PASADENA MEDI CENTER ASSOCIATES v. HOUTS

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Court of Appeal, Second District, Division 3, California.

PASADENA MEDI-CENTER ASSOCIATES et al., Petitioners, v. SUPERIOR COURT of the State of California, FOR the COUNTY OF LOS ANGELES, Respondent; Richard E. HOUTS, M.D. as Trustee for Pasadena Gynecologic and Obstetric Medical Group, Real Party in Interest.

Civ. 40198.

Decided: August 08, 1972

Gibson, Dunn & Crutcher and Gary D. Stabile, Los Angeles, for petitioners. No appearance for respondent Court. Bunn & Peterson and Robert M. Peterson, Los Angeles, for real party in interest.

Petitioners, Pasadena Medi-Center Associates, a limited partnership, Pasadena Medi-Service, Inc. (a California corporation and the general partner of the limited partnership) and Boyd L.Jefferies, seek a peremptory writ of mandate directing respondent superior court to vacate its order denying certain motions of the partnership and the corporation as defendants in the action, brought by the real party in interest, Richard E. Houts, M.D., and numbered in that court ‘NEC 10559‘.1 These motions were to quash service of summons upon these defendants in this action, to vacate their defaults therein, to quash the writ of execution issued therein and to vacate the levy of execution made therein upon certain real property located at 721 Fair Oaks Avenue in Pasadena.

This original proceeding in mandamus lies. (See Code Civ.Proc., §§ 1085, 1086; Dowell v. Superior Court, 47 Cal.2d 483, 486, 304 P.2d 1009; Owens v. Superior Court, 52 Cal.2d 822, 827, 345 P.2d 921; Security I. R. Co. v. Superior Court, 101 Cal.App. 450, 281 P. 709.)

We have decided to overrule the general demurrer of Dr. Houts to the petition, to grant the writ sought and to direct that the motions of the defendants in the action numbered NEC 10559 in respondent court be granted.

FACTS

On February 24, 1971 Dr. Houts filed a complaint initiating the aforementioned action in respondent court against the partnership and corporation on two unpaid demand notes totaling $15,000. The next day Houts' writ of attachment in the amount of $15,000 was levied on the aforementioned real property.

On March 13, 1971 a purported service of a copy of the summons and the complaint in the action was made on one Albert A. Binney, Sr. as secretary-treasurer of the corporation, the sole general partner of the limited partnership. Binney was not then and has never been an officer of the corporation, has never acted as or represented himself to be such and has never been designated by the corporation to receive service of process for it. Binney, Sr. said nothing to the process server at the time of the purported service. The actual secretary-treasurer of the corporation has always been Albert A. Binney, Jr.2

Immediately following this purported service of summons the officers and directors of the corporation were informed of the service, informed their then counsel of it and believed it to be valid.3 They decided, however, to do nothing in defense of the action for the apparent reasons that in their opinion the partnership and the corporation owed the obligations sued upon and neither had any money to finance a futile defense to the action. The officers and directors of the corporation also became aware of the levy of the writ of attachment immediately subsequent thereto.

Nevertheless, on March 31, 1971 the attached realty was sold to a third party. This sale was made possible by petitioner Boyd L. Jefferies, a limited partner of the partnership and a former director of the corporation purportedly acting on behalf of the partnership, indemnifying the title company insuring the title of the realty against the lien of Dr. Houts' attachment.

Subsequently on April 23 and May 27, 1971 the default of the partnership and corporation and a judgment by default against them were entered. The issuance and the levy of the writ of execution followed. On September 29 the partnership and the corporation made the motions now before us. The sale of the property under execution has been temporarily stayed.

Briefly stated, the fundamental question in the controversy before us is: May Dr. Houts collect his otherwise uncollectable debt from the sale on execution of the property of the partnership and the corporation at 721 Fair Oaks Avenue in Pasadena? We hold that he may not.

DISCUSSION

The trial court's denial of the motions of the partnership and the corporation to quash and to vacate was based on its ‘findings' that these defendants had waived the ‘deficiency in the method of service’ and that in any event the motions were not timely made. Neither finding is in accord with the law.

Code of Civil Procedure sections 416.10(b) and 416.40(a)4 specify how service of the summons in Dr. Houts' action against the partnership and the corporation should have been made.5 Under these sections no valid service of summons upon either the partnership or the corporation was made by delivering a copy of the summons and the complaint to Binney, Sr., who was not an officer of the corporation, the sole general partner of the limited partnership, and had never been authorized by the corporation to receive service of process for it.

Under section 410.50(a), except as otherwise provided by statute, the court in which an action is pending has jurisdiction over a non-generally appearing defendant only if summons therein has been served upon him as provided by the statutes governing the manner of service of summons. (See 1969 Judicial Council Report 34.)6

This has long been the law. (See Chaplin v. Superior Court, 81 Cal.App. 367, 371, 253 P. 954.) Absent such service, no jurisdiction over the person of such a defendant is acquired by the court in the particular action (see Sternbeck v. Buck, 148 Cal.App.2d 829, 833, 307 P.2d 970; 1 Witkin, Cal. Procedure (2d ed. 1971) Jurisdiction, § 83, p. 608) and any judgment thereafter rendered in the action is void. (See Chaplin, supra; City of Los Angeles v. Morgan, 105 Cal.App.2d 726, 731, 234 P.2d 319.) The default judgment rendered in Dr. Houts' action against the partnership and the corporation is therefore void because the service made was otherwise unauthorized by statute.

