Boys Town, USA, Inc. v. World Church

• Citation: 349 F.2d 576
• Decision Date: 28 September 1965
• Docket Number: No. 19556.,19556.
• Parties: BOYS TOWN, U.S.A., INC., a Nevada corporation, Appellant, v. The WORLD CHURCH, a California corporation, Jackson Appliance, Inc., a California corporation, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

349 F.2d 576 (1965)

BOYS TOWN, U.S.A., INC., a Nevada corporation, Appellant, v. The WORLD CHURCH, a California corporation, Jackson Appliance, Inc., a California corporation, Appellees.

No. 19556.

United States Court of Appeals Ninth Circuit.

August 10, 1965.

Rehearing Denied September 28, 1965.

Paul K. Duffy, Morris Lavine, Los Angeles, Cal., for appellant.

Philip F. Belleville, Latham & Watkins, Los Angeles, Cal., for appellee.

Before BARNES and ELY, Circuit Judges, and POWELL, District Judge.

POWELL, District Judge:

This appeal is from a judgment of dismissal on the merits on a motion for summary judgment in an action for specific performance of a contract and damages for its breach. It is a diversity case. This Court has jurisdiction under 28 U.S.C. § 1291.

On April 13, 1959, the World Church (Church) as seller, entered into a contract of sale of California real estate to the appellant and Sunset Development Company.¹ Performance of the contract was to be completed on July 24, 1959. On June 1, 1959, the Church, the seller, gave notice of the cancellation, termination and rescission of the contract.

On March 28, 1960, appellant commenced an action against the Church in the Superior Court of the State of California in and for the County of Ventura. The complaint in that action sought specific performance of the same alleged contract which was attached to the complaint in the lower court here. It also sought damages for breach of the contract. It asserted the seller was obligated to convey title to the property on July 24, 1959.

On March 17, 1961, Jackson Appliance, Inc. (Jackson) acquired title to the subject real property from the Church. On June 28, 1962, Jackson intervened in the state court action in Ventura County and filed its answer in intervention. It alleged ownership of the property, that it owed no amount in damages to appellant and that there was no right in appellant to specific performance of the contract.

On July 23, 1962, the Superior Court for the State of California in Ventura County entered a judgment on the merits in that suit in favor of Jackson and the Church. That judgment found appellant was not entitled to damages from either defendant or intervener and was not entitled to specific performance of the contract.

The state court judgment was appealed to the District Court of Appeals for the State of California and on October 23, 1963, was affirmed. 221 Cal. App.2d 468, 34 Cal.Rptr. 498. Petition for hearing by the Supreme Court was denied December 18, 1963.

This action was filed in the United States District Court on February 26, 1964. It concerns the same property that was described in the prior state court action. The complaint is for damages and specific performance based on the same contract as that relied on in the former state court action. The only allegation not in the amended complaint in the state court action is that Jackson has interfered with the appellant's contract with the Church and is liable for damages.

RES JUDICATA OR ESTOPPEL BY JUDGMENT

There is an invasion of only one primary right by each of the defendants. That is the right to whatever contractual benefits appellant may be entitled under the contract of purchase. That right was adjudicated in the former action, which judgment is now a bar to this action by appellant.

Restatement, Judgments § 48:

"Where a valid and final personal judgment is rendered on the merits in favor of the defendant, the plaintiff cannot thereafter maintain an action on the original cause of action."

See: Panos v. Great Western Packing Co., 21 Cal.2d 636, 134 P.2d 242 (1943); McNulty v. Copp, 125 Cal.App. 2d 697, 271 P.2d 90 (1954).

Appellant seeks to avoid the effect of this rule by contending that Jackson was not a party to the first case. Jackson was a party to the case by intervention and subject to the jurisdiction of the court. It raised the questions in its answer in intervention that terminated the case. The state court judgment provided dismissal as to Jackson.

All matters that could have been raised by any of the parties will be considered as adjudicated.

