Majority
This is an appeal by the defendant from a judgment for damages in an action for malicious prosecution of a civil action. The background of this matter is stated in Albertson v. Raboff, 46 Cal.2d 375 [ 295 P.2d 405 ].[1]
After the Supreme Court had determined that the amended complaint was sufficient to state a cause of action and had remanded the case to the trial court, a second amended complaint was filed. In that complaint, allegations were set forth in harmony with the following statement on page 383 of the opinion of the Supreme Court: ‘ ‘ Since the judgment must be reversed, plaintiff will have an opportunity if she so wishes to
1 The Supreme Court made the following summary at pages 377-378: “In 1948 defendant brought an action against plaintiff in which he sought a money judgment and either a lien on real property owned by plaintiff or a judgment declaring that her title was obtained from her husband without consideration and in fraud of creditors. Defendant recorded a notice of pendency of this action in the county recorder’s office of the county in which the real property is located. After a trial of the action, judgment was entered in favor of plaintiff on defendant’s claims of a lien on or an interest in plaintiff’s real property. Defendant did not appeal. Plaintiff appealed only from that part of the judgment awarding money to defendant and that part of the judgment was affirmed. (Raboff v. Albertson, 122 Cal.App.2d 555 [ 265 P.2d 139 ].) “In the present action, plaintiff alleges that defendant knew at the time of filing his complaint in the prior action that he had no right to a lien on or an interest in her real property, that he nevertheless knowingly and maliciously asserted false claims thereto, and that by recording a notice of lis pendens he disparaged her title to her damage. The court sustained defendant’s objection to the introduction of evidence on the ground that the complaint did not state a cause of action . . . and entered a judgment of dismissal. ’ ’
Upon the trial of the case on its merits, the findings of fact of the trial court were in part as follows: 1. The prior action was filed on December 29, 1948. In connection therewith and particularly the second cause of action contained in the original complaint (being a cause of action in which it was sought to assert a claim to the property on the theory of a fraudulent conveyance), the defendant in the present action caused a notice of pendency of the prior action to be recorded in the office of the county recorder. 2. In the prior action, the defendant in the present action asserted that Lee Albertson, now deceased (who was the husband of the present plaintiff), conveyed and transferred the title to the real property to the plaintiff in the present case while he was insolvent and “in defraud of defendant herein and other alleged creditors of Lee Albertson. ’ ’ During the pendency of the prior action, the present plaintiff, through her attorney, sent a letter and notice in writing to the present defendant informing him of the actual and true financial status of Lee Albertson at the time of the alleged conveyance and transfer. The present defendant well knew of the fact that his statements as to the transfer and conveyance of the real property were unfounded and untrue, but thereafter and notwithstanding the notice by the present plaintiff’s attorney he persisted in filing amended complaints in the prior action, in all of which he continued to assert claims falsely and maliciously in and to the real property. 3. The present defendant well knew that he had no right, title, estate or interest in and to the real property and that the recording of the notice of pendency of the prior action would decrease the value of the real property and render it unmarketable, and that the actions of the present defendant were without any just, probable or reasonable cause and by reason thereof the present plaintiff suffered damages in the sum of $7,500. The conduct of the present defendant was malicious and with the intent and purpose to injure the present plaintiff. 4. The purpose of the present defendant in recording the notice of pendency of the prior action and in falsely asserting and claiming an interest in the real property was to enable and permit the present defendant improperly to secure the payment of money claimed by him pending his securing a money judgment in the prior action and thereby to
The defendant, as appellant herein, contends that the evidence fails to support the determination of the trial court. In evaluating such contention, it is necessary to relate the evidence in some detail.
