Spencer v. Spencer

This is an appeal from an order of the Superior Court of Tuolumne County denying appellant’s request for an order directing respondents to release a bank account. Since the circumstances of this appeal are somewhat unusual, we will set forth the facts in detail.

In 1961 Mary Spencer, who had engaged the respondents as her attorneys, instituted an action in the Superior Court of Tuolumne County for a divorce against her husband, Horace C. Spencer, the appellant herein. On April 8, 1964, approximately three years later, an account was opened with the. Modesto Savings & Loan Association in the joint names of the respondents (then attorneys for Mrs. Spencer) and appellant’s attorney, Mr. John M. Trimbur, and approximately $22,000 was deposited therein. This money, which apparently represented the balance due on a promissory note in favor of Mr, Spencer, was obviously deposited in the account by respondents and Mr. Trimbur as trustees for the benefit of their clients. In fact, on November 5, 1965, respondents notified the Modesto Savings & Loan Association that the money in the account was being held in escrow for the Spencers, and that it was an escrow account. The passbook, however, remained in their possession and no withdrawals can be máde from the. account except.upon the signatures of respondents and Mr. Trimbur. Respondents continued to represent Mrs. Spencer in the di

“Also, it is true that the assignor (plaintiff) could assign no greater interest than she had and her one-half interest in the whole fund was subject to Taylor & Taylor’s lien. In addition, in this instance, the assignee (defendant) took with actual notice of the claim of lien.

“It is therefore the decision of the Court that defendant’s motion and request for an order directing Edward T. Taylor and/or Edward T. Taylor, Jr., to deliver over the remaining $7500.00 to defendant, or in the alternative to order said Modesto Savings & Loan Association to do so, be and the same hereby is denied.” On April 12, 1966, appellant renewed his motion for an order directing respondents to deliver the funds remaining on deposit in the Modesto Savings & Loan Association account to appellant, and on this occasion appellant also

In view of the jurisdictional problems involved, we must first determine whether the court had the power in the divorce action to order respondents to appear and show cause in relation to a collateral issue, and if so whether its decision in this respect is appealable. In other words, although respondents represented Mrs. Spencer as her attorneys when the divorce action was instituted, they were not her attorneys when the order to show cause was issued, nor were they, by virtue of their attorney status, ever parties to the lawsuit itself. (Norton v. Walsh, 94 Cal. 564 [ 29 P. 1109 ].) Consequently, the power of the court to make them parties to the divorce action by the issuance of an order to show cause, and the appeal-ability of the orders which it made in connection therewith, raise important jurisdictional questions which must first be resolved (although they were studiously avoided in this appeal by the parties themselves) before the appellant’s appeal may be decided on the merits.

It is fundamental that a divorce action not only severs the marital relationship between the immediate parties, but also divides the community property and settles such issues as support for one of the spouses. Hence, it is settled, in this state at least, that an orderly and satisfactory termination of the action requires a complete determination of the property rights of the parties, and if necessary to attain this salutaiw objective (since the law abhors multiplicity of suits), third parties who claim an interest in the property alleged to be community may be brought in and their rights adjudicated (Elms v. Elms, 4 Cal.2d 681 [ 52 P.2d 223 , 102 A.L.R 811 ] ; Melny v. Melny, 90 Cal.App.2d 672 [ 203 P.2d 588 ]; Callnon v. Callnon, 7 Cal.App.2d 676 [ 46 P.2d 988 ]). In Elms v. Elms, supra, the court at pages 683-684 of the opinion stated the salient reasons behind the rule: ‘‘ There are sound reasons

By asserting a lien (possessory, retaining or otherwise), respondents in essence claimed an interest in the property of the parties to a divorce action, and thus we conclude that the court at appellant’s request had the power to bring them in, in order to adjudicate this claim. In other words, appellant and Mrs. Spencer had arrived at an agreement settling their respective property rights. Under this agreement appellant was to receive the money in the Modesto Savings & Loan Association account. Consequently, in order to finally dispose of all of the issues of the divorce action, and more particularly to enable it to distribute the property of the parties (community, separate or otherwise) according to their property settlement agreement, it was necessary for the court to bring in respondents to adjudicate their claim. Moreover, respondents acquired control over the property against which they assert their lien during the course of litigation by virtue of their relationship as attorneys for one of the litigants and as joint trustees (with Mr. Trimbur, the attorney for the

We will now direct our attention to the question of whether the court’s order denying appellant’s motion is appealable under Code of Civil Procedure section 963. This section, with a few exceptions (not pertinent to the facts of this case), provides that appeals may be taken only from a final judgment. The rule embodied in this section has come to be known as the “final judgment rule” or the rule of “one judgment” which is a fundamental principle of appellate practice in the United States (3 Witkin, Cal. Procedure (1954) Appeal, § 10, p. 2151). Thus, in order to avoid a'piecemeal disposition of a case which causes unnecessary delay and expense &-2id a multiplicity of suits (with few specified exceptions), appeals generally may not be taken from interlocutory orders or similar decrees.

