Merco Construction Engineers, Inc. v. Municipal Court
Merco Construction Engineers, Inc. v. Municipal Court
Opinion of the Court
Opinion
Appeal from judgment denying petition for writ of mandate directing, inter alia, the respondent Long Beach Municipal
Both the municipal court and Sully-Miller contend the Legislature is precluded by the separation of powers clause from designating those persons who are authorized to practice law.
In Brydonjack v. State Bar (1929) 208 Cal. 439 [281 P. 1018] we noted that “[a]dmission to practice is almost without exception conceded everywhere to be the exercise of a judicial function . . . .” (Id., at p. 443.)
While recognizing “that the legislature may prescribe reasonable rules and regulations for admission to the bar” we held such “legislative regulations are, at best, but minimum standards unless the courts themselves are satisfied that such qualifications as are prescribed by legislative enactment are sufficient. ... In other words, the courts in the exercise of their inherent power may demand more than the legislature has required. [Citations.]” (In re Lavine, supra, 2 Cal.2d 324, 328.) (See fn. 5.) We concluded “that in so far as the . . . ‘pardon statute’ purports to reinstate, or to direct this, or any other, court to reinstate, without any showing of moral rehabilitation, an attorney who has received an executive pardon of the offense upon the conviction of which his disbarment was based, the same is unconstitutional and void as a legislative encroachment upon the inherent power of this court to admit attorneys to the practice of the law and is tantamount to the vacating of a judicial order by legislative mandate.”
We deem it established without serious challenge that legislative enactments relating to admission to practice law are valid only to the extent they do not conflict with rules for admission adopted or approved
The issue according to Merco is whether a corporation can appear in court in propria persona in the same way as a natural person. Prior to enactment of section 90 it was well established that a corporation could not so appear. “A corporation cannot represent itself in court, either in propria persona or through an officer or agent who is not an attorney.” (Vann v. Shilleh, supra, 54 Cal.App.3d 192, 199; see also Roddis v. All-Coverage Ins. Exchange (1967) 250 Cal.App.2d 304, 311 [58 Cal.Rptr. 530]; Himmell v. City Council (1959) 169 Cal.App.2d 97, 100 [336 P.2d 996]; Paradise v. Nowlin (1948) 86 Cal.App.2d 897, 898 [195 P.2d 867].) Merco contends the established rule is inapplicable because, for the first time, section 90 expressly provides for representation in propria persona. A party appearing in propria persona, Merco contends, is not engaged in the practice of law contrary to the dictates of the Constitution and this court, because such party is not appearing in a representative capacity.
Merco recognizes that it, while being a corporation and a person within many legal concepts, nevertheless lacks attributes and rights of natural persons.
Merco’s argument requires further examination of corporate existence. It is fundamental, of course, that a “corporation is a distinct legal entity separate from its stockholders and from its officers.” (Maxwell Cafe v. Dept. Alcoholic Control (1956) 142 Cal.App.2d 73, 78 [298 P.2d 64].) “A corporation ... in its corporate . . . rights and liabilities ... is as distinct
To presume, as we must if we are to follow Merco’s reasoning, that a corporation can act without representation, is a fiction we cannot accept. (See American Center for Education, Inc. v. Cavnar (1972) 26 Cal.App.3d 26, 36 [102 Cal.Rptr. 575]; Roddis v. All-Coverage Ins. Exchange (1967) 250 Cal.App.2d 304, 311 [58 Cal.Rptr. 530].) A corporation cannot in fact appear in court except through an agent. (See Brooks v. Small Claims Court (1973) 8 Cal.3d 661, 669 [105 Cal.Rptr. 785, 504 P.2d 1249].) Section 90 does not even purport to grant to a corporation a right to represent itself—it purports only to change the identity of the representative through whom it may appear. If we were to hold that a corporation represents itself when appearing through a “director, an officer, or an employee” (Code Civ. Proc., § 90), then it would necessarily follow that the corporate “self’ is comprised of directors, officers, or employees, contrary to the authorities we have noted.
The qualifications of the human representing a corporation—or for that matter any other person or entity—in court is one of vital judicial concern. Such person is clearly engaged in the practice of law in a representative capacity. The practice of law “is the doing and performing services in a court of justice in any matter depending therein through its various stages . . . .” (People v. Merchants Protective Corp. (1922) 189 Cal. 531, 535 [209 P. 363]; see also Bluestein v. State Bar (1974) 13 Cal.3d 162, 173-174 [118 Cal.Rptr. 175, 529 P.2d 599]; Baron v. City of Los Angeles (1970) 2 Cal.3d 535, 543 [86 Cal.Rptr. 673, 469 P.2d 353].)
