Slaughter v. Edwards

Decision Date08 April 1970
Citation85 Cal.Rptr. 856,6 Cal.App.3d 407
CourtCalifornia Court of Appeals Court of Appeals
PartiesJames SLAUGHTER, Junior, and Helen D. Slaughter, Plaintiffs and Respondents, v. Harold B. EDWARDS, Defendant and Appellant. Civ. 26370.

Harold B. Edwards, in pro. per.

Kilpatrick, Peterson & Ely, Vallejo, for respondents.

MOLINARI, Presiding Justice.

Defendant appeals from an order granting plaintiffs' application for an order directing payment of a prior judgment for compensatory damages against defendant out of the Real Estate Education, Research and Recovery Fund. 1 (Bus. & Prof.Code, §§ 10470-10483. 2 )

Statement of the Case

On July 10, 1967, plaintiffs obtained a judgment against defendant, a licensed real estate broker, in an action sounding in fraud for $4,025 compensatory damages and $2,500 punitive damages. No appeal was taken from that judgment within the prescribed time and it has, therefore, become final. Thereafter, on November 1, 1967, plaintiffs filed, pursuant to section 10471, 3 and in the same action in which the judgment was entered, a verified application for an order directing payment out of the Fund of the damages awarded in the judgment. A hearing was conducted upon such application following service of the application upon the Real Estate Commissioner. 4 At this hearing defendant was personally present and was called as a witness by the Attorney General who was appearing as attorney for the Commissioner. Following the hearing the court made its order on March 7, 1968 directing the Commissioner to pay out of the Fund the compensatory damages awarded in the judgment to plaintiffs. No appeal from this order was taken by the Commissioner, but an appeal has been taken therefrom by defendant.

Plaintiffs do not contend that the subject order is not an appealable order, but they do contend that defendant has no standing to bring this appeal. Before considering this contention it is appropriate that we discuss the nature of the instant proceeding. Pursuant to section 10471, as it read at the time the instant application was filed, any 'aggrieved person' who obtained a final judgment in any court of competent jurisdiction against any person or persons licensed under the Real Estate Law on grounds of fraud, misrepresentation, or deceit with reference to any transaction for which a license was required could file a verified application in the court in which the judgment was entered for an order directing payment out of the Fund of the amount of actual damages unpaid upon the judgment. None of the pertinent statutes provided that the licensee should be made a party to the proceeding. Moreover, section 10471 provided for service of the application only upon the Commissioner.

Pursuant to section 10472, as it read at the time of the instant application, the 'aggrieved person' was required to show, among other things, that he had obtained a judgment as set out in section 10471; that he had, pursuant to Code of Civil Procedure section 714, previously examined the judgment debtor under oath concerning his property; and that he had made a reasonable and diligent search to ascertain all personal and real property held by the judgment debtor capable of satisfying the judgment. Under section 10473, 5 as it read at the time of the instant proceeding, the Commissioner could defend such an action by any and all appropriate means and, at the hearing, the judgment was only prima facie evidence of the validity of the claim.

The provisions under discussion clearly indicate that the determination to be made at the hearing upon such application was whether the Fund was to be invaded in order to satisfy the 'aggrieved person's' judgment. The pivotal issue was whether the 'aggrieved person' had obtained a judgment as set out insection 10471 and whether he has complied with the provisions of section 10472. Defending against the 'aggrieved person's' application was specifically entrusted to the Commissioner. Section 10473, as it read at the time of the instant proceeding, specifically provided that the Commissioner had the right to defend the Fund and to appear on its behalf. We point out here that the Fund belongs to the state and that the licensee's only connection with the Fund is that it is partially supported by the license fees collected by the Commissioner from licensees. 6 Accordingly, insofar as the payment of monies out the Fund was concerned, the present proceeding was against the Fund and not against the licensee. It was, therefore, a proceeding collateral to, independent of, and severable from the issues in the main action. Furthermore, in this proceeding, the Commissioner, a stranger to the main action, was made a party to the instant proceeding. In this connection, we note that, although section 10471 merely provided that the application was to be filed 'in the court in which the judgment was entered for an order directing payment' out of the Fund, we apprehend that the language of the section contemplates that the application be filed in the same action. 7 This procedure was followed in the instant case.

