Lee v. Merchants Collection Ass'n of Oakland

• Decision Date: 06 December 1957
• Docket Number: No. 17423,17423
• Citation: 318 P.2d 701,155 Cal.App.2d 762
• Court: California Court of Appeals Court of Appeals
• Parties: Florida Franklin, LEE, Plaintiff and Appellant, v. MERCHANTS COLLECTION ASSOCIATION OF OAKLAND, in which firm name and style George B. Fink is doing business; George B. Fink, Defendants and Respondents.

Page 701

318 P.2d 701

155 Cal.App.2d 762

Florida Franklin, LEE, Plaintiff and Appellant, v. MERCHANTS COLLECTION ASSOCIATION OF OAKLAND, in which firm name and style George B. Fink is doing business; George B. Fink, Defendants and Respondents.

No. 17423.

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

Dec. 6, 1957.

Rehearing Denied Jan. 3, 1958.

Hearing Denied Jan. 28, 1958.

Irving M. Liner, Oakland, and appellant.

Harry M. Gross, Oakland, for respondents.

BRAY, Justice.

The questions raised by plaintiff's appeal from a judgment in her favor in this action for conversion of her automobile are:

1. In estimating plaintiff's damage were the deductions made by the court proper?

2. Did the chattel mortgages waive its lien?

3. Was the municipal court judgment res judicata?

4. Was plaintiff entitled to punitive damages?

5. Should plaintiff have been allowed interest?

6. Rejection of evidence.

Record.

Defendant ¹ operating a collection agency levied execution upon plaintiff's automobile under a judgment which was subsequently set aside for lack of service. It was stipulated that there was a conversion as of the date of the purported execution sale. The court found the market value of the automobile to be $4,300 (the car sold for $3,640 at the purported execution sale) and held that there should be deducted therefrom the following sums: satisfaction of judgment, $684.50; upholsterer's lien, $228.80; chattel mortgage, $2,250; total $3,163.30, leaving a balance of $1,136.70. There was on deposit in court a marshal's warrant for $511.47 which was the net amount received by the levying officer from the sale of the car after paying the above amounts. The court ordered this sum to be paid plaintiff, deducting it from the $1,136.70, and gave plaintiff judgment for the balance of $625.23 together with interest on the last mentioned sum from the date of conversion.

1. Deductions.

Plaintiff contends that the amounts paid by defendant were not deductible for two reasons: (a) defendant did not plead any set-off or counterclaim, and (b) as the levy and sale were made under a void judgment, sums paid by the levying officer to clear title and to pay the judgment thereafter obtained against plaintiff could not be deducted from the value of the car.

(a) The deductions were not made as a set-off or counterclaim. The issue in the case was the damage caused plaintiff by the conversion. As said in Ward v. Sherman, 1909, 155 Cal. 287, 291, 100 P. 864, where the defendant took possession of a cattle ranch under a judgment thereafter reversed and the court gave defendant judgment for moneys expended in taking care of the ranch and cattle in excess of moneys received from sale of cattle, the victim of a conversion is entitled to be placed a nearly as possible in the condition in which he previously stood, and the defendant must account for the property with his liability being measured by the prudent businessman rule applicable to trustees. In view of the court's finding of lack of malice the following quotation from 4 Cal.Jur.2d, Appeal and Error, § 676, appearing in Stockton Theatres, Inc. v. Palermo, 121 Cal.App.2d 616, at pages 619-620, 264 P.2d 74, at page 77, is applicable: "The law proceeds upon the theory that, in equity, the party who receives money or property in good faith under an erroneous judgment, thereafter reversed, should be required to restore what he has received, and not upon the theory of a supposed wrong committed. Restitution must be made of all that was received under the erroneous judgment, but no further liability should be imposed. After reversal the respondent stands in the position of a trustee for the appellant of the property obtained under the judgment. He must handle that property as an ordinarily prudent man of business would, and is not chargeable with more than he received." While these cases dealt with erroneous judgments, we can see no reason why the same rule should not apply to void judgments, particularly where, as here, the evidence supports the court's finding that defendant did not act maliciously nor was he guilty of fraud and deceit in the taking of the default judgment and levying execution thereon. Plaintiff is not entitled to be placed in any better position than she would have been in had the conversion not taken place. Thus, the court was correct in deducting the liabilities which existed against the automobile at the time of the conversion. In other words, the value of the car to plaintiff then was its actual value less the liens upon it.

