Savings Bank of San Diego County v. Burns

California Supreme Court Nov 2, 1894 No. No. 19422Published

Before: Belcher, Fleet, Garoutte, Harrison, Temple, Vancliee

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Holding. The court held that a complaint incorporating an exhibit by reference is sufficient, that the 1893 act effectively repealed the 1876 banking act, and that a violation of Civil Code section 578 by a bank officer does not render a loan contract unenforceable by the bank.

Issues

Whether a complaint is sufficient when it refers to an attached exhibit without express language of incorporation.
Whether the act of March 9, 1893, effectively repealed the act of April 1, 1876, despite the repealing language appearing only in the body of the act.
Whether a loan made in violation of Civil Code section 578 is void and unenforceable by the lending bank.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The exhibit, as attached to the complaint, forms a part of it, and must he so treated, notwithstanding no express words declaring it to be so are used.”

“The obvious purpose of the section of the code invoked and relied upon was to protect savings banks and their depositors.”

Synopsis

Appeal from a judgment of the Superior Court of San Diego County.

The facts are stated in the opinion.

The complaint is insufficient as the note and mortgage is not pleaded in hsec verba, but is merely attached to the complaint as an exhibit. It should have been expressly made a part of the pleading. {Joseph v. Holt, 37 Cal. 253; Stoddard v. Treadwell, 26 Cal. 302, 303; Boone on Code Pleading, sec. 26, note 2.) Matters of substance, necessary to be alleged in complaint, cannot be omitted and the defect supplied by reference to an exhibit attached to the complaint. (Los Angeles v. Sig-noret, 50 Cal. 298; Burkett v. Griffith, 90 Cal. 541; 25 Am. St. Bep. 151; Brooks v. Paddock, 6 Col. 36; Bowling v. McFarland, 38 Mo. 465; Gebhard v. Gamier, 12 Bush, 325; 23 Am. Rep. 721.) The act of April 1, 1876, is a complete defense to this action, and plaintiff’s demurrer should have been overruled. (Bank of British North America v. Gahn, 79 Cal. 463; Bank of British North America v. Alaska Imp. Co., 97 Cal. 28.) The act of March 9, 1893, did not repeal the act of April 1, 1876, referred to in the title of the later act, as the title of an act is no part of it, and therefore the words “ said act is hereby repealed” are meaningless. (Cohen v. Barrett, 5 Cal. 209; Sutherland on Statutory Construction, sec. 210, notes 1-4; Endlich on Interpretation of Statutes, sec. 58, p. 73, notes a, b, ,p. 74, note 1; Garrigus v. Board of Commrs., 39 Ind. 66; Eastman v. McAlpin, 1 Ga. 157; Bradford v. Jones, 1 Md. 351; Commonwealth v. Slifer, 53 Pa. St. 71; Plummer v. People, 74 Ill. 361; Hadden v. Collector, 5 Wall. 110; Ogden v. Strong, 2 Paine, 584; Brooks v. Hydorn, 76 Mich. 280; 23 Am. & Eng. Ency. of Law, 327, note 7.) The title of an act is never allowed to enlarge or control the language in the body of the act. (Hagar v. Supervisors of Yolo County, 47 Cal. 232; Barnes v. Jones. 51 Cal. 306; Harris v. Supervisors, 52 Cal. 553; 23 Am. & Eng. Ency. of Law, 329.) The taking of the note and mortgage sued upon by the plaintiff was a violation of the provisions of section 578 of the Civil Code, and the note and mortgage were therefore null and void, and no action can be maintained upon same. (Civ. Code, sec. 1667; Gardner v. Tatum, 81 Cal. 373; Swanger v. Mayberry, 59 Cal. 91; Ladda v. Hawley, 57 Cal. 51; Capron v. Hitchcock, 98 Cal. 427.) The plaintiff in this case knew of the violation of law invalidating this note and mortgage, and its remedy is now and always has been against its delinquent president, who as to it is merely a trustee. (Bayley v. Taber, 5. Mass. 286; 4 Am. Dec. 57; Vallett v. Barker, 6 Wend. 615; Richardson v. Crandall, 48 N. Y. 362; Collins v. Blantern, 1 Smith’s Lead. Cas., 9th Am. ed., 668, 669, 675, 685; 5 Lawson’s Bights, Bemedies, and Practice, secs. 2392, 2393; 9 Am. & Eng. Ency. of Law, 880, 883, 909, 910.) Courts do not decline to enforce contracts of this kind out of any sympathy for the party opposing the enforcement of the contract, hut “ intervene for the sake of the law itself.” (Kreamer v. Earl, 91 Cal. 118; Valentine v. Stewart, 15 Cal. 405; Richardson v. Crandall, 48 N. Y. 362.) In fact the courts in some instances have declined to aid either party, or to take any action where the party seeking the enforcement of the contract was apparently entirely innocent. (Spur-geon v. McElwain, 6 Ohio, 442; 27 Am. Dec. 266; Dillon v. Allen, 46 Iowa, 299; 26 Am. Bep. 145; Conley v. Sims, 71 Ga. 161; Law v. Hodgson, 2 Camp. 147.) The purpose of section 578 of the Civil Code is clearly to protect the general public by securing and guaranteeing the exercise of the greatest amount of sober judgment and sound business sense in the making of loans; and this is the only way in which the rights of depositors can be protected; and any contracts contravening such conditions, in any particular, are null and void, and courts will not enforce tliem. (Miller v. Post, 1 Allen, 434; Smith v. Arnold, 106 Mass. 269; Dolson v. Hope, 7 Kan. 161; Solomon v. Dreschler, 4 Minn. 278; Johnson v. Hidings, 103 Pa. St. 498; 49 Am. Rep. 131; 3 Am. & Eng. Ency. of Law, 872.)