Although the licensee is not a party to the hearing upon the application, it is clear that he is affected by the order for payment. Section 10475 provides that if the Commissioner is ordered to pay from the Fund, the licensee's license is automatically suspended upon the effective date of the order and until the amount paid from the Fund on his account is repaid to the Fund with 4 percent interent. Our inquiry, then, is whether the judgment debtor licensee is an aggrieved party Code of Civil Procedure section 938 which, at the time of the instant appeal, provided that 'Any party aggrieved many appeal' in cases in which appeals lie from the superior court. 8 In considering this question, we observe, initially, that the appellant's failure to participate in the matter below does not deprive him of his right to appeal. (Guardianship of Copsey, 10 Cal.2d 748, 752, 76 P.2d 691; Estate of Sloan, 222 Cal.App.2d 283, 291, 35 Cal.Rptr. 167.)

In Estate of Colton, 164 Cal. 1, 5, 127 P. 643, 645, it was held that '* * * any person having an interest recognized by law in the subject-matter of the judgment, which interest is injuriously affected by the judgment, is a party aggrieved and entitled to be heard upon appeal.' (See also Buffington v. Ohmert, 253 Cal.App.2d 254, 255, 61 Cal.Rptr. 360; Danielson v. Stokes, 214 Cal.App.2d 234, 237, 29 Cal.Rptr. 489; Radunich v. Basso, 235 Cal.App.2d 826, 829, 45 Cal.Rptr. 824.) The appellant's interest must be immediate, pecuniary, and substantial, and not a nominal or remote consequence of the judgment. (Hamilton v. Hamilton, 83 Cal.App.2d 771, 774, 189 P.2d 722; Leoke v. County of San Bernardino, 249 Cal.App.2d 767, 771, 57 Cal.Rptr. 770.) It also appears to be the law in this state that if an appellant would be bound by a ruling of the trial court because of the doctrine of resjudicata, then it is a party sufficiently aggrieved to warrant the right of direct appeal, irrespective of the fact that it was not a party of record in the original proceeding. (Estate of Sloan, supra, 222 Cal.App.2d at p. 292, 35 Cal.Rptr. 167; Butterfield v. Tietz, 247 Cal.App.2d 483, 485, 55 Cal.Rptr. 577; Harris v. Alcoholic Beverage Control Appeals Bd., 245 Cal.App.2d 919, 922-923, 54 Cal.Rptr. 346; see also Leoke v. County of San Bernardino, supra, 249 Cal.App.2d at p. 771, 57 Cal.Rptr. 770.) In this regard we observe, moreover, that although defendant was not a party to the 'record' in the proceedings below, he was a party of record to the action in which the proceedings below were brought. We also observe that the interest of defendant in the subject license appears in the proceedings here under review. 9 As noted in Harris, supra, 'The test * * * is whether the party seeking to appeal has an interest which appears on the record.' (245 Cal.App.2d p. 923, 54 Cal.Rptr. p. 349.) (See Estate of Levy, 4 Cal.2d 223, 226, 48 P.2d 675; Estate of Armstrong, 241 Cal.App.2d 1, 6, 50 Cal.Rptr. 339.)

Applying these principles to the instant case we conclude that defendant is an 'aggrieved party' entitled to appeal the order made in the proceedings below. There can be no question that defendant's license is recognized as a valuable and vested property right. (Hewitt v. Board of Medical Examiners, 148 Cal. 590, 592, 84 P. 39, 3 L.R.A., N.S., 896; Elder v. Bd. of Medical Examiners, 241 Cal.App.2d 246, 260, 50 Cal.Rptr. 304; Laisne v. Cal. St. Bd. of Optometry, 19 Cal.2d 831, 835, 123 P.2d 457.) His interest in the license was injuriously affected by the order made in the proceedings below since by that order he was automatically deprived of a license in which he had a substantial and pecuniary interest. That interest clearly appears of record as does the fact that defendant is bound by the order since the making of the order automatically suspends his license, and, to that extent is res judicata.

We do not believe that a contrary conclusion is warranted because defendant could have appealed from the judgment in the main action. Defendant may have elected not to appeal that judgment for a variety of reasons. Moreover, the direct effect of that judgment was to impose monetary damages only. It did not, in and of itself, suspend defendant's license but was the basis for the instant proceeding which resulted in a suspension of edfendant's license when the court below made its order for payment of the compensatory portion of the judgment for damages. The validity of that order depends upon whether plaintiffs complied with the provisions of section 10471. As a person aggrieved by that order defendant is entitled to show on appeal that the requirements of this statute have not been complied with.

Turning to the merits of the instant appeal, we observe, initially, that defendant attacks the judgment which was rendered on July 10,...

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