(b) Payments under void judgment. The upholsterer's lien was paid off by the marshal from money received from defendant and later repaid to defendant from the sale price. The chattel mortgage was paid from a fund in which had been deposited the moneys advanced by defendant to the marshal to pay the mortgage and the moneys received by the marshal from the sale. Even though this sale resulted from a judgment thereafter found to be void, plaintiff received the benefit of those payments. Plaintiff's property was subject to those liens and plaintiff would have been required to pay them.

The deduction of the $684.50 raises a problem. Finding VI gives as one of the payments made by the marshal out of proceeds of the execution sale on 'the judgment hereinafter referred to (a) Satisfaction of Judgment $684.50.' Finding VII finds that the judgment (apparently the judgment last referred to) and the execution issued thereon were void. Finding VI states that the marshal paid $684.50 to satisfy the said writ (the void one). Thereafter, defendant obtained a valid judgment against plaintiff for a higher amount and claims the right to keep said $684.50 in satisfaction thereof. While defendant did not plead plaintiff's indebtedness upon which the judgment was based as a set-off, his answer did set forth plaintiff's indebtedness to him in the sum of $519.50 (apparently the principal upon which the $684.50 judgment was based). To require defendant to return said sum to plaintiff would result in an unjust enrichment of plaintiff. Moreover, the automobile had been seized originally under an attachment. Thus the value of plaintiff's interest in the car at the time of sale was reduced by the lien of that attachment. Therefore, the statement in the findings that the money was paid in satisfaction of the void judgment is unimportant. While it was so paid it became a credit upon the higher judgment later obtained. As we have said, the value of plaintiff's interest in the automobile was reduced pro tanto.

Again, the issue is not whether the marshal had the right under a void judgment to pay off these liens. The issue is how much plaintiff was damaged by the conversion of her automobile. She did not attempt to recover her car which had been sold at void sale. She elected to let the sale stand and to sue for conversion, thereby putting in issue the value of her interest in the car at the time of sale. It is rather interesting to note that in her direct testimony plaintiff brought out the fact that the automobile was subject to the upholsterer's claim and the chattel mortgage.

While the court found that it was not true that defendant paid off the third-party claim of the mortgagee but that it was paid by the marshal out of the sale proceeds pursuant to the instructions of defendant, the uncontradicted evidence shows that defendant advanced the money to the marshal and he later repaid defendant from the sale proceeds. As said by plaintiff in her opening brief, the marshal was acting as defendant's agent. In advancing the money for the chattel mortgage and the upholsterer's lien defendant was not acting as a volunteer-officious intermeddler, whom it has been held would not have the right of subrogation (see authorities cited in Stein v. Simpson, 37 Cal.2d 79, 84, 230 P.2d 816). Defendant had an interest in the automobile because of his attachment thereon. Moreover, defendant through mistake believed that by reason of the writ of execution he also had an interest in the car. 'It has been held that where a person discharges a lien not incurred by him on property not his own, but which he mistakenly believes to be his, [he] is subrogated to the rights of the lienholder.' (37 Cal.2d at page 84, 230 P.2d at page 820).

Plaintiff attacks the validity of the affidavit and undertaking on attachment claiming that because the signature of the notary public on the attestation clause is a stamped signature rather than one in his own handwriting, the attachment was void. ² Assuming, but not deciding, that the attachment was thereby invalidated and that such invalidity may be determined in this collateral action (no motion to set aside the attachment was made in the municipal court) such fact would not affect the situation here. Defendant's mistake, if it was one, in paying prior lienholders, relying on a defective attachment, would not make him a volunteer nor deprive him of his right of subrogation.

2. Mortgagee's Lien.

When the marshal attached plaintiff's automobile the mortgagee filed a third-party claim. As prescribed by law (Code Civ.Proc. § 689b) the marshal demanded of defendant the payment of the amount of the claim. Defendant then sent check for the amount due but requested the marshal to 'hold this pay-off money in trust until the date of the car sale.' Defendant's letter stated that the mortgagee would also send an assignment of its mortgage. The next day the mortgagee wrote the marshal, apparently enclosing the pink slip to the car, but no assignment, and stated '* * * it is our desire for you not to pay us off on the 1951 Cadillac * * * until such time as the sale of the car has been completed.' Plaintiff contends that by this letter the mortgagee waived its lien. Kuehn v. Don Carlos, 5 Cal.App.2d 25, 28, 41 P.2d 585, was an action brought by the mortgagee against the mortgagor and the successor in interest of the purchaser at execution...