GUDGER v. MANTON ET AL

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District Court of Appeal, First District, Division 1, California.

GUDGER v. MANTON ET AL.*

Civ. 11900.

Decided: March 18, 1942

Harold A. Fendler and Bertin Weyl, Jr., both of Los Angeles, for appellant. Eckman & Lindstrom, Ralph G. Lindstrom, Arthur W. Eckman, and Robert L. Moore, all of Los Angeles, for respondent.

This is an appeal from a judgment in favor of plaintiff for damages for alleged slander of title to certain real property belonging to him, rendered in an action brought against defendants Manton and a number of attorneys, including appellant, to quiet title to the property and to recover said damages. No question is raised on the appeal with respect to that part of the judgment quieting title in plaintiff as prayed.

The facts of the case are as follows: In 1932 a default judgment in the sum of $40,166.45 was entered in the state of New York against plaintiff's wife and in favor of Mabel Manton, growing out of a premarital tort of the former. As the result of a contingent agreement for payment of services appellant, who had represented Mrs. Manton in the action, had a “substantial interest” in the judgment. On December 6, 1934, she wrote Hamilton and Hoornaert of Los Angeles, non–appealing defendants herein, to “immediately institute proceedings for the collection of the judgment in this matter.” This direction was without authorization from Mrs. Manton. Following communications between them, appellant wrote Hamilton and Hoornaert on January 10, 1935, in part as follows: “I also note your verification of our understanding upon which you are handling this matter, namely, that you are to receive 20% or 1/5 of my 40% contingent fee. * * * Of course, while the property of the husband is not subject to this judgment, nevertheless, the husband's social and financial position is a factor to be considered.” On January 7, 1935, a complaint upon the New York judgment was filed in the superior court of the state of California in and for the county of Los Angeles against plaintiff's wife. Some negotiations were conducted among the parties directed toward a compromise of the suit but when no satisfactory progress was made, appellant on February 11th advised the Los Angeles attorneys to “return the papers * * * with your bill.” On February 14th, Hamilton and Hoornaert complied with this direction, advising appellant at the same time that they had requested the entry of a default judgment. This was entered February 18th in favor of Mabel Manton and against Mrs. Gudger, plaintiff's wife, in the sum of $48,296.76. The appellant never paid the bill of Hamilton and Hoornaert. For several years thereafter, purporting to act for her client Mrs. Manton, appellant had other attorneys working on the case, consulted them with reference to a substitution of attorneys––which she attempted to procure––and various other phases of the litigation, including the payment to them of percentages of her contingent fee. During this time she also continued to correspond with her original Los Angeles representatives with reference to the litigation, and neither as a party interested in the Manton judgment, nor as the purported attorney for Mrs. Manton, did appellant cause other attorneys to be substituted for Hamilton and Hoornaert. C.C.P., sec. 284.

In the meantime, having attempted to obtain from appellant her authority to proceed with the collection of the default judgment, but without success, Hamilton and Hoornaert communicated with plaintiff Manton direct and received authority from her to collect the judgment against Mrs. Gudger. To this end, without advice to appellant, they gave Sadicoff, another of the defendants herein, authority to levy a writ of execution and, pursuant thereto, the sheriff levied upon “all right, title and interest of defendant * * * in and to” certain real property standing in the name of plaintiff herein, her husband. This writ appears of record in the office of the county recorder of the county of Los Angeles. Immediately thereafter the attorney for the plaintiff herein advised Sadicoff, Hamilton and Hoornaert that Mrs. Gudger had no interest in the property attached and that he would look to each of said parties for “full legal accountability.” Following several months' investigation, which included the taking of depositions, the inspection of a safe deposit box, conferences, etc., Sadicoff advised Hamilton and Hoornaert that he was convinced Mrs. Gudger had no interest in any of the property attached; that she “had never had any right, title and interest whatsoever therein” and that the attachment should be released. This was not, however, done, notwithstanding much urging of Hamilton and Hoornaert by the attorney for the plaintiff herein, and the present action was commenced, as above stated, to quiet title to the property and to recover damages for slander of title, appellant Pugh being named as one of the defendants and being served with summons and complaint in New York. After a considerable lapse of time, Hamilton and Hoornaert did release the attachment.

Plaintiff's complaint alleges that the claims of defendants to his property were maliciously made, and that in refusing to cause the levy of the writ of attachment to be released, although they knew it to be inoperative so far as Mrs. Gudger was concerned, defendants acted maliciously, with intent to vex and harass plaintiff, and with full knowledge that their actions would result in a cloud upon, and a slander of the title to plaintiff's property. Damages were predicated upon the malicious and wrongful acts of defendants. Appellant's answer was in effect a general denial, thereby putting in issue the allegations of the complaint. Trial by jury having been waived, the case was tried by the court as a slander of title action, but no findings were made upon the issue of malice, although the evidence is ample to support the allegations of the complaint in this particular. Such a finding should have been made, at least in so far as the appellant herein is concerned. Upon this theory appellant's further contentions will be considered.

