text:
    [Bar Misc. No. 1481.
    In Bank.
    November 22, 1937.]
    In the Matter of IRA S. HATCH, an Attorney at Law.

      Houser, Houser & Houser for Attorney Hatch.
    Philbrick McCoy for The State Bar.
   THE COURT.

On February 10, 1937, Ira S. Hatch, an attorney at law, was found guilty by the court sitting without a jury on 52 counts in two informations charging violations of the Corporate Securities Act in that he knowingly participated in the issuance and sale of securities without first having obtained a permit from the commissioner of corporations ; also that he engaged in the purchase of securities for the purpose of reselling them without first having obtained a broker’s license from the commissioner of corporations. The record of his convictions was filed with this court pursuant to the provisions of sections 287, 288, 289 and 299 of the Code of Civil Procedure. Under those sections an attorney who has been convicted of a felony or misdemeanor involving moral turpitude must be suspended upon the receipt by the court of the record of conviction, and when the judgment of conviction has become final he must be permanently disbarred.

The question was raised whether the offenses of which Hatch was convicted were crimes involving moral turpitude. The matter is submitted on the record of conviction and the briefs filed on behalf of the attorney and The State Bar.

Upon his own application to the trial court, Hatch, hereinafter referred to as the defendant, was granted probation. The order of the court was that the “proceedings herein be suspended and defendants placed on probation as follows: Defendant Hatch is placed on probation for a period of ton years under the following conditions: Defendant shall not engage in any investment business or handle the money of others. Defendant is ordered released forthwith”.

The record in each of the two criminal proceedings against the defendant presents the numerous counts based upon the complaint of the persons therein named, the finding by the court of the guilt of the defendant on specified counts, and the orders of the court on the motions to dismiss certain other counts and on the application for probation. Under the sections of the Code of Civil Procedure above cited the offense or crime, whether a felony or a misdemeanor, must be one involving moral turpitude, otherwise the court is not called upon to carry out the requirements of the statute.

The defendant contends that the violations of the Corporate Securities Act, of which he was convicted, constitute merely technical violations and do not indicate that they were committed with moral turpitude; that the act of issuing and selling securities without a permit is not inherently bad, but is merely malum prohibitum, inasmuch as prior to the adoption of the act the issuance and sale of securities without a permit did not involve any question of right or wrong in human conduct. The defendant therefore stresses the view that wherever suspension or disbarment pursuant to section 299 of the Code of Civil Procedure is concerned, moral turpitude must connote baseness, vileness or depravity, such as is inherently a part of murder and other crimes malum in se, . However, the courts of this state have rejected such a test as exclusive in determining whether an attorney has been guilty of conduct requiring disciplinary action or disbarment. Conduct involving moral turpitude has been defined as “everything done contrary to justice, honesty, modesty or good morals”. {Matter of Coffey, 123 Cal. 522, 524 [56 Pac. 448]; Lantz v. State Bar, 212 Cal. 213, 218 [298 Pac. 497]; Jacobs v. State Bar, 219 Cal. 59, 64 [25 Pac. (2d) 401].) Therefore, if the offenses of which the defendant was convicted meet the test and involve moral turpitude, this court under the code sections must suspend him from the practice of the law in this state at least during the term of his probation. {In re Jacobsen, 202 Cal. 289 [260 Pac. 294].)

This court is not called upon to consider the question of the defendant’s guilt. Section 287, subdivision 1, Code of Civil Procedure, makes the record of conviction conclusive on that point.

Conceivably not in every case of the conviction of violations of the Corporate Securities Act will the face of the record of conviction indicate conclusively whether the offense involved moral turpitude. No doubt attaches to the conviction of such crimes as murder, embezzlement, extortion and many others. But convictions of violations of police regulations, or of simple assault or battery, may indicate without further inquiry that moral turpitude was not involved.

There is necessarily a field of doubtful eases where the determination as to whether moral turpitude was involved may fall on one or the other side of the line, depending upon the circumstances of the particular case. That certain violations of the Corporate Securities Act may fall into this class of doubtful cases is evident from the fact that in the criminal prosecution of a person so charged the question of good or bad faith is not necessarily an element for consideration. {El Claro Oil etc. Co. v. Daugherty, 11 Cal. App. (2d) 274, 281 [53 Pac. (2d) 1128, 55 Pac. (2d) 488]; People v. McCalla, 63 Cal. App. 783, 793-795 [220 Pac. 436].) The fact that the legislature has made the basis of conviction the bare act of knowingly authorizing or assisting in the issue or sale of securities without a permit, leaves for the determination of the court the question whether such act involved moral turpitude. This court would not be justified in holding that, because the circumstances of any one such case might indicate a. mere technical omission without the stigma of moral guilt, the entire class of offenses is one not involving moral turpitude. In some doubtful cases the record of conviction may not be sufficient upon which to base a determination one way or the other on the question of moral turpitude, and appropriate action by the court may require a reference to the Board of Governors of The State Bar for an inquiry and recommendation. The State Bar is not deprived of jurisdiction in disciplinary proceedings to inquire into the fitness of an attorney to practice when a record of his conviction is on file with the court under sections 287 et seq. of the Code of Civil Procedure. (Shafer v. State Bar, 215 Cal. 706 [12 Pac. (2d) 957].)

“The concept of moral turpitude depends upon the state of public morals, and may vary according to the community or the times.” (hi re Bartos, 13 Fed. (2d) 138.) In Beck v. Stitzel, 21 Pa. 522, 524, citing among other cases, In re Coffey, supra, it was said: “This element of moral turpitude is necessarily adaptive; for it is defined by the state of public morals, and thus far fits the action to be at all times accommodated to the common sense of the community.” In the case of Rudolph v. United States, 6 Fed. (2d) 487 [55 App. D. C. 362, 40 A. L. R. 1042], it was said: “We are not much concerned with the distinction sought to be made between crimes malum in se and those which are merely malum prohibitum. Many things which were not considered criminal in the past have, with the advancement of civilization, been declared such by statute, and the commission of the offense, if it involves the violation of a rule of public policy and morals is such an act as may involve moral turpitude”; and, “There is no hard and fast rule as to what constitutes moral turpitude. It cannot be measured by the nature or character of the offense unless, of course, it be an offense inherently criminal, the very commission of which implies a base and depraved nature. The circumstances attendant upon the commission of the offense usually furnish the best guide. ’ ’

In sustaining legislation of the character of the Corporate Securities Act, it has been held that the general purpose and tenor of the act is to “protect the public against the imposition of unsubstantial schemes and the securities based upon them” and against “fraudulent or unlawful stock a,nd investment schemes and enterprises”. [Hall v. Geiger-Jones Co., 242 U. S. 539 [37 Sup. Ct. 217, 61 L. Ed. 480, Ann. Cas. 1917C, 643, L. R A. 1917F, 514]; In re Leach, 215 Cal. 536, 543 [12 Pac. (2d) 3]; Daugherty v. Riley, 1 Cal. (2d) 298, 305 [34 Pac. (2d) 1005] ; Cecil B. De Mille Productions v. Woolery, 61 Fed. (2d) 45.) It must necessarily follow that violations of the act are contrary to the concept of honesty and good morals where the intent is to evade its provisions with the object of gain or profit. Therefore the stigma of moral turpitude may attend the violation of the statutory requirement that a permit must be obtained from a body constituted to supervise the details and guard the interests of the public against impositions and frauds before the issuance or sale of securities. This stigma would seem to attach to the conviction of an attorney who, as charged and found guilty, “knowingly authorizes, directs or aids in the issue and sale of” securities contrary to the provisions of the act (Stats. 1931, p. 950, sec. 18), where the circumstances indicate that the omission was not merely technical but was done with the object and design of evading compliance with the act. (See, also, In re Diesen, 173 Minn. 297 [215 N. W. 427, 217 N. W. 356].)

The defendant claims that the failure to obtain the permit was in this ease merely a technical omission, for which he should not be disbarred or suspended from the practice of the law relying on In re Kling, 44 Cal. App. 267 [186 Pac. 152], The fact of the record itself refutes the contention. Numerous persons to whom we may assume the securities were sold complained against the defendant. The defendant does not offer to show that his alleged “technical” omission was cured by a dilatory application for a permit, or that a permit was subsequently granted. On the contrary the plain indication from the two classes of charges is that the defendant’s purpose was to evade the necessity of a permit by purchasing the securities and reselling them as his personally-owned property. The trial court apparently concluded that the acts of the defendant were of such a serious and dishonest character that protection to society demanded that he should not, during the period of probation, engage in the investment business or handle the money of other persons. It would be anomalous to conclude that he should nevertheless be permitted to continue in the practice of the law during that period. The same reason for requiring that he be restrained from further engaging in the business of making investments for others or in handling the property of others is persuasive that the motive and intent with which he acted was such as to indicate turpitude in the commission of the offenses of which he was convicted. The record of conviction therefore is sufficient upon which to dispose of the proceedings herein finally without a reference to and investigation and recommendation by the Board of Governors of The State Bar as to whether the defendant’s acts involved moral turpitude.

It is therefore ordered that the defendant be suspended from the practice of the law in this state for the period of his probation in the action herein referred to and until the further order of this court.


source: Caselaw Access Project

author: THE COURT.

license: Public Domain

text:
    [L. A. No. 15889.
    In Bank.
    November 24, 1937.]
    LAUREN PIERCE AMELL, Respondent, v. BEULAH JO AMELL, Appellant.

      Laurence B. Martin for Appellant.
    Morris Lavine for Respondent.
   THE COURT.

Motion to dismiss appeal.

