JOHNSON v. FIREMAN FUND INSURANCE COMPANY

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Court of Appeal, Fifth District, California.

Diane Camille JOHNSON, a minor, etc., Petitioner, v. SUPERIOR COURT OF KERN COUNTY, Respondent; FIREMAN'S FUND INSURANCE COMPANY, Real Party in Interest.

Civ. 1893.

Decided: March 16, 1973

Sims & Solomon, Bakersfield, Burke West, Ridgecrest and Gabriel W. Solomon, Bakersfield, for petitioner. No appearance for respondent. McCormick, Barstow, Sheppard, Coyle & Best and R. A. McCormick, Fresno, for real party in interest.

OPINION

By this petition, Diane Camille Johnson, a minor (referred to as ‘Diane’), through her father and guardian ad litem, William F. Johnson, asks this court to direct the Superior Court of Kern County to set aside its order denying petitioner's motion for summary judgment and to direct that court to enter an order granting summary judgment in her favor and against the real party in interest, Fireman's Fund Insurance Company (referred to as ‘Fireman's') for the sum of $100,000, plus interest from November 18, 1971.

Fireman's issued a liability insurance policy to Anna and Jerry Little, husband and wife, with limits of $100,000. On June 28, 1970, at Little residence, Anna was operating a power-driven lawn mower which struck Diane's left foot, resulting in its amputation. Diane was then seven years of age.

Diane sued Anna and Jerry, alleging negligent operation of the lawn mower by Anna, and prayed for $350,000 general damages plus special damages. The sole basis of potential liability alleged as to Jerry was that Anna, at the time of the accident, was acting as the agent of Jerry in operating the lawn mower.

Fireman's assumed the defense of the personal injury action on behalf of Anna and filed an appearance on her behalf. Though demanded by Jerry to assume the defense on his behalf and advised by Diane that Jerry's default would be entered if they refused to file an appearance, Fireman's refused to furnish a defense to Jerry and did not file an appearance on his behalf.

No appearance having been filed by Jerry, on November 18, 1971, pursuant to a written ‘Stipulation for Entry of Judgment and Confession Thereof.’ a clerk's judgment (Code Civ.Proc., §§ 1132–1134) was entered in favor of Diane in the sum of $195,000 and in favor of her father, William F. Johnson, in the sum of $5,000 against Jerry. The confession of judgment was executed pursuant to a ‘Compromise Agreement’ between Diane and William F. Johnson and Jerry wherein Jerry assigned all his rights against Fireman's to Diane and William F. Johnson arising out of Fireman's denial of coverage to Jerry and refusal to defend Jerry and failure to effect settlement within the policy limits. Diane and William F. Johnson agreed they would abstain from any action to collect the judgment from Jerry.

Neither the compromise nor the confession of judgment was approved by thecourt pursuant to Code of Civil Procedure section 372.

On April 4, 1972, in a separate action in declaratory relief, it was adjudged that Fireman's policy covered both Anna and Jerry.

On April 18, 1972, Diane and William F. Johnson notified Fireman's of the confession of judgment entered five months before, and on May 1, 1972, Diane and William F. Johnson commenced the instant suit against Fireman's pursuant to the above mentioned assignment of rights contained in the compromise agreement. The complaint, commonly referred to as an ‘excess suit,’ is framed upon the theory that Fireman's breached its duty to its insured, Jerry, by allegedly in bad faith denying coverage to him and in refusing to defend him and for compensatory and punitive damages in the total amount of $305,000. (Sawyer v. State Farm Fire & Casualty Co. (1968) 69 Cal.2d 801, 73 Cal.Rptr. 232, 447 P.2d 344; Crisci v. Security Insurance Co. (1967) 66 Cal.2d 425, 58 Cal.Rptr. 13, 426 P.2d 173; Geddes & Smith v. St. Paul Mercury Indemnity Co. (1959) 51 Cal.2d 588, 334 P.2d 881; Drinnon v. Oliver (1972) 24 Cal.App.3d 571, 101 Cal.Rptr. 120; Zander v. Texaco, Inc. (1968) 259 Cal.App.2d 793, 66 Cal.Rptr. 561; Pacific Indemnity Co. v. Liberty Mutual Insurance Co. (1966) 239 Cal.App.2d 346, 48 Cal.Rptr. 667.)

In Diane's motion for summary judgment she waives all claims against Fireman's should the motion be granted, except for the $100,000 balance due upon the judgment against Jerry after crediting $100,000 paid by Fireman's on behalf of Anna pursuant to the minor's compromise proceedings hereinafter referred to.