It was stipulated that the appellant herein would testify that he signed the verification of the original complaint and of each amended complaint thereafter filed. The appellant testified that he did not read the original complaint before he signed it, although he believed that Mr. Hutchinson told him to do so and he may have read the paragraph in which the insolvency of Mr. Albertson was alleged. He told his attorney, Mr. Hutchinson, that in May and June, 1946,[2] Mr. Albertson owed a great deal of money and that Mr. Albertson had said that he owed money to the Internal Bevenue Department, to his former wife, and for dental work and various bills. Mr. Albertson also told the witness that he owed some department store bills in Toledo. But Mr. Albertson never told him, and the witness did not know, how much he owed on any of those bills. He did not recall telling Mr. Hutchinson anything else with regard to such obligations before he signed the complaint. But he did tell Mr. Hutchinson that Albertson owed him $6,500. His former wife claimed $1,800 “or some sort of sum of that character.” He told Mr. Hutchinson that that was a claim in Mr. Albertson’s estate, Mr. Albertson having died in September of 1947, but he did not tell Mr. Hutchinson that the debt, which was the basis of the claim made by the former wife, was due in May or June, 1946. When the appellant lent Albertson the money in May, 1946 ($7,500 as part of the money to be used by Albertson to purchase the real property), Mr. Albertson expected to receive severance pay from his former employer but the appellant did not know the amount.
2 In the original complaint, it was alleged that on or about June 8, 1946, the Albertsons transferred title to the property to themselves as joint tenants and continued to so hold the property until Mr. Albertson’s death.
The statement of assets and liabilities of the new enterprise (of appellant and Lee Albertson), Lee Products, Inc., as of December 31, 1946, showed capital stock of $110,000 and a surplus of $14,928.13. The appellant stated that he believed that was a true reflection of the business as of that date. He told Mr. Hutchinson that the corporation was operating at a profit for 1946. He believed that he told him that the stock owned by Mr. Albertson was worth its par value at least.
The respondent, Mrs. Albertson, testified that in May or June, 1946, Mr. Albertson had $10,000 coming from his former employer and he subsequently received that amount. (Later evidence indicated that the amount may have been approximately $8,000.) She testified that he had life insurance in the amount of $60,000, which had a cash value of $10,000 to $12,000, with loans against each policy of about $200 or $250. When they came to California in the spring of 1946, they owed about $92 to a department store in Toledo, Ohio, which was not yet due. It was paid. As to the subject of unpaid bills in May or June of 1946, her husband did not owe anything and was never in arrears on his alimony payments to his former wife. In May or June, 1946, or thereafter until Mr. Albertson’s death, no suits were filed against either of them on account of debts. In April, 1946, he received pension funds in the total amount of $1,740.78. He had advanced between $3,500 and $4,500 in making purchases on behalf of the business he was entering with the appellant and, as far as the witness knew, such advances had been repaid to him. They had government bonds having a cash value of about $4,500 which were sold when her husband and the appellant decided to go into business together. The respondent, Mrs. Albertson, was vice president of the new company and received a salary of $250 a month, including the months of May and June, 1946. In the period of May to August, 1946, Mr. Albertson had no medical bills.
The respondent’s efforts to sell the house were unsuccessful because of the Us pendens. The same was true of her attempts to refinance the property. After a writ of execution was issued on the judgment,[3] she sold the house in 1952 for $24,000. In
3 The plaintiff recovered a money judgment in the prior ease but such recovery was based on the sixth cause of action of the sixth amended complaint. As has been noted in footnote 1, that judgment was affirmed on appeal. (Raboff v. Albertson, 122 Cal.App.2d 555 [ 265 P.2d 139 ].)
A copy of the creditor’s claim of the former wife of Mr. Albertson, which was filed in the probate proceeding, was received in evidence. Item 3 thereof was for reimbursement of the college expense of Lee Albertson, Jr., for September, 1946 to September, 1947. The respondent testified that in May or June, 1946, Mr. Albertson did not owe his former wife any sums for college expenses of his son. Another item of that claim related to the reimbursement of federal income tax “for 1947.” The respondent testified that as of May or June, 1946, she knew of no amount owed by her late husband for income tax payable by his former wife. A third item of the former wife’s claim related to dental expense but the witness did not know when such services were rendered.
