ELNAT OF CALIFORNIA INC v. WILKINSON SWORD INC

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

ELNAT OF CALIFORNIA, INC., a corporation, Plaintiff, Cross-Defendant and Appellant, v. WILKINSON SWORD, INC., a corporation, Defendant, Cross-Complainant and Respondent.

Civ. 28715.

Decided: May 10, 1965

J. Albert Hutchinson, San Francisco, for appellant. Lawler, Felix & Hall and Richard D. De Luce, Los Angeles, for respondent.

This is an appeal from an order denying the motion of Elnat of California, as crossdefendant, to dissolve an attachment secured by Wilkinson Sword, as cross-complainant. Elnat has also attempted to appeal from various other orders, presently to be mentioned, all of which are non-appealable; such purported appeals must be dismissed.

In August of 1961 the parties entered into a written agreement by the terms of which plaintiff was appointed a ‘sales broker’ for the solicitation of orders for certain of Wilkinson's products; in such capacity plaintiff was to act as ‘sales representative for the area of California, Arizona and Nevada.’ Claiming repudiation by Wilkinson of the above contract, plaintiff in September of 1963 brought an action for various forms of relief; contemporaneously therewith a preliminary injunction was also sought to prohibit Wilkinson from soliciting sale of its products to plaintiff's customers. Declarations by one of Wilkinson's officers ‘under penalty of perjury’ having been filed in opposition thereto, a preliminary injunction was denied following the hearing of plaintiff's motion.

In the interval prior to the hearing just mentioned, Wilkinson filed an answer, which included a counterclaim, to plaintiff's complaint. A cross-complaint was also filed by Wilkinson against plaintiff for damages (for conversion) and for possession of any of its products in plaintiff's possession. More than two months later, plaintiff answered this latter cross-demand. Two months thereafter, in February of 1964, Wilkinson secured the issuance of the subject attachment following the declaration by one of its attorneys, executed at Los Angeles and under penalty of perjury, that plaintiff, as cross-defendant, was indebted to Wilkinson, as defendant and cross-complainant, in the sum of $68,625. The declaration, on a court-approved form, recites that ‘Plaintiff as defendant's agent failed to properly account for defendant's merchandise under plaintiff's care and failed to transmit to defendant collections resulting from the purchase by others of defendant's merchandise under plaintiff's care’ and, adopting the form's language, ‘that such contract was made or is payable in this state, and that the payment of the same has not been secured by any mortgage, deed of trust, or lien upon real estate or personal property, or any pledge of personal property.’ (Other language appearing on the fact of the form, and likewise adopted, is omitted as irrelevant to this appeal.)

Thereafter plaintiff moved to dissolve the attachment upon the grounds that (1) Wilkinson, a Delaware corporation, was engaged in the transaction of intrastate business at the times in question and lacked the capacity to sue by reason of its failure to comply with the provisions of section 6801, Corporations Code;1 (2) the verifications to the cross-complaint, as well as to the answer and counterclaim, were defective, and the declaration in support of the attachment was likewise defective because of the assertedly contradictory, conclusionary and fatally uncertain statements contained therein. Plaintiff's motion, in addition to asking for the writ's discharge, asked that service of the writ be quashed, that Wilkinson's answer, counterclaim, cross-complaint and its attorney's declaration be stricken from the files, and for summary judgment in favor of plaintiff. The rulings on these latter motions, all of which were denied, are the non-appealable determinations mentioned earlier. An order denying a motion to quash the service of a writ of attachment is interlocutory in nature, although an appeal properly lies from the subsequent order refusing to vacate the writ. (Michael v. Burge, 176 Cal.App.2d 128, 130, 1 Cal.Rptr. Rptr. 183; Code Civ.Proc. § 963.) Likewise interlocutory in nature, and non-appealable, is the denial of a motion to strike. (W. A. Rose Co. v. Municipal Court, 176 Cal.App.2d 67, 74, 1 Cal.Rptr. 49.) Finally, no appeal lies from an order denying a motion for summary judgment (Stanton v. Andrews, 170 Cal.App.2d 269, 338 P.2d 529); as stated in Stanton, ‘An order denying the motion does not determine any issue. Its effect is merely a finding that there is an issue of fact to be tried.’ (p. 271, 338 P.2d p. 531.)

