KEELER v. SCHULTE

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District Court of Appeal, Fourth District, California.

William A. KEELER, Plaintiff and Appellant, v. Ruth SCHULTE, Constance Hostler, Earl Hostler, Ross Simpson, James A. Long, Theosophical Endowment Corporation, The Theosophical Society and Kirby Van Mater, Defendants and Respondents.*

Civ. 5161.

Decided: July 12, 1956

Johnson & Johnson, San Diego, for appellant. Rinehart, Merriam, Parker & Berg, Pasadena, for respondents.

This action was previously before this court for consideration. Judgment was rendered against the defendants and a new trial was granted and sustained on appeal. Keeler v. Schulte, 119 Cal.App.2d 132, 259 P.2d 37. On the new trial an amended complaint was filed alleging in general the facts set forth in the original complaint and praying for declaratory relief, a decree declaring the attempted dissolution void, ordering defendants to deliver up all assets of the lodge, adjudging a deed and transfer of personal property void and restraining the sale of the property. An accounting is sought and there is a prayer that a receiver be appointed. Defendants demurred generally and specially to the amended complaint and moved to strike portions of it, claiming that the former decision eliminated certain claimed issues presented by the original complaint. The presiding judge overruled the demurrer and struck an immaterial paragraph from the complaint relating to the articles of incorporation of the defendant Theosophical Endowment Corporation, and the constitutional provisions of defendant The Theosophical Society and leaving, as the pivotal question, the legality of the dissolution proceedings of San Diego Lodge No. 1 of the American Section of the Theosophical Society. (Hereinafter referred to as the Lodge.) Defendants answered and denied generally the allegations of the amended complaint and attached the by-laws of the Lodge and resolutions adopted, and by counterclaim sought possession of $2,377.90 in the bank and certain properties of the Lodge.

On January 28, 1955, the parties appeared in court and certain evidence was received. Thereupon the court determined that certain issues should be presented to a referee to be appointed by the court to take evidence and make findings on those issues and required both plaintiff and defendants to deposit $700 each before March 28 on account of costs. Further trial of the action was continued to that date. On April 18, 1955, over objections, defendants renewed the general and special demurrers and motion to strike portions of the amended complaint pertaining to the jurisdiction and power of certain named defendants to act as leader and official head of The Theosophical Endowment Corporation and setting up the by-laws of San Diego Lodge No. 1 in relation thereto. On April 22, 1955, the judge granted the motion to strike, sustained the demurrers, and allowed plaintiff ten days to amend. Apparently, plaintiff refused to further amend the complaint and announced his inability to deposit the $700 advance costs for the referee. Whereupon the court made a statement in the decree dismissing the action to the effect that by failure of plaintiff to comply with the court's prior order to post $700 and his refusal without adequate excuse, his actions demonstrated a purpose not to proceed in good faith and accordingly, it would be deemed that he ‘abandoned the portions of said amended complaint sought’ to be stricken. It then held that the complaint did not state a cause of action and that San Diego Lodge No. 1 was not a party to the action and plaintiff could not maintain it because he did not legally represent the Lodge and accordingly, no judgment could be entered declaring its rights or to set aside the deed. The action was ordered dismissed. No findings were made as to factual or legal issues presented at the former hearing prior to the order of reference. However, the record shows that the trial judge assigned as his reasons for the reference that twenty to twenty-five witnesses (both old and young) would be called and evidence taken in reference to the ‘slanderous statements' of ‘acrimonious character’ and accordingly, it would be desirable to appoint a referee; that a shorthand reporter would be required and probably a property appraiser examined as to the value of the property. The greater portion of the amended complaint in reference to the dissatisfaction of the members of this religious organization here involved was stricken from the complaint. Accordingly, it is difficult to see what assistance a reference of this subject matter would be to the trial court. The amount of the property involved and its value would not be difficult to determine. The pivotal question attempted to be presented by the pleadings, portions of which the trial court erroneously struck out, is the validity of the deed and the purported transfer of the property and the validity of the claimed dissolution of San Diego Lodge No. 1 and the resultant rights of the respective parties. These were issues raised by the pleadings which should have been determined by the court before reference. If it was previously established by evidence and so found by the court that the proceedings were valid, then there would be no need for a reference. Stoll v. Selander, 81 Cal.App.2d 286, 183 P.2d 935. It does not appear to us that it would necessarily require a reference in regard to any accounting, or if it would, it seems to us that $1,400 would be an excessive deposit to be required, particularly in view of the fact that plaintiff appeared only as representing a group claimed to be representing the Lodge which was injured by the transaction and which had no access to funds of the Lodge to protect its interests.

