Opinion ID: 1161511
Heading Depth: 1
Heading Rank: 16

Heading: Plaintiff Gerhard's Acquisition of His Claims

Text: [33] The Frusetta-Cornwell defendants contend that Joseph Gerhard, plaintiff in S.F. 21805, cannot establish title against them because he obtained his interest in section 31 illegally: (1) by the unlawful practice of law; and (2) by the issuance of securities without a permit from the Corporations Commissioner. As we shall explain, we need not inquire into the legality of Gerhard's conduct because the complaining defendants are strangers to the transactions between Gerhard and his grantors and therefore may not challenge them. Defendants describe Gerhard's activities as follows: at the time he learned of the discovery of oil on section 31 he possessed no interest in the property. Nevertheless he undertook research on the title to the mineral rights. Contacting many of the successors of the shareholders in Ashurst and COP, he or his attorney informed them of a possible claim to the oil-producing property and endeavored to acquire their interest. In most of the instances in which Gerhard successfully obtained an assignment and quitclaim deed he did not recompense his grantors with a fixed consideration but rather promised to undertake at his expense legal proceedings to establish the claim and to transfer to his grantors a percentage of his recovery. Defendants argue that these activities, conducted by a person not an attorney, constituted the unlawful practice of law as condemned in Estate of Butler (1947) 29 Cal.2d 644 [177 P.2d 16, 171 A.L.R. 343]. In that case an heir-hunter solicited a decedent's heirs, who executed powers of attorney and assignments of one-third of their interest in his favor. The heirs later sought to avoid the assignment and receive their full distributive share of the estate. The probate court upheld the assignment, but this court found it void. This court held, The invalidity of respondent's claims stems from the nature of the agreements which he solicited from appellants, which agreements are typical of those used in his general practice of soliciting beneficiaries of decedents' estates. [R]espondent admittedly conducts his business in the following manner: by contacting and soliciting the heirs, securing their authorization to appear for them, and employing counsel to represent them under powers of attorney or assignments. Thus, as a nonlawyer acting for prospective beneficiaries under agreements providing for his paying `any and all expenses incident to the doing of the things he is authorized to do by said power of attorney, including attorneys' fees and court costs, respondent assumes complete control of litigation instituted on behalf of the beneficiaries through attorneys hired by him and becomes a `middleman' intervening for profit in the conduct of legal proceedings. (29 Cal.2d at p. 647.) Such is the nature of the undertakings which are here condemned as constituting the unlawful practice of the law and as contrary to the public policy of this state. ( Id. at p. 652.) We need not decide whether Gerhard's activities, as described by defendants, fall within the penumbra cast by Estate of Butler. We hold that defendants, being strangers to the agreements between Gerhard and his predecessors, cannot shield themselves from inquiry into the legality of their use of the property in question by diverting attention to Gerhard's conduct. [56] Adequate and well-established sanctions other than that proposed by defendants will serve to combat the evil of unlawful practice of law. (Cf. Keller v. Thornton Canning Co. (1967) 66 Cal.2d 963, 966-967 [59 Cal. Rptr. 836, 429 P.2d 156]; Lewis & Queen v. N.M. Ball Sons (1957) 48 Cal.2d 141, 151 [308 P.2d 713].) [34] A person not an active member of the State Bar who practices law commits a misdemeanor. (Bus. & Prof. Code, ง 6126; see People v. Ring (1937) 26 Cal. App.2d Supp. 768 [70 P.2d 281].) Moreover, a person illegally contracting to practice law may not recover compensation for his services. ( Agran v. Shapiro (1954) 127 Cal. App.2d Supp. 807, 826-827 [273 P.2d 619].) California prohibits the unlawful practice of law not to discourage the champertous fomenting of litigation (cf. Martin v. Freeman (1963) 216 Cal. App.2d 639, 641-642 [31 Cal. Rptr. 217]) but to afford protection against persons who are not qualified to practice the profession. Gerhard's predecessors, rather than defendants, would be the person entitled to the protection afforded by the proscription. [35] We are aware of the time-honored principle that generally in a quiet title action the plaintiff can prevail only by the establishment of his own title and not by reliance upon a weakness in defendant's title. (See 41 Cal.Jur.2d, Quieting Title, ง 24.) The cases, however, more accurately state that plaintiff must prove a title in himself superior to that of defendant. ( DiNola v. Allison (1904) 143 Cal. 106, 115 [76 P. 976, 101 Am.St.Rep. 84, 65 L.R.A. 419]; see Central Nat. Bank v. Bell (1936) 5 Cal.2d 324, 328-329 [54 P.2d 1107].) Thus defendant may not defeat plaintiff's action by claiming that plaintiff obtained his interest by defrauding his grantor as long as defendant himself does not also claim title from plaintiff's grantor. (Cf. Regoli v. Fancher (1937) 19 Cal. App.2d 673, 675-676 [66 P.2d 214].) In Bonninghausen v. Hansen (1943) 305 Mich. 595 [9 N.W.2d 856], the defendant in possession in a quiet title action alleged that the plaintiff had obtained his title by fraud on his predecessor, but the court refused to entertain this defense: [Plaintiff's predecessor] is not a party to this suit, and the question as to whether or not plaintiff obtained the quitclaim deed from him through fraud, is not before us. In any event, defendant could not create a superior title in herself through plaintiff's alleged fraud.... (305 Mich. at p. 605.) [57] [36] Defendants also contend that Gerhard shows no enforceable interest in the property because he acquired his claims from his predecessors in violation of the California Securities Law. Not being parties to the alleged illegal transactions, however, defendants may not raise this issue. As we held in Austin v. Hallmark Oil Co., supra, 21 Cal.2d 718 at page 727, It is apparent also that defendants are in the position of third parties having no interest with respect to the alleged issuer or buyer and cannot therefore raise the question of compliance with the act.... The judgment in S.F. 21806 is reversed as to Joseph M. Gerhard and affirmed as to all other parties. The judgments in S.F. 21805, 21807, and 21808 are reversed.