Opinion
10-26-1951
ORELLA v. JOHNSON et al. Civ. 14752.
Alfred J. Harwood, San Francisco, for appellant. J. Frank Murphy, Eugene J. Adams, Santa Cruz, for respondents.
ORELLA
v.
JOHNSON et al.
Oct. 26, 1951.
Dissenting Opinion Oct. 29, 1951.
Rehearing Denied Nov. 24, 1951.
Hearing Granted Dec. 20, 1951. *
Alfred J. Harwood, San Francisco, for appellant.
J. Frank Murphy, Eugene J. Adams, Santa Cruz, for respondents.
DOOLING, Justice.
This appeal is from a judgment for defendants after a nonsuit was granted.
The prayer of the amended complaint is for a judgment decreeing that plaintiff is the equitable owner of an improved parcel of real property in Santa Cruz County and that defendant May Pastana (formerly May Johnson) convey it to him; also that she account for money held as his agent and trustee.
Three pieces of real property are in the picture, the first known as the Harder Road place in Alameda County, the second the Winton Road place in Alameda County, and the third a place in Santa Cruz County. Appellant married Mary Orella, his second wife, in 1918 and they lived on the three places successively until her death in 1948, and since then appellant has lived on the Santa Cruz property.
The original Harder Road property belonged to appellant's parents, and 1.712 acres thereof became vested in him as separate property. There was a mortgage of $1,000 thereon, and to pay it off appellant in 1933 borrowed $1,000 from respondent, a daughter of his wife by her former marriage.
On March 24, 1938, while the $1,000 was unpaid, appellant and his wife made a grant deed conveying the 1.712-acre parcel to respondent. The deed was recorded at respondent's request about 21 months later.
On July 15, 1941 the property was sold for $3,900, which was paid to respondent, and the deed was executed by her; out of the $3,900 she retained the $1,000 owing by appellant and $400 interest thereon, and used $1,800 of the $3,900 to purchase the Winton Road property, the title to which was taken in her name.
The latter property was sold for $4,500, which was paid to respondent, and the deed was executed by her, whereupon the Santa Cruz place was acquired for $2,300 and title taken in respondent's name; its purchase price was derived from the sale of the Winton Road property.
Shortly after the death of appellant's wife he requested respondent to convey to him the Santa Cruz property, which she refused to do.
After that demand, but before this action was commenced, respondent on May 24, 1948 made a deed which vested the title to the Santa Cruz property in herself and her daughter, Geraldine J. Strickland, as joint tenants, and the daughter has since been joined as a defendant and has answered herein.
Appellant testified that he did not learn that the title to the Santa Cruz property was not in his name until December 1, 1947 when he went to pay the taxes.
He testified that when he signed the deed to respondent he 'was supposed to sign a deed of trust', and believed he was signing one; that he did not read the deed or discover that it was an absolute deed until December 1, 1947; that all his discussions respecting the deed and the other transactions were with his wife; that he had no conversation with respondent respecting any sale, or the purchase of either the Winton Road place or the Santa Cruz place.
He testified that he paid the taxes on the Santa Cruz property after he bought it (in 1943). The tax bills for 1947-48, produced by appellant, were admitted in evidence. He made alterations and repairs on the Santa Cruz property which came to $800, which his wife got from respondent 'from the sale of the Winton Road property'. Aside from that $800 and the $2,300 paid for the Santa Cruz property he testified respondent had never accounted for any part of the money received from the Winton Road sale and that, of the $3,900 received from the Harder Road sale, $1,800 was used to buy the Winton Road property and $1,400 to pay off the loan and interest, but the balance had not been paid or accounted for.
Appellant's first contention is that the court erred in excluding evidence of statements made to him by his wife just before the deed to respondent was made.
