People ex rel. Mosk v. Barenfeld

The state appeals from a judgment for defendants Jack Barenfeld, Irving J. Leff and Maurice H. Friedman, in an action brought by it to recover all rents paid as lessee plus the purchase price paid by it for 836-846 Santee Street, Los Angeles; it made no restoration of benefits received, offered none and insisted on retaining the benefit of occupancy without payment of any compensation from about June 22, 1949 (date of lease) to July 1, 1952, under a lease prescribing rental of $346,469.85 for that period; also to recover the sum of $900,000 purchase price paid for the property on the last-mentioned date while retaining title to the premises so obtained. Quoting the findings: “ [P]laintiff refused to claim damages for fraud or undue influence and plaintiff refused to pursue a remedy of damages for fraud or undue influence, and plaintiff elected to claim a forfeiture of all sums allegedly paid by plaintiff to defendants as alleged and prayed in said Third Amended Complaint.” As to rescission and amendment of the complaint the court said at the trial: “ [T]he State is according to the theory of the pleadings entitled to keep the building, recover back the entire purchase price paid for the building, and to recover back all of the payments made under the lease, which the Court, it appears to me to constitute a complete forfeiture of everything. I know of no such action cognizable under State law.

“We have discussed at length alternative theories that possibly could be supported under the pleadings, and I have been informed that there never has been an offer to restore the building. So, if the State at this time is in the position of an ordinary litigant before the Court, and for the alleged fraud perpetrated would be entitled to rescind or keep their bargain and sue for damages, an action for rescission would not be maintained because the requirements of the law with respect to rescissions have not been complied with so that the pleading could not be amended to show that you offered to restore it where the pleadings could be construed as being sufficient to state a cause of action for damages for fraud.

We would experience little difficulty in finding for defendants upon the following propositions—that the party to each action is the same, the State of California, not its agents who invoked the processes of the court; that the condemnation case necessarily presented the issue of the value of the state’s existing leasehold upon defendants’ land and that that issue turned upon the validity or invalidity of the lease; that a void lease is worthless and a voidable one worth little more; that a stipulated judgment generally has the same quality of conclusiveness as does a contested one. (Rogers v. Springfield Fire & Marine Ins. Co., 92 Cal.App. 537 [ 268 P. 679 ] ; Nielsen v. Emerson, 119 Cal.App. 214 [ 6 P.2d 281 ] ; FitzGerald v. Terminal Development Co., 11 Cal.App.2d 126 [ 53 P.2d 177 , 55 P.2d 194 ]; Guaranty L. Corp. v. Board of Supervisors, 22 Cal.App.2d 684 [ 71 P.2d 931 ].) But we can follow respondents no further along this line.

Defendants’ proofs (principally the judgment roll in the eminent domain case) show that the complaint in that proceeding was filed on May 5, 1952; no answer was filed by any defendant; a stipulation dated June 5, 1952, was filed on June 24, 1952, which expressly constitutes a general appearance;

The situation is controlled by Miller & Lux Inc. v. James, 180 Cal. 38 [ 179 P. 174 ] (cited and quoted by appellant), rather than the eases above cited. The court there said, at page 44: “The rule of res adjudícala is to prevent vexatious litigation and to require the parties to rest upon one decision in their controversy, but where they expressly agreed to withdraw an issue from the court, the reason for the rule ceases. The issue is not in fact adjudged, and the parties themselves having consented to that method of trial are not entitled to invoke the rule which requires parties to submit their whole case to the court. If they consent to adjudicate their differences piecemeal, there is no reason that the court should extend the rules of law to prevent that which they had expressly agreed might be done. ’ ’ At page 46: “Taken as a whole, therefore, the stipulation was in fact a withdrawal of an issue from the consideration of the court. The reservations and provisos in favor of the parties neither add to nor detract from this fundamental fact, and the issue having thus been withdrawn by consent, the decision of the court cannot be held to be an adjudication upon the very issue so withdrawn.” Accord: Loup County v. Rumbaugh, 151 Neb. 563 [ 38 N.W.2d 745 , 754]; Warren v. Stanton County, 145 Neb. 220 [ 15 N.W.2d 757 , 764] ; Abarr v. United States, 153 F.Supp. 387 , 388; United States v. International Bldg. Co., 345 U.S. 502 , 506 [ 73 S.Ct. 807 , 97 L.Ed. 1182 ]; 2 A.L.R.2d 514 , Note at page 539. The above-cited eases which state that a stipulated judgment has the same conclusiveness

