a condition to their right to maintain a suit ed demurrer superseded the original, and to vacate a foreclosure decree collusively and that the order of the superior court is by fraudulently entered for an amount largely in

its terms confined to the original, leaving excess of that due. [Ed. Vote.-For cases in point, see vol. 30,

the amended demurrer still standing as an ('ent. Dir. Judgment, $ 8.53.]

obstacle to any final judgment. It is true McFarland, J., dissenting.

the amended demurrer did supersede the In Bank. Appeal from Superior Court,

original, and thereby completely disposed of Riverside County; J. S. Noyes, Judge.

it. The order of the court subsequently en

tered therefore had nothing to operate upon Suit luy Francisco Estudillo and another

except the amended demurrer, and is to be against the Security Loan & Trust Com

construed as sustaining it. This is doing no pany of Southern California and another.

violence to the terms of the order. From a judgment in favor of defendants,

A deplaintiffs appeal. Reversed.

murrer is none the less a demurrer because

it has been amended, and the last amended J. F. Conroy, for appellants. R. II. F.

demurrer in a case, being the only demurrer, Variel and John G. North, for respondents.

is properly designated as "the demurrer."

. BEATTY, C. J. The plaintiffs, who are

The entry of the judgment cannot be held to husband and wife, mortgaged certain lands

have been even irregular, so far as this obto secure an indebtedness to the defendant

jection is concerned. loan and trust company, a corporation. Un

The more serious objections to the judg. der a judgment of foreclosure, entered upon

ment remain to be considered, and among their default, the mortgaged premises were

these the first in order and importance is sold to the corporation by its codefendant,

the claim that the allegations of the comKeete, acting as special commissioner under

plaint, if true, were sufficient to entitle the the decree. The object of the present action

plaintiffs to a decree vacating the foreclosure is to obtain a decree vacating the foreclos

judgment upon the ground that it was proure sale, canceling the certificates and deeds

cured by fraud. Assuming the truth of what executed and recorded in pursuance of tie

is alleged, there can be no doubt that the sale, requiring the corporation to account

decree of foreclosure was procured by a fraud for moners received by it from the plain- practiced upon the court of a character entiffs and from others to their use, which

titling the plaintiffs to the relief which they should have been credited upon the mortgage

are seeking in this action, and the only quesindebtedness, and for general relief. The

tion is whether their complaint does not also grounds upon which this relief is claimed show that they are debarred from any relief are. first, that the foreclosure decree was

in equity by the fact that they had a comfraudulently obtained for an excessive

plete remedy by motion in the foreclosure amount; and, second, that the sale of the suit-a proceeding which they took and in mortgaged premises was unfairly and illegal

which they litigated unsuccessfully the same ly conducted by the commissioner acting in matters which they are endeavoring to collusion with the mortgagee, for the pur

relitigate here. The facts alleged are that pose, and with the effect, of discouraging

plaintiffs borrowed of the loan and trust competition of bidders, and thereby ena- company $12,673 in May, 1892, giving their bling the mortgagee to become the purchaser

note for that principal sum, and also separate at a price much below the actual value of interest notes, payable semiannually for a the lands. The complaint was filed in De- period of three years. To secure the notes (ember, 1900. The defendants first filed a they mortgaged a tract of land containing 950 general demurrer for want of facts. After- acres, which had been surveyed and platted Wards, but before any action upon that de- into lots and blocks as an addition to the town murrer, they filed, as of course, an amended of San Jacinto, in Riverside county. They demurrer, specifying more particularly their

received in cash only $1,874.44; the balance objections to the complaint for want of facts, of the loan being retained by the loan and and adding the special objection that several trust company to satisfy alleged prior liens separate and distinct causes of action had upon the land. They have never had any acbeen uited and combined in the complaint count of the application of the moneys so rewithout a separate statement. An order was tained, and charge that they were more than subsequently entered in the cause in these sufficient to satisfy the liens. Between the terms: "It is ordered that the demurrer be date of the loan and the 25th of October, sustained and ten (10) days given to amend 1898, plaintiffs paid all the interest notes, the complaint." Plaintiffs declined to amend, and, besides, there had been paid by thein and judgment was entered dismissing the and by others for their account various sums, action. From the judgment so entered plain- amounting in the aggregate to $9,600, which tiff's appeal.

the corporation has appropriated, and for The first point urged in support of the ap

which it has failed to account. The suit to peal is that the judgment was erroneously foreclose was commenced October 22, 1898, entered because it appears that the only de- and as shown by the default judgment submurrer in the case has never been disposed sequently entered the corporation alleged an of. The appellants contend that the amend- indebtedness of nearly $16,000, with interest

from May 1, 1898. The sum so claimed was, , shall be held that their sole remedy was by on any calculation, more than could have motion in the foreclosure suit to vacate the been due at that date, after deducting the judgment on the ground of surprise and expayments alleged to have been made. These

