COTTEN v. PERISHABLE AIR CONDITIONERS

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

COTTEN et al. v. PERISHABLE AIR CONDITIONERS et al.

Civ. 12202

Decided: March 10, 1941

August J. O'Connor and George J. Hider, both of Los Angeles, for appellants. Monta W. Shirley and R.R. Sleeper, both of Los Angeles, for respondent receiver.

The facts pertinent to a determination of this appeal are chronologically as follows:

On November 13, 1937, the minor appellant, while working for respondent copartnership as a precooling operator and foreman, received serious personal injuries; it being alleged in the complaint herein that at the time mentioned said respondent copartnership did not carry compensation insurance as required by section 29 of the Workmen's Compensation Insurance and Safety Laws of the State of California, St.1933, p. 975.

On January 17, 1938, in an action entitled Carroll v. Cross, the Perishable Air Conditioners, a copartnership composed of Dalton E. Cross and Irwin R. Carroll, was dissolved by an interlocutory order of the superior court of Los Angeles county, and R.E. Allen was duly appointed receiver thereof. Preparatory to filing suit to recover damages from said copartnership on account of the injuries sustained by the minor appellant, a motion was made for leave to sue the receiver Allen which was denied on March 18, 1938, on the ground that the minor's right accrued prior to the dissolution of the copartnership and appointment of the receiver, and therefore it was a matter to be litigated between the principal parties.

On March 19, 1938, appellants filed their complaint herein and on March 21st served “Perishable Air Conditioners, a co-partnership composed of Dalton E. Cross and Irwin R. Carroll, and Dalton E. Cross, individually”. No answer having been filed in said cause, a default was entered by the court on April 11, 1938. In entering said default the court found: “It appearing to the court from an examination of the records and files in this action that the defendant Perishable Air Conditioners, a co-partnership, composed of Dalton E. Cross and Irwin R. Carroll, and Dalton E. Cross individually having been duly served with summons in the manner required by law, to-wit: personal service upon Dalton E. Cross, and having failed to answer the Plaintiff's Complaint herein, and the time for answering having expired, the default of said Defendant is hereby entered according to law.”

On April 14, 1938, at a hearing held for that purpose, Dalton E. Cross being personally present, judgment was rendered for the sum of $3,405 in favor of appellants and against Perishable Air Conditioners, a co-partnership composed of Dalton E. Cross and Irwin R. Carroll, and also against Dalton E. Cross. On April 14, 1938, notice of entry of said judgment was duly served upon said Dalton E. Cross.

Although neither motion is shown in the clerk's transcript herein, it is stated by respondent receiver in his points and authorities that appellants on April 20, 1938, filed a notice of motion for leave to levy execution on the assets of the copartnership in the hands of the receiver which motion was heard and denied on April 29, 1938; and it is also stated in appellants' brief that the court denied on April 20, 1938, a motion made by respondent receiver to vacate the default judgment on the ground that since the partnership had been dissolved and was not in existence, the court had no jurisdiction to enter judgment against it. Disregarding these motions purported to have been made and denied, the record discloses that on July 5, 1938, the court denied without prejudice the motion of respondent receiver (theretofore submitted under date of June 24th) to vacate said default judgment; and on December 1, 1938, respondent receiver again filed notice of motion to vacate the said default and default judgment on the ground that said default was not properly entered against the copartnership because it had been dissolved by order of the superior court prior to the date of service of summons and complaint upon Dalton E. Cross, one of the copartners, and therefore the court had jurisdiction to enter judgment against said Cross individually but had no jurisdiction to enter judgment against the copartnership. Appended to said notice of motion was a certified copy of an order of the superior court theretofore made, instructing respondent receiver to file said notice of motion to set aside said default judgment and to take such further steps as might be necessary to protect the estate of the copartnership.

Counsel for appellants filed an affidavit in opposition to said motion to vacate on the ground that by its denial of the prior motion on July 5, 1938, the court had exhausted its power to again pass upon the same motion; that service was properly made upon the copartnership; that the injuries for which redress was sought were sustained by the minor appellant in the course of his employment at a time prior to the dissolution of the copartnership and the appointment of receiver; that the default judgment could not be vacated at the instigation of receiver, who is a stranger to the proceedings; and the affidavit in support of the motion “does not state that the partnership nor Irwin R. Carroll, who is now without the jurisdiction of the Court, has any meritorious defense.”

Upon the issues joined by the affidavits in support of and in opposition thereto, said motion to vacate came on for hearing on December 19, 1938, and was granted. From the order which was thereafter entered this appeal is prosecuted.

