A. F. C., Inc. v. Brockett

• Decision Date: 15 December 1967
• Citation: 257 Cal.App.2d 40,64 Cal.Rptr. 771
• Court: California Court of Appeals Court of Appeals
• Parties: A.F.C., INCORPORATED, a California corporation, Plaintiff, Appellant and Respondent, v. James H. BROCKETT, Third Party Claimant, Appellant and Respondent, R. W. Akers, Individually and doing business under the firm and style of Akers Farms, Defendant. Civ. 24292.

Page 771

64 Cal.Rptr. 771

257 Cal.App.2d 40

A.F.C., INCORPORATED, a California corporation, Plaintiff, Appellant and Respondent, v. James H. BROCKETT, Third Party Claimant, Appellant and Respondent, R. W. Akers, Individually and doing business under the firm and style of Akers Farms, Defendant.

Civ. 24292.

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

Dec. 15, 1967.

Dominic Bianco, Mark Bianco & Means, Bakersfield, for appellant, A.F.C., Incorporated.

Allan McFarland, Vizzard, Baker, Sullivan & McFarland, Bakersfield, for respondent, James H. Brockett.

DEVINE, Presiding Justice.

Appellant, in an action on a promissory note of R. W. Akers, caused attachment to be levied on a Bonanza airplane. The amount of $21,953.01 and interest and attorneys' fees are alleged to be due to appellant. ¹ Respondent is a third party claimant. It was adjudged that Akers had an interest of but $1,863.85 in the airplane. The court found the airplane to be worth approximately $27,000.

1. Subrogation

Following the attachment, a bank which had financed the purchase of the airplane by Akers and respondent to the extent of $19,965.66, made demand on appellant, the attaching creditor, for payment of this sum. The bank held a chattel mortgage on the airplane. Appellant paid the bank in full and received an assignment of the bank's note and mortgage. Immediately, appellant made demand on Akers and respondent for reimbursement, and at once respondent paid the amount in full to appellant. Appellant refused to give respondent an assignment of the bank's note and chattel mortgage. But the trial judge held that respondent was entitled to be subrogated to the bank's rights as mortgagee against appellant. Appellant contends that a right to subrogation must first be established in a separate proceeding, a suit in equity.

In this state an equitable right may be enforced in a court of law. This principle applies to a proceeding in subrogation. (Offer v. Superior Court, 194 Cal. 114, 228 P. 11; 4 Witkin, Summary of Cal.Law, Equity, § 89, p. 2864.) Appellant cites several suits in equity in which subrogation was allowed (Elbert, Ltd. v. Federated Income Properties, 120 Cal.App.2d 194, 261 P.2d 743 (partition); Kenney v. Kenney, 97 Cal.App.2d 60, 217 P.2d 151 (divorce); Shaffer v. McCloskey, 101 Cal. 576, 36 P. 196 (suit to revive mortgage)), and argues that a suit in equity is necessary to establish a right by way of subrogation. But the cases do not say anything to justify the proposition that a separate suit in equity is required. The statement in Meyers v. Bank of America, etc., Assn., 11 Cal.2d 92, at page 96, 77 P.2d 1084, at page 1086, that one asserting a right of subrogation 'must first show a Right in equity to be entitled to such subrogation,' does not mean, as we construe the case, that he must file a preliminary suit and prosecute it to favorable judgment before putting forth his claim to subrogation. It means, rather, that it is a prerequisite for one who asserts a right to subrogation to demonstrate superior equity of his claim.

Appellant cites Jack v. Wong Shee, 33 Cal.App.2d 402, 92 P.2d 449, for the proposition that the right of subrogation is not one which a party may assert by his own action, but which must be asserted in a civil action. But this does not mean that it must be established in a suit in equity. In fact, the Jack case cites, at page 411, 92 P.2d 449, for the proposition itself, Offer v. Superior Court, supra, 194 Cal. 114, 117, 228 P. 11, which recognizes the availability of subrogation in actions at law.

Of course, principles of equity apply, even if the action be one in form legal rather than equitable. (Meyers v. Bank of America, supra, 11 Cal.2d p. 95, 77 P.2d 1084.) We have no doubt that subrogation may exist, under the rule stated in Offer v. Superior Court, to third party claim proceedings as well as to direct two party actions at law. Nor do we doubt the correctness of the trial court's holding that respondent, on receiving the demand of appellant to pay the bank's indebtedness, became subrogated to the bank's prior right against Akers' interest in the airplane, which had been assigned to A.F.C., Incorporated, and was entitled to invoke this interest against appellant's inferior third party claim. One who has property subject to a lien for a due claim may redeem it before redemption is foreclosed, and he then becomes subrogated to the benefits of the lien. (Civ.Code, § 2903.) A tenant in common may redeem the common property from a mortgage and become entitled to an equitable lien on the interests of his cotenant for their just proportion of the redemption money. (Kenney v. Kenney, 97 Cal.App.2d 60, 62, 217 P.2d 151. And see Riley v. Turpin, 47 Cal.2d 152, 156--157, 301 P.2d 834.)

Respondent complied with appellant's demand. He cleared title to the airplane as against the lien of the chattel mortgage. Thereafter, to the extent that respondent might fail to carry the burden as to his share of ownership of the airplane, appellant's claim would be effective.

Appellant makes the point, in its closing brief, that respondent was a primary debtor to the bank and hence is not entitled to assert subrogation to Akers' obligation to the bank. The liability of contenants, as between themselves, for the payment of liens against the common estate, is proportionate to their respective interests, and a cotenant relieving the common property from a lien or charge for the joint benefit of the tenants in common is entitled to an equitable lien by subrogation. (Seale v. Balsdon, 51 Cal.App. 677, 197 P. 971; Kenney v. Kenney, supra, 97 Cal.App.2d 60, 217 P.2d 151; 83 C.J.S. Subrogation § 21, p. 621.) For purposes of subrogation the paying cotenant is not deemed primarily, but only secondarily, liable for his cotenant's proportion of the debt. (50 Am.Jur., Subrogation, § 67, p. 724; Seale v. Balsdon, sepra.)

2. The Evidence

A. Appellant contends that the evidence is insufficient to sustain the 'finding' ² that a payment of $5,379.06 made to the seller of the airplane (to Akers and Brockett) was made by Brockett from his own funds. Appellant contends that the funds originated from the sale of another airplane, a Cessna, which had been owned by Akers. But Brockett testified that the funds were obtained by his own personal note to a bank, and although a...