ANDREWS v. REIDY

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

ANDREWS et al. v. REIDY et al.*

Civ. 9893.

Decided: January 29, 1936

I. Henry Harris and I. Henry Harris, Jr., both of Los Angeles, for appellant. Leonard J. Meyberg and Paul M. Joseph, both of Los Angeles, for respondents.

Based upon a somewhat elaborate factual background which we find it unnecessary to recite, respondents, as plaintiffs, commenced action against defendant, appellant herein, seeking relief under section 3 of the Usury Law (Stats. 1919, p. 1xxxiii; Deering's Gen. Laws 1931, Act 3757), for a violation of section 1 of said act and recovered treble damages for interest paid to and accepted by appellant in violation of said section 1 in the sum of $9,000. The record shows that respondents' action was commenced October 29, 1928, but that judgment was not entered therein until January 23, 1934. This appeal is taken from said judgment, but no stay bond was filed, nor was any agreement of any kind entered into staying the execution of said judgment. On November 6, 1934, after the entry of judgment in this action, and during the pendency of this appeal, the people of the state of California at a general election enacted a new section to the State Constitution by adding section 22 to article 20 thereof. The amendment, having been proposed by the Legislature, took effect on the day of the election. Johnston v. Wolf, 208 Cal. 286, 289, 280 P. 980. By reason of the adoption of the said constitutional amendment, it is not necessary to review the many questions argued by respective counsel, since one point raised in the supplemental briefs of counsel, to wit, that the effect of said amendment is to wipe out respondents' cause of action, is decisive of this appeal.

The appellate department of the superior court of Los Angeles county, in the case of Fenton v. Markwell & Co., 52 P.(2d) 297, 301, decided November 29, 1935, in a solid and well-considered opinion analyzes the effect of the constitutional amendment on the usury statute and the remedies heretofore offered thereby, and holds that the rights and remedies given by the usury statute did not exist at common law and that they are purely statutory, and “the rule in such a case is that the right falls and the statutory remedy ceases with the repeal of the statute, without a saving clause, unless that right has been carried into a final judgment. Napa State Hospital v. Flaherty, 134 Cal. 315, 317, 66 P. 322; People v. Bank of San Luis Obispo, 159 Cal. 65, 67, 112 P. 866, 37 L.R.A. (N.S.) 934, Ann.Cas. 1912B, 1148; Moss v. Smith, 171 Cal. 777, 788, 155 P. 90; Freeman v. Glenn County Tel. Co., 184 Cal. 508, 510, 194 P. 705; Callet v. Alioto, 210 Cal. 65, 67, 290 P. 438; Krause v. Rarity, 210 Cal. 644, 652, 293 P. 62, 77 A.L.R. 1327; Pacific Gas, etc., Co. v. State of California, 214 Cal. 369, 373, 6 P.(2d) 78; Coombes v. Franklin, 213 Cal. 164, 166, 1 P.(2d) 992, 4 P.(2d) 157; see, also, Ewell v. Daggs, 108 U.S. 143, 150, 2 S.Ct. 408, 27 L.Ed. 682; Petterson v. Berry (C.C.A.) 125 F. 902. Here there is no saving clause, and the action was begun and judgment was entered after the repeal of the Usury Law. We find nothing to impair the rule just stated or defeat its application to the present case in Coombes v. Getz, 285 U.S. 434, 52 S.Ct. 435, 76 L.Ed. 866, on which plaintiff relies. It is true that case does reverse the decision of the California Supreme Court in Coombes v. Franklin, supra, but it does not question the rule stated by the California court; it merely holds that the cause of action there is contractual in nature, and hence the rule is not applicable to it.”

