Opinion
Page __
__ Cal.App.2d __ 213 P.2d 78 HOWARD GREER CUSTOM ORIGINALS v. CAPRITTI et al. Civ. 17036. California Court of Appeals, Second District, First Division Dec. 29, 1949.Hearing Granted Feb. 23, 1950.
Subsequent opinion 221 P.2d 937.
As Modified on Denial of Rehearing Jan. 16, 1950.
[213 P.2d 79] Geo. W. Rochester, Los Angeles, for appellant.
Abraham Gottfried, Los Angeles, for respondent.
DRAPEAU, Justice.
This is an appeal from an order denying a motion of defendant Capritti made under section 473, Code of Civil Procedure to set aside a default judgment.
It appears from the record herein that on March 19, 1948, respondent corporation sued J. C. Capritti doing business as Rose Marie of California, and other fictitious defendants, for claim and delivery, conversion and damages for breach of contract, and on April 1, 1948, filed its amended complaint based on contract. On the latter date writ of attachment issued against the personal property of defendant Capritti, hereinafter referred to as appellant. Undertaking to discharge such attachment was filed on behalf of appellant in his individual capacity on April 23rd.
Thereafter, on May 7th, the answer and cross-complaint of Rose Marie of California, Inc., sued as Black and White Company, a corporation, were filed, and on the following day summons on the amended complaint was filed showing proof of service thereof on appellant as of April 26th. Demurrers to the answer and the cross-complaint were interposed and sustained on May 20th and defendant was given fifteen days to amend.
In the meanwhile, on May 17, 1948, upon request of respondent the default of appellant was entered by the Clerk.
Thereafter, on June 24th, Rose Marie of California, Inc., filed its petition in bankruptcy and E. A. Lynch was appointed receiver.
On July 21st, appellant in his individual capacity filed an answer to the amended complaint in which he alleged that he did not at any time 'do business under the fictitious name and style of Rose Marie of California, but was employed by Rose Marie of California, a corporation organized and existing under the laws of the State of California, as an employee having no other business nor entering into any agreements, contracts or understandings of any kind whatsoever, save and except within the capacity of his employment with the said Rose Marie of California, Inc.'
On July 22nd counsel for appellant filed and served notice of motion to set aside the default, supported by appellant's affidavit averring that an answer to the amended complaint having been filed on behalf of Rose Marie of California, a corporation, 'affiant was under the impression that this would be sufficient and that there was no need for affiant to file an answer in his individual and personal capacity'; that when informed that a default had been entered against him, he conferred with counsel for the corporation, who prepared and filed an answer in his behalf on July 21st.
The default and appellant's motion to set it aside were heard jointly on July 29, 1948, resulting in a denial of the motion and the granting of a default judgment against appellant.
No appeal was taken from such judgment which was entered on August 3rd, but on August 5th, appellant served and filed his notice of motion under section 473, Code of Civil Procedure, to set such judgment aside, and for permission to file his proposed answer to the amended complaint, such motion being supported by affidavits of appellant, his counsel and others, all to the effect that appellant had a meritorious defense to the action, to-wit: that he had been employed as manager of the plant owned and operated by Rose Marie of California, Inc., at no time had done business under the fictitious name and style of Rose Marie of California.
[213 P.2d 80] By reason of a filed alternative writ of prohibition, which was subsequently discharged, said motion went off calendar, but was later restored to calendar for hearing on October 21st, when the matter was submitted; and was denied on November 1, 1948. This appeal followed.
Appellant here contends that the denial of his motion to set aside the default judgment was an abuse of discretion which deprived him of his day in court and the opportunity to present a meritorious defense.
At the outset respondent urges the dismissal of this appeal on the grounds (1) the order of November 1st is non-appealable; (2) a motion to set aside a default judgment must be denied where a motion to set aside the entry of default has been previously denied.
