Stewart v. Phoenix National Bank

• Citation: 64 P.2d 101,49 Ariz. 34
• Decision Date: 11 January 1937
• Docket Number: Civil 3748
• Parties: FRANK R. STEWART, Appellant, v. PHOENIX NATIONAL BANK, a Corporation, Appellee
• Court: Arizona Supreme Court

64 P.2d 101

49 Ariz. 34

FRANK R. STEWART, Appellant, v. PHOENIX NATIONAL BANK, a Corporation, Appellee

Civil No. 3748

Supreme Court of Arizona

January 11, 1937

APPEAL from a judgment of the Superior Court of the County of Maricopa. Howard C. Speakman, Judge. Judgment affirmed.

Mr. L C. McNabb and Mr. O. B. DeCamp, for Appellant.

Messrs Chalmers & Fennemore, Mr. H. M. Fennemore, and Mr. Henry W Allen, for Appellee.

OPINION

LOCKWOOD, J.

This is an appeal from a judgment of the superior court of Maricopa county, wherein Frank Stewart was plaintiff and Phoenix National Bank, a corporation, was defendant. The facts which led up to the appeal may be stated as follows:

Plaintiff, by his complaint, sought to recover damages for a loss alleged to have been sustained through the fraudulent foreclosure of a mortgage given by him to defendant as security for an original indebtedness of some $17,000. The defendant filed a motion to strike, one to make more definite and certain, a plea in bar, and a general demurrer. The court denied the motions and overruled the demurrer, and the case went to trial on the merits before the court sitting with a jury. Shortly after the trial opened, and while plaintiff was testifying as the first witness, the court sustained an objection to the introduction by plaintiff of any evidence tending to show the invalidity of the mortgage above referred to or questioning defendant's right to foreclose it, and also sustained an additional objection to the introduction of any further evidence on the ground that the complaint did not state facts sufficient to sustain a cause of action, thus in effect reversing its ruling on the general demurrer. Plaintiff then made an offer of proof, and, defendant moving that the action be dismissed, it was so ordered by the court, and later a formal judgment of dismissal was rendered as required by the rule. After the usual motion for new trial had been overruled, this appeal was taken.

There are some eight assignments of error, but we think that there are but two questions which we need consider in disposing of the case. They are (a) the extent to which the trial court may go in taking judicial notice in one action of the record in another action which has been tried and gone to judgment in the same court, and (b) whether the complaint herein states a cause of action against defendant.

We consider the first question. The ordinary rule in the state courts is that they do not take judicial notice of proceedings in another cause in the same court. 23 C.J. 133, and cases cited. The federal rule seems to be different. In Butler v. Eaton, 141 U.S. 240, 11 S.Ct. 985, 986, 35 L.Ed. 713, the Supreme Court of the United States says:

"We think, therefore, that the evidence of the judgment recovered was properly admitted as a bar to the receiver's title to recover in reference to the new stock. And it cannot be said, therefore, looking to the record in this case alone, that there is error in the judgment now before us. But, by our own judgment just rendered in the other case, the whole basis and foundation of the defense in the present case, namely, the judgment of the supreme judicial court of Massachusetts, is subverted and rendered null and void for the purpose of any such defense. While in force, an execution issued upon it, and a sale of property under such execution, would have been effective. And when it was given in evidence in this case it was effective for the purpose of a defense, but its effectiveness in that regard is now entirely annulled. Are we, then, bound to affirm the judgment, and send it back for ulterior proceedings in the court below, or may we, having the judgment before us, and under our control for affirmance, reversal, or modification, and having judicial knowledge of the total present insufficiency of the ground which supports it, set it aside as devoid of any legal basis, and give such judgment in the case as would and ought to be rendered upon a writ of error coram vobis, audita querela, or other proper proceedings for revoking a judgment which has become invalid from some extraneous matter?...

"The judgment complained of is based directly upon the judgment of the supreme judicial court of Massachusetts, which we have just reversed. It is apparent from an inspection of the record that the whole foundation of that part of the judgment which is in favor of the defendant is, to our judicial knowledge, without any validity, force, or effect, and ought never to have existed. Why, then, should not we reverse the judgment which we know of record has become erroneous, and save the parties the delay and expense of taking ulterior proceedings in the court below to effect the same object?"