Following trial, an interlocutory decree of divorce was entered in this action in favor of the plaintiff-husband and against the defendant-wife, the latter, however, being awarded, in addition to one-half of the community property, certain alimony, counsel fees and costs. Pursuant to and within the time prescribed by the provisions of section 663 of the Code of Civil Procedure, plaintiff moved to set aside and vacate the conclusions of law and to substitute another and different judgment consistent with the findings of fact. The motion was granted, the conclusions of law were modified and a new and different judgment was entered in which no reference was made to alimony, counsel fees or costs. This new and different judgment was entered on December 12, 1935. Within ten days after service of notice of entry thereof and on December 23, 1935, the defendant-wife moved for a new trial. The motion was dismissed by the trial court on February 6, 1936, for an assumed lack of jurisdiction. Thereafter and on February 13, 1936, the defendant-wife noticed an appeal from the new and different judgment. Inasmuch as the motion to dismiss now before us is directed solely at said appeal, we make no mention of any other appeal in the cause.

In our opinion, the motion must be denied. There can be only one final judgment in an action. If for any reason a judgment is vacated and another and different judgment is entered in lieu thereof, as was the case here, the new and different judgment becomes the only judgment in the case. It furnishes the sole guide as to the respective rights and obligations of the parties to the action and is the judgment referred to in section 659 of the Code of Civil Procedure, wherein it is provided that new trial proceedings must be instituted “within ten (10) days after receiving written notice of the entry of the judgment”. We entertain no doubt as to the appealability of such new and different judgment nor as to the extension of time for such appeal resulting from a subsequently and seasonably instituted proceeding for new trial. The following eases suggest the propriety of our conclusions: Karsh v. Superior Court, 124 Cal. App. 373, 376 [12 Pac. (2d) 658]; Bond v. United Railroads, 169 Cal. 273 [146 Pac. 688]; Mc-Nutt v. City of Los Angeles, 187 Cal. 245, 257 [201 Pac. 592]; Berry v. Moulie, 180 Cal. 137 [179 Pac. 686]; Gillanders v. Da Silva, 212 Cal. 626, 627 [299 Pac. 722]; McCaleb v. McCaleb, 177 Cal. 147, 148 [169 Pac. 1023].

In the instant case the new trial proceeding was instituted within ten days after service of notice of entry of the new and different judgment and was therefore within time. (Sec. 659, supra.) The filing of the notice of appeal from said judgment occurred within thirty days after termination of the new trial proceeding and likewise was within time. (Sec. 939, Code Civ. Proc.)

The movant has also appended to the prayer of his motion to dismiss a request that we “affirm the actions of the trial court” in vacating the original judgment and entering another and different judgment. He does not, however, on this proceeding undertake to justify the entry of an interlocutory decree of divorce in his favor, an issue also subject to review upon the defendant-wife's appeal from such decree. We shall not, therefore, treat the motion as one to affirm under section 3 of Rule V but shall allow the appeal to take its regular course.

The motion is denied.


author: NOURSE, J., pro tem.

text:
    [L. A. No. 15763.
    In Bank.
    November 24, 1937.]
    J. D. WATSON et al., Appellants, v. MARY ANN PEYTON, Respondent.
    Davis & Thorne and Leland S. Davis for Appellants.
    Thomas W. Cochran for Respondent.
   NOURSE, J., pro tem.

In 1927 this defendant, Mary Ann Peyton, and her husband purchased with community funds a family home, taking title as joint tenants with right of survivorship. On January 8, 1935, the husband filed a declaration of homestead on the property, in which the wife did not join. On April 22, 1935, the husband died, and the property passed into probate for distribution to the widow. In 1934 these plaintiffs had foreclosed a mortgage on other land of the Peytons and on June 28, 1935, they secured a deficiency judgment against them. A controversy arose as to whether this judgment constituted a valid, subsisting lien against the homesteaded property. The plaintiffs therefore filed the present action for declaratory relief, praying to have their judgment declared a valid lien and the homestead declared invalid. Defendant widow answered alleging that the home was purchased and held as community property, despite the joint tenancy deed, and asking that the homestead be declared valid and free of the lien of plaintiffs’ judgment. Upon trial of the action the court permitted the widow to testify that she left all business transactions to her husband, and that she had always believed that they had acquired the home as community property, with community funds; that she knew nothing of taking record title as joint tenants with right of survivorship.

The trial court found that although the deed described the grantees as joint tenants with right of survivorship, there was no intention on the part of either spouse to alter the character of the property from its community status to that of a joint tenancy and that said property, purchased with community funds, was and continued to remain community; hence the homestead filed by the husband was valid. Judgment followed declaring the homestead valid and free and clear of plaintiffs’ lien. Plaintiffs have appealed, arguing two main points.

First question: Was it proper for the court below to admit parol evidence of community ownership to vary the terms of the conveyance to the husband and wife as joint tenants with right of survivorship? Appellants argue that it was improper. Both parties cite Siberell v. Siberell, 214 Cal. 767 [7 Pac. (2d) 1003], which discusses the point without deciding it. The recent case of Cummins v. Cummins, 7 Cal. App. (2d) 294, 304 [46 Pac. (2d) 284, 289], is cited in support of respondent’s position. The court there said: “In the presence of such undisputed evidence of both owners (testimony of spouses to vary terms of deed) there can be no question of their intention to hold the property as community property, regardless of the terms of the joint tenancy deed.’]

It may be assumed from the statements made in both of these cases that the evidence of the intention of the parties was admitted without objection. In neither case was its admissibility for that purpose squarely decided. Section 1856 of the Code of Civil Procedure limits the use of extrinsic evidence when the terms of the contract have been reduced to writing. Here the writing—the joint tenancy deed—was executed to husband and wife in 1927 upon their written request and mutual consent. The pleadings do not put in issue any mistake or imperfection in the writing, nor is the validity of the document in dispute. The purport of the testimony objected to is that the property was purchased from community funds and that the wife did not know that her name was on the deed as one of the grantees. From this testimony it is argued that there was no intention on the part of either spouse to alter the character of the property from its community status to that of a joint tenancy. There is no testimony of the intention of the husband, but this appears clearly upon the face of the writing. The wife having requested in writing the execution of the joint tenancy deed, she cannot defeat her act by testimony of a hidden intention not disclosed to the other party at the time of the execution of the document. (Brant v. California Dairies, Inc., 4 Cal. (2d) 128, 133 [48 Pac. (2d) 13].) Since the property was purchased with the earnings of the husband, which were community property, and, since the wife gave her written consent to the transfer of this community personal property into a joint tenancy estate in the realty, all the restrictions of sections 172 and 172a of the Civil Code were met, and no evidence of the secret and undisclosed intention of the wife was admissible.

Second question: If the deed could not be varied by parol evidence, and we consider the homestead as one declared by the husband alone on joint tenancy property, then is that homestead valid?

Section 1238, Civil Code, prior to 1929, provided: “ . . . the homestead may be selected from the community property, or the separate property of the husband, or, with the consent of the wife, from her separate property”. Section 1239 provided : “The homestead cannot be selected from the separate property of the wife, without her consent, shown by her making or joining in making the declaration of homestead.”

In 1929 the legislature added the following sentence to section 1238: “Property, within the meaning of this section, includes any freehold title, interest, or estate which vests in the claimant the immediate right, of possession, even though such right of possession is not exclusive.” Section 1265 of the Civil Code provides: “ ... If the selection was made by a married person from the community property, or from the separate property of the spouse making the selection or joining therein, the land so selected, on the death of either of the spouses, vests in the survivor. ...” Section 663 of the Probate Code provides: “If the homestead . . . was selected . . . from the separate property of the person selecting or joining in the selection of the same, it vests, on the death of either spouse, absolutely in the survivor.”

There is language in the Siberell case, supra, indicating that the estate of each spouse in a joint tenancy is the separate property of each, subject to the right of survivorship. Since the respondent herein consented to the creation of such an estate, she must be deemed to have given her husband all the incidents of such ownership. Bach having held the freehold title, subject to the right of survivorship, the interest, or estate, of the husband therein, coupled as it was with the right of immediate possession, was property within the meaning of section 1238 of the Civil Code, as amended, from which the husband was entitled to select a homestead. And, since this “property” was the separate property of the husband, the consent of the wife was not necessary.

Prior to the amendment to section 1238 of the Civil Code, where the joint tenants were husband and wife, it was held that the wife alone, or the husband and wife together, could make a valid declaration of homestead upon the property held in joint tenancy. (Swan v. Walden, 156 Cal. 195 [103 Pac. 931, 134 Am. St. Rep. 118, 20 Ann. Cas. 194]; 13 Cal. Jur., pp. 451, 452.) A different rule obtains as to joint tenants and tenants in common who are not husband and wife. (Schoonover v. Birnbaum, 148 Cal. 548 [83 Pac. 999].) The Swan case rested upon the theory that the interest of each spouse in the joint tenancy was separate property and that the wife had the power to declare a homestead on her husband’s interest, though he had no such power over hers. This ruling was supported by numerous authorities. The amendment to section 1238 of the Civil Code followed these cases and declared that the “property” from which a husband could select a homestead was that “estate” which vests in the claimant the immediate right of possession, even though such right of possession is not exclusive. It is such an estate that the husband has in property held in joint tenancy with his wife —a right of possession though not exclusive, but nevertheless a separate estate upon which he may declare a homestead. This estate covers the whole interest in the land, subject to the right of survivorship, and upon the death of the husband, the entire estate, subject to the homestead, vests absolutely in the survivor, and is not thereafter subject to the payment of any debt existing against either spouse at the time of death. (Section 663 of the Probate Code.)

The judgment is affirmed.

Seawell, J., Curtis, J., Edmonds, J., Langdon, J., and Waste, C. J., concurred.

Rehearing denied.


author: CURTIS, J.

text:
    [S. F. Nos. 15831-15832.
    In Bank.
    November 24, 1937.]
    WILLIAM L. PENZINER, Plaintiff and Appellant, v. WEST AMERICAN FINANCE COMPANY (a Corporation), Defendant and Appellant.