A motion to dismiss made upon practically the same grounds has been denied by this court during the pendency of this appeal. Moreover, it was held in Swan v. Riverbank Canning Co., 81 Cal.App.2d 555, 557, 184 P.2d 686, 687. 'That an order denying a proper motion under section 473, Code of Civil Procedure, is appealable, seems to be settled. See Winslow v. Harold G. Ferguson Corp., 25 Cal.2d 274, 282, 153 P.2d 714; Funk v. Campbell, 15 Cal.2d 250, 251, 100 P.2d 762; In re Yoder, 199 Cal. 699, 702, 251 P. 205; Huffaker v. Decker, 77 Cal.App.2d 383, 386, 175 P.2d 254.'
In the Winslow case, supra, it was held: 'In those cases where the law makes express provision for a motion to vacate--as under sections 473, 473a and 663, 663a of the Code of Civil Procedure--an order denying such motion is regarded as a 'special order made after final judgment' and as such is appealable under section 963, subdivision 2, of the Code of Civil Procedure. California Delta Farms v. Chinese American Farms, 201 Cal. 201, 255 P. 1097; Funk v. Campbell, 15 Cal.2d 250, 100 P.2d 762.' [25 Cal.2d 274, 153 P.2d 718] (Emphasis included.)
The general rules applying to motions such as the one here under review are well stated in Toon v. Pickwick Stages, Inc., 66 Cal.App. 450, 453, 226 P. 628, 629: 'The legal principles by which courts are guided in considering motions to set aside defaults are well established and are comparatively simple. The trial court is to exercise a sound and legal discretion in passing upon the application. This discretion is not capricious or arbitrary, but it is an impartial discretion, and is to be exercised in such a manner as to conform with the spirit of the law by subserving and not impeding or defeating the ends of substantial justice. Waite v. Southern Pac. Co. [192 Cal. 467], 221 P. 204. 'Section 473,' says the court in Nicoll v. Weldon, 130 Cal. , 667, 63 P. , 64, 'is a remedial provision, and is to be liberally construed so as to dispose of cases upon their substantial merits, and to give to the party claiming in good faith to have a substantial defense to the action an opportunity to present it. * * * It is for this reason that we more readily listen to an appeal from an order refusing to set aside a default, than where the motion has been granted, since in such case the defendant may be deprived of a substantial right, where as it may be assumed, if nothing to the contrary is shown, that the plaintiff will be able at any time to establish his cause of action. If, for any reason, he will be unable to do so, that fact should be made to appear; but if he is merely subjected to delay or inconvenience by having the default set aside, he can be compensated herefor by the terms which the court may impose as the condition of granting the motion.' See, also, Brasher v. White, 53 Cal.App. 545, 200 P. 657.'
Again, in Kent v. County Fire Ins. Co., 27 Cal.App.2d 340, 341, 80 P.2d 1019, it is stated: 'The purpose of section 473 of the Code of Civil Procedure is remedial. It should be liberally construed so as to dispose of cases upon their substantive merits and give the party claiming in good faith to have a meritorious right, an opportunity to present it. Because of this the reviewing courts will scan more closely orders denying relief and are more prone to reverse orders of denial. They look with disfavor upon a party, who, regardless of the merits of his case, attempts to take [213 P.2d 81] advantage of mistake, surprise and inadvertence of his adversary. Brill v. Fox, 211 Cal. 739, 743, 297 P. 25.'
However, the foregoing is qualified somewhat by the following statement appearing in 14 Cal.Jur. 1078, sec. 116: 'But notwithstanding statements by the supreme court to the effect that the discretion is better exercised when it tends to bring about a decision on the merits, the rule not to disturb the trial court's action except in a clear case of abuse of discretion 'has never been relaxed'; such statements 'have been in the nature of advice' to the court below and not a compulsion to act in the manner suggested. (Citation of authorities.)'
No doubt has been raised as to the propreity of the instant motion. And the 'question here is the one that was before the [trial] court on the motion to vacate the judgment, namely, whether appellant made a sufficient showing for relief under section 473, Code of Civil Procedure, although we are, of course, under a duty to abide by the ruling of the trial court unless we are satisfied that in denying the motion to court was guilty of an abuse of discretion.' Nicholson v. Nicholson, 85 Cal.App.2d 506, 508, 193 P.2d 112, 113.