These .

cusable neglect. Code Civ. Proc. $ 473. plaintiffs retained an attorney to defend the The facts relevant to this question are that suit to foreclose, and communicated to him plaintiffs first learned of the stipulation and the facts constituting their defense. He in- subsequent proceedings on the 14th of April, terposed a demurrer to the complaint, which 1899, and immediately discharged their said was subsequently overruled by his consent; attorney, and on the 19th of the same month time being allowed to answer. A week be- filed a motion to set aside their default and fore the time to answer expired he signed vacate the judgment. This motion was overand tileil in the action the following stipula- ruled by the superior court June 14th. An tion: "The defendant Francisco Estudillo, appeal from that order was taken to this and Felicitas Estudillo, his wife, named in court, and was still pending when the present said action, having appeared therein by their action was commenced in December, 1900. attorney, Wilford M. Peck, and demurred to The grounds upon which that motion was the plaintiff's complaint, and said demurrer based are not stated in the complaint, but having been overruled by the above-entitled counsel in their briefs make frequent refercourt on the Sth day of February, 1899, by an ence to the report of our decision on the aporder duly entered in the minutes of said peal from the order (Security Loan & Trust court: Now, therefore, it is stipulated and Company 1. Estudillo, 134 Cal. 166, 66 Pac. agreed by and between the plaintiff repre- 2.57), from which it appears that the whole sented by its undersigned attorney, duly au

question mooted was that of the authority thorizeel thereto, and the said defendants of the attorney to make the stipulation. It Francisco Estudillo and Felicitas Estudillo,

does not appear from that decision that any his wife, by their said attorney duly author- question of fraud on the part of the loan ized thereto, that said defendants waive the and trust company was litigated or involved service of notice of overruling of said demur

in that proceeding unless it was necessarily rer, and further waive the right to ani re

involved in the question as to the authority fuse to further appear or answer in said ac

of the attorney to stipulate. But we are tion, and that the plaintiff shall be entitled

clearly of the opinion that in this case we to take judgment in accordance with the pray

cannot take notice of the record on that aper of its complaint, or as may otherwise be real. We are here confined to the facts alordered by the court on the hearing of said

leger in this complaint, which merely shows cause. Dated February 21, 1899. R. H. F.

that the motion to vacate was made and Variel, Attorney for Plaintiff. Wilford J.

overruled, and that an appeal from the order Peck. Attorney for said Defendants."

was peniling when this action was com

On the same day the cause was heard and juilg

menced. It is alleged that the frauds and

fraudulent conduct of the defendant corporament of foreclosure entered. The mortgage

.

tion were liscovered about the 10th of Octoindebtedness according to the complaint and judgment amounted at that date to $18, 16-4.98,

ber. 1899, which was more than six months to satisfy which and costs the lands were

after the entry of the judgment. These al

leved frauds consisted, in addition to what ordered sold. There was besides a person

is above stated, in inducing the attorney to al judgment entered against these plaintiffs

execute and deliver the stipulation for judg. for $1.000 attorney's fee. According to the

ment, and to conceal his unauthorized proallegations of the complaint in this action,

ceedings in the action, in ignoring the proper a much smaller sum remained unpaid on the

description of the lands in the foreclosure mortgage debt than was found due by said

judgment, and causing them to be described judgment, and the mortgagee must be deemed in the decree and order of sale as nine parto have known that it was taking judgment

cels or tracts, which could not be identified for an excessive amount upon the stipulation by reference to the recorded map of the of an attorney who was sacrificing the in

premises, in naming the defendant Keefe as terest of his clients in abandoning their

commissioner to make the sale, when he was valid defense to a large portion of the claim clerk in the office of the corporation's atasserted against them. It is charged, and

torney, and in causing him to do and to by the demurrer admitted, that the mort

omit to do various things in connection with gagee knew prior to the date of the stipu- the sale in disregard of the rights of these lation that said attorney had been instructed plaintiffs, all with the intent and purpose of to file an answer for these plaintiffs, and enabling the corporation to deprive plaintiffs that he had no authority to stipulate for a of their lands. judgment by default. That the stipulation If the right of plaintiffs to maintain this was collusive and fraudulent in fact and in

action depends upon their discovery of the intent is repeatedly charged, and is by the frauds here alleged too late to make them demurrer admitted. These facts so admitted

the ground, or one of the grounds, of their constitute a fraud extrinsic and collateral to

