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District Court of Appeal, Fourth District, California.

WATTSON et al. v. DILLON et al.*

Civ. 1705.

Decided: July 29, 1935

Fred W. Heath, of Los Angeles, for appellants. Halverson & Halverson, by Byron Halverson, and Chauncey E. Snow, all of Los Angeles, for respondents.

The plaintiffs instituted this action for the purpose of vacating a final judgment rendered against them in a prior action wherein they were defendants and the defendants Dan L. Dillon and Lilly Dillon were plaintiffs. Upon a trial of the action, judgment was entered in favor of plaintiffs vacating the former judgment. From this judgment, the above-named defendants have appealed.

The material facts which were developed by the evidence produced during the trial and as to which there is no dispute are as follows: Prior to January 9, 1928, the plaintiff R. A. Wattson had entered into a contract with the city of Los Angeles whereby he agreed to perform certain street improvement work, a part of which consisted of the filling of certain canals in Venice. On January 9, 1928, the said plaintiff entered into a contract with the Hollywood Granite Company, Inc., whereby the corporation agreed to perform a portion of the work which the plaintiff was obligated to perform under his contract with the city. Included in the work covered by this contract was the filling of the canals. At some subsequent date the Hollywood Granite Company, Inc., entered into a contract with the Lewis Construction Company, whereby the last-mentioned company agreed to perform the work which the Hollywood Granite Company, Inc., was obligated to perform under its contract with the plaintiff R. A. Wattson. On October 7, 1930, Dan L. Dillon and Lilly Dillon instituted an action in the superior court of Los Angeles county whereby they sought to recover damages for an alleged trespass to real property owned by them. The trespass consisted of the removal of earth from the premises of the plaintiffs. In this action R. A. Wattson, John H. Wattson, Hollywood Granite Company, Inc., and Raymond Lewis, doing business under the fictitious name of Lewis Construction Company, were named as defendants. On October 8, 1930, service of process in the suit was made on the Wattsons. After they had been served with process and on the date of service, John H. Wattson telephoned the agent of the bonding company, which had executed a bond in behalf of the Hollywood Granite Company, Inc., guaranteeing to the Wattsons faithful performance of the work to be done under the contract between the Wattsons and the Hollywood Company. In this telephone conversation John H. Wattson informed the agent of the bonding company of the fact that service of process in the suit of Dillon v. Wattson had been made, that the Wattsons expected the bonding company “to take care of it,” and was advised to send the complaint and summons to the bonding company “and they would take care of it.” Acting on this advice, John H. Wattson thereupon, on the same date, sent by mail the summons and complaint in the action of Dillon v. Wattson to the Standard Accident Company. In a letter which accompanied the above-mentioned documents, John H. Wattson stated that he was inclosing a copy of the complaint, referred to his telephone conversation of the same date with the agent of the company, and concluded with the following statement: “Please be advised that we look entirely to you for protection in this matter.” Receipt of the complaint and summons was acknowledged in a letter sent to R. A. Wattson by agents of the Standard Accident Company on October 15, 1930, wherein it was stated: “In connection with the complaint served on you we handed this claim over to our claim department and we understand they took this matter up with the Union Indemnity Company and the latter company will handle this matter.” Approximately a week or ten days after the Wattsons had been served with process, R. A. Wattson had a telephone conversation regarding the action of Dillon v. Wattson with Raymond Lewis of the Lewis Construction Company and was informed by Lewis “that the matter had been handled satisfactorily.” No appearance was made in the action of Dillon v. Wattson by the Wattsons or by any one in their behalf. Their default for failure to make an appearance was accordingly noted on December 13, 1930. A demurrer to the complaint in said action was interposed by the defendant Raymond Lewis on October 15, 1930. On October 20, 1930, this demurrer was sustained with leave to plaintiffs to amend their complaint. So far as appears, the plaintiffs did not, however, amend the complaint as to the defendant Lewis. On May 22, 1931, evidence respecting the damage alleged to have been sustained by the Dillons was presented to the superior court and a judgment after default was rendered in favor of Dan L. Dillon and Lilly Dillon in the amount of $1,575 and costs against R. A. Wattson and John H. Wattson. A writ of execution to enforce collection of the amount specified in the judgment was issued on July 2, 1931. This writ of execution was placed in the hands of the sheriff of Los Angeles county on December 30, 1931, and on December 31, 1931, the sheriff attached a bank account of R. A. Wattson under authority of the writ. This attachment conveyed to the Wattsons notice for the first time that no appearance in the action had been made for them and that judgment by default had been taken against them. On January 4, 1932, they instituted the present equitable action to vacate the judgment.