In the late case of Mann v. Pacific Greyhound Lines, 92 Cal.App.2d 439, 207 P.2d 105, 108, in discussing a motion made pursuant to section 473, supra, it was said: 'The problem presented to the trial court on the motion was whether plaintiffs were entitled to relief from the judgment of dismissal because of their 'mistake, inadvertence, surprise or excusable neglect.' That problem was presented on affidavits, and it is definitely settled that 'In the consideration of an appeal from an order made on affidavits, involving the decision of a question of fact, the appellate court is bound by the same rule that controls it where oral testimony is presented for review. If there is any conflict in the affidavits, those in favor of the prevailing party must be taken as true, and the facts stated therein must be considered established.' 1 Cal.Jur. p. 681; 2 Cal.Jur. p. 932.'
Turning to the affidavits filed in support of the instant motion, (1) that of appellant averred, among other things, that Rose Marie of California, Inc., was incorporated on September 25, 1947; that on October 1st, affiant was employed by such corporation as manager of its manufacturing plant; that when on March 26, 1948 he was served with summons and complaint directed against him as J. C. Capritti doing business as Rose Marie of California, he was instructed 'by said corporation to confer with its attorney, Geo. W. Rochester, Esq., in regard to defense'; that affiant filed an answer on behalf of the corporation and 'was under the impression that this would be sufficient as the said corporation's attorney assured him that the plaintiff and plaintiff's counsel understood the situation.' That on June 24th, the corporation filed a petition in bankruptcy, and affiant filed a claim in that proceeding for wages due him. Further, that he fully and fairly stated all the facts in the case to his counsel, Mr. Rochester, and 'is advised by said counsel and he verily believes that he has a valid and meritorious defense to the within action upon the merits.'
(2) The affidavit of Mr. George W. Rochester, counsel for the corporation, avers that 'on or about the middle of July, 1948, he became the attorney for J. C. Capritti'; that about April 21, 1948, one Dragna, Secretary-Treasurer of Rose Marie of California, Inc., a corporation, showed affiant the complaint and amended complaint filed in the within action which had been served on the president hereof about March 26 and April 1, 1948, respectively; that at the hearing of May 20th on the demurrers to the answer and cross-complaint of respondent corporation, it was stated in the presence of respondent's attorney, Mr. Abraham Gottfried, 'that his suit was intended to be against Rose Marie of California, Inc., a corporation, inasmuch as there was no J. C. Capritti doing business under the fictitious name and style of Rose Marie of California.' That after imparting such information to said attorney, 'affiant was under the impression * * * that the amended answer and amended cross-complaint would suffice for [213 P.2d 82] the purposes of getting the causes of action at issue.' That thereafter said Mr. Gottfried interposed demurrers to the amended answer and amended cross-complaint 'setting up hyper-technical objections to the pleadings, one of them being 'whether Rose Marie of California, Inc. is a defendant herein, and if so, for which of the named defendants it is appearing', he, Abraham Gottfried, knowing full well the factual situation and that Rose Marie of California, Inc., answered the complaint for the reason that there was no such legal entity as J. C. Capritti doing business under the fictitious firm name and style of Rose Marie of California.' That hearing on the demurrers was set for June 24, 1948, and continued by stipulation between affiant and Mr. Gottfried to July 1, 1948; that on June 24, 1948, affiant advised Mr. Gottfried that Rose Marie of California, Inc. had filed a petition in bankruptcy and that therefore the action would have to be defended and tried by the attorney for the receiver. Further, affiant averred that early in July of 1948, a deputy county clerk telephoned him and said that Mr. Gottfried had requested from her 'a setting for trial of a default taken against J. C. Capritti doing business under the fictitious firm name and style of Rose Marie of California'; whereupon he talked to Mr. Gottfried and told him in substance that, after the implied understanding between them, for Mr. Gottfried to 'now try to 'pull the sneak' was indeed a surprise to affiant, but that if he wanted J. C. Capritti to file an answer, contrary to our mutual understanding, of course, affiant would try and get hold of Mr. J. C. Capritti and file the answer. Said Abraham Gottfried over the telephone then stated to affiant that an answer should be filed for J. C. Capritti in his personal capacity, whereupon affiant assured Abraham Gottfried that the answer from J. C. Capritti would be filed'; that such answer was filed on July 21, 1948, and on that very afternoon affiant received notification that a default trial had been set for 'J. C. Capritti dba Rose Marie of California' on July 29, 1948; that he thereupon had his motion to set aside such default set for hearing on the same day, at which time it was denied; that he thereafter made the instant motion under sec. 473, C.C.P. to set aside the 'default judgment on file herein, by reason of 'inadvertence, surprise or mistake', caused by affiant's reliance upon his understanding with Abraham Gottfried, a member of the Bar of California * * *'
The several other affidavits made in support of the motion contained averments with respect to the defense which it was proposed to present. No allegations were made touching upon the elements of 'inadvertence, surprise, mistake or excusable neglect' necessary to be shown in order to prevail under section 473, supra.
