JOHN P. MILLS ORGANIZATION, Inc., v. SHAWMUT CORPORATION et al.
MILLS v. CUNNINGHAM.
This is an appeal from an order denying plaintiff's motion authorized by section 685 of the Code of Civil Procedure.
Section 681 of the same code provides that a writ of execution for the enforcement of the judgment may issue within five years. Section 685 provides for the writ of execution after the five year period, ‘by leave of the court.’
The within action was reduced to final judgment in 1927. It was an action on promissory notes against the corporation and a large number of its stockholders. Respondent herein was one of the stockholders. In May 1945, appellant obtained an order to show cause why an execution should not issue; a restraining order also issued. After a hearing, the motion was denied; the restraining order remains in effect.
John P. Mills, as president of the corporation that obtained the judgment against defendant Shawmut Corporation and its stockholders, including respondent, filed the following affidavit in support of the motion:
‘That he is acquainted with all the facts as regards the judgment heretofore entered herein and that, as president of the plaintiff corporation, and its general manager, he assigned the task of following the judgments and the investigation hereof to Wells A. Rathbun, secretary-treasurer of plaintiff corporation, with instructions to investigate and report to affiant at regular intervals of six months after entry of judgment.
‘That as president of plaintiff corporation, affiant directed that full and detailed reports from the secretary-treasurer and from W. I. Gilbert, plaintiff's attorney, be presented semi-annually to the Board of Directors of plaintiff corporation, showing the financial condition of the judgment debtors herein, and particularly the details of the investigation made of each judgment debtor within the six-months period preceding each regular report; that members of the office staff of W. I. Gilbert, Mr. Gilbert, himself, Mr. Wells A. Rathbun and various private investigators over the period of years since entry of judgment, made the regular and diligent investigation of the judgment debtors as required of them by affiant for the purposes of said regular reports to the plaintiff's Board of Directors; that affiant has personal knowledge of the foregoing facts and personally presented said regular reports at meetings of said Board of Directors.
‘That upon the death of W. I. Gilbert and Wells A. Rathbun, affiant personally continued said investigation of the judgment debtors herein and faithfully and diligently continued said investigations each six-month period as before; that in each instance said investigation revealed no assets subject to levy, although many new addresses, positions and possibilities were discovered; that each of the judgment debtors is an experienced and astute business man, each having been stockholders in defendant corporation, and each clever and learned in the art of covering assets to defeat the judgment herein; that process for examination of the judgment debtors would have, in the opinion of this affiant and according to advice of plaintiff's attorney, W. I. Gilbert, informed said judgment debtors that regular investigations of them were under way and served as notice upon them that their actions of evasion, be more guarded, intense and complicated; on this opinion and advice such examinations were discarded in favor of the regular investigations herein mentioned.
‘That such investigation and discreet inquiry have now met with success in the location of certain assets belonging to the judgment debtor, George Cunningham; that the information leading to the discovery of said assets has developed over a period of years and could not have been developed without regular and diligent inquiry; that at no time has plaintiff, its agents or servants been dilatory, negligent or haphazard in the conduct of regular inquiry, investigation and surveillance of the judgment debtors herein; that on the contrary, plaintiff, its agents and servants have been persistent, extremely diligent, regular and unceasing in their efforts to locate assets of the judgment debtors, since the date of entry of judgment to date hereof;
‘Wherefore, affiant prays that execution be issued as to the defendant, George Cunningham whose assets have now been located.’
The motion was also supported by the affidavit of one J. F. Taylor, which is as follows:
‘J. F. Taylor, being duly sworn, deposes and says:
‘That he is an investigator in the employ of A. G. Reily, attorney for creditor herein; that he has made a thorough examination of the financial transactions of the defendant, George Cunningham; that since the entry of the judgment herein, the defendant George Cunningham has used a ‘dummy’ to cover his major financial transactions in an attempt to defraud the creditor herein; that during the lifetime of his wife, the said George Cunningham frequently ‘used’ her as his ‘dummy’ for the purpose of banking his monies and covering assets which in truth and in fact were his own.
