Tresway Aero, Inc. v. Superior Court

487 P.2d 1211, 5 Cal. 3d 431, 96 Cal. Rptr. 571, 1971 Cal. LEXIS 264

• Court: California Supreme Court
• Decided: August 16, 1971
• Docket: L.A. 29750
• Status: Published

Opinions

Opinion

TOBRINER, J.

Petitioner Tresway Aero, Inc. [hereafter “defendant”] seeks mandamus to compel the Los Angeles County Superior Court to quash service of summons in the action of Dent v. Tresway Aero, Inc. (Superior Court No. SO C 13661) and to dismiss that action for failure to serve summons within three years of the filing of the complaint, pursuant to Code of Civil Procedure section 581a. We concur in defendant’s contention that the summons served upon it did not comply with the requirements of Code of Civil Procedure section 410 respecting service upon corporations;¹ accordingly, the trial court should have quashed service. We observe, however, that plaintiff served defendant with the defective summons within the three-year period of section 581a; defendant then requested an extension of time in which to appear to a date more than three years from the filing of the complaint. By such affirmative action defendant effectively prevented plaintiff from discovering the defect in service until after the statutory period had run. We uphold the conclusion of the trial court that on these facts defendant is estopped to seek dismissal under section 581a.

On August 7, 1965, an airplane owned by defendant crashed, killing eight persons including James Dent. Plaintiff, as executrix of the estate of James Dent, brought a wrongful death action against defendant; the complaint was filed and summons issued on August 2, 1966. Plaintiff withheld service of summons pending litigation of another action against defendant arising out of the same airplane crash.

As of July 1969 the test case had been settled, and plaintiff engaged Alan Curtis to serve process on defendant. On July 22, 1969, Curtis arrived at defendant corporation’s office and requested to see Ira Cree, an officer of the corporation. Curtis then encountered William Cree, Ira’s brother and defendant’s attorney. Curtis had been informed by plaintiff’s counsel that William was authorized to accept service for defendant; Curtis therefore delivered the summons to William and asked William to “take care of it.” According to Curtis’ declaration, William stated that he would “take care of it”; William’s declaration stated that he said only “Thanks a lot.” Curtis lost the original summons, but filed a declaration of service on July 28, 1969, showing service on “William Cree, who accepted service on behalf of Tresway Aero, Inc., a corporation.”²

Code of Civil Procedure section 410 provided that “When the service is against a corporation . . . there shall appear on the copy of the summons that is served a notice stating in substance: ‘To the person served: You are hereby served in the within action (or proceeding) on behalf of (here state the name of the corporation . . .) as a person upon whom the summons and a copy of the complaint must be served to effect service against said party. . . The copy of the summons delivered by Curtis to William Cree did not contain this notice.

Shortly after defendant received the summons and complaint, defendant’s present counsel³ telephoned plaintiff’s counsel and obtained a 20-day extension of time in which to answer the complaint. The three-year period for service of summons expired on August 4, 1969.⁴ On August 11, 20 days after the attempted service by Curtis, defendant appeared and moved to quash service and to dismiss the action.⁵ The trial court denied both motions, and defendant sought mandate.

1. The attempted service of summons on defendant did not comply with Code of Civil Procedure section 410, and should be quashed.

Code of Civil Procedure section 411 provided that in a suit against a domestic corporation, summons may be served upon “. . . a person designated for service of process or authorized to receive service of process.”⁶ William Cree, in a declaration filed with the trial court, stated that “since 1965 . . . declarant has been a person authorized to accept service for said corporation [Tresway Aero, Inc.].” Consequently, service of process in proper form upon William Cree, as an agent of defendant corporation, would constitute service upon the corporation.⁷

The copy of the summons delivered to William Cree, however, did not contain the notice required by Code of Civil Procedure section 410. The provisions of this section are mandatory, and service of a summons which does not comply with those provisions is ineffective. (National Union Fire Ins. Co. v. Superior Court (1966) 247 Cal.App.2d 326, 329 [ 55 Cal.Rptr. 574 ].)⁸ Plaintiff calls our attention to the conversation between William Cree and the process server, Alan Curtis, but we find no language therein to suggest that William Cree offered to waive compliance with section 410. Neither this conversation, nor defendant’s subsequent acquisition of an extension of time in which to appear constitute a general appearance.⁹