City of Winter Haven v. State, 125 Fla. 392 [ 170 So. 100 , 108] : “Even when the sovereign goes into one of its own courts as a party litigant and seeks the benefit of the use of one of the court’s discretionary writs, it must do so subject to the settled law and rules governing the granting and enforcement of such writ. It has been said that the American citizen bows his knee to no earthly power save the law of the land; and even the state itself, at least as a litigant, is not superior to its own laws and to those well-settled principles of jurisprudence which govern the administration of justice according to law in its courts.” (To the same effect, see Grady v. City of Livingston, 115 Mont. 47 [ 141 P.2d 346 , 353-354]; State v. Holgate, 107 Minn. 71 [ 119 N.W. 792 , 793]; State v. Kilburn, 81 Conn. 9 [ 69 A. 1028 ,1030]; State ex rel. Comrs. of Land Office v. Sparks, 208 Okla. 150 [ 253 P.2d 1070 , 1074]; State v. Portsmouth Sav. Bank, 106 Ind. 435 [ 7 N.E. 379 , 380]; State v. Bucholz, 169 Minn. 226 [ 210 N.W. 1006 , 1006-1007]; State v. Schurz, 143 Minn. 218 [ 173 N.W. 408 , 409]; Bouldin v. State, 21 Ark. 84 , 85; State v. Arkansas Brick & Mfg. Co., 98 Ark. 125 [ 135 S.W. 843 , 844, 33 L.RA. N.S. 376 ]; Rice v. Dickson Car Wheel Co. (Tex.Civ.App.) 65 S.W. 645 ; Howard v. Cook, 59 Idaho 391 [ 83 P.2d 208 , 211] ; Anderson, Clayton & Co. v. State, 122 Tex. 530 [ 62 S.W.2d 107 , 110]; People v. Sound View Land & Improvement

This basic requirement of governmental honesty has been recognized in this State in procedural matters (Superior Oil Co. v. Superior Court, 6 Cal.2d 113 , 118-119 [ 56 P.2d 950 ]; Bank of America v. Superior Court, 84 Cal.App.2d 34 , 35 [ 189 P.2d 799 ]; Estate of Thatcher, 120 Cal.App.2d 811 , 814 [ 262 P.2d 337 ]; Bayle-Lacoste & Co. v. Superior Court, 46 Cal.App.2d 636 , 640 [ 116 P.2d 458 ]), but our courts have not confined the doctrine to the mere adjective aspects of a cause. In Farrell v. County of Placer, 23 Cal.2d 624 , 627, 628 [ 149 P.2d 570 , 153 A.L.R. 323 ], it is said; “It has been said generally that a governmental agency may not be estopped by the conduct of its officers or employees (10 Cal.Jur. 650-651), but there are many instances in which an equitable estoppel in fact will run against the government where justice and right require it. . . . It has been aptly said: ‘If we say with Mr. Justice Holmes, “Men must turn square corners when they deal with the Government,” It is hard to see why the government should not be held to a like standard of rectangular rectitude when dealing with its citizens.’ ( 48 Harv. L.Rev. 1299 .) ” (See also City of Los Angeles v. Borax Consolidated (9 Cir.) 102 F.2d 52 , 56-58 (cert. den. 307 U.S. 644 [ 59 S.Ct. 1042 , 83 L.Ed. 1524 ]); County of Sacramento v. Southern Pac. Co., 127 Cal. 217 , 222-225 [ 59 P. 568 , 825].) The sovereign not only is subject to the plea of estoppel in a proper case but must also affirmatively do equity when it invokes the jurisdiction of a court of equity. Counsel for plaintiff conceded at the trial that “basically, we are in a court of equity”; “We have been into the equity side, appealing to the equity side of the Court.”

