CROWLEY v. MODERN FAUCET MFG CO (1954)

This appeal has to do with two lawsuits growing out of one business transaction.

In the first action plaintiffs' third amended complaint alleges that plaintiffs and defendants entered into an oral agreement whereby plaintiffs were given the exclusive right to buy from defendants a number of patented shower heads. Other of the many parts of the agreement alleged need not be repeated. The complaint then alleges breach of the agreement and damages therefor.

Paragraphs XI and XII of the complaint read:

‘XI. That a written memorandum of said agreement, signed by the defendants, is set forth in a letter dated October 17th, 1950 a copy of which is attached hereto as Exhibit ‘A’ and made a part hereof as though set forth herein in full.

‘XII. That a written guarantee and memorandum of said agreement, signed by the defendants, is set forth in a letter dated January 15th 1951, a copy of which is attached hereto as Exhibit ‘B’ and made a part hereof as though set forth herein in full.'

Defendants' plea by demurrer to the complaint was sustained without leave to amend, and judgment followed. Plaintiffs' appeal from that judgment was dismissed by the District Court of Appeals.

It appears from a memorandum of decision by the trial judge that the demurrer was sustained for the reason that action on the alleged contract, not being in writing, was barred by the statute of frauds. Civil Code, § 1624, subd. 1; Code of Civil Procedure, § 1973, subd. 1.

In the second action, now before this Court, defendants' motion for dismissal was granted, and judgment followed. The motion was granted because the Superior Court determined that the cause of action pleaded was res judicata, and entirely concluded by the judgment in the first action.

Plaintiffs appeal from this judgment.

Therefore it becomes necessary to compare the complaints in the two cases, and to determine whether plaintiffs have now successfully pleaded a new and different cause of action. Keidatz v. Albany, 39 Cal.2d 826, 249 P.2d 264; Cf. Sutphin v. Speik, 15 Cal.2d 195, 99 P.2d 652, 101 P.2d 497.

The complaint in this action alleges that defendants signed and delivered to plaintiffs their written memorandum of agreement to sell the shower heads exclusively to plaintiffs. All of the other allegations of the complaint are substantially the same as in the first action.

Plaintiffs contend that the complaint in this action states a new and different cause of action, and thus brings their pleading within the rules stated in the Keidatz case. Many res judicata cases are collected and cited in the decision in that case.

The rules stated in the Keidatz case may be summarized as follows:

1. The procedural effect of a judgment on the merits to the extent that it adjudicates that the facts alleged to not constitute a cause of action is a bar to a second action alleging the same facts.

2. Even though different facts may be alleged in the second action, if the demurrer was sustained in the first action on a ground equally applicable to the second, the former judgment will be a bar.

3. If, on the other hand, new or additional facts are alleged that cure the defects in the original pleading, the former judgment is not a bar to the subsequent action.

4. A judgment entered on demurrer does not have the same broad res judicata effect as a judgment entered after trial of a case. Such a judgment is analogous to the rule that was applicable to nonsuits before section 581c was added to the Code of Civil Procedure in 1947. Before this amendment to the Code, a judgment of nonsuit was not on the merits, and the plaintiff could start anew and recover judgment if he could prove sufficient facts in the second action.

Defendants argue that the reference to the writings in the complaint in the first case made a written contract one of the essential elements of the pleading and thus put in issue the very facts alleged in the complaint in this case.

This Court has read the pleadings, and the affidavit of counsel for defendants, and has endeavored to put itself in the position of the Superior Court and the parties at the time of the decision in the first case. It seems clear that although reference was made to the writings in the complaint, the case was submitted to the Superior Court and decided on the theory that the contract pleaded was not in writing, and that plaintiffs' case was, therefore, barred by the statute of frauds.

So, trying this case in accordance with the rules applied in the Keidatz case, it is concluded that the present complaint states a new and different cause of action, and that plaintiffs are entitled to their day in court. Then they may prove, if they can, that the cause of action is founded upon a written contract.

Defendants argue that the judgment should be affirmed on the further ground that the second action is ‘sham and frivolous.’ However, this Court can not go so far as to say that the history of this case shows clearly that the pleading is sham and without merit. See McKenna v. Elliott & Horne Co., 118 Cal.App.2d 551, 258 P.2d 528. We think the legal philosophy of this case requires submission of the controversy to a trial court for determination after a hearing on the merits.

The judgment is reversed.

DRAPEAU, Justice.

WHITE, P. J., and DORAN, J., concur.