2. Defendants motion for dismissal under Code of Civil Procedure section 581a is barred by estoppel.

As of August 1969, Code of Civil Procedure section 581a read in part as follows:

“No action heretofore or hereafter commenced shall be further prosecuted, and no further proceedings shall be had therein, and all actions heretofore or hereafter commenced must be dismissed by the court in which the same shall have been commenced, on its own motion, or on the motion of any party interested therein, whether named in the complaint as a party or not, . . . unless the summons shall be served and return thereon made within three years after the commencement of said action, except where the parties have filed a stipulation in writing that the time may be extended. But all such actions may be prosecuted, if general appearance has been made by the defendant or defendants, Within said three years in the same manner as if summons had freen issued and served; provided, that, ... no dismissal shall be had under this section as to any defendant because of the failure to serve summons on him during his absence from the state, or while he has secreted himself within the state to prevent the service of summons on him. . . .

“A motion to dismiss pursuant to the provisions of this section shall not, nor shall any extension of time to plead after such motion, constitute a general appearance.”

Earlier cases held that this section was mandatory and jurisdictional (see, e.g., Gonsalves v. Bank of America (1940) 16 Cal.2d 169, 172 [105 P.2d 118]); these decisions did not recognize any exceptions not expressly stated in the statute (see White v. Superior Court (1899) 126 Cal. 245, 247 [58 P. 450]; Vrooman v. Li Po Tai (1896) 113 Cal. 302, 305 [45 P. 470]; Cahn v. Jones (1950) 101 Cal.App.2d 345, 348 [225 P.2d 570]). This view of section 581a was substantially altered by our ruling in Wyoming Pacific Oil Co. v. Preston (1958) 50 Cal.2d 736 [329 P.2d 489]. In that case the defendant allegedly concealed himself to avoid service during the last two weeks of the three-year period. The trial court dismissed the action; we reversed, holding that the trial court had abused its discretion.

Although Wyoming Pacific involved a statutory exception to section 581a—concealment to avoid service—the court addressed itself more generally to the construction of section 581a and to the existence of non-statutory exceptions to its directive. We stated;

“Similar both in general purpose and language [to section 581a] are the provisions of section 583 of the Code of. Civil Procedure requiring the dismissal of actions not brought to trial within five years after being filed. Despite the apparently mandatory language of that section, this court has found many ‘implied exceptions’ where it was ‘impracticable and futile’ to bring the action to trial within the designated five-year period. (Rose v. Knapp, 38 Cal.2d 114, 117 [237 P.2d 981], with cases cited.) Thus, discretion has entered into the application of this provision so as to prevent it from being used to compel the dismissal of actions where- the plaintiff has not had a reasonable opportunity to proceed to trial. (See Ojeda v. Municipal Court, 73 Cal.App.2d 226, 232 [166 P.2d 49].)

“We are therefore of the view that notwithstanding the mandatory language of section 581a, the trial court is vested with discretion in applying the exceptions comparable to the discretion with which it is vested in applying the exceptions to section 583. As with the exercise of the court’s other inherent and statutory powers to dismiss actions for want of diligence in either serving the summons or bringing the action to trial, the discretion permitted must be ‘exercised in accordance with the spirit of the law and with a view of subserving, rather than defeating, the ends of substantial justice.’ (16 Cal.Jur.2d, Dismissal, Discontinuance, and Nonsuit, § 30, p. 179.) Each case must be decided on its own particular facts, and no fixed rule can be prescribed to guide the court in its exercise of this discretionary power under all circumstances.” (50 Cal.2d at pp. 740-741.)¹⁰

