author: SEAWELL, J.

text:
    [S. F. No. 16170.
    In Bank.
    April 28, 1939.]
    MADELINE ECHLIN, Petitioner, v. THE SUPERIOR COURT OF SAN MATEO COUNTY et al., Respondents.

      Robert E. Hatch and Carl Conradi, Jr., for Petitioner.
    J. E. McCurdy and Theodore M. Stuart for Respondents.
   SEAWELL, J.

Petitioner seeks by writ of mandate to compel the Superior Court of San Mateo County to make an order substituting Robert E. Hatch as her attorney, in place of J. E. McCurdy, in a pending action for personal injuries wherein she is plaintiff. The action has not yet been brought to trial.

Subdivision 1 of section 284, Code of Civil Procedure, provides for substitution of counsel “upon the consent of both client and' attorney, filed with the clerk, or entered upon the minutes”. Subdivision 2 provides for substitution “upon the order of the court, upon the application of either client or attorney, after notice from one to the other”. In 1935 there was added to subdivision 2 a further provision, as follows: “except that in all civil cases in which the fee or compensation of the attorney is contingent upon the recovery of money, in which case the court shall determine the amount and terms of payment of the fee or compensation to be paid by the party.” The contract under which petitioner employed McCurdy provided for compensation in the amount of one-third the recovery by judgment or settlement.

Petitioner contends that the 1935 amendment is special legislation and therefore unconstitutional in that there is no reasonable distinction in the matter of determining attorney’s fees between cases where the fee is “contingent on the recovery of money” and other cases. By this proceeding she seeks to compel the trial court to order a substitution without fixing the fee of her discharged attorney, leaving that matter to be determined in a separate action. She further contends that the amendment is unconstitutional for the reason that it denies a jury trial in the determination of the attorney’s fee. The decision of the Appellate Department, Superior Court of Los Angeles, in Cassel v. Gregori, 28 Cal. App. (2d) (Supp.) 769 [70 Pac. (2d) 721], supports petitioner’s contentions.

Respondent contends that since the petitioner, rather than her attorney, asked for the substitution under section 284 she may not question the constitutionality of any part of said section, but must accept it in its entirety. The principle for which respondent contends, although frequently invoked, is not of invariable application. Thus, in Mojave River Irr. Dist. v. Superior Court, 202 Cal. 717 [262 Pac. 724], we sustained the contention of the district as to the unconstitutionality of a 1923 amendment to the Water Commission Act under which procedure and practice in superior court actions based on orders of the division of water rights differed from practice in other actions in the superior courts. We rejected the contention that the district was estopped to challenge the amendment for the reason that it had obtained an order or permit for the appropriation of water under other provisions of said act, which permit was the basis of the action brought against it in the superior court. (202 Cal. 717, 730.)

In the instant case, as in the cited case, the statute has stood for years without the amendatory provision, which, if unconstitutional, is plainly severable. Furthermore, the right to an order of substitution would exist without section 284. The English common law recognized the right of a client to change his attorney by court order. (MacPherson v. Rorison, (1779) 1 Doug. 217, 99 Eng. Reprint 142; Perry v. Fisher, (1805) 6 East. 549, 102 Eng. Reprint 1398; Hill v. Roe, (1816) 6 Taunt. 532, 128 Eng. Reprint 1141; Ginders v. Moore, (1823) 1 B. & C. 654, 107 Eng. Reprint 241; Langley v. Stapleton, Barnes, 40, 94 Eng. Reprint 796; Weeks on Attorneys, 2d ed., 513-522.)

Petitioner did not aver in her notice of application for change of attorney that she had cause to discharge attorney McCurdy. But the right to change attorneys, with or without cause, has been characterized as “universal”. (5 Am. Jur. 281; 7 C. J. S. 940; 19 Ann. Cas. 592; 1 Thornton, Attorneys at Law, p. 253; California cases: Todd v. Superior Court, 181 Cal. 406 [184 Pac. 684, 7 A. L. R. 938] ; O’Connell v. Superior Court, 2 Cal. (2d) 418 [41 Pac. (2d) 334, 97 A. L. R. 918]; Wright v. Security First Nat. Bank, ante, p. 139 [88 Pac. (2d) 125] ; 3 Cal. Jur. 635.) If the discharge is without cause the client is liable for compensation and damages. Only where the attorney has a “power coupled with an interest” must he be retained, and an interest in and to the fruits or proceeds to be derived from the action is not such a power. (O’Connell v. Superior Court, supra, note, 97 A. L. R. 923; Wright v. Security First Nat. Bank, supra.) This is consistent with the rule as to agents generally. (Sec. 2356, Civ. Code.)

Section 284, Code of Civil Procedure, providing for a court order of substitution, has been a part of our statutory law since the enactment of the codes in 1872. But in the absence of statutory provision the courts would have inherent power to make such an order, which is necessary to the orderly conduct of litigation. Indeed it was held in England at an early date that a substitution was not effective unless based on court order. (English cases cited, supra.) This doctrine prevails in this state. (Jacobus v. Jacobus, 208 Cal. 562 [282 Pac. 796]; Anglo-California T. Co. v. Oakland Rys., 191 Cal. 387 [216 Pac. 578]; 7 C. J. S. 951.)

Respondent relies on Foster v. Superior Court, 26 Cal. App. (2d) 230 [79 Pac. (2d) 144], and Tracy v. MacIntyre, 29 Cal. App. (2d) 145 [84 Pac. (2d) 526]. In the Foster ease the petitioners expressly requested the court, as a part of the order of substitution, to determine the compensation of their attorney. Being dissatisfied with the court’s order as to the fee, they thereafter urged that the 1935 amendment to section 284 was unconstitutional. In the Tracy case the client consented to determination of the attorney’s fee by an affidavit suggesting a different method of computing it than that urged by the attorney. But in the instant case there is no such request or consent. Petitioner’s only reference to section 284 is that the application for change of attorney would be based on “all the records, papers and pleadings on file, upon the authority of section 284 of the Code of Civil Procedure”. Before attorney McCurdy had filed an affidavit as to the legal services performed by him, petitioner filed “Objections to Court Fixing Attorney’s Fees under Sec. 284, C. C. P.” We conclude that petitioner has not waived her right to challenge the 1935 amendment to section 284.

In many jurisdictions it is the rule that where the client discharges the attorney without cause, the court may make substitution conditional on the client compensating his attorney. (Griffith v. United States, 72 Fed. (2d) 466; Woodbury v. Andrew Jergens Co., 69 Fed. (2d) 49; In re Weitling, 266 N. Y. 184 [194 N. E. 401]; Kellogg v. Wayne Circuit Judge, 229 Mich. 150 [200 N. W. 976] ; 7 C. J. S. 953; 5 Am. Jur. 284.) The attorney’s lien is often referred to in this connection. But in this state, where an attorney has no lien in the absence of an agreement therefor (City of Los Angeles v. Knapp, 7 Cal. (2d) 168, 173 [60 Pac. (2d) 127]), it has been held from an early date that the attorney’s remedy for a wrongful discharge is by an in-" dependent action. (Wright v. Security First Nat. Bank, supra.)

The 1935 amendment limits the right of the attorney to have his fee determined in the main action, and to have substitution made conditional on payment, to the class of cases in which the fee is “contingent upon the recovery of money”.

