Fairfield v. Hamilton

• Decision Date: 08 August 1962
• Court: California Court of Appeals Court of Appeals
• Parties: Joseph W. FAIRFIELD, Plaintiff and Appellant, v. Jesse A. HAMILTON, Evert L. Hagan, and Robert O. Ahlstrom, Defendants and Respondents. Civ. 25830.

Page 73

24 Cal.Rptr. 73

206 Cal.App.2d 594

Joseph W. FAIRFIELD, Plaintiff and Appellant, v. Jesse A. HAMILTON, Evert L. Hagan, and Robert O. Ahlstrom, Defendants and Respondents.

Civ. 25830.

District Court of Appeal, Second District, Division 2, California.

Aug. 8, 1962.

Rehearing Denied Sept. 4, 1962.

Hearing Denied Oct. 2, 1962.

Joseph W. Fairfield, Ethelyn F. Black, Frank C. Wickhem, Los Angeles, for appellant.

Jesse A. Hamilton, Los Angeles, for respondents Evert L. Hagan and Robert O. Ahlstrom.

Jesse A. Hamilton, in pro. per.

HERNDON, Justice.

On July 7, 1958, Joseph W. Fairfield, appellant, brought this action in two counts against Jesse A. Hamilton, Evert L. Hagan, Charles M. Farrington, Matthew W. McClean and Robert O. Ahlstrom, alleging that they (1) had combined and conspired to defame and injure him, and, in pursuance of a preconceived plan, had prepared and mailed false and defamatory letters; and (2) had filed such legal proceedings against him as amounted to a malicious abuse of process. McClean was not served. Appellant and Farrington executed a covenant in which appellant covenanted not to sue Farrington further in the action. The action went to trial before a jury against the defendants Ahlstrom, Hagan and Hamilton.

On February 16, 1961, at the conclusion of plaintiff's cases, the trial court granted a nonsuit in favor of Ahlstrom. The jury returned a verdict against Hagan on both counts, assessing the compensatory damages for libel in the amount of $250.00 and punitive damages of $5,000; they assessed $1,000 as the compensatory damages for abuse of process and allowed punitive damages of $10,000. Hagan's motion for a new trial was granted 'on the ground of insufficiency of the evidence to justify the verdict and decision and said verdict and decision is against law'. The verdict against Hamilton assessed plaintiff's compensatory damages on his libel cause of action in the sum of $250.00, and allowed him nothing either on the cause of action for abuse of process or for punitive damages on the libel cause of action.

Plaintiff appeals: (1) from the judgment of nonsuit in favor of defendant Ahlstrom; (2) from the order granting the motion of defendant Hagan for a new trial; and (3) from 'so must of said judgment which is in favor of the defendant Hamilton on the Second Cause of Action of plaintiff's complaint'.

On May 23, 1951, Flintridge Heights, Inc., a California corporation, was adjudicated a bankrupt in the United States District Court. The plaintiff was appointed attorney for the original trustee in this proceeding and later reappointed attorney for a successor trustee. The principal asset of the bankrupt was a tract of undeveloped property comprising approximately sixty acres.

The difficulties which have produced such a tragic and wasteful volume of litigation between the parties to this action all appear to have stemmed from what we may generously term the very remarkable and most unfortunate terms of the sale of this real property which was made in 1955 by the then trustee. The trustee, with plaintiff acting as his attorney, sold the property to three individuals named Naylor, Byers and King for $138,000. Plaintiff testified that he could not recall having obtained any credit report on these purchasers. The terms of sale provided for payment by the purchasers of $40,000 in cash, the balance fo $98,000 to be evidenced by a promissory note secured by deed of trust covering only a portion of the tract.

The amazing order approving this sale provided that ten acres were to be excluded from the trust deed and that these ten acres 'shall be selected and designated by the buyers and shall be their sole concern and not the concern of the Trustee'. (Emphasis added.) The purchasers then selected a number of lots spread throughout the tract totalling approximately ten acres. The trustee conveyed these lots to the purchasers unencumbered. It appears that the cash payment of $40,000 was borrowed by the three purchasers from one Dwight Anderson and that to evidence this loan they gave him a note secured by a deed of trust on the lots which were excluded from the purchase money trust deed theretofore given the trustee in bankruptcy.

Naylor, Byers and King formed a corporation known as Flintridge Highlands, Inc. (not to be confused with Flintridge Heights, Inc.) and conveyed to it the purchased property, except the lots which they had taken in fee from the trustee.

