Philpott v. Superior Court (1 Cal. 2d 512, 1934)

PRESTON, J.

By this proceeding in prohibition we are required to declare the nature of the two causes of action pleaded in the case of John Philpott, Plaintiff, v. Broadway State Bank et al., Defendants, No. 292646, now pending in the Superior Court of the County of Los Angeles. Petitioner asserts that the cause is one in equity of which the superior court alone has jurisdiction and that unless it is restrained by this writ, said superior court will attempt to divest itself of jurisdiction of the cause by holding that the action is one at law, involving a sum less than $2,000, to wit: $625, cognizable alone by the municipal court of said county.

The far-reaching importance of this inquiry is seen when it is remembered that the jurisdiction of both the appellate and the trial courts is directly affected by the answer thereto. The right of trial by jury and, to a certain extent, the right of attachment may also be affected.

It is almost superfluous to preface this discussion with the statement that although we have but one form of action, and practically but one forum, under our system of state jurisprudence, yet in applying the relief allowable we must adhere to the distinctions commonly accepted as existing between actions at law and actions in equity. In DeWitt v. Hays, 2 Cal. 463, 469 [56 Am. Dec. 352], the court uses this language: "The legislature in providing that ‘there shall be but one form of civil action’, cannot be supposed to have intended at one fell stroke to abolish all distinction between law and equity, as to actions. Such a construction would lead to infinite perplexities and endless difficulties. The innovation extends only to the form of action, and the pleadings, while the technicalities of pleading have been dispensed with; and the plaintiff need only-state his cause of action in ordinary and concise language, whether it be in assumpsit, trespass, or ejectment, without regard to the ancient forms; still the distinction between those actions has not been abolished, but remains the same. So cases legal and equitable have not been consolidated, and though there is no difference between the form of a bill in chancery, and a common law declaration, under our system, where all relief is sought in the same way from the same tribunal; the distinction between law and equity is as naked and broad as ever. To entitle the plaintiff to the equitable interposition of- the Court, he must show a proper case for the interference of a Court of Chancery, and one in which he has no adequate or complete relief at law.”

See to the same effect Hallidie v. Enginger, 175 Cal. 505, 506 [166 Pac. 1], where the court said: “The next general consideration is that legislatures in establishing the simplified code pleading and in thus abolishing the forms of common-law actions did not destroy, and even if it had desired tiould not destroy, the essential characteristics of those actions so long as the common law remains the basis of our jurisprudence.” In this connection we should repeat also that the common law of England is, except where modified by Constitution or statute the rule of decision in this state. (Pol. Code, sec. 4468; Martin v. Superior Court, 176 Cal. 289 [168 Pac. 135, L. R. A. 1918B, 313].)

We are thus brought to consider the criteria by which we may distinguish between an action at law and one in equity. The forum, form of action, and mode of proof are no longer factors in view of the already noted court system and procedure. In reality the distinction between the two classes of remedies is more or less arbitrary and groundless. It is well said also that the courts of equity are reaching into new fields of operation and the courts of law are encroaching upon the former territory of the courts of equity. This thought was expressed by Lord Bedesdale as quoted in the case of Spect v. Spect, 88 Cal. 437, 442 [26 Pac. 203, 22 Am. St. Rep. 314, 13 L. R. A. 137], as follows: “The distinction between strict law and equity is never in any country a permanent distinction. Law and equity are in continual progression, and the former is constantly gaining ground upon the latter. A great part of what is now strict law was formerly considered as equity, and the equitable decisions of this age will unavoidably be ranked under the strict law of the next.” See Spect v. Spect, supra, and Barbour v. Flick, 126 Cal. 628, 634 [59 Pac. 122].

We must therefore find the distinction between the two forms of action in their history and development rather than in their intrinsic differences in theory or philosophy. The two forums were set up under the English system to complement each other in the field of remedial justice, actions at law occupying' a portion of the field; and actions in equity, supplying the defects in the legal system, occupied the remainder of the field. In its last analysis, therefore, the difference between the two actions lies largely in the mode of relief granted and to determine whether the action is of one type or another, one must of necessity resort to the apposite English law on the subject. Mr. Blackstone (Cooley’s Blackstone, 4th ed., vol. II, pp. 1181, 1182, sec. 436) in this connection, says: “The rules of decision are in both courts equally apposite to the subjects of which they take cognizance. . . . The difference between courts of law and equity.—Such then being the parity of law an$I reason which governs both species of courts, wherein (it may be asked) does their essential difference consist 1 It principally consists in the different modes of administering justice in each; in the mode of proof, the mode of trial and the mode of relief. ...” Therefore, to give a proper classification to a cause of action we should seek to find its counterpart in the history of the English law in the light of such modifications thereof as have taken place under our own system.