The rule prescribed by the amendment also differs from that prevailing in other jurisdictions in that it is, in terms, mandatory. Other jurisdictions recognize a discretionary right in the court upon ordering substitution, to postpone the matter of attorney’s fees to subsequent determination in the main action or in an independent suit. (Marshall v. Romano, 10 N. J. Misc. 113 [158 Atl. 751]; Yuengling v. Betz, 58 App. Div. 8 [68 N. Y. Supp. 574] ; United States v. McMurtry, 24 Fed. (2d) 145; Vosges Syndicate v. Everglades Club Co., 122 Fla. 267 [164 So. 881]..) This is a matter of some importance. The determination of a dispute between attorney and client may extend beyond the time when steps are required by law to be taken in the main action, especially if an appeal is taken from the trial court’s determination of the fee. In some jurisdictions the attorney has been given protection where it is important that proceedings in the main action be not delayed by requiring the client to file a bond, conditioned on payment of the attorney in the event it is subsequently determined he has been wrongfully discharged. (Marshall v. Romano, supra; Yuengling v. Betz, supra; United States v. McMurtry, supra.) The 1935 amendment would seem not to give our courts discretion to refuse to determine the attorney’s fee in a particular case upon ordering substitution.

It is settled in this state that where a cause is pending an appeal, substitution is to be effected by order of the appellate court. (Wright v. Security First Nat. Bank, supra; Jacobus v. Jacobus, supra.) Hence the effect of the 1935 amendment is to impose on the appellate courts the burden of determining, in the first instance, disputes between attorneys and clients in cases pending on appeal.

This brings us to petitioner’s main contention, that the amendment is special legislation and therefore unconstitutional in that it requires the client to submit to determination of his discharged attorney’s fee in the main action in those eases only where the fee is “contingent upon the recovery of money”. In Cassel v. Gregori, supra, the Appellate Department, Superior Court of Los Angeles County, upheld this contention, Judge Shaw writing the opinion, as follows:

“ . . . passing by the question whether contingent fee cases as a whole would constitute a separate class justifying special provisions regarding attorney’s fees, we entertain no doubt that the special classification of contingent fee cases made by this statute is arbitrary and invalid. The probable purpose of the amendment ... is to protect attorneys who have contingent fee agreements from possible efforts of their clients to dismiss them without payment of fees. For this purpose, no substantial difference exists between a case where the contingency depends on the payment of money and many other contingency cases. The contingency may be the recovery of property other than money; and granting that in such a case, where the attorney’s fee is to be a share of the property, he may have an interest in that property which he can follow (Kelly v. Smith, (1928) 204 Cal. 496, 500 [268 Pac. 1057]), and is then not so much in need of protection, yet there are many other possible contingencies not covered by the statute. Even where recovery of property is the contingency, the fee may not be a share of that property; and the contingency may be the successful defense of an action or the establishment of the client’s rights with no recovery at all. If the attorney needs protection against his client, why should he not have it in these cases, as well as in that covered by the statute?”

The court concluded its discussion with the statement that there was no natural, intrinsic or constitutional distinction justifying such discrimination and that the amended portion of the statute was, therefore, void. We are in accord with this conclusion.

It cannot be said that contracts for an attorney fee contingent on the recovery of money are usually entered into with clients who are without funds, and hence employment under such contracts calls for special protection of the attorney through authority in the court to make substitution dependent upon payment of the reasonable value of his services to date, since one of the most common instances of employment under such contracts is in connection with claims! for personal injuries, where employment is frequently under such a contract regardless of the financial status of the client.

An attorney discharged without cause may recover the reasonable value of his services to date in an action brought for that purpose. (Kirk v. Gulley, 202 Cal. 501 [261 Pac. 994]; Neblett v. Getty, 20 Cal. App. (2d) 65 [66 Pac. (2d) 473]; Lessing v. Gibbons, 6 Cal. App. (2d) 598 [45 Pac. (2d) 258].) Or he may sue for the fee contracted to be paid. (Zurich General Acc. etc. Co. v. Kinsler, 12 Cal. (2d) 98 [81 Pac. (2d) 91.3] ; Webb v. Trescony, 76 Cal. 621 [18 Pac. 796]; Countryman v. California Trona Co., 35 Cal. App. 728 [170 Pac. 1069].) If the fee agreed to be paid is contingent on the recovery of money or other property, the right of the discharged attorney to sue for the agreed fee does not arise until recovery through the services of the substituted attorney. (Bartlett v. Odd Fellows’ Sav. Bank, 79 Cal. 218 [21 Pac. 743, 12 Am. St. Rep. 139].)

It is unnecessary here to consider petitioner’s contention that the 1935 amendment is unconstitutional for the additional reason that it denies a jury trial. Said section would seem to contemplate that the court sitting without a jury should determine the attorney’s fee. Where substitution pending appeal is made in an appellate court this would necessarily be so, since a jury does not exist as an adjunct of our appellate courts. The right of trial by jury is guaranteed by our Constitution (art. I, sec. 7) only in those cases where it existed at common law. (Pomeroy v. Collins, 198 Cal. 46, 70 [243 Pac. 657] ; In re Escover, 108 Cal. App. 697 [292 Pac. 167] ; Gregory v. Hecke, 73 Cal. App. 268, 283 [283 Pac. 787]; 15 Cal. Jur. 325.) The English courts exercised the right to order the client to pay his attorney as a condition of substitution. (Witt v. Amiss, 8 L. T. N. S. 425; Langley v. Stapleton, supra; Weeks on Attorneys at Law, 2d ed., 518.) Whether they recognized a right of trial by jury in such matters is a question to which counsel herein have not directed their research. It is not necessary to determine the matter here, in view of our conclusion that the. 1935 amendment is unconstitutional on other grounds.

It follows that petitioner is entitled to an order of substitution without determination of the compensation to which her attorney may be entitled. Let the writ of mandate issue as prayed for.

Shenk, J., Curtis, J., Langdon, J., Edmonds, J., and Houser, J., concurred.


source: Caselaw Access Project

author: THE COURT.

license: Public Domain

text:
    [L. A. No. 17063.
    In Bank.
    April 28, 1939.]
    EARLE M. HATHEWAY, Petitioner, v. INDUSTRIAL ACCIDENT COMMISSION and JACK HODGKINSON, Respondents.

      Webster Hazlehurst for Petitioner.
    Everett A. Corten and Eldon B. Spofford for Respondent.
   THE COURT.

This ease presents but one question: Does the finding of respondent commission that the industrial, compensable injury sustained by Jack Hodgkinson was caused by the serious and wilful misconduct of the employer, petitioner Earle M. Hatheway, find any substantial support in the record?

The record discloses that the injury was received by Hodgkinson on July 28, 1937, at petitioner’s garage, where the injured employee had been working as a mechanic for a period of five or six months prior to the accident; that at this garage some twenty-five or thirty persons were employed; that located entirely within the main garage building was a paint shop with a flat roof; that in this flat roof was a glass skylight about 3 feet square; that petitioner Hatheway used the roof of this paint shop to store and display automobile tires; that employees of the petitioner were occasionally required to go to the roof to secure tires; that a stairway led to this roof; that there was no guard rail around the roof nor was there any warning of any kind to inform employees of the presence of the skylight; that about 10 days before the accident the foreman of the garage discovered that one pane of the skylight was broken and was hanging down into the paint shop; that he taped the broken pane and immediately informed his employer, petitioner, of the broken glass, and of the dangerous condition that was thus created. Both Hatheway and the foreman testified that they took no steps to inform the employees of the dangerous condition. No warning was posted, nor were any temporary means taken to protect the skylight. Hatheway testified that upon being informed of the dangerous condition he telephoned the Smith Construction Company and ordered the skylight boarded up, but that this was not done until two days after the accident.

