Opinion ID: 1149011
Heading Depth: 1
Heading Rank: 4

Heading: Is the 1946 Judgment Res Judicata?

Text: [10] The 1946 judgment purported to be in rem and to be binding upon all persons having any claim to membership rights, which would include Mary, who was then alive, and her successors. The judgment in effect determined that Mary and her successors had no membership rights. The complaint is thus subject to demurrer on the ground of res judicata unless the additional facts alleged will, as plaintiffs claim, justify setting that judgment aside. Plaintiffs assert that the complaint alleges facts which, although not disclosed by the judgment roll of the prior action, are sufficient to show that the 1946 judgment was obtained without proper service of process and by extrinsic fraud. It is immaterial, in connection with this question, whether the present action be regarded as primarily one for declaratory relief, with the prayer to set aside the prior judgment as merely incidental, or whether, as defendants assert, this is essentially a suit to set aside that judgment. In either event plaintiffs, having disclosed the existence of the prior judgment, are barred unless they plead and prove sufficient facts to overcome the judgment. It should be kept in mind that we are not concerned here with a judgment which is void on its face and therefore subject to collateral attack. [11] Ordinarily equity will not interfere with a judgment on the ground of extrinsic fraud or mistake unless the one whose interests were infringed can present a meritorious case; the plaintiff must plead and prove facts from which it appears, at least prima facie, that if the judgment were set aside and the proceedings were reopened, a different result would probably follow. ( Olivera v. Grace, 19 Cal.2d 570, 578-579 [122 P.2d 564, 140 A.L.R. 1328]; Kupfer v. MacDonald, 19 Cal.2d 566, 568-569 [122 P.2d 271]; Wattson v. Dillon, 6 Cal.2d 33, 43 [56 P.2d 220]; Karlslyst v. Frazier, 213 Cal. 377, 380 [2 P.2d 362]; Frost v. Hanscome, 198 Cal. 550, 559 [246 P. 53]; Hite v. Mercantile Trust Co., 156 Cal. 765, 768 [106 P. 102]; see Hallett v. Slaughter, 22 Cal.2d 552, 557-558 [140 P.2d 3]; Bell v. Thompson, 147 Cal. 689, 692-694 [82 P. 327]; Parsons v. Weis, 144 Cal. 410, 417-418 [77 P. 1007].) This rule has been applied in a number of cases involving proceedings in equity to set aside a judgment upon the ground that summons had not been served or that service was in some manner defective. ( Swallow v. Tungsten Products Co., 205 Cal. 207, 220 [270 P. 366]; Lee v. Colquhoun, 175 Cal. 16, 17 [164 P. 894]; Matson v. John Batto & Sons, 173 Cal. 800, 801 [161 P. 1144]; Gregory v. Ford, 14 Cal. 138, 141 et seq. [73 Am.Dec. 639]; Brozey v. Alesen, 116 Cal. App. 641, 642 [3 P.2d 68]; Hickey v. Algie, 51 Cal. App. 595, 599-600 [197 P. 359]; see Bell v. Thompson, 147 Cal. 689, 692-693 [82 P. 327]; Parsons v. Weis, 144 Cal. 410, 417-418 [77 P. 1007]; Young v. Barker, 83 Cal. App.2d 654, 657 [189 P.2d 521].) In order to meet the meritorious case requirement the complaint must allege that plaintiffs have membership rights in Hibernia, and, as we have seen, the allegations in this respect are sufficient against a general demurrer. We therefore assume, for the purposes of this discussion, that the membership rights were transferable and that they survived the closing of the account; we also assume that the action is not barred by the statute of limitations. In considering the effect of the 1946 judgment we must determine whether Hibernia complied with section 29a of the Bank Act [] in that it did not name Mary, who was then alive, as a defendant or personally serve her with process. The section provides that actions brought thereunder shall include as defendants all persons appearing upon the records of the corporation as members, and all other persons who are known to the plaintiff to claim to be members, and other persons unknown claiming any right of membership or any interest in the property or assets of the corporation. A copy of the summons, which shall contain the names of the parties and a reference to all other persons unknown claiming any right to membership, is to be posted and recorded. Personal service is required to be made upon each defendant residing in this state whose place of residence is known to the