Commercial & Farmers Nat. Bk. v. Hetrick

• Court: California Court of Appeals
• Writing for the Court: FORD
• Citation: Commercial & Farmers Nat. Bk. v. Hetrick, 134 Cal.Rptr. 285, 64 Cal.App.3d 158 (Cal. App. 1976)
• Decision Date: 24 November 1976
• Parties: COMMERCIAL AND FARMERS NATIONAL BANK, Plaintiff, v. H. Morgan HETRICK, Defendant and Appellant; Paris Jet, Inc., Third-Party Claimant and Respondent. Civ. 48911.

Page 285

134 Cal.Rptr. 285

64 Cal.App.3d 158

COMMERCIAL AND FARMERS NATIONAL BANK, Plaintiff, v. H. Morgan HETRICK, Defendant and Appellant Paris Jet, Inc., Third-Party Claimant and Respondent.

Civ. 48911.

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

Nov. 24, 1976.

Bernard Meyerson, Ventura, for defendant and appellant.

Kelly & Bleuel and Michael J. Kelly, Ventura, for third-party claimant and respondent.

FORD, Presiding Justice.

Appellant H. Morgan Hetrick (hereinafter Hetrick) appeals from 'the judgment on the petition in the matter of the third party claim filed by PARIS JET, INC., entered on 15 January 1976.'

A knowledge of the background of the litigation is necessary to an understanding of the proceedings here. With respect to the underlying action, plaintiff Commercial & Farmers National Bank (hereinafter Bank) brought suit on a note naming Hetrick and Paris Jet, Inc. (hereinafter PJI) as defendants. Thereafter Bank secured a writ of attachment and levied on the purported interests of defendants PJI and Hetrick in and to certain personal property, specifically 17 pieces of equipment. On October 7, 1975, PJI secured an order from the trial court discharging the writ of attachment '(a)s between plaintiff (Bank) and defendant, PARIS JET, INC.' The October 7, 1975, order provided as follows: 'Pursuant to stipulation . . . (the 17 items of equipment) may be released to PARIS JET, INC. forthwith upon the posting of a bond or undertaking with the Marshal or levying officer in the amount of $22,000.00 in the favor of both plaintiff herein and defendant, W. MORGAN HETRICK, it being contemplated that the rights of defendants, PARIS JET, INC. and W. MORGAN HETRICK in the below listed personal property will be determined by a Third Party Claim procedure to be filed by PARIS JET, INC.'

Thereafter, on October 28, 1975, PJI petitioned the trial court for a 'Hearing in the nature of a Third Party Claim (CCP §§ 549, 689).' In his opposition to PJI's petition Hetrick asserted, among other contentions, that PJI, as a defendant in the main action, had 'no standing to bring an action under Code of Civil Procedure section 689 as a third party claimant' and that he, Hetrick, was in fact the owner of the equipment in question.

In his declaration filed in opposition to PJI's petition, Hetrick stated in part as follows: '4. I have already appeared once in a court proceeding and proved my ownership of the property listed in Petitioner's Order to Show Cause. In the proceeding in which I previously appeared (Travel Enterprises, Inc. v. Aviation Research Corporation, Ventura County Superior Court No. 58249), the plaintiff had obtained a judgment by default against Aviation Research Corporation and had executed on the property listed in Petitioner's Order to Show Cause. Although Aviation Research Corporation is wholly owned by Paris Jet, Inc., neither Paris Jet, Inc., nor Aviation Research Corporation moved to oppose Travel's execution on the property. The foregoing was true albeit that Paris Jet, Inc., had actual knowledge of the execution in that its officers and directors in a large part were the same as Aviation Research Corporation's and its business operations were conducted on the same premises wherein the personal property listed in the petition was located and wherein it was executed on. I filed a third party claim in that action, appeared at a hearing, proved ownership to the property listed in petitioner's Order to Show Cause and was given an order which provided that I was the owner of the property listed in petitioner's Order to Show Cause and that the Ventura County marshal was required to release the property to me. A copy of said order is attached hereto as Exhibit 'C'. ¹ ( ) 5. On July 14, 1975, with the above-described court order in hand, I, along with representatives from the Ventura County Marshal's Office, went to the premises of Paris Jet, Inc., and Aviation Research Corporation to claim and receive my property, to wit, the personal property listed in Petitioner's Order to Show Cause. Before we could completely remove the property from the premises, Commercial and Farmers National Bank served upon us a Writ of Attachment under which the personal property listed in Petitioner's Order to Show Cause is now held. ( ) 6. If the court herein should release said property from the Writ of Attachment by which it is now held, it would necessarily have to release the property to me since I am the lawful owner thereof and have a court order which requires that the property be released to me. ( ) 7. I have already commenced a lawsuit with this court (Hetrick v. Graves, Case No. 58674) wherein Paris Jet, Inc., and Aviation Research Corporation have appeared as party defendants and wherein my first cause of action is for claim and delivery of the property listed in Petitioner's Order to Show Cause.'