‘That more recently he used as a ‘dummy’ his friend, one William Welker Selby for the purpose of defrauding the creditor herein by covering his assets in the name of said Selby, when in truth and in fact said assets were the sole property of the defendant and judgment creditor herein, George Cunningham.
‘That on or about October 1, 1943, the defendant George Cunningham was the rightful owner of premises located at 2027 Victoria Avenue in the City of Los Angeles and that he ‘used’ William Welker Selby as ‘dummy’ to cover his ownership of the said property described as Lot 14, Block 2, Tract 2072; that on or about October 4, 1943, one Mable G. Blanche and/or Catherine R. Ruppe, opened and entered into an escrow with the said Selby and George Cunningham himself, who signed the escrow instructions under an alleged ‘power of attorney’ for Selby; that the escrow was handled by the Bank of America, 54th & Crenshaw Branch, being Escrow #2245; that Cunningham represented himself as the ‘true’ owner of said property to said buyer and to the escrow manager, Mrs. Jacobson; that Cunningham received the proceeds from the sale of said property, all as evidenced by Bank of America Cashier's Check #3122949, dated December 17, 1943, for the sum of $6,619.00; that said check was made payable to William Welker Selby, the ‘dummy’ of Cunningham and endorsed over to Cunningham who then placed the same to his credit by either cashing or depositing same at the Security-First National Bank, Fifth & Spring Office, on January 27, 1944; that a photostatic copy of said Cashier's Check, both sides thereof, is attached to this original affidavit and is made a part hereof.
‘Affiant has also checked other transactions of said George Cunningham and found that he used a ‘dummy’, particularly one certain escrow transaction in the City of Alhambra; that affiant is informed and believed, and therefore alleges that ever since the entry of judgment herein, said Cunningham has ‘covered’ his assets by the use of ‘dummys', trickery, ruse and fraud.’ A photocopy of the check referred to appears as part of the affidavit.
Respondent's affidavit in opposition to the motion set forth a history of the litigation that resulted in the judgment. The following also appears in said affidavit:
‘However, after the rendition of the judgment against this defendant, your affiant, and other defendant named therein, the said Captain Manaires, an officer or agent of the plaintiff corporation, assured your affiant and C. E. Kenyon, one of the codefendants, that no effort would be made to collect the judgment against them. In reliance upon such statement and the further fact that no demand or request has ever been made to pay the judgment from the date of its entry until the date of service of this Motion, and your affiant has never been examined in supplementary proceedings, your affiant has never considered and does not now consider that he is liable for said judgment, or any sum or sums due thereunder.’ Any attempt to conceal assets is denied and laches as well as a lack of diligence, are also averred.
The trial court denied plaintiff's motion; and it is contended on appeal that such denial was an abuse of discretion. Respondent contends to the contrary and urges in support of such contention that, inasmuch as there was no showing of ‘due diligence’, the motion was properly denied. Respondent relies on Butcher v. Brouwer, Beccuti v. Colombo Banking Co., and Hatch v. Calkins, hereinafter referred to.
The following cases are concerned with writs of execution authorized under section 685 of the Code of Civil Procedure. Mohr v. Riccomi, 14 Cal.App.2d 416, 58 P.2d 659; Corcoran v. Duffy, 18 Cal.App.2d 658, 64 P.2d 735; Peers v. Stoll, 32 Cal.App.2d 511, 90 P.2d 119; see also Troendle v. Clinch, 74 Cal.App.2d 480, 169 P.2d 55. and three decisions by the Supreme Court, namely, Butcher v. Brouwer, 21 Cal.2d 354, 132 P.2d 205; Beccuti v. Colombo Baking Co., 21 Cal.2d 360, 132 P.2d 207; Hatch v. Calkins, 21 Cal.2d 364, 132 P.2d 210.
