Burt v. Irvine Co.
| Decision Date | 22 December 1952 |
| Citation | 47 Cal.Rptr. 392,237 Cal.App.2d 828 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Athalie I. BURT, also known as Joan Irvine Burt, and Athalie R. Clarke, as Trustee under a Declaration of Trust dated |
Loeb & Loeb, Alden G. Pearce, Howard I. Friedman, Los Angeles, C. Ray Robinson, San Francisco, for appellants.
McCutchen, Doyle, Brown, Trautman & Enersen, Morris M. Doyle, San Francisco, Howard J. Privett, Los Angeles, for respondents Irvine Co., James Irvine Foundation, Robert H. Gerdes, A. J. McFadden, N. Loyall McLaren, James G. Scarborough, C. S. Wheeler and Allison Honer.
Newlin, Tackabury & Johnston, David H. Massey, Los Angeles, for respondents Robert W. Long, Baycrest Co., Maslo. Inc., and Bayside Associates, Inc.
Plaintiffs have appealed from a judgment entered for the defendants after the court sustained the respective demurrers of each of two groups of defendants without leave to amend, and also from an order requiring plaintiffs to furnish security pursuant to the provisions of section 834 of the Corporations Code.
A review of the proceedings held before the lower court facilitates understanding of the legal issues raised by the appeal and the factual matters, both alleged and evidentiary, bearing thereon. On July 31, 1962 plaintiffs filed their complaint, in two counts. The suit is concededly a stockholders' derivative action for the alleged benefit of defendant, The Irvine Company, a corporation (hereinafter 'the Company'), and joins as defendants The James Irvine Foundation, a nonprofit charitable corporation (hereinafter 'the Foundation'), certain named directors and officers of the Company, and business entities in which an officer of the Company allegedly has an interest. Plaintiffs attack a real estate transaction entered into in 1959 and concluded early in 1960, in which the Company exchanged land suitable for residential development in Orange County for agricultural land in Imperial County. They seek to recover the difference between the alleged fair market value of the land conveyed and the value received by the Company in exchange therefor; and, in addition, the alleged loss to the Company from the exchange, rather than the retention for leasing, of 29 acres allegedly improperly transferred and conveyed, alleged profits made by an officer of the Company in the development of a portion of the property received by him and the business entities in which he is interested, and their costs of suit and attorneys' fees.
On October 30, 1962, the time therefor having been properly extended, the Foundation and the named individual defendants other than Long, who is the alleged recipient of an interest in the property conveyed by the Company, filed a demurrer and memorandum of points and authorities setting up failure of the complaint to state facts sufficient to constitute a cause of action, and the bar of the two-year limitation of subdivision 1 of section 339 of the Code of Civil Procedure. Contemporaneously the Company and related individual defendants filed a notice of motion to require plaintiffs to furnish security under section 834 of the Corporations Code on the ground that there is no reasonable possibility that the prosecution of the causes of action alleged in the complaint will benefit the Company, and on the additional ground as to the defendants Gerdes and Honer that they did not participate in any capacity in the transactions complained of in the complaint. This notice of motion was accompanied by the declarations of four of the six appearing defendants and of the defendant Long, of Fant, an employee of the Company, and of the attorney for the moving parties.
On the same day the defendant Long, and the business entities in which he is allegedly interested, took similar action. By their demurrer they raised the same issues as their codefendants and specially asserted that several causes of action had been improperly united. Long also filed a notice of motion to require plaintiffs to furnish security on his own behalf on the ground first asserted by his codefendants, which was supported by the declaration of his attorney and all of the declarations hereinabove noted, except that of the attorney for the codefendants.
Thereafter, on March 7, 1963, each of the plaintiffs filed her declaration in opposition to the pending motion. In addition there were filed on plaintiffs' behalf declarations of the former secretary and of the former assistant secretary of the Company, of two appraisers, and of two individuals, each of whom represented a developer who had been interested in the acquisition of the Orange County property.