      Bronte M. Aikins and Oliver B. Wyman for Plaintiff and Appellant.
    Knight, Boland &Riordan, F. Eldred Boland, Richard M. Sims, Jr., and John A. Sinclair for Defendant and Appellant.
   CURTIS, J.

These two appeals are taken from the same judgment. The judgment rendered was in favor of the plaintiff and against the defendant West American Finance Company, and is for the sum of $38,909.91, besides costs and interest. Said defendant has appealed from said judgment on the ground hereinafter more fully referred to and discussed, and claims that the same is erroneous in its entirety. The plaintiff has appealed from said judgment and claims that it is inadequate and should include the sum of $6,693.98, in addition to the sum of $38,909.91, the amount found due plaintiff by the trial court.

Plaintiff was the owner of two adjoining lots in the city of San Francisco, situated on Jackson Street, near Buchanan. He planned to erect thereon a class A apartment house and applied to the defendant for a loan to finance the erection of said building. His application for a loan of $150,000 was approved, the proceeds to be used in the erection of said building. Accordingly a promissory note in that amount payable one year after date with interest at seven per cent per annum payable monthly in advance was executed and delivered by plaintiff to defendant. At the same time and as a part of the same transaction, the plaintiff executed and delivered a trust deed to secure the payment, of said promissory note. C. A. Gibson and B. T. Harper were named as trustees in said trust deed and the defendant was named as the beneficiary. This trust deed covered the two Jackson Street lots owned by the plaintiff.

Upon the execution and delivery of his note and trust deed, and the recordation of the latter instrument, the plaintiff began the construction of said apartment house upon said lots. The process of construction continued for a period of one year and at the end of the year the building was uncompleted. The defendant had advanced for the use of plaintiff on said promissory note from time to time during said year the sum of $134,396.11, which had been used in payment of the cost of constructing said building. This item according to the findings of the court was made up as follows: $122,804.03, advanced by defendant to plaintiff, or on his orders, during said year; $11,473.99, advanced by defendant to R. L. Flint during said year for the purpose of paying construction costs, and which was actually used for that purpose, and the item of $120.09, insurance on said building. According to the terms of this promissory note it matured at the end of one year. The plaintiff was then unable to pay said note or the amounts advanced thereon. Proceedings were instituted to foreclose said trust deed and these proceedings resulted in a sale of the real property covered by the trust deed to the Pacific States Savings & Loan Company acting for the defendant for the sum of $150,000. Although this property was bid in by the Pacific States Savings & Loan Company, it is conceded that the property was bought for defendant. Immediately after the sale, the Pacific States Savings & Loan Company conveyed the property to the defendant. Thereafter and within one year from the date of said sale the plaintiff commenced this action. His complaint was subsequently superseded by his third amended complaint. The third amended complaint consisted of four causes of action. The first cause of action was for damages alleged to have been sustained by the plaintiff by the wrongful act of this defendant and others in failing to deed to plaintiff said property under a refinancing plan after it had been bid in at said foreclosure sale as it was alleged the defendant had agreed to do. The second cause of action was for the recovery of treble the amount of usurious interest alleged to have been paid by plaintiff to defendant. The third and fourth causes of action, we are not concerned with in the decision of either of these appeals. We do not consider it necessary to set forth in detail the facts alleged in the first and second causes of action as it would aid but little in the decision of any question before us. A mere detailed statement of the allegations of these four causes of action may be found in the decision of the District Court of Appeal in the case entitled Penziner v. West Americam Finance Co., 133 Cal. App. 578 [24 Pac. (2d) 501.]

To this complaint both general and special demurrers were interposed by the West American Finance Company and other defendants. These demurrers were sustained, but on appeal the judgment of the trial court in favor of the defendant after sustaining said demurrers was reversed as to plaintiff’s first two causes of action. (Penziner v. West American Finance Co., supra.)

Upon the ease being returned to the superior court for trial upon the first two causes of action of said third amended complaint, the defendant filed its answer thereto. The cause went to trial, and resulted in a judgment in favor of the defendant on the first cause of action and in favor of the plaintiff upon the second cause of action. No appeal has been taken from the judgment on the first cause of action in favor of defendant. The controversy therein involved is, therefore, not before us in any manner. As before stated, the plaintiff has appealed from that portion of said judgment deducting from the amount of treble interest said sum of $6,693.98, and the defendant has appealed from said judgment in its entirety. We will continue to refer to the parties as the plaintiff and the defendant, the latter term applying only to the West American Finance Company.

The evidence shows that the transaction between the parties hereto was carried on in the following manner. Plaintiff was given credit upon the books of the defendant for the amount of the loan, $150,000. He was paid no part of this sum in cash, but as payments became due on the building, the defendant would pay the contractors or advance to plaintiff funds sufficient to meet the payments, and charge plaintiff’s account with the amount so advanced or paid. Plaintiff was also charged in advance monthly interest on the entire loan. For instance, the note was dated August 16, 1927. On that date the plaintiff’s account was charged with the sum of $875, being one month’s interest at 7 per cent per annum on the entire amount of $150,000. During that month the account of plaintiff as kept by defendant showed that defendant paid out for the use of plaintiff approximately the sum of $7,500. On the 16th of September, defendant charged the plaintiff’s account with a full month’s interest on the entire loan although the entries in its books showed that it had only paid out for plaintiff at that time the sum of approximately $7,500. On the following months for the balance of the entire year, the same procedure was followed. The regular charge of $875, being one month’s interest on the entire loan, was made against plaintiff’s account each month regardless of the amount which the defendant from time to time had advanced for plaintiff during said periods. Plaintiff was also charged with the sum of $4,500, as brokerage paid for making the loan, which the trial court found was not in fact paid. In this manner the plaintiff’s account was charged during the year with $10,500 interest, which together with the $4,500 brokerage payment amount to a profit of $15,000, and greatly exceeded 12 per cent per annum. This amount the court found “is a greater sum and value than the rate of 12 per cent upon $100.00 for one year”. The interest on the several amounts of money from the time they were advanced respectively to the end of the year at 12 per cent per annum is the sum of $7,434.48. Upon the sale of the property under the deed of trust, the proceeds were applied, after the payment of the costs of sale and said sum of $134,396.11, to the payment of said brokerage charge of $4,500 and interest on the entire loan from the date to the maturity of said promissory note.

It is first contended by defendant that plaintiff never paid one cent of interest to it and that the sale under the. trust deed did not constitute payment of interest. The facts are undisputed that the only interest paid by plaintiff was paid through the sale of the encumbered property under the deed of trust and the application of the proceeds of said sale by the trustees to the payment of the amounts advanced by the defendant with interest thereon as charged in the manner hereinbefore shown and said sum of $4,500 brokerage charge. This contention presents a serious question of law w'hich might be difficult of solution if the same were properly before us. We are of the opinion, however, that the question as to whether the sale under the trust deed constituted payment of interest was decided in the former appeal in this action against the contention of the defendant.

As noted above the order of the trial court sustaining defendant’s demurrer to the second cause of action of the third amended complaint, being the cause of action in which the judgment appealed from was rendered, was reversed by the District Court of Appeal. (Penziner v. West American Finance Co., supra.) As we have seen in this second cause of action, plaintiff predicates his right to recover treble interest upon the theory that the sale under the trust deed constituted payment of interest. In holding that the second cause of action stated a good cause of action, the court not only implied but expressly held that the sale of plaintiff’s property under the trust deed and the application of the proceeds of said sale to the payment of the interest claimed to be due and owing from plaintiff to defendant constituted payment of such interest within-the terms of the usury law then in force. A reading of the opinion in that case compels such a conclusion. The only argument advanced by the defendant against the application of the doctrine of the law of the case to the situation existing in the present action is that in the former appeal the court had before it only the allegations of the complaint; that the deed of trust was not before the court on the former appeal but is part of the record on appeal now before us, and that this deed of trust contains a covenant that the plaintiff is entitled to any surplus over and above his obligation. Defendant does not indicate the materiality of its new evidence, but appears to contend that the facts now before the court are different from those before the court on the former appeal, and therefore the rule of the law of the case does not apply. It cites in support of its present contention the case of Otten v. Spreckels, 183 Cal. 252 [191 Pac. 11]. That case simply holds that the rule has no application where the facts in the second appeal are different from those shown io have been present on the first appeal. There is no question but that the decision correctly states the law, but it will appear from a most casual reading of the opinion in that case that there was a radical difference between the facts before the court on the two appeals. That is not the case in the present appeal. We fail to see just what bearing the provision of the trust deed containing a covenant that the trustor shall be entitled to any surplus over and above his obligation, liad in determining the question as to whether the sale under the trust deed constituted payment of interest. Such a provision is usually contained in instruments of that character, and even in the absence of such a covenant, the rule would be the same, and upon a sale of the trust property, after the payment of all claims of the beneficiary and the trustees, the surplus remaining would belong to the trustor. (25 Cal. Jur., p. 108; Atkinson v. Foote, 44 Cal. App. 149, 156 [186 Pac. 831].)

