpose. By order made August 14, 1920, the motion was denied.

The plaintiff and the bank set up in opposition to the motion that each of the said four judgments was barred by the provisions of subdivision 1 of section 336, of subdivision 1 of section 337, of subdivision 1 of section 338, of subdivision 1 of section 339, and by the provisions of section 343, all of the Code of Civil Procedure; that each and all of the claims based upon or arising out of said judgments and each.of them, and any and all right to offset the same,

The proposition is not questioned that a judgment debtor has the right to acquire an existing judgment against his judgment creditor and to present it by motion in reduction or extinguishment of the judgment debt owed by him. The contention of respondents is that this right cannot be enforced in favor of the owner of an outlawed judgment debt.

It must be conceded that without the aid of the procedure authorized by section 685 of the Code of Civil Procedure, the judgments acquired by appellants herein could not be enforced against the judgment debtor. No execution could have been issued. An action on them could not have been successfully maintained. [1] A procedure under section 685 constitutes neither an “action” nor a “special proceeding of a civil nature” within the meaning of those terms, nor is it in the nature of either. “It is a mere subsequent step in an action or special proceeding already commenced, which is governed entirely, so far as the time within which the same may be taken is concerned, by the provisions of the statute specially relating thereto.” (Doehla v. Phillips, 151 Cal. 488 , 493 [ 91 Pac. 330 ].)

The answer which must be made to the concrete problem here presented depends upon the nature of the proceeding to offset a judgment. If that is an independent proceeding, extraneous to any exercise of power of the court which rendered the judgment sought to be enforced and out of which the process for enforcement has issued, then the motion to offset is not within the scope of such proceedings as are authorized by section 685 of the Code of Civil Procedure. [2] We are of the opinion that a motion of this kind calls for an exercise of judicial power of the court where the motion is made, and not of the court from which the execution process issued. In effect it is an attempt to have it declared that the principal judgment (against which offset is claimed) has been satisfied, or to

[3] Where such equitable relief is necessary an action may be maintained to compel a setoff of mutual demands. This right exists, even though one of the opposing demands has not been reduced to judgment. (Machado v. Borges, 170 Cal. 501 [ 150 Pac. 351 ].) And, of course, the same hind of action would lie where both demands have been reduced to judgment. As to such judgments, the distinction between the powers of courts of equity and courts of law has ceased to be important. In every case the suitor has the right to ask for the setoff, and in every proper case as of right the motion should be granted. This is a power which exists independent of statute, and rests upon the general jurisdiction of courts over their suitors and processes. (Haskins v. Jordan, 123 Cal. 157 , 160 [ 55 Pac. 786 ].) But the fact that this power may be invoked by motion, instead of by a separate action, does not change the nature of the proceeding, which in any event is one whereby the judgment debtor- seeks to have the judgment against him satisfied by crediting to him an outstanding debt owned by him, against his judgment creditor.

Counsel for appellants have referred to Saunders v. Simms, 183 Cal. 167 [ 190 Pac. 806 ], as supporting their contention that their motion to set off judgments is not a special proceeding in the nature of an action, and that it comes within the scope of the proceedings allowed by section 685 of the Code of Civil Procedure. In that case Mrs. Saunders was the owner of a judgment against Albert S. Collins, of whose estate Simms was administrator. At the time of the death of Collins more than five years had expired since the entry of the judgment. The plaintiff obtained from the superior court- of San Bernardino County, where that judgment had been entered, an order granting permission to enforce the judgment “as provided by law against the estate of Albert S. Collins, deceased.” A claim on the judgment was thereupon presented to the administrator. This claim having been rejected by the administrator, Mrs. Saunders instituted an action in the superior court of the county of Orange, where the probate proceedings

It may be conceded that some of the language used in Saunders v. Simms, if received without limitation to the facts of that case, and without respect to the controlling •code provisions relating to the enforcement of claims against estates, would tend to support the argument of appellants here; but undoubtedly the views there expressed had regard particularly to the fact that an action to enforce a judgment by establishing a claim thereon against a decedent’s estate is merely the statutory method “substituted by law in place of enforcement by writ of execution.” Viewed in -that light, and considered as merely the allowance of a claim and “not in any true sense a judgment,” the so-called judgment was affirmed as constituting a valid method of enforcing the judgment and within the scope of the authority conferred by section 685. Nevertheless, we think that section 685 was never intended to serve any purpose other than as an aid to the enforcement of a judgment coming within its provisions by some procedure having its authorized source in the court which rendered the judgment. The power conferred by the section must be exercised either by means of an execution or “by judgment for that purpose founded upon supplemental pleadings.” The case illustrated by Saunders v. Simms is an exception authorized by statute as a substitute for the execution authorized by section 685. The general rule remains unchanged that an action may not be maintained as against

The views heretofore expressed render it unnecessary to make any statement of the evidence bearing upon the contention of respondents that Joseph Citron was an attorney, of appellants in this action and that through knowledge obtained by Citron in the course of his services rendered on their behalf in this case appellants had notice of the assignment by Murphy of the judgment in this action, and that for that reason any rights which they may have against the plaintiff are subject to the rights of the San Bernardino National Bank as owner of the judgment in this action.

The order is affirmed.

Shaw, J., and James, 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 January 26, 1922.

All the Justices concurred.