The trial court made certain findings of fact which are material to this appeal. It found that prior to the date of service of process in the action of Dillon v. Wattson, the respondents herein “had referred all claims and other matters requiring attention arising out of the said sub-contract with Hollywood Granite Company, Inc., and with Raymond Lewis to the said bond company, Standard Accident Insurance Company, and the bond company for said Lewis Construction Compay, namely, Union Bond and Indemnity Company, and that all such claims had been satisfactorily adjusted by said bond companies.” The court also found “that pursuant to such practice, on October 8, 1930, plaintiffs notified said bond companies that they had been served with a copy of the complaint and summons in said action, and were told by said bond companies that if said complaint and summons were sent to the said Standard Accident Company, that it would be duly cared for.” The court further found that on October 8, 1930, the complaint and summons which had been served on respondents were forwarded by them to the Standard Accident Company and this company notified respondents “that said complaint and summons would be attended to.” There is also a finding that “on or about October 21, 1930, plaintiff R. A. Wattson telephoned to said Raymond Lewis and was then and there told by him that said complaint had been attended to, and that there was nothing further for the above plaintiffs R. A. Wattson and John H. Wattson to do.”

With respect to the above-mentioned findings, examination of the record impels the conclusion that they are not lacking in evidentiary support.

The finding which is most material to the appeal is that wherein the trial court found that “without negligence on the part of the above plaintiffs and through mistake and accident the above plaintiffs believed that said complaint and summons had been properly disposed of, and that they had no further knowledge, notice or information regarding the same until December 31, 1931, at which time a levy of execution was made against the bank account of plaintiff R. A. Wattson pursuant to judgment in favor of said Dan L. Dillon and Lilly Dillon.” The question which arises with respect thereto is whether or not it may be declared that the finding that respondents were free from negligence is fairly supported by the evidence which, as has been observed, was undisputed.

In giving consideration to this question, it may be remarked at the outset that the question of negligence is generally one for the trier of facts. This principle has been developed in tort actions which are based on failure to perform a legal duty known to the law as negligence. No citation of authorities is required in support of a principle so familiar and so thoroughly established. It may be assumed that the principle is applicable to the problem here presented.

It should next be observed that the present action is one whereby respondents are seeking the aid of equity to relieve them from a judgment duly rendered against them whose enforcement they claim will be unjust and inequitable as to them.

In an action of this character it is settled that equity will afford relief when it is made to appear that the judgment sought to be vacated was rendered as a result of extrinsic fraud practiced on the party who seeks to have it vacated. It is equally well established that mistake furnishes a ground for equitable interposition where enforcement of the judgment would be unconscionable and unjust to the party seeking relief. Bacon v. Bacon, 150 Cal. 477, 491, 89 P. 317. The power of equity to grant relief from a final judgment either on the ground of extrinsic fraud or mistake is limited, however, to those cases wherein the fraud or mistake was not the result of negligence on the part of the complainant. Jeffords v. Young, 98 Cal. App. 400, 404, 277 P. 163.

It is not pretended that fraud furnished the ground for seeking equitable relief in the instant proceeding. The complaint is bare of any allegation respecting fraud. No evidence tending to show that fraud was practiced on respondents was produced during the trial. No finding indicating the existence of fraud was made by the trial court. It is obvious from the allegations of the complaint and from the evidence presented during the trial that the ground for seeking relief was mistake. As above noted, the court found that through mistake and accident respondents believed that proper disposition of the process served upon them had been made. The only mistake which the evidence indicated was present was that respondents believed that some appearance in the action wherein they were named as defendants would be made in their behalf. It must, however, be conceded that this mistake of itself would not warrant the very broad relief which they sought in the form of a decree vacating a solemn judgment duly rendered upon evidence submitted to the court. Upon respondents rested the further burden of showing that the mistake was not due to their own negligence. This burden they attempted to sustain by showing that, prior to the service of process in the action of Dillon v. Wattson upon them, they had received numerous complaints respecting the performance of the work; that they had referred those complaints to the surety on the faithful performance bond of the subcontractor; and that such complaints had been satisfactorily adjusted. They also showed that a prior action for work and labor performed for the subcontractor, Hollywood Granite Company, had been instituted in the municipal court of the city of Los Angeles; that R. A. Wattson was named as a defendant in such action; that he had transmitted the papers served upon him in the action to a bonding company which had executed a material and labor bond for the subcontractor; and that this action had been dismissed as to them. They then showed that, when they were served with process in the action of Dillon v. Wattson, they pursued the same course which they had theretofore followed with satisfactory results, viz., they referred the matter to the bonding company and were assured by the representative of this company that the matter would receive proper attention and that some ten days later they were assured by one of their codefendants in the action, the subcontractor who was actually carrying on the work out of which the claim for damages had arisen, that attention had been given to the complaint and that no further action on their part was required. These are the circumstances which constitute the evidentiary basis for the finding that respondents were not guilty of negligence.