It is clearly established by the decisions in this state that when the precise question before the court has been decided in a former appeal in the same action and under substantially the same state of facts, the parties are estopped from again litigating this question in any subsequent proceeding either before the trial or appellate courts. (United Dredging Co. v. Industrial Acc. Com., 208 Cal. 705, 712 [284 Pac. 922], and scores of cases decided by this court and listed in 2 Cal. Jur., pp. 946, 947 and 948.) On the former appeal in this action the question as to whether the sale under the trust deed and application of the proceeds thereof constituted payment of interest, was squarely before the court, and it was unequivocally held that such sale constituted a payment of interest on the original obligation of the plaintiff. That the court so held plainly appears from the following excerpts from the opinion. On page 588 of the opinion, we find this statement: “Through the sale and conveyance to the loan company [the Pacific States Savings & Loan Company] for the finance company [the defendant herein], the plaintiff paid to the latter and the latter [the defendant] extorted from him for the loan, the sum of $19,362.50, which exceeds twelve per cent per annum on $100,000, the amount actually advanced.” Again on the same page of the opinion, the court says: ‘ ‘ The interest was paid to and received by the finance company [defendant] alone, by the application of the amount of the bid made by the loan company at the sale to the claimed debt due the finance company by the trustees.” The law of the case applies regardless of whether the former decision is correct or erroneous. (Westerfeld v. New York Life Ins. Co., 157 Cal. 339, 342 [107 Pac. 699], Tally v. Canahl, 151 Cal. 418, 421 [90 Pac. 1049], Newport v. Hatton, 207 Cal. 515, 519 [279 Pac. 134], and McEwen v. New York Life Ins. Co., 187 Cal. 144, 147 [201 Pac. 577].) In these deeisions the doctrine of the law of the case is stated as follows: “Where upon an appeal, the Supreme Court, in deciding the appeal, states in its opinion a principle or rule necessary to the decision, that principle or rule becomes the law of the case and must be adhered to throughout its subsequent progress, both in the lower court and upon subsequent appeal . . . and this, although in its subsequent consideration this court may be clearly of the opinion that the former decision is erroneous in that particular.” (Westerfeld v. New York Life Ins. Co., supra, p. 342.) However, in holding that the law of the case applies in the present appeal before us, we are not to be understood as passing upon the accuracy of the former decision. For our present purpose, the former decision in this action establishes the law which must govern this court in determining the question as to whether any interest was really paid by the plaintiff. The former opinion held that interest was paid by the sale under the trust deed and the application of the proceeds of the sale in the manner shown above. That decision established the law which must govern this court in the decision of the question there decided.

It is next contended that the usury law of 1918 (Statutes of 1919, p. Ixxxiii), an initiative measure, was repealed by the adoption in November, 1934, of section 22 of article XX of the Constitution. The judgment in this case was rendered June 17, 1935. There can be no doubt that if the constitutional provision did in fact repeal the usury law of 1918 without a saving clause, plaintiff’s cause of action fell with such repeal. The right to recover treble damages given by section 3 of the usury law is a purely statutory remedy, not existing at common law, and is likewise a penalty imposed upon the lender. The rule in such cases is clear that where no rights are vested the right falls and the statutory remedy ceases to exist upon the repeal of the statute without a saving clause unless the right has been converted into a final judgment prior to a repeal of the statute. Although the cause of action upon which the judgment herein is based, accrued prior to the date of the alleged repeal, the judgment was entered subsequent to that date. The repeal of the statute without a saving clause would therefore wipe out the cause of action and render the judgment of no legal validity. (Anderson v. Byrnes, 122 Cal. 272 [54 Pac. 821]; Napa. State Hospital v. Flaherty, 134 Cal. 315 [66 Pac. 322]; People v. Bank of San Luis Obispo, 159 Cal. 65 [112 Pac. 866, Ann. Cas. 1912B, 1148, 37 L. R. A. (N. S.) 934]; Moss v. Smith, 171 Cal. 777 [155 Pac. 90]; Callet v. Alioto, 210 Cal. 65 [290 Pac. 438]; Krause v. Rarity, 210 Cal. 644 [293 Pac. 62, 77 A. L. R. 1327]; Ewell v. Daggs, 108 U. S. 143 [2 Sup. Ct. 408, 27 L. Ed. 682].)

We are thus directly presented with the question as to the legal effect upon the usury law of the adoption by the people of section 22 of article XX of the Constitution. It should be here mentioned that the usury law was adopted as an initiative measure and inasmuch as it contains no provision permitting its amendment by the legislature, the act can be amended or repealed only “by a vote of the electors”. (California Constitution, art. IV, see. 1.)

On the question as to the legal effect of the constitutional provision, not only have exhaustive briefs been filed by the parties, but numerous amici curiae have filed briefs covering a wide range of discussion.

The usury law consists of five sections. Section 1 provides that the rate of interest upon the loan or forbearance of money, or upon California judgments shall be 7 per cent per annum, but it shall be competent for the parties to contract for a rate of interest not to exceed 12 per cent per annum, if such contract is in writing.

Section 2 provides that no person, company, association, or corporation shall directly or indirectly take or receive, in money, goods or things in action, or in any manner whatsoever any greater sum for the loan or forbearance than at the rate of 12 per cent per annum; that in the computation of interest, interest shall not be compounded, nor shall interest bear interest unless so agreed in writing. It is further provided that any agreement or contract of any nature in conflict with the provisions of this section shall be null and void”, as to its interest provisions and no action to recover interest on such agreement shall be maintained, and the maturity date of the debt cannot be accelerated.

Section 3 provides that every person, company, association or corporation that has paid interest in excess of that allowed under sections 1 and 2 may recover against the person, company, association, or corporation who shall have taken or received the same, treble the amount of the money so paid in violation of said sections, providing that such action must be brought within one year after such payment. The section further provides for certain penalties to be imposed on certain classes of lenders which provisions have been held to be unconstitutional. (Wallace v. Zinman, 200 Cal. 585 [254 Pac. 946, 62 A. L. R. 1341]) and then provides any violation of sections 1 and 2 shall be a misdemeanor.

Section 4 repeals sections 1917, 1918, 1919 and 1920 of the Civil Code and all acts and parts of acts inconsistent with the usury law.

Section 5 provides that the act may be designated as the “usury law”.

Article XX, section 22, of the Constitution is not divided into numbered sections. Paragraph 1 provides that the rate of interest upon the loan or .forbearance of money, or upon California judgments shall be 7 per cent per annum, but it shall be competent for the parties to any loan agreement to contract in writing for a rate of interest not exceeding 10 per cent per annum. It is to be noted that except for the permissible contract rate being reduced from 12 per cent to 10 per cent this paragraph is substantially similar to section 1 of the usury law.

Paragraph 2 of the amendment provides that no person, association, copartnership or corporation shall by charging any fee, bonus, commission, discount or other compensation receive from a borrower more than 10 per cent per annum upon any loan or forbearance of any money. Except as to the reduction of interest from 12 per cent to 10 per cent per annum this paragraph is substantially Similar to the first part of section 2 of the usury law. The many other provisions of section 2 of the usury law find no counterpart in the constitutional amendment.

Paragraph 3 of the constitutional amendment finds no counterpart in the.usury law. It provides, “However, none of the above restrictions shall apply” to building and loan associations, industrial loan companies, credit unions, licensed pawnbrokers or personal .property brokers, or to banks incorporated under the state “Bank Act” of 1909 or under federal law, or to any nonprofit cooperative association organized under the Agricultural Code and certain other designated classes of lenders of which appellant is not a member, “nor shall any such charge or any said exempted classes of persons be considered in any action or for any purpose as increasing or affecting or as connected with the rate of interest hereinbefore fixed”. It is further provided that “the Legislature may from time to time prescribe the maximum rate per ¡minim of, or provide for the .supervision, or the filing of a schedule of, or in any manner fix, regulate or limit, the fees, bonus, commissions, discounts or other compensation whibh all or any of the said exempted classes of persons may charge or receive from a borrower in connection with any loan or forbearance of any money, goods or things in action”.

Paragraph 4 of the constitutional amendment provides that, “The provisions of this section shall supersede all provisions of this Constitution and laws enacted thereunder in conflict therewith. ’ ’

In reading the amendment it is at once apparent that the first two paragraphs, except as to reducing the maximum rate of interest, are wholly consistent with the usury law. Further, the amendment is wholly silent as to remedies or penalties and does not contain many of the other provisions of the usury law. The amendment does, however, place in the hands of the legislature the power to control certain of the charges of certain designated classes of lenders. Aside from reducing the maximum permissible rate from 12 per cent to 10 per cent there is nothing in the constitutional provision to indicate that it was intended thereby to affect the applicability of the usury law provisions at least in so far as they apply to the nonexempt classes of lenders of which defendant is one.

In so far as the provisions of the usury law and the constitutional provision are similar, or substantially so, it is obvious that they are not in conflict, and it is further clear that the repealing clause of the amendment did not expressly repeal the similar provisions of the usury law, inasmuch as that clause only supersedes laws “in conflict therewith”. It is not at all unusual to find both a statutory provision and a constitutional provision identical in their operation, and in such event both are considered as the source of the right conferred or penalty imposed. In Kaysser v. McNaughton, 6 Cal. (2d) 248 [57 Pac. (2d) 927], an almost identical problem to the one here under discussion was presented. That case involved the question as to the effective repeal date of the stockholders’ liability. This liability was first imposed by statute. Later, a substantially similar provision was inserted in the Constitution. While both were in existence, the court held the liability was imposed by both the statute and the Constitution. At a still later date the constitutional provision was repealed. It was held that the statutory provision still remained and served to impose the liability until the statute was itself repealed. (See also Gardiner v. Bank of Napa, 160 Cal. 577 [117 Pac. 667].)° It therefore follows that in so far as the provisions of the usury law and the constitutional amendment are identical, or substantially so, such provisions were not repealed by the constitutional provision.

In so far as the constitutional amendment changes the maximum permissible rate of interest from 12 per cent to 10 per cent for all practical purposes, it constitutes an amendment of sections 1 and 2 of the usury law. It is true the usury law is an initiative measure, but it is quite clear that an initiative measure may be changed or amended by a constitutional provision adopted by the people. Article IY, section 1, provides that no act adopted by the people “shall be amended or repealed,except by a vote of the electors”. Article XX, section 22, was adopted by such a vote.

Defendant urges that the usury law was repealed under any one or all of three theories—(1) that it was expressly repealed by the repealing clause of paragraph 4; (2) that it was impliedly repealed because inconsistent with the constitutional provisions; and (3) that a repeal by revision was accomplished. In connection with the last two theories, appellant relies strongly on the reasoning of Fenton v. Markwell & Co., 11 Cal. App. (2d) (Supp.) 755 [52 Pac. (2d) 297], in which it was held the usury act was repealed by the adoption of the constitutional provision. After a careful consideration of the applicable rules of construction, we are convinced that none of the theories advanced by appellant is sound.

