Gutleben v. Crossley

Plaintiff, as assignee and successor in interest of Wilhelmine and Ernest Wolkenhauer, brought this action to collect certain moneys claimed to be due as the result of a transaction involving the sale of real estate. The complaint contains four counts. The first two are for the recovery of $7,195 theretofore paid to the defendant Nat M. Crossley by the city of Oakland as an award in an eminent domain proceeding affecting the property involved, and the remaining two are for the recovery of a deficiency of $13,083.20 following a sale under a deed of trust covering said property. The action was tried without a jury and judgment was rendered in plaintiff’s favor and against the defendant Nat M. Crossley for the amount sued for under the first two counts, and accrued interest, and against plaintiff under the remaining two counts. From that part of the judgment so entered against him the said Nat M. Crossley prosecutes this appeal. The other parties defendant to the action are in no way affected by the judgment nor interested in the appeal.

The facts, as they appear from the findings, which appellant concedes are supported by the evidence, and from the allegations of the complaint which the trial court found to be true, are as follows: In November, 1926, the city of Oakland instituted eminent domain proceedings to condemn a strip of land for street purposes. The properties affected thereby belonged to plaintiff’s assignors, Wilhelmine Wolkenhauer and Ernest Wolkenhauer, the appellant Nat M. Crossley and his wife, Walter E. Crossley and others, all of whom were made parties to the proceeding, and the separate parcels owned by each were specifically described in the complaint. At that time the Wolkenhauer property was encumbered with a deed of trust given to the Oakland Bank as trustee. It was so alleged in the complaint; also that the trustee and beneficiary, who were likewise named in said complaint and made parties to the proceeding, claimed an interest in said property.

The trust deed was recorded a few days after its execution; and about two weeks later Walter E. Grossley conveyed the property to appellant, subject to said deed of trust. The deed was not placed on record, however, for more than two years after its execution, which, as will hereinafter appear, was nearly two years subsequent to the entry of the interlocutory decree in the condemnation proceedings.

After appellant had thus obtained title to the property under said unrecorded deed and the Wolkenhauers had allowed their default to be taken in said condemnation pro

Following the entry of the final decree appellant defaulted in making payments due on the promissory note and deed of trust given to the Wolkenhauers as part of the purchase price, and the property was sold at trustee’s sale. It was bid in by plaintiff and after deducting the expenses of sale there was due a deficiency of $13,083.20. Subsequently the Wolkenhauers assigned and transferred said note and deed of trust, and their right to recover said award of $7,195, to plaintiff, who instituted the present action to recover said award and the amount of the deficiency due on the note and trust deed.

Appellant frankly concedes “that if the Wolkenhauers had filed an answer [in the condemnation proceeding] setting up the fact that, although they were not the owners of the real property as alleged in the complaint, but were the owners of a first deed of trust thereon, they would have been entitled to an award up to the amount secured by the deed of trust owned by them” (Rose v. Conlin, 52 Cal. App. 225 [ 198 Pac. 653 ]); but he contends that in the absence

Admittedly, however, as before stated, appellant did not serve either of the Wolkenhauers with a copy of the amended answer nor with any notice of application to file the same or that it had been so filed; and it is well settled that where a. pleading is amended in matter of substance, as distinguished from mere matter of form, it must be served on all adverse parties affected thereby, including a defaulting party; that the amendment operates to open the default and unless it is so served no binding additional adverse rights may be acquired thereunder. Such is the established rule governing the filing of amended complaints and amended answers setting up cross-complaints (14 Cal. Jur. 889; 21 Cal. Jur. 226; Linott v. Rowland, 119 Cal. 452 [ 51 Pac. 687 ]), and for obvious reasons the same rule applies to the filing of amended answers whereunder for the first time affirmative relief, based on adverse claims, is sought against a codefendant who has previously defaulted. (Strong v. Shatto, 201 Cal. 555 [ 258 Pac. 71 ].)

In the present ease, at the time the Wolkenhauers defaulted in the condemnation proceeding, the pleadings therein presented no adverse or conflicting claims as to the Wolkenhauers’ ownership of the property. Consequently, in that state of the record, they were, as such owners, entitled to receive whatever award of damages was made respecting said property, subject, of .course, to the rights of the Oakland Bank as trustee; and it was thereafter that appellant amended his answer setting up his ownership of the property and asserting his exclusive right to said award, but omitting entirely any reference to the outstanding deed of trust then held by the Wolkenhauers. Therefore, under the rules above mentioned, appellant’s failure to serve the Wolkenhauers with a copy of the amended answer rendered any judgment based thereon, as between appellant and the Wolkenhauers, ineffectual as to the Wolkenhauers, and left the way open to them to recover from appellant the amount of the award so paid thereunder to him. Nor, under the doctrine declared in Rose v. Conlin, supra, were the Wolkenhauers, as the holders of the deed of trust on said

The judgment is affirmed.

Tyler, P. J., and Cashin, J., concurred.

A petition by appellant 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 15, 1936.