Counsel’s reliance upon Pan American Petroleum & Transp. Co. v. United States, 273 U.S. 456 [ 47 S.Ct. 416 , 71 L.Ed. 734 ]; Mammoth Oil Co. v. United States, 275 U.S. 13 [ 48 S.Ct. 1 , 72 L.Ed. 137 ], and Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433 [ 86 A.2d 201 ], finds little justification in those decisions. The Pan American and Mammoth Oil cases grew out of the Teapot Dome scandal. At the suit of the government contracts and leases obtained through collusion with Secretary Fall and his subordinates were invalidated and defendants denied any offsetting compensation for improvements made upon the property. It is to be noted, however, that the government had not leased or purchased any land from defendants; the reverse was true. Secondly, the de

The Driscoll case was an action brought by the Governor

Only indirectly do the foregoing cases bear upon the situation at bar wherein the state was lessee and then purchaser of defendants’ property, insisting upon retaining all that it got from defendants and recovering back all it had paid for the same. No case has been cited which authorizes this even when the sovereign complains, and our own research has disclosed no such holding.

We are aware of authorities that say estoppel will not run against the state; that a contract which is contrary to public policy is void, not merely voidable (17 C.J.S., § 211, p. 563), and that rescission and restoration of benefits are not necessary to recover what has been paid under such a void contract (12 Cal.Jur.2d, § 201, p. 419; 17 C.J.S., § 413, p. 899). But as we shall show, they are not applicable here. Estoppel will run against the state where justice and right require it. (See Farrell v. County of Placer, supra, 23 Cal.2d 624 , 627-628; County of Sacramento v. Southern Pac. Co., supra, 127 Cal. 217 , 222-225; 44 Cal.L.Rev. 340 -351.)

A contract which is contrary to public policy is not always void nor is it universally true that it cannot be the subject of rescission. That is especially true in this State. Section 1667, Civil Code, says: ‘ ‘ That is not lawful which is:

Volume 5, Williston on Contracts (rev. ed.), section 1632, page 4575: “It may be observed here also that even a guilty party, if not thought to be in pari delicto, and if public policy demands it, even an equal participant in the illegality is often allowed relief by way of restitution or rescission, though not on the contract.” Volume 6, id., section 1762, page 5002: “But it should be noted that an executed illegal transaction though based on an unenforceable bargain is in general effectual between the parties. In some instances, however, a sound public policy may demand either the enforcement of an executory illegal bargain, or the rescission of an executed one, when a denial of such relief by the courts would work a forfeiture disproportionate to the social interest supporting the public policy, or result in harm to those for whose protection such bargains are declared illegal.” Section 1787, pages 5080-5081: “To the general rule that an executed transfer cannot be set aside, there are, however, exceptions which may be included either under the head of an unexecuted illegal purpose or of parties not in pari delicto. Occasionally, there may also be cases where, in spite of both parties sharing in the illegality of an executed transaction, public policy will be best served by rescission, even though the result is to permit recovery by a guilty plaintiff; for example, if failure to rescind will affect

It is apparent that the defendants, who were entitled to tax the reasonable cost of a copy of the depositions, could properly have insisted upon the documents being copied into the deposition or attached thereto so that the testimony of the witnesses and the effect of these potential exhibits could be used by defense attorneys in their preparation for trial and during the trial of this action involving a large amount of money. Instead, they cooperated with the Attorney General and procured photostats of the exhibits, which answered the full purpose of their being transcribed in the deposition. That the copies of the documents were not necessary to defendants’ case is not claimed by plaintiff, nor is it suggested that the cost was excessive. The verified cost bill made a prima facie ease of such necessity. (Jeffers v. Screen Extras Guild, Inc., 134 Cal.App.2d 622 , 623 [ 286 P.2d 30 ] ; Wilson v. Board of Retirement, 176 Cal.App.2d 320 , 323 [ 1 Cal.Rptr. 373 ]; Meyer v. City of San Diego, 132 Cal. 35 , 36 [ 64 P. 124 ].)

It was held in Hoge v. Lava Cap Gold Mining Corp., 55 Cal.App .2d 176 , 187, 188 [ 130 P.2d 470 ], that traveling expenses of an attorney incurred in going to and from the place of a deposition taken by his opponent upon oral interrogatories was taxable; this was based upon the consideration that the court did not abuse its discretion in holding that the attorney’s presence at the deposition was reasonably necessary and hence a proper item of taxable costs. We hold that the trial judge exercised a reasonable discretion in the present instance.

Judgment and order affirmed.

Fox, P. J., and Herndon, J., concurred.

Appellant’s petition for a hearing by the Supreme Court was denied June 27, 1962.