As far as the alleged express repeal is concerned, little need be said. Article XX, section 22 only repeals or supersedes “all provisions of this constitution and laws enacted thereunder in conflict therewith”. Such clauses have uniformly been held to repeal or supersede only those portions of prior acts repugnant to the later act. It must be presumed that the legislature in proposing and the electorate in adopting the constitutional amendment acted with full knowledge of the existence of the prior statute relating to the same general subject. Such a limited repealing clause expresses indirectly the intent that non-conflicting prior statutes shall remain in force. It is well settled that such a repealing clause operates as an express limitation upon the extent to which the former acts shall cease to be operative, namely, only in so far as they are actually inconsistent with the new act. These rules of construction are well settled. The appropriate rule, supported by many authorities, is stated as follows in 59 Corpus Juris, page 903: ‘ Such a clause is effective to repeal all prior general laws or parts thereof, which are repugnant to, inconsistent and irreconcilable with, the repealing statute. ... On the other hand, the clause operates as an express limitation upon the extent to which it is intended that former acts shall cease to be operative, namely, only so far as they are actually inconsistent with the new act. Also, it may be considered as a recognition, or indication of a purpose, that prior acts or parts of acts which are not repugnant to and inconsistent with the new act are to remain in force, ...” (See, also, 25 R. C. L., p. 912; Holden v. Minnesota, 137 U. S. 483 [11 Sup. Ct. 143, 34 L. Ed. 734].)

The arguments based on implied repeal and repeal by revision are equally without merit. One of the cases strongly relied upon by appellant expressing these rules is Mack v. Jastro, 126 Cal. 130 [58 Pac. 372], holding that the County Government Act of 1897 in reference to the issuance, sale and disposition of county bonds was intended to substitute a new and complete scheme in relation to the subject matter, and to have superseded certain earlier acts dealing with the same subject. At page 132 the court stated: “We think, however, that a reading of the two sections at once discloses that the legislature in the County Government Act of 1897 designed and devised a new and complete scheme for the issuance of county bonds, and, while it is true that repeals by implication are not favored, whenever it becomes apparent that a later statute is revisory of the entire matter of an earlier statute, and is designed as a substitute for it, the later statute will prevail, and the earlier statute will be held to have been superseded, even though there be found no inconsistencies or repugnancies between the two.” And again, at page 133, it is stated: “It would unduly and unnecessarily prolong this consideration to set forth the two statutes for purposes of comparison and contrast, but, as has been said, a mere reading of the two will at once disclose that the legislature, by the latter, formulated a plan for the issuance of bonds, full and complete in itself, and, therefore, a plan which superseded its earlier declaration on the matter. It is not so much a repeal by implication as it is that, the legislature having made a new and complete expression of its will upon the subject, this last expression must prevail, and whatever is excluded therefrom must be ignored.” In Sponogle v. Curnow, 136 Cal. 580, 584 [69 Pac. 255], the rule is briefly stated as follows: “Although an act or part of an act may not be repealed expressly or by necessary implication, still a revision of the whole subject matter covering said act would supersede all such portions as were omitted from the revisory act.” Other similar statements of the rule are to be found in State v. Conkling, 19 Cal. 501; Treadwell v. Yolo County, 62 Cal. 563; Harris v. Cooley, 171 Cal. 144 [152 Pac. 300]; Carter v. Stevens, 208 Cal. 649 [284 Pac. 217].

The above statements of the rule likewise serve to fix the extent of its operation. In order for the second law to repeal or supersede the first, the former must constitute a revision of the entire subject, so that the court may say that it was intended to be a substitute for the first.

The presumption is against repeals by implication, especially where the prior act has been generally understood and acted upon. To overcome the presumption the two acts must be irreconcilable, clearly repugnant, and so inconsistent that the two cannot have concurrent operation. The courts are bound, if possible, to maintain the integrity of both statutes if the two may stand together. Where a modification will suffice, a repeal will not be presumed. (Santa Cruz Rock Pavement Co. v. Lyons, 133 Cal. 114 [65 Pac. 329]; Smith v. Mathews, 155 Cal. 752, 758 [103 Pac. 199]; In re Johnson, 167 Cal. 142 [138 Pac. 740]; Crooks v. Peoples Finance etc. Co., 111 Cal. App. (Supp.) 769 [292 Pac. 1065]; Beneficial Loan Soc. v. Haight, 215 Cal. 506 [11 Pac. (2d) 857]; 23 Cal. Jur., p. 694.)

Applying these well-settled principles of construction to the two provisions under consideration, we have no hesitancy in holding that there is nothing in the constitutional amendment indicating an intent that the provision was intended as a revision of the entire subject covered in ,the usury act, nor are the provisions of the two acts so inconsistent or repugnant that the later repealed the earlier by implication. There have already been noted the many provisions of the usury law—material and important provisions— which are entirely consistent with, and in fact supplement, the constitutional provision. As already noted, the constitutional amendment fails to expressly provide any remedies-or penalties—matters fully covered in the usury law. These remedial and penalty provisions have been the subject of judicial interpretation for over seventeen years. All that the constitutional amendment does is to reduce the maximum permissible rate from 12. per cent to 10 per cent per annum; to exempt certain enumerated classes of lenders from certain of its provisions; and to place in the legislature a certain degree of control over the fixing of charges made by the exempted groups. In its own sphere of operation, and in so far as it establishes different rules from those found in the usury law, the constitutional provision is supreme—but that is the extent of its operation.

Of course, the placing in the hands of the legislature the control of the charges to be made by the exempted groups is inconsistent with the usury law over which the legislature has no power. This change, however, was brought about by a constitutional provision voted upon and approved by a vote of the people. To that extent the electorate has waived its freedom from interference granted it by article IV, section 1 of the Constitution. This does not indicate an intent to repeal in toto the prior measure.

Moreover, the power granted to the legislature by the constitutional amendment is expressly limited in its scope to the regulation and control of the charges of the exempted classes of lenders. As to the nonexempt classes of lenders, the legislature possesses no such power. The usury law applied to all lenders. That has been changed to permit the legislature to regulate the charges made by certain lenders, but except as to reduction of the maximum interest rate, there is nothing to indicate that the constitutional amendment was intended to affect the nonexempt lenders at all.

This interpretation finds some support in the background of the constitutional provision. This court decided the case of Beneficial Loan Soc. v. Haight, supra, in 1932. In that case it was held that because the terms of the usury law applied to all lenders, the legislature had no power to provide by statute that personal property brokers could charge a higher rate than permitted by the usury law. (See, also, Crooks v. Peoples Finance Co., supra.) In the Haight case, the court recognized the force of the argument that from an economic standpoint there was need for the classification of certain types of lenders differently from other lenders as to permissible rates of interest and other charges. The legislature in order to remedy this situation submitted article XX, section 22, to the electorate. It is quite significant that in the argument in support of the amendment sent to all voters (there was no argument contra), there is not one word indicating an intent to repeal the usury law. The argument speaks of “inadequacies” of the usury law, and of the individual problems of the exempted groups, and of the necessity for legislative regulation of these groups. Among other things it states, “This measure seeks to rectify the errors of the usury law and cure its deficiencies”. It is quite unlikely that if the legislature in drafting, and the people in adopting, the constitutional provision had intended it to repeal the usury law, such intent would not have been clearly expressed.

From what has been said, it follows that in our opinion, at least as to the non exempt classes of lenders (of which group defendant is a member) the usury law was not repealed by the adoption of the constitutional provision, and plaintiff’s cause of action was not affected thereby.

The further and final contention of defendant is that assuming that the sale of the property under the trust deed, as detailed above, constituted a payment of interest, and assuming that the usury law has not been repealed, no usurious interest was in fact paid by the defendant. This contention is based upon the claim that there were two other charges against the fund in the hands of the trustees, after said sale under the trust deed, which the trustees were required to satisfy and pay, and that after the payment of these two items, the balance remaining in their hands, if the whole thereof was applied to the payment of interest on the aggregate of the amount advanced during the year, would not exceed the rate of 12 per cent per annum. These two items were (1) interest on the sum of $134,396.11 at the rate of 7 per cent per annum from the date of the maturity of said promissory note, August 15, 1928, to the date of the sale, December 31, 1928, amounting to the sum of $3,527.86; (2) the sum of $6,193.98, costs and attorneys’ fees in defending certain mechanics’ lien cases and for conducting the trustees’ sale.

We think the claim of defendant respecting the item of $3,527.86 should be sustained. The note and trust deed provide for interest at the rate of 7 per cent per annum payable in advance. There was nothing usurious in the original transaction between the parties as shown by the written instruments evidencing the loan. There was nothing in the dealings of the parties which ran counter to the provisions of the usury law prior to the date of the trustees’ sale. It was only in the application of these proceeds of the sale that usurious interest or excessive profit is claimed to have been extorted. We are not overlooking the entries made by defendant in its books of account wherein the plaintiff was charged with the items of brokerage and interest, but mere bookkeeping entries could not create any liability against the defendant, or in favor of the plaintiff. It is only when there has been an actual payment of usurious interest that the one receiving such interest is held to have violated the terms of the usury law and accordingly held liable for the penalties thereby imposed. (Liebelt v. Carney, 213 Cal. 250 [2 Pac. (2d) 144, 78 A. L. R. 405]; Grall v. San Diego Bldg. & Loan Assn., 127 Cal. App. 250, 257 [15 Pac. (2d) 797]; Coulter v. Collins, 71 Cal. App. 381, 385 [235 Pac. 465].) It was not, therefore, until the interest and brokerage were actually paid through the trustees’ sale that it is claimed the usury law was violated. The defendant was, therefore, entitled to interest at the rate of 7 per cent on this amount of $134,396.11 from the date of maturity of the note to the date of the sale amounting as we have seen to the sum of $3,527.86. This amount should be taken into consideration in determining whether the amount of interest or profit which the defendant received through the trustees’ sale exceeded the maximum amount permitted by the usury law.

