Rudolph v. Fulton

Exchange Commission of the substantive and procedural defects forming the basis of the complaint. Section 25 'of the Securities Exchange Act provides for judicial review by the appropriate federal Circuit Court of Appeals of decisions of the Securities and Exchange Commission. (15 U.S.C.A. § 78y.) The section has been held to include eases originating with the NASD. (R. H. Johnson & Co. v. Securities & Exchange Com., (2d. Cir., 1952) 198 F.2d 690 , cert. den. 344 U.S. 855 [ 73 S.Ct. 93 , 97 L.Ed. 663 ].) Judicial remedies provided by the Securities Exchange Act are exclusive. (Securities & Exchange Com. v. Andrews, (2d Cir., 1937) 88 F.2d 441 ; Johnson v. McNeill (1942), 151 Fla. 536 [ 10 So.2d 142 ].) Therefore, if plaintiff is entitled to any relief because of the alleged acts of the defendants in prosecuting him before the NASD, such relief can be obtained only in the federal Circuit Court of Appeals.

1. (b) Exhaustion of Administrative Remedies.

Exhaustion of administrative remedies is a jurisdictional prerequisite to resort to the courts. (Abelleira v. District Court of Appeal (1941), 17 Cal.2d 280 , 291 [ 109 P.2d 942 , 132 A.L.R. 715 ]; Child v. State Personnel Board (1950), 97 Cal.App.2d 467 , 469 [ 218 P.2d 52 ]; Jensky v. State Board of Equalization (1945), 67 Cal.App.2d 612 [ 155 P.2d 87 ].) The complaint shows that the proceedings before the NASD were still pending when plaintiff withdrew from the proceedings and notified defendant executive director that he was going to appeal to the courts. Moreover, according to the complaint, the association billed plaintiff for dues for a period indicating that he had not been expelled at any time before judgment in this case. Also, as stated, the Securities Exchange Act provides an administrative remedy by an appeal to the Securities and Exchange Commission. (15 U.S.C.A. § 78o-3(g).)

Although there is no allegation in the complaint to support his contention, plaintiff contends that this action “has nothing concerned with the proceedings of the NASD” or “with the reinstatement of the plaintiff as a member, but is a clear civil suit brought against the NASD and its thirteen defendant officials under the Bill of Rights . . . for the injustice done towards the plaintiff under Amendments Y, YII and YIII of the Amendments to the United States Constitution.” As pointed out herein, the allegations of the complaint relate solely to disciplinary proceedings against plaintiff by the

NASD and are to the effect that such proceedings were unlawfully instituted and conducted, and intended to harass and deprive plaintiff of his business and have defamed plaintiff’s business reputation. His allegations of damage are based upon alleged substantive and procedural defects in said proceedings. This action, therefore, basically involves a review of the NASD proceedings. If the proceedings terminated with a finding that the charges against plaintiff were true, and such finding was affirmed by the Securities and Exchange Commission and the federal court (if appeals to them were made) such finding would be a complete defense to this action.

2. Prejudice.

Plaintiff’s charges of prejudice on the part of the trial judge are completely unfounded. Principally they grow out of the court’s refusal at argument on the demurrer to permit plaintiff to read his “Answer” to the demurrer and his “Memorandum of Evidence and Facts.” With extreme patience the court explained to plaintiff that in considering a demurrer to the complaint the court must assume that the facts stated in the complaint were true and therefore there was no place for evidence to support the allegations. Plaintiff either did not or would not understand. This is another ease in which a propria persona insists on presenting issues and arguments not supported by the law but only by the propria persona’s rabid insistence of what he would like the law to be. We deem it unnecessary to discuss further the several charges of prejudice made by plaintiff other than to refer to one of the charges of prejudice made by plaintiff which is typical so far as foundation of prejudice is concerned, of all of them. The court entered a minute order sustaining the demurrer. Thereafter a judgment was entered thereon. Plaintiff says that thereby, due to the court’s prejudice against him, the court twice decided the ease against him, and moreover entered the judgment against him in his absence. Once the court determined that the demurrer was good (and its determination was a proper one) the procedure was correct. An order sustaining a demurrer without leave to amend is not a final judgment and is not appealable. It is followed as a matter of course by a judgment of dismissal, which is made and entered in the absence of both parties, and which is appealable (Berri v. Superior Court, 43 Cal.2d 856 , 860 [ 279 P.2d 8 ]; 2 Witkin, California Procedure, p. 1496.)

In his brief plaintiff states that subsequent to the judgment NASD sent him a second bill for dues and a “bill for the cost of the hearing” (presumably the cost bill in the case). These facts, says plaintiff, prove his innocence and that the superior court had jurisdiction of the subject matter of the case. We fail to follow his reasoning. Further, plaintiff states that since the judgment defendants unsuccessfully attempted in the trial court to dismiss the action for failure of plaintiff to provide security under section 830, Code of Civil Procedure (requiring an undertaking by plaintiff in a defamation action —plaintiff had theretofore deposited $500 pursuant to that section). This fact, says plaintiff, coupled with other actions of defendants, also proves plaintiff’s innocence. Again we are unable to follow plaintiff’s reasoning. Moreover, matters occurring subsequent to the judgment and of the type here are irrelevant to the appeal. (Solomon v. Solomon (1953), 118 Cal.App.2d 149 , 155 [ 257 P.2d 760 ].)

For the foregoing reasons the court properly sustained the demurrer without leave to amend.

In view of our decision, it is unnecessary to discuss defendant’s contention that the alleged actions of defendants were privileged and hence the complaint was demurrable on that ground.

The appeal from the order is dismissed. The judgment is affirmed.

Tobriner, J., and Duniway, J., concurred.

A petition for a rehearing was denied March 24, 1960, and appellant’s petition for a hearing by the Supreme Court was denied April 20, 1960.