Wyoming Pacific discussed the implied exception of impracticability; the present case involves the venerable doctrine of estoppel. This doctrine affirms that “a person may not lull another into a false sense of security by conduct causing the latter to forebear to do something which he otherwise would have done and then take advantage of the inaction caused by his own conduct.” (Lovett v. Point Loma Development Corp. (1968) 266 Cal.App.2d 70, 75 [71 Cal.Rptr. 709]; see Carruth v. Fritch (1950) 36 Cal.2d 426, 433 [224 P.2d 702, 24 A.L.R.2d 1403]; Industrial Indem. Co. v. Ind. Acc. Com. [Varela] (1953) 115 Cal.App.2d 684, 690 [252 P.2d 649].) Notwithstanding the desirability that actions be promptly filed and diligently prosecuted (see General Motors Corp. v. Superior Court (1966) 65 Cal.2d 88, 91 [52 Cal.Rptr. 460, 416 P.2d 492]), we have held that a defendant may be estopped from raising the statute of limitations¹¹ and from urging the defense of failure to file a timely claim.¹² Although cases are in conflict¹³ on whether a defendant may be estopped to seek dismissal for failure to bring an action to trial within five years (Code Civ. Proc., § 583), the most recent decision of this court upholds estoppel. (Woley v. Turkus (1958) 51 Cal.2d 402, 408 [334 P.2d 12].) We perceive no reason why the logic of such cases does not apply with equal force to section 581a; recognition of the doctrine of estoppel is essential if section 581a is to be applied “ ‘with a view of subserving, rather than defeating, the ends of substantial justice.’ ” (Wyoming Pacific Oil Co. v. Preston (1958) 50 Cal.2d 736, 741 [329 P.2d 489].)¹⁴

Courts of Appeal since Wyoming Pacific, have recognized the applicability of estoppel under section 581a. In Flamer v. Superior Court (1968) 266 Cal.App.2d 907 [72 Cal.Rptr. 561], defendant’s insurance agent represented to plaintiff that her action would be settled and that she need not see an attorney. Relying on these statements, plaintiff failed to serve summons within three years from the filing of her complaint. The trial court dismissed the action under section 581a; the Court of Appeal reversed, holding that “neither the apparently mandatory language of sections 581a and 583 nor decisional law preclude the court from refusing to dismiss an action under those sections upon the ground of a claim of estoppel in an appropriate case.” (266 Cal.App.2d at p. 917.) Hill v. Superior Court (1967) 251 Cal.App.2d 746, 750 [59 Cal.Rptr. 768] accepted the principle of estoppel as an implied exception to section 581a, but found insufficient factual basis on the record before it for the establishment of an estoppel. Smith v. Herzer (1969) 270 Cal.App.2d 747, 751 [76 Cal.Rptr. 77] also noted that courts may create implied exceptions to section 581a, citing Wyoming Pacific and Flamer.15

Three cases have held as a matter of law that a defendant cannot be estopped from seeking dismissal under section 581a; Siskiyou County Bank v. Hoyt (1901) 132 Cal. 81, 83-84 [64 P. 118]; White v. Superior Court (1899) 126 Cal. 245, 247 [58 P. 450]; and Sauer v. Superior Court (1925) 74 Cal.App. 580, 584 [241 P. 570]. These cases long antedate our opinion in Wyoming Pacific, and, as the Court of Appeal noted in Flamer v. Superior Court, supra, rest upon an interpretation of section 581a rejected by that opinion. (See 266 Cal.App.2d at p. 912.) We disapprove those cases to the extent that they are inconsistent with Wyoming Pacific or with this present opinion.

We conclude That a defendant, although not served with summons within three years of the commencement of the action, may be estopped to move to dismiss that action under section 581a. It is contended, however, that estoppels under section 581a should be limited to those two circumstances in which previous decisions had imposed estoppels under sections 581a or 583; (a) a defendant makes a misrepresentation to a plaintiff who is not represented by counsel (Flamer v. Superior Court (1968) 266 Cal.App.2d 907 [72 Cal.Rptr. 561]; or (b) a defendant stipulates in open court to an extension of the statutory period (see Woley v. Turkus (1958) 51 Cal.2d 402 [334 P.2d 12]; Govea v. Superior Court (1938) 26 Cal.App.2d 27 [78 Cal.Rptr. 433]). In all other cases, the contention goes, the plaintiff’s attorney may not rely upon the words or conduct of his counterpart, but must insist on a written stipulation extending the limitation period, and to fail to do so, it is implied, constitutes malpractice.

We perceive no logical reason why the doctrine of estoppel should be so restricted. Stipulations in open court are not the only words or conduct which reasonably and commonly induce reliance by counsel. When the defendant induces the plaintiff to delay service of summons, or to overlook errors in service, and the plaintiff’s reliance is reasonable, an estoppel is essential to prevent the defendant from profiting from his deception. In such a case, any distinction between words spoken in open court or over the telephone, or between words' spoken to an attorney or to a layman would be purely arbitrary.

