v. (1956)

This proceeding involves two appeals consolidated for hearing and decision.

The first appeal is taken from that portion of an order retaxing costs filed December 17, 1954, which granted the motion of defendant Palermo to retax costs on appeal as to the premiums on a surety bond to preserve an attachment on appeal. The second appeal is taken from a minute order of January 27, 1955, which granted the motion of defendant Palermo to enter satisfaction of judgment and to discharge the liens created by the recording of abstracts of judgment and to release all levies of attachment or execution.

On June 5, 1944 Emil Palermo, the owner of the real property and lessor of the Star Theatre, a motion picture theater in Stockton, brought an action against the lessee, Stockton Theatres, Inc., for declaratory relief to obtain a declaration by the Superior Court of San Joaquin County that the lease was void. On June 11, 1945, a judgment was made in Palermo's favor by the trial court declaring the lease void. Immediately thereafter Palermo brought an action for forcible detainer and a judgment was rendered in his favor, and he obtained possession of the theater in December, 1945, and remained in possession until August 11, 1948. In the meantime, Stockton Theatres, Inc. appealed both judgments and they were reversed. A history of this litigation is set forth in Palermo v. Stockton Theatres, Inc., 32 Cal.2d 53 et seq., 195 P.2d 1.

After the reversals of said judgments, Stockton Theatres, Inc. filed this action against Palermo for restitution of the Star Theatre and the benefits which Palermo derived from the operation of the theater. Plaintiff's complaint prayed for judgment against Palermo in the sum of $130,000 and against Forrest E. Macomber for the amount or amounts belonging to Stockton Theatres received by defendant Forrest E. Macomber.

At the trial an accounting was had and the court gave judgment April 24, 1951 that plaintiff should recover from Palermo the sum of $13,658.75. Both parties took an appeal from this judgment. Stockton Theatres' notice of appeal is dated June 7, 1951.

Plaintiff and appellant, Stockton Theatres, Inc., levied attachments concurrently with the filing of the action for restitution. After the judgment against Palermo and before notice of appeal, plaintiff filed an undertaking to preserve the attachments on appeal. Defendant Palermo moved to discharge the attachment on the ground that appellant had not complied with Section 946 of the Code of Civil Procedure. The motion was denied. Stockton Theaters, Inc., v. Palermo, 1952, 109 Cal.App.2d 616, 241 P.2d 51. The appeal of plaintiff and appellant resulted in a modification of the judgment in favor of plaintiff and the judgment against Palermo was accordingly increased to $45,992.19. Stockton Theatres, Inc. v. Palermo, 1953, 121 Cal.App.2d 616, 264 P.2d 74. The interest on the judgment exceeded $9,000.

The decision of this court granted the appellant, Stockton Theatres, Inc., the right to recover its costs on appeal. Upon the coming down of the remittitur from the District Court of Appeal on January 29, 1954, Stockton Theatres, Inc. filed its memorandum of costs and disbursements on appeal. Included was an amount of $6,980.49 for premiums on the bond to preserve the attachments on appeal. Defendant Palermo thereafter filed a motion to tax costs on appeal, objecting among other things to the inclusion of the bond premiums as a cost. The court granted defendant Palermo's motion to tax costs on appeal as to this item, although his other objections to the cost bill were denied. Costs were taxed at $1,097.37. A certified check for this amount was sent to appellant's attorney which was refused. Although respondents state that there were no strings attached, appellant states that had appellant accepted this offer on the terms enunciated in the letter of transmittal, it would have acknowledged that the judgment is fully satisfied, which is not the case, since the matter of costs has not been finally settled. Respondents state that the check is still available at any time.

Following the granting of Palermo's motion to tax the item covering premiums on the surety bond, Palermo gave notice of a second motion to require Stockton Theatres, Inc. to release all attachments and enter a satisfaction of judgment. This motion was opposed by Stockton Theatres, Inc. on the ground that there was still unpaid interest on the judgment owing to Stockton Theatres, Inc., and on the ground that an appeal from the order retaxing costs had been taken by Stockton Theatres, which was filed on January 4, 1955. The second motion of Palermo came on to be heard on January 25, 1955, and at the hearing $32.78 was paid as owing on interest. On January 27, 1955, while the appeal from the order retaxing costs was pending, defendant's motion that satisfaction of judgment be entered, that the levy of attachment be released, and the liens created by recordation of abstracts of judgment be discharged was granted.

