California Overseas Bank v. French American Banking Corp.

154 Cal. App. 3d 179, 201 Cal. Rptr. 400, 1984 Cal. App. LEXIS 1873

• Court: California Court of Appeal
• Decided: March 29, 1984
• Docket: Civ. 67271
• Status: Published

Opinions

Opinion

SPENCER, P. J.

Introduction

Plaintiff California Overseas Bank appeals from the trial court’s grant of defendant French American Banking Corporation’s motion to quash service of process for lack of personal jurisdiction.¹

Statement of Facts

The underlying litigation stems from the “back-to-back” issuance of two letters of credit allegedly issued, in conjunction with the sale and purchase of an air pollution control system, by Norco Process Corporation (Norco), a California corporation, to KSTAR International, another California corporation, in 1979. The parties arranged with Balfour Maclaine Overseas Ltd. (Balfour), an international trading and finance corporation, for Balfour to finance the transaction by arranging for the issuance of two letters of credit, one from its account with defendant French American Banking Corporation (FAB), a New York corporation, in favor of the seller, Norco, and the other in favor of Balfour, issued by plaintiff California Overseas Bank (COB), a California banking corporation, from the account of its customer, KSTAR, the buyer. The COB letter of credit was confirmed on December 20, 1979, by Security Pacific National Bank (Security Pacific), with whom COB maintains a correspondent banking relationship. As security for the issuance of its letter of credit, COB was to take a security interest in the air pollution control system to be purchased by KSTAR.

Following the issuance of COB’s letter of credit, FAB purchased, at a discount, all of Balfour’s claim and interest in that credit. FAB then submitted documents as required under COB’s letter of credit.

COB filed the present lawsuit in June 1981, seeking damages and injunctive relief for breach of beneficiary’s warranty, fraud, negligent misrepresentation and declaratory relief.

Plaintiff also filed an application for temporary restraining order and order to show cause re preliminary injunction; a hearing was held on June 25, 1981, before Judge Robert Weil. At the hearing, FAB was represented by counsel. After introducing himself, counsel simply stated that he was “for French American Banking Corporation.” During the hearing, the court asked, “Why shouldn’t an order to show cause be set and why shouldn’t a temporary restraining order issue?” Counsel then proffered two reasons why the court should not interfere with the payment to FAB by Security Pacific of COB’s letter of credit obligation:

“Counsel: First of all, based on what he has said, I don’t know that there is any reason to have any temporary restraining order be entered, but with regard—

“The Court: Something is going to be paid tomorrow, isn’t it?

“Counsel: Exactly. The main reason why this court—or the reasons why this court should not interrupt that procedure are among the following: Number one, letters are [s/c] credit are instruments by which businesses throughout the world—

“The Court: I know. They are sacrosanct and all of that.

“Counsel: Number two, to the ektent that any monies are paid to French American Bank, those monies will be kept or spent by a company that is a wholly-owned subsidiary of one of the, if not the largest banks in the world, as far as customer deposits are concerned, a bank which itself has, as I understand it—

“The Court: Who is supposed to be paying to French American Bank tomorrow?

“Counsel: Security Pacific National Bank.

“The Court: Security Pacific is paying to French American. French American now has the paper.

“Counsel: Exactly.

“The Court: French American got the paper by purchasing it from—

“Counsel: Balfour Maclaine Overseas Ltd.” Plaintiff’s application was denied by Judge Weil on June 25, 1981.

A motion to quash service of process on the ground that the court lacked in personam jurisdiction over FAB was filed July 30, 1981; defendant’s motion was granted by Judge Dickran Tevrizian on December 21, 1981. The court found “Moving party’s French American Banking Corporation’s motion to quash service of process for lack of jurisdiction is granted. Court further finds that French American Banking Corporation did not make a general appearance on 6/25/81.”

Plaintiff’s appeal was timely filed.

Contentions

I

Plaintiff contends defendant waived any jurisdictional objections by making a general appearance in the superior court.

II

In the alternative, plaintiff asserts economic benefits which defendant derived from its acts are sufficient to subject defendant to special regulation.

III

Finally, plaintiff contends the trial court erroneously granted defendant’s motion to quash service of process for lack of personal jurisdiction inasmuch as defendant’s participation in events which prompted plaintiff to issue a letter of credit was sufficient to subject defendant to the court’s limited jurisdiction.

Discussion

We are convinced, on the basis of plaintiff’s initial contention, that FAB waived its objection to the court’s jurisdiction by making a general appearance at the June 25, 1981, hearing on plaintiff’s application for a temporary restraining order and order to show cause re preliminary injunction.²

According to Code of Civil Procedure section 1014, a defendant has made an appearance when “an attorney gives notice of appearance for him.” A defendant who has made a formal appearance has submitted himself to the jurisdiction of the court. (California Pine Box & Lumber Co. v. Superior Court (1910) 13 Cal.App. 65 [108 P. 882].) The appearance will be considered “general” in nature if the defendant acts in a manner “showing of a ‘purpose of obtaining any ruling or order of the court going to the merits of the case’.” (Chilcote v. Pacific Air Transport (1937) 24 Cal.App.2d 32, 35 [74 P.2d 300], quoting from Davenport v. Superior Court (1920) 183 Cal. 506, 509 [191 P. 911].)

On June 25, 1981, FAB was represented in court by counsel. After introducing himself, counsel stated that he was “for French American Banking Corporation.” During the hearing, the court asked “Why shouldn’t an order to show cause be set and why shouldn’t a temporary restraining order issue?” Counsel then proffered two reasons why the court should not interfere with the payment to FAB by Security Pacific of COB’s letter of credit obligation.

In order to determine whether counsel’s remarks constitute a general or a special appearance, we look not to whether a party expressed an intent that the appearance be considered general or special, but rather to the “character of the relief asked.” (Hernandez v. National Dairy Products (1945) 126 Cal.App.2d 490, 492 [272 P.2d 799].) If the defendant “raises any other question, or asks for any relief which can only be granted upon the hypothesis that the court has jurisdiction of his person, his appearance is general . . . .” (Olcese v. Justice’s Court (1909) 156 Cal. 82, 87 [103 P.317].) Thus, it is clear that FAB made a general appearance, for counsel clearly asked the court for a decision in FAB’s favor. Rather than confining his remarks to a denial of the court’s jurisdiction over FAB or simply to clarifications of fact in order to assist the court, counsel addressed the propriety of the issuance of the temporary restraining order and, thus, FAB’s right to payment. Inasmuch as the underlying suit involved just that question, we cannot but conclude that counsel addressed the merits of the case when he opposed the temporary restraining order. Having addressed the merits of the case, FAB submitted itself to the jurisdiction of the court.

In view of the conclusion reached ante, we need not address plaintiff’s remaining contentions.

The order is reversed.

Dalsimer, J., concurred.

1 The order is expressly made appealable by Code of Civil Procedure section 904.1, subdivision (c).

2 The June 25 hearing was held in chambers; we find no impropriety in the proceeding inasmuch as California law has long held that a judgment rendered in chambers is not necessarily void where the matter being heard is within the court’s jurisdiction and the parties are represented by counsel. (Ex Parte Bennett (1872) 44 Cal. 84.) In the present case, there can be no doubt the court had jurisdiction over the subject matter; moreover, the presence of all counsel as well as the court reporter attest to the regularity of the proceeding.