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SANTA CLARA COUNTY v. HAYES CO

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

SANTA CLARA COUNTY v. HAYES CO.*

No. 15741.

Decided: March 18, 1954

Howard W. Campen, County Counsel, Santa Clara County, Donald K. Currlin, Asst. County Counsel, San Jose, for appellant. Campbell, Custer, Warburton & Britton, Edwin J. Owens, San Jose, of counsel, for respondent.

After demurrer sustained to its first amended complaint, plaintiff elected not to amend. From a judgment of dismissal because of failure to amend, plaintiff appeals.

Question Presented.

Is the action barred by section 339, subdivision 1, Code of Civil Procedure?

Record.

The amended complaint contains three counts. All three counts allege that in connection with statutory proceedings brought to adopt a charter form of government, defendant orally agreed with plaintiff to publish in its newspaper for the time prescribed by law, the contents of a proposed county charter; that the publications were so carelessly and negligently printed as to cause a transposition of certain sections of the charter, which transposition was held in People by Howser ex rel. Levin v. Santa Clara County, 37 Cal.2d 335, 231 P.2d 826, to invalidate the entire charter adoption proceedings. The county, prior to this decision, had concluded the proceedings and had been acting under the invalid charter. The complaint then asked for damages for certain out of pocket costs incurred in said charter proceedings. Count 2 attempted to set up a cause of action upon a written contract, based upon a bill for the cost of publishing the transposed charter rendered by defendant to plaintiff subsequent to the completion of the erroneous publication. Count 3 alleged certain matters by way of estoppel of defendant to raise the statute of limitations. Defendant demurrer generally and specifically, including setting up the bar of section 339, subdivision 1.

Count 2—Written Instrument?

This count is based upon the contention that the bill presented to plaintiff by defendant for printing the charter is the ‘instrument in writing’ referred to in section 337 of the Code of Civil Procedure which allows four years to bring ‘An action upon any * * * obligation or liability founded upon an instrument in writing * * *.’ In September, 1948, the oral contract to publish was made. The charter was published ten consecutive days from September 16th to 25th. The bill for such publication was rendered September 30th. It is a unique conception that a bill for services previously performed under an oral agreement constitutes the obligation of the person rendering that service. The section requires that the obligation for which suit is brought be founded upon the written instrument. While a bill is a written instrument it is obvious that the creditor's obligation to perform the services theretofore rendered is not founded upon the bill thereafter presented for those services. Count 2 did not state a cause of action for an obligation or liability founded on an instrument in writing. Hence the demurrer to this count was properly sustained.

Count 1.

The complaint alleges that plaintiff discovered the publication defects about November 10, 1948. The suit was not filed until August 31, 1951, more than the two years permitted by section 339, subdivision 1, for an action on a contract, obligation or liability not founded on an instrument in writing. To avoid the application of this section plaintiff makes two contentions: (1) that defendant negligently breached its duty under the oral contract and therefore this is a tort action and the applicable statute of limitations is section 343, ‘An action for relief not hereinbefore provided for * * * four years'; (2) that if section 339, subdivision 1, be applicable to this tort action, nevertheless plaintiff's cause of action did not accrue until May 28, 1951, the date of the decision in People by Howser ex rel. Levin v. Santa Clara County, supra, 37 Cal.2d 335, 231 P.2d 826, as it is claimed plaintiff was legally unable to bring suit until that time.

If plaintiff's contention that it was under a legal prohibition to sue prior to the decision of the Supreme Court be valid, then it becomes unnecessary to determine whether the cause of action sounds in tort or contract or whether section 343 applies. The action was filed within two years of that decision, and if the cause of action did not accrue prior thereto, section 339, subdivision 1 would not bar it.