The court's authority for reference stems from section 639 of the Code of Civil Procedure, which recites, generally, that a court is authorized on its own motion to direct a reference ‘1. When the trial of an issue of fact requires examination of a long account on either side; * * * 2. When the taking of an account is necessary for the information of the court before judgment, or for carrying a judgment or order into effect; 3. When a question of fact, other than upon the pleadings, arises upon motion or otherwise, in any stage of the action; * * *’ Section 638 of the Code of Civil Procedure refers to reference upon agreement of the parties and authorizes the referee to try any or all the issues. An involuntary reference may be compelled only in the manner and in the cases indicated by the statute. Code Civ.Proc. § 639; Barker Bros., Inc., v. Coates, 211 Cal. 756, 758, 297 P. 8; 22 Cal.Jur. 685; Fredendall v. Shrader, 45 Cal.App. 719, 723, 188 P. 580. An involuntary or compulsory reference may well deny one the right of trial where the reference has been made for the purpose of trying the entire controversy. Hendy Machine Works v. Pacific Cable Const. Co., 99 Cal. 421, 33 P. 1084. An order for the exaction of a deposit for contemplated costs which appears to be unreasonable may very well operate as a gross injury and deprive a litigant of his day in court. Under such circumstances an appellant may not be legally required to conform to the order. Green v. Duvergey, 146 Cal. 379, 80 P. 234; In re Brown, 97 Cal.App.2d 848, 218 P.2d 1006.

The court's claim that as a result of plaintiff's conduct in failing to post the security fixed and failing to amend the complaint amounted to lack of good faith in prosecuting the action and authorized a dismissal of it under section 437c of the Code of Civil Procedure cannot be sustained. Continental, etc., Ass'n v. Boggess, 145 Cal. 30, 34, 78 P. 245; Arnold v. Hibernia Savings & Loan Soc., 23 Cal.2d 741, 146 P.2d 684.

A more serious question arises as to whether the court had jurisdiction under the pleadings to enter judgment in favor of the plaintiff as representative of a group, which involves the recapture of the Lodge's funds and property, and of his right to test the validity of the dissolution, when the Lodge was not named as a party to the action. It is the claim of plaintiff that defendants wrongfully and illegally dissolved the Lodge at the meeting indicated. Defendants contend that it was rightfully dissolved at that time. If so, it had no legal existence and could not sue or be sued in its corporate name or capacity and no officers were in existence who could maintain a suit in its name. If it was wrongfully dissolved, its members, in a representative suit, would be authorized to proceed to recover, on its behalf, the property wrongfully taken. This same question was determined in the previous action, Keeler v. Schulte, supra, 119 Cal.App.2d 137, 259 P.2d 40, in which Rosicrucian Fellowship v. Rosicrucian Fellowship Non-Sectarian Church, 39 Cal.2d 121, 245 P.2d 481 and Providence Baptist Church of San Francisco v. Superior Court, 40 Cal.2d 55, 251 P.2d 10 are cited. Defendants were bound by that decision in this respect.

The judgment is reversed.

GRIFFIN, Justice.

BARNARD, P. J., and MUSSELL, J., concur.

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