Hodgkinson, the injured employee, testified that he had worked in the garage for five or six months prior to the accident; that his duties had taken him inside the paint shop on but one or two occasions; that he did not then, or at any other time prior to the accident, observe or know of the existence of the skylight; that he had been on the roof of the paint shop but once before; that no one had told or warned him about the skylight; that on the day in question he was ordered to go on the roof to get two tires; that he proceeded to the roof and had to search for the tires; that he was on the roof about five minutes; that he stepped on the glass skylight and fell through it to the cement floor below; that his skull was fractured and his wrist broken; that the skylight was so covered with dust and paper that it appeared no different from the surrounding roof; that he had not known of the skylight nor had he heard it discussed. The foreman testified that he knew some of the employees were required to go to the roof, and that the skylight was dusty and covered with tire wrappings.

Hodgkinson was so severely injured that at the time of the hearing—August, 1938—he had been unable to return to work.

On this testimony the commission awarded normal compensation to the employee against the insurance carrier, and, in addition, found the employer guilty of serious and wilful misconduct, and made its additional award against him personally as provided by section 4553 of the Labor Code. No question is raised concerning the award of normal compensation, but the employer contends that the additional award against him personally, based on his alleged serious and wilful misconduct, as a matter of law, was not justified by the evidence.

What constitutes serious and wilful misconduct within the meaning of the Workmen’s Compensation Act so as to entitle the employee to an increased award as therein provided, has frequently been discussed by the courts. The definition of what constitutes such conduct set forth by this court in E. Clemens Horst Co. v. Industrial Acc. Com., 184 Cal. 180 [193 Pac. 105, 16 A. L. R. 611], has frequently been cited and relied upon by the courts. It was there stated (p. 188) :

“The first question presented is, then, Was the commission justified in finding that the petitioner was guilty of ‘serious misconduct’? There is no statutory definition of this term. In this connection we may again quote from Seven, page 401: ‘To constitute “serious misconduct’’ it is probable that the legislature intended to signify conduct that an average workman in being guilty of, either would know, or ought to know, if he turned his mind to consider the matter, to be conduct likely to jeopardize his own and his fellow-workman’s safety. ’ In our opinion the serious misconduct of an employer under our statute may be similarly defined. There should be no difference in principle between the degree of care required of an employer and that exacted from an employee. ‘Serious misconduct’ of an employer must, therefore, be taken to mean conduct which the employer either knew, or ought to have known, if he had turned his mind to the matter, to be conduct likely to jeopardize the safety of his employees. . . .
“Next, as to whether such serious misconduct was ‘wilful’. It has frequently been said that wilful misconduct involves the knowledge of the person that the thing which he is doing is wrong. (Lewis v. Great Western Ry. Co., L. R. 3 Q. B. Div. 195; In re Burns, 218 Mass. 8 [Ann. Cas. 1916A, 787, 105 N. E. 601] ; Riley v. Standard Acc. Ins. Co., 227 Mass. 55 [116 N. E. 259]; Beckles’ Case, 230 Mass. 272 [119 N. E. 653].) Conceding that knowledge is required, it seems to us that in order to prove the requisite knowledge, it is not necessary for the evidence to show positively that the person was notified of the unsafe condition of his premises, but that it is sufficient if it appears that the circumstances surrounding the act of commission or omission are such as ‘evince a reckless disregard for the safety of others and a willingness to inflict the injury complained of.’ ”

The cases are quite uniform to the effect that permitting employees to work under dangerous conditions which are capable of being guarded against, constitutes such a reckless disregard for the safety of the employees that the commission’s finding that such conduct is serious and wilful will not be disturbed. The mere fact the employer did not believe the condition was dangerous does not relieve him from liability. Thus in Blue Diamond Co. v. Industrial Acc. Com., 188 Cal. 403, 409 [205 Pac. 678], the employee was killed as a result of the failure of the employer to place guards on machinery. The managing agents of the employer testified that they knew of the condition, but stated that they did not consider the condition unsafe. “Their mistake in judgment upon that subject cannot be held to relieve their employer from liability.” An award based on serious and wilful misconduct was affirmed. In Hoffman v. Department of Industrial Relations, 209 Cal. 383 [287 Pac. 974, 68 A. L. R. 294], it was held that where the employer violated the terms of a statute providing for a specified type of temporary flooring and its method of construction to be used when erecting a building, he was guilty of serious and wilful misconduct, even though the employer was ignorant of the provisions of the statute. In Pacific Emp. Ins. Co. v. Industrial Acc. Com., 209 Cal. 412 [288 Pac. 66], the employee was injured by an unguarded saw. The employer was held guilty of serious and wilful misconduct although the saw had been in operation but a week, and the employer testified that he intended to place a guard thereon. In Gordon v. Industrial Acc. Com., 199 Cal. 420 [249 Pac. 849, 58 A. L. R. 1374], the employee was killed in a cave-in of a gravel pit. It was held that compelling an employee to work in a dangerous spot, without taking protective measures, where the employer knows or should have known of the danger is serious and wilful misconduct. In holding an employer guilty of serious and wilful misconduct under somewhat similar circumstances the appellate court in Johannsen v. Industrial Acc. Com., 113 Cal. App. 162, 166 [298 Pac. 99], stated: “Had he (the employer) turned his mind to a consideration of the subject he must have known that a person working in the trench was in jeopardy, which danger could readily have been obviated by the necessary bracing.”

In considering the evidence, it must be kept in mind that the question of wilful misconduct is essentially a question of fact, and that on this petition it is our duty to indulge in all reasonable inferences to support the award. As was stated in Ethel D. Co. v. Industrial Acc. Com., 219 Cal. 699, 704 [28 Pac. (2d) 919] : “At all events, the question of whether, under the circumstances, the employer should have known that the failure to provide more secure and more readily accessible handholds would be so likely to jeopardize the safety of employees as to evince a reckless disregard for their safety and a willingness to inflict injury, was a question of fact to be determined by the referee to whom the evidence in the case was submitted.” (See, also, Jackie Coogan Productions v. Industrial Acc. Com., 21 Cal. App. (2d) 225 [68 Pac. (2d) 750].)

It is apparent that under the rules laid down in the cases above referred to, the commission was amply justified in the instant case in finding the employer guilty of serious and wilful misconduct. Under these cases, and many others that could be cited, the employer is under a duty to supply his employees a reasonably safe place in which to work, and when he knows or should have known of a dangerous condition and fails to take reasonable precautions, the commission properly may find him guilty of serious and wilful misconduct. The following facts and circumstances support the finding of the commission:

1. A dangerous condition practically constituting a trap existed on the premises in a place where employees in the performance of their duties were required to go;
2. The dangerous condition was brought to the attention of the employer and he acknowledged and recognized its existence;
3. After being informed of the dangerous condition neither the employer nor his foreman took any steps to warn the employees, either by telling them of the condition, or by posting warnings. It should be mentioned that the dangerous condition could easily have been temporarily obviated by simply placing boards across the skylight, but this obvious precaution was not taken;
4. The employee had no knowledge of the dangerous condition.