The complaint shows that all the proceedings for the adoption of the charter up to and including the election took place before plaintiff discovered the defective publication. In Santa Clara County v. Superior Court, 33 Cal.2d 552, 203 P.2d 1, it was held that as the only step left in completion of the legislative process was the certification of the charter by plaintiff to the Legislature for its approval or rejection, the courts had no power to interfere with that process. This left the matter to await the action of the Legislature and if it approved the charter (as it did), the only way the validity of the charter could be attacked was by quo warranto. See Taylor v. Cole, 201 Cal. 327, 257 P. 40; American Distilling Co. v. City Council of City of Sausalito, 34 Cal.2d 660, 213 P.2d 704, 18 A.L.R.2d 1247.

Barnes v. City of Kirksville, 1915, 266 Mo. 270, 180 S.W. 545, 546, cited by defendant, was an action for salary by a person who claimed to have been illegally removed from the office of city marshal after the adoption by the voters of the city of an ‘alternative form of government’. The only question involved was ‘the constitutional validity of the act empowering respondent to terminate appellant's term of office.’ 180 S.W. at page 546. In holding that that question could properly be determined in that action, the court said, 180 S.W. at page 546: ‘Before passing on the objections of appellant to this enabling act, it is well to note that none of the objections involved a disincorporation of defendant as a municipal body, nor its right to exist as a city of the third class; and hence we are not precluded from considering such objections by the rule that the corporate existence of a municipal corporation can only be attacked by the state through its proper officers.’ Defendant contends that in our case, Santa Clara County remained a county government even though without the charter form and hence the ruling in the Barnes case would apply to a collateral attack. If the Barnes case so holds it is contrary to the California rule as set forth in the above mentioned cases and in Santa Clara County v. Superior Court, supra, 33 Cal.2d 552, 203 P.2d 1. In the latter case, even though as claimed by defendant, the very irregularity later held void by the Supreme Court appeared upon the face of the charter adoption proceedings, it was flatly held that the only method of attacking those proceedings was by quo warranto.

The charter was filed with the Secretary of State after adoption by the Legislature on June 15, 1949, St.1949, p. 3294. It was recorded in the County Recorder's office of Santa Clara and became effective on July 1, 1949. Thus, the effect of the error in publication could not be determined by any one, including plaintiff, until at least that date. Obviously, had plaintiff theretofore attempted to sue defendant for the incorrect publication it would have been met with the absolute defense that no damage had occurred and the further contention (as was made by defendant prior to the Supreme Court decision) that the error did not invalidate the charter adoption proceedings.

But the suit was not brought within two years of the effective date of the statute. This brings us to the question of whether the starting of the running of the statute was delayed until the Supreme Court decision. Here again had suit been brought prior to that time, the defense would have been that no damage had occurred, that the error did not invalidate the proceedings, as this question could only be determined by quo warranto.

Defendant contends that the language in People v. City of San Buenaventura, 213 Cal. 637, 3 P.2d 3, 5—‘As it appears on the face of the Assembly concurrent resolution approving the charter that one of the essential steps required by the Constitution * * * was not taken * * * we are compelled to hold that the freeholders' charter of San Buenaventura * * *’ was not legally adopted,—justifies its claim that the validity of the charter in our case could have been collaterally attacked at any time. That language, however, does not justify such conclusion. First, that was a quo warranto proceeding and not a collateral attack. Secondly, that language was used because of the rule that a legislative resolution adopting a freeholders' charter is conclusive as to facts recited in the preamble, to show that the very facts recited showed noncompliance with the law and hence the resolution could not be conclusive against the contestants. It was not a holding that if irregularities appear on the face of the legislative proceedings the adoption of a charter may be collaterally attacked. It is interesting to note on the question of whether a fatal irregularity appeared on the face of the proceeding that in the quo warranto proceeding of People by Howser ex rel. Levin v. Santa Clara County, supra, 37 Cal.2d 335, 231 P.2d 826, three of the seven justices of the Supreme Court did not think the irregularity was fatal.