The item of $6,193.98 referred to above involves some further facts. At the time of the trustees’ sale, December 31, 1928, there were on file and of record a number of mechanics’ liens against said property for work done and materials furnished in the construction of said buildings. A suit to foreclose four of these liens had been instituted on December 28, 1928, and was pending at the date of said sale, and suits to foreclose the two remaining liens were commenced in the following March after the sale under the trust deed. The defendant expended various sums of money in the defense of these suits. In one of these suits there was an appeal from the judgment which was reversed and a petition for a hearing denied by this court on June 20, 1932. (Keeling Collection Agency v. Penziner, .123 Cal. App. 296 [11 Pac.(2d) 24].)

The defendant at the trial presented an itemized statement purporting to show that it had paid out after the date of said trustees ’ sale the sum of $13,021.72 as costs and attorneys’ fees in the defense of said mechanics’ lien action; for legal services rendered by its attorney in the foreclosure proceedings ; for taxes on said property which were a lien thereon at the date of the trustees’ sale; and a charge of $451.02 for ornamental plastering on said building. The court found, “That the sum of $6,193.38 is a reasonable allowance for legal services and costs involved in said suits and in the proceedings leading up to and including the trustees’ sale’’. However, it refused to hold that these charges were properly payable by the trustees out of the proceeds of the sale under the trust deed. As we have seen there was only one of said lien suits pending at the date of said sale, and it had been commenced only three days before said sale. There is no evidence that the trustees or the defendant as beneficiary paid out any costs whatever or any attorneys’ fees, or became liable for any costs or attorneys’ fees prior to said sale on account of this pending action. Whatever costs or attorneys’ fees the defendant incurred or paid out for that purpose after said sale it expended as purchaser, and not as a beneficiary under said deed of trust, and such payments were not chargeable to the plaintiff and were not properly payable by the trustees out of the proceeds of the sale. The rule is well settled that the purchaser at execution sale, or under a foreclosure sale under a deed of trust, takes the property as it stands and subject to all liens against it. (Jordan v. Myres, 126 Cal. 565 [58 Pac. 1061]; Boggs v. Fowler, 16 Cal. 559 [76 Am. Dec. 561]; Breeze v. Brooks, 71 Cal. 169, 181 [9 Pac. 670, 11 Pac. 885].) As to the taxes paid by the defendant after the sale, although a lien against the property prior to the sale, they were paid by him as purchaser and not as the beneficiary under the trust deed. Defendant was not, therefore, entitled to be reimbursed out of the proceeds of the trustees ’ sale for money paid to discharge said taxes. (T. L. Reed Co. v. Kruse, 220 Cal. 181 [29 Pac. (2d) 856].) The item of $451.02 for ornamental plastering was simply a voluntary payment by the defendant. It does not appear even to have been secured by a lien against the property. This disposes of all the items of said statement except the item of $2,027 paid out as legal services in the foreclosure of said deed of trust. This charge was a proper charge, and one which the trustees were entitled to pay from the proceeds of the trustees’ sale. It should have been allowed by the trial court in its computation for the purpose of determining whether there was any usury in the payment of interest, and also in determining the amount of interest upon which treble damages should be allowed in case the payment of interest was usurious. With these two items just discussed allowed, the account between the parties upon the trustees' sale stood as follows:

Cash advanced up to maturity of note..........$134,396.11
Interest thereon at 7% per annum from August 16,
1928, to December 31, 1928................ 3,527.86
Attorneys’ fees in foreclosure proceedings...... 2,027.00
Total................................$139,950.97

This amount taken from $150,000, for which the property was sold at the trustees’ sale leaves the sum of $10,049.03, as the amount of interest or profit that was paid to the defendant through the trustees ’ sale. Interest on the several amounts of money advanced from the respective dates of their advancement to the date of the maturity of said promissory note, computed at the rate of 12 per cent per annum, as testified to by an expert accountant, was the sum of $7,434.48. We find no serious contention on the part of the defendant that this amount is incorrect. The interest, or profit, therefore which was paid the defendant exceeded the maximum amount permitted to be charged by the usury law by the difference between $10,049.03 and the sum of $7,434.48, or the sum of $2,614.55. The plaintiff, therefore, having been compelled to pay defendant the sum of $10,049.03 as a profit on said loan which amount exceeded the maximum amount of profit permitted to be paid on said loan under the provisions of the usury law of this state, defendant is liable to plaintiff in treble the amount of profit so paid by the plaintiff, or the sum of $30,147.09, in which amount plaintiff is entitled to judgment against the defendaiit.

Our determination of the questions involved in the appeal of the defendant from the judgment herein leaves but little to be said respecting the appeal of the plaintiff. This appeal involves the sum of $6,693.98 which the trial court charged against the plaintiff and deducted from the certain amounts found to be due plaintiff. This sum of $6,693.98 is made up of the two items of $6,193.98 and $451.02, already given consideration in this opinion, and a third item amounting to $48.98, being money paid out by R. L. Flint after the trustees ’ sale from funds which were paid to him by the defendant prior to said sale. We have already held that the item of $451.02 was improperly charged against plaintiff, and for the same reason, the item of $48.98 is not a legal charge against plaintiff. We have further held that of the sum of $6,193.98 only the sum of $2,027, attorneys’ fees paid for services rendered in proceedings to foreclose said trust deed, was a legal charge against the plaintiff, and we have made allowance for it accordingly. It should not, therefore, be again deducted from any amount found to be due the plaintiff. The remaining items malting up said sum of $6,193.98 represent payments made by the defendant as purchaser at said trustees ’ sale and subsequent to said sale and were, therefore, not chargeable to the plaintiff. We conclude in view of this situation that the defendant is not entitled to any deduction from the amount found to be due plaintiff on account of any of the amounts making up said item of $6,693.98.

The judgment is accordingly modified by striking therefrom the following words, “thirty-eight thousand and nine hundred and nine and 91/100 dollars ($38,909.91) ” and inserting therein in the place of said words stricken out the words, “thirty thousand and one'hundred and forty-seven and 9/100 dollars ($30,147.09) ”, and as so modified the judgment is affirmed. Costs on appeal to be paid by the respective party incurring the same.

Shenk, J., Langdon, J., Waste, C. J., and Seawell, J., concurred.

Rehearing denied.


text:
    [L. A. No. 16238.
    In Bank.
    November 24, 1937.]
    J. B. WOLF, Appellant, v. PACIFIC SOUTHWEST DISCOUNT CORPORATION (a Corporation), Respondent.
    Harry K. Sargent for Appellant.
    Don S. Irwin and Edward J. Cotter for Respondent.
   CURTIS, J.

Plaintiff instituted this action to recover treble the amount paid by him as interest or profit on two loans made to the plaintiff by the defendant. Each of said two loans plaintiff alleges was usurious. Upon the trial of the action, and after the plaintiff had closed his case, the court, upon motion of the defendant, granted a nonsuit, after which judgment was rendered in favor of the defendant, from which the plaintiff has appealed.

Each of said loans was secured by a chattel mortgage upon household furniture and was negotiated by the Scherer Brokerage Company, a regularly licensed personal property broker. The .defendant ivas also a personal property broker doing business as such under the Personal Property Brokerage Act. (Stats. 1933, p. 1496.) The charge of usury was based upon the alleged illegal payment of a commission by plaintiff to the Scherer Brokerage Company. In negotiating said loans, the plaintiff contends that the defendant shared in the fruits of said commission payments to such an extent that it received a profit on each of said loans which exceeded the maximum amount of interest or profit permissible under the usury law.

Each of said loans was entered into and all payments of interest or commission were made while the usury law adopted by the people in 1918 was in full force and effect. However, in 1934, the people of the state adopted article XX, section 22, of the Constitution. While the adoption of this section of the Constitution did not repeal the usury law of the state (Penziner v. West American Finance Co., this day filed [ante, p. 160, 74 Pac. (2d) 252]), it did cause some radical changes to be made in that statute, and particularly respecting those organizations or individuals doing business as personal property brokers. The third paragraph of said section of the Constitution designated certain organizations and individuals which are exempt from the general provisions of the usury law, and the legislature was given power to prescribe the maximum rate of interest to be charged in connection with loans made by them. Personal property brokers were included in the exempted classes. While the legislature has acted under this constitutional grant of power as to certain of these exempted classes, it has taken no action respecting the interest charges which may be made by a personal property broker. Therefore, since the adoption of said section of the Constitution in 1934, there has been no provision of law, either statutory or constitutional, limiting the amount of interest or profit which a personal property broker may exact for a loan made by him. (Matulich v. Mario Investment Co., 7 Cal. (2d) 374 [60 Pac. (2d) 842].)

It will be further noted that the constitutional amendment repealing the provisions of the usury law as to those 'exempted classes contains no saving clause as to causes of action accruing prior to the adoption of said amendment. A repeal of the statute, or an amendment thereof, resulting in a repeal of the statutory provision under which the cause of action arose wipes out the cause of action unless the same has been merged into a final judgment. (Penziner v. West American Finance Co., supra, and authorities cited therein.) As the judgment in this case was adverse to the plaintiff, any cause of action which the plaintiff might have had prior to said amendment of the statute has been destroyed by the amendment. The judgment is affirmed.

Shenk, J., Edmonds, J., Langdon, J., Waste, C. J., and Seawell, J., concurred.


author: SHENK, J.

text:
    [L. A. No. 15567.
    In Bank.
    November 24, 1937.]
    SHELDON C. WHEELER, Appellant, v. THE FIRST NATIONAL BANK OF SANTA ANA (a National Banking Association) et al., Respondents.

