McDONALD v. SEVERY (1935)

Appeal by defendant Electrotone Corporation of America, Limited, from an order vacating a dismissal of this action against appellant.

This action was brought on November 1, 1933, by plaintiff as assignee of ten claimants to recover wages due from defendants. On May 9, 1934, defendant Severy entered into a written agreement with C. S. Murphy and associates, as parties of the first part, by which, after reciting that the latter had a claim for labor and the filing of this action, Severy agreed to confess judgment, to pay $500 on or before May 20, 1934, and assigned and agreed to assign certain property as security for the performance of the agreement. It was also agreed that execution on the judgment be stayed until July 20, 1934, and that the parties of the first part would forthwith file a dismissal of the action as against defendant Electrotone Corporation. The dismissal was executed, dated April –, 1934, delivered to the attorney for Severy and filed May 15, 1934. Appellant asserts that no summons or process of any kind was ever served upon it and no appearance made in its behalf.

In August, 1934, plaintiff served notice of motion to vacate the dismissal upon counsel for defendant Severy, defendant Electrotone Corporation having apparently not yet been served in the action, supported by an affidavit by Clifford S. Murphy in which, among other things, it was alleged that the written request for a dismissal was delivered to the attorney for Severy upon the express understanding that it was not to be filed until the stipulated $500 had been paid and all other arrangements contained in the agreement had been carried out, but that, contrary to this agreement and without paying the $500, Severy caused the dismissal to be filed and secured an order for the dismissal of the action. These allegations were denied by the affidavit of Severy. The court decided the issues thus raised against Severy and made the order vacating the order of dismissal and extending the time of Electrotone Corporation to plead to the complaint, from which order this appeal is taken.

The finding of the trial court upon the issues of fact raised by the affidavits is conclusive on appeal. Since that court found that the dismissal was filed contrary to and in violation of the understanding between the parties, the court properly set the dismissal aside. The fact that the written agreement provided for a dismissal forthwith is not, as contended by appellant, conclusive. If, as alleged in the Murphy affidavit, which obviously was accepted by the court as correctly stating the facts and which supports the court's order, the contract itself was not to become effective and the dismissal was not to be filed until the $500 had been paid, the filing thereof prior to such payment was unauthorized and the court, acting under section 473 of the Code of Civil Procedure, did not abuse its discretion in setting the dismissal aside. In the absence of a clear showing of abuse of such discretion, the order of the trial court will not be disturbed on appeal. Waybright v. Anderson, 200 Cal. 374, 377, 253 P. 148. Furthermore, as stated in the case cited, it is the policy of the law to favor, wherever possible, a hearing on the merits.

While making the contention, appellant has cited no authority that the court below could not act upon proof by affidavit. Affidavits may be used in support of motions under section 473 of the Code of Civil Procedure and other motions, and section 2009, Code of Civil Procedure, provides for the use of affidavits as evidence upon motions.

Appellant's argument based on the law governing the rescission of contracts is not in point. We are not dealing with an action for rescission.

It is argued that appellant should have had notice of the motion to vacate the order of dismissal, although in the same breath it is contended that at the time of the motion it had not been served in the action. No authority is cited that in such a case appellant was entitled to notice. The court had before it the simple question of vacating a dismissal which would not have been ordered had the court known the facts as it found them on the hearing of the motion. To this proceeding appellant was not a necessary party as, so far as the record shows, it had not appeared in the action and was at that time an entire stranger to what had gone before.

The order vacating the dismissal is affirmed.

I concur in the opinion of Justice FRICKE. While the Electrotone Corporation was not charged with fraud in the procurement of the contract under which the dismissal was obtained, nevertheless the contract was made for its benefit and the contract's provisions could be voided under the circumstances of this case both for fraud and for failure of consideration, not only as to the maker of the contract, but also as to the party for whose benefit it was made.

It is true that the corporation was not served with notice of the motion to vacate the dismissal, but it had not yet appeared in the action; indeed it had not yet been served with summons and a copy of the complaint. Under the circumstances of this case, it was not entitled to notice of the motion to vacate the dismissal. Sections 650 and 1014, Code Civ. Proc.

While it is the general rule that a dismissal of an action finally terminates it, this does not mean that the order dismissing the action is not subject to direct attack under section 473 of the Code of Civil Procedure. 9 Cal. Jur. 517, and cases cited.

I dissent. Plaintiff filed the action naming two defendants. He then entered into an agreement in writing with one of them, defendant Severy, by which Severy agreed to pay $500 on or before May 20, 1932, and plaintiff agreed to “forthwith file a dismissal * * * against Electrotone Corporation of America,” the other defendant. The dismissal was delivered to Severy's attorney and filed on May 15, 1934. Plaintiff sought an order of court vacating the dismissal and based his motion upon an affidavit in which facts are set forth charging fraud and misrepresentation on the part of defendant Severy. It is not charged in the affidavit that defendant Electrotone Corporation, appellant herein, was guilty of fraud or misrepresentation. At the time the order vacating the dismissal was entered, defendant Electrotone Corporation had not been served with notice of the motion to vacate the dismissal.

Under these circumstances, the fraudulent acts of the other defendant, as impliedly found by the court, cannot be imputed to appellant. There is nothing in the record to show that defendant corporation took any part in arranging for the dismissal. The record discloses that the action was terminated as to defendant corporation without notice and thereafter reinstated as to said defendant without notice. In my opinion the general rule that a dismissal finally terminates the action is applicable here. In Smurda v. Superior Court, 266 P. 843, 845, this court said: “The effect of a dismissal, where the answer seeks no affirmative relief * * * is ipso facto to terminate the case and oust the court of jurisdiction to proceed.” Huntington Park Imp. Co. v. Superior Court, 17 Cal. App. 692, 121 P. 701; Hopkins v. Superior Court, 136 Cal. 552, 69 P. 299; Kaufman v. Superior Court, 115 Cal. 152, 46 P. 904.

FRICKE, Justice pro tem.