Bank of America v. Department of Mental Hygiene

• Decision Date: 21 November 1966
• Citation: 246 Cal.App.2d 578,54 Cal.Rptr. 899
• Court: California Court of Appeals Court of Appeals
• Parties: BANK OF AMERICA, as Executor of the Last Will and Testament of Francesco Cerruti, deceased, Plaintiff and Appellant, v. DEPARTMENT OF MENTAL HYGIENE of the State of California, Defendant and Respondent. Civ. 23583.

Page 899

54 Cal.Rptr. 899

246 Cal.App.2d 578

BANK OF AMERICA, as Executor of the Last Will and Testament of Francesco Cerruti, deceased, Plaintiff and Appellant, v. DEPARTMENT OF MENTAL HYGIENE of the State of California, Defendant and Respondent.

Civ. 23583.

Court of Appeal, First District, Division 3, California.

Nov. 21, 1966.

Hearing Denied Jan. 18, 1967.

J. A. Pardini, Elda Granelli, Julian Pardini, San Francisco, for appellant.

Thomas C. Lynch, Atty. Gen., Elizabeth Palmer, Deputy Atty. Gen., San Francisco, for respondent.

BRAY, Justice. ^*

Plaintiff Bank of America as executor of the last will and testament of Francesco Cerruti, deceased, appeals from judgment in favor of defendant Department of Mental Hygiene of the State of California after demurrer to complaint sustained without leave to amend.

Questions Presented

1. May the court on the hearing of the demurrer take judicial notice of the decree settling first and final account and of distribution in Francesco's estate?

2. If so, is the decree res judicata of the subject matter of this action?

3. The effect of the dismissal with prejudice of the prior action.

4. Does a cause of action lie for recovery of money paid to the state under a statute held prior to payment to be constitutional but subsequently declared to be unconstitutional?

5. Does section 905.2 of the Government Code apply?

6. Applicability of Department of Mental Hygiene v. Kirchner (1964) 60 Cal.2d 716, 36 Cal.Rptr. 488, 388 P.2d 720.

Record

This being a judgment based upon the sustaining of a demurrer to the complaint without leave to amend, the facts stated in the complaint must be accepted as true. Plaintiff is the executor of the last will of Francesco Cerruti, who died in 1961. His daughter, Albina, was committed to Napa State Hospital in 1954 as a mentally ill person. In August, 1962, defendant department, pursuant to section 6650 of Welfare and Institutions Code, brought an action in San Francisco Superior Court against plaintiff to recover $8,069.48 for Albina's care. Judgment of dismissal in favor of the bank was appealed and in Department of Mental Hygiene v. Bank of America (1963) 220 Cal.App.2d 160, 33 Cal.Rptr. 566, was reversed. Petition for hearing in the Supreme Court was denied. Thereafter the claim was settled for $5,676.19, which amount was paid by plaintiff executor on December 3, 1963. On January 31, 1964, the California Supreme Court in Kirchner held section 6650 unconstitutional. On March 31, 1964, plaintiff filed a claim with the State Board of Control to recover the money. The claim was rejected. Thereupon, on October 26, 1965, plaintiff filed this action to recover the amount paid. Defendant's general demurrer to the complaint was sustained without leave to amend.

1. Judicial Notice of the Probate Decree.

Defendant contends that that decree is res judicata of the subject matter of the complaint herein.

On February 19, 1964, the decree settling the first and final account of plaintiff herein and decree of final distribution in Francesco's estate was entered. The executor's payment in settlement of the defendant's claim was approved therein.

At one time there was a wide split in the cases as to the use of judicial notice when ruling upon a demurrer where the judgment did not appear on the face of the complaint. (See, for example, Pike v. Archibald (1953) 118 Cal.App.2d 114, 257 P.2d 480; Garcia v. Garcia (1957) 148 Cal.App.2d 147, 306 P.2d 80; Willson v. Security-First Natl. Bank (1943) 21 Cal.2d 705, 134 P.2d 800.) However, the matter is now settled by Flores v. Arroyo (1961) 56 Cal.2d 492, 495, 15 Cal.Rptr. 87, 364 P.2d 263, where the court held that in ruling on a demurrer essentially founded on res judicata, the court may take judicial notice of a prior judgment in a different case though such judgment or its content is not pleaded in the complaint, provided (a) the judgment is appropriately drawn to the court's attention and (b) the plaintiff has adequate notice and opportunity to be heard on the question of the effect of such judgment. ¹ The court expressly stated that any statements in the decisions of its court or of the District Courts of Appeal contrary to the rule announced in Flores were overruled and disapproved (p. 497, 15 Cal.Rptr. 87, 364 P.2d 263).

