Bennett v. Superior Court , 218 Cal. 153 ( 1933 )

I concur in the conclusion reached in this opinion, but I think it should do expressly what it does in effect, namely, overrule the case of Stone v. Superior Court, 214 Cal. 272 [4 P.2d 777, 77 A.L.R. 743]. The Stone case is, in its essential features, identical with the instant case, and the present decision destroys the former one as authority. Both are actions to recover money paid as consideration under a contract which was previously rescinded by the aggrieved party, for a ground specified in Civil Code, section 1689 The only difference between them is a wholly unimportant one; in the Stone case thegrounds for rescission were two: fraud and failure of consideration; in the instant case, a single ground is alleged: failure of consideration. Irrespective of the grounds, theobligation remaining after a completed rescission is the same in each case, and it is this obligation which is sued upon, and which the court herein holds to be a proper basis for attachment. That such a result is sound cannot be doubted, and I need not here repeat the reasons discussed in my dissent in the former decision.

The Stone case laid down at least two principles which were directly in conflict with numerous decisions in this state, and were also contrary to the great weight of authority elsewhere. (See cases cited in dissenting opinion, 214 Cal. 276 [4 P.2d 777]; see, also, notes, 21 Cal. L. Rev. 130; 20 Cal. L. Rev. 541; 5 So. Cal. L. Rev. 440; 77 A.L.R. 748.) It has been followed by the District Court of Appeal, Second Appellate District, Division One, in several cases. (See Fair View Farms Co. v. SuperiorCourt, 123 Cal.App. 9 [10 P.2d 1011]; Ingalls v.Superior Court, 121 Cal.App. 453 [9 P.2d 266]; Ryker v.Lindenberg, (Cal.^* App.) [20 P.2d 763].) The appellate department of the Superior Court in Los Angeles County, in an elaborate opinion which makes an immaterial distinction, did not follow it. (Jensen v. Harry H. Culver Co., 127 Cal.App. (Supp.) 783 [2 Cal. Supp. 37, 15 P.2d 907].) The District Court of Appeal, Second Appellate District, Division Two, approved the decision in Jensen v. Harry H. Culver Co., supra. (HarryH. Culver Co. v. Superior Court, 129 Cal.App. 589 [19 P.2d 43].) This intolerable confusion has resulted from the simple fact that the Stone case, while plainly contrary to prior decisions of this court, did not expressly disapprove of such decisions, with the result that two appellate courts have felt at liberty to rely upon them. The majority opinion in the instant case relies upon these earlier decisions, but fails to disapprove of the Stone case, and hence invites further confusion. It is in the hope that this confusion may be avoided, and the rule clearly stated for the guidance of the courts of this state, that I proceed to analyze briefly the holding of the Stone case and the effect of this opinion upon the principles therein announced.

The first principle laid down in that case is that where an action is brought to recover the consideration paid under a contract, on the ground of fraud in the inducement thereof, such action "sounds in tort," notwithstanding the fact of prior rescission. The important result of this principle was that no attachment could be had in such an action. Examining this conclusion, we find that it was based largely on the case of SanFrancisco Iron Metal Co. v. Abraham, 211 Cal. 552 [296 P. 82, 83], in which the action was based upon fraud, but no prior rescission was alleged or proved. It is clear enough that an action based upon the facts constituting the fraud is not an action on "a contract, express or implied", within the meaning of the attachment statute, despite a pleading in the form of an action for "money had and received". (San Francisco Iron MetalCo. v. Abraham, supra.) But where a contract is entered into between the parties, and upon proper grounds the plaintiff gives notice of rescission and offers to restore the consideration he has received, it is settled by innumerable decisions that aquasi-contractual obligation arises on the part of the defendant to restore what he has received. This obligation comes within the meaning of "a contract, express or implied", for purposes of attachment. It surely can make no difference what the grounds for rescission may have been: Fraud, mistake, duress, menace, undue influence, partial failure of consideration, total failure of consideration, breach of warranty in a contract of sale, insanity of the contracting party. (See Civ. Code, secs. 1689, 1789, 39.) Indeed, suppose the aggrieved party misconceived his case and gave notice of rescission upon an erroneous and unsupportable ground. This would not affect the validity of his rescission. (Hull v. Ray, 211 Cal. 164 [294 P. 700].) It is immaterial, therefore, what cause for rescission is relied upon, where the plaintiff seeks simply the recovery of his consideration. The action is not being brought upon the grounds for rescission, or upon any cause existing prior to rescission, but rather upon the new obligation which arises after the completed rescission. How can the obligation to restore the consideration be contractual in the one case and tortious in another? The majority opinion in the instant case holds that in an action upon such obligation an attachment is proper. It necessarily follows that the first rule of the Stone case is incorrect, and that the Stone case is overruled by the instant case on that point.

The second and more basic misconception of the Stone case is in the nature of rescission itself. The opinion takes the position that the allegation of completed rescission is immaterial, and implies that the action was to secure a judgment of rescission. Under this view there would be no quasi-contractual obligation upon which to sue, and the only cause of action would be based upon the fraud therein alleged. The necessary implication from the decision was that there could not be a rescission by the act of one party, but only an adjudication of rescission by an action brought in a competent court, and that this action was inequity. The result of this ruling was that actions to recover the consideration paid under a contract, after completed rescission by notice and restoration of all things received, were treated as suits in equity, jurisdiction being vested exclusively in the superior court, regardless of the amount in controversy. There is no justification in our statute or decisions for such a conclusion, as pointed out in the dissenting opinion in the Stone case, and in the majority opinion in the instant case. It follows that in so far as the Stone case suggests this conclusion, it is overruled by the instant case, and so are Fair View FarmsCo. v. Superior Court, supra, Ingalls v. Superior Court,supra, and Ryker v. Superior Court, supra. The result reached in Jensen v. Harry H. Culver Co., supra, and HarryH. Culver Co. v. Superior Court, supra, is correct.

Preston, J., concurred.

Rehearing denied.

Shenk, J., and Langdon, J., dissented.

^* REPORTER'S NOTE. — A hearing was granted by the Supreme Court in the case of Ryker v. Lindenberg on June 5, 1933.