Rudy v. Slotwinsky

is an appeal from a judgment in favor of plaintiffs granting a permanent injunction against defendant from proceeding to enforce a certain judgment and setting aside and canceling the same.

The complaint alleges that defendant herein on April 17, 1920, commenced an action against the above-named plaintiffs R. L. Rudy and E: D. Hopper and one Garbini, as directors and incorporators of Chateau Bellevue Vineyard Company, a defunct corporation, and that on May 21, 1920, Rudy and Hopper demurred to the complaint, which demurrer was sustained. That an amended complaint was filed on the twentieth day of August, 1920, to which Rudy and Hopper again demurred and this demurrer was, on September 10, 1920, overruled with ten days’ leave to answer.

Proceeding, the complaint then alleges that on September 14, 1920, plaintiff Slotwinsky in that action by and through his attorney attempted to serve notice of the overruling of the demurrer upon Clark and Clark, attorneys for said defendants Rudy and Hopper.

In this connection it is alleged, in substance, that the notice of the overruling of the demurrer was served on one Ellison, who occupied an adjoining office to Clark and Clark,

It is then alleged that at the time of the finding of the demurrer by Hopper and Rudy, the attorney for plaint: E Slotwinsky had remarked to J. W. Clark, one of the attorneys for the defendants, that he supposed he would have to collect from the estate of one F. D. Burr, deceased, he being the party with whom Slotwinsky had had the transaction which was the subject matter of the litigation. That due to this remark Clark and Clark concluded that the action would be discontinued as to their clients, and, not having heard any more concerning the demurrer which they had interposed, they considered the case closed. Nothing further was heard of the matter, so it is alleged, by either Hopper or Rudy or their attorneys Clark and Clark until about two years and a half thereafter and on the sixth day of March, 1923, when a letter was addressed by one Carl W. Mueller, acting attorney for Slotwinsky (his original attorney having been killed September 28, 1921), to Hopper informing him that his real estate was about to be sold under writ of execution upon a judgment secured in the action referred to.

The complaint in the original action is then set forth in full. It appears therefrom that it was one based upon a claim of liability against the directors of Chateau Bellevue Vineyard Company,.under section 309 of the Civil Code, it being alleged in said action that the directors of that corporation had incurred an indebtedness in the sum of twelve hundred dollars at a time when the total amount of the subscribed capital stock of the corporation did not exceed the sum of sixty dollars, thus making them individually liable for debts created beyond the subscribed capital stock. Proceeding, the complaint in the instant ease charges that the complaint in the original action, in which the judgment was procured and here sought to be set aside, was predicated on the false and fraudulent misstatement of the total amount of the subscribed capital stock of the corporation, as the state

Further allegations are to the effect that on the 28th day of April, 1922, judgment was rendered by default against Rudy and Hopper for the sum of $1,200, interest and costs of suit, which judgment was entered on April 29, 1922.

Plaintiffs then allege that had they knowledge of the entry of their default, or had they knowledge of the trial, they would have taken steps in said ease to have protected their rights; that they would have proved to the court upon the hearing of the case, that it was not true no more than sixty dollars of the capital stock of the corporation had been subscribed and thus have avoided liability.

The complaint concludes with a prayer for a cancellation of the judgment. To this complaint defendant filed a demurrer alleging that it did not state facts constituting a cause of action nor a cause for equitable relief, nor did it state facts sufficient to justify the issuance of a restraining order or injunction.

The demurrer was overruled.

Defendant answering alleged in effect that the notice of the overruling of the demurrer was legally served. It also denied that any statements had been made to the attorneys in the original action which would justify them in concluding that the action would not be further prosecuted and it also denied that the statement contained in the original complaint concerning the amount of the subscribed capital stock of the corporation was false. As an additional defense it set forth certain facts charging that defendants, as directors of the corporation named, had fraudulently obtained a certain tract of land of the value of twelve hundred dollars in exchange for a note executed by the corporation, which was worthless.

Laches on the part of defendants was also pleaded. The trial court found, among other facts, that the attorneys for defendants in the original action had relied upon statements made by the attorney for the plaintiff that the case would not be further prosecuted, and also that the attorneys for the defendant had never been properly notified of the overruling of their demurrer. It also found that the complaint in the

In support of the judgment respondents claim that the facts as found by the court constitute extrinsic fraud justifying the setting aside of the judgment.

We cannot subscribe to this contention. [1] The mere fact that defendant herein may have obtained the judgment here sought to be set aside upon allegations that may have been untrue, did not authorize the setting aside of the judgment. Equity will not relieve by injunction against a fraudulent judgment, unless the fraud in obtaining it is extrinsic to the merits. It will grant no relief even in cases where a judgment is obtained through perjured testimony. (Stern v. March, 132 Cal. 616 [ 64 Pac. 994 ] ; Eisenmeyer v. Thompson, 186 Cal. 538 [ 199 Pac. 798 ]; Pico v. Cohn, 91 Cal. 135 [ 25 Am. St. Rep. 159 , 13 L. R. A 336 , 25 Pac. 970 , 27 Pac. 537 ] ; Borland v. Thornton, 12 Cal. 440 .)

This rule, however, seems to be conceded by respondents’ counsel, as they state that the evidence upon the subject is important only as showing that their clients possessed equities upon the merits of the original action which it was necessary for them to do in making an application to set aside the default judgment.

The extrinsic fraud relied upon, therefore, consists in the alleged remarks of the attorney for defendant in the original action indicating that the case would be abandoned and in the taking of the default without giving a legal notice of the overruling of the demurrer where time had been given to answer and in proceeding to trial and having a judgment entered when the attorney was kept in ignorance of the proceedings.

Assuming that these facts, if true, would constitute ex-x trinsic fraud, we do not think the evidence upon the subject justifies the conclusion that defendants were prevented from fully presenting their claims in the original suit by reason thereof. The original judgment recites that notice of the overruling of the demurrer was given. [2] Ellison, who signed the admission of service on the notice, testified in the instant case that the admission was in his handwriting. He

[3] Nor was there any evidence to support the finding that the attorneys for defendants in the original action (plaintiffs herein) were prejudiced or kept away from the trial by anything the former attorney had said, giving such remarks their full force and effect. All that is proved to have been said is that plaintiff’s attorney during a discussion in relation to Burr's property stated to Clark that “he was not concerned much with the other defendants, because he did not think he had a ease against them of any particular merits.’’ This statement did not justify Clark in concluding that the case would be discontinued against his clients nor warrant him in completely ignoring any further progress of the proceedings.

[4] Where a judgment by default is obtained against a party through his own neglect, it constitutes no ground for equitable intervention that his adversary obtained relief to which he may not have been entitled.

[5] Equity will not entertain a bill for relief against a judgment founded on any matters which were tried and determined in the action at law, or which were there so put in issue that they might have been adjudicated, however unjust the judgment may appear to be. Such matters have become res judicata. This rule assumed that there has been a trial in which the respective parties have had an opportunity fully to present their claims. (34 Corpus Juris, 466.)

There must be some end to litigation. [6] Here plaintiffs had appeared in the action through their attorneys. The exercise of the slightest diligence on their part would have acquainted them with the fact that a judgment had been rendered against them. It was a matter of public record. They could have proceeded under section 473, Code of Civil Procedure, where relief might have been granted

The judgment is reversed.

Knight, J., and Cashin, J., concurred.

A petition by respondents to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on August 27, 1925.

Knight, <T., pro tem., did not participate.