The court found that two bona fide offers to purchase plaintiff's property were made during the period of the existence of the lien thereon; that the prospective buyers would have made such purchase for $32,500 and $35,000 respectively but for the cloud upon the title; that the value of the property on the date of the release of the attachment was not in excess of $16,500.

Appellant's initial contention is that the levy of a writ of execution upon “all the right, title and interest” of a judgment debtor in and to real property standing in the name of the judgment debtor's husband does not constitute either a lien against, nor a cloud upon, nor a slander of title to real property, but that even assuming it constituted defamation it may not be designated as a slander of title, for the reason that such levy and such defamation, if any, are privileged.

The validity of a lien depends upon the legality of its foundation. If valid, it may not be the basis of an action for slander of title. If invalid, the “cloud” may be removed by proceedings to quiet title, but the damaging effect, if any, on the property in the meantime is measurable in damages, depending upon the facts of the case. The fact that it may be determined there was no “cloud,” may not, standing alone, be the basis of a logical argument that there was no damage to the title. The gist of any action for slander of title is the besmirching of the title, which in this case was accomplished by attempting wrongfully to impose on the property a charge for the obligation of another.

A person is not always liable in damages for an effort judicially to assert what he believes to be true, but if a lien is false, and its falsity ascertainable, and the continuance thereof is prompted by an intention to annoy and vex plaintiff to a point where he might consent to pay an illegal demand, the filing and continuance of such lien is wrongful, and gives rise to an action for slander of title to the property. Ezmirlian v. Otto, 139 Cal.App. 486, 34 P.2d 774.

Needless to say, such defamation could not be privileged. In Coley v. Hecker, 206 Cal. 22, 29, 272 P. 1045, 1048, the court said: “It was the filing, maliciously and falsely, of a document which clouded the title of respondent that caused the injury. The effect would be the same had said document been a forged deed, rather than an unauthorized abstract of judgment.” The allegations of pleadings in a proceeding to be tried in a court of justice are sometimes privileged, but this rule does not extend to the recordation and continued maintenance of a levy imputing actual interest in property to one who is known by the party responsible for the levy to have no such interest. It is the imposition, without probable cause, of the cloud of an apparent lien, which defames the title until it is dissolved, that constitutes slander of title to real property. The filing or recording of an instrument, such as a lien, not actionable per se, but which is in fact (Davis v. Hearst, 160 Cal. 143, 116 P. 530; Fitzpatrick v. Clark, 26 Cal.App.2d 710, 80 P.2d 183) maliciously levied and produces actual damage, is a defamation against title and actionable as such. Coley v. Hecker, supra; 37 C.J., p. 130, § 594; Fearon v. Fodera, 169 Cal. 370, 148 P. 200, Ann.Cas.1916D, 312.

The evidence shows that there was no justification for the retention of the lien against plaintiff's property after a clear showing that his wife had no interest therein. This fact, plus defendant's opinion as expressed, that the “social and financial position” of plaintiff was a factor to consider are amply sufficient to demonstrate that the plan was conceived maliciously, and pursued malevolently, in the hope of exacting tribute for the release of the lien.

In the findings, in determining the liability of the parties, the defendants, except in a few instances, were referred to as a group. The appealing defendant was not differentiated from the others, all being referred to as “defendants and each of them.” Appellant contends that there was no evidence to justify a finding that she caused the writ of execution to be levied or recorded, or that demand was made upon her for its release, or that she refused to act in that regard.

The first claim in this respect is that a forwarding attorney is not liable for wrongful acts committed by correspondent attorneys in a foreign jurisdiction. It is true that the documents filed do not disclose the name of Lucile Pugh either as a party to the action or as attorney therein. The fact that Pugh, without the knowledge of her client Mrs. Manton, or the authority of Mrs. Manton's then legal representative or attorney in fact, employed Hamilton and Hoornaert to take all steps necessary to collect the judgment against plaintiff's wife for a fee based upon a percentage of Pugh's contingent interest arising from the action in New York, Mrs. Manton's interest in such judgment being in no way involved for the payment of the fee, places appellant outside of the sphere of a forwarding attorney, and legally classifies her as a principal, employing attorney agents directly for herself. The fact that incidentally the employment may have been of advantage to Mrs. Manton in no way changes the relationship of Pugh and her legal representatives. It is true that at one time appellant notified Hamilton and Hoornaert that “it was useless for your office to proceed further in the matter,” and instructed them to return the papers “with your bill.” The bill for services, $200, seems to have been ignored. Several months later, Hamilton wrote Pugh: “In accordance with your instructions the above entitled matter has been lying dormant.” That appellant was interested in prosecuting the claim is indicated by her reply in which she requested the Los Angeles attorneys to kindly advise “what will insure collection after the first execution is levied.” As stated, Pugh discussed with Hamilton and Hoornaert the matter of their fee to be paid from her contingent interest; she also communicated with other attorneys relative to execution on the judgment, and fees to be paid them for proposed participation in the action, although her client Mrs. Manton never gave her direct authority to attempt to collect the judgment outside of the state of New York. She left Hamilton and Hoornaert as attorneys of record, however, and never caused other attorneys to be substituted for them notwithstanding that subsequently such substitution was signed by Mrs. Manton. Incidentally, this substitution was permitted to remain unused in appellant's office files. Subsequently Pugh visited Los Angeles, but even then no action was taken to substitute other attorneys.