motion to vacate the default judgment in the issues in the cause which entitles the the foreclosure suit, it must be held that their plaintiffs to relief in this action unless it complaint does not state facts sufficient to

constitute a cause of action. They allege Sugar Co. v. Porter, 68 Cal. 370, 9 Pac. 313. It is true that the frauds of the corporation That was a case very much like this, in defendant were discovered about the 10th of which the superior court sustained a demurOctober, 1899, but they also allege that they rer to the complaint, and where, on the aphad notice of the judgment and the stipula- peal, respondent contended that the action tion upon which it was entered in April, was not maintainable because the plaintiff 1899. Necessarily they also knew before that had a plain, speedy, and adequate remedy date of their instructions to their attorney by motion. In response to this objection to make their defense in the action and of his the court said: “It has been held in Bibend betrayal of their cause. They knew that the v. Kreutz, 20 Cal. 109, Ketchum v. Crippen, judgment was for an excessive amount and 37 Cal. 223, and Ede v. Hazen, 61 Cal. 360, that the corporation must have been aware that so long as the statutory remedy by moof the fact when its complaint was filed. tion to set aside a judgment exists, the assistThey knew how the land was described in ance of a court of equity cannot be invoked. the decree, and the manner in which it had But none of those cases involved the question been arbitrarily subdivided for the purposes of judgment fraudulently taken against ab of the sale. They knew that Keefe had been injured party and executed by a sale of his appointed commissioner to make the sale, property.” Further on the opinion says: “It and what his connection with the corpora- is a general rule that if relief be obtainable tion's attorney and with the litigation was. against mistakes or errors of law or fact comIn short, they knew all the facts which mitted in a judicial proceeding the statutory they now allege for the purpose of showing remedies for relief must be resorted to in the fraud, except the fact that the corpora- the proceeding itself. But, as the Supreme tion induced their attorney to enter into Court of the United States says in U. S. V. the stipulation, and to conceal his proceed- Throckmorton, 98 U. S. 65, 66, 25 L. Ed. 93, ings. That their attorney was induced by 'there is an admitted exception to this genthe corporation to consent to the default eral rule in cases where, by reason of some judgment was a fact necessarily to be in- thing done by the successful party to the suit, ferred from the facts which they knew, and there was in fact no adversary trial or de since they discovered his proceedings in time cision of the issue in the case. Where the to make their motion, his attempted conceal- unsuccessful party has been prevented from ment, whether collusive or not, is a circum- exhibiting fully his case by fraud or decepstance entirely immaterial here.

tion practiced on him by his opponent, as by We must therefore treat this complaint as keeping him away from court, a false promise showing, not that the alleged frauds were of a compromise, or where the defendant first discovered in October, 1899, but as never had knowledge of the suit, being kept showing that they were known to plaintiffs in ignorance by the acts of the plaintiff, or at the time they gave notice of their motion where an attorney fraudulently or without to vacate the default judgment. So regard- authority assumes to represent a party and ing it, the question presented for decision connives at his defeat, or where the attorney is whether a party against whom a judgment regularly employed corruptly sells out his excessive in amount has been entered upon client's interest to the other side, these and a fraudulent and collusive agreement between similar cases which show that there has never his attorney and the opposing party can main- been a real contest in the trial or hearing tain a separate suit in equity to vacate such of the case, are reasons for which a suit may judgment, or enjoin its enforcement when be sustained to set aside and annul the formit appears that he had notice of its entry er judgment or decree and open the case and the fraud in its procurement in ample for a new and a fair hearing.'” From time to have moved for relief under section all this it would seem that the judgment of 473 of the Code of Civil Procedure. Upon reversal in that case was intended to be rest. this question there seems to be a conflict ed upon a distinction as to the remedy beof autliority in other jurisdictions, and we tween cases of judgments obtained by fraud bare not been referred to any decision of of the plaintiff, and judgments suffered by this court in a case clearly calling for a de- reason of surprise or excusable neglect on the termination of the precise point. The gen- part of the defendant. It is not, however, eral principle that equity will not interfere entirely clear from the report that the ques. to vacate or enjoin the execution of a judg. tion was necessarily involved, though it may ment at law when the party aggrieved has have been. But, even if what was said in a plain, speedy, and adequate remedy by that case should be regarded as obiter, it motion to vacate the judgment or quash the is still entitled to respect, and in the absence secution, or by an appeal, is recognized and of direct authority upon the question ought applied in many cases, but the question wheth- to be followed if no good reason appears for er a summary motion to be supported by laying down a different rule; and no such affidavits is an adequate remedy, and there- reason is suggested. On the contrary, it ap

