Kinoshita v. Horio

• Decision Date: 30 October 1986
• Court: California Court of Appeals Court of Appeals
• Parties: Shigeo KINOSHITA, Plaintiff, Cross-Defendant and Respondent, v. Toshio HORIO, Defendant, Cross-Complainant and Appellant. Michiko Horio et al., Defendants and Appellants. A029509.

Page 241

231 Cal.Rptr. 241

186 Cal.App.3d 959

Shigeo KINOSHITA, Plaintiff, Cross-Defendant and Respondent, v. Toshio HORIO, Defendant, Cross-Complainant and Appellant Michiko Horio et al., Defendants and Appellants.

A029509.

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

Oct. 30, 1986.

Review Denied Jan. 21, 1987.

Bland W. Cannon, Jr., San Francisco, for defendants and appellants

John J. Murphy, San Francisco, for plaintiff and respondent.

Scott Tate, San Francisco, for real party in interest.

SABRAW, Associate Justice.

This is an appeal from a judgment directing the dissolution of a partnership and sale of its assets. We hold that such a judgment is interlocutory and that the appeal must therefore be dismissed under the "one final judgment" rule.

FACTS

The pleadings establish that plaintiff Shigeo Kinoshita and defendants Toshio Horio, Michiko Horio, and James Horio formed Asagiri Co., a limited partnership, to own and operate an apartment building. A written partnership agreement specified the percentage interest held by each partner. Plaintiff alleged and defendants failed to deny that defendants had failed to maintain proper records and that a receiver was necessary to take possession of and care for partnership assets. Defendant Toshio Horio filed a cross-complaint claiming credits for partnership obligations he claimed to have discharged and capital contributions he claimed to have made. Pending trial the court appointed a receiver, apparently without objection, and the parties stipulated to an accounting.

The judgment from which the appeal is taken decrees that (1) plaintiff owns a 31.43 percent interest in the partnership; (2) the partnership is "ordered dissolved"; (3) the receiver, subject to the court's approval, will sell the property, pay the partnership's debts, distribute the remaining assets, and dissolve the partnership; (4) defendants are entitled to certain credits but not others; (5) defendants will bear 85 percent of the receiver's expenses and fees; (6) at the time of distribution, plaintiff will recover his court costs from defendants' share of assets; (7) certain leases entered into by defendants are null and void; and (8) the court will retain jurisdiction "for all purposes necessary to insure compliance with this Judgment and dissolution and distribution of the partnership assets." The judgment does not specify the percentage interest held by each individual defendant; nor does it provide a formula for allocating among defendants the costs and expenses assessed against them.

Defendants noticed an appeal from the entire judgment. However they have assigned error only as to the parts of the judgment denying certain credits and directing the eventual recovery of costs by plaintiff. No challenge is made to the part of the judgment ordering the sale of partnership property.

ANALYSIS

At our request the parties have briefed the question whether the judgment is appealable. The question is jurisdictional and if the answer is negative we must dismiss the appeal on our own motion. (Olson v. Cory (1983) 35 Cal.3d 390, 398, 197 Cal.Rptr. 843, 673 P.2d 720; 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 38, pp. 61-62.

The right to appeal is wholly statutory. (9 Witkin, op. cit. supra, §§ 2, 37, pp. 33, 60-61; see Code Civ.Proc., § 904.) Under Code of Civil Procedure section 904.1, no appeal lies from an interlocutory judgment unless it is of a type specified in the statute. ¹ This provision codifies the fundamental principle known as the "final judgment rule" (9 Witkin, op. cit. supra, § 43, p. 67), the essence of which is that an appeal lies only from a final judgment (In re L.A. County Pioneer Society (1953) 40 Cal.2d 852, 858, 257 P.2d 1), i.e., a judgment which "terminates the proceeding in the lower court by completely disposing of the matter in controversy" (Henneberque v. City of Culver City (1985) 172 Cal.App.3d 837, 841, 218 Cal.Rptr. 704).

Unfortunately, "[t]he problem of determining whether a particular decree is essentially interlocutory and nonappealable, or whether it is final and appealable is often a difficult one.... It is not the form of the decree but the substance and effect of the adjudication which is determinative. As a general test, which must be adapted to the particular circumstances of the individual case, it may be said that where no issue is left for future consideration except the fact of compliance or noncompliance with the terms of the first decree, that decree is final, but where anything further in the nature of judicial action on the part of the court is essential to a final determination of the rights of the parties, the decree is interlocutory." (Lyon v. Goss (1942) 19 Cal.2d 659, 669-670, 123 P.2d 11, see In re L.A. County Pioneer Society, supra, 40 Cal.2d at pp. 857-858, 257 P.2d 1; Church v. County of Humboldt (1967) 248 Cal.App.2d 855, 857-858, 57 Cal.Rptr. 79.)