The delay in the issuance of execution was principally caused by Hamilton and Hoornaert's insistence that their contingent fee should be enlarged as it was found necessary to pay “others.” Under a separate agreement with Mrs. Manton, the fee was increased and the levy of execution followed. There should be no hesitancy, is so far as appellant is concerned, in approving findings that “the defendants and each of them caused a writ of execution * * * to be levied,” and that after demand by plaintiff or his attorney the defendants other than Sadicoff “refused to release said levy of execution.”

Appellant contends “In any event a principal is not liable for a slander of title committed by an agent.” The general rule is that a principal may under the circumstances of the particular case be responsible for actual damage caused by a wrongful levy on the part of his agent, but is not liable in exemplary damages for the agent attorneys' malicious conduct except upon proof of authorization or ratification. 7 C.J.S., Attorney and Client, p. 852, § 68. In the present case only compensatory damages were awarded. Proceedings in California upon the New York judgment originated with appellant Pugh as a principal, without the knowledge of Mrs. Manton, her client; she communicated by letter and wire with attorneys in Los Angeles, finally making a journey to California in connection with the matter, and, although she knew that “the property of the husband is not subject to this judgment,” she maliciously called attention to plaintiff's property as a factor for consideration, based upon his social and financial position. Though there is evidence from appellant as a witness herein that she had no direct knowledge of the levy, the record is replete with documentary evidence that she intended to maliciously harass and annoy respondent Gudger to the point, if possible, of forcing him to pay the pre–marital tort judgment against his wife. Malice, express or implied, is an essential element of any action based upon slander of title. Fearon v. Fodera, supra. The trial court failed to make a finding thereon. The malicious intent of appellant will be disposed of in the order affirming the judgment.

The briefs of appellant discuss at great length the sufficiency of the evidence, the bona fides of the offers of purchase and the paucity of evidence touching the question of the market value of the property. The complaint and the evidence sufficiently conform. The attack is primarily aimed at the weight and not the admissibility of the evidence. The evidence is not inherently improbable and, if believed––a matter for consideration of the trial court––sufficient to sustain the findings. Russell v. Ramm, 200 Cal. 348, 254 P. 532; Cottingham v. Smith, 28 Cal.App.2d 345, 82 P.2d 479; Coley v. Hecker, supra. The evidence shows the recordation of an apparent lien; offers during the pendency thereof to buy for stated amounts; failure to purchase when informed of the lien; the market value of the property on various dates, taking into consideration the period of recordation; the repeated demands for release following a full investigation of ownership, and the date of release. The amount of damages awarded represents the difference between one of the offers and the price that could have been obtained for the property following the release of the levy.

Other points raised by appellant are without merit, including the contention that plaintiff brought the damages on himself by informing the offerors of the existence of the lien. We cannot subscribe to the doctrine that the owner of property should enter into a contract to sell without disclosing to the purchaser the existence of a cloud against its title. The proximate cause of damages to plaintiff was the slander of title of his property and not his acknowledgment of the existence of the lien.

In conformity with the provisions of section 956a, Code of Civil Procedure, a trial by jury having been waived in the above entitled matter, an additional finding should be and is hereby made. In accordance with the pleadings, the evidence and the views herein expressed, a finding numbered XV on pages 33 and 34 of the clerk's transcript filed for this appeal is hereby amended to read as follows: “That it is true that defendant, Lucile Pugh, employed defendants Hamilton and Hoornaert for the purpose of ‘instituting’ in California ‘necessary proceedings for the collection of the judgment’ obtained in New York as aforesaid, and said action numbered 382124 was instituted for that purpose. That in causing the lien to be levied, recorded and continued, defendant Lucile Pugh acted wrongfully and with malicious intent to oppress, vex and annoy the plaintiff Francis A. Gudger.” With this amendment to the findings the judgment is affirmed.

WARD, Justice.

PETERS, P. J., and E. P. MURPHY, Justice pro tem., concurred.

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