The concept of limited estoppel also conflicts with the principles set forth in Wyoming Pacific Oil Co. v. Preston (1958) 50 Cal.2d 736 [329 P.2d 489] [discussing section 581a], and in General Motors Corp. v. Superior Court (1966) 65 Cal.2d 88 [52 Cal.Rptr. 460, 416 P.2d 492] [discussing section 583]. Both cases emphasized the duty of the trial court to examine all the acts and conduct of the parties, and render a discretionary decision with a view to furthering the ends of justice. Wyoming Pacific stressed that the trial court’s discretion “must be exercised . . . ‘with a view of subserving, rather than defeating, the ends of substantial justice.’ ” (50 Cal.2d at p. 741.) We went on to say that “Each case must be decided on its own particular facts, and no fixed rule can be prescribed to guide the court in its exercise of this discretionary power under all circumstances.” (Ibid.) General Motors, discussing section 583, held that “recognizing it would be impossible to identify every situation in which a mechanical application of Code of Civil Procedure section 583 would produce injustice, ... the statute must be applied in light of all the circumstances in the individual case, including the acts and conduct of the parties. . . .” (65 Cal.2d at p. 96.)

We read Wyoming Pacific and General Motors as marking a change in judicial attitude away from “mechanical application” of sections 581a and 583. To limit estoppel to cases of representations to laymen and of stipulations in open court would be to return to a policy of mechanical infliction of injustice in the present case and in many cases to follow; it would make irrelevant any effort by the trial court to inquire into “all the circumstances in the individual case, including the acts and conduct of the parties” (General Motors v. Superior Court, supra); it would deprive the trial court in most cases of a tool—the doctrine of equitable estoppel—long found essential to subserve “the ends of substantial justice” (Wyoming Pacific Oil Co. v. Preston, supra); it would relegate section 581a cases to a special preserve in which deception pays, and technical precision prevails over substantial justice.

We turn now to the facts of the present case to determine whether an estoppel should be invoked against defendant Tresway Aero, Inc. Uncontraverted declarations filed by plaintiff show that defendant received a copy of the complaint and the defective summons on July 22, 1969, and shortly thereafter requested and obtained a 20-day extension of time in which to make an appearance. The three-year period for service of summons under section 581a expired August 4, 1969. If defendant had been properly served on July 22, defendant’s responsive pleading would have been due on August 1. (Code Civ. Proc., § 407, subd. 3.)¹⁶ If defendant had appeared on or before August 1 and filed an answer or demurrer, that pleading would have constituted a general appearance within the three-year period, thus barring a dismissal under section 581a. If defendant, on or before August 1, had moved to quash service of summons, its action would have alerted plaintiff to the defective service in time for plaintiff to have effected valid service within the three-year period.

If defendant had done nothing, it would have been in default as of August 1, and plaintiff could have sought entry of default. Code of Civil Procedure section 410 (now Code Civ. Proc., § 412.30), however, specifically provided that “when service is against a corporation ... and notice of that fact does not appear on the copy of the summons or a recital of such notification does not appear on the certificate or affidavit of service of process as required by this section, no default may be taken against such corporation. . . .” Thus the clerk, upon examining the return of service, would have refused to enter default; again plaintiff would have been alerted to the problem in time to have effected valid service before the statutory period elapsed.

In sum, defendant’s maneuver in getting .additional time to plead resulted in plaintiff’s failure to serve summons within the period required by section 581a.¹⁷ By requesting that extension, defendant led plaintiff to believe that further service of process on defendant would be duplicatory and redundant.¹⁸ In Carruth v. Fritch (1950) 36 Cal.2d 426, 433 [224 P.2d 702, 24 A.L.R.2d 1403], which concerned the statute of limitations, we stated that “ ‘One cannot justly or equitably lull his adversary into a false sense of security, and thereby cause his adversary to subject his claim to the bar of the statute of limitations, and then be permitted to plead the very delay caused by his course of conduct as a defense to the action when brought.’ ” Defendant’s conduct in the present case lulled plaintiff into such a “ ‘false sense of security,’ ” and probably prevented plaintiff from discovering her error and effecting valid service within the statutory period.