Appellant makes two major contentions:

‘I. The bond premiums paid by Stockton Theatres, Inc., to preserve its attachment on appeal are recoverable as part of costs on appeal under Section 1035 of the Code of Civil Procedure.’

‘II. It was error to order that satisfaction of judgment be entered and that the judgment lien and levy of attachment be released, since plaintiff's costs on appeal have not been paid and an appeal is pending from the order retaxing costs on appeal.’

Appeal from Order Taxing Costs

Appellant contends that although, prior to the enactment of Section 1035 of the Code of Civil Procedure in 1951, it had been held that bond premiums were not allowable as part of the costs, that section changed the law. Said section 1035 reads as follows:

‘Whenever in this code or by other provision of law costs are allowed to a party to an action or other proceeding, such costs shall include the premium on any surety bond which was procured by the party entitled to recover costs in connection with the action or proceeding unless the court determines that the bond was unnecessary.’

Appellant argues that the legislature had the power to permit recovery of bond premiums paid to preserve an attachment on appeal and the legislature intended to permit recovery of such premiums. Conceding that Section 961 of the Code of Civil Procedure delegated to the Judicial Council the power to prescribe rules for practice and procedure on appeal, that Section 1034 of the Code of Civil Procedure was amended to provide that costs shall be awarded as provided in rules adopted by the Judicial Council, and Rule 26(c) of the Rules on Appeal adopted by the Judicial Council lists certain items recoverable as costs which do not include bond premiums, nevertheless the appellant contends that the rules of the Judicial Council are subject to the amending power of the legislature, and any rule in conflict with a legislative enactment must give way. Appellant contends that the words ‘whenever in this code or by other provision of law costs are allowed to a party’ must refer to the Rules on Appeal, since there is no indication that the legislature intended to permit recovery of bond premiums paid during the trial stage of an action but to deny recovery at the appeal level as the language of the section is plain and without exceptions, and, since there is no reason to make exceptions, Section 1035 in effect amended Rule 26(c) of the Rules on Appeal.

Appellant also contends that although premiums are not recoverable under Section 1035 if the court finds the bond ‘unnecessary’, the court did not base its order on the ground that the bond was unnecessary but on its interpretation of Section 1035, and its failure to so find implies that the bond was necessary. Appellant further urges that the facts demonstrate the necessity for the attachment.

Respondents, in reply, assert that Section 1034 of the Code of Civil Procedure provides that ‘In appeals from the superior and municipal courts, costs shall be awarded as provided in rules adopted by the Judicial Council’, and that Rule 26(c) of the Rules on Appeal specifies the items of costs that may be allowed on appeal and that the cost of surety bond is not one of the items listed. Respondents then argue that the legislature gave the Judicial Council the sole power to regulate the procedure and prescribe the rules on appeal, including costs on appeal, and that Section 1035 was intended to relate solely to proceedings in trial courts.

It is apparent that the trial court agreed with these views of respondents, for the court stated in its memorandum opinion:

‘It would seem in view of the provisions of 1034 CCP that had the Legislature intented to invade the field of costs on appeal the language of Section 1035 CCP would have been somewhat as follows: Whenever in this code or by other provision of law costs including costs on appeal are allowed, et cetera. The insertion of such language as ‘including costs on appeal’ would have indicated clearly and specifically the legislative intention. The absence of such language in view of the proximity of 1034 CCP and the specific and exclusive treatment of the subject of costs on appeal in the Judicial Council rules seems to require the conclusion that Section 1035 CCP has no reference at all to costs on appeal.

‘* * * [I]s it not reasonable to require the legislative intention to be clearly expressed rather than guess at it under the guise of construction, particularly when substantial rights are involved?’

The argument of respondents is persuasive but unconvincing. Section 1a of Article VI of our State Constitution, which was adopted in 1926, established the Judicial Council, and in enumerating the duties of the council provided in subsection (5) as follows:

‘Adopt or amend rules of practice and procedure for the several courts not inconsistent with laws that are now or that may hereafter be in force; and the council shall submit to the Legislature, at each regular session thereof, its recommendations with reference to amendments of, or changes in, existing laws relating to practice and procedure.’