Under these circumstances the commission was amply justified in finding that the employer knowingly acted in reckless disregard of the safety of his employees. To escape this obvious conclusion, the employer urges that as soon as the dangerous condition was called to his attention he telephoned to the contractor and ordered him to board over the skylight. It is true that he so testified, but this one factor, even if the testimony were believed by the commission, would not, as a matter of law, relieve the employer from the charge of serious and wilful misconduct. This was but one factor that the commission, as the trier of the fact, was entitled to weigh in ascertaining whether the charge was well founded. Whether this was a sufficient precaution, under all the circumstances, was solely for the commission to decide. As against this one factor the commission was entitled to and apparently did weigh the facts that the skylight, located as it was, constituted a trap; that the employer should have known this upon merely seeing it even before it was cracked; that even after he had been informed of the condition and recognized its danger he took no temporary precautions to protect his employees while waiting for the contractor to board up the skylight. .These factors serve to distinguish the case from Schmidt v. Pursell, 47 Cal. App. 440 [190 Pac. 846], so heavily relied upon by petitioner. That case was not a compensation case at all. The employee, after receiving an industrial injury, brought an action against his employer in the regular law courts, as he was then permitted to do, alleging gross negligence and wilful misconduct on the part of his employer as required by the then existing law. To support the allegation he proved that the employer had failed to equip certain machinery with a safety device after being orally ordered to do so by the commission. The evidence showed that the employer had immediately ordered such a device, but that the accident happened before the device could possibly have been secured. The trial court found that the safety appliance in question was not necessary equipment and that the employee was fully aware of the dangers incident to the use of the machine. The appellate court in affirming the trial court held that the reasonableness of the violated safety order and the reasonableness of the compliance by the employer were questions of fact, and since they had been determined adversely to the employee on competent evidence, the appellate court was bound thereby. The case is clearly distinguishable from the situation presented in the instant case.

The other points raised by petitioner are so unsubstantial as not to require comment.

The award of the commission is affirmed.


author: EDMONDS, J. SHENK, J., Dissenting.

text:
    [S. F. No. 16071.
    In Bank.
    April 29, 1939.]
    GOLDEN STATE GLASS CORPORATION (a Corporation) et al., Petitioners, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY et al., Respondents.

      Oscar C. Sattinger, in pro. per., Mitchell, Silberberg, Roth & Knupp, Lester William Roth. and Frank M. Gunter for Petitioners.
    John H. O’Connor, County Counsel, Douglas De Coster, Assistant County Counsel, Biby & Biby and John E. Biby for Respondents.
   EDMONDS, J.

In this original proceeding, the petitioners seek a writ of prohibition directed to the respondent court for the purpose of preventing the enforcement of any orders made by it appointing a receiver. They also ask that a writ of mandate issue ordering the superior court to recognize the petitioner Sattinger as attorney for Golden State Glass Corporation, a corporation, in the action which has occasioned the present application.

By the allegations of the petition, it appears that the controversy has arisen because of difficulties between the petitioners Shenberg and Goldman, on the one hand, and G. C. De-Garmo, who is opposing them in the affairs of Golden State Glass Corporation, which was incorporated in 1933. Shenberg and Goldman own more than two-thirds of the stock of the corporation and as vice-president and secretary, respectively, have been the active operators of its business and in possession of its assets from the time of organization to May 31, 1938. Up to that date the corporation was at all times financially successful and thoroughly solvent.

According to the petitioners, on May 31, 1938, the respondent court, ex parte and solely upon the allegations of a complaint verified by DeGarmo, the president of the corporation, which names him and W. M. Crane as plaintiffs, appointed a receiver for the corporation. By the authority of this order the receiver took possession of the corporation’s property. The corporation, acting through the petitioner Sattinger, who is an attorney at law, and Shenberg and Goldman each moved to vacate the ex parte order and sought to resist a confirmation of the appointment pendente lite. Each of these motions was denied.

The petitioners again allege in the present proceedings, as they did in affidavits presented to the superior court, that the receivership has worked and will continue to work irreparable injury to petitioners by impairing the credit of the corporation and destroying its business and good will. They also allege that petitioner Sattinger was appointed by Shenberg and Goldman to appear for the corporation ás its attorney to resist confirmation of the receivership; that Sattinger subpoenaed DeGarmo for the purpose of taldng his deposition in connection with the proceedings but DeGarmo refused to appear; and that Sattinger attempted to appear as attorney for the corporation at the hearing on the order to show cause why the order appointing the receiver should not be confirmed, but the court refused to permit him to participate in the hearing upon the ground that he was not the duly appointed attorney for the corporation.

The petitioners contend that the averments of DeGarmo’s complaint, being made up largely of conclusions and allegations upon information and belief, were insufficient to empower the trial court to make the ex parte order and that the court lacked jurisdiction to confirm the receivership pendente lite in the face of the petitioners’ specific and uncontradicted showing in opposition thereto. It is also argued that the court exceeded its powers in refusing to permit petitioner Sattinger to appear as attorney for the corporation in opposition to the receivership.

By a demurrer to the petition, the respondents assert that neither prohibition nor mandamus will lie under the circumstances here presented because the petitioners have an adequate remedy by way of appeal from the orders complained of. Petitioners argue, relying, upon Luckenbach v. Laer, 190 Cal. 395 [212 Pac. 918], that the corporation was the only party “aggrieved” by the order of appointment, and hence it was the only party entitled to appeal therefrom, and that the trial court took away its remedy by refusing to permit it to be represented by an attorney. However, it appears from the return of the trial judge that he offered to appoint a disinterested third person to act as attorney for the corporation, but Goldman and Shenberg rejected this offer, desiring that the corporation be represented only by an attorney of their own choosing. Also, Luckenbach v. Laer, supra, does not fully support the proposition contended for. There a creditor sued and recovered judgment against a defunct corporation and after a writ of execution had been returned unsatisfied, he procured the appointment of a receiver who was empowered to sue certain directors for sums alleged to have been misappropriated by them. The defendants attempted to appeal from an order denying their motion to vacate the appointment of the receiver. The court held that inasmuch as neither the appellants’ personal rights nor their property interests had been affected by the action of the trial court, they were not aggrieved parties and had no standing on appeal. The petitioners in the present case are in a different position if, as they are contending, the receiver superseded them in the active management and control of a going corporation.

This conclusion, however, is not wholly determinative of the point in question. It is established that this court will, in the exercise of its discretion, occasionally permit the validity of a trial court’s order to be tested by writ of prohibition where the petitioners have a remedy by appeal if the circumstances are aggravated and justify immediate relief. Under such conditions and where, because of delay, there would be consequential damages the court has allowed the writ. (Davis v. Superior Court, 184 Cal. 691 [195 Pac. 390].) The question is largely one of discretion. (A. G. Col Co. v. Superior Court, 196 Cal. 604, 622 [238 Pac. 926]; Slinack v. Superior Court, 216 Cal. 99, 105 [13 Pac. (2d) 670].) Furthermore, where, as here, the entire record of the proceedings is before the court, it is proper to review all the facts shown and render such relief as may be proper in the premises. (A. G. Col Co. v. Superior Court, supra, at p. 613.)

The following facts appear from the allegations of the complaint upon which the receiver was appointed:

Golden State Glass Corporation, organized under the laws of California, is engaged in the business of selling glass both at wholesale and retail. Outstanding non-voting stock is owned 561 shares by the defendant Goldman, 561 shares by the defendant Shenberg, and 559 shares by the plaintiff DeGarmo. These three persons and the plaintiff Crane, who are the directors of the corporation, own two shares each of the outstanding shares of voting stock. By-laws duly adopted by the corporation provide that its business affairs shall be controlled by the board of directors; that a majority of the number of directors shall constitute a quorum; that the officers shall be elected by and hold office at the pleasure of the board of directors which shall also fix their compensation and tenure of office; that the president shall, “subject to the control of the Board of Directors, have general supervision, direction, and control of the business and officers of the corporation” and “shall have the general powers and duties of management usually vested in the office of president”, and that “supervision, management and right to employ and discharge employees and fix salaries of employees shall be fixed by directors and in absence of such determination . . . may be vested in the managing and supervising agent of the corporation”.