We conclude that since the responsibility for plaintiff’s failure to effect valid service within the period of section 581a rests upon defendant, “the ends of substantial justice” (Wyoming Pacific Oil Co. v. Preston (1958) 50 Cal.2d 736, 741 [329 P.2d 489]) will be best served by estopping defendant from moving to dismiss under that section. Plaintiff’s action against defendant thus remains viable, and the superior court should afford plaintiff a reasonable time in which properly to serve defendant.

Let a peremptory writ of mandate issue directing the superior court to quash the service of summons upon defendant on July 22, 1969; however, to the extent that the alternative writ sought to compel the superior court to grant defendant’s motion to dismiss under Code of Civil Procedure section 581a, the alternative writ is discharged and the peremptory writ of mandate denied.

Peters, J., Mosk, J., and Burke, J., concurred.

1 Code of Civil Procedure section 410 was repealed effective July 1, 1970; its provisions concerning the notice on summons for service upon corporations or unincorporated associations now appear in Code of Civil Procedure section 412.30.

2 On September 14, 1969, Curtis filed an amended declaration of service of summons, in which he stated that he served “William Cree, who accepted service on behalf of Ira J. Cree, II, on behalf of Tresway Aero, Inc., a corporation.” On September 15 the Superior Court approved the amended return nunc pro tunc as of July 22, 1969.

Since William Cree ■ was authorized to accept service on behalf of defendant corporation, and Ira. Cree was an officer of the corporation, service upon either William or Ira could constitute service upon the corporation (see Code Civ. Proc., § 411, repealed as of July 1, 1970, and replaced by § 416.10); we thus fail to discern any legal significance between the original and the amended return of service..

3 Although Williám Cree apparently served generally as attorney for defendant, in both the present proceeding for mandamus and the superior court action defendant has been represented solely by the firm of Wise, Kilpatrick & Clayton.

4 Plaintiff filed her complaint August 2, 1966. August 2, 1969, fell on a Saturday so the following Monday, August 4, 1969, became the last day for service and return of summons under section 581a. (See Code Civ. Proc., § 12a.)

5 Defendant Ira Cree also appeared individually and moved to dismiss plaintiff’s complaint insofar as it asserted a cause of action against him in his individual capacity. Since plaintiff had made no attempt to serve Ira Cree individually, the superior court granted his motion under Code of Civil Procedure section 581a. The dismissal as to Ira, in his individual capacity, is not at issue in this mandamus proceeding.

6 Code of Civil Procedure section 411 was repealed as of July 1, 1970; the subsection relating to service upon corporations was reenacted • with some changes in language, in Code of Civil Procedure section 416.10.

7 Since William Cree acknowledged that he was in fact authorized to accept service for defendant, we need not consider plaintiff’s argument that defendant and William should be estopped to deny that he was so authorized.

8 In National Union Fire Ins. Co. v. Superior Court (1966) 247 Cal.App.2d 326 [55 Cal.Rptr. 574], the plaintiff served the corporate vice-president. The vice-president was told at the time of service that he was being served in such capacity, but the copy of summons served did not contain the notice required by Code of Civil Procedure section 410. The Court of Appeal issued mandate to quash service and dismiss the action, stating that “the provisions of section 410 are . . . mandatory and . . . the purported service of summons upon National Union was and is ineffective.” (247 Cal.App.2d at p. 329.)

9 A stipulation extending time in which to plead is not a general appearance. (Code Civ. Proc., § 416.1, repealed effective July 1, 1970 and replaced by Code Civ. Proc., § 418.10, subd. (d); Highlands Inn, Inc. v. Gurries (1969) 276 Cal.App.2d 694, 699 [81 Cal.Rptr. 273]; Chilcote v. Pacific Air Transport (1937) 24 Cal.App.2d 32, 35 [74 P.2d 300].) Plaintiff cites O’Keefe v. Miller (1965) 231 Cal.App.2d 920, 923 [42 Cal.Rptr. 343], which held that defendants who agreed “to file a pleading” to plaintiff’s complaint, and whose conduct showed their intent to submit to personal jurisdiction, had made a general appearance. William Cree’s statement that he would “take care of” the summons and complaint, however, falls far short of an agreement that the corporation would make a general appearance. Michael Cullen’s declaration does state that defendant requested the 20-day extension of time “in which to answer,” but this language does not purport to be a direct quotation of defendant’s request. .