Belcher, C. This is an action to foreclose a mortgage. The defendant demurred to the complaint upon the ground that it did not state facts sufficient to constitute a cause of action, and the demurrer was overruled. She then answered, setting up that the plaintiff had not complied with the requirements of the act of April 1, 1876, “concerning corporations and persons engaged in the business of banking,” aud also that in making the loan referred to in the pleadings plaintiff had violated section 578 of the Civil Code. The plaintiff demurred to the answer, and the demurrer was sustained, and thereupon, defendant declining to amend, [477]judgment of foreclosure was entered as prayed for, from whiciL this appeal is prosecuted.

1. The first point made for a reversal is that the court erred in overruling the demurrer to the complaint. The alleged insufficiency of the complaint is based upon the fact that it simply avers that on a certain day the defendant “executed to the plaintiff a certain promissory note, and also a certain mortgage to secure the same; that a copy of said note is set out in said mortgage, and said mortgage is hereto attached and marked ‘Exhibit B’”; and it is claimed that, as the exhibit is not expressly made a part of the complaint, it does not constitute a part of it, and therefore it cannot be ascertained from the pleading when the note matured, nor what property was mortgaged to secure its payment.

This point cannot be sustained, The exhibit, as attached to the complaint, forms a part of it, and must he so treated, notwithstanding no express words declaring it to be so are used. In Ward v. Clay, 82 Cal. 502, it was held that a copy of a note annexed to the complaint, and referred to in the body of it as an exhibit, forms a part of the complaint, and may properly be referred to by the court for the purpose of ascertaining the form and contents of the note. And in Whitby v. Rowell, 82 Cal. 685, it was held that when the complaint in an action to foreclose a mortgage lias a copy of the mortgage annexed as an exhibit, to which it refers, a correct description of the land in the mortgage is sufficient for all purposes of the suit.

There are other cases to the same effect, but they need not be cited. The cases cited by appellant are clearly distinguishable from this case, and are not in point.

The complaint was not well drawn, hut when tested by a general demurrer we think it must be held sufficient.

Savings Bank of San Diego County v. Burns

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