      Clyde C. Shoemaker, John Stewart Ross and Samuel W. Blum for Appellant.
    Rutan & Mize, Forgy, Reinhaus & Forgy, A. M. Bradley and R. T. Williams for Respondents.
   SHENK, J.

The plaintiff sued the trustee of an express trust and the beneficiaries thereof for an accounting, a declaration of the rights and duties of the respective parties under the trust provisions, and other equitable relief. From the judgment rendered the plaintiff appealed. No reporter’s transcript was filed. The appeal is presented on the clerk’s transcript and the briefs of the respective parties.

In February, 1929, John L. Wheeler and Louise A. Wheeler, the parents of the plaintiff, Sheldon C. Wheeler, entered into a declaration of trust whereby they conveyed to The First National Bank of Santa Ana certain described real and personal property, to hold for the benefit of the trustors in their lifetime, and thereafter for the benefit of their son and the brothers and sisters of John L. Wheeler. The real property consisted of a forty-acre orange grove situated in Orange County subject to a $50,000 mortgage, and a residence in Santa Ana subject to a $4,000 mortgage. The personal property consisted of money on deposit to the trustors’ account in the trustee bank; ranch equipment, machinery and tools; household goods and jewelry; certificates representing 1,000 shares of stock of Merchants Petroleum Company ; five shares of Farmers and Merchants Savings Bank of Santa Ana; and six life and accident insurance policies issued on the life of John L. Wheeler.

Louise A. Wheeler died on November 13, 1930, survived by her cotrustor, John L. Wheeler. The only provisions of the trust declaration which are pertinent in this controversy are those which bear upon the happening of the contingency of the death of Louise A. Wheeler survived by John L. Wheeler.

Paragraph 5 of the trust declaration provides that upon the happening of that contingency, John L. Wheeler should be permitted to withdraw from the trust corpus all the household furniture, automobiles, and the jewelry, clothing and personal adornments of Louise A. Wheeler. The property remaining in the trust was then to be divided into two equal parts to be known as subdivisions “A” and “B”. John L. Wheeler was given the right to manage both parts and upon his written request at any time after three months following the death of Louise A. Wheeler, he had the right to withdraw from the trust the portion thereof comprising subdivision “A”. .He was permitted to retain all the income from both parts while they remained in the trust and to continue to receive the income from subdivision “B” should he withdraw subdivision “A”. It was further provided that thereafter, should subdivision “A” and the income from subdivision “B” be insufficient for his support and comfort, he should receive sufficient amounts of the principal of subdivision “B” as the trustee in its uncontrolled discretion should deem necessary and advisable, but payments of principal from subdivision “B” could not be made to him so long as there remained in his possession any part of subdivision “A”. The declaration of trust contained provisions for the distribution of subdivision “B” to Sheldon C. Wheeler and to the brothers and sisters of John L. Wheeler upon the latter’s death, which it is not necessary to notice specifically. The controversy here is concerned only with the propriety of the withdrawal by John L. Wheeler of a portion of the trust estate following the death of Louise A. Wheeler.

In March, 1931, pursuant to a written request of John L. Wheeler, the trustee transferred to him the northeasterly ono-half of the forty-acre orange grove, the ranch equipment, household goods, jewelry and other personal property, the entire residence property subject to the $4,000 mortgage, one-half of the shares in the trust, and three of the insurance policies. John L. Wheeler also withdrew money on deposit amounting to about $2,000. He paid to the trustee the sum of $100 for the balance of the equity in the residence property. The mortgage on the forty-acre grove was adjusted by the payment thereon by John L. Wheeler of the sum of $5,000, and by a separate renewal of one-half of the remaining indebtedness of $45,000 against each twenty acres of the ranch property. The trustor failed to pay the insurance premiums on two of the insurance policies remaining in the trust, which thereupon lapsed. At the time of the trial he reconveyed to the trust a one-half interest in the farm equipment and machinery.

The trial court declared the rights of the parties and the powers and duties of the trustee, as to which no controversy is presented on this appeal. It found that a division of the estate at the time requested and a withdrawal of one part thereof was authorized by the trust provisions, but that the division made was not equal; that the part withdrawn by John L. Wheeler exceeded in value the part remaining by the sum of $15,786. After allowing certain credits on account of sums advanced by John L. Wheeler for the benefit of the trust, it- adjudged that equality would be attained by the payment into the trust, or upon the mortgage on the real property remaining in the trust, of the sum of $5,000. It therefore ordered that the defendant reimburse the trust estate and the trustee in the sum of $5,000. The judgment was made a lien upon all of the property transferred and withdrawn by John L. Wheeler from the trust estate, subject to the existing encumbrances thereon. The judgment contained the provision that the trustee should be under no obligation to cause execution to issue against any property of John L. Wheeler so long as the orchard property was owned by him without an increase otherwise in the encumbrances upon it. It also provided that John L. Wheeler should be relieved of the lien against his property upon the payment by him of $5,000 on the principal of the indebtedness against the orchard property remaining in the trust. The court decreed that the transfers of property withdrawn from the trust by John L. Wheeler were not void and that the plaintiff was not entitled to judgment setting aside any of said transfers. It accordingly expressly ratified and confirmed such transfers.

The defendant, San Joaquin Fruit and Investment Company, which held the note and mortgage on the orchard property, filed a cross-complaint seeking a foreclosure of the mortgage indebtedness amounting the $22,500 against the orchard property remaining in the trust. Judgment of foreclosure was rendered by the court.

The court ordered that each party pay his own costs, except as specially otherwise provided by the judgment of foreclosure.

The plaintiff’s contention is that the trial court erred in refusing to set aside and cancel the transfers to John L. Wheeler and restore the property to the trust estate. The plaintiff seems to have assumed that the court’s findings and conclusions are to the effect that the transfers were wrongful and in violation of the terms of the trust. He therefore places reliance on cases wherein property has been converted by the trustee, or some other wrongful disposition thereof has been made in contravention of the trust. But we are satisfied that the plaintiff has misconceived the result of the'trial court’s action. Contrary to the plaintiff’s assumption, the court found that the transfers were not void but were authorized, and that the division of the property was merely unequal. It provided for equality by a judgment that $5,000 be placed in the trust estate by the surviving trustor, and otherwise ratified and confirmed the transfers. The plaintiff is not here in a position to urge that with the $5,000 additional placed in the trust the division would still be unequal in so far as value is concerned. He must rest his contentions on the argument that as a matter of law the findings require a judgment of cancellation. However, the provisions of the trust agreement support the court’s conclusion that the transfers were authorized and nothing appears on the record which indicates any abuse in the exercise by the court of its equity powers to equalize the division of property. The foregoing also answers the contention that the court should have ordered a money judgment as well against the trustee. We find no basis in the record for any assumption that the trustee acted wrongfully or that any obligation rested upon it to restore anything to the trust corpus.

Belying on Estate of Spreclcels, 162 Cal. 559 [123 Pae. 371], the plaintiff urges that the trustors intended to create a tenancy in common between John L. Wheeler and the other beneficiaries of the trust and did not provide for a physical division of the property. That result in the Sprecbels case was reached because of a permissible interpretation of the will which, when given effect, would carry out the testator’s intent and avoid intestacy. In the present case such an interpretation is diametrically opposed to the specific provisions of the trust declaration and the obvious purpose of the trustors.

Likewise nothing appears to cast any doubt upon the propriety of the trial court’s approval of the equal apportionment of the balance of the mortgage indebtedness between the part of the orchard property withdrawn from the trust and the portion remaining therein. If there was an inequality in that division, the apportionment, so far as the record shows, has been equalized by the judgment of the court.

The plaintiff also urges that he should have been allowed his costs. He takes the view that having recovered a “money judgment” he has obtained partial relief, and that his costs should follow as a matter of right pursuant to the provisions of subdivision (a) of section 1032 of the Code of Civil Procedure. But again the plaintiff has misconceived the relief accorded to him. The provision for payment of $5,000 into the trust corpus by the defendant Wheeler is not a money judgment in favor of the plaintiff in the sense in which that term is used to denote the recovery of money as damages or as a debt due. The recovery by the plaintiff was confined to strictly equitable relief, being -the specific enforcement of the provisions of the trust by a judgment to return property, although in the converted form as to at least a portion thereof, to the trust estate to equalize the division of the property which was authorized by the trust agreement. So far as appears the result is the same as though the court had ordered the return of all property and a new and equal division in kind. There was therefore no error in the exercise of discretion to withhold or apportion the costs permitted by subdivision (c) of section 1032 of the Code of Civil Procedure. (Carter v. Chotiner, 210 Cal. 288, 292 [291 Pac. 577].)

The judgment is affirmed.

Curtis, J., Edmonds, J., Langdon, J., Seawell, J., and Waste, P. J., concurred.

Rehearing denied.


author: LANGDON, J. EDMONDS, J., Dissenting

text:
    [L. A. No. 16258.
    In Bank.
    November 26, 1937.]
    GEORGE REED et al., Petitioners, v. INDUSTRIAL ACCIDENT COMMISSION et al., Respondents.

      Jack J. Rimel and Harry C. Westover for Petitioners.
    Everett A. Corten and F. Britton McConnell for Respondents.
   LANGDON, J.

This is a petition to review an award of the Industrial Accident Commission. The facts are simple and undisputed.

On March 11, 1935, W. B. Mellott, a building contractor, obtained a policy of workmen’s compensation insurance from Hartford Accident and Indemnity Company, for the period of one year. The insured was designated therein as “W. B. Mellott, . . . Individual”. Thereafter Mellott became associated with Irwin G. Gordon, another contractor, and they conducted the building contract business as “W. B. Mellott and Irwin G. Gordon, doing business as Gordon and Mellott ’ ’. The policy remained unchanged. The record does not disclose whether the insurance company had knowledge of the association.