Heiser v. Woodruff, 327 U.S. 726, 66 S.Ct. 853, 90 L.Ed. 970 (1946), rehearing denied 328 U.S. 879, 66 S.Ct. 1335, 90 L.Ed. 1647:

"In general a judgment is res judicata not only as to all matters litigated and decided by it, but as to all relevant issues which could have been but were not raised and litigated in the suit." (327 U.S. p. 735, 66 S.Ct. p. 857)

Hatchitt v. United States, 158 F.2d 754 (9 Cir. 1946):

"Paraphrasing the language of the following authorities and applying it to the cases at bar, we may say that it is of no importance that in the St. Marie litigation the appellants failed to set up all their rights — namely, those under the 1923 schedule as well as those under the one of 1927 — upon which their cause of action could have been maintained. It is sufficient that it might have been litigated." (p. 757)

McFaddin v. H. S. Crocker Co., 219 Cal.App.2d 585, 33 Cal.Rptr. 389, 392:

"* * * It is well settled in this state that a party may not split a single cause of action, using the same obligation as the basis of separate suits, and that where this is done the judgment in the first action may be pleaded as a bar to a subsequent suit based on the same fundamental claim which could have been presented in the first action."

STATUTE OF LIMITATIONS

The contract was to be performed by the Church on July 24, 1959. This action was commenced February 26, 1964, more than four years later. The statute of limitations that governs the actions on the contract is California Code of Civil Procedure, Section 337 (Vol. I, R.p. 88, lines 25-28). It is a four year limitation and bars action against the Church.

Appellant cites cases which purport to permit a postponement of the running of the statute. They are Ross v. Tabor, 53 Cal.App. 605, 200 P. 971 (1921); Union Sugar Co. v. Hollister Estate Co., 3 Cal. 2d 740, 47 P.2d 273 (1935), and Tahoe Pines Co. v. Newman, 59 Cal.App. 186, 210 P. 445 (1922). They do not assist appellant here.

Ross v. Tabor holds that since the contract involved was an executory one, the statute of limitations did not commence running until the time arrived for complete performance, unless there had been a mutual abandonment or rescission by the plaintiff.

The Union Sugar case holds that in an executory farming contract, "where the parties did not mutually abandon or rescind it upon a breach or successive breaches, the injured party could wait until the time arrived for a complete performance by the other party and then bring an action for damages for such breaches." (47 P.2d page 276)

The Tahoe Pines Co. case holds that in an action for specific performance of an installment contract for the purchase of realty, the cause of action accrues when the last installment becomes due. This is based on the equitable doctrine of mutuality. Neither party to such an installment contract can maintain an action for specific performance until the final payment is due since the "vendor is prevented because of the fact that the installments are not due, and the vendee for the reason that until he has made full payment he is not in a condition to demand a conveyance." 210 P. page 447) The principle is stated in Restatement, Contracts, as follows:

"§ 322. WHEN STATUTE OF LIMITATIONS BEGINS TO RUN IN CASE OF ANTICIPATORY BREACH.

If no action on an anticipatory breach is brought before the time fixed by the contract for the beginning of performance by the party who has committed such a breach, the period of the Statute of Limitations begins to run only from the time so fixed by the contract."

The appellant states the statute of limitations is a personal defense and was not raised by the Church and Jackson cannot raise it for the Church. We disagree as the correct statement of the law appears to be stated in Taylor Bros. Co. v. Duden, 112 Utah 436, 188 P.2d 995, 996 (1948), where the court quoted 34 Am.Jur., Limitations of Actions, § 379, page 294:

"Although, it is generally true that the statute of limitations is a plea personal to the debtor, it is nevertheless established that where there is a privity between the party who could, if sued, plead the statute and the party offering to plead it, the latter may plead it to save his property. Such is the case with heirs, mortgagees, transferees of mortgaged property, and, unless the grant is fraudulent, vendees. * * *"

See also: Johnson v. Ware, 58 Cal. App.2d 204, 136 P.2d 101 (1943); Tinsley v. Lombard, 46 Or. 9, 78 P. 895 (1904); George v. Butler, 26 Wash. 456, 67 P. 263, 57 L.R.A. 396 (1901); Developments — Statute of Limitations, 63 Harv.L.Rev. 1177, 1250 (1950).

Appellant says this action is one for slander of title by Jackson and is therefore not barred by the two year statute of limitations, Cal.Code of Civil Procedure, Sec. 339. The claim of...