Plaintiff DeGarmo also alleges that he is president and is ready, able, and willing to perform the duties of that office. The complaint asserts: “Illfeeling, dissension, hatred, mutual hostility and distrust have arisen and now exist between the said plaintiffs and directors, G. C. DeGarmo and W. M. Crane, on the one side and the said defendants and directors, A. Goldman and N. E. Shenberg, on the other side. Because of said illfeeling, dissension, hatred, mutual hostility and distrust of said directors toward each other no business of the corporation has been transacted by said corporation since on or about the 1st day of January, 1938, and it is impossible because of said illfeeling, dissension, hatred, mutual hostility and distrust of the board of directors and the members of said board for them to transact any business of the corporation or to elect any person to act as manager or to give any person authority or power to transact business for said corporation, and because thereof said corporation is not now transacting any business and said corporation and its business, assets and property because thereof have been injured and said corporation has been greatly damaged.” It is also charged that Goldman and Shenberg have violated their duties as directors and are guilty of fraudulent acts and gross abuse of authority and discretion, in that they have refused to permit DeGarmo to perform his duties as president and have refused to permit him to exercise any direction or control over the business, and have usurped possession, direction and control of the business affairs of the corporation without right.

It also appears that on December 5, 1936, Shenberg, Goldman and DeGarmo entered into a written agreement which provides that Shenberg and Goldman shall each receive $600 per month as salary, $500 of which is to be paid in cash and $100 credited upon the purchase of additional shares of stock, and that DeGarmo shall be paid $500 per month for his services. At a meeting of the board of directors on December 30, 1937, at which Crane was not present, a motion to pay Shenberg and Goldman each $2,000 as additional compensation “at such time or times and in such amounts as the financial condition of the company makes advisable” was unanimously carried, and a modified agreement executed by them and DeGarmo providing for this increase in compensation was read into the minutes of the meeting. This agreement also provides that the agreement of December, 1936, shall remain in full force and effect except as modified. The corporation paid DeGarmo $500 per month as agreed on to March 1, 1938, but on or about that date Goldman and Shenberg gave written instructions to the auditor of the corporation to discontinue his salary and he has received nothing since.

The plaintiffs on information and belief assert by their complaint that the corporation entered into an agreement on April 14, 1937, with Glassworks Local Union No. 636 which provides that the employees of the corporation who are members of the union shall each be paid at the rate of $1.10 per hour for a 40-hour week or a total of $44 per week; that Goldman and Shenberg without the knowledge or consent of the plaintiffs demanded a rebate of $14 per week from some of these employees under threat of discharge, and that certain of the employees have been refunding $14 per week to the corporation for some time past. They also charge that prior to July, 1935, the corporation acting through Goldman and Shenberg entered into an agreement with the Glass Glazing and Mirror Contractors of Los Angeles, an association of persons engaged in the same business and organized for the purpose of maintaining uniform and reasonable prices in the industry; that by this contract the defendant corporation agreed to pay a certain per cent of its monthly gross sales to the association; that under instructions from defendants Goldman and Shenberg, the corporation’s auditor has kept two sets of books relating to accounts and sales for the purpose of deceiving the association and that by means of this device the defendant corporation deceived the association and paid to it less money than the contract requires; and that Goldman and Shenberg also violated the corporation’s contract with the association by cutting prices, all of which was done without the knowledge and consent of DeGarmo.

Other allegations made on information and belief are that after DeGarmo conversed and consulted with the employees of the corporation, Goldman told such employees that if he saw them conversing with DeGarmo again he would discharge them; that Goldman and Shenberg caused false sales tax returns to be filed by the corporation with the franchise tax commissioner of the State of California; that by the terms of the lease covering the use of the premises occupied by the corporation as its principal place of business, the amount of rental was to be based on the total amount of sales; that Goldman and Shenberg caused false statements to be made for the purpose of deceiving the lessor; and that the lessor was deceived by said statements and accepted smaller amounts than were due as full payment of rent due and owing.

The complaint also contains charges of financial mismanagement. The plaintiffs declare that Goldman and Shenberg, who are authorized by the board of directors to draw checks against corporate funds, have usurped the management and control of the business and have been drawing checks without right or power, thereby diverting and using the money of the corporation to its injury and also plead: “Because of the ill-feeling, dissension, hatred, mutual hostility and distrust existing between the said two factions of directors as above alleged, it is impossible for the said defendant, Golden State Glass Corporation, to carry on its business and the business and affairs of said defendant corporation are now at a deadlock so far as corporate action by its board of directors is concerned, and said deadlock will continue so long as said defendants, Goldman and Shenberg are directors of said corporation.”

A second cause of action in the complaint adopts by reference the allegations of the previous one and, in addition, charges that by reason of these facts the corporation has been injured and damaged in the sum of $10,000; that because of the illfeeling, hatred,' mutual hostility and distrust existing between the directors, the corporation cannot take action to authorize the filing of an action to recover that amount and it is useless to make demand on the corporation or on its directors or stockholders to file such action; and that the court should authorize the plaintiffs, as stockholders, to file such an action on behalf of the corporation. There then follows the demand that a receiver be appointed to take possession and control of all the assets including the records of the corporation; that he be empowered and directed to manage and conduct the business of the corporation; and that judgment be rendered in favor of the corporation and against Shenberg and Goldman in the sum of $10,000.

Section 564 of the Code of Civil Procedure vests jurisdiction in the superior court to appoint receivers under certain enumerated conditions. Authority to act, if it exists under the facts presented here, may be found only in subdivision 7 of that section which confers the power “In all other cases where receivers have heretofore been appointed by the usages of courts of equity.” This is a broad provision which vests a large measure of discretion in the trial court, and in the absence of a clear showing of an abuse of that discretion, its action in either appointing or refusing to appoint a receiver will be upheld. However, because of the drastic character of the remedy, the discretion is not an entirely uncontrolled one but must be exercised with due regard for the facts in a particular case. Especially is this true where serious injury to the name and good will of a solvent going concern may result from the appointment of a receiver. Ordinarily, if there is any other remedy, less severe in its results, which will adequately protect the rights of the parties, a court should not take property out of the hands of its owners. (A. G. Col Co. v. Superior Court, supra; Fischer v. Superior Court, 110 Cal. 129 [42 Pac. 561]; Dabney Oil Co. v. Providence Oil Co., 22 Cal. App. 233 [133 Pac. 1155] ; 53 C. J., p. 25.) “By numerous authorities, the principle is unequivocally announced that, from the standpoint of the business welfare of a defendant corporation, the appointment of a receiver on an ex parte application is so dangerous an expedient that it should be done only in cases of the greatest emergency and where, without such appointment, irreparable injury will unquestionably result.” (A. G. Col Co. v. Superior Court, supra, at p. 613.)