A hearing was held on PJI's alleged third party claim pursuant to Code of Civil Procedure sections 549 and 689, at which evidence, both oral and documentary, was presented by PJI and Hetrick. Thereafter the trial rendered its 'Judgment of (sic) Petition in the Nature of a Third Party Claim' wherein the trial court stated its decision as follows: 'IT IS ORDERED, ADJUDGED AND DECREED that the petition and claim of PARIS JET, INC., a Nevada Corporation to have title to certain personal property be determined to belong to it, and not W. MORGAN HETRICK, is hereby sustained establishing title in the property described in the petition filed by PARIS JET, INC. ( ) The bond posted by PARIS JET, INC. in favor of W. MORGAN HETRICK and FARMERS NATIONAL BANK is hereby exonerated.'

On this appeal ² Hetrick does not purport to attack the sufficiency of the evidence with respect to the trial court's determination concerning title to the equipment. Rather, Hetrick asserts initially that PJI 'did not have standing to petition as a third party claimant' because it was named, served and appeared as a defendant in the main action. While PJI argues the merits of this contention in its reply brief, it also asserts that Hetrick stipulated to the procedure that was followed in the trial court. Thus it is stated by PJI as follows: 'Hetrick, through his attorney, stipulated, as reflected in the court's order of October 7, 1975, that PJI may take possession of the property upon two conditions, which were thereafter incorporated in the court's order: (a) PJI post an undertaking in the sum of $22,000.00. (b) PJI cause a petition in the nature of a Third Party Claim to be filed so that the respective property rights of PJI and appellant could be promptly determined.'

While the order to which reference is made speaks of a 'stipulation,' the precise content of that stipulation does not appear in the record nor is there any indication as to who were the parties to such stipulation. Furthermore, we note that in his response to PJI's petition filed after the October 7 order, Hetrick raised the issue of the propriety of the procedure and that just prior to the hearing on PJI's petition counsel for Hetrick argued to the trial court that PJI could not maintain the third party claim procedure because PJI was a second party to the suit and because there was another action pending between the same parties concerning the same issues. There is no support in the record for PJI's contention that Hetrick stipulated to the use of the third party claim procedure.

We turn then to a consideration of Hetrick's contentions respecting the propriety of the trial court's action in entertaining PJI's petition for a 'hearing in the nature of a third party claim' pursuant to Code of Civil Procedure sections 549 and 689. ³ Section 549 (now section 488.090), which was in effect at the time of these proceedings, provided as follows: 'In cases where a third person claims, as his property, any personal property attached, the rules and proceedings applicable in cases of third party claims after levy under execution shall apply.' Section 689 sets forth the rules and procedures applicable to third party claims after levy under execution. Each of these code provisions deals with third party claims and no specific provision is made for the settlement of disputes as between codefendants respecting title to attached property. We do not perceive, as apparently the Legislature did not, any reason for allowing two codefendants to contest, as between themselves, the question of title to property in the middle of attachment proceedings prior to judgment.

As was said in National General Corp. v. Dutch Inns of America, Inc., 15 Cal.App.3d 490, at page 495, 93 Cal.Rptr. 343, 347: 'The basic purpose of the remedy of attachment, embodied in section 537, is to aid in the collection of a money demand by seizure of property in advance of trial and judgment, as security for eventual satisfaction of the judgment.' (See Randone v. Appellate Department, 5 Cal.3d 536, 555, 96 Cal.Rptr. 709, 488 P.2d 13; American Ind. Sales Corp. v. Airscope, Inc., 44 Cal.2d 393, 398, 282 P.2d 504; Schneider v. Zoeller, 175 Cal.App.2d 354, 358, 346 P.2d 515.)

A levy of attachment does not change the title to the attached property, even though as in the case of personalty, it may be taken from the possession and control of the defendant. Still, the general property remains in the defendant and the attaching creditor acquires no title to the property by means of his attachment. (Imperial Metal Finishing Co. v. Luminous Ceilings West, Inc., 270 Cal.App.2d 390, 394, 75 Cal.Rptr. 661; United States Overseas Airlines v. County of Alameda, 235 Cal.App.2d 348, 352, 45 Cal.Rptr. 337; 7 C.J.S. Attachment § 240, p. 415.) Furthermore, the attachment lien covers only the actual interest of the debtor in the property existing at the time of the levy. (Kinnison v. Guaranty Liquidating Corp., 18 Cal.2d 256, 259--260, 115 P.2d 450; A.F.C., Inc. v. Brockett, 257 Cal.App.2d 40, 44, 64 Cal.Rptr. 771; Motor...