Fireman's filed its answer to the complaint and concurrently filed a cross-complaint on July 7, 1972. In these pleadings, Fireman's states in substance that (1) the judgment in the personal injury action against Jerry was the result of fraud and collusion between Diane and Jerry; (2) it was not guilty of oppressive and outrageous misconduct in denying coverage to Jerry and refusing to defend him; (3) the personal injury action was still pending as to Anna and no judgment had been entered against Anna, the agent, at the time the confession of judgment was entered against Jerry, the principal, and that therefore the judgment against Jerry was premature and void.

Later, on August 2, 1972, the personal injury action1 against Anna was compromised and settled, which was approved in a minor's compromise proceeding (Code Civ.Proc., § 372) in the superior court. Under the settlement, Fireman's paid the policy limits of $100,000 on behalf of Anna alone to Diane and William F. Johnson ($95,000 to Diane and $5,000 to William F. Johnson). On September 15, 1972, the personal injury action was dismissed as to Anna alone. No judgment was ever entered in the action against Anna.

Fireman's affidavit filed in opposition to the motion raises only the defense of the invalidity of the confession of judgment due to its prematurity and the failure to have the compromise and judgment entered against Jerry approved by the court as required by Code of Civil Procedure section 372. The facts relating to these issues are undisputed. No issue of fact has been presented on the questions of extrinsic fraud or collusion or the other issues; Fireman's concedes that it does not resist the motion on these grounds, that it has raised no disputed question of fact and that the question to be resolved is solely one of law pertaining to the invalidity of the confession of judgment based on its prematurity and the lack of court approvalof the compromise and confession of judgment.

Where it appears that there is no material issue of fact to be tried and the question is solely one of law as to whether the claim of the moving party is tenable on the undisputed facts, and if petitioner's legal contentions are correct, then denial of the motion by the trial court constitutes an abuse of discretion and mandate is the proper remedy. (Brown v. Superior Court (1971) 15 Cal.App.3d 187, 188, 93 Cal.Rptr. 33; Burke Concrete Accessories, Inc. v. Superior Court (1970) 8 Cal.App.3d 773, 775, 87 Cal.Rptr. 619.)

So far as appears, neither Diane nor Jerry is displeased with the judgment entered on the confession. It also appears that no legal motion to set aside the judgment within the allowable six months pursuant to Code of Civil Procedure section 473 was filed, though Fireman's was advised of its entry within the six months and after the adjudication that its policy covered Jerry. The attack on the judgment by Fireman's, therefore, is a collateral attack and necessarily can succeed only by demonstrating that the confession of judgment when entered was void and not merely improper or voidable by reason of an error within the court's jurisdiction. (5 Witkin, Cal.Procedure, Attack on Judgment in Trial Court, § 5, p. 3588, § 4, p. 3587, § 10, p. 3590; 1 Witkin, Cal.Procedure, Jurisdiction, § 180, p. 708, § 184, p. 713; Kooper v. King (1961) 195 Cal.App.2d 621, 627–629, 15 Cal.Rptr. 848.)

Respondents argue that the confession of judgment was void by analogy to those cases holding that ‘. . . a judgment on the merits favorable to an employee in an action by a third person for a tort of the employee is a bar to an action by the third person against the employer where the latter's asserted liability for the tort rests upon respondeat superior and not his independent tort. [(Citations].) And the rule is the same whether the actions are separate or the employee and employer are joined in the same action.’ (Freeman v. Churchill (1947) 30 Cal.2d 453, 461, 183 P.2d 4, 8. See also Ponce v. Tractor Supply Co. (1972) 29 Cal.App.3d 500, 505, 105 Cal.Rptr. 628; Plott v. York (1939) 33 Cal.App.2d 460, 91 P.2d 924.)

In Plott v. New York, supra, 33 Cal.App.2d 460, 91 P.2d 924, it was held that in a personal injury action against an employer and his employee in which the default of the employer is entered, it is proper for the court to subsequently refuse to enter a default judgment against the employer after a jury verdict has exonerated the employee.

In Ponce v. Tractor Supply Co., supra, 29 Cal.App.3d 500, 105 Cal.Rptr. 628, which was a personal injury action against both the employer and employee based upon respondeat superior, a default judgment was obtained against the employee for $150,000. In a later jury trial a verdict for $180,000 was returned against the employer. The court directed the trial court to reduce the judgment against the employer to $150,000 and said:

‘There is ample authority for the proposition that a party secondarily liable is entitled to benefits of a prior judgment or ruling in favor of the primary tortfeasor. Thus, a prior judgment in favor of an employee bars an action against an employer whose liability could be predicated only on respondeat superior. (Freeman v. Churchill, 30) Cal.2d 453, 461, 183 P.2d 4; Spruce v. Wellman, 98 Cal.App.2d 158, 162, 219 P.2d 472; Hilts v. County of Solano, 265 Cal.App.2d 161, 176, 71 Cal.Rptr. 275.)