The claim of Otto H. Mayer in the Albertson estate was for a loan of $5,000 made by a check which was dated April 26, 1946. The claim was rejected after Mayer indicated he did not intend to press it.
The dental services of Dr. Swan were rendered to Mr. Albertson in the period shortly before the death of Mr. Albert-son.
Sarah R. Lorraine, a real estate broker, testified that she sold the property about August, 1952. It was “distressed” property and sold for $24,000.
Paul B. Hutchinson, the attorney who represented the appellant herein as plaintiff in the prior action, was called as a witness on behalf of the appellant. He testified in part as follows: “Now, the things that he told me . . . over a period of the next few weeks or months, while the pleadings were being prepared in this case, in addition to what I have already told you, was the fact that Albertson owed quite a bit of money at the time of this transaction pertaining to his house. ... I had him name all the creditors that he could name; and he named to me certain creditors. . . . And in addition to that, I checked the files for him, in court, on the estate to see what claims had been filed against Albertson. And then he also discussed with me Mr. Albertson’s relations with his former wife and children, as to which he said that Albertson had on a number of occasions told him that he was in default on his payments to Beverly, his former wife, in support of his
On cross-examination, Mr. Hutchinson said that prior to the time the first complaint was drawn or verified, the appellant did not tell him that Mr. Albertson was insolvent at the time the property was acquired but he did tell him who
On redirect examination, Mr. Hutchinson stated, as to the basis for allegations in the original complaint, as follows: “The facts on which I based it was the fact that in buying this property they had put the twenty-eight thousand five hundred into escrow and had transferred that asset into a
The appellant testified that Mr. Albertson was to buy $15,000 worth of stock in the new corporation but later Mr. Albertson said that he only had the money to purchase $5,000 worth of stock. He also related Ms conversations with Mr. and Mrs. Albertson with respect to buying the house. He told them that while he did not think that the house was “exactly” worth $28,500, “if that is the best they can do, and they liked it, well, they should go ahead with the deal.”
Pleadings in the prior action were received in evidence by reference. In the second cause of action of the second amended complaint, it was alleged that at the time title to the properts'- was “transferred to and taken in the name of the said Lee Albertson and his said wife, ’ ’ Lee Albertson was indebted to various creditors, the names of whom and the amounts of their claims ‘ ‘ are at this time unknown to plaintiff but are well known to defendants.” In the second cause of action of the third amended complaint, it was alleged upon
Since the appellant makes no contentions with respect to the evidence as to damages, it is not necessary to give attention to that subject.
In comment g to section 675 of the Restatement of Torts, it is said: “The advice of counsel gives to one who initiates civil proceedings a protection similar to that which it gives to a private prosecutor of criminal proceedings. There is, however, this difference between the two situations. "Where the proceedings are criminal, the advice which usually affords protection is that the facts known or reasonably believed by the prosecutor constitute the crime charged .... "Where the proceedings are civil the advice of counsel is a protection even though it consists merely of an opinion that the facts so known or believed afford a chance, whether great or small, that the claim asserted in the civil proceedings may be upheld.” That statement is in harmony with the law of this state as expressed by Mr. Justice White in Murdock v. Gerth, 65 Cal.App.2d 170 , at pages 178 and 179 [ 150 P.2d 489 ]: “ ‘Probable cause’ for the institution of an action does not mean ‘legal cause’ therefor, because, if it did, every plaintiff who failed to recover in his lawsuit would be liable to an action for malicious prosecution. . . . If the issue which the attorney is called upon to decide is fairly debatable, then under his oath of office, he is not only authorized but obligated to present and urge his client’s claim upon the court.” (See also Lotts v. Whitworth, 76 Cal.App.2d 601 , 605 [ 173 P.2d 823 ]; Silver v. Shemanski, 89 Cal.App.2d 520 , 546 [ 201 P.2d 418 ].)
Reliance on advice of counsel in good faith is a defense to an action for malicious prosecution, inasmuch as such defense shows probable cause. (Schubkegel v. Gordino, 56 Cal.App.