Appellant's complaint was drawn on the theory that the respondent is a trustee who has repudiated her fiduciary obligation. It alleges that 'defendant requested plaintiff to make a deed of trust of said portion of said Harder Road property to defendant; that said request was made by plaintiff's wife Mary Orella acting on behalf of defendant; that defendant stated to plaintiff through her agent Mary Orella that plaintiff might become involved in an automobile accident and that in order to protect plaintiff, it would be best that defendant hold said portion of said Harder Road property in trust for plaintiff and that upon demand the defendant would reconvey said real property to plaintiff.'
Appellant was permitted to testify, over objection, that his wife asked him to sign the deed to May Johnson, but to the question 'What did she say?' an objection was sustained on the ground that it called for hearsay. The following offer of proof was then made: 'Mr. Harwood: * * * we will show that the answer to that last question is this: 'Honey, I have got a proposition May wants me to put to you; she wants you to make a deed of trust of the property because she is afraid you will be involved in an automobile accident and the people who are injured might come on the property;' * * *.'
Appellant was then asked what he said to her, and an objection was sustained on the same ground, followed by this tender: 'Mr. Harwood: * * * we will prove by this witness the following: that he said yes, with the understanding that any time he wanted the property back in his name May Johnson would deed it back to him, and that his wife then said 'Yes, that is okey."
At the time that this tender was made the full proof in support of plaintiff's theory that her mother was acting as agent for defendant May Johnson in making the representations and promises above outlined had not been made. This proof consisted, in addition to the facts above stated, of the testimony of two witnesses, De Valle and Mesa.
De Valle testified to two admissions made by the defendant May Johnson in his presence. The first was in 1942 when plaintiff and his wife were discussing with May Johnson trading the Winton Road property for a place in Santa Cruz, 'they wanted to make a trade and buy property in Santa Cruz; and my sister (May Johnson) said they were making a mistake buying property in Santa Cruz.'
The second was after the Santa Cruz property had been purchased when plaintiff and his wife were discussing with defendant May Johnson the remodeling that was afterwards done.
'Q. What if anything did May Johnson say? A. Well, just said she didn't see why she should spend the money on that place, 'but it is your money, you can do so.''
The witness Mesa testified to a statement made by Mrs. Strickland, who is May Johnson's daughter, shortly after the death of plaintiff's wife.
'Mr. Orella (the plaintiff) asked Mrs. Strickland what her mother intended to do with her Santa Cruz property; Mrs. Strickland said: 'You know Ma is holding that property for you; that property is yours.' * * * Q. Was this conversation or this statement, these two statements--the question asked by Mr. Manuel Orella and the answer made by Mrs. Strickland--were they in the hearing of May Johnson and her husband? A. I would say it was because we were just talking ordinary.'
These several admissions of ownership of the property by plaintiff were sufficient, if believed, to support an inference that defendant May Johnson took the property with knowledge of the promise of her mother to the plaintiff that she would hold it for him and reconvey it to him upon his request.
The situation is not unlike that in Airola v. Gorham, 56 Cal.App.2d 42, 133 P.2d 78. There one brother, George, induced his mother to convey property to him and his brother Frank on George's promise that he and Frank would later reconvey it to her. The only evidence that Frank was privy to this promise was found in admissions made by him. In that case we said, 56 Cal.App.2d at page 49, 133 P.2d at page 81: 'Frank's subsequent statements acknowledging that the rest of the family would ultimately have a share of the property, while too indefinite in themselves to establish that he took the property subject to a trust, when coupled with the express testimony of the trust, tend to prove both his knowledge of and acquiescence in the trust arrangement. Taylor v. Morris, 163 Cal. 717, 127 P. 66; Cooney v. Glynn, 157 Cal. 583, 589, 590, 108 P. 506; Taylor v. Bunnell, 77 Cal.App. 525, 533, 534, 217 P. 240. Not only the weight of the testimony but the inferences to be drawn therefrom are for the trial court and circumstantial as well as direct evidence will support a finding. Silva v. Gustine Creamery Co., 217 Cal. 146, 149, 17 P.2d 699; Raggio v. Mallory, 10 Cal.2d 723, 76 P.2d 660; Hall v. Susskind, 120 Cal. 559, 563, 53 P. 46; Katenkamp v. Union Realty Co., 36 Cal.App.2d 602, 617, 98 P.2d 229.'
