Norman v. Berney

• Decision Date: 28 June 1965
• Citation: 45 Cal.Rptr. 467,235 Cal. App. 2d 424
• Court: California Court of Appeals
• Parties: Ernest Eugene NORMAN, Plaintiff and Respondent, v. Ray BERNEY, Defendant and Appellant. Civ. 22067.

Page 467

45 Cal.Rptr. 467

235 Cal.App.2d 424

Ernest Eugene NORMAN, Plaintiff and Respondent, v.Ray BERNEY, Defendant and Appellant.

Civ. 22067.

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

June 28, 1965.

Stewart & Tuttle, Pacific Grove, William H. Tuttle, Saratoga, for appellant.

Weingarten, Girard & McGinty, Irwin B. Rosenstein, Seaside, for respondent.

BRAY, Justice.^*

DefendantRay Berney appeals from an order denying his motion to set off judgment.

QUESTIONS PRESENTED

1.Was the default judgment in Handley v. Norman valid?

2.Did Weingarten acquire an interest under the contingent fee agreement which diminished or defeated defendant Berney's right to set off the Handley judgment?

3.Is defendant Berney entitled to set off the Handley judgment or portion thereof against the Norman judgment?

RECORD

On August6, 1962 T. H. Handley commenced action number 53641 in the Superior Court of Monterey County against Ernest E. And EmmaJean Norman.The complaint, entitled 'Foreclosure,' alleged that Handley, Marina Plumbing and Hardware, Inc.(Hereafter referred to as 'Marina'), and George J. Turner, had all furnished materials or services and materials in connection with improvements located on certain real property owned by the Normans: Handley, materials reasonably valued at $5,798,23, Marina, services and materials reasonably valued at $1,160.44, and Turner, services and materials reasonably valued at $1,388.97; that in each instance said materials or services and materials had been furnished at the request of the Normans 'and for which they orally and expressly, and also impliedly, agreed to pay' $5,798.23 to Handley, $1,160.44 to Marina, and $1,388.97 to Turner; that no payment therefor had been received; that claims of lien had been filed with the Monterey County Recorder against the Normans' real property; that Marina and Turner had assigned all rights and claims arising out of these facts to Handley.

The prayer of the complaint was that Handley be adjudged and decreed to have a lien upon the Normans' real property; that such lien be foreclosed and the property sold to satisfy said lien; that Handley be allowed to bid at such sale; that personal judgment be entered against the Normans for the amounts of money specified in the body of the complaint; and that all right, title and interest of either of the Normans to the real property be foreclosed.

Summons and complaint were served upon Emma Jean Norman, and upon Ernest E. Norman.

On March 5, 1963, the mechanics' liens claimed under the Handley complaint were extinguished when the holder of a second deed of trust on the Normans' real property foreclosed.

On March 29, 1963, neither of the Normans having appeared or answered the complaint, the clerk, at Handley's request, without entering a default, filed and entered a default judgment in the amount of $8,834.58 in favor of Handley and against the Normans jointly and severally.

Meanwhile, on October 2, 1962, Ernest E. Norman entered into a written contract whereby the law firm of Twohig, Weingarten and Haas agreed to 'undertake the case of Norman v. Berney on a one-third contingent basis, with no fee in the event of no recovery, 50% in event of appeal.'On July 1, 1963, said law firm having dissolved, all rights under the contingent fee contract were assigned to Saul M. Weingarten.¹

Pursuant to said contract, Weingarten represented Ernest E. Norman in action number 54388 in the Superior Court of Monterey County against Ray Berney and Ray Berney Associates.On October 9, 1963, judgment was entered in favor of Norman against both defendants in the amount of $8,651.53.On December 10, 1963, defendantRay Berney filed notice of appeal from the judgment.²

Thereafter, on December 31, 1963, defendant Berney purchased from T. H. Handley the judgment against the Normans in action number 53641.Berney paid $2,500 for said judgment and received a written assignment thereof executed by Handley.Handley subsequently divided the $2,500 between himself, Marina and Turner in exact proportion to the claims which each had asserted in action number 53641.