In the introduction to the Rules on Appeal, published and issued by the Judicial Council, it is stated:

‘* * * Pursuant to this provision the Judicial Council adopted rules for the Supreme Court and District Courts of Appeal which became effective September 1, 1928. (See 204 Cal., p. xxxix.) These rules, as amended (see 18 Cal.2d 1), were in effect until July 1, 1943, and thereafter to a limited extent govern proceedings in appeals pending at that time.

‘In 1941 the legislature enacted the following statutes, which were amended by Chap. 4, Stats. of 1943:

‘Section 961 of the Code of Civil Procedure, providing:

“The Judicial Council shall have the power to prescribe by rules for the practice and procedure on appeal, and for the time and manner in which the records on such appeals shall be made up and filed, in all civil actions and proceedings in all courts of this State.

“The Judicial Council shall report the rules prescribed by it to the Legislature on or before March 31, 1943.

“The rules reported as aforesaid shall take effect on July 1, 1943, and thereafter all laws in conflict therewith shall be of no further force or effect.'

‘Pursuant to its constitutional authority and the authority given by these statutes, the Rules on Appeal (Rules 1–55) were adopted by the Judicial Council on March 30, 1943, and reported to the Legislature. They became effective July 1, 1943 (see Rule 53), and superseded the prior rules and inconsistent statutes. * * *’

Section 26 of said Rules on Appeal specifies the items of costs on appeal to which the prevailing party shall be entitled, and Section 1034 of the Code of Civil Procedure as amended in 1945, provides that in appeals from the superior and municipal courts costs shall be awarded as provided in the rules adopted by the Judicial Council.

Section 1035 of the Code of Civil Procedure, hereinbefore quoted, was adopted by the legislature in 1951, and we think it is clear that the legislature had the power to adopt it and that it superseded or amended any rule in conflict with it. For, as stated in Lane v. Superior Court, 104 Cal.App. 340, at page 344, 285 P. 860, at page 862:

‘* * * The rule-making power of the Judicial Council would seem to be limited by any existing law, the Constitution reserving to the Legislature and the people the primary and higher right to provide rules of procedure for our courts, with the secondary right in the Judicial Council, to adopt rules only, when and where the higher authority of the Legislature and the people has not been exercised.’

Respondents do not contend that the legislature did not have the power to provide in Section 1035 that premiums on a surety bond were not proper costs on appeal, but respondents argue, as did the trial court, that the legislature, in stating that ‘such costs shall include the premium on any surety bond which was procured by the party entitled to recover costs in connection with the action or proceeding’, intended such language to relate only to costs in the trial court. We are unable to agree with this construction because we believe it is contrary to well-settled rules of statutory construction. It is hardly necessary to cite authorities in support of the rule that when a statute is general in its terms any exemption or exception from its operation must be specified. The rule is stated in 23 California Jurisprudence, p. 743, as follows:

‘As a general rule, a court is not authorized, in the construction of a statute, to create exceptions not specifically made. In other words, if the statute announces a general rule and makes no exception thereto, the courts and make none—at least none which would be contrary to the terms of the act * * *.’

There appears to us no good reason why necessary bond premiums should be a proper item of costs in the proceedings in the trial court and not proper items in the proceedings on appeal. If the legislature in adopting Section 1035 in 1951 did not intend it to apply to costs on appeal it could easily have said so, and in view of the fact that the legislature has the benefit of the assistance of a well-trained and highly efficient Legislative Counsel Bureau, we think it a reasonable assumption that if Section 1035 was not intended to relate to costs on appeal, such an exception would have been written into the statute.

Respondents advance the further argument that since the appeal taken by appellant and bond posted was on June 7, 1951, and the effective date of Section 1035 of the Code of Civil Procedure was September, 1951, at the time appellant obtained its bond to continue the attachment, there was no statute in effect permitting the allowance of cost of surety bonds and it was settled that these were not allowable as costs even in a case not governed by the Rules on Appeal. However, we agree with appellant that the fact that the bond was obtained before the effective date of Section 1035 does not bar recovery of the premiums because at the time that the judgment for costs on appeal was entered and appellant's right to costs accrued, Section 1035 had been in force for some time. The judgment for costs would include such items as were allowed by statute or rule at the time the judgment was modified in accordance with the decision of this court upon appeal.