It is established, however, that a court of equity has power to appoint a receiver of a going corporation upon a showing that there are such dissensions in its governing body as to create a virtual suspension of its business. (Boyle v. Superior Court, 176 Cal. 671, 674, 675 [170 Pac. 1140, L. R. A. 1918D, 226], and eases there cited; see annotation 43 A. L. R. 242.) In the Boyle case a mining corporation had ceased the operation of its mines because of a deadlock between its four directors. Certain stockholders brought suit against two of the directors seeking their removal upon the ground of fraud and mismanagement. The trial court appointed a receiver pendente lite without determining the merits of the case as between plaintiffs and defendants and upon the sole ground that because of the deadlock the business of the corporation was not being operated. On appeal it was held that although under the circumstances shown it was proper to appoint a receiver in accordance with “the usages of courts of equity”, the function of such an officer is not to close up the corporation’s affairs or to effect its dissolution but to preserve its business, and, if possible, to continue its functions. The rule which should govern such an appointment has been succinctly stated by Mr. Pomeroy as follows: “The power of a court of equity to appoint a receiver of a co'rporation either because it has no properly constituted governing body, or because there are such dissensions in its governing body as to make it impossible for the corporation to carry on its business with advantage to its stockholders, appears to be settled ; but it is equally well settled that this power is subject to certain limitations, namely, it must always be exercised with great caution, and only for such time and to such an extent as may be necessary to preserve the property of the corporation and protect the rights and interests of its stockholders. As soon as a lawfully constituted and competent governing body comes into existence, whether it is brought into existence by an adjustment of the dissensions or by the election of a new body, and such body is ready to take possession of the property of the corporation, and proceed in the proper discharge of its duties, the court must lift its hand and retire.” (4 Pomeroy’s Equity, Jurisprudence, 4th ed., sec. 1545.)

Under these principles even if there is dissension in corporate management a receiver should not be appointed where no actual or threatened cessation or diminution of business operations is shown. Thus in Katz v. DeWolf, 151 Wis. 337 [138 N. W. 1013, Ann. Cas. 1914B, 237], the two surviving directors, each of whom owned one-half of the stock, could not agree on the management of the company but it was held that “where there is no imminent danger of loss of the corporate property or of any other injury to the moving party which cannot be fully compensated by the final decree, the courts will not, upon affidavits and in advance of a trial on the merits, by placing the property in the hands of a receiver, wrest the possession of the corporate property from the corporation, and from those officers who are duly elected and who prima facie are entitled to administer the affairs of the corporation.” In Wallace v. Pierce-Wallace Pub. Co., 101 Iowa, 313 [70 N. W. 216, 63 Am. St. Rep. 389, 38 L. R. A. 122], dissension had arisen between the plaintiff and the defendants who owned equally all the stock of the corporation. The court decided that the plaintiff, who had been excluded from management, was not entitled to have a receiver appointed upon proof of these facts since it appeared that the disagreement between the parties had not resulted in a stoppage of the business and the corporation was perfectly solvent and well-managed. A case involving similar facts is Enterprise Printing & Pub. Co. v. Craig, 195 Ind. 302 [144 N. E. 542, 145 N. E. 309]. It was there declared that the mere fact that a minority stockholder is excluded from the management of a corporation is not a ground for the appointment of a receiver when the business is being successfully managed under the majority control.

In the case at bar the allegations of the complaint show that the directors were deadlocked and that “because of said illfeeling, dissension, hatred, mutual hostility and distrust of said directors toward each other no business of the corporation has been transacted by said corporation since on or about the 1st day of January, 1938 ... ”. These facts are undoubtedly sufficient to justify the appointment of a receiver ex parte under the authority of Boyle v. Superior Court, supra. But the force of this showing is weakened by other averments of the complaint to the effect that since January 1, 1938, Goldman and Shenberg “have usurped and exercised and are now usurping and exercising the direction and control of the business and affairs” of the corporation. At the hearing on the order to show cause it was shown by numerous affidavits in support of defendants’ motion to vacate the ex parte order that Goldman and Shenberg had been conducting the business of the corporation, which was clearly solvent, from 1933 to the time of the receivership. Attached to these affidavits were certified copies of monthly audits made by a firm of certified public accountants showing that during the first four months of 1938 the corporation had an average gross monthly income from sales in excess of $12,000 and in May, 1938, when the complaint was filed, had assets of more than $60,000 in excess of liabilities. This specific showing stood uneontradicted at the time of the hearing. Under these circumstances no sufficient grounds existed for continuing the receivership pendente lite and the trial court exceeded its jurisdiction in confirming its ex parte order of appointment.

It is true that the complaint contains averments alleging fraud and mismanagement on the part of Shenberg and Goldman, but these are stated either as conclusions or upon information and belief. Stronger proof is essential to justify a receivership where specific and detailed evidence that the corporation’s business is being successfully conducted at a profit is presented in opposition thereto. A complaint based largely upon generalities and conclusions of the plaintiffs and upon information and belief is insufficient upon which to appoint a receiver. (Mason v. San-Val etc. Co., 1 Cal. (2d) 670 [36 Pac. (2d) 616].)

Petitioners’ contention that the trial court should have recognized Sattinger as attorney for the corporation must also be sustained. The commencement of the litigation by DeGarmo made necessary the appointment of an attorney for the corporation. At that time it had four directors, but only DeGarmo, Shenberg and Goldman actively participated in the direction of the corporate affairs. By the uncontradicted affidavits of Goldman and Shenberg it appears that Crane acquired his two shares of stock in 1936 for the purpose of representing DeGarmo’s interest during his absence on a long vacation trip. The agreements between DeGarmo, Shenberg and Goldman which are set forth in the complaint recite that these three men are the sole owners of the stock of the corporation. Unquestionably, Crane has no interest in the defendant corporation and the record includes an affidavit quoting Crane as saying that the action was filed without his knowledge or consent.

Under such circumstances the superior court should have recognized the attorney employed by the two directors owning two-thirds of the corporate stock and in actual control of the corporation’s business affairs. In Streeten v. Robin son, 102 Cal. 542 [36 Pac. 946], where the vice-president, then actually managing the business of the corporation, employed an attorney without approval of the board of directors, this court held such action proper, the court saying: “The authority of the president, or other head of a corporation, to employ an attorney when the exigencies of his company require it has been frequently recognized. (Citing cases.) ”

The writ of prohibition and the writ of mandate will each issue as prayed.

It is so ordered.

Waste, C. J., Seawell, J., and Houser, J., concurred.

SHENK, J., Dissenting.

I dissent.

In the first place, the opinion has invaded the domain of the trial court.

Contrary to the rule, the evidence favorable to the defendants in the trial court has been given controlling effect as against the decision of the court based on substantial evidence favorable to the plaintiffs in the pending action.

The ex parte character of the order appointing the receiver became of no significance, in view of the later hearing on the motion to vacate the order, at which all parties interested in the corporation, either as shareholders or directors, were present and represented. The evidence on the motion to vacate consisted of the verified complaint, an affidavit of the president of the corporation in support thereof, and affidavits in opposition to the appointment and continuance of the receivership. It was disclosed by the allegations of the complaint that the two plaintiffs and the two individual defendants were and had been, since September 17, 1935, the four directors of the corporation; that, under the by-laws of the corporation, all corporate powers were to be exercised by or under the authority of the board of directors, and the “business and affairs” of the corporation were to be controlled by said board; that, when the board consisted of four, three should constitute a quorum and the favorable action of three should be necessary to the transaction of business; that the president should be “the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and affairs of the corporation . . . and shall have the general powers and duties of management usually-vested in the office of president of a corporation”; that G. C. DeGarmo is and has been since September 17, 1935, president of the corporation, ready, able and willing to perform the duties of his office; that because of illfeeling and dissension existing between the two plaintiff directors and the two defendant directors “no business has been transacted by said corporation since on or about the first day of January, 1938”; and because thereof it is impossible for the board “to transact any business of the corporation or to elect any person to act as manager or to give any person authority or power to transact any business for said corporation, and because thereof the corporation is not transacting any business and said corporation and its business, assets and property have been injured and said corporation has been greatly damaged”; that the directors Goldman and Shenberg have taken possession and control of all the business, assets and property of the corporation and have usurped and “are now'usurping and exercising the direction and control of the business and affairs of said defendant, Golden State Glass Corporation, without any right whatever to do so”; that Goldman and Shenberg, since March 1, 1938, have refused to permit the plaintiff president to perform any of the duties of his office or any services on behalf of the corporation, and that on March 1, 1938, the defendant Goldman, without any authority whatsoever, instructed the auditor of the corporation to discontinue the salary of the plaintiff DeGarmo, as president of the corporation.