We recognize, of course, that corporations are represented in small claims court by persons who are not members of the State Bar. Such representation is authorized by statute (Code Civ. Proc., § 117 et seq.) as interpreted and approved by court decision (Prudential Insurance Co. v. Small Claims Court (1946) 76 Cal.App.2d 379 [173 P.2d 38, 167 A.L.R. 820]). Merco quotes from Prudential for the proposition that “the common law rule that prohibits a corporation from appearing in legal proceedings in propria persona may be modified by the Legislature.”
Prudential stands for two propositions which are important to our determinations here. First, a corporation not itself being a natural person, can make a court appearance only through a natural person—obviously a person other than the corporate person. Second, because the statute cannot be construed as intending to deny to a corporation the right to sue or defend in small claims court, it can appear in such court through a natural person as an exception to a literal reading of former section 117g.
Prudential is not to be extended to courts other than small claims courts even when, as here, the Legislature has expressly provided for such extension. As stated, it is this court and not the Legislature which exercises ultimate control over admissions to practice law. The fact that we have approved lay representation of corporate parties in small claims courts does not require that we do so for other courts. The special circumstances which were deemed necessary for such representation in small claims proceedings do not exist in the municipal court.
In net effect our holding today is to deny the Legislature’s invitation to permit a person with no demonstrable skills as an attorney to represent a corporation in municipal court merely because such person may be a director, officer or employee of the corporation. We are not authorized, of course, to reject in the usual course of our judicial function a legislative enactment merely because we deem it serves no desirable purpose. But when the matter at issue involves minimum standards for engaging in the practice of law, it is this court and not the Legislature which is final policy maker.
We deem, also, Code of Civil Procedure section 90 not to serve the general welfare in that it would authorize the appearance, in behalf of a corporation, of almost any person selected by a corporation regardless of the length of his association or employment, his position with the corporation, or his training, character and background. Thus an “employee” could be a disbarred attorney who becomes employed solely for the purpose of bill collection, moving in and out of court and from corporation to corporation. Or he could be a paraprofessional who, while having failed to pass a bar examination, is nevertheless not precluded from practicing law so long as he confines his client/employer to corporations and his practice to justice and municipal courts.
The judgment is affirmed.
Mosk, J., Richardson, J., and Manuel, J., concurred.
The basic civil action was commenced in municipal court by real party in interest, Sully-Miller Contracting Company (Sully-Miller) against petitioner Merco for damages resulting from an alleged breach of contract. Merco filed an answer and cross-complaint, purporting to appear in propria persona through Phil Rotblatt, Merco’s treasurer, not a member of the State Bar. Sully-Miller demurred to both the answer and the cross-complaint on the ground a corporation could not appear in propria persona. (See Vann v. Shilleh (1975) 54 Cal.App.3d 192, 199 [126 Cal.Rptr. 401].) The demurrer was sustained as to the cross-complaint, but for procedural reasons was overruled as to the answer. Merco then commenced the instant proceedings, filing in superior court petition for writs of certiorari and mandamus seeking an order directing the municipal court to set aside its order sustaining the demurrer, to overrule the demurrer, and to permit Merco to appear in propria persona. In denying the petition the superior court concluded Code of Civil Procedure section 90 (see fn. 2, post), in purporting to authorize a nonattomey to appear in behalf of a corporation, offends the separation of powers clause of the state Constitution (see fn. 3, post) and the equal protection clauses of the state and federal Constitutions. (See U.S. Const., Amend. XIV, § 1; Cal.Const., art. I, § 7.) The instant appeal followed.
Section 90 provided at times pertinent herein: “Where a corporation is a party in the municipal court it may appear through a director, an officer, or an employee, whether or not such person is an attorney at law.”
Section 90 was subsequently repealed and reenacted as Code of Civil Procedure section 87, identical to former section 90 except that it applies also to proceedings in justice courts. (Stats. 1976, ch. 1288, § 6.)
California Constitution, article III, section 3, provides: “The powers of state government are legislative, executive, and judicial. Persons charged with the exercise of one power may not exercise either of the others, except as permitted by this Constitution.”
