Gregory v. J. P. Clabrough's Executors

The plaintiff, as assignee of one Blake, brought suit against Clabrough for the sum of six hundred and thirty-two dollars and eighty-five cents, which, it is alleged and found, "Clabrough in his lifetime received for and on behalf of ____ Blake ____ to be held by said ____ Clabrough until demanded by the said ____ Blake." On the death of Clabrough the suit was continued against his executors, against whom judgment was rendered. The defendants appeal from the judgment and from an order denying a new trial.

The facts out of which the controversy arose are as follows: Clabrough had a mortgage on Blake's ranch for the amount, including interest, of nineteen thousand two hundred and twenty-seven dollars and sixty cents, for which a suit to foreclose was pending, and the parties were negotiating for a conveyance of the mortgaged premises to Clabrough in satisfaction of the mortgage. Under these circumstances Clabrough and Blake came to the office of Preston, the attorney of the former, to consult him about the proceeds of the crops then growing upon or recently severed from the mortgaged land; which — referring to the proceeds — "Blake stated ____ certain creditors of his were about to attach or might attach"; or, "in other words, these proceeds were in jeopardy of being lost." Thereupon they were advised by the attorney that the mortgage "covered not only the land but the rents, issues, and profits," and that Clabrough "should receive [the money] because he was entitled to it under the clause giving him the rents, issues, and profits of the ranch." The money was afterward received by Clabrough under this understanding. There was no promise that the money should be repaid to Blake on demand or otherwise. But there was a proposition from Clabrough to Blake — whether then pending or subsequently made does not appear — that, upon the conveyance of the mortgaged premises by Blake and his wife to Clabrough, the latter would pay to him, or them, the amount thus received and two hundred and fifty dollars in addition. This proposition was accepted by Blake, and a deed executed by him; but his wife refused to join in the deed, and Clabrough was unwilling to dispense with her signature. The negotiations thus failing, the foreclosure suit was prosecuted to judgment, under which the premises were sold. The money received by Clabrough was not credited on the mortgage or allowed in the judgment. The claim of Blake was assigned to the plaintiff, and, on Clabrough's death — pending the suit brought by the plaintiff to recover it — was duly presented to his executors on the nineteenth day of August, 1896, but was neither approved or disapproved by them. An "amended and supplemental complaint," setting up these facts, was filed May 19, 1897.

The points urged for reversal — so far as material — are that there was no promise on the part of Clabrough to repay the money to Blake; that the money was paid to Clabrough for the purpose of defrauding the creditors of Blake; that the plaintiff was estopped by the judgment in the foreclosure suit; and, finally, that his cause of action was barred by the provisions of sections 1496, 1498, 1500 and1501 of the Code of Civil Procedure.

1. On the merits, the case was very plainly for the plaintiff. The money was paid to Clabrough on the advice of Mr. Preston to him and Blake that the former was entitled to it under the mortgage; which was clearly not the case. (Simpson v. Ferguson,112 Cal. 180¹; Modesto Bank. v. Owens, 121 Cal. 223.) The money was paid, therefore, under a mistake of law common to all the parties (Civ. Code, sec. 1578), and hence must be regarded as paid to Clabrough to the use of Blake. (Kreutz v. Livingston,15 Cal. 346; 1 Chitty on Pleading, 362, note, 2; Moses v. McFarlan, 2 Burr. 1012; Lockwood v. Kelsea, 41 N.H. 187.) The promise to pay on demand is implied by the law; it was unnecessary to allege or to prove it. (Wilkins v. Stidger, 22 Cal. 231.²)

2. There was no issue as to fraud in the case; and no evidence tending to prove fraud. On the contrary, it appears from the evidence that the money was paid to Clabrough under the mistaken belief of all that he was entitled to it as mortgagee; there was no fraud in paying him what was believed to be his own.

3. The claim of estoppel is based on two grounds, namely: 1. That Blake's claim was proper matter for counterclaim under subdivision 1 of section 438 of the Code of Civil Procedure, and was barred under the provisions of section 439 for failure to set it up; and 2. That it was in fact set up in the answer and adjudicated adversely to Blake; but neither of these contentions can be sustained.

If Blake's demand was a proper subject for counterclaim, it must have been so, under the second clause of the subdivision, as a cause of action "connected with the subject of the action," i.e., in the foreclosure suit. This clause is very vague and general, and its precise meaning has not as yet been determined. (Pomeroy on Code Remedies, secs. 793, 794; Bliss on Code Pleadings, secs. 126, 373.) But we may at least assume that the clause refers to some sort of real and legal connection. Here the only connection was that of the mistaken impression that the money belonged to the mortgagee; but this was apparent only, and not real. Blake was entitled to recover back the money, and on his election to do so — which was evidenced by his assignment to the plaintiff — the apparent relation ceased.

Nor can it be said the claim was in fact adjudicated. The defense set up by Blake in the foreclosure suit was an alleged agreement between him and Clabrough, by which the latter was to pay him eight hundred and ninety dollars and release the mortgage in exchange for Blake's deed. The decision of the court simply negatived this claim, and did not in any way affect the right of Blake or his assignee to recover the money paid by mistake. Indeed, the assignment had been made several months before the answer was filed, and the assignee's rights could not be affected by any defense set up by the assignor.

4. Section 1498 of the Code of Civil Procedure can have no application to a case like the present, where the action was already pending when the claim was presented. All that is required of the plaintiff in such case is simply to present his claim. (Code Civ. Proc., sec 1502.) The point intended seems to be that the suit was not revived against the executors for over three months after the claim was rejected. But there is no provision of the code requiring that it should be revived within any definite period. It may be added that it appears from the record that the claim was neither approved nor rejected by the executors, and that plaintiff exercised his option to regard it as rejected only at the time of, or shortly before, the bringing of the suit. (Bank of Ukiah v. Shoemake, 67 Cal. 147; Cowgill v. Dinwiddie, 98 Cal. 481.)

The judgment and order denying a new trial should be affirmed.

Chipman, C., and Cooper, C., concurred.

For the reasons given in the foregoing opinion the judgment and order denying a new trial are affirmed.

Henshaw, J., McFarland, J., Temple, J.

Hearing in Bank denied.

¹ 53 Am. St. Rep. 201.

² 83 Am. Dec. 64.