On January 20, 1964, defendant Berney filed in action number 54388 a notice of motion to set off the Handley judgment against the judgment in favor of Ernest E. Norman.In support of said motion, Berney filed the declaration of his attorney, W. K. Stewart, averring that on October 9, 1963, judgment in the amount of $8,651.53 was entered in favor of Ernest E. Norman against Ray Berney; that on March 29, 1963, judgment in the amount of $8,834.58 was entered in favor of T. H. Handley against Ernest E. Norman; that on December 31, 1963, T. H. Handley, 'for good and lawful consideration,' assigned the latter judgment to Ray Berney, 'and the said T. H. HANDLEY has no further interest in said Judgment and the said RAY BERNEY is the real and beneficial owner of the said Judgment and that the said RAY BERNEY is not holding the said Judgment * * * for collection, or as trustee for another or for another's benefit, but is holding it for his own benefit'; that said judgment 'is a good, valid and outstanding Judgment against the said ERNEST E. NORMAN and is not subject to any defenses in law or equity.'A copy of the written assignment of the Handley judgment was attached to the declaration as an exhibit.

During the course of the hearing on the motion to set off, John Thompson, the attorney who represented Handley in action number 53641, testified that his client had received verbal assignments of the Marina and Turner claims prior to commencing that action, but had paid nothing for said assignments, which were made for purposes of collection only.He admitted that at the time Handley assigned the judgment to Berney, Handley was the beneficial owner of only a portion of said judgment and held the remainder as an assignee for purposes of collection.It was for this reason that Handley paid Marina and Turner their proportionate shares of the $2,500 which he received for the assignment.At the time the assignment was made, Handley had written the judgment off for income tax purposes, and Thompson had discarded most of his files pertaining to the case because he considered it closed.Berney's attorney, W. K. Stewart, testified that his client purchased the judgment for his own benefit and was not acting on behalf of anyone else.There was no evidence that Berney was aware of the contingent fee contract between Norman and Weingarten at the time he purchased the Handley judgment.His attorney, Stewart, in response to questioning by the court, offered to swear under oath that he had no knowledge of the contingent fee contract.

The court made findings of the facts hereinbefore set forth, and concluded that the default judgment in 53641 was void; that Handley was an assignee for collection and that Berney, as Handley's assignee, could take no greater rights than his assignors, and was an assignee for collection; that Weingarten acquired an equitable ownership interest in one-third of the 54388 judgment, and his interest was not subject to setoff; that Handley had ceased to pursue and had abandoned his judgment and that the assignment by him to Berney was void; and that the motion to set off should be denied.

Order was entered accordingly.

1.The default judgment.

The ground upon which the court found that the default judgment was void was that the clerk had no power to enter it because (a) the clerk failed to enter default before entering the default judgment, and (b) the action was not an action upon a contract for the recovery of money and damages only.

(a) The failure of the clerk to enter default before entering the judgment did not affect the validity of the judgment.It is settled that a valid default judgment may be rendered by the court even though no formal default has been entered.(Crouch v. H. L. Miller & Co.(1915)169 Cal. 341, 345-346, 146 P. 880;Drake v. Duvenick(1873)45 Cal. 455, 462-463.)As said in the latter case, 'The only purpose of a default is to limit the time during which the defendant may file his answer, and that time never extends beyond a trial and judgment'(p. 463).We can see no good reason why a judgment entered by the clerk should be any different in this respect from one entered by the court.

(b)The Court's determination that action number 53641 was not for the recovery of money and damages and hence could not be entered by the clerk is likewise erroneous.Code of Civil Procedure, section 585, provides in pertinent part that the clerk may enter judgment '[i]n an action arising upon contract for the recovery of money or damages only.'

The Handley complaint, while it was entitled 'Foreclosure,' sought other relief as well as foreclosure of mechanics' liens.The title or designation of a complaint does not determine the character of the action.(Zumwalt v. Hargrave(1945)71 Cal.App.2d 415, 418, 162 P.2d 957.)In addition to setting forth the necessary allegations for foreclosure and that the amounts sought were the reasonable value of the materials furnished and services rendered, the complaint alleged that the Normans orally and expressly agreed to pay plaintiff and his assignors the specific sums claimed for the materials and services.The prayer, in addition to asking foreclosure, also asked for personal judgment against the defendants.

There can be no doubt that it was proper for Handley to plead this alternative contractual theory of recovery.Materialmen and subcontractors who are lien claimants have two remedies which may be pursued simultaneously and are entitled to proceed against the property for the full amount of their liens and to proceed in the same action to obtain a separate personal judgment against those persons personally liable for their respective debts notwithstanding the lien.(SeeCode Civ. Proc., § 1200;Culbertson v. Cizek(1964)225 Cal.App.2d 451, 468, 37 Cal.Rptr. 548.)

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