Such contention is also urged by amici curiae, the State Bar of California and the Legal Aid Foundation of Los Angeles, in support of the municipal court as respondent.
The “inherent power” of the judiciary to govern admission to the practice of law is not expressly dealt with in any constitutional provision. It is provided in article VI, section 1 that the “judicial power of this State is vested in the Supreme Court, courts of appeal, superior courts, municipal courts, and justice courts. All except justice courts are courts of record.”
The words of the controlling statute (“. . . the word ‘person’ includes a corporation as well as a natural person” (Code Civ. Proc., § 17)), make it clear a corporation is not deemed to be a natural person in legal contemplation. (See also Corp. Code, § 207.)
While the appeal was pending herein the Legislature enacted and the Governor signed Assembly Bill No. 2192 increasing the limitation on civil action recoveries in municipal courts from $5,000 to $15,000. (Stats. 1978, ch. 146, § 1.) The amendment thus provides added inducement to engage in the type of practice purportedly authorized by section 90.
The situation which might thus develop in municipal court could be similar to that which now exists in small claims court. (See Brooks v. Small Claims Court, supra, 8 Cal.3d 661.) In Brooks we noted a study which indicated only 35 percent of plaintiffs but 86 percent of defendants in small claims were individuals, and that almost 90 percent of all
Dissenting Opinion
I dissent. It may be that section 87 of the Code of Civil Procedure is not a perfect answer to the vexing problem of participation by nonlawyers in adjudicatory proceedings. The majority of this court now intervenes, however, to restrict seriously the Legislature’s power to seek imaginative and improved answers to that vexing problem.
I am not persuaded here that the Legislature has violated the vague commands in article III, section 3 of the California Constitution. Nor am I persuaded that the word “court” (compared, say, with the phrase “administrative tribunal”) should trigger automatically the monopoly that some people think inheres in article VI, section 9 of the Constitution, regarding the State Bar. (Cf. Eagle Indem. Co. v. Industrial Acc. Com. (1933) 217 Cal. 244, 247-249 [18 P.2d 341]; and see Bennett, Non-Lawyers and the Practice of Law Before State and Federal Agencies (I960) 46 A.B.A.J. 705; State Bar Reports (Dec. 1977-Jan. 1978) p. 14 [“90,000 California lawyers in 1984”].)
Bird, C. J., concurred.
Dissenting Opinion
I dissent.
Although past decisions recognize this court’s ultimate policymaking role as to regulations affecting the “practice of law,” none of the judicial
In placing corporate entities on an equal footing with individuals, sole proprietorships and partnerships that have long enjoyed in propria persona rights, the Legislature articulated the increasing public concern with the growing expense of legal services and the need to insure continued access to courts in controversies of less than major financial proportions. Failing to address the serious problem to which this legislation is directed, the majority invalidates the statutory enactment by simply speculating as to the abuses that the presence of nonattorneys in court may engender. In my view, such speculation fails to serve as a basis for invalidating the enactment, even as to a matter in which the judiciary shares policy making authority with the Legislature. Unless and until such a legislatively prescribed procedure demonstrably interferes with the administration of justice, I believe that the judiciary should grant to the instant modest legislative innovation the opportunity to prove itself in operation.
In invalidating section 87, the majority relies heavily on decisions from California and other jurisdictions embracing the common law rule that corporations must be represented by attorneys in courts of record. (See, e.g., Paradise v. Nowlin (1948) 86 Cal.App.2d 897 [195 P.2d 867].) All of the decisions, however, represent judicial declarations of the rights of corporations in the absence of a specific statutory authorization of in propria persona representation. The majority fails to cite a single decision in which a court has invalidated a statute, such as section 87, expressly permitting a corporation to be represented by a nonattomey employee.