plaintiff. A copy of the summons and complaint must be mailed to each of the known defendants who reside out of the state, at their place of residence, if known, and also to each of the known defendants, wherever residing, whose residences are unknown to plaintiff, addressed to them at the county seat of the county or city and county where the action is commenced. [12] We are of the opinion that section 29a, when properly construed, requires personal service not only upon California members of known address whose names actually appear upon the records of the corporation but also upon persons of known address residing in California who are successors of such members, provided the corporation is aware, or could by the exercise of reasonable diligence discover, that they are successors. While the section, in designating who must be included as defendants, does not expressly refer to persons known by the corporation to be successors of members, it requires the inclusion of all persons appearing on the records of the corporation as members and, if the corporation has actual knowledge that a person is the successor of a member whose name so appears, the successor should be treated as though his name likewise appears on the books as a member. Any other construction of the section would be unreasonable. If such were not the rule, a corporation could deliberately take advantage of and profit at the expense of a successor-member whose name had not been placed upon the books but whose interest was known to the corporation. There is nothing in the statute indicating that personal service need not be made if the defendant does not know or claim that he is a member, and where the corporation knows of the successor's interest, its duty should not be altered because of the fact, as is alleged with respect to Mary, that the successor is unaware of his rights in the company. The successor of a member known by the corporation to be such but whose name has not formally been placed in the books is entitled to the same consideration as the member whose name is in the books. These principles are applicable not only to a member's successor who is known to the corporation but also to a successor who is unknown but who could and should be discovered by the company upon a reasonably diligent search. A close analogy in support of this construction of section 29a is afforded by Title etc. Restoration Co. v. Kerrigan, 150 Cal. 289, 317-318 [88 P. 356, 119 Am.St.Rep. 199, 8 L.R.A.N.S. 682]. The statute there involved authorized an in rem proceeding to establish and quiet title to property whenever public records were destroyed, and it provided, among other things, for personal service upon adverse claimants when the plaintiff knew or had been informed of them. The court said that the evident purpose was to secure, so far as possible, actual notice of the proceeding to all known claimants, and that where a statute is careful to provide for actual notice to the known claimants, it should not be construed as intended to permit a plaintiff to willfully or negligently close his eyes to the means of knowledge and thus secure a decree by publication and posting alone as against persons whose identity he might have learned by the use of due effort. On the basis of this reasoning the court held that the statute, properly construed, imposed upon the plaintiff the duty of inquiry as to the names and residences of all persons who might claim an adverse interest in the property and that it required the plaintiff to designate and serve all persons whom, with reasonable diligence, he could ascertain to be claimants. Moreover, the rule of construction adopted in the Kerrigan case, which did not involve a fiduciary relationship, would seem particularly applicable to statutes dealing with a corporation and its members where, as we shall see, fiduciary obligations are involved. Section 29a, when construed in the manner set forth above, meets the requirements of due process not only as to persons who must be personally served but also as to persons who cannot reasonably or practicably be given personal service and who are given substituted service under the various provisions for mailing, publication, and posting. ( Title etc. Restoration Co. v. Kerrigan, 150 Cal. 289, 306, 318 [88 P. 356, 119 Am.St.Rep. 199, 8 L.R.A.N.S. 682]; cf. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 [70 S.Ct. 652, 94 L.Ed. 865]. [13] The allegations of the complaint are sufficient to show that Mary was entitled to personal service in the proceedings under section 29a leading to the 1946 judgment. Facts disclosing Curtin's membership appeared on the records of Hibernia, which knew that Curtin died in 1914 and that upon his death his successors became entitled to membership. Hibernia also knew the residence of Mary, who lived in California throughout her entire lifetime. Mary should have been named in the prior action and given personal service provided Hibernia knew, or with reasonable diligence could have learned, that Mary was Curtin's successor. In this connection the complaint states that the events relating to the probate of Curtin's estate in Santa Clara County and its distribution to Mary were known to Hibernia or could have been ascertained by inspection of Hibernia's records and the records of the superior court in that county. [14] We do not mean to suggest that a corporation desiring to avail itself of the procedure authorized by section 29a must make a complete search of all known possible sources of information in order to notify its members and their successors, such as, for example, examination of the probate records of all the counties of the state. Only a reasonable investigation is required, and its extent will necessarily depend upon the circumstances of each situation, including such matters as the facts known to the corporation and the value of the membership involved. We cannot hold as a matter of law that Hibernia had no duty to make inquiries at the last known address of a member known to have died, or to examine the probate records at the county seat of the place where the member resided or died, or to make an inquiry concerning the whereabouts of a known assignee of a deposit account. [15] Failure to comply with the statutory provisions constitutes grounds for the vacation of the judgment. [16] A suit in equity instituted for the purpose of vacating a judgment is a direct attack. ( Caldwell v. Taylor, 218 Cal. 471, 475 [23 P.2d 758, 88 A.L.R. 1194]; Bacon v. Bacon, 150 Cal. 477, 486 [89 P. 317]; Campbell-Kawannanakoa v. Campbell, 152 Cal. 201, 209 [92 P. 184]; Parsons v. Weis, 144 Cal. 410, 415 [77 P. 1007]; Turner v. Milstein, 103 Cal. App.2d 651, 655 [230 P.2d 25].) [17] Such an attack may be made upon the ground of extrinsic fraud where it appears that there was a willful failure to give the required service or that willfully false affidavits of service were filed. ( Bernhard v. Waring, 213 Cal. 175, 179-181 [2 P.2d 32]; Rivieccio v. Bothan, 27 Cal.2d 621, 624 [165 P.2d 677]; Wool v. Scott, 140 Cal. App.2d 835, 841 et seq. [296 P.2d 17]; City of Los Angeles v. Morgan, 105 Cal. App.2d 726, 730-731 [234 P.2d 319]; Turner v. Milstein, 103 Cal. App.2d 651, 654-655 [230 P.2d 25]; Sipe v. McKenna, 88 Cal. App.2d 1001, 1005 [200 P.2d 61]; cf. Aldrich v. Aldrich, 203 Cal. 433, 437 et seq. [264 P. 754].) [18] A direct attack has also been allowed in an independent action in equity where there has been a failure to exercise the degree of diligence required by law in connection with personal service ( Stern v. Judson, 163 Cal. 726, 728 et seq. [127 P. 38]; Rowe v. Silbaugh, 107 Wash. 518 [182 P. 576, 577]), where false recitals of service were the result of fraud, negligence, or mistake ( Martin v. Parsons, 49 Cal. 94, 100), and where failure to name a person as a party was the result of mistake ( Boyle v. Boyle, 97 Cal. App. 703, 706-707 [276 P. 118]). These cases are in accord with the general principles followed in recent decisions of this court holding that extrinsic mistake may be a ground for vacation of a judgment by an independent action in equity where there has been no fair adversary trial. ( Olivera v. Grace, 19 Cal.2d 570, 578 [122 P.2d 564, 140 A.L.R. 1328]; Hallett v. Slaughter, 22 Cal.2d 552, 557 [140 P.2d 3].) The allegations are sufficient to bring the case within these principles. Hibernia knew of Curtin's membership, of his death leaving successors, and of Mary's address. Also, as we have seen, the complaint is sufficient to show that Hibernia either knew or, in the exercise of reasonable diligence, could have discovered that Mary was Curtin's successor.