This brings us to the counts of the complaint here in question. They are two. Count one declares that plaintiff paid to the defendants $625 on account of a contract to purchase stock of defendant bank to be thereafter issued by it; that plaintiff later discovered that the stock, if and when issued, would be worthless and that the financial condition of the bank and other material facts and circumstances had been fraudulently represented to him, giving in detail the nature of the misrepresentations made, and closing with the allegation that said fraudulent representations were the sole inducing cause of the agreement to purchase and the payment of said sum; finally pleading that plaintiff had rescinded said transaction in the manner provided by the code. The second count is merely one of the common counts for money had and received, to wit: indebitatus assumpsit. The prayer is for return of the $625 to plaintiff, with interest and costs, “and for such other and further relief as may he just and equitable”.

Count one, of course, contains allegations of fraud but courts of law, as well as courts of equity, have jurisdiction to give relief in certain specified cases of fraud. (Fish v. Benson, 71 Cal. 428, 435 [12 Pac. 454].) Under the peculiar facts in this case a judgment for plaintiff in the sum of $625, with interest "and costs, would fully satisfy his demands. In short, he asks no relief that a court of law may not in all respects give him. This, of itself, would seem sufficient to deny plaintiff a place in a court of equity. In Morrison v. Land, 169 Cal. 580, 586, 587 [147 Pac. 259], the court said: “Passing without discussion other requisites, it is elementary that where, as here, the primary right of a party is legal in its nature, as distinguished from equitable, and one for which the law affords some remedy, as here damages by way of compensation for breach of contract, a proper exercise of the equitable jurisdiction will not give equitable relief in any case where the legal remedy is full and adequate and does complete justice. No principle of equitable jurisprudence is more firmly established than this. ... In so far as cases of the character of the one before us are concerned, the very basis of the granting of equitable relief is the conclusion in view of the circumstances of the particular case that full and adequate compensation cannot be had at law. Certainly no case has been cited to us, and we know of none, in which such relief has been given where it was apparent that full and adequate compensation can be given at law.” (See, also, 10 Cal. Jur., p. 465, see. 7.) A judgment of rescission in this cause would be entirely superfluous. (Prewitt v. Sunnymead Orchard Co., 189 Cal. 723, 732 [209 Pac. 995].)

If the action is not one in equity, it follows, of course, that it is an action at law. It seems material, however, at this time to determine under what common-law species of action this complaint should be classified. It is not a case of express promise, as an action in debt; although it is for a sum certain, for it lacks the element of an express promise to pay. Neither is it an action in which there is. in fact an implied promise to pay, for there is no privity of contract from which to imply such a promise. In reality, it is an action in which the law, in order to prevent the unjust enrichment of defendants from the property of plaintiff, itself implies a promise to repay the sum demanded. In other words, it is an action in assumpsit upon a promise implied by law. That is, it is a case where the plaintiff has not elected to sue for damages, general or special or both, which he may have suffered from the tort inflicted upon him by defendants; likewise it is not a case where the plaintiff is seeking the application off equitable remedies to redress his grievances. All these elements, which may have been shown by appropriate allegations for such relief, are conspicuously absent. Plaintiff apparently is content to merely seek a return from defendants of money given them, with interest, forgetting and foregoing all other elements of injury.- Is it not plain, therefore, that he has waived the tort of defendants and has come into court relying solely upon the promise created by law to return to him the consideration paid upon the contract ?

Count two is one of the common counts for money had and received, commonly styled indebitatus assumpsit. We then have two actions for assumpsit, one on a special count and one on a common count. These counts may properly be united in the same action. (5 C. J. 1399.) A case where a special and a common count in assumpsit for fraud were united .in one action is First Nat. Bank v. Steel, 136 Mich. 588 [99 N. W. 786].