We are not persuaded that the first ground urged by plaintiff is well taken. ‘Transact intrastate business' is defined to mean ‘entering into repeated and successive transactions of its business in this State, other than interstate or foreign commerce.’ (Corp. Code, § 6203.) In this connection, plaintiff says that the transactions covered by the contract from May of 1962 to January of 1964 numbered more than 111, representing $113,741 in ‘sales' of razor blades and $33,814 in garden tools. Even if the sales of razor blades should be disregarded because, as respondent contends, the agreement only pertained to its garden tools, the above figure ($33,814) constitutes a goodly sum which was doubtless taken into consideration by the court below. In weighing the respective prosand cons presented by the motion, the court below had also to consider that plaintiff bore the burden of proving that the particular transactions sued upon were intrastate and that section 6801 applied. (Automotriz etc. De California v. Resnick, 47 Cal.2d 792, 794, 306 P.2d 1, 63 A.L.R.2d 1042.) According to the declaration of one of respondent's officers, Wilkinson's garden tools are made by the parent company and imported by respondent for sale in the United States. In its answer to the complaint, the following allegations appear: ‘At no time were any garden tools sold to plaintiff’ who, according to a prior allegation in that pleading, ‘was to act purely as a manufacturer's representative and agent.’ Continuing: ‘Garden tools were delivered by defendant [Wilkinson] to California to be disposed of by plaintiff on behalf of defendant. All garden tools shipped by defendant to California were warehoused in California at a warehouse or on plaintiff's premises at defendant's expense. Prior to August, 1962 garden tools were to be trans-shipped by plaintiff from California warehouse to the purchaser only in circumstances approved by defendant. After the merchandise was shipped from the warehouse to the purchaser, defendant was to invoice the purchaser on receipt of advice of shipment from plaintiff, and defendant was to receive payment directly from the purchaser. Only upon receipt of payment from the purchaser was the commission due plaintiff to be paid by defendant.’ (Emphasis added.)

From the foregoing, particularly the italicized portion of the matter quoted, it might be inferable that the right of final acceptance of any offer to purchase respondent's products lay with respondent outside of California (cf. Charlton Silk Co. v. Jones, 190 Cal. 341, 212 P. 203); hence the contract was not ‘made in this State’—contrary, however, to the declarations in respondent's affidavit. But it is unnecessary to pursue this phase of the matter further because this, the first of appellant's contentions, is not sustainable for another reason.

Respondent's capacity to sue, specifically its non-compliance with section 6801, was challenged neither by demurrer nor by affirmative allegations in its answer. In an early case, Kehrlein-Swinerton Con. Co. v. Rapken, 30 Cal.App. 11, 156 P. 972, it was said: ‘* * * it has been held in a long line of well-considered cases bearing upon the rights of partnerships or of corporations to commence or maintain actions until they have complied with certain requirements of the Legislature restricting such right, that the plea of proof that such partnerships and corporations may not maintain actions while under the disabilities provided in such statutes are matters of affirmative defense, and are in the nature of dilatory pleas, which are waived by the failure on the part of the defendant to make the required averments and proof; * * *.’ (p. 15, 156 P. p. 973.) The above rule was adhered to in a later case: ‘[Want of capacity to sue] may be raised by demurrer if incapacity affirmatively appears, otherwise [as here] by answer, and if not raised will be deemed to have been waived.’ (Danziger v. Peebler, 88 Cal.App.2d 307, 310, 198 P.2d 719.) To the same effect is Parker v. Bowron, 40 Cal.2d 344, 351, 254 P.2d 6. Appellant nonetheless argues that since an attachment may issue only when there is an action pending, such action must be pending by a party having the capacity to sue. For this argument reliance is had on the decision of this court in J. C. Peacock, Inc. v. Hasko, 184 Cal.App.2d 142, 7 Cal.Rptr. 490, but the case is distinguishable. Thus, the Peacock corporation secured the issuance of an attachment on the same day that its complaint was filed; thereafter, apparently unbeknown to persons who should have been aware of the facts, it developed that the suing corporation had ceased its existence, due to its merger with another corporation, prior to the time the action had been initiated. The case, therefore, turned on the fact of dissolution by merger. In the present proceeding, however, respondent's corporate existence was unchallenged. Section 6801, Corporations Code, does not say that a foreign corporation failing to comply with its provisions shall not ‘commence’ any action upon intrastate business; rather, it is therein provided that such entity shall not ‘maintain’ the action or proceeding, and the decisions distinguish the two terms. (Ward Land etc. Co. v. Mapes, 147 Cal. 747, 752–753, 82 P. 426.) Too, it has been further held that the dilatory plea must be rejected if the foreign corporation complies with the governing statute before trial upon the issue or even after the rendition of judgment. (Hall v. Citizens Nat. Tr. & Sav. Bank, 53 Cal.App.2d 625, 631–632, 128 P.2d 545.)* We know of no authority which would permit an appellant, under the circumstances at bar, to avoid its previous waiver of asserted non-compliance with statutory requirements in the manner presently sought.

