Flickinger v. Swedlow Engineering Co.

• Decision Date: 28 October 1955
• Citation: 289 P.2d 214,45 Cal.2d 388
• Court: California Supreme Court
• Parties: R. H. FLICKINGER, Plaintiff and Respondent, v. SWEDLOW ENGINEERING CO., Inc., a corporation, and Fireman's Fund Indemnity Co., a corporation, Defendants and Appellants. L. A. 23534. . In Bank

Page 214

289 P.2d 214

45 Cal.2d 388

R. H. FLICKINGER, Plaintiff and Respondent, v. SWEDLOW ENGINEERING CO., Inc., a corporation, and Fireman's Fund Indemnity Co., a corporation, Defendants and Appellants.

L. A. 23534.

Supreme Court of California.

In Bank.

Oct. 28, 1955.

Rehearing Denied Nov. 23, 1955.

Laurence J. Rittenband, Anderson, McPharlin & Conners and Kenneth E. Lewis, Los Angeles, for appellants.

C. J. Walker, Los Angeles, for respondent.

SPENCE, Justice.

Defendants appeal from a judgment for plaintiff in this action arising out of a contract for the performance of work on a state-highway project. As grounds for reversal, defendants contend: (1) that plaintiff is precluded from maintaining this action because of failure to comply with the state licensing requirements, Bus. & Prof.Code, §§ 7025-7031; (2) that a prior judgment which has now become final is res judicata on the claim here asserted; and (3) that plaintiff's present action is barred by section 439 of the Code of Civil Procedure. Since defendant's third point is well taken and is determinative of this appeal, it will be unnecessary to consider the first two contentions above recited.

On January 29, 1948, plaintiff Flickinger, a licensed contractor, entered into a written contract with defendant Swedlow Engineering Co., Inc., to perform a portion of the latter's contract with the state for the construction of a public highway. Defendant Fireman's Fund Indemnity Co. is the surety on Swedlow's contractor's bond. Gov. Code, §§ 4204, 14371 et seq. By an oral agreement on March 15, 1948, Flickinger assigned the benefits of the contract to a partnership composed of himself and another licensed contractor, Ralph Welker. Thereafter the partnership entered upon the performance of Flickinger's obligations under the contract, except that portion of the work that Swedlow, the general contractor, thereafter agreed to complete Periodic payments were made to the partnership of Flickinger & Welker as the work progressed. The partnership at no time during performance of the contract obtained a contractor's license. All of the work under the contract between Swedlow and the state was officially accepted by the state on October 27, 1948.

After the contract was completed a controversy arose between Swedlow and Flickinger concerning the work under their contract; and Swedlow sued (April 9, 1949) Flickinger and Welker, individually and as copartners, for a sum in excess of $60,000 as damages for breach of contract. Flickinger and Welker answered and, in addition, filed a counterclaim alleging that there was a sum of money owing to them and that an account had been stated for some $11,000 between the parties. In that action judgment was entered (February 3, 1953) that neither party take anything on their opposing claims. That judgment became final.

The present action was brought (May 12, 1949) by Flickinger, individually and as assignee of the partnership, against Swedlow, the general contractor, and the surety, Fireman's Fund, setting forth a claim for work performed under the contract and for payment alleged to be due under the terms of defendants' bond. (Formerly Code Civ.Proc. § 1184e; now Code Civ.Proc. § 1192.1.) The same amount asserted in the prior action as a counterclaim by defendants Flickinger and Welker, plus one additional charge for certain blasting material furnished for the construction project, constitutes the sum sought in this action. The parties agreed that the present action should be ordered off calendar pending disposition of the prior action, and it was reset for trial on January 8, 1954. By stipulation, the pleadings in the prior action were introduced in evidence in this action.

Flickinger sought recovery here in his own name, alleging that at all times he had been a licensed contractor; that he had assigned the 'benefits' of his individual contract to the partnership (Flickinger & Welker); that the partnership and Welker had agreed to do the work under his control and direction; that he (Flickinger) duly performed all the conditions agreed to be performed; and that prior to the commencement of suit the partnership and Welker had assigned to him all their right and interest in the money here sought for the work performed. However, at the trial Flickinger testified that following the oral assignment of the Swedlow contract to the partnership, the partnership did the work; and the court generally found that 'plaintiff and said partnership duly performed all' the agreed conditions and work for defendant Swedlow. The court further found that 'during all of the time mentioned in plaintiff's * * * complaint, plaintiff was and now is a duly licensed contractor * * *; that Ralph Welker at all times since November 24, 1947, has been and now is a duly licensed contractor * * *; and that at all times since May 9, 1949, the said partnership of Flickinger & Welker has been and now is a duly licensed contractor * * *,' which date was some six months after the work was completed and three days before the filing of the complaint in this action. The court concluded that Flickinger and Welker individually and as partners had 'substantially complied with the licensing provisions of the Business and Professions Code,' and that 'the cause of action * * * (was) not barred by * * * section 7031 or any section of (that) code.' It further determined that the prior decision was not res judicata, and that this action was not barred by the provisions of section 439 of the Code of Civil Procedure. Accordingly, judgment was entered on plaintiff's alleged claim.

Defendants moved for a new trial, which was denied. However, at that time, in response to defendants' request for a 'more detailed and comprehensive finding of fact with reference to (their) sixth affirmative defense' (the alleged bar of section 439 of the Code of Civil Procedure), the court made these additional findings, Code Civ.Proc. § 662: That the same highway construction project was the subject matter of both actions, involving the same basic contract between Swedlow and the state and the same subcontract between Swedlow and Flickinger; and that 'the work and labor for which plaintiff herein seeks to recover upon defendants' labor and material bond arose out of said agreement (subcontract) between * * * Flickinger and * * * Swedlow * * * upon which Swedlow * * * brought suit as plaintiff in (the prior) action.' Upon the basis of this finding, defendants properly challenge the propriety of the trial court's conclusion that the statutory bar, Code Civ.Proc. § 439, does not apply; and accordingly, they seek reversal of the judgment.

Section 439 provides: 'If the defendant omits to set up a counterclaim upon a cause arising out of the transaction set forth in the complaint as the foundation of the plaintiff's claim, neither he nor his assignee can afterwards maintain an action against the plaintiff therefor.' A counterclaim 'must tend to diminish or defeat the plaintiff's recovery and must exist in favor of a defendant and against a plaintiff between whom a several judgment might be had * * *.' Code Civ.Proc. § 438; Tomales Bay Oyster Corp. v. Superior Court, 35 Cal.2d 389, 393, 217 P.2d 968; Case v. Kadota Fig Ass'n, 35 Cal.2d 596, 603-604, 220 P.2d...