Overholser v. Glynn

• Decision Date: 03 December 1968
• Citation: 73 Cal.Rptr. 628,267 Cal.App.2d 800
• Court: California Court of Appeals Court of Appeals
• Parties: J. Homer OVERHOLSER, Plaintiff and Respondent, v. John D. GLYNN, Defendant and Appellant. Civ. 31976.

Page 628

73 Cal.Rptr. 628

267 Cal.App.2d 800

J. Homer OVERHOLSER, Plaintiff and Respondent, v. John D. GLYNN, Defendant and Appellant.

Civ. 31976.

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

Dec. 3, 1968.

Rehearing Denied Dec. 27, 1968.

Hearing Denied Jan. 29, 1969.

John D. Glynn, in pro per.

A. A. Rotberg, Los Angeles, for plaintiff and respondent.

FOURT, Associate Justice.

John D. Glynn, a former stockholder in Bonus Rent-A-Car System, Inc. (hereinafter sometimes referred to as Bonus) and one of the coguarantors on certain promissory notes payable by Bonus to Community Bank, appeals from a judgment entered against him for his proportionate share of that obligation.

It appears that in 1961 plaintiff Overholser and defendants Klavir, Freemond, Keltner, Glynn and Maizlish were stockholders of Bonus, a corporation engaged in the automobile rental business. Bonus financed its automobile purchases through Community Bank with promissory notes secured by chattel mortgages on the vehicles. In order to provide additional security for these obligations, the six above-named Bonus shareholders executed as individuals separete continuing guarantees.

Bonus defaulted in the payment of its obligations and Community Bank notified Bonus and the individual shareholder-guarantors of the default and demanded surrender of the automobiles. The bank also obtained bids on these automobiles from dealers and calculated that a deficiency of about $30,000 would remain after dealer prices were credited against the balance owing on the Bonus account. All parties concerned, however, believed that if the automobiles were instead sold at retail, the deficiency could be reduced by approximately one-half. Therefore, Community Bank agreed that, in consideration of the deposit of cash or additional acceptable collateral security in the amount of about $15,000, it would release the automobiles to the Bonus shareholders for retail sale. Accordingly, Overholser, the only shareholder who possessed collateral acceptable to the bank, on August 14, 1962, deposited with the bank on behalf of the guarantors listed securities valued at $15,000. In this manner, Overholser and the defendants obtained the release of the automobiles for liquidation sale.

All of the automobiles except one were subsequently sold by the Bonus shareholders. The net proceeds were paid to Community Bank which credited these sums to the Bonus obligation. Glynn retained one of the automobiles and gave the Community Bank his premissory note for $1,000 payable August 30, 1962, in consideration of the purchase price. On September 7, 1962, Glynn wrote to the bank advising them that he was deferring payment until on or about September 11, 1962, in order to obtain the necessary signature of one of the Bonus officers on the pink slip. Glynn, however, never paid this obligation.

In June 1963 the unpaid deficiency on the guaranteed Bonus obligation was $17,150.73. On June 12, 1963, the bank liquidated the securities pledged by Overholser and credited the $16,988 thus obtained to the Bonus indebtedness. On July 2, 1963, Overholser gave the bank an additional $162.73 in cash to satisfy the Bonus obligation in full. The Community Bank thereupon assigned to Overholser the obligations secured by the shareholder guarantees as well as the unpaid Glynn note.

On July 23, 1963, Overholser instituted the present action against the other guarantor-shareholders of Bonus to obtain payment of their respective proportionate shares of the Bonus debt. At that time Klavir was not a resident of the United States and could not be served. Maizlish obtained a summary judgment on the basis of an indemnity agreement executed in his favor by Glynn and others. Keltner answered alleging that Overholser had agreed to limit Keltner's liability to 10% Of the total debt. Freemond by answer alleged Inter alia that each of the other defendants was liable jointly and severally on the same obligation and the action was dismissed as to this defendant when he paid $4,750 prior to trial. Glynn by answer alleged among other things that Overholser was not entitled to recover because he had been liable on the same obligation and in the same manner as the other shareholders. Although Overholser originally stated a cause of action as the assignee of the bank, on November 19, 1965, he made a motion to amend his pleadings. This motion was granted on December 10, 1965, and accordingly Overholser amended his complaint to set forth as a second cause of action a common count for money had and received.

The trial court thereupon determined that each of the defendants was liable for his original one-sixth share of the debt; that each of defendants Keltner and Glynn was liable under the indemnity agreement to pay one-fourth of Maizlish' liability; and the Glynn was liable to Overholser for an additional $1,000 on the unpaid promissory note he gave the bank in payment for one of the automobiles. Accordingly the court rendered judgment against appellant for $5,388.25 including prejudgment interest.