The foregoing facts appear by direct averment of the plaintiffs’ complaint. On information and belief, the plaintiffs have alleged acts of fraud and mismanagement on the part of defendants Goldman and Shenberg, as set forth in the prevailing opinion.

On the allegations of the complaint, the further affidavit of plaintiff DeGarmo in support thereof, and the affidavits of the defendants in opposition, the trial court concluded, as stated in his answer and return to the alternative writ herein, as follows:

“After having considered said verified complaint and said affidavits and after having heard argument by said attorneys and having considered said argument, said respondent believed that the allegations made in said verified complaint are true and, so believing, said respondent did then and there make an order confirming the appointment of a receiver pendente lite.”

The respondent judge further stated, “That upon conflicting evidence before said court at the time of said hearings last above mentioned, he determined that said defendants Shenberg and Goldman were not, prior to May 31, 1938, the day said ex parte order appointing said receiver was made, in possession of the assets of said defendant corporation as officers or otherwise of said corporation, but were personally in possession of the assets of said corporation without any rights whatsoever and were purporting to conduct the business of such corporation without any right so to do, and further on said conflicting evidence he determined that because of dissension existing between the members of the Board of Directors above mentioned said corporation was not transacting and could not transact any corporate business”.

The respondent court had power to resolve the conflict presented by the complaint and the conflicting affidavits. (Doak v. Bruson, 152 Cal. 17 [91 Pac. 1001]; Brush v. Apartment & Hotel Finance Corp., 82 Cal. App. 723 [256 Pac. 285].) The ease of Boyle v. Superior Court, 176 Cal. 671 [170 Pac. 1140, L. R. A. 1918D, 226], is direct authority for the appointment of a receiver in ease of a deadlock of the board of directors on account of which the corporate business cannot be exercised. Such a deadlock was present on the showing made by plaintiffs in the pending action. That fact, together with other facts appearing in support of the plaintiffs’ showing, was sufficient to support the order appointing the receiver. As the court had jurisdiction of the parties and the subject matter, the authority of the trial court to act was full and complete and on this collateral attack on the decision of the trial court the peremptory writ of prohibition should be denied.

Secondly, the defendants Goldman and Shenberg had an appeal from the order appointing the receiver. (Subd. 2, sec. 963, Code Civ. Proc.) Under section 943, Code of Civil Procedure, they as appellants could have filed an undertaking staying all proceedings under said order pending determination of the appeal on its merits. This procedure constitutes a plain, speedy and adequate remedy in the ordinary course of law, within the meaning of section 1103, Code of Civil Procedure. (Jacobs v. Superior Court, 133 Cal. 364 [65 Pac. 826, 85 Am. St. Rep. 204] ; Sunset Farms, Inc., v. Superior Court, 9 Cal. App. (2d) 389, 393 [50 Pac. (2d) 106] ; Pacific Broadcasting Co. v. Superior Court, 100 Cal. App. 649 [280 Pac. 991]; Santa Ynez Mercury Corp., Ltd., v. Superior Court, 26 Cal. App. (2d) 279 . [79 Pac. (2d) 185].)

The ruling in the Jacobs case has never been questioned. It was there said at pages 365 and 366:

“Formerly—and when Havemeyer v. Superior Court, 84 Cal. 327 [24 Pac. 121, 18 Am. St. Rep. 192, 10 L. R. A. 627], was decided—there was no appeal from an order appointing a receiver, but in 1897 (Stats. 1897, p. 55) section 939 of the Code of Civil Procedure was amended so as to allow such appeal, and at the same time section 943 was amended so as to provide for the staying of an order appointing a receiver by an undertaking on appeal. These amendments were apparently intended to afford a remedy for prodigal, unwise, and unwarranted appointments of receivers, which seems to be a growing evil; and we think that they do afford an adequate remedy, as contemplated by said section 1103, and the decisions of this court on the subject. The fact that a question of jurisdiction arises does not change the rule as to the adequacy of the remedy by appeal. (See Agassiz v. Superior Court, 90 Cal. 101 [27 Pac. 49].)”

This rule has been consistently followed in the later eases above cited and was relied on by the District Court of Appeal in denying the writ of prohibition in this matter. (Cal. App.) [82 Pac. (2d) 492]. The case of A. G. Col Co. v. Superior Court, 196 Cal. 604 [238 Pac. 926], so greatly relied on by the petitioner, did not overrule the Jacobs case, but annulled the order as if the proceeding were one in certiorari.

I see no abuse of discretion on the part of the trial court in denying to the defendant directors, who are thus prima facie usurping the functions of the corporation and wrongfully in possession of its assets, the right to appoint an attorney to represent the corporation. All the shareholders and all the directors of the corporation were parties to the action. All interested parties were, therefore, represented in the action. The points in controversy affecting the corporation and its assets can be adjudicated in this action between the parties thus appearing. Especially was this true since the trial court ordered that no default be entered against the corporation and that the court would, on the suggestion of the defendant directors, appoint an attorney to represent the corporation, but the offer was denied. Under these circumstances, the action of the trial court in refusing to permit the attorney for the defendant directors to represent the corporation was not arbitrary, did not amount to an abuse of discretion, and should not be controlled by mandamus. The peremptory writ of mandamus should also be denied.

Curtis, J., concurred.

Rehearing denied. Shenk, J., and Curtis, J., voted for a rehearing. Langdon, J., did not participate.


author: SHENK, J.

text:
    [L. A. No. 16970.
    In Bank.
    May 4, 1939.]
    A. P. JENSEN et al., Respondents, v. HUGH EVANS & COMPANY (a Corporation) et al., Defendants; L. H. BOOKER et al., Trustees, etc., Appellants.

      Olson & Olson, Allen Miller and Robert Clifton for Appellants.
    Max Lewis, A. Arnold Klein and Laurence M. Weinberg for Respondents.
   SHENK, J.

This application for a writ of supersedeas presents the question of the extent of discretion which may be exercised by the trial court in requiring a stay bond on appeal under the 1927 amendment to section 949 of the Code of Civil Procedure (Stats. 1927, p. 874).

In 1935 the plaintiffs Jensen recovered a judgment in the superior court against Hugh Evans, Diversified Real Estate Investments Trust #1, Diversified Real Estate Investments Trust #2, and others. In May, 1938, the sheriff of Los Angeles County levied a writ of execution in aid of the enforcement of said judgment upon deposits totaling $25,000 standing to the credit of said real estate trusts in the Citizens National Trust and Savings Bank in Los Angeles. The money was delivered by the bank to the sheriff. Within due time L. IT. Booker, Lillian C. Prentiss-Baker and W. G. Hargis, as trustees of both of said real estate trusts, served and filed third party claims against said funds. The plaintiffs Jensen, instead of giving an undertaking as permitted by section 689 of the Code of Civil Procedure, filed a petition to determine title as provided for by that section. A hearing was duly had, at the conclusion of which the trial court rendered judgment determining that each of the third party claims was without merit and that the trustees were not the owners of the fund, but that the plaintiffs were entitled to the whole thereof. The third party claimants appealed from the judgment adjudicating title to the fund.