‘In Daniel v. Jones, 140 Cal.App. 145, at page 147, 35 P.2d 198, at page 199, the court stated, ‘Since there can be but one verdict for a single sum against the driver and his employer [citation], and since the liability of the latter arises solely by reason of the detriment caused by the former, the judgments against defendant corporation will be reduced to conform to the judgments against defendant Jones, . . .’ (See also Luscher v. Jones, 140 Cal.App. 743, 744, 35 P.2d 87, and Bradford v. Brock, 140 Cal.App. 47, 50–51, 34 P.2d 1048.) No other California decision has been found which holds that a recovery against a party secondarily liable is limited to the amount recoverable from the primary tortfeasor, but ‘The rule is established, in most jurisdictions in which the question has arisen, that an amount recovered as actual or compensatory damages in a tort action against a servant or other person who was the active tortfeasor is the limit of the amount recoverable as such damages against the master or other person whose responsibility is solely derivative.’ (141 A.L.R. 1164–1173.) Thus, the damages determined against the primary tortfeasor in the default judgment would be applicable as an upper limit to the one secondarily liable.' (At p. 505, 105 Cal.Rptr. at p. 631.)

This rule is a specialized application in an employer-employee situation of the broader principles stated in Adams Mfg. & Engineering Co. v. Coast Centerless Grinding Co. (1960) 184 Cal.App.2d 649, at page 655, 7 Cal.Rptr. 761, at page 765, where the court said:

‘The rule is definitely established that where there are two or more defendants and the liability of one is dependent upon that of the other the default of one of them does not preclude his having the benefit of his codefendants establishing, after a contested hearing, the non-existence of the controlling fact: in such case the defaulting defendant is entitled to have judgment in his favor along with the successful contesting defendant.’

In Mirabile v. Smith (1953) 119 Cal.App.2d 685, 689, 260 P.2d 179, prohibition issued to prevent the court from entering a judgment against a defaulting defendant until the issues common to his liability and that of the litigating defendants had been tried. In Nicholls v. Anders (1936) 13 Cal.App.2d 440, 56 P.2d 1289 it was held to be proper to quash execution issued on a default judgment after a jury had exonerated persons jointly obligated with the defaulting party.

It is clear, therefore, both on principle and on precedent, that had the cause at bench proceeded to judgment against Anna for the amount of $100,000 the confession of judgment for $200,000 theretofore entered against Jerry (principal) would be required to be limited and reduced to $100,000 (Ponce v. Tractor Supply Co., supra, 29 Cal.App.3d at p. 505, 105 Cal.Rptr. 628; Daniel v. Jones (1934) 140 Cal.App. 145, 147, 35 P.2d 198) and the satisfaction of the judgment as to Anna would have inured to the benefit of Jerry. However, the cause as to Anna has been settled and compromised and dismissed. It did not and will not proceed to trial and judgment against Anna. There has not been and will not be a judgment to operate as a collateral estoppel (see Ponce v. Tractor Supply Co., supra, 29 Cal.App.3d 500, 105 Cal.Rptr. 628) or otherwise limit the amount of the judgment that was entered against the principal (Jerry).

Counsel has not cited and our research has not revealed a single case holding a default judgment entered against a principal void in the absence of a subsequent different adjudicated result as to the agent.

While it was undoubtedly improper to enter a confession of judgment against Jerry prior to the judicial determination of the action, including the amount of damages against Anna, the error was one within the jurisdiction of the court and did not render the resulting judgment void. In Morehouse v. Wanzo (1968) 266 Cal.App.2d 846, at page 852, 72 Cal.Rptr. 607, at page 610, the court said:

‘The question of whether the court should render a judgment against a defaulting defendant when there are several defendants is one that is entrusted to the discretion of the court by the provisions of section 579 of the Code of Civil Procedure. [ ](Citations.)’

(See Code Civ.Proc., § 579.)

