Cockerell v. Title Insurance & Trust Co.

SCHAUER, J.

I dissent.

Justice Carter’s opinion holds that an issue as to the fact of assignment must be presumed to have been raised and that the evidence fails to prove an assignment of the note to the plaintiffs. Neither the record nor the law supports this holding.

The clerk’s transcript shows that the answer of the defendants T. E. Denny and Edna Denny does not contain any denial sufficient to raise an issue as to the fact of assignment. The language of the answer is as follows: “Answering Paragraph IV of said complaint, these defendants do not have sufficient information as to the allegation contained therein, and basing their denial upon that ground, generally and specifically deny the same.”

It has been the law of this state for the past 95 years that an attempted denial in the form and substance of the language above quoted raises no issue. (Aronson & Co. v. Pearson (1926), 199 Cal. 295, 297-298 [ 249 P. 191 ] ; May v. Board of Directors of El Camino Irr. Dist. (1949), 34 Cal.2d 125, 127 [ 208 P.2d 661 ] ; North v. Evans (1931), 117 Cal.App. 317, 320 [ 3 P.2d 609 ].) As repeatedly pointed out in the cases section 437 of the Code of Civil Procedure provides that a defendant if he “has no information or belief upon the subject sufficient to enable him to answer an allegation of the complaint . . . may so state in his answer, and place his denial on that ground,” but it is wholly insufficient to merely aver lack of information or knowledge as a basis for denial, and, as held in the May case, supra, “A denial in that form is insufficient to present an issue on the subject of ownership.”

However, even if we assume that the fact of plaintiffs’ title to the note (and accompanying security) was placed in issue the ultimate result must be the same. The evidence as to plaintiffs’ ownership is uncontradicted. The opinion seeks to avoid its effect on two theories: 1. That the evidence of ownership is not competent or sufficient; 2. That the *295 plaintiffs’ title must fail because they did not prove that the payee of the note, the ‘‘ Crestmore Co., a Limited Partnership,” had complied with section 2468 of the Civil Code.

As to the first contention, the evidence shows without dispute that plaintiffs had possession of the note, that they produced it, and that on the reverse side it was endorsed ‘ ‘ The undersigned does hereby assign this note to the account of [plaintiffs] . . . , as of the 27th day of August, 1951. [Signed] The Crestmore Co. P. H. Wierman.” The note was purchased through an escrow for a consideration purporting to amount to a value of at least $6,300. The production of the note, without more, was sufficient evidence of ownership. It is presumed that “things which a person possesses are owned by him” (Code Civ. Proc., § 1963, subd. 11) and when a note purporting to bear the endorsement of the payee is produced by the transferee it is presumed that the transferee has acquired it for value and is the owner thereof (Waldrip v. Black (1887), 74 Cal. 409, 411-412 [ 16 P. 226 ]; Ramboz v. Stansbury (1910), 13 Cal.App. 649, 652 [ 110 P. 472 ] ; Carver v. San Joaquin Cigar Co. (1911), 16 Cal.App. 761, 769 [ 118 P. 92 ]). Under the circumstances shown the evidence does not support a finding that plaintiffs do not have title. (Reinert v. Proud (1935), 8 Cal.App.2d 169, 171 [ 47 P.2d 491 ] ; see also Sipe v. W. I. Hollingsworth & Co. (1950), 99 Cal.App.2d 391, 392 [ 221 P.2d 991 ].)

The second contention in the majority opinion—that plaintiffs must fail because they did not prove that their predecessor in interest, the Crestmore Company, had complied with section 2468 of the Civil Code—is wholly devoid of merit. This is not an action to recover on the note; it is a proceeding for declaratory relief. If the plaintiffs are the owners of the note but cannot maintain an action on it until their predecessors have complied with section 2468 the court should so declare. Section 2468 cannot work a forfeiture of the plaintiffs ’ title to the note or to the funds here involved; it could, at most, be availed of as a plea in abatement in an action on the note. (Kadota Fig Assn. v. Case-Swayne Co. (1946), 73 Cal.App.2d 796, 802 [ 167 P.2d 518 ].) Furthermore, the pleadings in this case are completely silent on this issue; there is no plea in abatement. ‘A plaintiff is not required to allege or prove compliance with this section, since noncompliance is a matter of defense, and the issue cannot be raised for the first time on appeal. (Phillips v. Goldtree (1887), 74 Cal. 151, 154-155 [ 13 P. 313 , 15 P. 451 ] ; see, also, *296 Vance v. Gilbert (1918), 178 Cal. 574, 578 [ 174 P. 42 ].) “The rule is also settled that it is not necessary that the plaintiffs have complied with the statute at the time of the commencement of the action; that it is sufficient if they have done so at the time at least when issue as to the matter of abatement is made.” (Rudneck v. Southern California M. & R. Co. (1920), 184 Cal. 274, 282 [ 193 P. 775 ].) Here, that issue has never been made.

It follows that the judgment of the trial court should be reversed.

Appellants’ petition for a rehearing was denied March 25, 1954. Schauer, J., was of the opinion that the petition should be granted.