The inference is, of course, strengthened in this case by the further testimony that plaintiff and his wife always lived on the several properties without the payment of any rent and that plaintiff paid the taxes.
At the close of all of the plaintiff's testimony plaintiff's counsel asked leave to reargue the admissibility of the testimony which has been excluded and the trial judge directed him to do so in briefs to be filed on defendants' motion for a nonsuit. By thereafter granting the nonsuit the trial judge reaffirmed his exclusion of the proffered testimony with all of plaintiff's evidence before him. That this was error follows from what we have said above.
We have thus presented a case in which the inference may be reasonably drawn that defendant May Johnson, acting through the agency of her mother, secured the conveyance of plaintiff's property to her upon her promise made through her mother that she would reconvey to plaintiff upon demand. Her repudiation of that promise is sufficient to raise a constructive trust if the necessary relation of trust and confidence is present. Steinberger v. Steinberger, 60 Cal.App.2d 116, 140 P.2d 31.
There is much discussion in the briefs as to whether a confidential relation between plaintiff and May Johnson was established by the testimony. It is suggested in Steinberger v. Steinberger, supra, 60 Cal.App.2d at page 122, 140 P.2d at page 34 that '(f)ew cases will arise where one person will convey property to another by absolute deed, and where the grantor will be satisfied with the oral promise of the grantee to reconvey, unless the grantor, in fact, has trust and confidence in the integrity and fidelity of the grantee.'
Under the circumstances of this case we are satisfied that the necessary relation of confidence may be found from the evidence. The plaintiff testified of May Johnson: 'I thought a lot of her; I thought as much of her as a daughter,--a lot of confidence in her.'
We need not determine whether this evidence standing alone would support a finding of a confidential relation. It does not stand alone. That plaintiff and his wife occupied a confidential relation to one another is clear. Allen v. Meyers, 5 Cal.2d 311, 54 P.2d 450; Lauricella v. Lauricella, 161 Cal. 61, 118 P. 430; 13 Cal.Jur., Husband and Wife, sec. 54, pp. 860-862. Here it may be inferred from the evidence that the plaintiff's step-daughter in whom plaintiff had 'a lot of confidence' elected to act through the agency of the plaintiff's wife and took advantage of the plaintiff's confidence in his wife which induced the conveyance to her.
Section 2330 of the Civil Code makes the principal subject to all 'liabilities which would accrue to the agent * * * if they had been entered into on his own account.' When May Johnson elected to act through the agency of her mother to induce the plaintiff to convey his property to her she made herself subject to the same liabilities as her mother would have been under if the conveyance had been made to the mother on the same promises.
If May Johnson did not authorize or ratify her mother's representations to plaintiff the result would be the same. In that event the mother's representations would be false and fraudulent. It is well settled that where A induces B to convey to C by fraudulent representations, C holds as constructive trustee for B. 3 Scott on Trusts, sec. 469, pp. 2336-2337; 3 Bogert, Trusts and Trustees, sec. 473, pp. 25-26; 1 Perry on Trusts and Trustees, 7th Ed., sec. 211, pp. 371-372.
Whether the evidence is sufficient to establish that plaintiff's wife was acting with authority from May Johnson or not the result should be the same.
The judgment of nonsuit is reversed.
NOURSE, P. J., concurs.
GOODELL, J., dissents.
GOODELL, Justice.
I dissent because in my view there was no proof of a confidential relation.
Appellant testified: 'Q. Did the defendant May Johnson ever live at your house? A. At one time for a few days,--a weekend or so; they would come up on the weekends, her and her husband, playing cards, or something. Q. Describe your relations with your stepdaughter May Johnson. A. I thought a lot of her; I thought as much of her as a daughter,--a lot of confidence in her.' That was all.
Instead of describing their relations, as he was invited to do, so the court could draw its own conclusions from a recital of acts, conduct and dealings, appellant merely told of his affection for respondent and asserted that he had 'a lot of confidence in her.' Despite the unresponsiveness of his answer, the subject was not pressed or followed up.