Respondents concede that the opinion in the Fenton Case is “entitled to the utmost respect,” but assert that in the Fenton Case the action was commenced a month after the amendment to the Constitution became effective, whereas, in the instant case, the judgment was entered approximately ten months before the effective date of the amendment, and that, although an appeal had been perfected therefrom, the judgment was for all practical purposes final, since its execution had not been stayed by bond or otherwise. Dehors the record, respondents in their brief go on to assert that executions have been issued on the judgment and returned unsatisfied, that supplementary proceedings have been had against appellant without success, that abstracts of said judgment have been filed by reason of which they had become vested with liens against real property, and, finally, that they have commenced five several actions against appellant in the superior court to set aside fraudulent transfers of real property in order to uncover property to satisfy the judgment in question. The fact that the judgment in the trial court was had before the effective date of the constitutional amendment, does not, in our opinion, affect the application of the principles enunciated by the Fenton Case, nor do any of the actions taken by respondents since entry of judgment in the trial court in an attempt to satisfy said judgment alter the situation. The right created by the usury statute was in the nature of a penalty. There was no such right at common law. There was no saving clause in the repealing statute. The litigation between the parties hereto obviously was not terminated by the entry of judgment in the lower court, when an appeal had been taken therefrom. Until the litigation is terminated there can be no final judgment. A few cases supporting this general proposition are: People v. Bank of San Luis Obispo, 159 Cal. 65, 67, 112 P. 866, 37 L.R.A.(N.S.) 934, Ann.Cas. 1912B, 1148; De Vally v. Kendall de Vally Operalogue Co., 220 Cal. 742, 32 P.(2d) 638; Doudell v. Shoo, 159 Cal. 448, 114 P. 579; Jennings v. Ward, 114 Cal.App. 536, 300 P. 129. Specifically on a comparable factual situation, we consider the case of Anderson v. Byrnes, 122 Cal. 272, 54 P. 821, directly in point. In that case there was an action by a stockholder to recover a statutory penalty from directors of a mining corporation “‘for failure to make or post monthly balance sheets, etc., required by act approved April 23, 1880.”’ Plaintiff recovered judgment. During the pendency of an appeal from said judgment, the act in question was amended. Plaintiff contended the judgment was a vested right. The court said: “Subsequent to the filing of plaintiff's original brief, and while the appeal from the judgment in his favor was pending in this court, the legislature amended the act under which this litigation was inaugurated. This amendment was most important and substantial,–so important and substantial that it may be said that, so far as this plaintiff's rights are concerned, the act was repealed. * * * If this act of the legislature is essentially penal,–if the $1,000 which he has recovered as a stockholder from the directors is a penalty, and not damages, he has no case. This is eminently true, for the penalty had not yet been enforced, and, as has been said by judges of other courts, ‘no person has a vested right in an unenforced penalty.’ Therefore a repeal of the statute before the penalty is enforced is not a deprivation of any vested right. It follows that the amendment to the statute here under consideration absolutely prevents any further prosecution of this litigation if the statute is penal in character, and the amount recovered in the lower court is in all essentials a penalty.” (Italics ours.) To the same effect are Ball v. Tolman, 135 Cal. 375, 67 P. 339, 87 Am.St.Rep. 110; City of Sonora v. Curtin, 137 Cal. 583, 590, 70 P. 674; Krause v. Rarity, 210 Cal. 644, 654, 293 P. 62, 77 A.L.R. 1327; Denver & R. G. Ry. Co. v. Crawford, 11 Colo. 598, 600, 19 P. 673; Western Union Tel. Co. v. Lumpkin, 99 Ga. 647, 26 S.E. 74. In the case of Krause v. Rarity, supra, the court indorses the rule here stated. The repealing statute in that case, however, had a saving clause. The court says, 210 Cal. 644, at page 654, 293 P. 62, 66, 77 A.L.R. 1327: “It is apparent that, if the new section had been enacted without the proviso, the rule contended for by the defendant Rarity would apply, the plaintiffs' cause of action would have been wiped out, and no recovery could be had on the judgment against said defendant, for the reason that said judgment has not become final.”

There is nothing in the case of Howard v. Howard, 87 Cal.App. 20, 261 P. 714 (cited by respondents) to the contrary. The Howard Case merely holds that a judgment may be final for certain purposes before it is final in law. So in this case the judgment was final in the absence of a stay bond on appeal or some other legal arrangement staying the execution of judgment for the purpose of having an execution issued, but it is not final as permanently defining the rights and obligations of the parties until affirmed on appeal and the time to ask for further hearing has expired. The posting of a stay bond, or the failure to post such a bond is of no importance, except as to the practical consequences which may ensue because of the failure to post such a bond. We hold that the amendment adopted by the people of this state on November 6, 1934, eliminates respondents' right of action and that the judgment of the trial court falls with it.

The judgment is reversed, with instructions to the trial court to enter judgment for appellant. The appeal from the order denying motion for new trial is dismissed, as there is no appeal from such an order.

ROTH, Justice pro tem.

We concur: YORK, Acting P. J.; DORAN, J.