J. C. Peacock, Inc. v. Hasko

• Citation: 196 Cal.App.2d 363,16 Cal.Rptr. 525
• Court: California Court of Appeals
• Decision Date: 17 October 1961
• Parties: J. C. PEACOCK, INC., a Corporation, d.b.a. J. C. Peacock Machine Co., Plaintiff and Respondent, v. John H. HASKO et al., Defendants. John H. Hasko, Leonard R. Greer, Ronald C. Hinman, Alice Faye Plummer, Administratrix of the Estate of Earl C. Plummer, Deceased, T. M. Hinman, Ernest Sanchez and Pacific Aircraft Products, a Co-partnership, Appellants. Civ. 25222.

Page 525

16 Cal.Rptr. 525

196 Cal.App.2d 363

J. C. PEACOCK, INC., a Corporation, d.b.a. J. C. Peacock Machine Co., Plaintiff and Respondent, v. John H. HASKO et al., Defendants John H. Hasko, Leonard R. Greer, Ronald C. Hinman, Alice Faye Plummer, Administratrix of the Estate of Earl C. Plummer, Deceased, T. M. Hinman, Ernest Sanchez and Pacific Aircraft Products, a Co-partnership, Appellants.

Civ. 25222.

District Court of Appeal, Second District, Division 1, California.

Oct. 17, 1961.

Rehearing Denied Nov. 14, 1961.

Hearing Denied Dec. 13, 1961.

Ralph W. Evans and Guy Richards Crump, Los Angeles, for appellants.

Danielson & St. Clair, Los Angeles, and Deryl D. Shumway, Huntington Park, for respondent.

LILLIE, Justice.

This appeal is from the judgment in the 'fraud' case referred to in the companion appeal, 16 Cal.Rptr. 518, this day decided. Sought to be recovered were secret profits realized from the operation of defendant Pacific Aircraft Products, the creation of which company (as pleaded in the 'bonus' case) assertedly resulted from a conspiracy among the various individual defendants to cheat and defraud plaintiff in the subcontracting of work to that partnership. Unlike the remaining individual defendants, Sanchez and Hinman were not employed by plaintiff; however, they are said to be jointly and severally liable for the profits of the operation because they knowingly joined an agent or fiduciary in an enterprise where the agent's interest was adverse to his trust. Anderson v. Thacher, 76 Cal.App.2d 50, 172 P.2d 533.

Trial proceeded upon plaintiff's third amended complaint. Count one thereof, which set forth the conspiracy, was for recovery of the reasonable value of the cost to plaintiff of completing work that the partnership had contracted to do; count two involved the conversion of small tools; and count three was one for money had and received. As in the 'bonus' case, cross-complaints were filed by certain defendants for salaries unpaid and other relief. A Los Angeles attorney was appointed as referee to ascetain the net profits realized out of defendant's transactions with plaintiff; his report was in due course approved by the trial court. Judgment against the defendants in varying amounts was subsequently rendered; no relief was given the cross-complainants on their cross-demands.

The principal claim on this appeal is to the effect that the entire action is a complete nullity because it was originally filed under the name of J. C. Peacock Machine Co., which corporation had been merged with J. C. Peacock, Inc. prior to the filing of the action. There is no dispute as to the fact and time of this merger; they were previously considered by this court on the appeal from the order refusing to discharge a writ of attachment issued at the instance of respondent. 184 Cal.App.2d 142, 7 Cal.Rptr. 490. In January of 1953, J. C. Peacock Machine Co. became a constituent corporation of a merger whereby J. C. Peacock, Inc. (respondent herein) became the surviving corporation. The present action was filed in August of 1953 by J. C. Peacock Machine Co. as plaintiff. None of the officers of either corporation learned of the merger until some time in 1954--Mr. Peacock was the president and principal stockholder of both corporations. Upon discovery of the merger, a certificate of doing business under the fictitious name of J. C. Peacock Machine Co. was executed by J. C. Peacock, Inc. and duly published and filed. Also, after discovery of the merger, the trial court, upon notice, made its order permitting respondent to correct the name of plaintiff.

