Smith v. Great Lakes Airlines, Inc.
| Decision Date | 05 May 1966 |
| Court | California Court of Appeals Court of Appeals |
| Parties | P. D. SMITH and P. D. Smith, Inc., a California corporation, Plaintiffs and Appellants, v. GREAT LAKES AIRLINES, INC., a corporation, et al., Defendants and Respondents. Civ. 28394. |
Goldstein, Bernson & Wolf, Los Angeles, for appellants.
Robert A. Eaton, Los Angeles, for respondents.
This is the third time that the airframe of a certain Douglas C--54B aircraft has occupied the attention of this court. The background of the present controversy is detailed in the opinion written by Justice Wood in Great Lakes Airlines, Inc. v. Smith, 193 Cal.App.2d 338, 14 Cal.Rptr. 153. For convenience we briefly summarize it as follows:
On September 13, 1955 one of the present plaintiffs, P. D. Smith, leased the aircraft in question to the present defendants, who were also granted an option to purchase it. This option was exercised by them on April 14, 1956. At the time of the lease Smith had represented orally that in 1955 the airframe of the aircraft had been overhauled in Tokyo in accordance with the regulations of the Civil Aeronautics Administration ('C.C.A.'). He also promised that he would obtain records which would substantiate this representation. The effect of this representation, if true, was that no major overhaul of the airframe would have been required for at least eleven thousand hours of operation.
Although such a major overhaul of the airframe had apparently been accomplished in Tokyo in 1955, Smith was unable to provide the purchasers, to whom we collectively refer as 'Great Lakes', with the necessary documentation and in July and August of 1956 the C.A.A. required another major airframe overhaul. Smith delivered the records which substantiated his representation about the 1955 Tokyo overhaul after this partially 1 unnecessary overhaul in 1956 was accomplished.
After two trials 2 Great Lakes obtained a judgment against Smith which became final in late 1961. The amount of the judgment, which included the cost of the overhaul, interest thereon, damages for loss of use and attorneys' fees approximated $110,000.00.
Not quite two years after this judgment became final the former defendants, Smith and P. D. Smith Inc., 3 filed an action in the superior court against the former plaintiffs. A judgment in favor of defendants was entered after the trial court sustained a demurrer to the first amended complaint without leave to amend.
The first amended complaint which is in three counts alleges in substance as follows:
First Count. The pleader refers to the earlier action, the judgment therein and to the appeal. He correctly states that the subject matter of that action was that Great Lakes was required by the Federal Aviation Agency 4 ('F.A.A.') to perform a premature major airframe overhaul because Smith had not delivered the records pertaining to the Tokyo overhaul in 1955. It is then alleged that no such overhaul was in fact performed, but that Great Lakes and certain F.A.A. officials had conspired to make it so appear before and at the trial.
The complaint charges fraudulent representations made to Smith by these officials before the first trial to the effect that Great Lakes had accomplished a major airframe overhaul. One F.A.A. official then falsely testified to the same effect. Smith relied on these representations because of the official status of the maker who had conspired with defendants to mislead Smith and the court.
Further allegations are to the effect that the falsity of these representations was not discovered until January, 1963. Just what plaintiff discovered is somewhat mysterious, but doing the best we can we gather that it was ascertained shortly after the first judgment became final that the airframe had been placed on a 'one shot overhaul.' The complaint alleges that this is a term of art peculiar to airline operators and F.A.A. officials, but it never says just what it means. 5 Anyway, Smith discovered that Great Lakes had not performed a major overhaul in 1956.
Second Count. After incorporating the references to the issues in the first action, this count alleges:
Defendants concealed a special arrangement with the F.A.A. whereby they were permitted 'by unauthorized means to credit prior repairs, replacements, maintenance and partial overhaul to the subsequent officially required overhaul beginning on July 20, 1956.' Great Lakes, however, was on a 'one shot overhaul' basis which did not allow such a credit and that in spite of the credit arrangement Great Lakes maintained that all but an insignificant amount of the cost of the overhaul was incurred after July 20, 1956. In fact several major repairs were done before that date. Since in the first action Smith was only liable for expenses incurred as a result of the F.A.A.'s order of July 20, 1956 to overhaul the airframe, the concealment of the credit arrangement was 'extrinsic fraud on the court and on plaintiff.' If the truth had not been kept from the court, Great Lakes would not have recovered the amounts credited to the overhaul.
Third Count. This count is a common count for money had and received in the sum of $127,944.00.
Prayer. The prayer of the complaint is that the judgment in the first action be declared null and void, vacated and set aside and that Great Lakes be required to account to Smith for all monies received from Smith 'pursuant to said judgment in the amount of $127,944.04.' There is also a prayer for an equitable lien on the plane in question and for punitive damages.
Were it not for one case cited by plaintiffs, we would be inclined to consider the appeal as frivolous, since the fraud was obviously not extrinsic. Plaintiffs appeared in the earlier action and no claim is made that they did not have an opportunity to litigate the question whether or not a major overhaul had been performed in 1956. Indeed, in view of the various records of which both this court and the superior court can take judicial notice, it would have been futile to advance such a contention. (Varcoe v. Lee, 180 Cal. 338, 343, 181 P. 223; Stafford v. Ware, 187 Cal.App.2d 227, 9 Cal.Rptr. 706; Pike v. Archibald, 118 Cal.App.2d 114, 116--117, 257 P.2d 480.)
It may well be that in the first action plaintiffs accepted representations made by defendants that there had been a major overhaul and merely disputed the cost. 6 The question, however, is not whether they actually disputed the fact of an overhaul, but whether or not they had an opportunity to do so.
There is no question that perjury to the court is intrinsic fraud. (Jorgensen v. Jorgensen, 32 Cal.2d 13, 18, 193 P.2d 728; Preston v. Wyoming Pac. Oil Co., 197 Cal.App.2d 517, 528--531, 17 Cal.Rptr. 443.) We should also have considered it as settled beyond dispute that where the lies told by the successful party to the court are mere repetitions of lies previously told to the loser, the fraud is also intrinsic. It would burden the citator unduly to add a long list of cases to support this proposition. We will content ourselves, therefore, by referring merely to Jorgensen v. Jorgensen, supra. There, Mrs. Jorgensen had previously procured an uncontested divorce after she and her husband had executed a property settlement agreement. This agreement was approved and adopted in the final decree. Later she tried to set aside the provisions of the interlocutory decree relating to the property settlement agreement on the grounds of fraud or mistake. She claimed that her husband had fraudulently misrepresented certain community assets as being his separate property. She and her attorney had relied on these representations. The superior court held that her complaint did not state a cause of action and the Supreme Court agreed, although it recognized that the husband as the manager of the community property occupied a position of trust and was therefore under a duty to the wife not to conceal any assets which are part of the community property. No such concealment was alleged. His representation that disclosed assets were separate rather than community, was merely a position favorable to his own interest, the truth of which the wife and her attorney had every opportunity to investigate.
The significant part of the Jorgensen case, for our present purpose, is the way in which the court distinguishes the duty of a fiduciary to disclose assets, from the duty of a husband or wife to disclose philandering. It referred to its earlier decision in Howard v. Howard, 27 Cal.2d 319, 163 P.2d 439 as follows: (Ibid., 32 Cal.2d pp. 21--22, 193 P.2d p. 733--734.)
It seems obvious to us that the relationship between Great Lakes and Smith with respect to the question of whether or not there had been a major overhaul of the aircraft was not fiduciary and that the parties dealt at arms length.
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