The pertinent parts of sections 681 and 685, herein considered are as follows:
‘§ 681. The party in whose favor judgment is given may, at any time within five years after the entry thereof, have a writ of execution issued for its enforcement.’
‘§ 685. In all cases the judgment may be enforced or carried into execution after the lapse of five years from the date of its entry, by leave of the court, upon motion, and after due notice to the judgment debtor accompanied by an affidavit or affidavits setting forth the reasons for failure to proceed in compliance with the provisions of section 681 of this code. The failure to set forth such reasons as shall, in the discretion of the court, be sufficient, shall be ground for the denial of the motion.’ (Italics added.)
That portion of section 685 in italics was added by amendment in 1933 and all of the cases cited above are particularly concerned with section 685 as amended in 1933. Peers v. Stoll, [32 Cal.App.2d 511, 90 P.2d 121] contains a brief history of the legislation here considered and sets forth the 1933 amendment of section 685 in italics. It is then pointed out that, ‘The portion not italicized should be construed as the law since 1895 and the portion italicized should be construed as stating the law since August 21, 1933.’ Thus, the opinion not only shows that the law was in fact changed in 1933, but also shows the change. The opinion continues, ‘under the statute as enacted in 1895 there is a long line of decisions to the effect that said statute did not provide a time limit.’ And, with regard to the subject of ‘time limit,’ concludes that, ‘A comparison of the enactment in 1933 with the enactment in 1895 shows no change of intention on the part of the legislature.’ (Italics added.) Apparently, Mr. Justice Sturtevant, the author of the opinion, referred to the subject of discretion and meant that the legislature, notwithstanding the 1933 amendment, left the discretionary power of the court undisturbed. However, the Supreme Court in Butcher v. Brouwer, supra, 21 Cal.2d at page 358, 132 P.2d 206, commented on the Peers v. Stoll case, supra, as follows:
‘On three occasions the District Courts of Appeal have passed upon the effect of the 1933 amendment. In Peers v. Stoll, 32 Cal.App.2d 511, 90 P.2d 119, the court held that the Legislature intended no change in the law under the amendment. That case is therefore disapproved.’
In Mohr v. Riccomi, supra [14 Cal.App.2d 416, 58 P.2d 660], the court, referring to the 1933 amendment, used the following language:
‘We see nothing in the amendment that in any manner changes the character of discretion to be exercised in passing upon such motions after the matter has been properly presented.’
And, the court in Corcoran v. Duffy, supra, reached the same conclusion, quoting the above language from the Riccomi case. The Supreme Court, in Butcher v. Brouwer commented on the last two above-mentioned cases as follows:
‘Corcoran v. Duffy, 18 Cal.App.2d 658, 64 P.2d 735, presented for review an order in favor of the creditor after a writ of execution was issued within the five-year period and returned unsatisfied. And the decision in Mohr v. Riccomi, 14 Cal.App.2d 416, 58 P.2d 659, included express approval of the superior court's conclusion that the issuance of execution within the five years following judgment would have been futile. The affirmance of the orders directing execution to issue in the latter two cases therefore may be justified upon the ground that the appellant showed no abuse of discretion by the superior court and that the judgment creditors had exercised due diligence, although the opinion in each of them contains dictum to the effect that the 1933 amendment to section 685 did not change the character of the discretion to be exercised.’