Respondent argue further that the trial court's action an striking the bond premium item from the cost bill was of itself a determination that the bond was unnecessary. But it is clear that the court based its decision upon the ground that Section 1035 did not relate to costs on appeal.

Appellant, in reply to this contention of respondents, states:

‘Section 946 of the Code of Civil Procedure requires that the undertaking for a bond to preserve an attachment on appeal be double the amount of the debt. The amount of the debt in this case was the amount claimed on appeal, $116,341.25, and double this amount is $232,682.50. The bond premium was 1% of this latter sum, amounting to $2,326.83 per year or a total of $6,980.49. (There is a credit against this sum of $791.12 from a recent premium refund.) The final amount recovered by appellant, including principal and interest, but without costs, was about $55,000.00.’

The judgment in the trial court was for only $13,658.75.

Appellant argues that in view of the fact that the court did not base its order on the ground that the bond was unnecessary its failure to so find implies that the bond was necessary and that this court under Section 956a of the Code of Civil Procedure should make such a finding.

While we have concluded that the court was in error in determining that Section 1035 did not relate to costs on appeal and that the order must therefore be reversed we do not believe that it can be held upon the limited record before us that the court made any decision upon the question as to whether or not the bond on appeal was necessary.

Appeal from Order Entering Satisfaction of Judgment and Releasing Attachment

Appellant contends that the effect of the order releasing the judgment lien and the levy of the attachment was to deprive plaintiff and appellant of its security for costs on appeal. Appellant points out that its appeal from the order taxing costs is pending and that upon a favorable decision in that appeal it is entitled to rely upon its attachment for security for recovery of the bond premiums amounting to about $7,000. Appellant states that if defendant Palermo wished to have the levy of attachment released, he could have given an undertaking under Section 554 of the Code of Civil Procedure in the amount of the costs demanded by appellant.

We agree with appellant that since the question of costs has not been finally decided, satisfaction of judgment should not have been entered. It is settled by the cases and it is fundamental that a satisfaction of judgment is the last act and end of the proceedings. See Brochier v. Brochier, 1941, 17 Cal.2d 822, 825, 112 P.2d 602; Cason v. Glass Bottle Blowers Ass'n, 1952, 113 Cal.App.2d 263, 247 P.2d 931. The authorities are in accord on the proposition that no satisfaction of judgment can be entered as long as there are unpaid costs in the action. Thus in Volume 2 of Freeman on Judgments, 5th Ed., at page 2329, it is said:

‘Except where a valid release is given, or there is a lawful agreement otherwise providing, a judgment may be satisfied or discharged only by payment in full with accrued interest and costs.’

In 49 C.J.S. § 552, p. 1024, it is said:

‘There can be no complete satisfaction of a judgment by payment unless the payment covers interest, if any, and the costs chargeable against defendant, even though the amount of the costs is not inserted in the judgment.’

Rule 26(b) of Rules on Appeal provides, in part, as follows:

‘In any case in which the reviewing court directs the manner in which costs shall be awarded or denied, the clerk shall enter on the record and insert in the remittitur a judgment in accordance with such directions.’

In this action the final judgment in favor of Stockton Theatres, Inc. expressly provided that appellant was entitled to its costs on appeal. Stockton Theatres, Inc., v. Palermo, 121 Cal.App.2d 616, 264 P.2d 74. These costs are part of the judgment and must be paid before there has been a satisfaction.

We therefore conclude that the court erred in making its order that a satisfaction of judgment be entered and that the attachment be released.

The order in appeal 3 Civil No. 8796 granting defendant Palermo's motion to retax costs is reversed, with directions to the trial court to pass upon the question as to whether the bond in question was unnecessary.

The order in appeal 3 Civil No. 8833 that satisfaction of judgment be entered and the attachment be released is reversed.

Appellant to recover costs on these appeals.

SCHOTTKY, Justice.

VAN DYKE, P. J., and PEEK, J., concur.