Appellant's second ground for dissolution of the attachment is predicated on the claim (at least in part) that there was no ‘action pending’ at the time of the issuance of the writ. Specifically, the declaration supporting respondent's cross-complaint consisted of an unsworn statement on October 1, 1963, by an officer of Wilkinson under penalty of perjury but executed at New York City. It did not, therefore, comply with the 1961 amendment to section 2015.5, Code of Civil Procedure, to the effect that the place of execution of any such statement must be ‘within this State.'2 Similarly defective were the declarations in support of respondent's answer and counterclaim. Since the complaint was verified, says appellant, respondent's pleadings were required to be verified (Code Civ.Proc. § 446); in any event, the argument continues, respondent's unverified pleadings are not evidence in its behalf, and the writ must be supported (if at all) exclusively upon the declaration of its counsel made prior to issuance. It appears, however, that prior to the hearing of appellant's motion for dissolution of the attachment, respondent's counsel under penalty of perjury having asserted excusable inadvertence on his part, new verifications in affidavit form were filed in support of all three pleadings.

While respondent contends that section 446 places no restriction as to the place where the assertion under penalty of perjury must be made, claiming further that section 2015.5 is inapplicable to the verification of pleadings, it is now settled that the failure to verify or a defect in any attempted verification amounts to no more than a defect in pleading which does not deprive the court of jurisdiction to cure such deficiency by amendment. (Security T. & S. Bk. v. Fidelity & D. Co., 184 Cal. 173, 176, 193 P. 102; Ware v. Stafford, 206 Cal.App.2d 232, 237, 24 Cal. Rptr. 153.) As pointed out in Ware, ‘the defect may be cured by amendment even though the statute of limitations has run on the time to file the original complaint. [Citations.]’ (p. 237, 24 Cal.Rptr. p. 157.) Peculiar moreover to the particular problem at hand is the specific statutory provision that an attachment will not be discharged if at or before the hearing the affidavit upon which such attachment was based ‘shall be amended.’ (Code Civ. Proc. § 558.) Furthermore, although the provisions governing the verifications of pleadings are set forth in section 446, supra, the statute is silent with respect to the requirement that a cross-pleading (such as respondent's) be verified at all. (Cf. § 128, Civ.Code, requiring the verification of a cross-complaint for divorce.) Of interest, therefore, is the court's statement in Baldwin v. Napa etc. Wine Co., 137 Cal. 646, 649, 70 P. 732, 733, that ‘The plaintiff may file an unverified complaint in which judgment is sought against the defendant in a larger amount than he would be willing to support by his oath, but he is entitled to a writ of attachment for only the amount’ (emphasis added) specified in his supporting affidavit. Finally, we are of the view that appellant suffered no prejudice by reason of the fact that the court permitted the amendments to respondent's verifications without proof that a noticed motion (to amend) had been served on appellant. The decisions have consistently recognized the court's power thus to act, particularly where the amendments (as here) do not allege new matters of substance that would prejudice the party affected thereby. (Central Surety & Ins. Corp. v. Foley, 204 Cal.App.2d 738, 744, 22 Cal.Rptr. 504.)