In Demens v. Huene, 89 Cal.App. 748, 265 P. 389, 391, the court comments on the purpose and effect of section 685 as follows:
‘It is the intent of the law, and it would seem the intent, as well, of good morals, that everyone being able should pay his debts. Here we find the debt ripened into a judgment. Several years go by and it is not paid. The law does not contemplate that, the time of the statute of limitations having run, the liability to pay has completely passed. The motion made in this case is provided for by law. There must, then, be something added to the mere fact of the expiration of the time and that the judgment debtors were possessed of personal property, which would move the court to deny the right given by the statute, section 685 of the Code of Civil Procedure. As was said in Hovey v. Bradbury, 112 Cal. 620, at page 625, 44 P. 1077, 1078: ‘Nor, when we come to view plaintiff's conduct generally, can there be seen any act or omission upon his part which would justify so stern a treatment of his claim as its rejection under the doctrine of laches. That doctrine, as has been said, is neither technical nor arbitrary. It is not designed to punish a plaintiff. It can be invoked only where to allow the claim would be, because of the claimant's own acts, to permit an unwarranted injustice. It looks to the peace of society, and not to the punishment of the claimant, even if he has been negligent.’'
In connection with a consideration of the question here presented and in particular with regard to the interpretation to be given to section 685 as amended in 1933, it should be remembered that a judgment is property (sec. 14, Civil Code), and like all property it is subject to ownership, sale, transfer and assignment. The ownership of the judgment herein referred to is absolute. Accompanying such ownership is the right of use, enjoyment and management by the owner to the exclusion of all others. In Curtin v. Kowalsky, 145 Cal. 431, at page 434, 78 P. 962, at page 963, the Supreme Court declared:
‘Prior to the adoption of the Codes it was held that, inasmuch as a judgment was not assignable at common law, the effect of such assignment was to transfer an equitable title only, but that such title vested in the assignee all the beneficial interest in the judgment, and gave him the right to enforce it by process in the name of the judgment plaintiff. Wright v. Levy, 12 Cal. , 262, 263. It was said to be property, however, which could be purchased, the same as any other species of property. Id. Under the Code there is no limitation upon the power to assign choses in action, including judgments, and it is clear from its provisions that such an assignment carries the legal title to the judgment, and that the transfer of that title does not depend upon the fact of there being a valuable consideration. It is provided that ‘property of any kind may be transferred, except as otherwise provided by this article’ (Civ.Code, § 1044), and the only exception made in the article is that of a possibility not coupled with an interest. A judgment is therefore property which can be transferred.'
Moreover, a judgment, being property, its ownership is secured by the fifth amendment of the Constitution of the United States: no person shall be deprived of property without due process of law.
The language of section 635, as amended, is clear, plain and unambiguous, hence, is not open to construction. The rule has been noted in other words as follows, ‘Where a law is plain and unambiguous, whether it be expressed in general or limited terms, the legislature should be intended to mean what they have plainly expressed, and consequently no room is left for construction.’ Tape v. Hurley, 66 Cal. 473, at page 474, 6 P. 129, at page 130.
Before the 1933 amendment to section 685, only a motion was required to obtain the writ of execution, ‘by leave of the court.’ To grant or refuse such a motion was purely discretionary. The 1933 amendment contains three changes or additions: 1, due notice, 2, the production and presentation of the affidavits described in the amendment, and 3, providing grounds for the denial of such motion. It should be emphasized that, although grounds for denying the motion are provided, nevertheless, whether such grounds are sufficient, remains a matter of discretion. The amendment places no limitation on the freedom to decide, as the judgment of the court dictates. There is nothing in the provision, as amended, from which judgment debtors can derive any particular satisfaction. Sentiment and sympathy for them is not involved. It is conceivable in that regard, that there are, or could be, crafty and designing judgment debtors who would seek to avoid the satisfaction of a valid judgment, in any event. And there is nothing in the language of the section, as amended, tending to indicate that the legislature intended to cast its lot with such judgment debtors at the expense of honest and deserving judgment creditors. Indeed, so far as legislative intent is concerned, all indications are to the contrary, as an examination of Chapter I of Title IX of the Code of Civil Procedure will reveal. It is there plainly indicated that all intendments are in favor of the judgment creditor and the advantage of the judgment. The law even anticipates possibilities in that regard, for section 688.1 provides that, ‘Upon motion of a judgment creditor of a plaintiff or plaintiffs in an action or special proceeding made in the court in which the action or proceeding is pending, upon written notice to all parties, the court, judge or justice thereof may, in his discretion, order that the judgment creditor be granted a lien upon the cause of action and upon any judgment subsequently procured in such action * * *.’