Application of the final judgment rule has proven especially difficult in partnership dissolutions and similar proceedings because they tend to require a series of adjudications by the trial court. Typically, the court must first determine the weighty threshold questions on which the parties' rights and obligations depend, such as whether a partnership was formed and what assets were acquired. The court may then be called upon to order one or more provisional or special remedies which necessarily occur in a progression of steps culminating in a final decree which settles the actions taken under the earlier rulings. (See Corp.Code, §§ 15043 [accounting], 15038 [sale of property]; Code Civ.Proc., § 564, subd. (1) [receiver]; 6 Witkin, op. cit. supra, Provisional Remedies, §§ 343, 367, 372, pp. 290-291, 306-307, 309-310; 7 id., Judgment, § 11, pp. 459-460.)

Because of this serial aspect actions involving provisional remedies, and especially partnership dissolutions, have been the source of much judicial perplexity. ² Fifty-seven years ago in Gunder v. Gunder (1929) 208 Cal. 559, 561, 282 P. 794, the Supreme Court noted a "conflict of authority" over the appealability of a decree which determines the basic issues between the parties and orders an accounting. Six years later in Hollar v. Saline Products, Inc. (1935) 3 Cal.2d 80, 81-82, 43 P.2d 273, the court observed that the pre-Gunder authorities had displayed "considerable confusion," but held it the "now settled rule" that such a judgment is not appealable. This rule has been universally followed for judgments declaring the rights of the parties and ordering an accounting. (Bakewell v. Bakewell (1942) 21 Cal.2d 224, 227, 130 P.2d 975; Heywood v. Sooy (1935) 4 Cal.2d 352, 353, 49 P.2d 826; Di Blasi v. Di Blasi (1930) 209 Cal. 753, 754, 290 P. 7; Rose v. Boydston (1981) 122 Cal.App.3d 92, 97, 175 Cal.Rptr. 836; Degnan v. Morrow (1969) 2 Cal.App.3d 358, 363, 82 Cal.Rptr. 557; Shirley v. Cook (1953) 119 Cal.App.2d 220, 222, 259 P.2d 25; Heck v. Heck Bros. (1943) 57 Cal.App.2d 599, 134 P.2d 853; see In re L.A. County Pioneer Society, supra, 40 Cal.2d 852, 857-858, 257 P.2d 1; Schwartz v. Schwartz (1970) 5 Cal.App.3d 133, 141, 85 Cal.Rptr. 45; Wesley N. Taylor Co. v. Russell (1961) 194 Cal.App.2d 816, 822, 15 Cal.Rptr. 357; Gollard v. Bayless (1959) 174 Cal.App.2d 827, 829, 345 P.2d 299; Nesbitt v. Bruce Eells and Assoc. (1951) 105 Cal.App.2d 370, 372-373, 233 P.2d 183; David v. Goodman (1948) 89 Cal.App.2d 162, 169-170, 200 P.2d 568).

Defendants contend, however, that a judgment like the one before us is "final" under a distinct line of authority headed by Zappettini v. Buckles (1914) 167 Cal. 27, 138 P. 696. In that case a judgment was held to be appealable where it decreed the dissolution of a partnership and ordered its assets sold. The judgment declared the exact percentage interest of each partner and directed the manner in which the proceeds of sale would be applied, leaving nothing further for the trial court except the ascertainment of amounts due the parties and creditors. On that basis the court concluded that the appeal was proper because "nothing further in the nature of judicial action" was "essential to a final determination" of the parties' rights. (Id. at pp. 33-34, 138 P. 696.)

Three cases have followed Zappettini (Price v. Slawter (1959) 169 Cal.App.2d 448, 451-454, 337 P.2d 914; Taylor v. Taylor (1957) 153 Cal.App.2d 144, 145-146, 314 P.2d 60; Sondergard v. Breaum (1927) 83 Cal.App. 352, 353, 256 P. 580) and a few others have cited it uncritically (e.g. Eldridge v. Burns (1978) 76 Cal.App.3d 396, 404, 142 Cal.Rptr. 845; Grable v. Damar Production Co. (1965) 232 Cal.App.2d 510, 512, 43 Cal.Rptr. 16; Brown v. Memorial Nat. Home Foundation (1958) 158 Cal.App.2d 448, 457, 322 P.2d 600). However, a number of cases, including subsequent decisions of the California Supreme Court, hint that Zappettini does not state good law. In Di Blasi v. Di Blasi, supra, 209 Cal. 753, 754, 290 P. 7, the court declared that Zappettini "would have to be considered as modified" to conform to other holdings impliedly at variance with it. And Middleton v. Finney, supra, 214 Cal. 523, 525, 6 P.2d 938, flatly contradicts Zappettini's premise that the ascertainment of sums due does not involve an essential judicial act: "It is true that certain issues of fact and of law were declared to be settled in the first decree; and it may well be that these were all the 'substantial' or 'material' issues in the case. There remained only the necessity of ascertaining the amounts of money to be paid pursuant to the decree determining the proportional interest of each party. But this had to be done, and until done, the case before the court was not concluded. It involved, to be sure, a mere matter of arithmetic, but the computations were subject to the approval of the court and were to be incorporated, if approved, in a further judgment. A judicial act remained to be done." (See also Hollar v. Saline Products, Inc., supra, 3 Cal.2d 80, 82...