And this rule has been affirmed by that tribunal many times. New York & Texas L. Co. v. Votaw, 150 U.S. 24, 14 S.Ct. 1, 37 L.Ed. 983; Bienville Water Supply Co. v. Mobile, 186 U.S. 212, 22 S.Ct. 820, 46 L.Ed. 1132; Craemer v. Washington, 168 U.S. 124, 18 S.Ct. 1, 42 L.Ed. 407. We think the federal rule more consonant with common sense and modern practice, and adopt it as the law of this state. But even in most of those jurisdictions which adhere to the stricter rule there are exceptions, and one of these is that where in his complaint a party refers to the other proceeding or judgment, and specifically bases his right of action in whole or in part on something which appears in the record of the previous cause, the court, in passing on a demurrer to the complaint, will take judicial notice of the matters appearing in the record in that case without formal proof thereof. Cogburn v. Callier, 213 Ala. 38, 104 So. 328; Schneider v. Decker, 144 Okl. 213, 291 P. 80. And allegations of a pleading, which are contrary to facts of which judicial notice is taken, are treated as a nullity. Verde W. & P. Co. v. Salt River V.W.U. Assn., 22 Ariz. 305, 197 P. 227. We think that since plaintiff, by his complaint, based his action to a very great extent upon matters which appear in a certain mortgage foreclosure case between the same parties, which had been heard in the same court, that the court in passing on the sufficiency of the complaint was entitled to consider, and properly did consider, the entire record in such previous case without the necessity of its being offered in evidence, and, if such record contradicted the allegations of the complaint or was a defense thereto, the demurrer to the complaint was properly sustained, and the case taken from the jury and the action dismissed. We therefore consider the sufficiency of the complaint, viewed in the light of the record in cause No. 37255A, the mortgage foreclosure case referred to in the complaint.

The complaint is voluminous and we therefore summarize it, except in so far as we think necessary to quote verbatim therefrom. It commences with the usual allegations of residence and character of parties, stating that defendant has for years been engaged in the banking business in Arizona. It then alleges as follows:

"That on or about the 4th day of March, 1931, and for about twenty-three years prior thereto, the plaintiff was a customer of the Phoenix National Bank, and the officers and directors of said Phoenix National Bank had during all of said twenty-three years been the plaintiff's financial advisor; at divers times prior to the said 4th day of March, 1931, the plaintiff had borrowed large sums of money from the said defendant bank without giving any security or collateral therefor, and had repaid the same, and had been advised on divers occasions by the officers and directors of the bank of the bank's friendship for him, and the plaintiff had always believed that the bank and its officers and agents would not take any financial advantage of him."

Continuing, it sets up that about the 4th day of March, 1931, plaintiff was indebted to the defendant bank in the sum of $17,800, evidenced by unsecured notes; that the defendant, desiring to obtain for itself all of plaintiff's property for the debt aforesaid, and with the intent to deceive and defraud plaintiff out of his property, requested him to give a mortgage on certain real estate which he owned as security for the debt. It then alleged:

"That at the time of the defendant requesting the said note and the said mortgage securing said note, the defendant through its officers and agents, well knowing that the plaintiff would and did rely upon their representation wilfully and wickedly and falsely represented to the plaintiff that it did not want his property, but only wanted the note secured by 'A-1, gile edged security,' and that it was necessary for them to have the security for the records to satisfy the banking department; plaintiff informed the said defendant that he would not be able to raise the money within a year because of the depression, and the said officers and agents of said defendant with the intent to deceive and defraud the plaintiff wickedly and falsely represented to the plaintiff that they would not foreclose said mortgage at the expiration of one year; and the plaintiff gave as additional security an assignment of a mortgage in the sum of Two Thousand ($2,000) Dollars; that said false representations were made by the defendant, its officers and agents, well knowing that they did not intend to live up to said representations but intended to foreclose said note and mortgage if same was not paid upon the expiration of said one year, and well knowing that the plaintiff did rely upon said representations, and well knowing that the plaintiff did not know of the defendant's false and fraudulent intention, induced the plaintiff to execute the said note and mortgage; that the plaintiff did not know that the said representations made by the defendant, its...