The trial judge stated the point in a nut-shell when he said: 'The kind of relationship the law raises in its wisdom is where over the years two people are in close relationship, where one is in a position, if he desires, to overreach the relationship * * *' and further, when in response to the argument that 'This witness has testified as to the actual relationship of confidence between himself and his daughter', he said 'He cannot create it by self-serving declarations.'
From 1933 to 1947, a period of about 14 years, but one transaction was conducted personally between the parties, namely the loan of $1,000 which bore interest, and, accoridng to the admission of appellant's counsel, was secured by a deed of trust--an ordinary business transaction.
With respect to the situation at the time of the transfer: despite the alleged confidential relation, appellant never discussed the transaction with respondent. Why enlist an intermediary if a confidential relation existed?
With respect to the relations between 1938 and 1947 (of interest only in so far as they might shed light on the relationship existing at and before the time of transfer), appellant's testimony shows that he had no discussion whatever with respondent respecting (a) the sale of the Harder Road place, (b) the purchase of the Winton Road place, (c) the sale of the latter, (d) the purchase of the Santa Cruz property, or (e) the $800 repairs to the latter. If it be suggested that this might have been because he thought all the while that legal title to these several properties stood in his name, the fact remains that, for all the record shows, appellant and respondent had no communication of any kind during that period of almost ten years. Yet it is alleged that such relationship continued throughout that period.
The record is barren of all facts showing any personal dealings other than the $1,000 loan and that was a strictly business transaction.
'It is not every case where parties trust each other that the law recognizes as confidential.' Brison v. Brison, 75 Cal. 525, 528, 17 P. 689, 691; Taylor v. Kelly, 103 Cal. 178, 183, 37 P. 216; Ampuero v. Luce, 68 Cal.App.2d 811, 819, 157 P.2d 899; 9 Cal.Jur. p. 229.
In Jackson v. Gorham, 98 Cal.App. 112, 116-117, 276 P. 391, 393, the court said: 'There must be something further than mere confidence in another's honesty and integrity to sustain the presumption of constructive fraud. [Citations.] As to what does constitute such relationship is well illustrated in the case of Cox v. Schnerr, 172 Cal. 371, 156 P. 509, where the person charged with fraud had been the confidential business agent, and for a long time transacted business for the one upon whom undue influence was alleged to have been exercised. What constitutes confidential relationship in law is also well illustrated in the case of Piercy v. Piercy, 18 Cal.App. 756, 124 P. 561, where a son had lived in the same house with his mother, managed her property as her agent, and also held a general power of attorney.'
Followed in Hausfelder v. Security, etc., Bank, 77 Cal.App.2d 478, 482, 176 P.2d 84, and Wilson v. Sampson, 91 Cal.App.2d 453, 459, 205 P.2d 753.
In Ampuero v. Luce, 68 Cal.App.2d 811, 819, 157 P.2d 899, 903, this court said: 'No evidence whatever is pointed out to show such relation beyond the fact that they had been close friends since girlhood, had corresponded, visited back and forth, and Mrs. Ampuero considered the respondent the most reliable friend she had. It is conceded by respondent's counsel that Mrs. Ampuero had confidence in Mrs. Luce. But that is not to say that a confidential or fiduciary relation, as those terms are used in the authorities (see 9 Cal.Jur. p. 228, sec. 106 et seq.), existed between them.'
Other cases dealing with the subject are Taylor v. Kelly, 103 Cal. 178, 182-183, 37 P. 216; Ruhl v. Mott, 120 Cal. 668, 679, 53 P. 304, and Frantz v. Porter, 132 Cal. 49, 54, 64 P. 92. The latter holds that the relation is not shown by proof of a warm personal friendship without more.