Despite the provisions of subdivision (c) of section 834 of the Corporations Code, which grant a stay of proceedings until ten days after a motion requiring a party to furnish security is disposed of, both the demurrers and the motions came on regularly for hearing on March 11, 12 and 13, 1963. At that time, by agreement of counsel, the depositions of plaintiff Burt, theretofore taken on behalf of defendants, and of defendant McFadden, and of employee Fant, previously taken on behalf of plaintiffs were made part of the record on the motions for security.
Following the hearing defendants filed supplements to the declarations of Long, Fant, and defendant Wheeler, and a declaration of the appraiser who had appraised the Orange County property for the Company in 1959. Finally, at the suggestion of the court, albeit reluctantly, the plaintiffs lodged with the court a copy of a proposed amended complaint.
After consideration of this voluminous record, which includes not only the documents to which reference has been made, but also numerous exhibits attached to the complaint and to the various declarations, the court rendered its decision sustaining without leave to amend, the demurrer of the Foundation and related defendants on both of the grounds asserted, and that of the defendants Long and associated defendants on the ground that the complaint failed to state a cause of action. The motion for security was denied without prejudice. A formal order denying motions for security and a judgment on demurrer were thereupon signed and filed, and notice thereof was given to plaintiffs.
On June 5, 1963, plaintiffs filed their notice of appeal from the aforementioned judgment. Thereafter on June 6, 1963, Long, on the one hand, and the Company and related defendants on the other, each filed a notice of appeal from the order denying the motions for security. By appropriate notices and by stipulation all of the matters before the trial court, including a transcript of the hearings before it, were incorporated in the record for each of the appeals.
On August 13, 1963, each of the appealing defendants, pursuant to the provisions of Rule 19(a), California Rules of Court, abandoned the appeal from the order denying the motions for security. They jointly filed their notice of intention to renew motions to require plaintiffs to furnish security under Corporations Code, section 834, and the declarations of their respective attorneys in support thereof. The notice of motions indicates that their renewal is predicated upon the same grounds as originally asserted, and is based upon substantially all of the declarations and other matters proffered by the defendants in support of their prior motions, and the new declarations, which reflect the pendency of plaintiffs' appeal. Following hearing the court made and filed its order requiring plaintiffs to deposit security in the sum of $15,000 for the reasonable expenses and attorneys' fees of the defendant Company, six directors and the defendant Long. Plaintiffs appealed from this order. By appropriate designations and stipulations the record on this appeal includes all that was adduced before augmented by the subsequent proceedings, including the order which is attacked.
The dismissals of the appeals from the order denying the motions for security dispose of the question of whether such an order is an appealable order (see Efron v. Kalmanovitz (1960) 185 Cal.App.2d 149, 8 Cal.Rptr. 107 and Bailey v. Fosca Oil Co. (1963) 216 Cal.App.2d 813, 815, 31 Cal.Rptr. 380). It is unnecessary to determine whether an appeal from an order granting such a motion after judgment (see Kaiser v. Easton (1957) 151 Cal.App.2d 307, 314-315, 311 P.2d 108) lies because it is a 'special order made after final judgment' (Code Civ.Proc. § 963, subd. 2), or, because it is a final order in a collateral proceeding directing the performance of an act, to wit, the deposit of security, by appellants. (See 3 Witkin, Cal. Procedure, Appeal, § 11, pp. 2152-2153; Efron v. Kalmanovitz, supra, 185 Cal.App.2d 149, 154-155, 8 Cal.Rptr. 107.) Any suggestion in the case last cited that an order granting security can only be reviewed following dismissal of the action for failure to furnish the security ordered (185 Cal.App.2d at pp. 156-157, 8 Cal.Rptr. 107) is questionable in view of the fact that two of the three judges who participated in Efron, without comment, entertained and determined an appeal, taken before the expiration of the period granted within which to post security, from an order for security entered prior to judgment (see Marble v. Latchford Glass Co. (1962) 205 Cal.App.2d 171, 175, 22 Cal.Rptr. 789). More particularly, in these proceedings, on prior motion of respondents for a stay of proceedings on the appeal from the judgment pending determination of the appeal from the order requiring security, it was recognized that the latter...
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