The plaintiffs moved the trial court for an order, pursuant to the 1927 amendment to section 949 of the Code of Civil Procedure, requiring the third party claimants to file an undertaking on appeal if they desired the enforcement of the judgment to be stayed pending the appeal. The court made an order requiring the appealing parties to post a surety bond in the sum of $4,000, “conditioned upon the performance of the judgment upon third party claims heretofore appealed from by third party claimants in the event that the judgment appealed from is affirmed or the appeal is dismissed”.

Prior to 1927 section 949 of the Code of Civil Procedure provided that the perfecting of an appeal stayed proceedings in the trial court without the filing of a bond, in all cases (of which the present is one) not covered by sections 942, 943, 944 and 945 of the same code. Certain exceptions, not here pertinent, are specified in said section 949 where a writ of supersedeas is required.

The court’s order purports to be pursuant to the 1927 amendment to said section 949, which reads: “ . . . but the court in its discretion may require an undertaking in an amount to be fixed by it conditioned for the performance of the judgment or order appealed from if the same is affirmed or the appeal is dismissed; . . . ”.

The present application for a writ of supersedeas is made on the ground that section 949 as amended does not vest discretion in the court to order the posting of an undertaking to effect a stay where the. judgment appealed from does not require any performance by the appellants. It is the theory of the appellants that inasmuch as the fund, which was the subject-matter of the proceeding to determine title, presumably is in the custody of the sheriff, there is no performance required of the appellants by the judgment from which the appeal was taken; therefore that there is no “performance” which may become the basis of the condition specified by the code and the court’s order.

The related code sections and pertinent decisions may properly be considered as bearing upon the legislative intent and purpose in the adoption of the amendment. The language of the amendment suggests the question: Do the words, “conditioned for the performance of the judgment”, place a limitation on the discretion vested in the trial court; or may the trial court require a bond in every case, regardless of the fact that the judgment, if it be affirmed or the appeal dismissed, requires no performance on the part of the appellants? It is conceded that the only judgment of the trial court in the title proceeding was the adjudication of title accompanied by a direction to the sheriff to release and deliver to the plaintiffs the whole of the money on deposit in partial satisfaction of their judgment. In such a ease, would there be any possible ground- of recovery under the stay bond specified by the court’s order, if the sheriff should fail to comply with the direction upon an affirmance of the judgment?

Commencing with the case of In re Schedel, 69 Cal. 241 [10 Pac. 334], appealing parties, under section 942 (requiring an undertaking to stay proceedings on an appeal from a money judgment); section 943 (requiring the placing of documents or personal property in the custody of the sheriff, or an undertaking to stay proceedings where the judgment appealed from directs the assignment or delivery of documents or personal property); section 944 (requiring the execution and deposit of instruments of conveyance to effect a stay where the judgment directs the execution of a conveyance or other instrument); and section 945 (requiring the filing of an undertaking conditioned against the commission of waste, to effect a stay where the judgment appealed from directs the sale or delivery of possession of real property), have been classified as appellants who are required “to perform the directions of the judgment or order appealed from”. In the Schedel case the appeal was from a decree of distribution. The appealing legatee applied to this court for a writ of supersedeas. It was held that, since the judgment or decree did not require the appellant “to perform the directions of the judgment”, the perfecting of the appeal without the filing of any additional bond stayed the effect of the decree and any further proceedings pending determination of the appeal.

The same distinction was made and similar results followed in the cases of Born v. Horstmann, 80 Cal. 452 [22 Pac. 169, 338, 5 L. R. A. 577], where the appeal was from an interlocutory decree in partition; Pennie v. Superior Court, 89 Cal. 31 [26 Pac. 617], where the appeal was by certain claimants from a decree in a proceeding to determine heirship and from an order granting family allowance, as to which the appellants “were not required to do anything”; In re Woods’ Estate, 94 Cal. 566 [29 Pac. 1108], involving an appeal from a decree adjudging the public administrator entitled to letters of administration as against the appellants; Zappettini v. Buckles, 167 Cal. 27 [138 Pac. 696], where the appeal was from a judgment decreeing dissolution of a partnership, directing sale of partnership property by the receiver and deposit of the proceeds into court to abide its further order, and adjudging the manner of the application thereof. (See, also, Rohrbacher v. Superior Court, 144 Cal. 631 [78 Pac. 22]; Halsted v. First Sav. Bank, 173 Cal. 605 [160 Pac. 1075].)

The facts in the case of Fulton v. Webb, 9 Cal. (2d) 726 [72 Pac. (2d) 744], were similar to those shown here, but the legal question now presented was not. decided. The writ of supersedeas was there issued on another ground.

The ease of McCallion v. Hibernia Sav. & Loan Soc., 98 Cal. 442 [33 Pac. 329], involved conflicting claims of parties plaintiff and defendant to a fund of several thousand dollars. The judgment directed that the plaintiffs were entitled to the money and to costs of the action. The defendants appealed and furnished a stay bond in double the amount of the judgment and costs. Upon the affirmance of the judgment and the filing of the remittitur, the plaintiffs moved for judgment against the sureties. The sureties appealed from the judgment rendered against them. On consideration of the appeal the court observed that section 942 of the Code of Civil Procedure “applied only to appellants who were required to perform the directions of the judgment or order appealed from”. A reversal was ordered on the ground that the judgment did not require a bond to stay execution and that the undertaking was without consideration and void.

The foregoing well-recognized distinction may be said to have moved the legislature to frame, as it did, the amendment to section 949 of the Code of Civil Procedure permitting the trial court to require an undertaking to effect a stay pending appeal in all those cases not covered by sections 942 to 945. The use of the words, “conditioned for the performance of the judgment”, indicates the intent that a bond may be ordered in such of those cases where the appellant was adjudged to have money or other property in his possession belonging to the respondent, or was required to perform some act for the benefit of the respondent or in pursuance of the directions of the judgment or order appealed from, and that in all other cases the provisions of the section should operate as a stay of proceedings without bond. Applying the intent as so manifested, it would follow that the requirement of a bond in the present proceedings would amount to an abuse of the discretion vested in the court by the language of the amendment. The judgment in this case requires nothing of the appellants. It merely adjudges the title to a fund which reposes in custodia legis, awaiting only the final outcome of the controversy before distribution to the parties entitled thereto. The direction for the distribution of that fund by the sheriff (whose performance is protected by his official bond) is not part of the judgment but is ancillary thereto, and is automatically stayed by the appeal. (Fulton v. Webb, supra.) The parties have not indicated what possible liability would attach to the sureties under the $4,000 undertaking if it were given. The trial court apparently was of the view that the language of the amendment permitted it to exercise a discretion to require a bond in every case merely upon the application of the respondents; but such exercise would be arbitrary where the posting of an undertaking would amount to nothing more than an empty and expensive formality.

The plaintiffs contend that the issuance of the writ of supersedeas at this time would not effect a stay for the reason, so it is claimed, that the direction to the sheriff has been executed. It appears that a warrant had. been drawn on the county treasurer for the payment of the fund to the plaintiffs or their attorneys. Payment of the warrant has been withheld because of a temporary stay ordered by the trial court pending the result of the present application. If the requested writ be not issued the judgment will be enforced and the money paid to the respondents unless the appellants comply with the order requiring the undertaking on appeal. The fact that the county treasurer is not a party to the present proceeding will not defeat the operation of the writ for the reason that the fund, in legal contemplation, is in the possession of the sheriff as an officer of the court, with the county treasury as his depository.

We conclude that the facts justify the issuance of the writ, the effect of which will stay any further enforcement of the judgment pending the disposition of the appeal.

Let the writ of supersedeas issue accordingly.

Curtis, J., Edmonds, J., Seawell, J., Langdon J., and Houser, J., concurred.