Appellants point to the result reached on the previous appeal (supra, 184 Cal.App.2d 142, 7 Cal.Rptr. 490) and argue that it is determinative of the present question. The opinion on the prior appeal by no means went that far, being limited to the sole issue there presented, namely, the validity of the writ of attachment. Thus, at page 152 of 184 Cal.App.2d, at page 496 of 7 Cal.Rptr. it was stated: 'The fact that the trial court, during the trial, permitted plaintiff to file a Third Amended Complaint, wherein the caption was changed to J. C. Peacock, Inc., an existing entity, did not cure the defect in the original attachment.' (Emphasis added.) Continuing, 'The defect was still present in the affidavit of attachment, the undertaking on attachment, and finally, the writ and alias writ of attachment.' (Emphasis added.) Further, 'It must be apparent that in effect there was no undertaking or bond. The undertaking signed by Hartford Accident and Indemnity Company went to J. C. Peacock Machine Co., a corporation, which did not exist.' Thereafter it was observed that 'It may well be that the writs of attachment, the affidavit and the undertaking could have been amended by substituting the proper party and thereby Hartford could have determined whether to accept or reject the substituted party and whether to write the bond but this was not done.' (Emphasis added.) We might have gone on to say that 'attachment is a harsh remedy at best in that an alleged debtor loses control of his property before the claim against him is adjudicated. This being so, the provisions relating thereto should be strictly construed.' Barceloux v. Dow, 174 Cal.App.2d 170, 174, 344 P.2d 41, 44.

Attachment being a remedy auxiliary to an action at law, '(n)either the action nor the judgment under our law in any manner depends upon the attachment, although the attachment depends upon the action. The judgment in the case is precisely the same, whether the attachment is dissolved or not.' Allender v. Fritts, 24 Cal. 447, 448. Formerly it was provided by Section 558, Code of Civil Procedure, that a writ of attachment improperly or irregularly issued 'must' be discharged upon a satisfactory showing to that effect--no provision was made for any amendment to the undertaking. Before the 1909 amendment permitting such amendment, the respondent in Tibbet v. Tom Sue, 1898, 122 Cal. 206, 54 P. 741, asked the privilege of amending the undertaking, invoking the provisions of Section 473, Code of Civil Procedure, whereby amendments are allowed in furtherance of justice. The court held that the statute, as then specifically worded, limited and controlled the general provisions of Section 473. On the former appeal (supra, 184 Cal.App.2d 142, 7 Cal.Rptr. 490) the respondent (likewise respondent here) similarly invoked the provisions of Section 473; but the argument in no wise went to the undertaking which, as noted above, was never amended, and the decision of this court did not turn on that point. We repeat that appellants have read into our former opinion certain conclusions that simply are not there.

In the present matter, however, we are confronted with an amendment accomplished in due course pursuant to court order after proper notice. In support of that order we are again referred to the language of Section 473 (Code of Civil Procedure): 'The court may, in furtherance of justice, and on such terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or mistake in any other respect.' (Emphasis added.) This section has always been liberally construed. On the other hand, a motion to dismiss on the ground of incapacity of the plaintiff to sue is a plea in abatement, not favored in law and strictly construed. Maryland Casualty Co. v. Superior Court, 91 Cal.App. 356, 361, 267 P. 169. At least with respect to the statute of limitations, 'the allowance of amendment and relation back * * * does not depend on whether the parties are technically or substantially changed; rather the inquiry is as to whether the nature of the action is changed.' (Witkin, California Procedure, p. 1620). It is not suggested that any change in the nature of the action resulted from the amendment here. Such was the situation in Klopstock v. Superior Court, 17 Cal.2d 13, 108 P.2d 906, 135 A.L.R. 318 where the court held the substitution of a party plaintiff to be proper. At pages 19-20 of 17 Cal.2d, at pages 909-910 of 108 P.2d, it said: 'We now come to the decisive question whether, after the reversal by the District Court of Appeal, it was within the discretionary power of the trial court to permit the amendment of the complaint which, in effect, substituted the proper plaintiff in the action, i. e., Flora E. Short as administratrix of the estate of the deceased stockholder, Isaac Klopstock. Petitioners contend that since no cause of action was stated by the original complaint and since the decision on appeal inferentially held that a general demurrer on that ground should have been sustained, no course of action was open for the trial court but to dismiss the action. Code [of] Civ.Proc., sec. 473, provides: 'The court may, in the furtherance of justice, and on such terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party * * *' The same section provides further, that the court may, in its discretion and after notice, allow 'an amendment to any pleading or proceeding in other particulars * * *' This statutory provision giving the courts the power to permit amendments in furtherance of justice has received a very liberal interpretation by the courts of this state. (ditations). This position is clearly in accord with the modern theories of code pleading, which would permit amendment in the discretion of the court unless an attempt is made to present an entirely different set of facts by way of amendment. (citation) * * * Of course, the court's power to permit amendments of pleading is not unlimited. It has generally been said that an amendment may not be permitted where the effect of such amendment is to state 'another and distinct cause of action' (citation). But this court has said; 'It is obvious that the unqualified way in which the rule is...