Where the evidence is in conflict or subject to different inferences as to whether there was a full, fair and complete disclosure to the attorney of all of the facts of the case within the knowledge of the client or as to whether the client acted in good faith on the advice of the attorney, it is for the trier of fact to resolve such conflict or draw the credible inferences. (Seabridge v. McAdam, 108 Cal. 345 , 349-350 [ 41 P. 409 ]; Portman v. Keegan, 31 Cal.App.2d 30 , 36 [ 87 P.2d 400 ]; Torney v. Petersen, 109 Cal.App. 560 , 565 [ 293 P. 653 ].) On appeal, the findings of the trier of fact as to such matters will not be disturbed unless it can be held that they are not supported by substantial evidence in the record. (Singleton v. Singleton, 68 Cal.App.2d 681 , 691 [ 157 P.2d 886 ].)
The function of this court as to factual matters is aptly stated in New v. New, 148 Cal.App.2d 372 , at page 383 [ 306 P.2d 987 ]: “The appellate court must accept as established all facts and all inferences favorable to respondent which find substantial support in the evidence. ‘And where appellant urges the insufficiency of the evidence to sustain the findings . . . the rule is that, “Such contention requires defendants to demonstrate that there is no substantial evidence to support the challenged findings.” (Nichols v. Mitchell, 32 Cal.2d 598 , 600 [ 197 P.2d 550 ].) (Emphasis added.) It is said in Crawford v. Southern Pac. Co., 3 Cal.2d 427 , 429 [ 45 P.2d 183 ], that: “It is an elementary, but often overlooked principle of law, that when a verdict is attacked as being unsupported, the power of the appellate
In the present case, the trial court found that the appellant did not make a full and fair statement to his attorney of the facts constituting his claim against the respondent and that he did not act in good faith. There is substantial support in the record for such findings. It was a reasonable inference from the record that the appellant gave a distorted picture to his attorney as to the extent of the indebtedness of Mr. Albertson at the time of the real estate transaction. It was within the province of the trier of fact to draw the inference that the appellant had no basis for asserting that at that time Mr. Albertson was delinquent in his obligations to his former wife and that he then had an existing obligation with respect to federal income tax. Moreover, the court was justified in drawing the inference that the appellant had misrepresented as to the extent of the loans outstanding against Mr. Albertson’s life insurance policies. It was a fair inference that the appellant’s representations were colored by the claims asserted during the course of the probate of Mr. Albertson’s estate without proper discrimination on the appellant’s part as to when the obligations upon which such claims were based came into existence. In the absence of a proper disclosure to his attorney, advice of counsel could furnish no protection to the appellant. (Fry v. Bank of America, 142 Cal.App.2d 150 , 158 [ 298 P.2d 34 ]; Graham v. Griffin, 66 Cal.App.2d 116 , 122 [ 151 P.2d 879 ]; Schubkegel v. Gordino, supra, 56 Cal.App.2d 667 , 672-673.)
As set forth above, the appellant testified to his concept of insolvency which was in substantial harmony with that recognized by the law: “A person is insolvent when the present fair salable value of his assets is less than the amount that will be required to pay his probable liability on his existing debts as they become absolute and matured.” (23 Cal.Jur.2d, Fraudulent Conveyances and Transfers, § 49; Civ. Code, § 3439.02, subd. (a).) He admitted that he did not know the actual extent of Albertson’s assets and liabilities as of the time in question. It was his duty to read the original complaint before verifying that pleading by his affidavit. (See Code Civ.