With this finding we cannot agree. It may be conceded that respondents were warranted in referring the process served upon them to the bonding company. It may further be conceded that, when they were advised by the representative of this company that the matter would receive proper attention, they were warranted in believing that an appearance would be made in their behalf in the suit and that they would be afforded the opportunity to present their defense which it may be assumed was meritorious. It may further be conceded that, when they were later informed by their codefendant that attention had been given to the matter and that no further action was required of them, they were justified in believing that the bonding company had entered an appearance for them in the action. It is, however, our opinion that these concessions are all that the uncontradicted evidence supports and that, under the circumstances, they are not sufficient to absolve them from the clear and palpable neglect of which they were guilty. The complaint served upon respondents informed them of the nature of the action. The summons notified them that, if they did not appear in the action within the time specified, the plaintiffs in said action would take judgment for the amount demanded in the complaint. The duty was then imposed upon respondents of appearing in the action and of setting up whatever defense they may have had. In default of the performance of this duty they were concluded by the judgment. Brum v. Ivins, 154 Cal. 17, 20, 96 P. 876, 129 Am. St. Rep. 137. There is no showing that, after they had been assured that attention would be given to the matter, they ever made any inquiry to discover whether any appearance had actually been made for them in the action. The evidence shows that their default was not noted until more than two months after they had been served with process. The evidence further shows that more than five months elapsed after default was noted before judgment was rendered. During all of this time respondents made no effort to discover what, if anything, had been done in the action. The suit was a matter of public record. It was open to inspection. The slightest exercise of diligence by respondents would have disclosed that no appearance in their behalf had been made. They made no inquiry. They put forth no effort to discover the status of the case. They consulted no attorney. They remained inactive and quiescent for more than a year after service of process and it was not until the bank account of one of them was attached by virtue of a writ of execution that they exhibited any interest in the proceedings. Under such circumstances, the following language from the decision in Rudy v. Slotwinsky, 73 Cal. App. 459, at page 466, 238 P. 783, 785, is apropos to the situation:

“While it is true that one seeking to set aside a judgment is not limited to the relief provided for by section 473, Code of Civil Procedure, but may, where the facts justify it, invoke the aid of a court of equity, he must, in doing so, exercise due diligence. The instant case in our opinion, however, does not present such a situation. Here, as stated, the default was a matter of public record, open to inspection at all times to the plaintiffs and their attorneys. This fact should have put them upon inquiry which would have led to the discovery of the alleged fraud in the procurement of the judgment.”

Here, also, the default was a matter of public record open to inspection by respondents. It put them on inquiry which would have immediately disclosed that they were mistaken in their belief that an appearance had been made for them in the action. The uncontradicted evidence, in our opinion, entirely fails to support the trial court's finding that respondents were free from negligence.

It should finally be observed that we are not here dealing with an application for relief under the provisions of section 473 of the Code of Civil Procedure. The provisions of that remedial statute are broad enough to relieve a party from a judgment taken against him through his neglect if the court to whom the application is addressed can discover some reasonable excuse for such neglect. The breadth of the provisions of the statute may not, however, properly be construed as an attempt to broaden the powers of a court of equity in determining its jurisdiction in an independent proceeding. The application for relief under the statute is addressed to the discretion of the trial court within a limited time and before the judgment has become final. The institution of an independent action to vacate a judgment calls for the exercise of equitable powers by an independent court based upon established rules. Amestoy Estate Co. v. City of Los Angeles, 5 Cal. App. 273, 277, 90 P. 42. One of such rules which is so well established that it is denominated a maxim of jurisprudence in the Civil Code of California is the familiar principle that “the law helps the Vigilant, before those who sleep on their rights.” Section 3527, Civ. Code.

For the reasons stated, the judgment is reversed and the trial court is directed to correct its findings in accordance with the views herein expressed and to enter judgment in favor of appellants.

JENNINGS, Justice.

We concur: BARNARD, P. J.; MARKS, J.

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