On March 5, 1936, while the policy was in force, George Reed, an employee, sustained a compensable injury, and filed his application with the commission. The commission first decided that the insurance company was liable, but on rehearing reversed itself and gave its award against the employers alone. The employee and employers petitioned, seeking to hold the insurance company liable. In its answer, the commission admits error in the decision, but the respondent insurance company maintains that the same was correct. The position of said respondent is, in brief, that the policy insured W. B. Mellott, an individual, and not the partnership of Gordon and Mellott; that Reed was employed by the firm of Gordon and Mellott, and not by W. B. Mellott; and that consequently, the policy did not cover the injury, because Reed’s employer, the partnership, was not insured. This position is unsound on principle and contrary to prior decisions in this state.

The underlying fallacy in respondent’s argument is the assumption that the partnership is a distinct unit, separate from the members thereof. Occasional suggestions of this “entity” theory of partnership are found in statutes or decisions, but apart from exceptional situations, a partnership is not considered an entity, but an association of indu victuals. (See First Nat. T. & S. Bank v. Industrial Acc. Com., 213 Cal. 322, 331 [2 Pae. (2d) 347, 78 A. L. R. 1324]; 9 Cal. L. Rev. 119.) In consonance with this view, an employee of a partnership is an employee of each of the partners, and no individual partner may escape liability to such employee on the ground that only the partnership and not the individuals composing it can be held. It is immaterial whether the liability of the partners in this situation is joint and several, or joint, for even in the case of joint liability, a several judgment may be had against an individual partner by proper joinder and pleading. (See Palle v. Industrial Com., 79 Utah, 47 [7 Pac. (2d) 284, 81 A. L. R. 1222]; Merchants’ Nat. Bank v. Clark-Parker Co., 215 Cal. 296 [9 Pac. (2d) 826, 81 A. L. R. 778].) The result is that W. B. Mellott, a partner in the firm of Gordon & Mellott, was an employer of petitioner Reed, and was undoubtedly liable to Reed for workmen’s compensation. Since W. B. Mellott procured insurance with respondent company to cover such liability, and paid the required premium therefor, the company must perform its obligation by paying the award.

This conclusion is supported by two closely analogous decisions. In First Nat. T. & S. Bank v. Industrial Acc. Com., supra, Charles Hascall and S. W. Powell carried on a business as copartners under the firm name of “Hascall & Powell”, and procured workmen’s compensation insurance covering the employees of the business. Then Hascall bought Powell’s interest and continued to conduct the business under the same name. The insurance carrier resisted liability for a compensable injury on the ground that it had insured a particular entity, the partnership. Describing this point as “a most technical one”, we held that it was not a good defense for the reason, among others, that a partnership was not a legal entity (213 Cal. 331).

In Zimmerman v. Industrial Acc. Com., 119 Cal. App. 253 [6 Pac. (2d) 291], Sam Zimmerman carried a policy naming the insured as “Sam Zimmerman (an individual) doing business as Royal Paint and Wall Paper Company”. He took in one Stern as partner, and they continued to do business under the same name. A. compensable injury occurred, and the court followed our decision in First Nat. T. & S. Bank. v. Industrial Acc. Com., supra, holding the insurance company liable. The court pointed out that although Stern, the new partner, was not covered by the policy, Zimmerman continued as an employer and “to the extent that ho may be required to respond in the matter of the payment of said award, is entitled to the full protection afforded by his policy”.

There are several minor factual differences between the instant ease and the cited cases, but as to the basic issue, whether change of a business from single individual to partnership, or partnership to individual, avoids liability of an insurance carrier to its named insured, they are squarely in point and are controlling.

The award is annulled and the proceeding remanded to the commission for an award in consonance with the. foregoing opinion.

Curtis, J., Shenk, J., and Seawell, J., concurred.

(Filed November 29, 1937.)

EDMONDS, J., Dissenting

I dissent. The decision holding the insurance company liable for compensation is based upon the theory that the injured workman was the employee of W. B. Mellott, one of the partners, and not of the partnership. This theory ignores the.stipulated facts concerning employment, the terms of the policy contract and specific provisions of the law under which the applicant claims.

It was agreed that the applicant sustained an injury “while employed . . . by W. B. Mellott and Irwin G. Gordon doing business as Gordon and Mellott”. The claim for compensation names “W. B. Mellott and Irwin G. Gordon dba Gordon and Mellott ’ ’ as the employer, and the answer thereto, expressly admitting the employment, is signed “Gordon and Mellott by W. B. Mellott”. Upon the hearing the applicant testified that at the time of the accident he was working for the partnership of Gordon and Mellott and there is no evidence to the contrary. Gordon testified that he employed Reed under the name of Gordon and Mellott.

But it is said that the partnership is not an entity and that the applicant was the employee of each of the partners. However, the Workmen’s Compensation Act (Stats. 1917, p. 831) requires that the term “employer” as used in it shall be construed to include every firm and voluntary association. (See. 7.) This is specific statutory authority for holding that a partnership may be an employer so far as the rights and liabilities arising under that act are concerned. Also, by the policy here in controversy the Hartford Accident and Indemnity Company made certain agreements with “this employer, named and described as such in the declarations”, and there are provisions, added by endorsement, which apply if any member of a firm, association or co-partnership” is insured under it. As the act prohibits any change in the standard form of policy “except by indorsement thereon in accordance with a form or forms prescribed by the insurance commissioner in accordance with rules and regulations adopted by the insurance commissioner after consultation with the industrial accident commission” (sec. 31) it is clear that the endorsement was written by those charged with the administration of the compensation law to provide insurance if a copartnership is an “employer”.

This is significant in two connections, first, as an administrative construction of the plain terms of the compensation law, and, second, as positive evidence that the policy written by the respondent insurance carrier does not include any partnership liability. The policy contract names W. B. Mellott as the employer. In the schedule of declarations which is a part of the standard form of policy issued to him the question whether the employer is an “individual, copartnership, corporation, or estate” is answered by the designation “individual”. This is certainly a contract between the insurance company and an individual, with the approval of the Industrial Accident Commission, that the employer insured under it is an individual and not a copartnership, corporation or estate.

The facts in the case are not disputed and they show that at the time the policy was written Mr. Mellott was engaged in the contracting business as an individual. He testified that when he took out the policy it was with the intention of insuring his liability as an individual and that he then had no thought of entering into any copartnership. Thereafter he and Mr. Gordon went into business together. The record does not show whether this was a continuation of the old business in which work uncompleted by Mr. Gordon was taken over by the copartnership or an entirely new venture. No transfer of an interest- in the business carried on by Mr. Mellott is shown and for all that appears the copartnership may have been formed to erect some particular building or buildings, or Mr. Mellott may have continued his individual business by completing some of the work he then had in course of construction. There is no evidence that the insurance company ever knew of the partnership operations, and even' had these come to its attention it might very properly have concluded that Mr. Mellott was continuing the policy as a protection against his individual liability in any personal business he was carrying on. Also, it had a right to rely on the provision that “no assignment of interest under this policy shall bind the company”-without its written consent.

The early case of Harrison v. McCormick, 69 Cal. 616, 620 [11 Pac. 456], announced the rule that “several persons contracting together with the same party for one and the same act, shall be regarded as jointly, and not individually or separately liable, in the absence of any words to show that a distinct as well as entire liability was intended to fasten upon the promisors. . . . Especially is this the rule as to the legal liability of partners upon their partnership obligations.” This ease was followed in Miner v. Rickey, 5 Cal. App. 451 [90 Pac. 718], which was an action against an individual for services. Although the evidence introduced by the plaintiff was sufficient to prove that the services had been rendered, it also appeared from the evidence presented by the defendant that whatever liability existed was against a partnership of which he and another were members, and a judgment for the plaintiff was reversed. Since these decisions were rendered the Uniform Partnership Act has become the law of this state (see. 2395 et seq., Civ. Code) and has also been enacted in Utah. Construing its provisions in a compensation case, the Supreme Court of Utah held that a partner is jointly, but not jointly and severally, liable for injuries suffered by an employee of the partnership. (Palle v. Industrial Com., 79 Utah, 47 [7 Pac. (2d) 284, 285, 81 A. L. R. 1222].) It seems clear, therefore, that while Mr. Mellott is jointly responsible to the applicant for compensation, his liability rests upon membership in a copartnership which was the employer. Obviously, then, he was not the employer and as the insurance company assumed only the liability of the employer, it is not responsible to the applicant.

The case of First Nat. T. & S. Bank v. Industrial Acc. Com., 213 Cal. 322 [2 Pac. (2d) 347, 78 A. L. R. 1324], was decided upon an exactly opposite state of facts and is not controlling here. In that case a policy insuring against liability for workmen’s compensation was issued to two individuals doing business under a firm name and described in the declaration as a copartnership. One of them dropped out of the business and the other continued it as before without making any change in the policy. Subsequently, an employee was injured and this court properly held the insurance company liable. But the situation there shown was governed by section 2557 of the Civil Code which, as it then existed, provided that “a transfer of interest by one of several partners, joint owners, or owners in common, who are jointly insured, to the others, does not avoid an insurance, even though it has been agreed that the insurance shall cease upon an alienation of the thing insured”. Although the court said that “in this state a partnership is not usually considered a legal entity”, this does not mean that under unusual or particular circumstances a partnership may not be so regarded.

The case of Zimmermcm v. Industrial Acc. Com., supra, presents practically the same facts as the present case but the conclusion there reached, as in the decision here, fails to recognize the rights of the insurance company under its policy. The only contract which the insurer made in this case was with W. B. Mellott, an individual. It did not agree to insure either a partnership of which Mr. Mellott might thereafter become a member, or the individual liability of Mr. Mellott as a member of such a partnership.

The award of the Industrial Accident Commission should be affirmed.

Rehearing denied. Edmonds, J., voted for a rehearing.