Carroll v. Puritan Leasing Co.

Opinion

The plaintiff appeals from a judgment of dismissal issued when plaintiff (hereinafter appellant) failed to amend the complaint within the time allowed by the court after the demurrer of

After a hearing, the trial court sustained defendant Puritan’s demurrer on the grounds that (1) the complaint failed to state facts sufficient to constitute a cause of action and (2) that the action was barred by the former judgment. In reaching its decision, the court had before it certain documents from the previous action, including the findings of fact and conclusions of law, the memorandum of decision, and the judgment, which the parties had attached to their moving papers. Upon sustaining the demurrer, the court did grant appellant leave to amend. After appellant failed to amend her complaint within the time allowed, the court granted Puritan’s motion to dismiss the action.

On appeal, appellant contends that the judgment of dismissal should be reversed. She asserts that the complaint did state a cause of action to quiet title. She also contends that the previous action did not decide the limitations upon the liability of appellant’s separate property under Civil Code sections 5121 and 5123; therefore, she urges res judicata is not applicable. We have concluded, however, the prior action was res judicata as to the present proceeding; therefore, the present action is barred.

Where a judgment prior to the quiet title action determined the same rights between the same parties as in the quiet title action, that judgment is a defense to the quiet title action. (Walker v. Hansen (1933) 218 Cal. 619 [ 24 P.2d 764 ].) If all of the facts necessary to show that the action is barred are within the complaint or subject to judicial notice, a trial court may properly sustain a general demurrer. (Legg v. United Benefit Life Ins. Co. (1960) 182 Cal.App.2d 573 , 580 [ 6 Cal.Rptr. 73 ]; Kronkright v. Gardner (1973) 31 Cal.App.3d 214 , 217-218 [ 107 Cal.Rptr. 270 ].)

It is clear that by bringing a quiet title action to assert limits upon the liability of her separate property, based on Civil Code, section 5123, appellant is once again attempting to litigate the extent of her personal liability under the contract of guarantee. That cause of action was conclusively litigated on its merits by the same parties in the previous Santa Barbara proceeding. As appellant herself admits, she was adjudged jointly and severally liable under that obligation in the amount of $37,114.14. Even if we assume that the prior judgment was incorrect, it is settled that “[a]n erroneous judgment is as conclusive as a correct one.” (Panos v. Great Western Packing Co. (1943) 21 Cal.2d 636 , 640 [ 134 P.2d 242 ]; Olwell v. Hopkins, supra, 28 Cal.2d 147 , 152.) If, in appellant’s opinion, the judgment erroneously failed to fix the proper limits upon her liability, appellant should have appealed from the former judgment upon that ground. Once that judgment became final, however, it could not be collaterally attacked by a quiet title action which sought in essence to subtract from rights which the previous judgment confirmed to Puritan. (Hamaker v. Heffron (9th Cir. 1945) 148 F.2d 981 , 984-985; accord, Kirkpatrick v. Harvey (1942) 51 Cal.App.2d 170 [ 124 P.2d 367 ].)

There is authority for the proposition that courts may refuse to apply res judicata where manifest injustice would result. (Greenfield v. Mather (1948) 32 Cal.2d 23 , 35 [ 194 P.2d 1 ]; In re Marriage of Hight (1977) 67 Cal.App.3d 498 , 502-503 [ 136 Cal.Rptr. 685 ]; Jackson v. Jackson (1967) 253 Cal.App.2d 1026 , 1037 [ 62 Cal.Rptr. 121 ].) This exception to the general rule of res judicata is very limited, however, and has recently

In the present case the appellant has failed to demonstrate that any injustice whatever would result from the barring of her quiet title action. True appellant will be adversely affected if her property is subjected to execution; but, of course, respondent Puritan would be adversely affected if it cannot recover upon the deficiency judgment. Adverse consequences alone obviously cannot outweigh the interest in having an end to litigation. The matter which appellant seeks to assert was clearly within the scope of the prior action; appellant had the opportunity to litigate the very limitation on her liability that she now seeks to assert, and apparently did so, as evidenced by the trial judge’s discussion of her contention in the memorandum opinion. The fact that only the memorandum opinion explicitly addressed the matter she seeks to raise is not a basis for rejecting res judicata. The judgment and findings in the prior action are entirely consistent with that opinion, which expressly addresses and rejects appellant’s contentions on that matter. Appellant, therefore, had ample notice that the trial court had ruled against her on that matter and could have appealed the decision. Hence, to reject res judicata in this case would call into question the finality of a judgment without any corresponding gain. We will not do so.