A waiver is an intentional relinquishment of a known legal right. (See Roesch v. De Mota, 24 Cal.2d 563, 572, 150 P.2d 422.) At the time the officers and directors of the defendant corporation decided against undertaking a defense of Dr. Houts' action against the corporation and the partnership, they did not know that Dr. Houts' service of summons in the action upon the corporation and the partnership was invalid and this ignorance of their part, as previously indicated in footnote 3, continued until after the default judgment had been entered. Under these circumstances neither the partnership nor the corporation can be said to have waived their rights to object to the trial court's lack of jurisdiction over their persons in Dr. Houts' action against them.

The motions under review were timely made. It is true that the motions to quash service of summons on these defendants on the ground of lack of jurisdiction over their persons by reason of defective service of summons upon them were not made within the period required for the making of a statutory motion on this ground pursuant to section 418.10. But we have found nothing in the legislative history of this section, or of the act of which it is a part, to indicate that the statutory motion was intended to be exclusive. (See 1969 Judicial Council Report, supra, 28–29, 61–62.) It is also true that these defendants did not ask for relief from their defaults pursuant to section 473.5. But such relief was not available to them because the defective service upon them in Dr. Houts' action did result in actual notice to them ‘in time to defend the action’.

We regard their motions as being based either on an inherent power of the court or on the last provision of section 473. This provision authorizes a court on motion of either party, after notice to the other party, to set aside a void judgment or order. (Cf. Riskin v. Towers, 24 Cal.2d 274, 277, 148 P.2d 611.) If this be so, the equitable jurisdiction of the trial court was not invoked by these motions, provided they were timely made, as it would have been under the remaining provisions of section 473, aside from the clerical mistake provision. (See Penland v. Goodman, 44 Cal.App.2d 14, 17–19, 111 P.2d 913; Waller v. Weston, 125 Cal. 201, 203, 57 P. 892; Richert v. Benson Lumber Co., 139 Cal.App. 671, 674, 34 P.2d 840.)

A motion to set aside a void judgment must be made within a reasonable time. In this case the motions under consideration were made about four months following the entry of the default judgment and about five months following the entry of the default. It would seem clear that such a peried of time is a reasonable one.7 (See Estate of Estrem, 16 Cal.2d 563, 571, 107 P.2d 36; Wellborn v. Wellborn, 55 Cal.App.2d 516, 524–525, 131 P.2d 48; City of Los Angeles v. Morgan, supra, 105 Cal.App.2d 726, 730, 234 P.2d 319; Richert v. Benson Lumber Co., supra, 139 Cal.App. 671, 674–676, 34 P.2d 840; cf. Munoz v. Lopez, 275 Cal.App.2d 178, 181–183, 79 Cal.Rptr. 563.)

Dr. Houts contends that in any event defendant partnership and defendant corporation should be estopped to challenge the validity of the service of summons upon them. He relies upon five New York cases, mainly from a trial court, and the decision of a federal district court sitting in New York City.8 These cases hold generally that where a defective service of summons has resulted in actual notice to a defendant in time for him to defend the action, any defects in the manner of service shall be overlooked, especially when refiling of the action would be barred by the statute of limitations. Dr. Houts concedes that California has not gone this far, but argues that these defendants should be estopped here, as the defendant was in Tresway Aero, Inc. v. Superior Court, 5 Cal.3d 431, 433, 96 Cal.Rptr. 571, 487 P.2d 1211, from obtaining a dismissal of the action pursuant to section 581a for failure to serve summons within three years.

We do not regard Tresway as applicable. There, the defendant took affirmative action by obtaining from plaintiff an extension of time in which to answer and this extension went beyond the three-year period. Here, there was no corresponding affirmative action on the part of these defendants. Their only action in the suit under review was to make and support the motions now before us.

Dr. Houts also calls our attention to two other 581a cases (Merner Lumber Co. v. Silvey, 29 Cal.App.2d 426, 428–429, 84 P.2d 1062; O'Keefe v. Miller, 231 Cal.App.2d 920, 927, 42 Cal.Rptr. 343) and a third case (Brown v. Douglas Aircraft Co., 166 Cal.App.2d 232, 239, 333 P.2d 59). None appears applicable. Brown involved a waiver of defective service by counsel for the defendant involved. In O'Keefe and Merner the appellate courts were satisfied that certain conduct on the part of the defendants amounted to a general appearance in the action or the equivalent of service and return of summons. No such situation obtains here.

Dr. Houts has advanced another theory of estoppel. This is that these defendants caused the defective service upon them by the corporation's failure to file the annual statement of names and addresses of its officers, for purpose of service of process, required by Corporations Code section 3301. In support of this equitable position he cites Civil Code section 3517 that ‘no one can take advantage of his own wrong‘.