. fore exclusive, in a case such as this, has pears to me to be a salutary rule. The burnot been directly involved or decided in any den of proof rests upon no one more heavily of the cases that have come to this court, than upon a plaintiff seeking relief upon the with the possible exception of California Beet ground of fraud, and he ought not to be induly hampered as to the means of mak- readiness and ability of the plaintiffs to pay ing proof. In support of a motion he is the amount that may be found due on an limited to ex parte affidavits of voluntary accounting. They are entitled to a correct witnesses unless the court in its discretion determination of the amount of their inpermits a wider latitude. In a separate suit

. In a separate suit | debtedness and to have the mortgaged premhe may bring unwilling witnesses into court ises sold only under a proper decree. What by subpæna, and he may take their deposi- has been said in the cases of rescission cited tions. The remedy is ampler and more by the respondent as to the necessity of efficacious, and the case is one which de- a verring readiness and ability to restore mands the amplest and most efficacious reme- what has been received under the contract dy. My conclusion is that the plaintiffs had has no application to such cases as this. the right to maintain this suit, notwithstand- It follows from what has been said that ing they knew of the frauds alleged in ample the judgment of the superior court must be time to have moved upon that ground.

reversed, but in view of the further proceedBut it is objected that they did move, and ings involved in this conclusion it is proper to that their right to have the judgment vacat- add that if, upon a trial of the issues, it shall ed is res judicata. It does not, however, ap- be found that the attorney who represented pear from this complaint that they moved these plaintiff's in the foreclosure suit had upon the ground of the fraud here alleged, authority from them and acted in good faith and the report of our decision on the appeal in stipulating for judgment according to the from the order denying the motion shows prayer of the complaint, and that no fraud that it was made upon the ground of want was practiced by the defendant corporation of authority in their attorney to stipulate. in procuring the entry of the decree, the The allegations of this complaint do not plaintiff will have no right to demand that show that the order denying the motion to the sale and other subsequent proceedings vacate is a bar to this action. In Black on

.

be vacated; for, if the decree was not in Judgments it is said (section 321): "In an accordance with the prayer of the complaint, action to set aside a judgment on the ground the defendants therein had a remedy by apof fraud, neither the judgment thus sought peal, and that remedy was exclusive, and to be vacated nor an order refusing to set if it was in accordance with the prayer of aside a default and permit an answer in the complaint they cannot now object to a that case can be set up as a bar to the ac- sale made in the inode authorized by their tion.” From which it would seem to follow formal consent. In other words, our conthat in such a case as this the correct clusion is that, if there was in fact no fraud practice would be to move promptly under in the procurement of the judgment, the section 473 of the Code of Civil Procedure, plaintiffs have no right of action. and, if sefeated in that proceeding to com- The judgment appealed from is reversed, mence à separate action for relief upon the and the cause remanded, with instructions ground of the plaintiff's fraud-a practice to the superior court to overrule the demurto be commended as convenient and ex- rer with leave to the defendants to answer. peditious in case the motion should be granted, and as affording the injured party We concur: SHAW, J.; SLOSS, J.; ANall the advantage of a regular trial of the GELLOTTI, J.;

J.; HENSHAW, J.; LORIissue of fraud if the more summary pro- GAN, J. ceeding proved ineffectual. This is the course which plaintiffs have taken, and, if MCFARLAND, J. (dissenting). I dissent, the practice is admissible, they cannot be and adhere to the opinion delivered in decharged with lack of diligence. They moved partinent affirming the judgment. I think promptly for relief in the foreclosure suit, that the case clearly comes within the rule and before that motion was finally decided that equity cannot be invoked where there they commenced this action.

is a remedy at law. Appellants had an There has been no laches. The period of ample remedy for their alleged grievance by limitation for actions for relief on the motion under section 473, Code Civ. Proc. ground of fraud is three years from the dis- They availed themselves of that remedy and covery of the fraud. This action was com- were defeated; and they are now seeking menced less than two years after its com- to try all over again the matter there litigamission. The cases cited by respondent in ted. If their statements are true, they were which the complaint has been held bad for the victims of the "surprise" which is made failure to show how and when the fraud one of the grounds for relief in section 473; was discovered, and why it was not sooner and it makes no difference that the surprise discovered, were all cases in which the ac- was the result of alleged fraud. Moreover, tion was con menced more than the full if the decision on the motion were no bar period of limitation after the commission to the present action because of fraud inof the fraud. In such cases the doctrine of volved, then in my opinion there is no sufficilaches applies, but in a case like this the ent averment in the complaint of facts conright to maintain the action is governed by stituting fraud. The mere averment that the statute of limitations. Nor does the plaintiffs "procured" defendant's attorney right to maintain the action depend upon the to make the stipulation, etc., is insufficient.