Westinghouse Credit Corp. v. Wolfer

• Citation: 88 Cal.Rptr. 654,10 Cal.App.3d 63
• Court: California Court of Appeals
• Decision Date: 30 July 1970
• Parties: WESTINGHOUSE CREDIT CORPORATION, a Delaware Corporation, Plaintiff and Respondent, v. Roberta H. WOLFER, Defendant and Appellant. Civ. 35532.

Page 654

88 Cal.Rptr. 654

10 Cal.App.3d 63

WESTINGHOUSE CREDIT CORPORATION, a Delaware Corporation, Plaintiff and Respondent, v. Roberta H. WOLFER, Defendant and Appellant.

Civ. 35532.

Court of Appeal, Second District, Division 3, California.

July 30, 1970.

Aitken & Bradshaw and John G. Bradshaw, Santa Ana, for defendant and appellant.

Swerdlow, Glikbarg & Shimer, Allan Albala and Joel Behr, Beverly Hills, for plaintiff and respondent.

COBEY, Acting Presiding Justice.

Roberta H. Wolfer appeals from a minute order denying her motion to vacate her default ¹ and the judgment entered thereon and for relief incidental thereto. The appeal lies (Code Civ.Proc. § 904.1(b)), but we affirm for reasons which we will now set forth.

THE FACTS

In January 1966 Westinghouse acquired by written assignment for valuable consideration, all of the seller's interest under a written agreement covering the sale of certain restaurant equipment and related items to one Griffin. About six months later appellant assumed by a written assumption agreement all of Griffin's obligations to Westinghouse under the agreement On March 28, 1968, Westinghouse filed suit against Griffin, appellant and Savoy for the balance then due under the agreement of sale, namely, $13,081.18, and for other relief. About a month later the summons and the complaint in this action were duly served upon appellant and Savoy. Appellant thereupon delivered the summons and complaint she had received to an attorney, Endres, who apparently advised her that the matter would be taken care of. Endres, who was also Savoy's attorney, and Albala, Westinghouse's attorney, then negotiated a proposed settlement of the litigation under which, among other things, the monthly payments provided by the agreement of sale would be reduced to $175 and the period for the making of them thereby impliedly extended. Savoy accepted the settlement, executed a conditional stipulation for judgment, and made the payment of money to Westinghouse then required by the settlement.

of sale. A short time later one Savoy apparently took over the restaurant where the equipment and other items involved were in use, and assumed by written agreement with appellant and Griffin alone their debt to Westinghouse for these items. Shortly thereafter Westinghouse apparently learned of this assumption. The monthly payments to Westinghouse, however, almost immediately stopped.

Appellant, on the other hand, refused the settlement, which had been offered jointly to her and Savoy, and disclaimed any liability to Westinghouse. Westinghouse rejected the disclaimer and notified Endres orally and in writing that unless appellant appeared by July 5, 1968, Westinghouse would have her default entered. Appellant thereafter failed to appear in the action and her default was entered on August 19, 1968.

With the exception of one payment in June 1968, Westinghouse did not receive any of the reduced monthly payments. Consequently in February 1969 Westinghouse had the stipulated judgment against Savoy entered in the full principal amount for which suit had been brought, $13,081.18, and in May 1969 took judgment after default against appellant in the principal amount of $9,886.80. The following month a writ of execution issued on this judgment and a levy was made upon appellant's deposit of $1,344.06 and her safe deposit box at a certain bank. Appellant thereupon moved to set aside her default and the judgment taken thereon, and for incidental relief.

DISCUSSION

A motion to vacate a default judgment poses the fundamental issue of accommodation between the policy favoring the finality of judgments, on the one hand and the policy favoring judicial determinations by a hearing on the merits, on the other hand.

Appellant asks that the default judgment against her be set aside because she was deprived of the opportunity to present a meritorious defense to Westinghouse's suit against her through an extrinsic mistake on the part of her attorney, Endres. Specifically she claims that when Savoy promised her that he would pay the debt to Westinghouse for the restaurant equipment and related items, he became as between them the principal on her obligation to Westinghouse and she became the surety; that once Westinghouse learned of this relationship it was obligated to recognize it and act accordingly; that Westinghouse failed to do this when it granted to Savoy, without appellant's consent, as a part of its settlement of the suit with Savoy an extension of time in which to make the monthly payments due to Westinghouse on the items sold; and that under Civil Code, section 2819 this conduct by Westinghouse exonerated her from her debt to Westinghouse.

We believe that appellant did have a meritorious defense to Westinghouse's suit against her. A surety is, among other things, one who promises to answer for the debt of another. (Civ. Code, § 2787.) In a suretyship relation there are two obligors and one obligee who is entitled to but one performance. (See Rest., Security (1941) § 82, p. 228; Everts v. Matteson, 21 Cal.2d 437, 447, 132 P.2d 476.) When Savoy assumed appellant's debt to Westinghouse, he became the principal obligor and she became the surety. ² (See Rest., Security (1941) § 83(c), p. 239, com. e, p. 243; Everts, supra, at 447, 132 P.2d 476.) As soon as Westinghouse learned of the assumption by Savoy of appellant's debt to Westinghouse, Westinghouse was required to recognize the relation of suretyship between Savoy and appellant and respect it in all of its subsequent dealings with them. ³ (Everts, supra, at 447--448, 132 P.2d 476; Rest., Security (1941) § 83, com. (e), p. 243, § 114, com. (a), pp. 299--300.) This it did not do. Instead, without appellant's consent and without any reservation of its rights against appellant, it extended Savoy's time for payment and thereby exonerated appellant from the debt. ⁴ (See Civ.Code, § 2819; Rest., Security (1941) § 129(1), p. 346; Wise v. Clapper, 257 Cal.App.2d 770 ,774, 65 Cal.Rptr. 231.)

Since appellant did have this one meritorious defense to Westinghouse's suit under Civil Code, section 2819, we will not consider the merit of her other claimed defense of novitation.

Her possession of at least one meritorious defense to Westinghouse's suit against her did not in itself, however, entitle her, without more, to the extraordinary equitable relief she sought of setting aside a final judgment. (See 3 Witkin, Cal.Procedure (1959) p. 2120, et seq.) She based her right to this relief on her claim that she had been denied a fair opportunity to present this defense by the total failure of her counsel, Endres, to represent her in the litigation in two respects. First, he represented Savoy as well as herself, and by reason of their different legal positions in the transaction at issue there was a conflict of interest between them. Second, according to her own declaration, at no time prior to the levy upon her property had Endres advised her 'that it would be necessary for her to obtain advise of other counsel or that a default or judgment had been entered against her. ⁵

Appellant's contention that her default was occasioned by Endres' total failure to represent her is untenable. As we have already indicated, appellant did not acquire a meritorious defense to Westinghouse's suit against her until Westinghouse settled its suit with Savoy alone. From that point on, for all practical purposes, Endres represented only appellant. Therefore, any claim of misconduct on Endres' part in jointly representing appellant and Savoy prior to that time is beside the point. Furthermore, because he did at this point represent her alone, it was unnecessary for him to advise her to obtain other counsel.

Additionally, we note that her personal declaration is completely silent...