Numerous cases have come to an end at the demurrer stage because of a failure to allege facts showing a confidential relation, among them, Bacon v. Soule, 19 Cal.App. 428, 436, 126 P. 384; Robbins v. Law, 48 Cal.App. 555, 561-562, 192 P. 118; Meyer v. Zuber, 92 Cal.App. 767, 772, 268 P. 954 and Wilson v. Cooper, 126 Cal.App. 607, 616, 15 P.2d 174.
In Robbins v. Law, supra [48 Cal.App. 555, 192 P. 120], in affirming a judgment entered on the sustaining of a demurrer, it was said: 'But the mere statement in the complaint that the plaintiff had unlimited confidence in and relied upon the defendant is not a sufficient statement of the facts to show a confidential relation. The facts must be alleged, from which the court can see that a confidential relation does in fact exist. Robins v. Hope, 57 Cal. 493.' (Emphasis added.)
There is nothing in the amended complaint herein which goes beyond the allegations held insufficient in the four cases just cited, and there is no testimony in this record which goes any further than the bare statement that plaintiff 'had a lot of confidence' in defendant.
I am mindful, of course, of the rule that a family connection is a material circumstance to be considered, Odell v. Moss, 130 Cal. 352, 356, 62 P. 555, but, even so, there was no proof that respondent was even a member of the Orellas' household. She had married before they had, and the record shows that she visited them only occasionally 'playing cards, or something'. There is no other proof of any family contacts or of any intimacy.
This case is likened by the majority to Airola v. Gorham, 56 Cal.App.2d 42, 133 P.2d 78, but there, to start with, the court found, see 56 Cal.App.2d 53, 133 P.2d 83, that 'the most confidential relations existed' between the grantor, a woman of 86, 'an age when confidence is more likely to be reposed in members of the family' and the grantees, both of whom were her sons and both of whom were equally interested in obtaining title to her property to save themselves from disaster. It is true that one of the sons, George, was more active in procuring the deed than the other, the appellant, Frank, but it is clear that Frank made statements before the mother's deed was delivered from which it could be inferred that he knew all about the deal and was simply letting George take the lead in getting the property for both grantees. In 56 Cal.App.2d at page 49, 133 P.2d at page 82 this court said: 'The acceptance of the deed by Frank with knowledge of George's promise to Lucinda [the mother], and the evidence will support the inference that this is what occurred, was enough to bind him to the obligations previously assumed by George [citation]'.
This seems to be somewhat inconsistent with the statement in the majority opinion herein that 'The only evidence that Frank was privy to this promise [made by George] was found in admissions made by him.' There the opinion is speaking of 'Frank's subsequent statements' but, as said already, this court conceded, 56 Cal.App.2d at page 49, 133 P.2d at page 81, that Frank had 'knowledge of George's promise to Lucinda' their mother, which knowledge could have been and was inferred from Frank's conversations with members of the family at the time when George was negotiating which was before the deed was delivered. It would seem, then, that he was privy to George's promises.
In the Airola case the existence of 'the most confidential relations' between the mother and both George and Frank was found by the court and went practically unchallenged on appeal. In the present case no confidential relations between appellant and his step-daughter were proved.
A confidential relationship between appellant and his wife goes without saying, but how that can be used to bridge the gap by invoking some sort of agency relationship is difficult to understand. If the rule respecting confidential relations is to be extended on such an attenuated theory the case law of this state dealing with a very important subject is in danger of becoming seriously unsettled. All a plaintiff will have to do, in order to place on a defendant the burden of explanation, exculpation, and of proving that there was a sufficient consideration for the transfer and that the transaction was fair and above board and not 'shady' will be to allege and prove that the plaintiff had 'a lot of confidence' in the defendant who is under fire, or 'unlimited confidence' see Robbins v. Law, supra.
Speaking of consideration: the appellant in this case has sought throughout to shift onto the defense the burden of proving that there was sufficient consideration for the deed but he had ample opportunity to prove, as part of his case, that there was no consideration. No such evidence was produced. This might have been because at the time of the tranfer appellant's $1,000 debt to respondent remained unpaid.
In my opinion the judgment should be affirmed. --------------- * Subsequent opinion 242 P.2d 5.