The action of assumpsit, in its development, had an interesting but stormy career at the common law. Although in existence for some years previous to that time, it came into prominence following the decision in Slade’s Case in 1603 (Coke’s Rep., vol. 2, p. 505; 2 Harvard Law Review, p. 16). It gradually gained prominence and widened in scope until 1760 when Lord Mansfield, in the case of Moses v. Macfarlan (2 Burr. 1005, English Reports, Pull Reprint, King’s Bench Book 26, vol. 97, p. 676), described its function as follows: “This kind of equitable action to recover back money, which ought not in justice to be kept, is very beneficial, and therefore much encouraged. It lies only for money which, ex aequo et bono, the defendant ought to refund,-.it does not lie for money paid by the plaintiff, which is claimed of him as payable in point of honor and honesty, although it could not have been recovered from him by any course of law; as in payment of a debt barred by the statute of limitations, or contracted during his infancy, or to the extent of principal and legal interest upon a usurious contract, or, for money fairly lost at play: because in all these cases, the defendant may retain it with a safe conscience, though by positive law he was barred from recovering. But it lies for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition (express or implied); or extortion; or oppression; or an undue advantage taken of the plaintiff’s situation, contrary to laws made for the protection of persons under those circumstances. In one word the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money.”

Quoting the above, Mr. Holdsworth in his work on the History of English Law, volume 8, page 97, uses this language: “It was thus in the action of indebitatus assumpsit that the larger part of our modern law of quasi-contract has originated.”

■See, also, Cooley’s Blackstone, fourth edition, volume II,page 975, section 162, where it is said: “It lies for money paid by mistake, or on a consideration which happens to fail, or through imposition, extortion, or oppression, or where any undue advantage is taken of the plaintiff’s situation.” Also, see 1 Chitty on Pleading, section 100.

Clark on Contracts, fourth edition, Hornbook Series, pages 699, 700, dealing with the subject of quasi-contracts, uses the following language: “A frequent illustration of a quasi-contractual obligation of this kind arises where a person obtains another’s money by wrongful or fraudulent means. Where one person has wrongfully taken another’s money, or has taken his property and converted it into money, the latter has a right of action ex delicto for the wrong done to him, as by an action of trespass or trover, or by an action on the case for the fraud. He is not always restricted, however, to an action ex delicto for the specific wrong, but may in general waive the tort, and sue in assumpsit for the money as for money received for his use. . . . Where a person steals another’s money or property, or obtains it by false pretenses, the fact that a crime has been committed will not prevent a civil action by the person injured. He may sue the thief in tort, or he may elect to sue in assumpsit as for money received for his use. The same is true in any case in which one person, by means of trespass, fraud, or other tortious means obtains another’s money.” This doctrine is also expressly indorsed in Hallidie v. Enginger, supra (175 Cal., at p. 508) : “In some instances the action on implied contract does not in truth rest upon contract at all. In others, the contract may lie at the base of the wrong or may have enabled the perpetrator to have accomplished his wrong. Thus, where A delivers goods to B at B’s request, even though B never meant to pay for them, the law erects the legal fiction that he promised to pay, and he will not be heard to deny it in the action for quantum valelat in. assumpsit. But upon the other hand, if B stole A’s watch, A could treat the theft as a contract of sale and sue in like manner ex contractu, though in fact there was no foundation whatsoever for the fiction other than the need of broadening A’s remedies. (Downs v. City of Baltimore, 111 Md. 674 [19 Ann. Cas. 644, 41 L. R. A. (N. S.) 255, 76 Atl. 861].) Or again, if B, in the employ of A, misappropriates his money or property, while A could sue ex delicto for the wrong, he could, on the other hand, waive the tort and sue, again depending upon the nature of the property converted, either for the value, for goods sold and delivered, or for money had and received. (Citing cases.) ” See Page on Contracts, volume 3, page 2510, section 1473, also pages 2671-2673, section 1548, where it is said: “If money has been paid under such contract, the right of the party defrauded to waive the tort and recover such payment on the theory of an implied contract, in general assumpsit, is very generally recognized. It is not necessary that the fraud should be the sole cause of the payment. It is sufficient if the payment would not have been made if it were not for such fraud. . . . The right to recover in assumpsit assumes that on discovering the fraud the party defrauded elects to disaffirm the express contract. ...”

Authorities in support of the prevalent use of this form of action in the courts of the common law could be multiplied indefinitely, but we will close this branch of the discussion by a quotation from Professor Ames in volume 2 of the Harvard Law Review, page 69: “ The main outlines of the history of assumpsit have now been indicated. In its origin an action of tort, it was soon transformed into an action of contract, becoming afterwards a remedy where there was neither tort nor contract. Based at first only upon an express promise, it was afterwards supported upon an implied promise, and even upon a fictitious promise. Introduced as a special manifestation of the action on the case, it soon acquired the dignity of a distinct form of action, which superseded Debt, became concurrent with Account, with Case upon a bailment, a warranty, and bills of exchange, and competed with Equity in the case of essentially equitable gw