The trial court having had the right to take judicial notice of said decree and having done so, we turn to the question:

2. Is the Decree Res Judicata of the Subject Matter of This Action?

'A former judgment operates as a bar against a second action upon the same cause, but, in a later action upon a different claim or cause of action, it operates as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determined in the first action.' (Zaragosa v. Craven (1949) 33 Cal.2d 315, 321, 202 P.2d 73, 77, 6 A.L.R.2d 461.)

The decree adjudged, in effect, that the claim of the department was a proper charge against the estate and its payment a proper one. 'A decree of distribution which has become final is as conclusive and final as any other judgment entered by a court of competent jurisdiction.' (Estate of Bodger (1955) 130 Cal.App.2d 416, 418, 279 P.2d 61, 63; Estate of Green (1955) 138 Cal.App.2d 211, 292 P.2d 651.)

'(T)he application of the principle or res judicata in a given case depends upon an affirmative answer to these three questions: Was the issue decided in the prior adjudication identical with the one presented in the subsequent litigation? Was there a final judgment on the merits? Was the party against whom the principle is invoked a party or in privity with a party to the prior adjudication? Bernhard v. Bank of America, 19 Cal.2d 807, 813, 122 P.2d 892.' (Dillard v. McKnight (1949) 34 Cal.2d 209, 214, 209 P.2d 387, 391, 11 A.L.R.2d 835.)

The issue decided by the decree is identical with the one presented in the case at bench, namely, the validity of the department's claim against Francesco's estate for Albina's care. The decree was a final judgment on the merits. The executor had the authority to make the settlement, even without a prior authorization from the court. (See Estate of Lucas (1943) 23 Cal.2d 454, 464, 144 P.2d 340.) The decree approving the payment was entered February 19, 1964. It was appealable. (Prob.Code, § 1240; Estate of Cole (1951) 106 Cal.App.2d 823, 825, 236 P.2d 206.) No appeal was taken, so the decree became final in 60 days. (Cal. Rules of Court, Rule 2(a).) Kirchner was decided January 30, 1964, some 20 days before the decree was entered and some 80 days before the time to appeal expired. So plaintiff executor could have raised the question of the application of Kirchner to defendant's claim.

The party against whom the res judicata principle is invoked in the case at bench, Francesco's estate, is the same party as the one in the prior adjudication.

3. Dismissal With Prejudice.

Somewhat akin to the fact that the decree in Francesco's estate is res judicata in this action, is the situation with reference to the effect of the dismissal with prejudice of the action brought by defendant against plaintiff on its claim. On December 10, 1963, there was filed in that action 'Dismissal With Prejudice' signed by counsel for both parties. This recited in pertinent part 'the above-entitled action having been compromised and settled, the same is hereby dismissed with prejudice.'

It is well settled that a dismissal with prejudice by consent or stipulation of the parties, after compromise or settlement of the suit where the dismissal is intended to operate as a retraxit and end the litigation, is a bar to a subsequent suit. (See Sears v. De Mota (1958) 157 Cal.App.2d 216, 220, 320 P.2d 579; Goddard v. Security Title Ins. & Guar. Co. (1939) 14 Cal.2d 47, 55, 92 P.2d 804.) Undoubtedly under this rule it would appear that the litigation is ended not only as to the plaintiff's cause of action but also as to any defense the defendant could have set up; otherwise there would be no 'end to the litigation' which is the object of a dismissal with prejudice.

Plaintiff contends that the above rule does not apply to a situation where the judgment is obtained under a statute which has been declared constitutional but thereafter is declared unconstitutional. It cites four cases in support of its contention, none of which are in point. One is Olivera v. Grace (1942) 19 Cal.2d 570, 122 P.2d 564, 140 A.L.R. 1328, in which the plaintiff brought an action to set aside a judgment against a person known to the plaintiff who obtained the judgment to be incompetent at the time. The reviewing court reversed the judgment based upon the sustaining of a demurrer without leave to amend, holding that the complaint stated a cause of action upon the ground of fraud. The question of validity of any statute was not involved.

The second case is Stetson & Co. v. Goldsmith (1858) 31 Ala. 649, an action to obtain an injunction to restrain the enforcement of a judgment for damages for a trespass. Stetson had brought suit against Goldsmith. In that action a writ of attachment was issued by the clerk of the city court, and under it a stock of goods belonging to Goldsmith was sold. It had been the custom for the city court clerk to issue such writs, and just prior to the issuance of this writ the city court in another action had held that the clerk had such authority. That ruling, however, was on appeal at the time of the issuance of the writ in question. The Supreme Court thereafter reversed the city court, holding that the clerk did not have such authority. Thereupon Goldsmith sued Stetson for trespass and obtained a $5,000 judgment. The trespass consisted of the levy on the Goldsmith stock of goods under the writ of attachment issued by the clerk. Thereupon Stetson brought the action in 31 Alabama to enjoin the enforcement of that judgment. The trial court made an interlocutory decree ordering a preliminary injunction which had...