It was stipulated by counsel herein that this appeal be submitted for decision upon the opening brief of appellants and the points and authorities of respondent filed in connection with a motion to dismiss said appeal which was denied by this court on June 26, 1939.

The questions presented upon this appeal are practically the same as those urged by appellants in their affidavit in opposition to the motion to vacate the default judgment, as hereinbefore recited.

With respect to the first of such questions, “the law is well settled in this state that, if a motion is denied without prejudice to its renewal, an objection to a subsequent motion on the ground of res judicata may not be properly sustained. Bowers v. Cherokee Bob, 46 Cal. 279, 286; Andersen v. Superior Court, 187 Cal. 95, 102, 200 P. 963; Tiffany Productions, Inc., v. Superior Court, 131 Cal.App. 729, 22 P.2d 275.” City of Los Angeles v. Forrester, 12 Cal.App.2d 146, at page 149, 55 P.2d 277, at page 278.

Although there is some question as to the sufficiency of the record as presented by appellants under section 953c of the Code of Civil Procedure, nevertheless the Supreme Court has held that it is proper for an appellate court to examine the record, and if possible to determine the cause upon the full record before it. (See rule VIII of the Rules of Supreme Court and District Courts of Appeal.)

Section 2429, subdivision (3) of the Civil Code provides: “The partnership is in no case bound by any act of a partner after dissolution * (c) Where the partner has no authority to wind up partnership affairs; *.”

There is nothing in the record here which indicates that Dalton E. Cross, the partner served, had any authority to wind up the affairs of the partnership. Therefore, the partnership could not be affected by service upon said Dalton E. Cross. This is especially true where the partnership is in the hands of a receiver, who is an officer of the court. This is not a case where the court has consented to having the receiver sued; as a matter of fact the court herein denied appellants' motion for leave to sue the receiver.

As is very pertinently stated in 20 California Jurisprudence at 804: “Dissolution has no effect on debts due from a partnership, except that the partners may not act for each other any further than may joint debtors.” As there is no statutory provision permitting the entry of judgment against all of several joint debtors by service upon only one of them, the only method to pursue is that provided by sections 414, 989 and 990 of the Code of Civil Procedure.

After dissolution, service of process upon one partner will not authorize judgment against the other. 20 Cal.Jur. 768, 769. Therefore, a judgment entered against a copartnership upon service of only one of the partners would come within this rule. Since neither partner had authority to wind up the partnership affairs, the proper procedure would be either to serve each partner individually, or secure permission of the court to bring the action against the receiver for the dissolved copartnership.

With respect to appellants' point that respondent receiver is a stranger to the instant action, it is shown by the record herein that prior to filing their complaint appellants “moved the court for an order permitting (them) to join the Receiver as a party defendant”, which motion was denied; that they then filed their complaint alleging “that on the 15th day of December, 1937, R.E. Allen was appointed Receiver for Dalton E. Cross and Irwin R. Carroll, said copartners, doing business under the firm name and style of Perishable Air Conditioners, and that on the 15th day of December, 1937, said R.E. Allen qualified by posting bond in the penal sum of $8,000, and from thence hitherto has been and still is the duly and regularly appointed, qualified and acting Receiver for said copartnership.”

It is also shown herein that respondent receiver just prior to making his second motion to vacate the default judgment petitioned the court for instructions in the dissolution action between Carroll and Cross, and that the following order instructing receiver was made under date of August 23, 1938:

“Petition for instructions came on regularly for hearing in Department 29 of the above entitled Court on Wednesday, August 17, 1938, Monta W. Shirley, Esq., appearing as attorney for R.E. Allen, Receiver, Earl C. Demoss, Esq., appearing as attorney for defendant (Cross) and no one appearing for plaintiff (Carroll), and it appearing to the Court that it is to the advantage and best interests of the estate that the Receiver present a motion to the Superior Court of this County in the case of Charles D. Cotten v. Perishable Air Conditioners to set aside the judgment against Perishable Air Conditioners,

“It is Hereby Ordered, Adjudged and Decreed: That the Receiver be, and he is hereby, instructed to file notice of motion to set aside the judgment against Perishable Air Conditioners in the said case of Charles D. Cotten v. Perishable Air Conditioners and to take such further steps in said proceedings as may be necessary to protect the estate of Perishable Air Conditioners.”

The motion to set aside default and default judgment which was granted on December 19, 1938, was made pursuant to said order of instructions.

The interest of the receiver in the property of the former partnership is such that he is justified in preserving the property from the levy of an illegal judgment, if he is not actually required to do so.

There is no merit in any of the questions raised upon this appeal.

The order granting the motion to vacate the default judgment herein is affirmed.

YORK, Presiding Justice.

We concur: DORAN, J.; WHITE, J.