Defendant contends that plaintiff could have tested the error by itself applying to the attorney general to bring such a proceeding on its relation. The county at all times, as did defendant, took the position that the proceedings were regular, the error immaterial. It is difficult to understand how the county officials could take any other position, in view of the fact that the people of the county had passed the charter at the election. It was their duty to uphold the charter, if possible. But assuming they should have applied to the attorney general for a writ of quo warranto, the determination of the regularity of the proceedings would not have been obtained any sooner than it was by the quo warranto proceeding initiated by Levin, who on August 6, 1949, obtained a writ of quo warranto. Thus, it becomes immaterial that the county, if it could, did not start the action. The final determination of the action would have been approximately the same. As this suit was filed approximately three months after the date of the decision (less than that from the date when the decision became final) there was considerable leeway if the statute of limitations starts running from the decision.

In Miller v. Dunn, 72 Cal. 462, at page 469, 14 P. 27, at page 30, it was held: ‘There is at least an exception, viz., that an act duly passed or approved has the force of law to protect citizens dealing with public officers under its provisions up to the time that it is declared unconstitutional.’ In our case, until determined otherwise by quo warranto, this principle of law would have given defendant a complete defense in an action brought by plaintiff against it. In Archer v. Edwards, 19 Cal.App.2d 253, 65 P.2d 115, the plaintiff purchased from defendant a promissory note secured by a deed of trust, which, in turn, had been assigned to the latter. The maker of the deed of trust served notice of rescission on all parties dealing with the deed of trust and then brought a quiet title action against them in which it was held that the deed of trust was void. Thereafter plaintiff sued defendant on a common count for the money paid for the note and deed of trust. Defendant raised the bar of the statute of limitations. The court held that the statute was tolled by the time taken in the trial court in the quiet title action together with the time taken by the Supreme Court, and that the statute did not begin to run until the date the Supreme Court decision became final. (It pointed out that until that time Archer had a lien by the deed of trust.) That situation is analogous to the one in our case.

Lattin v. Gillette, 95 Cal. 317, 30 P. 545, dealt with an entirely different situation. There, in an action brought against title searchers for error in a title certificate, the court held that the statute of limitations ran from the date of the certificate and not from either the date of discovery of the error or the date of the decision in a superior court action brought by the holders of an undivided one-half interest overlooked by the searchers. Had the error been discovered, suit could have been brought immediately for damages and as the error was shown of record the court in that action could have determined its effect. As said in Southern California Enterprises v. D. N. & E. Walter & Co., 78 Cal.App.2d 750, 178 P.2d 785, concerning the Lattin case, ‘* * * the incorrectness of the statements in the certificate could have been discovered by an examination of the public records at any time on and after the date of the certificate.’ 78 Cal.App.2d at pages 756–757, 178 P.2d at page 789. Whereas in our case the effect of the error could not have been determined in a damage suit. That, too, is the difference between the situation in the Archer and the Lattin cases, supra. In the Archer case, the invalidity of the deed of trust did not appear of record and hence could not be determined in the damage action. It must be remembered that in our case it is not a situation where the amount of the damage could not be ascertained prior to the Supreme Court decision, but the fact of any damage at all, which could not be ascertained. Such a situation must necessarily toll the statute or else plaintiff would be deprived of any right of action or redress whatever. ‘It is well recognized that the running of the statute of limitations is suspended during any period in which the plaintiff is legally prevented from taking action to protect his rights.’ Dillon v. Board of Pension Com'rs, 18 Cal.2d 427, 431, 116 P.2d 37, 39, 136 A.L.R. 800.

Count 3.

Inasmuch as count 3 is the same as count 1 except as to allegations as to certain facts claimed to estop defendant from raising the statute of limitations, and inasmuch as we have hereinbefore shown that the statute is not applicable, no additional cause of action appears in this count and hence the demurrer to it was properly sustained.

The demurrer was properly sustained as to counts 2 and 3, but improperly sustained as to count 1. We find no ambiguity, uncertainty or unintelligibility in that count. The judgment is reversed as to count 1, and affirmed as to the other two counts. Plaintiff will recover costs.

BRAY, Justice.

PETERS, P. J., and FRED B. WOOD, J., concur.

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