Appellant contends that the court erred in allowing Overholser to amend his complaint to state a common count which, in any event, fell when the court found that the plaintiff was not entitled to recover on the original cause of action. He further contends that the plaintiff was not entitled to rely upon the answers to supply the essential fact that plaintiff was a coguarantor of the Bonus obligation, which was missing from the complaint, to entitle him to amend with a common count. Appellant also contends that the court erred in awarding judgment on Glynn's $1,000 promissory note as a matter outside the pleadings and the evidence; that the court failed to enter findings on material issues, made findings unsupported by the evidence, and entered conclusions of law inconsistent with the findings; and that prejudgment interest was improperly allowed. These contentions are without merit.

Appellant first contends that the court erroneously allowed Overholser to amend his complaint after the statute of limitations on implied contracts had expired to set forth a second cause of action on a common count. The amendment was allowed on the basis that the common count, which relied upon the facts alleged in the original complaint supplemented by the answers of the defendants, varied only the theory of the action. The complaint as amended was therefore deemed to relate back to the filing date of the original complaint since the second count arose out of the same transaction set forth or attempted to be set forth in the original pleading. It is the basic set of facts and not the legal theory pleaded that is determinative of the plaintiff's right to amend his pleadings after the statute of limitations has run. (Austin v. Massachusetts Bonding & Insurance Co., 56 Cal.2d 596, 15 Cal.Rptr. 817, 364 P.2d 681.) 'In its modern formulation (citation) the rule is that 'the amended complaint will be deemed filed as of the date of the original complaint provided recovery is sought in both pleadings on the Same general set of facts. " (Wilson v. Bittick, 63 Cal.2d 30, 37--38, 45 Cal.Rptr. 31, 35, 403 P.2d 159, 163.) (Emphasis added.)

'The rule which makes relation back of an amendment dependent upon whether recovery is sought on the same general set of facts as those alleged in the original complaint is in accordance with the basic principle of code pleading that a litigant need only allege the facts warranting recovery. (Citations.)' (Austin v. Massachusetts Bonding & Insurance Co., supra, 56 Cal.2d 596, 601, 15 Cal.Rptr. 817, 819, 364 P.2d 681, 683.) 'The modern rule, where amendment is sought after the statute of limitations has run, is that the amended complaint will be deemed filed as of the date of the original complaint so long as recovery is sought in each complaint upon the same general set of facts.' (Wennerholm v. Stanford Univ. Sch. of Med., 20 Cal.2d 713, 718, 128 P.2d 522, 524, 141 A.L.R. 1358; Weinstock v. Eissler, 224 Cal.App.2d 212, 234, 36 Cal.Rptr. 537.) A change in the form or type of contractual obligation alleged may be only a change in legal theory, not affecting the cause of action for breach of the obligation. (Pruitt v. Fontana, 143 Cal.App.2d 675, 682, 300 P.2d 371; Ben-Hur Mfg. Co. v. Empire Factors, 181 Cal.App.2d 123, 131, 5 Cal.Rptr. 181.) So a complaint on express contract may be amended to change to, or add an additional count for Quantum meruit. (McCully v. Gano, 116 Cal.App. 695, 3 P.2d 348. See also Vallera v. Vallera, 64 Cal.App.2d 266, 148 P.2d 694; Wennerholm v. Stanford Univ. Sch. of Med., supra, 20 Cal.2d 713, 715, 718, 128 P.2d 522, 141 A.L.R. 1358; Sanders v. Magill, 9 Cal.2d 145, 151, 70 P.2d 159.) The appearing defendants, all of whom were attorneys, were not prejudiced because they could not possibly have been under any misapprehension as to the nature of Overholser's claim against them. (Wilson v. Bittick, supra, 63 Cal.2d 30, 38--39, 45 Cal.Rptr. 31, 403 P.2d 159.)

Appellant further contends that because the trial court concluded that Overholser was not entitled to recover as the bank's assignee, he is not entitled to recover on the common count based upon the same facts. Glynn's demurrer to Overholser's first cause of action was overruled by the court, and he thereafter established a valid defense to that action on the basis that his coguarantor was not entitled to sue as the assignee of the bank's claims. During the pretrial period it was brought out that the plaintiff instead should have sued to obtain contribution on the implied obligation of his coguarantors by way of a common count and Overholser amended his complaint to obviate this defect. Moreover, under circumstances such as these the common count with which the complaint is amended does not then fall due to the defect in the express contract pleaded in the first cause of action. 'A plaintiff may rely on a different theory of...