Ill

Even if we assume that which we do not assume—that this quiet title action is based upon a distinct cause of action—it would nevertheless be necessary to determine if the demurrer was properly sustained under the doctrine of collateral estoppel.

Contrary to the general allegations of ownership and adverse claim without right which characterize most complaints to quiet title, the allegations within appellant’s complaint are quite specific. Those allegations make clear that her quiet title action is premised basically upon one argument: that appellant’s obligation under her guarantee of the lease agreement constituted a “debt hypothecated by community property and that pursuant to Civil Code § 5123, plaintiff’s sole and separate property cannot be held liable for said debt.” They also show that appellant’s above-mentioned argument is the sole basis for her contention that the judgment lien is not applicable to her separate property.

Under the doctrine of collateral estoppel, a judgment in a prior action between the same parties operates to preclude relitigation of those issues which were actually litigated and determined in the first action. (Todhunter v. Smith (1934) 219 Cal. 690 , 695 [ 28 P.2d 916 ]; Saunders v. New Capital for Small Businesses, Inc. (1964) 231 Cal.App.2d 324 , 330, 333 [ 41 Cal.Rptr. 703 ]; Bleeck v. State Board of Optometry (1971) 18 Cal.App.3d 415 , 428-429 [ 95 Cal.Rptr. 860 ].) Furthermore, as our Supreme Court has held, “the prior determination of an issue is conclusive in a subsequent suit between the same parties as to that issue and every matter which might have been urged to sustain or defeat its determination.” (Pacific Mut. Life Ins. Co. v. McConnell (1955) 44 Cal.2d 715 , 724-725 [ 285 P.2d 636 ]; Sutphin v. Speik (1940) 15 Cal.2d 195 , 205 [ 99 P.2d 652 , 101 P.2d 497 ].)

This does not mean that issues not litigated and determined are binding in a subsequent proceeding on a new cause of action. Rather, it means that once an issue is litigated and determined, it is binding in a subsequent action notwithstanding that a party may have omitted to raise matters for or against it which if asserted might have produced a different outcome. (Price v. Sixth District Agricultural Assn. (1927) 201 Cal. 502 , 511 [ 258 P. 387 ].) In the absence of such a limitation, a party could relitigate an issue simply by framing a new theory to attack the prior determination. (Sutphin v. Speik, supra, at p. 205.) The policy of repose, which is the basis for the doctrine of preclusion, would thereby be frustrated.

The issue of whether appellant was liable under the lease and guarantee was litigated and determined in the prior action. Appellant was found to have guaranteed the lease and was adjudged jointly and severally liable for the default under that obligation. Applying the above

In addition—despite appellant’s assertions to the contrary—the facts show that the very matter which appellant now seeks to litigate in the quiet title action was previously considered and determined in the prior action upon the lease. Appellant contends that only the previous judgment and findings may be resorted to for a determination of the issues raised and concluded by that judgment. Appellant urges that since these do not specifically refer to the liability of her separate property interests, she cannot be precluded from raising the matter in a new action. We disagree.

It is settled that evidence extrinsic to the judgment roll may be used to ascertain what issues were determined in the former action. (Olwell v. Hopkins, supra, 28 Cal.2d 147 , 151; Rynsburger v. Dairymen’s Fertilizer Coop., Inc. (1968) 266 Cal.App.2d 269 , 276 [ 72 Cal.Rptr. 102 ]; Taiman v. Taiman (1964) 229 Cal.App.2d 39 , 42, 43 [ 39 Cal.Rptr. 863 ]; Tevis v. Beigel (1957) 156 Cal.App.2d 8 , 14 [ 319 P.2d 98 ].) It is true that the memorandum opinion of a trial court may not be used to impeach its findings and judgment. (Taormino v. Denny (1970) 1 Cal.3d 679 , 684 [ 83 Cal.Rptr. 359 , 463 P.2d 711 ]; Estate of Bullock (1955) 133 Cal.App.2d 542 , 549 [ 284 P.2d 960 ].) It is nevertheless equally true that the opinion may be used for some purposes, such as explaining the basis of the court’s ruling. The courts have so held in cases where they have considered the opinion of the trial court therein in deciding the case on review. (Wechsler v. Capitol Trailer Sales (1963) 220 Cal.App.2d 252 , 262-263 [ 33 Cal.Rptr. 680 ]; Bailey v. Fosca Oil Co. (1960) 180 Cal.App.2d 289 , 295 [ 4 Cal.Rptr. 474 ]; Canepa v. Sun Pacific, Inc. (1954) 126 Cal.App.2d 706 , 712 [ 272 P.2d 860 ].)