. The term “final” as used in section 963 does not necessarily mean last in time. In other words, there are occasionally some issues in the course of litigation that are distinct and severable from the main issue, and if a decision on such an issue would determine finally the rights of the parties, leaving no further judicial acts to be done by the court in regard to that issue, the decision is for all intents and purposes final. As stated in Colma Vegetable Assn. v. Superior Court, 75 Cal.App. 91 , 94-95 [ 242 P. 82 ] : “The term ‘final judgment,’ as used in said section, is not limited, however, to final judgment

Admittedly, this latter requirement has been the subject of some confusion in the appellate court decisions decided after Mehan v. Hopps, 45 Cal.2d 213 [ 288 P.2d 267 ]. In Meehan the Supreme Court allowed an appeal from an order denying a motion to enjoin opposing counsel from participating in the case on the main ground that the motion was in effect a motion for injunctive relief under Code of Civil Procedure section 963, subdivision 2. The court, however, stated (Meehan v. Hopps, supra, at p. 217) : “It requires no argument to demonstrate that the question of disqualification of counsel bears no relation to the main issue in the present case. It has been correctly stated that the general test for determining whether the judgment is final is ‘ that where no issue is left for future consideration except the facts of compliance or noncompliance with the terms of the first decree, that decree is final, but where anything further in the nature of a judicial action on the part of the court is essential to a final determination of the rights of the parties, the decree is interlocutory.’ [Citations.] Because the trial court’s order denying Hopps’ motion left nothing further of a judicial nature for a final determination of his rights regarding opposing counsel, the order was final for purposes of appeal.” Accordingly, in Berry v. Chrome Crankshaft Co., 159 Cal.App.2d 549 [ 324 P.2d 70 ],

We believe that most of the confusion arising from these conflicting appellate court decisions is eliminated when the leading and often cited California Supreme Court decision of Sjoberg v. Hastorf, supra, 33 Cal.2d 116 is carefully analyzed. In Sjoberg the parties to the collateral proceedings were the identical parties involved in the main action. Significantly, the court at page 119 stated: “If appellants have a right to arbitration they may assert it on the appeal from the final judgment in the contract action. Thus no greater hardship will result than in any case where a party is forced to stand trial because of an erroneous ruling of the trial court.”

We believe that where, as here, a stranger to the main action is made a party to the action on an issue collateral to, independent of, and severable from the issues of the main action, a decision which finally determines the respective rights of the parties, leaving no further judicial acts to be done by the court in regard thereto, is appealable even though it may not “technically” direct the prformanee of an act by or against appellant. In fact, this situation is somewhat analogous to an order striking a cross-complaint which brings in a new party. In other words, although an order striking a cross-complaint is not appealable (Sjoberg v. Hastorf, supra, 33 Cal.2d 116 , and Stockton etc. Works v. Glen’s Falls Ins. Co., 98 Cal. 557 [ 33 P. 633 ]), an order striking a cross-complaint which brings in a new party to the action is appealable (People ex rel. Dept. of Public Works v. Clausen, 248 Cal.App.2d 770 [ 57 Cal.Rptr. 227 ]). Moreover, we see little if any distinction between the facts of the instant case and the facts of McClearen v. Superior Court, 45 Cal.2d 852 [ 291 P.2d 449 ], and Hersch v. Boston Ins. Co., 175 Cal.App. 2d 751 [ 346 P.2d 796 ], both decided after Sjoberg v. Hastorf, supra.

We will now consider the merits of the appeal. In denying appellant’s motion for an order directing respondents to relinquish the funds in the Modesto Savings & Loan account, the trial court concluded that respondents had acquired a common law retaining lien thereon, and that they were correct in asserting that lien. Thereafter, in denying appellant’s second motion for such an order the court concluded that respondents did not waive their lien when they attempted to attach other property belonging to Mrs. Spencer in the separate action which they filed against her to recover for their services. Thus, appellant contends that the trial court erred because he believes an attorney cannot have a common law retaining lien in this state; and even if he could, he contends that the lien was waived by respondents. Respondents, on the other hand, not only assert that common law retaining liens for attorneys exist in this state, but they also urge that no waiver occurred.

The early ease of Ex parte Kyle, 1 Cal. 331 , has been cited on numerous occasions for the proposition that there is no retaining lien in this state. Moreover, in Echlin v. Superior

In any event, we do not find it necessary to resolve the perplexing question of whether a common law retaining lien exists in this state. This is so because respondents did not and could not acquire such a lien under the facts of this ease even if the lien is deemed to exist. They did not acquire the money on deposit in the Modesto Savings & Loan account only from their client Mrs. Spencer, nor solely in their capacity as her attorneys. To the contrary, the money was received by re

To hold that an attorney may acquire a retaining lien (even if it exists in this state) on property which he acquired under the facts of this case would be inconsistent with the duty which he voluntarily assumed as a trustee and would be repugnant to the high professional standard which the attorney must maintain during all phases of litigation. In fact, in litigation between marital (and even business) partners, heated disputes often arise as to the ownership or the division of community or partnership property. Hence, such litigants, while relying entirely on the advice and high professional standards of their attorneys, occasionally agree to trust-like arrangements for the safekeeping of the disputed property pending final determination of their rights in order to avoid troublesome and expensive procedures such as restraining orders, temporary injunctions and the appointment' of receivers. To permit the attorney of one of the litigants to later assert a lien against the property to the detriment of the litigant whom he did not represent is not only basically unfair, but it would effectively discourage similar arrangements, thereby cluttering the already congested court calendars with additional and unnecessary side-skirmishes which can be avoided. It is consistently held in our sister states which recognize retaining liens that an attorney does not acquire such a lien under circumstances which are inconsistent with its enforcement. It is also consistently held that a general retaining lien does not attach to papers, documents, or other property which come into’ the hands of the attorney as a trustee or for some special purpose (5 Am.Jur., p. 389 ; 7 C.J.S., p. 1169).

Conley, P. J., and Stone, J., concurred.

A petition for a rehearing was denied August 17, 1967, and respondents’ petition for a hearing by the Supreme Court was denied September 13, 1967.