People v. Superior Court (Good)

• Citation: 17 Cal.3d 732,131 Cal.Rptr. 800
• Court: United States State Supreme Court (California)
• Decision Date: 10 August 1976
• Parties: , 552 P.2d 760 The PEOPLE, Petitioner, v. The SUPERIOR COURT OF VENTURA COUNTY, Respondent; Stephen F. GOOD, Real Party in Interest. L.A. 30610.

Page 800

131 Cal.Rptr. 800

17 Cal.3d 732, 552 P.2d 760

The PEOPLE, Petitioner, v. The SUPERIOR COURT OF VENTURA COUNTY, Respondent Stephen F. GOOD, Real Party in Interest.

L.A. 30610.

Supreme Court of California In Bank.

Aug. 10, 1976.

C. Stanley Trom, Dist. Atty., and O. Guy Frick, Deputy Dist. Atty., Ventura, for petitioner.

Evelle J. Younger, Atty. Gen., E. Clement Shute, Jr., Asst. Atty. Gen., Herschel T. Elkins and Michael R. Botwin, Deputy Attys. Gen., as amici curiae on behalf of petitioner.

No appearance for respondent.

Heily, Blase, Ellison & Wellcome, Oxnard, Edward L. Lascher and Wendy Cole Wilner, Ventura, for real party in interest.

CLARK, Justice.

The Ventura County Grand Jury indicted a number of persons and corporations on criminal charges arising from an alleged investment fraud involving the sale of oil drilling contracts. The district attorney filed a civil complaint on the same day.

Two days later, real party in interest, Stephen F. Good and a purported class comprised of defrauded investors, commenced a separate action against the same defendants and were permitted to intervene in the People's action. The People's motion to strike the complaint in intervention was denied, and its demurrer overruled. Contending intervention is improper, the People petition for writ of mandate to compel respondent court to strike the Good complaint.

The People's complaint contains two causes of action, false and misleading advertising (Bus. & Prof.Code, §§ 17535, 17536) and unfair competition (Civ.Code, §§ 3369, 3370).

The allegations of the first are summarized as follows: Offering interests in oil exploration ventures, the defendants, numerous salesmen, corporations, and promoters, made false representations as to the income tax benefits, the effect of promissory notes, their oil exploration experience, their proposed drilling activities and the anticipated income. The representations, made to nearly 200 identified individuals and 100 Does, tend to deceive or mislead substantial numbers of the public and unless enjoined, defendants will continue to disseminate false and misleading statements.

The second cause of action alleges that defendants are engaging in acts of unfair competition by making the false and misleading statements alleged in the first cause of action; by offering and selling securities without permit; by willfully, and in violation of federal statute, aiding and advising in the preparation of false income tax returns; by preparing false documents to aid investors in securing federal income tax deductions; and by extending credit without full disclosure in violation of federal truth in lending regulations. It is further alleged that the acts of unfair competition were committed in transactions with all persons identified in the first cause of action and the Does, that defendants obtained funds from the identified persons and the Does by the use of unfair or fraudulent business transactions; and that defendants are involuntary and constructive trustees of the funds.

The People pray for injunction against the representations and business practices, for penalties of $5,000,000, for restitution to each investor, and for costs.

The Good complaint in intervention, prays for restitution with interest, punitive damage, attorney fees and costs, the causes of action include fraud, breach of investment contract, and violation of corporate securities law. The complaint further alleges upon information and belief that the district attorney has proposed settlement with the defendants by which $300,000 shall be paid to the county treasury and $25,000 divided among seven investors, rendering the defendants incapable of responding in damages or of making restitution to other investors. The court issued an ex parte order permitting intervention.

Twelve days later, stipulated judgment was entered based on an earlier agreement between the district attorney and defendants. ¹ It provides for payment of $200,000 to the county within the current year, $100,000 to the county in installments over ten years, $60,000 to the Franchise Tax Board to satisfy tax liens, and $25,000 to seven named investors as restitution. It further provides that the rights of plaintiffs in intervention shall not be affected in pursuing any remedy sought in the Good complaint.

An order pursuant to stipulation between the People and Good provides that any funds received by the district attorney will be deposited in court and distributed following notice and hearing.

We proceed to determine whether intervention is proper. Code of Civil Procedure section 387 provides: 'At any time before trial, any person, who has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both, may intervene in the action or proceeding. An intervention takes place when a third person is permitted to become a party to an action or proceeding between other persons, either by joining the plaintiff in claiming what is sought by the complaint . . . or by demanding anything adversely to both the plaintiff and the defendant, . . .'

The statute protects the interests of others affected by the judgment, obviating delay and multiplicity. (County of San Bernardino v. Harsh California Corp. (1959) 52 Cal.2d 341, 346, 340 P.2d 617; Belt Casualty Co. v. Furman (1933) 218 Cal. 359, 362, 23 P.2d 293; 3 Witkin, Cal.Procedure (2d ed. 1971) p. 1865.) Counterbalancing this purpose is the interest of the original parties in pursuing their litigation unburdened by others. (3 Witkin, Cal.Procedure, Supra, pp. 1869--1870.)

The...