It is true, as stated in comment d to section 675 of the Restatement of Torts, that “where the proceedings are civil, it is enough that the person initiating them believes that he can establish the existence of such facts to the satisfaction of the court and jury.” As expressed in Metzenbaum v. Metzenbaum, 121 Cal.App.2d 64 , at page 68 [ 262 P.2d 596 ]: “ ‘. . . want of probable cause in a civil proceeding exists when the circumstances are such as to satisfy a reasonable and prudent man that he had no ground for suing.’ ” Under the facts of the present case, the trial court was justified in determining that the appellant acted without probable cause in alleging facts directed to the purpose of showing a fraudulent conveyance. The evidence supported the inference that he was attempting to collect the sum of $6,500 from Mrs. Albertson by any means he could and that his purpose in availing himself of such allegations as would support a claim to or against the real property was to obtain “the benefit of an attachment upon plaintiff’s real property without incurring the burdens of an attachment.” On the prior appeal in this case, the Supreme Court stated: ‘1 The malice required in an action for malicious prosecution is not limited to actual hostility or ill will toward plaintiff but exists when the proceedings are instituted primarily for an improper purpose.” (Albertson v. Raboff, supra, 46 Cal.2d 375 , 383.) In Centers v. Dollar Markets, 99 Cal.App.2d 534 , it was said at pages 541-
The findings of fact of the trial court are supported by substantial evidence. The determination of the trial court is consistent with the applicable law as stated by the Supreme Court, upon the prior appeal, in Albertson v. Raboff, supra, 46 Cal.2d 375 .
The judgment is affirmed.
Shinn, P. J., concurred. Vallée, J., did not participate.
A petition for a rehearing was denied November 14, 1960, and appellant’s petition for a hearing by the Supreme Court was denied December 14, 1960. Sehauer, J., and Peters, J., were of the opinion that the petition should be granted.
Cases cited
- Albertson v. Raboff 46 Cal.2d 375 at 383 p. 374, p. 388, p. 389
- Murdock v. Gerth 65 Cal.App.2d 170 p. 385
- Lotts v. Whitworth 76 Cal.App.2d 601 at 605 p. 385
- Silver v. Shemanski 89 Cal.App.2d 520 at 546 p. 385
- Montz v. Nevins 40 Cal.App. 202 at 207 p. 386
- Masterson v. Pig'n Whistle Corp. 161 Cal.App.2d 323 p. 386
- Walker v. Jensen 95 Cal.App.2d 269 at 275 p. 386
- Diggs v. Arnold Bros. 132 Cal.App. 518 at 523 p. 386
- Seabridge v. McAdam 108 Cal. 345 at 349-350 p. 386
- Portman v. Keegan 31 Cal.App.2d 30 at 36 p. 386
- Torney v. Petersen 109 Cal.App. 560 at 565 p. 386
- Singleton v. Singleton 68 Cal.App.2d 681 at 691, at 696 p. 386, p. 389
- New v. New 148 Cal.App.2d 372 p. 386
- Nichols v. Mitchell 32 Cal.2d 598 at 600 p. 386
- Crawford v. Southern Pacific Co. 3 Cal.2d 427 at 429 p. 386
- Hartzell v. Myall 115 Cal.App.2d 670 at 673 p. 387
- Fry v. Bank of America National Trust & Savings Ass'n 142 Cal.App.2d 150 at 158 p. 387
- Graham v. Griffin 66 Cal.App.2d 116 at 122 p. 387
- Schubkegel v. Gordino 56 Cal.App.2d 667 at 672-673 p. 387
- McCaffey Canning Co. v. Bank of America 109 Cal.App. 415 at 420 p. 388
- Pasqualetti v. Hilson 43 Cal.App. 718 at 720 p. 388
- Patterson & Frisbie v. Ely 19 Cal. 28 at 39 p. 388
- H. G. Bittleston Law & Collection Agency v. Howard 172 Cal. 357 at 360 p. 388
- Osborn v. City of Whittier 103 Cal.App.2d 609 at 619 p. 388
- Baker v. Gawthorne 82 Cal.App.2d 496 at 501 p. 388
- Metzenbaum v. Metzenbaum 121 Cal.App.2d 64 p. 388
- Centers v. Dollar Markets 99 Cal.App.2d 534 p. 388
- Pickering v. Havens 70 Cal.App. 381 at 388 p. 389
- Hudson v. Zumwalt 64 Cal.App.2d 866 at 872 p. 389