People ex rel. State of Cal. v. Drinkhouse

• Decision Date: 26 February 1970
• Citation: 4 Cal.App.3d 931,84 Cal.Rptr. 773
• Court: California Court of Appeals Court of Appeals
• Parties: PEOPLE ex rel. STATE OF CALIFORNIA, and County of Kern, Plaintiffs and Respondents, v. Fred DRINKHOUSE and Thomas D. Rutledge, Defendants and Appellants. PEOPLE ex rel. STATE OF CALIFORNIA, Plaintiff and Respondent, v. Walter C. HARBERT, Defendant and Appellant. Civs. 27061, 27062.

Page 773

84 Cal.Rptr. 773

4 Cal.App.3d 931

PEOPLE ex rel. STATE OF CALIFORNIA, and County of Kern, Plaintiffs and Respondents, v. Fred DRINKHOUSE and Thomas D. Rutledge, Defendants and Appellants.

PEOPLE ex rel. STATE OF CALIFORNIA, Plaintiff and Respondent, v. Walter C. HARBERT, Defendant and Appellant.

Civs. 27061, 27062.

Court of Appeal, First District, Division 4, California.

Feb. 26, 1970.

Hearing Denied April 22, 1970.

William A. Howell, Bakersfield, for Fred R. Drinkhouse.

Donald G. Kendall, Bakersfield, for Thomas Rutledge.

Cassman & Lachina, Los Angeles, for Walter C. Harbert.

Thomas C. Lynch, Atty. Gen., E. G. Benard, Asst. Atty. Gen., Sacramento, for People of the State.

Ralph B. Jordan, County Counsel, Dennis N. Reid, Deputy County Counsel, Bakersfield, for County of Kern.

DEVINE, Presiding Justice.

Summary judgment quieting title of the State of California to certain lands was rendered against appellants Drinkhouse, Rutledge and Harbert, and against other persons who have not appealed or whose appeals have been dismissed. Drinkhouse, Rutledge and Harbert filed separate notices of appeal and have filed separate briefs.

The lands were purportedly conveyed by Leslie W. Weber, the tax collector of Kern County, under a tax sale on April 24, 1964, to appellants Drinkhouse and Rutledge. The complaint to quiet title alleges that on that date the tax collector was financially interested in the sale and that the sale was therefore void. The motion for summary judgment is supported by a declaration of D. N. Reid, deputy county counsel, which recites that Weber, the tax collector at the time of the sale, was charged by indictment with violation of section 1090 of the Government Code, that he was convicted thereof upon trial by jury (as well as of conspiracy with appellant Rutledge to violate the same section), and that the judgment of conviction has become final because appeal, although noticed, was abandoned; that he has served a jail sentence upon the conviction as one condition of a grant of probation; and that the transaction which was described in the indictment was the sale on April 24, 1964, which included the properties which are the subject of this lawsuit.

Section 1090 of the Government Code forbids county officers to be financially interested in any contract made by them in their official capacity, or to be purchasers at any sale made by them in such capacity. A sale is a contract within the conflict of interests statutes. (Salada Beach etc. Dist. v. Anderson, 50 Cal.App.2d 306, 309, 123 P.2d 86.) A contract in violation of section 1090 of the Government Code is void. As it was put in Kaufmann and Widiss, The California Conflict of Interest Laws, 36 So.Cal.L.Rev. 186, 199: 'Notwithstanding the language that such contracts 'may be avoided'--the courts have often held that a contract in which a public officer is interested is void, rather than voidable as the statute indicates.' The authors cite cases supporting their statement: People v. Deysher, 2 Cal.2d 141, 147, 40 P.2d 259; Berka v. Woodward, 125 Cal. 119, 127, 57 P. 777; Stockton Plumbing & Supply Co. v. Wheeler, 68 Cal.App. 592, 601, 229 P. 1020. To these many others could be added, among them Stigall v. City of Taft, 58 Cal.2d 565, 569, 25 Cal.Rptr. 441, 375 P.2d 289. The principle, as stated in Berka v. Woodward, Supra, is that where a statute pronounces a penalty for an act, a contract founded on such act is void, although the statute does not pronounce it void nor expressly prohibit it (at p. 127, 57 P. 777). To the same effect are Severance v. Knight-Counihan Co., 29 Cal.2d 561, 568, 177 P.2d 4, 172 A.L.R. 1107, and a host of other authorities.