There remains for determination appellant's claim that the supporting declaration of respondent's counsel was also deficient. Appellant's argument on this point is quite elaborate. Among other things, it is stated that the declaration is untruthful and directly contrary to the asserted judicial admissions of respondent; we believe, however, that this phase of the argument goes to the merits of respondent's cross-demand which are not open to review on a motion of this kind. (Rose v. Pearman, 163 Cal.App.2d 480, 483–484, 329 P.2d 501.) As noted earlier, the declaration sets forth appellant's failure, as respondent's agent, to properly account for merchandise under appellant's care as well as its failure to transmit to respondent collections resulting from the purchase by others of such merchandise. The reference in the attachment statute (Code Civ. Proc. § 537, subd. 1) to ‘implied’ contracts covers agreements ‘implied in law’ or quasi contracts. ‘Hence an attachment may issue in any action properly classified as quasi-contractual, no matter what the nature of the defendant's breach may be.’ (Witkin, 1 Cal.Procedure, 891, § 49.) In Savage v. Mayer, 33 Cal.2d 548, 551, 203 P.2d 9, 11, it is declared that ‘moneys received by one in the capacity of agent are not his, and the law implies a promise to pay them to the principal on demand. [Citations.] It follows that the principal's right to recover does not depend upon any deceit of the agent, but is based upon the duties incident to the agency relationship and upon the fact that all profits resulting from that relationship belong to the principal.’ Cited in the Savage case is Oil Well Core Drilling Co v. Barnhart, 20 Cal.App. 2d 677, 67 P.2d 696, where the defendants allegedly collected rentals and other charges belonging to plaintiff company contrary to the terms of a written contract; the order of the lower court dissolving the attachment was reversed upon the principles mentioned in the Savage case. The declaration in the case at bar appears to have been drafted with those principles in mind; it was, therefore, sufficient to support the issuance of the writ.

Additionally, and finally, it is true that the affidavit is the essential foundation for the issuance of the writ; but it is also true that the complaint must likewise be treated as an affidavit and ‘in establishing the right to an attachment the pleadings must be considered in their entirety * * *.’ (Eaton v. Queen, 78 Cal. App.2d 571, 576, 177 P.2d 997, 1000.) As stated at the outset, the cross-complaint asks damages for conversion of respondent's goods. ‘It is well settled that where personal property is converted the injured party may ‘waive the tort and sue in assumpsit.’ [Citations.]' (Los Angeles Drug Co. v. Superior Court, 8 Cal.2d 71, 74, 63 P.2d 1124, 1125.) The court concluded that the complaint stated a cause of action in contract and that the issuance of the writ of attachment was proper.

Other subsidiary contentions are made which do not require discussion in view of our determination of the major points dispositive of the present appeal.

The order (denying discharge of the attachment) is affirmed; all other purported appeals are dismissed.

FOOTNOTES

1.  Section 6801, Corporations Code: ‘A foreign corporation subject to the provisions of Chapter 3 of this part which transacts intrastate business in this State without complying therewith shall not maintain any action or proceeding upon any intrastate business so transacted in any court of this State, commenced prior to compliance with Chapter 3 until it has complied with the provisions thereof, and has paid to the Secretary of State a penalty of two hundred fifty dollars ($250) in addition to the fees due for filing the statement and designation required by Section 6403, and has filed with the clerk of the court in which the action is pending, receipts showing the payment of said fees and penalty and all franchise taxes and any other taxes * * * that should have been paid for the period’ in question.

FOOTNOTE.  Prior to commencement of the action respondent had qualified to do business in California (§ 6403, fn. 1, supra) although it had not fully complied with section 6801 by filing with the Clerk of the Superior Court receipts showing payment of fees and taxes.

2.  Section 2015.5: ‘Whenever, under any law of this State or under any rule, regulation, order or requirement made pursuant to law, any matter is required or permitted to be supported, evidence, established, or proved by the sworn statement, declaration, verification, certificate, oath, or affidavit, in writing of the person making the same * * * such matter may with like force and effect be supported, evidence, established or proved by the unsworn statement, declaration, verification, or certificate, in writing of such person stating the date and place of execution within this State and which is subscribed by him and certified or declared by him to be true ‘under penalty of perjury,’ * * *.'

LILLIE, Justice.

WOOD, P. J., and FOURT, J., concur.