Zainudin v. Meizel

• Decision Date: 21 July 1953
• Citation: 259 P.2d 460,119 Cal.App.2d 265
• Court: California Court of Appeals Court of Appeals
• Parties: ZAINUDIN et ux. v. MEIZEL et al. Civ. 15312.

Page 460

259 P.2d 460

119 Cal.App.2d 265

ZAINUDIN et ux. v. MEIZEL et al.

Civ. 15312.

District Court of Appeal, First District, Division 2, California.

July 21, 1953.

Rehearing Denied Aug. 20, 1953.

Hearing Denied Sept. 17, 1953.

Herman Daniel Gill and John F. O'Sullivan, San Francisco, for appellants.

Joseph F. Mannion, San Francisco, for respondents.

NOURSE, Presiding Justice.

Plaintiffs sued for damages for fraudulent representations leading to their purchase from certain named defendants of a leasehold in a hotel. At the trial plaintiffs dismissed as to three of the named defendants and a nonsuit was granted as to one other. On a trial to a jury a verdict was returned against the four remaining defendants for $24,000 compensatory damages and $5,000 punitive damages. Two of these defendants, Meizel and Cook, appealed. Pending the appeal the defendant Meizel deceased and his administratix was duly substituted and the same counsel appears for her.

A brief outline of the proceedings shows that prior to the trial of this action two of the defendants brought suit against the plaintiffs herein for cancellation of the agreement of sale which is the subject of this action, and to quiet title to the hotel furniture. The plaintiffs herein did not set up their cause of action as a defense to that suit and judgment was taken against them by default. In the present action the defendants herein set up those circumstances in a special plea contending that the present claim of these plaintiffs is barred since it was not pleaded as a counterclaim to the suit for cancellation of the agreement, and that the whole matter is res adjudicata. A demurrer to this special plea was sustained and the present action went to trial without that special defense. The correctness of this ruling presents the only debatable issue on this appeal.

On the question of res adjudicata appellants cite English v. English, 9 Cal.2d 358, 70 P.2d 625, 128 A.L.R. 467; Thompson v. Modern School, Etc., 183 Cal. 112, 190 P. 451; and Sutphin v. Speik, 15 Cal.2d 195, 99 P.2d 652, 101 P.2d 497, all of which are contrary to the point raised. Appellants then argue that these cases are unsound because they did not consider the effect of section 439, Code Civ.Proc. No further argument is made on the point and we may assume that it has been abandoned as it is wholly without merit.

The question of the application of section 439, Code Civ.Proc., presents the only difficulty. The section reads:

'If the defendant omits to set up a counterclaim upon a cause arising out of the transaction set forth in the complaint as the foundation of the plaintiff's claim, neither he nor his assignee can afterwards maintain an action against the plaintiff therefor.' The purpose of the section is clearly explained in Ward v. Goetting, 44 Cal.App. 435, 438, 186 P. 640, 642, where the court said: "A counterclaim, when established, must in some way qualify or defeat the judgment to which a plaintiff is otherwise entitled.' 'It must be something that resists or modifies the plaintiff's claim.' Leavenworth v. Packer, 52 Barb. (N.Y.) 132. And in Mattoon v. Baker, 24 How.Pr. (N.Y.) 329, the court, in discussing the subject, says: 'A counterclaim, to be available to a party, must afford to him protection in some way against the plaintiff's demand for judgment, either in whole or in part. It must, therefore, consist in a setoff or claim by way of recoupment, or be in some way connected with the subject of the action stated in the complaint. It must present an answer to plaintiff's demand for relief. * * * It must, therefore, contain not only the substance of what is necessary to sustain an action in favor of defendant against the plaintiff, but it must also operate in some way to defeat, in whole or in part, the plaintiff's right to recover in the action. An answer which does not meet this requirement is insufficient, whether regarded as a defense or counterclaim."

Another element in which the authorities are in accord is that the counterclaim must tend 'to diminish or defeat' the claim for damages alleged in the complaint. See Case v. Kadota Fig Ass'n, 35 Cal.2d 596, 604, 220 P.2d 912. None of these elements are present here. The plaintiffs commenced this action against eight defendants to recover damages for fraud. Before the action was tried two only of the defendants commenced an action in equity to quiet title to personal property which had been part of the fraudulent sale. The suit for damages did not and could not qualify or defeat the plea to quiet title to the personalty since the contract of sale had been abandoned. That suit did not seek a money judgment for damages, or on any other basis. The claim for damages for fraud could not afford the respondents herein any protection against the suit to quiet title to the personal property. Assuming, as that is the only way in which the appellants can find a shadow of an argument, that the word 'maintain' found in the code section does not include a counterclaim pleaded in an action already on file, we are nevertheless impelled to hold that a 'counterclaim' means in effect a plea that will defeat plaintiff's claim in whole or in part. We may also suggest that if appellants' point is good here the rule they advocate would have defeated their suit to quiet title which was brought long after this action for fraud. The word 'maintain' as used in the section has not been definitely defined. It has been used to signify 'to begin', to 'carry on', to 'commence and prosecute to a conclusion'. County of Los Angeles v. Craig, 52 Cal.App.2d 450, 452, 126 P.2d 448, 449.

But we do not deem it necessary at this time to seek a precise definition of the word 'maintain' as used in the code section. Following the accepted rule of statutory construction that the court should seek the purpose and intent of the legislature, it requires no imagination to see that here the legislature intended to require the parties to consolidate their controversies on all claims 'arising out of the [same] transaction' and thus avoid delay and a multiplicity of suits. The distriction between a counterclaim, section 439, and a cross-complaint, section 442, is well known. It is only when the second claim is a claim for money which may affect or defeat the plaintiff's claim for money that the term 'counterclaim' is applied.

Here the appellants' suit to quiet title to personalty could not have been 'offset' in any degree by...