Court Opinion

ID: 9529702
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:53:31.1918+00
Date Added: 2024-06-11T13:27:54.013442
License: Public Domain

KAUS, J.
I concur entirely in the court’s opinion concerning appellant’s claim to an equitable lien in the “Baldwin stock.” I also concur in the result as far as respondents’ claim for contribution is concerned. It seems to me, however, that it would be better to reach this result by the application of equitable principles—as mooted in footnote 7 of the court’s opinion—than by exegeses of sections 1479 of the Civil Code and 3802 of the California Uniform Commercial Code which are not called for by the facts of this case.
Section 1479 of the Civil Code is obviously designed to help settle disputes between debtors and creditors. This case, though, is nothing of the sort; it is a claim for contribution among debtors, which the court settles by determining how a hypothetical dispute between the debtors and the creditor would have ended. Just why the equities between the parties before us should be governed by the result of a dispute that never arose is hard to see. It has always been recognized that even as between debtor and creditor, section 1479 provides only guidelines for the application of equitable principles. In Murdock v. Clarke (1891) 88 Cal. 384 [26 P. 601], the very first case to consider section 1479, this *662court said with respect to the section: “No specific rule can be laid down that will embrace all the cases that may arise for its application, inasmuch as the infinite variety of human transactions cannot be included within the limits of a formulated rule; and therefore courts must be governed by principles rather than by fixed rules. In this state an attempt has been made for the guidance of courts in this matter, but the rules there prescribed are insufficient for all occasions, and do not embrace even the conditions of the present case. ...” (88 Cal. at p. 391.) I believe that this, too, is a case for which no specific rule has been laid down and that, therefore, we should look to equitable principles to determine whether respondents are entitled to contribution.
Applying such principles, I believe it is clear that no contribution is called for. I summarize my reasons:
1. The somewhat murky oral “apportionment agreement” between the Baldwins and the Jessups to the effect that personal liability would be apportioned in accordance with stock ownership in HHR clearly absolves appellant. As of the time of the agreement she owned no stock in HHR. That the agreement applied not only as between the Baldwins on one side and the Jessups on the other, but also between the Baldwins inter se, is evidenced by the fact that Mr. Baldwin signed the 1973 note in his individual capacity, but appellant only as treasurer of HHR.
2. Even without the apportionment agreement, equity demands that as between appellant and the Jessups, the latter be primarily liable on all indebtedness incurred after appellant divested herself of any legal interest in HHR by her property settlement agreement. I agree that in view of the trial court’s findings we must accept her individual liability on the 1972 note. There is, however, no equitable reason for failing to distinguish between that note which was signed at a time when appellant was still a stockholder in HHR and the 1973 note, given when her only connection with HHR was that of an officer and the holder of an unperfected security interest in her husband’s stock.
3. The logical consequence of respondents’ claim is that as between themselves and appellant they could unilaterally determine how much of each payment to PCA was to be credited to the 1972 note. Each new debt to PCA incurred by HHR diluted that credit, although appellant had no voice in determining that such a debt should be incurred. Theoretically, respondents would have been in a position to make the portion of any payment to be credited to the 1972 note diminish to the vanishing point by the simple device of borrowing more money—at a price, of course—and using the proceeds of the new loans to repay the total indebtedness. There is, of course, no evidence that this was done; further, the scheme assumes an unproven readiness on the part of PCA to go on lending money. Nevertheless, the mere possibility of such a unilateral “water*663ing” of appellant’s contribution demonstrates the inequity of respondents’ position.
Richardson, J., concurred.