This theory is an appealing one. The trouble with it, however, is that there is no indication that the Legislature intended to impose this particular sanction for non-compliance with this section. Instead, the Legislature in Corporations Code section 3301.1 imposed the sanction of suspension of corporate powers by the Secretary of State. (Cf. Gensler, et al. v. Barrett, Inc., Cal., 103 Cal.Rptr. 247, 499 P.2d 503 (filed July 25, 1972).) Apparently no such suspension of the defendants' corporate powers has occurred.

Assuming for the sake of discussion only that jurisdiction of a court over the person of a defendant can be acquired by estoppel, we see no basis for estoppel here. Estoppel aside, jurisdiction over the person of a defendant can be obtained only (1) involuntarily, by proper service of process upon him9 (2) voluntarily, by his consenting in some manner to such jurisdiction, as by a general appearance in the action. (See 1969 Judicial Council Report, supra, 74–75.) In this case the service of summons upon these defendants was improper and neither consented to the court's jurisdiction over their persons.

Consequently, as previously stated, the default judgment against them is void. The judgment being void, the writ for its execution is likewise void. (See Salveter v. Salveter, 11 Cal.App.2d 335, 337, 53 P.2d 381.)

The general demurrer of the real party in interest, Dr. Richard E. Houts, to the petition for writ of mandate is overruled. The alternative writ of mandate is discharged. Let a peremptory writ of mandate issue requiring respondent superior court to vacate its order denying the motions of defendant partnership and defendant corporation to quash service of summons upon them in the action in said court entitled, Richard E. Houts, M.D. v. Pasadena Medi-Center Associates, et al., and numbered NEC 10559, to vacate their defaults therein, to quash the writ of execution issued therein and to vacate its levy and to make in lieu thereof an order granting said motions.

FOOTNOTES

1.  We have taken judicial notice of the file of respondeat superior court in said action.

2.  This mistake in the service of the summons was made because Houts' counsel relied on a 1968 application of the corporation for a permit to issue certain stock. This application erroneously showed Binney, Sr. to be secretary-treasurer of the corporation. This mistaken reliance occurred because the corporation had never filed the annual statement of the names and the addresses of its officers required by Corporations Code section 3301.

3.  This ignorance on their part apparently continued until after the default judgment had been entered.

4.  All sections hereinafter referred to are in the Code of Civil Procedure unless otherwise indicated.

5.  Section 416.10(b) reads:‘A summons may be served on a corporation by delivering a copy of the summons and of the complaint:‘. . .‘(b) To the president or other head of the corporation, a vice president, a secretary or assistant secretary, a treasurer or assistant, a general manager, or a person authorized by the corporation to receive service of process;’Section 416.40(a) reads:‘A summons may be served on an unincorporated association (including a partnership) by delivering a copy of the summons and of the complaint:‘(a) If the association is a general or limited partnership, to the person designated as agent for service of process as provided in Section 24003 of the Corporations Code, or to a general partner or the general manager of the partnership;’

6.  The State Judicial Council and the State Bar cosponsored the Jurisdiction and Service of Process Act. (See Review of Selected 1969 Code Legislation (Cont.Ed. Bar) p. 67.) The report sets proposed act with clarifying commentary.

7.  Dr. Houts claims that under Civil Code section 2313 this period was almost six months because it was not until November 22, 1971 that the present counsel for the partnership and the corporation obtained the necessary ratification of its authority to make and support the motions under review.In this connection it is of interest to note that the fees of the present counsel for these defendants are being paid entirely by their other client in this proceeding, petitioner Boyd L. Jefferies.

8.  See Marcy v. Woodin, 18 A.D.2d 944, 237 N.Y.S.2d 402, 403 (mistaken service on son instead of father); Green v. Morningside Heights Housing Corp., 13 Misc.2d 124, 177 N.Y.S.2d 760, aff'd, appellate division, 7 A.D.2d 708, 180 N.Y.S.2d 104 (mistaken service on defendant's receptionist); Pitagno v. Staiber, 53 Misc.2d 858, 280 N.Y.S.2d 178, 181 (mistaken service on defendant's wife); Davidman v. Ortiz, 63 Misc.2d 984, 314 N.Y.S.2d 198, 203 (mistaken service on defendant's attorney in defendant's presence); Erale v. Edwards, 47 Misc.2d 213, 262 N.Y.S.2d 44, 45 (mistaken service through apartment house janitor); Lumbermens Mutual Casualty Co. v. Borden Co., D.C., 268 F.Supp. 303, 309–310 (mistaken service on similarly named and related corporation).The rationale of these cases would appear to be that if defective service of process has served its funcition of notifying a defendant of the existence and basis generally for the action against him in time for him to defend the action, it should be treated as effective service.

9.  This is why actual knowledge by the defendant of the existence of the action against him is not the equivalent of due service of process upon him. (See Waller v. Weston, supra, 125 Cal. 201, 203, 57 p. 892.)

COBEY, Associate Justice.

FORD, P. J., and ALLPORT, J., concur.

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