GERING v. SUPERIOR COURT OF STATE IN AND FOR LOS ANGELES COUNTY

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

GERING v. SUPERIOR COURT OF STATE, IN AND FOR LOS ANGELES COUNTY et al.

Civ. 18094.

Decided: November 22, 1950

Macbeth & Ford, Norman Macbeth and Patrick H. Ford, all of Los Angeles, for petitioner. Zagon, Aaron and Sandler, Marvin Manuel, all of Los Angeles, for respondents Sophia Herman and Herman Properties, Inc.

On December 24, 1946, petitioner Gering filed a complaint in Superior Court, seeking damages against the respondents other than the Superior Court, for a conspiracy to defraud by wrongfully expelling petitioner from a partnership; for wrongful eviction from partnership leased property, and appropriation of the partnership business, assets and premises. While this action was still pending and on January 28, 1948 petitioner was adjudicated a bankrupt, and on July 22, 1948 was discharged in bankruptcy in the U. S. District Court in Los Angeles.

Thereafter, and while said bankruptcy proceeding was still pending, a hearing was held before Referee Benno M. Brink and on November 12, 1948 said referee ‘Ordered, Adjudged and Decreed that the bankrupt's right of action in the suit known as Gering v. Jameson, et al. (Superior Court, Los Angeles County, No. 523285) did not pass to the trustee in this case and is not an asset of the estate’.

In connection with said order, Referee Brink filed a memorandum stating that petitioner's complaint in the Superior Court action set forth ‘a cause of action for damages to an advantageous business relationship and not to an existing property interest which the bankrupt could have disposed of to his advantage. In other words, the alleged wrongful conduct of the defendants * * * interfered with the future earning capacity or power of the bankrupt. Such earning capacity or power is not ‘property’ until it has created earnings or brought them into existence. Hence I conclude that the bankrupt's aforesaid right of action did not pass to the trustee in this case. (See Boudreau v. Chesley, 1 Cir., 1943, 135 F.2d 623, 53 A.B.R.(N.S.) 471, and the cases therein cited.)'. The order in question was not appealed from and became final; on December 17, 1948 the trustee was duly discharged and the bankruptcy estate closed.

On November 22, 1949 petitioner's Superior Court action came on for trial and was transferred by Judge Clarence Kincaid in Department One to Judge Charles P. Johnson in Department 68. In the latter department defendants, having filed a supplementary answer setting up the bankruptcy, moved the court to stay all proceedings upon the ground, as stated in the petition, ‘that the asset and cause of action automatically passed to the trustee under the National Bankruptcy Act’. A copy of the referee's order was introduced in evidence. ‘Said Judge Johnson’, quoting from the petition herein, ‘held that the asset did pass to the trustee, refused to follow the order of Judge (Referee) Brink, stayed all proceedings and placed the case off calendar.’

Thereafter, on June 20, 1950, petitioner Gering moved the respondent court, Judge Clarence Kincaid, to vacate the prior orders of Judge Johnson and to restore said cause to the calendar. Judge Kincaid denied the motion, according to the petition herein, ‘expressing the opinion that the proper attack on Judge Johnson's action would be by writ of mandate or by action from the Federal Court.’ Petitioner now seeks, by writ of mandate, to compel the Superior Court to reset the cause for trial ‘at the earliest possible date, and to proceed with such trial.’

It is petitioner's contention that the referee's order holding that the bankrupt's cause of action did not pass to the trustee, ‘is res judicata and cannot be questioned in a state court’. Sampsell v. Gittelman, 55 Cal.App.2d 208, 130 P.2d 486, 489, cited in support thereof, was an action by a trustee in bankruptcy against the bankrupt to recover certain money which the referee had ordered turned over to the trustee. The Superior Court decided in favor of the plaintiff trustee ‘upon the hypothesis that the turnover order was res judicata of the claim’, which decision was affirmed on appeal. The reviewing court there said: ‘The turnover order comes before the courts of California with the same force and effect as would a judgment of a sister state’. The opinion therein also mentions that under the Bankruptcy Act ‘The dominion of the trustee extends to all property * * * which, prior to the filing of the petition, the bankrupt might by any means have transferred, or which might have been levied upon or sold under judicial process or otherwise seized and taken away.’

Answering the petition, respondents call attention to the rule that a ‘writ of mandamus cannot be used to correct the errors of a court in passing upon questions of law or fact regularly submitted to it in the course of judicial proceedings'. In this connection is cited San Francisco Breweries v. Superior Court, 80 Cal.App. 433, 251 P. 935, 937, holding that mandate is not a proper proceeding to compel a trial court to set a case for further hearing after an order abating the action on the ground that plaintiff, a foreign corporation, had not complied with California laws. The appellate court there remarked that it was immaterial ‘whether the trial court arrived at a correct on an erroneous conclusion, so long as it rendered a judgment’.

Respondents further argue that ‘Power to stay proceedings is incidental to power inherent in every court to control the conduct of litigation before the court’, citing Schoenfeld v. Gerson, 48 Cal.App.2d 739, 742, 120 P.2d 674; that the trial court had jurisdiction to make the order staying the present action until the defect in parties plaintiff had been cured; and that whether right or wrong, the order made cannot be interfered with by writ of mandate. It is further contended that the trial court, and not the referee in bankruptcy, was correct in determining that the cause of action passed to the trustee in bankruptcy.

None of the cases cited are factually similar to the present controversy although the basic principles involved are well established. One of the fundamental principles governing the use of mandate is that the writ is not to be used as a substitute for an appeal, motion for a new trial, or other regular procedure available to the petitioner. In the instant action this general rule must prevent petitioner from securing relief in this manner. To hold otherwise would be tantamount to enlarging the functions of the writ to permit a review of any and all orders made by a trial court displeasing to one of the parties. The writ of mandate was not designed for that purpose.

Petitioner in the instant case has only to reopen the bankruptcy proceeding, secure the appointment of a trustee who will then be made a party plaintiff in the Superior Court action. Having thus complied with the trial court's order, the action will be set for trial and the matter determined upon its merits. In the final outcome of the case it may be that petitioner's position will be vindicated; that, however, is a matter unnecessary to determine in the present proceeding.

As pointed out in the respondents' brief, the closing of the bankruptcy proceeding does not have the effect of abandonment, and under the Bankruptcy Act, § 2, 11 U.S.C.A. § 11, the bankrupt's estate may be reopened for the purpose of administering assets. Moreover, petitioner's contention that the referee's order is res judicata is untenable, for, as the respondents point out, the parties in that proceeding and in this are not the same. Sampsell v. Gittelman, 55 Cal.App.2d 208, 130 P.2d 486, 489, cited by petitioner is therefore not in point, for in the Sampsell case the parties were the same. As the opinion states, ‘The parties had notice; they contended at the trial (in the Federal Court), and both enjoyed the privileges of the court's process, hearing and deliberation’. Such was not the situation in the present case.

For the reasons hereinbefore stated, the alternative writ of mandate heretofore issued is discharged and the peremptory writ prayed for is denied.

DORAN, Justice.

WHITE, P. J., and DRAPEAU, J., concur.