It is also noteworthy that inasmuch as a judgment for money earns seven percent interest, the owner thereof, with full knowledge of the judgment debtor's ability to satisfy the judgment, may choose in the management of his property, to regard the judgment as an investment and postpone its collection indefinitely. Such conduct on the part of the owner of the judgment could be a valid reason for a ‘failure to proceed in compliance with the provisions of section 681’.
And inasmuch as the judgment debtor, meanwhile, is free to pay the debt and satisfy the judgment at any time, such a situation, in the circumstances, is no grounds for complaint. Moreover, when the ability of the judgment debtor to pay the debt and satisfy the judgment is shown to have existed at any time following the five-year period, and, in particular at the time the motion is made by the owner of the judgment under and by virtue of section 685, then and in that event, the judgment debtor cannot be heard to complain about the delay on the part of the judgment creditor in obtaining a writ of execution. Satisfaction of the judgment would avoid the delay and the failure to satisfy the judgment in such circumstances, is the equivalent of consent to such delay. And, ‘He who consents to an act is not wronged by it.’ Civil Code, sec. 3515.
The motion authorized by section 685 is not required to be made within any specified time; its provisions are merely procedural and not designed to penalize the owner of the judgment for delay, hence, laches is beside the issue and may not be urged by the judgment debtor to defeat the motion. Indeed, there is nothing in the language of the law that suggests directly, or by implication, a revival of any rights in the judgment debtor whatsoever. So far as the latter is concerned, the action has long since become final and, with the exception of an action in equity in appropriate circumstances, no means are provided by law as an aid to circumvent and thus defeat the satisfaction of the judgment. Section 685 is not to be deemed the equivalent of the statute of limitations. The law clearly recognizes a distinction between a judgment and a mere debt and, for obvious reasons, requires action on the latter if contemplated, within a specific time. But once these steps have been taken and the debt reduced to a final judgment, its status under the law is fixed and all rights incident to the judgment are vested in the owner thereof.
What the ‘reasons' may be for ‘failure to proceed in compliance with the provisions of section 681,’ the legislature did not specify. What they may be is left to the judgment and discretion of the trial court. It is elementary that the court is without power, in such circumstances, to read into the provisions, by interpretation, anything that tends to extend, restrict, or modify the law, and for the court therefore to attempt to read into the law what conduct shall amount to the ‘reasons' referred to, would be an unwarranted invasion of the functions of the legislature. Section 1858 of the Code of Civil Procedure provides as follows:
‘In the construction of a statute or instrument, the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted; and where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all.’
The reference herein, in substance, that the judgment creditor may regard the judgment as an investment which could be a reason contemplated by section 685, obviously, is dictum; it serves merely as an example that may be adopted or rejected by the trial court. The reference to, ‘due diligence,’ in the Butcher v. Brouwer case, supra, must, for the same reason, be understood to be in such category, for in the final analysis, the decision thereof was based on the question of ‘abuse of discretion’; the last sentence of the opinion being as follows: ‘As the record discloses no abuse of discretion by the trial court, the order is affirmed.’
In the light of the foregoing, respondent Cunningham's affidavit is unavailing, indeed it is trifling, and ‘the law disregards trifles.’ Civil Code, sec. 3533. When reasons are presented that amount to an honest, sensible and logical explanation of plaintiff's failure to obtain an execution within the five-year period, then it clearly is the court's duty to aid in its processes and to issue the writ. The failure to do so in such circumstances is, as a matter of law, an abuse of discretion. Appellant's affidavits amounted not only to a sufficient showing in this regard but a generous one and the court's refusal to grant the motion was therefore an abuse of discretion.
For the foregoing reasons the judgment is reversed with directions to grant plaintiff's motion.
YORK, P. J., and WHITE, J., concur.