In opposition to the motion, respondent's counsel, Mr. Gottfried, filed his affidavit in which he averred, among other things, that on March 2, 3, 4, 8, 9, 10, 11, 18, 24, April 21 and 26, 1948, he had numerous conversations with appellant and the various attorneys representing him, to-wit: Harry M. Umann, Esq., of the firm of Altagen, Rubin & Umann; Bernard S. Selber, Esq., and George W. Rochester, Esq., and at no time during such conversations did any of the attorneys or appellant advise affiant or his client that appellant was not the owner of the business and that same was owned by a corporation; that to the contrary, Mr. Umann specifically advised affiant that he represented appellant personally; that the day before respondent's complaint was filed, affiant together with the president and secretary of respondent corporation visited the place of business of appellant, at which time the latter stated that he was the owner of the business, Rose Marie of California; that on March 19th, affiant filed the original complaint herein and attached the bank account of appellant dba Rose Marie of California; that on March 24th Mr. Umann telephoned affiant that he 'would enter an appearance for Mr. J. C. Capritti' requesting that affiant furnish him a copy of the summons and complaint, which was done. Affiant then averred upon information and belief that when service of summons and complaint was made upon appellant, [213 P.2d 83] that the latter conferred with Mr. Umann, who advised that a personal appearance would have to be made for appellant; that appellant thereupon instructed Mr. Umann to turn over the files in the case to Mr. Rochester; that among these files 'affiant is informed and believes, was the original complaint and summons, together with correspondence showing that Mr. Capritti dealt with plaintiff in his individual capacity.'
It is further averred that on May 6th, Mr. Rochester filed an answer on behalf of Rose Marie of California, Inc. Also that appellant, as well as his attorneys, 'knew at all times that he was sued in his individual capacity and that the same is evidenced by the fact that his undertaking to release the attachment was given for Mr. Capritti only, and that as a result of such undertaking, the Sheriff released the property held under attachment.' That he is now informed that the corporation is a bankrupt, and 'that the present action on the part of J. C. Capritti is an attempt to avoid liability and to saddle a bankrupt corporation with his responsibilities.' That Mr. Rochester was representing appellant in his individual capacity long before July, 1948, may be seen by his letter dated May 24, 1948, addressed to affiant, a copy of which is attached to the affidavit. Affiant also denied that he had any understanding with Mr. Rochester that the action was intended to be against the corporation and not against appellant; or that the amended answer and cross-complaint would suffice for the purpose of getting the causes of action at issue. Further, that affiant at all times told Mr. Rochester that he was not interested in any corporation, but was interested only in appellant, individually; that affiant made no statement, representation or indication to Mr. Rochester to the contrary; that Mr. Rochester knew that appellant was the real party in interest and on May 6th when he entered the appearance of Rose Marie of California, Inc., he also knew or had reason to believe that the corporation was insolvent and was contemplating bankruptcy.
The affidavits of the president and secretary respectively of respondent corporation in opposition to the motion were to the effect that at no time did appellant state that he was not personally responsible under the contract which forms the basis of the instant action; or that it was not made between respondent and appellant personally; or that appellant represented a corporation, but to the contrary, appellant represented that he was the owner of the business.
The matter has been argued and briefed with great care and at great length, and at times with acrimony. But when all is said and done, the defendant never has had his day in court. He claims to have a meritorious defense, and the ends of justice will be better served if he is afforded an opportunity to present it.
The order is reversed. Each party to pay their respective costs on appeal.
WHITE, P. J. and DORAN, J., concur.