Indeed, the Court of Appeal opinion in Prudential Insurance Co. v. Small Claims Court (1946) 76 Cal.App.2d 379 [173 P.2d 38, 167 A.L.R. 820], directly refutes the majority’s conclusion that the Legislature lacks authority to grant in propria persona rights to corporations. In the Prudential Insurance case, Justice Peters (then on the Court of Appeal) initially recognized the “general rule that a corporation in the absence of statutory authority, even in its own behalf, cannot practice law.” (Italics added.) (76 Cal.App.2d at p. 386.) Justice Peters went on to point out, however, that none of the earlier decisions establishing the “general rule” “dealt with a statutoiy situation such as is here involved. Here we have a
The majority suggests that the holding in Prudential was a necessary exception to the general rule prohibiting in propria persona representation by corporations: since section 117g provided that no attorney could represent a party in small claims court, “a corporation, although it could be sued in small claims, could not defend because [under a literal construction of that statute] it was incapable of defending through a natural person . . . .” (Ante, p. 731.) The majority contends these “special circumstances” which justified in propria persona representation in small claims proceedings do not exist in municipal court. This analysis fails to acknowledge the underlying public policy on which the holding in Prudential was expressly based, and does not explain why that policy should not be applied with respect to municipal and justice court disputes as well as small claims.
The policies underlying both section 117g and the legislation at issue here are largely the same: Individuals have long been entitled to appear in propria persona because in many minor disputes the relatively small amount in controversy renders representation by counsel infeasible. A rule requiring representation by counsel in such disputes could well deny a potential litigant his right to judicial resolution of the dispute. As was aptly expressed by Justice Peters in Prudential: “Justice should not be a rich man’s luxury. The Magna Carta guaranteed that justice would not be denied or delayed. Ever since 1215 those interested in the administration of justice have struggled somewhat unsuccessfully to live up to that promise so far as the poor litigant is concerned. The delay and expense incident to litigation have long discouraged the attempts of the poor litigant to secure redress for claims meritorious but small in amount. These cases are relatively of as great importance to those litigants as those heard in our highest courts, but the expense of employing an attorney and paying normal court costs is more than the cause will bear. . . .” (76 Cal.App. at p. 383.)
Without question minor claims frequently arise in municipal and justice court in which the “cost of employing counsel is more than the cause will bear.” In enacting section 87 the Legislature simply recognized
The majority emphasizes that municipal courts, unlike small claims courts, are courts of record in which “formal rules of procedure and evidence are to be observed by representatives of the parties, and the court is entitled to expect to be aided in the resolution of the issues by presentation of the cause through qualified professionals rather than a lay person.” (Ante, p. 732.) While we recognize the courts’ interest in assistance of counsel and maximum procedural efficiency, we doubt the majority’s conclusion that corporations appearing in propria persona will unduly handicap a court of record. Individuals have long been permitted to proceed in propria persona; the legal system has not been left in shambles. In the absence of any showing, we cannot see how corporate in propria persona representation will have a more deleterious judicial effect.
The majority further suggests that section 87 dangerously opens the door for a “cadre of unprofessional practitioners” ethically unrestrained from abusing the judicial system and from taking unfair advantage of individual litigants, especially in debt collection matters. The majority engages in speculation in assuming, however, that corporations that appear in propria persona will cause greater injuiy than individual proprietors or partnerships that do so. The abstract distinction between sole proprietorships and partnerships, which ostensibly constitute “natural” persons, and corporations, which constitute “artificial” persons, has little bearing on the practical effect of nonattorney representation.
Both the nonattomey who represents his own business or his partnership, and the nonattorney who represents his corporate employer perform exactly the same functions both in and out of court. The majority fails to explain why the Legislature could not reasonably conclude that the latter class of corporate employees posed no greater danger to the public and the judicial system than the former class. In the past, trial courts have proven quite capable of handling any abuse of in propria persona privileges that may arise in the course of actual litigation; the majority
Of course, if the provisions of section 87 do in fact prove to create a significant danger to the public or to the administration of justice, our court retains the authority to invalidate the enactment under the “separation of powers” doctrine. In striking down the statute in the absence of any such showing, however, I believe the majority has acted prematurely and without due consideration of the important public policies reflected in the legislation. In my view, we should not hamper the Legislature’s efforts to facilitate more procurable, accessible and equal justice and should allow this innovative legislation an opportunity to prove itself in actual operation.
Bird, C. J., concurred.
Reference
- Full Case Name
- MERCO CONSTRUCTION ENGINEERS, INC., Plaintiff and Appellant, v. THE MUNICIPAL COURT FOR THE LONG BEACH JUDICIAL DISTRICT OF LOS ANGELES COUNTY, Defendant and Respondent; SULLY-MILLER CONTRACTING COMPANY, Real Party in Interest and Respondent
- Cited By
- 105 cases
- Status
- Published