The Rutledge Appeal

Rutledge was convicted not only of conspiracy with Weber to violate section 1090 of the Government Code, but also of violation of the underlying section itself, which means that the jury found him guilty as a principal because of aiding and abetting. The purchase was not criminal, or illegal, merely because Rutledge was a county officer. His official position was not connected with the making of tax sales. (Title Guarantee & Trust Co. v. Woody, 63 Cal.App.2d 209, 213, 146 P.2d 252.) The jury, in finding Rutledge guilty of violating section 1090, necessarily had to find that Weber, who executed the tax deed, was financially interested in the contract. Of course, Rutledge as codefendant in the criminal case had every opportunity to challenge the prosecution's essential contention that Weber was financially interested in the contract. Despite the presumption of innocence and the requirement of proof beyond reasonable doubt, and the requirement of unanimous verdict of the jury, both Weber and Rutledge were convicted. Rutledge cannot now be heard to deny that Weber had a financial interest in the contract at the very time of its making. (Teitelbaum Furs, Inc. v. Dominion Insurance Co., Ltd., 58 Cal.2d 601, 605, 607, 25 Cal.Rptr. 559, 375 P.2d 439; Newman v. Larsen, 225 Cal.App.2d 22, 36 Cal.Rptr. 883.) He has had his day in court. The Drinkhouse and Harbert Appeals

A. Collateral Estoppel

Appellants Drinkhouse and Harbert were not parties to the criminal prosecution. Indeed, both of them were called as witnesses for the prosecution. Drinkhouse was a co-grantee with Rutledge on the original deed from Weber. Harbert was a grantee of a deed from Rutledge.

We have said above, citing authorities, that a deed made in violation of Government Code, section 1090 is void. But although such a deed Ad initio carries no title, obviously there must be a judicial decision to effectuate nullification against nominal title. In reaching such a decision, however, the judicial body need only find that the officer acting for the state as grantor had a financial interest in the property. All other matters, equities and the like, are irrelevant. The final conviction of Rutledge established invalidity of the deed as to him, as explained above.

But Drinkhouse and Harbert contend that the doctrine of collateral estoppel does not apply to them, because, they say, they were neither parties to the criminl prosecution nor were they privies to the defendants. They contend that they have not had their day in court, because they had no control of the criminal prosecution. They could not produce witnesses, nor could they cross-examine witnesses produced by the People. They could not have their own counsel, nor could they appeal.

The three questions which we put to ourselves in determining whether collateral estoppel applies to appellants Drinkhouse and Harbert, as taken from Teitelbaum Furs, Inc. v. Dominion Insurance Co., Ltd., 58 Cal.2d 601, 604, 25 Cal.Rptr. 559, 560, 375 P.2d 439, 440, are: "Was the issue decided in the prior adjudication identical with the one presented in the action in question? Was there a final judgment on the merits? Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?"

The first interrogatory must be answered in the affirmative. As we have said before, the single question, a necessary question in the criminal case, was, and the single one in this case is, whether Weber was financially interested in the contract at the time it was made. Appellants would have it that they are entitled, in the quiet title action, to challenge and to require the People to prove the fact that Weber actually was interested financially at the very time of sale. (The evidence in the criminal case was that whenever Rutledge made a resale of a part of the property which had been conveyed to him in the tax deed, he remitted exactly one half of the proceeds to Weber. What the state had to prove, and did prove, to the satisfaction of the jury was that this procedure was not an afterthought but was an integral part of the arrangement of the sale.) Question No. 1 clearly has been answered.

Question No. 2, of course, is answered affirmatively. No appeal has taken from the judgment of conviction, nor has that conviction been attacked collaterally.

We come now to Question No. 3, whether appellants were in privity with Weber and Rutledge, the parties to the prior adjudication. Our answer is that they were such privies. It is true that there are statements in the cases to the effect that a privy is one who after rendition of the judgment has acquired an interest in the subject matter affected by the judgment through or under one of the parties, as by inheritance, succession or purchase. Such a statement, indeed, appears in Bernhard v. Bank of America, 19 Cal.2d 807, 811, 122 P.2d 892, the landmark case which did away with the need for mutuality of estoppel. Appellants make the point that they did not become grantees after the judgment of conviction, but rather before it was rendered.

But the word 'privy' has acquired an expanded meaning. The courts, in the interest of justice and to prevent expensive litigation, are striving to give effect to judgments by extending 'privies' beyond the classical description. (People v. One 1964 Chevrolet Corvette Convertible, 274 A.C.A. 793, 804, 79 Cal.Rptr. 447.) The emphasis is not on a concept of identity of parties, but on the practical situation. The question is whether the non-party is sufficiently close to the original case to afford application of the principle of preclusion. (People v. One 1964 Chevrolet Corvette Convertible, supra, at pp. 804--805, 79 Cal.Rptr. 447; Vestal, Preclusion/Res Judicata Variables: Parties, 50 Iowa L.Rev. 27, 45.) To quote Professor Vestal (at p. 45): 'The courts and commentators have indicated...