10 Code of Civil Procedure section 583 contains three provisions: (1) the court may, in its discretion, dismiss an action for want of prosecution if not brought to trial within two years of filing; (2) the court shall dismiss an action if not brought to trial within five years of filing; and (3) the court shall dismiss an action if not brought to trial within three years from the granting of a new trial. It is the second of these provisions—the five-year limitation—which Wyoming Pacific treated as analogous to section 581a. This portion of section 583 states that “Any action . . . shall be dismissed by the court . . . after due notice to plaintiff or by the court upon its own motion . . . unless such action is brought to trial within five years after the plaintiff has filed his action,, except where the parties have filed a stipulation in writing that the time may be extended and except where it be shown that the defendant has been absent from the state or concealed therein and his whereabouts unknown to plaintiff and not discoverable to said plaintiff upon due diligence, in which event such period of absence or concealment shall not be a part of said five year period.”

11 See, e.g., City of Los Angeles v. Industrial Acc. Com. [Dillin] (1965) 63 Cal.2d 255 [46 Cal.Rptr. 105, 404 P.2d 809]; Carruth v. Fritch (1950) 36 Cal.2d 426, 433 [224 P.2d 702, 24 A.L.R.2d 1403]; Regus v. Schartkoff (1957) 156 Cal.App.2d 382, 386 [319 P.2d 721].

12 Farrell v. County of Placer (1944) 23 Cal.2d 624 [145 P.2d 570, 153 A.L.R. 323],

13 Compare Woley v. Turkus (1958) 51 Ca1.2d 402, 408 [334 P.2d 12] and Govea v. Superior Court (1938) 26 Cal.App.2d 27, 31 [78 P.2d 433]; with e.g., Christin v. Superior Court (1937) 9 Cal.2d 526, 529-530 [71 P.2d 205, 112 A.L.R. 1153] and Miller & Lux, Inc. v. Superior Court (1923) 192 Cal. 333, 340 [219 P. 1006].

14 “Although a defendant is entitled to the weight of the policy underlying the dismissal statute, which seeks to prevent unreasonable delays in litigation, the policy is less powerful than that which seeks to dispose of litigation on the merits rather than on procedural grounds.” (Denham v. Superior Court (1970) 2 Cal.3d 557, 566 [86 Cal.Rptr. 65, 468 P.2d 193]; see Daley v. County of Butte (1964) 227 Cal.App.2d 380, 390 [38 Cal.Rptr. 693].)

15 See also Bernstein v. Superior Court (1968) 2 Cal.App.3d 700, 704 [82 Cal.Rptr. 775], in which the court “assumed” that an estoppel may bar dismissal under section 581a, but found no estoppel on the facts before it.

16 In 1969 Code of Civil Procedure section 407, subdivision 3, required a defendant to file a responsive pleading within 10 days of service, if served within the county in which the action was brought, or 30 days of service if served outside the county. Section 407 was repealed effective July 1, 1970, and replaced by section 412.20, subdivision 3, which requires a responsive pleading within 30 days of service regardless of the place of service.

17 Highlands Inn, Inc. v. Gurries (1969) 276 Cal.App.2d 694, 699 [81 Cal.Rptr. 273]; National Union Fire Ins. Co. v. Superior Court (1966) 247 Cal.App.2d 326, 330 [55 Cal.Rptr. 574]; Miles & Sons, Inc. v. Superior Court (1960) 181 Cal.App.2d 151 [5 Cal.Rptr. 73]; and Chilcote v. Pacific Air Transport (1937) 24 Cal.App.2d 32, 35 [74 P.2d 300], all involved extensions requested and granted after the three-year period for service of summons had run. Thus, in those cases, the defendant’s act in seeking an extension of time played no role in inducing plaintiff not to effect service of summons within the statutory period.

18 “Actual fraud in the technical sense, bad faith, or an intent to mislead, are not essential to create such an estoppel.” (Industrial Indent. Co. v. Ind. Acc. Com. (1953) 115 Cal.App.2d 684, 690 [252 P.2d 649]; Denham v. County of Los Angeles (1968) 259 Cal.App.2d 860, 867 [66 Cal.Rptr. 922].)