OLWELL et al. v. HOPKINS et al.
From a judgment of dismissal predicated upon the sustaining of defendants' demurrer without leave to amend to plaintiffs' amended complaint in an action to recover real property and to have an accounting, plaintiffs appeal.
The essential facts are these:
Prior to the filing of the present action plaintiffs filed against defendants an action in the Superior Court of Santa Barbara County, No. S. B. 32442. In such action plaintiffs alleged that they became owners of the cause of action alleged therein by virtue of an assignment to them of the assets of the Independent Distributing Company, a corporation of the State of Washington; that in 1929 that corporation entered into an agreement with one W. L. Hopkins for the conduct of a business enterprise for growing and dealing in food crops and farming; that upon the dissolution of the corporation in December, 1936, all of its interests in the joint venture were taken over by these plaintiffs. Action No. S. B. 32442 was brought to recover certain lands which the joint venture had leased for farming purposes and which had been managed for the partnership by defendant Hopkins. Plaintiffs also demanded an accounting and damages. Upon motion of defendants in such action a judgment of dismissal was entered. Thereafter an appeal was taken from the judgment by plaintiffs. This appeal was dismissed on March 31, 1943, and such judgment thereafter became final.
On January 25, 1943, the present action was instituted, being No. S. B. 34361. In the present action the facts pertaining to the filing, rulings, appeal and dismissal in action No. S. B. 32442 are fully pleaded in the complaint as amended. Defendants' general demurrer to the complaint as amended was sustained on the ground, among others, that the judgment in action No. S. B. 32442 constituted a bar to the present action under the doctrine of res judicata, whereupon the present judgment of dismissal was entered.
There are two questions necessary for us to determine, which will be stated and answered hereunder seriatim:
First: Did the judgment of dismissal predicated upon the sustaining of defendants' demurrer in action No. S. B. 32442 constitute an adjudication upon the merits?
This question must be answered in the affirmative and is governed by this rule of law: A judgment upon the sustaining of a general demurrer on the ground that an absolute defense is disclosed by the allegations of the complaint constitutes a judgment on the merits and is a bar to a subsequent action based upon the same facts. (See v. Joughin, 18 Cal.2d 603, 606, 116 P.2d 777; Goodard v. Security Title Insurance & Guarantee Co., 14 Cal.2d 47, 52, 92 P.2d 804.)
Applying the foregoing rule to the facts of the present case, the record discloses that on December 28, 1942, the prior case, action No. S. B. 32442, duly and regularly came on for hearing upon defendants' motion to dismiss on the ground that the contract of partnership or joint venture which constituted the gravamen of plaintiffs' cause of action to enforce a constructive trust was void and illegal for the reason that it appeared from the face of the complaint to be a continuous contract made and entered into in 1927 and in continuing existence until 1936, which contract provided for the carrying on of intrastate business in California; that at no time during the period when performance was had thereunder was the foreign corporation which was alleged to be a partner or joint venturer qualified to do business under the laws of the State of California; which law in effect at the time made such contract illegal and void as to such foreign corporation and its assigns, the plaintiffs.
The motion was fully argued and submitted to the trial court. Thereafter defendants' motion was granted and a judgment of dismissal entered and an appeal taken by the plaintiffs from such judgment to the Supreme Court on January 7, 1943. This appeal was dismissed by plaintiffs March 31, 1943, and the judgment in the prior action has become final.
It thus clearly appears from the record that the ruling in the prior action was based upon a matter of substance,* in that the complaint as amended disclosed upon its face that plaintiffs did not have a cause of action against defendants. Hence such judgment was a judgment upon the merits of the cause of action attempted to be alleged in such prior case.
Second: Was the judgment in action No. S. B. 32442 res judicata so far as the present suit is concerned?
This question must also be answered in the affirmative and is governed by this rule: A formal judgment rendered by a court of competent jurisdiction on the merits, which has become final, is conclusive as to the rights of the same parties in a subsequent action involving the (1) identical subject matter and (2) same cause of action. (Elliott v. Bertsch, 59 Cal.App.2d 543, 549, 139 P.2d 332. See 15 Cal.Jur.  p. 146, sec. 195.)
Plaintiffs in their opening brief at page 7 concede the applicability of the foregoing rule to the present case, when they say: ‘* * * it may be assumed that there are present the elements of notice and of identity of persons and subject matter in the two actions involved, so if the judgment in case No. 32442 is res adjudicata it would operate as a bar and not an estoppel (15 Cal.Jur. 136)’. Since it is conceded that the parties and subject matter in the two actions are identical, it clearly follows that the prior judgment on the merits constitutes a bar to the subsequent action, and that this bar was properly raised by a general demurrer to the complaint as amended, which pleading discloses on its face the identity of the parties and subject matter of both actions.
In view of our conclusions it is unnecessary to discuss other questions argued by counsel.
For the foregoing reasons the judgment is affirmed.
FOOTNOTE. The ruling was not based upon a formal or technical defect in the complaint and thus did not fall within the third or fifth rule as stated by our Supreme Court in Goddard v. Security Title Ins. & Guarantee Co., supra, 14 Cal.2d at page 52 et seq., 92 P.2d at page 806 et seq.
MOORE, P. J., concurs. Hearing granted; SCHAUER, J., not participating.