Respondent requested that the trial court herein take judicial notice of the memorandum opinion of the trial court in the prior action upon the lease, which states in relevant part: “With respect to the contentions that Civil Code § 5123 limits the ability of Puritan Leasing Company to recover from Doris M. Mitrovich, it is the finding of this Court that Civil Code § 5121 controls, which section provides that the separate property of a spouse is liable for the debts of such spouse contracted during the course of the marriage. Counsel for defendants has cited no cases supporting his interpretation of Civil Code § 5123 and as noted in Hammond Lumber Co. v. Danzinger, 2 CA 2d 197; In Re Setrakian’s Estate, 178 CA 2d 833; and Garthofner v. Edmonds, 74 CA 2d 15, a wife who signs a guarantee cannot claim a lack of consideration because the transaction involved her spouse; further these authorities illustrate that a wife is liable to the same extent as though she were a stranger to the other contracting party (her husband), since it is the law of this state that a married woman may contract as freely as though she were unmarried afid her separate property may be reached to secure the performance of a married woman’s contract.”

The opinion indicates that counsel for appellant (defendant in the prior action) did argue their “contention” that Civil Code section 5123 limits the ability of Puritan Leasing Company to recover from appellant, although he apparently marshalled no case law in support of that contention. The trial judge’s rejection of that argument in his written opinion is entirely consistent with both the findings and the judgment. The court specifically found that “The lease agreements . . . were duly executed by the parties and the leases were guaranteed by Doris M. Mitrovich.” Interpreting this finding in light of the memorandum opinion, it is clear that the trial court in the previous action found that appellant had personally guaranteed the lease thereby subjecting herself

Appellant asserts that the court below should have exercised its discretionary power to reject the doctrines of res judicata and collateral estoppel as defenses in this case because of considerations of fairness and policy. We have found, however, no circumstances which would call the application of either doctrine into question.

It is true that there are limitations on the application of collateral estoppel to questions of law. The distinction between issues of fact and issues of law is frequently artificial. However, even if we conceded that the issue sought to be precluded was one of law, the other circumstances necessary to justify a refusal to apply collateral estoppel would nevertheless be absent. This is not a case where the application of collateral estoppel would result in injustice; in the prior case appellant had and utilized her opportunity to litigate the veiy matter she now seeks to raise. Nor is this a case in which the application of collateral estoppel would allow a party who has previously won on an issue to obtain an unfair advantage as against third persons in the administration of the law. (Commissioner v. Sunnen (1948) 333 U.S. 591 , 597-599 [ 92 L.Ed. 898 , 905-907, 68 S.Ct. 715 ]; Louis Stores, Inc. v. Department of Alcoholic Beverage Control (1962) 57 Cal.2d 749 , 757-758 [ 22 Cal.Rptr. 14 , 371 P.2d 758 ].) Nor is this a case where the issue sought to be relitigated arises out of a different subject matter or transaction. (Chern v. Bank of America (1976) 15 Cal.3d 866 , 872 [ 127 Cal.Rptr. 110 , 544 P.2d 1310 ]; Louis Stores, Inc. v. Department of Alcoholic Beverage Control, supra, at pp. 757-758.) On the contrary, appellant seeks to relitigate her liability for the same default of the same lease and guarantee as against the same party. Further, this case does not involve a matter of intense public interest, as where the dispute concerns an industry requiring close

We therefore conclude that the order of the trial court sustaining respondent’s demurrer to the complaint must be sustained.

The judgment is affirmed.

Hastings, J., concurred.

I concur in the result, but since I have lingering doubts about the court’s res judicata rationale, I would simply add my personal opinion that appellant labors under a mistaken view concerning the impact of section 5123 of the Civil Code.

Amazingly enough, the section has never really been interpreted. It is a successor statute to former section 171b, the chief purpose of which was “to prevent liability of the wife’s separate property in cases in which she had to join with the husband in executing an instrument encumbering the community real property(Witkin, Summary of California Law (8th ed. 1974) p. 5170.) Admittedly the section goes further in that it also covers secured transactions in personal property where the wife’s signature is not required. Nevertheless, I do not believe the statute was ever intended to protect wives who, as appellant, guarantee a community obligation secured by a security interest of community property, by a separate instrument. Such a case squarely falls under section 5121 of the Civil Code to the effect that “the separate property of the wife is liable for her own debts contracted before or after her marriage,...”