Anna having been dismissed, the posture of the case at the time of the motion for summary judgment and now is identical to the which would exist if the principal alone were sued without joining the agent and the agent, because of unavailability, is not and never will be a party. It is well established that the principal alone may be sued without joining or naming the agent and proof is admissible that the acts alleged were in fact done by an agent. (Burnett v. Boucher (1951) 108 Cal.App.2d 37, 238 P.2d 1; Pfaff v. FairHipsley, Inc. (1965) 232 Cal.App.2d 274, 42 Cal.Rptr. 624.) Under these circumstances, we hold that the confession of judgment against Jerry was not void ab initio so as to justify setting it aside pursuant to a collateral attack. It is apparent that since its original entry it has become a separate valid judgment within the meaning of Code of Civil Procedure section 579, in that any illegality with which it may have been infected at the time of its original entry has been cured by subsequent events.

Having reached this conclusion upon the assumption that under the facts in this case a confession of judgment (Code Civ.Proc., §§ 1132–1134) should be treated the same as a judgment by default, we do not reach petitioner's contention that there is a distinction between these types of judgments which renders the precedents dealing with default judgments upon which Fireman's relies inapplicable to a confession of judgment.

Fireman's second and last contention is that the confession of judgment is void and subject to collateral attack because neither the underlying compromise agreement nor the judgment itself was approved by the court pursuant to the provisions of Code of Civil Procedure section 372.

Code of Civil Procedure section 372 in pertinent part provides:

‘The guardian of the estate or guardian ad litem so appearing for any minor, or insane or incompetent person in any action or proceeding shall have power, with the approval of the court in which such action or proceeding is pending, to compromise the same, to agree to the order or judgment to be entered therein for or against his ward, and to satisfy any judgment or order in favor of said ward or release or discharge any claim of said ward pursuant to such compromise.’

Significantly, neither Diane not her father, William F. Johnson, nor Jerry Little is contesting either the validity or the amount of the confession of judgment. In the petition for compromise of Diane's settlement against Anna the judgment by confession against Jerry was extensively referred to and the fact of its existence was one of the cogent considerations alleged in the petition why the court should approve the compromise of Diane's claim against Anna for $100,000.

We have found no authority precisely in point, but by analogy to precedent dealing with a failure to appoint a guardian ad litem to conduct litigation we are impelled to the conclusion that the failure to obtain the approval of the compromise or of the judgment herein under the circumstances renders the judgment voidable, rather than void, and therefore not subject to collateral attack in these proceedings.

In Johnston v. Southern Pacific Co. (1907) 150 Cal. 535, at page 539, 89 P. 348, at page 350, the court stated:

‘It has long and consistently been held in this state that a failure to appoint a guardian ad litem, or to sue by one, while irregular, is only that, that the defect is not a jurisdictional one, and therefore the judgment is not void.’

In Briggs v. Briggs (1958) 160 Cal.App.2d 312, at page 319, 325 P.2d 219, at page 223, the court said:

‘Improper failure to appoint a guardian ad litem does not affect the jurisdiction of the court that proceeded without such appointment to decide the case. [Citations.]

‘Undoubtedly, however, such a judgment made and entered without the appointment of a guardian ad litem against an incompetent who has no general guardian, may be vacated in a proceeding for that purpose ‘if no innocent purchaser has acquired rights under it.’ [Citation.]

‘The statutes regarding appointment of guardians ad litem were enacted to protect minors and insane and incompetent persons—not to preclude them from their legal rights. [Citation.]’

It thus appearing that the compromise and confession of judgment were in the best interests of the minor and that the judgment was not void but was at best voidable, it cannot be set aside in a collateral attack; it follows that the motion for summary judgment cannot properly be denied on the basis of the claimed invalidity of the judgment.

Because we have concluded that the failure to obtain approval of the compromise does not render the judgment subject to collateral attack in these proceedings, we find it unnecessary to pass upon petitioner's contention that by referring to the judgment against Jerry in the minor's compromise proceedings against Anna the underlying compromise agreement and confession of judgment were in fact approved by the court and the requirements of Code of Civil Procedure section 372 were thus satisfied. (See Morris v. Standard Oil Co. (1923) 192 Cal. 343, 348–351, 219 P. 998.)

Let a writ of mandate issue directing the Superior Court of Kern County to vacate and set aside its order denying petitioner's motion for summary judgment and directing that the court enter a summary judgment in favor of the petitioner and against Fireman's Fund Insurance Company as prayed.

FOOTNOTES

1.  The personal injury action and the declaratory relief action were filed in Stanislaus County and the confession of judgment was entered there, as was the judgment declaring the Fireman's policy to cover both Jerry and Anna. The personal injury action was subsequently transferred to Kern County and the minor's compromise proceedings were had in the latter county.

GEO. A. BROWN, Presiding Justice.

GARGANO and FRANSON, JJ., concur.

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