The buyers made no payment on either note. Anderson, the lender of the $40,000 used to make the down payment to the trustee, exercised his power of sale under his deed of trust on the ten acres covered thereby and, by purchase at the foreclosure sale, acquired title to these lots. Plaintiff unsuccessfully sought to prevent this foreclosure, and, in an affidavit filed in connection therewith, alleged that it had become apparent that the purchase of the tract by Byers, King and Naylor had been a promotional venture previously arranged between said buyers and Anderson, and that the severance of the tract which Anderson's foreclosure would accomplish would greatly decrease the value of the tract with the portion retained by the trustee having the lesser value. This statement was later shown to be correct by the sale by the trustee of his reclaimed portion for $35,000.

The trustee, in lieu of exercising the power of sale conferred upon him by his trust deed, obtained the consent of the referee to proceed by way of judicial foreclosure. Flintridge Highlands, Inc., was not made a party to the foreclosure action, nor was a title report obtained to determine whether or not any transactions affecting the title to the property had occurred since the sale. Plaintiff handled this foreclosure suit in his capacity as attorney for the trustee.

On January 10, 1956, a decree of foreclosure was entered, and on February 9, 1956, the property was sold to the trustee at execution sale for $25,000, and a deficiency judgment was entered in favor of the trustee and against the three purchasers in the amount of $77,296.55. One year thereafter, the statutory period of redemption expired and the commissioner who conducted the sale issued a deed to the trustee. However, Flintridge Highlands, Inc., the corporation formed by Naylor Byers and King, in the meantime, had become indebted to defendant Hagan for approximately $10,000. Hagan reduced this obligation to judgment and levied on the same portion of the tract which, as previously indicated, stood of record in the name of Flintridge Highlands, Inc. He received a marshall's conveyance, dated April 21, 1958.

Thereafter followed a prolonged series of legal maneuvers and counter-maneuvers on the part of defendant Hagan and his attorney, defendant Hamilton, and the trustee in bankruptcy and his attorney, plaintiff herein. In is manifestly apparent that personalities soon became hopelessly confused with principles. The proceedings included, inter alia, petitions to redeem the property; quiet title actions filed by defendants in both the state and federal courts; orders to show cause in re contempt, instituted by plaintiff in the bankruptcy court; malicious prosecution actions in the municipal and superior courts filed by defendants as a result of the contempt citations, etc., etc. As might be anticipated, nothing was accomplished by these proceedings but an increase in the ill will existent among the combatants.

Apparently in order to improve his tactical position, defendant Hagan sought to purchase creditors' claims and shares in another corporation for which plaintiff acted as attorney, known as Benedict Heights, Inc. Hagan, acting through defendant Farrington, an employee, purchased a claim against the bankrupt corporation and then filed a creditor's petition in the bankruptcy proceeding seeking to remove plaintiff as attorney for the trustee. Defendants Hagan, Hamilton and Farrington acquired shares of stock in Benedict Heights, Inc., and thereafter various proceedings were instituted by them seeding to compel transfers of stock certificates and to obtain orders for the inspection of the books and records of said corporation. Appeals resulted from a number of these proceedings, including Hagan v. Gardner, 9 Cir., 283 F.2d 643; Hagan v. Fairfield, 183 Cal.App.2d 703, 7 Cal.Rptr. 248; Farrington v. Fairfield, 194 Cal.App.2d 237, 16 Cal.Rptr. 119; and Hagan v. Superior Court, 53 Cal.2d 498, 2 cal.Rptr. 288, 348 P.2d 896.

This court has no intention of being drawn into an unnecessary recital of the history of this prolonged and vexatious litigation beyond the point required in order to pass upon the issues presently before us. We feel that the summary of the proceedings involved in the history of the present action as above set forth is sufficient for this purpose.

It was against this inflamed background that defendant Hagan wrote letters to the creditors of the bankrupt corporation on July 9, 1957, and on July 15, 1957, wherein he charged plaintiff with mishandling the real property sale described above, and further charged that plaintiff had performed numerous legal services that were unnecessary and made statements from which it might be inferred that this was for the purpose of enlarging his fees.

We shall first consider plaintiff's appeal from the nonsuit granted upon defendant Ahlstrom's motion. The granting of a nonsuit is 'warranted when, and only when, disregarding conflicting evidence and giving to plaintiff's evidence all the value to which it is legally entitled, indulging in every legitimate inference that may be drawn from that evidence, the result is a determination that there is no evidence of sufficient substantiality to support a verdict in favor of plaintiff.' (16 Cal.Jur.2d, § 48, p. 214.) As stated in Wilson v. Southern Pacific R. R. Co., 62 Cal. 164, 172: 'Such an order should not be made, unless there is no evidence at all, or a mere scintilla of evidence wholly...