103 Cal. 15 | Cal. | 1894
This is an action for an accounting, and has been pending seventeen years. This is the second appeal to this court, the first being reported in 80 Cal. 636, where a full statement of the facts may be found. Prior to the entry of the judgment which was before the court on the first appeal, the amount of money belonging to Steen which defendant Hendy had received was fixed by stipulation. On the sum so agreed upon the
When the case reached the low'er court plaintiff filed a supplemental and amended complaint, as permitted by the order of this court. February 27, 1891, the trial court referred the case to E. B. Young, Esq., “ to inquire what profits the defendants, or either of them, have actually realized by the use of the money or property of the plaintiff, or in which the plaintiff had an interest, since June 2, 1875, and to "state any and all profits actually realized by such use, and report a statement of the same.” The order then proceeds to specify at length, and with considerable particularity, what matters and questions the referee shall investigate and determine, and also directs him at request of either party to “ make special findings upon any question of fact which may arise during the trial before him, and state and report any other matter touching the true
“By agreement of parties hereto, it is ordered that the evidence taken before the Hon. W. T. Wallace be, and the same is hereby, submitted to E. B. Young, the referee heretofore appointed herein, for his consideration. It is further ordered that the said referee shall report findings of fact and conclusions of law herein, and a judgment thereon. It is further ordered that nothing in this order contained shall affect in any manner or way any order heretofore made in the above-entitled action.”
Since by this last order the referee was to report findings of fact, conclusions of law, and a judgment, it is difficult to discover any utility in requiring the referee to answer all the numerous questions propounded by the court and by counsel under the leave given in the first order of reference. However, if it had been doubtful before, as I think it was not, the second order makes it certain that under the first order of reference the referee was not expected to report findings of fact which should be the basis of a judgment.
On the 5th of November, 1892, the referee filed two reports, both of which are printed in the transcript. One is entitled by the referee, “Report of E. B. Young, referee under order of court, filed herein March 2, 1891.” The first order was filed on the last-mentioned date. This report is a lengthy statement of the substance of the testimony, the reasons of the referee for certain conclusions, and why certain questions cannot be answered, and the answers of the referee to a great many questions propounded by the court and by counsel. It" contains, also, arguments with citations of authorities, and in some cases refers to specified testimony, which presumably was filed with the report, but
This appeal is taken by the plaintiff upon the judgment-roll alone. His principal points are based, to some extent, upon the conclusions of the referee, as shown in the report made under the first order of reference, and that report is constantly referred to for facts to sustain appellant’s contention. Respondents contend that this report does not legally constitute a part of the record, and cannot be referred to for any purpose.
On this proposition I think respondent’s contention must be sustained. If the report of a referee is part of a judgment-roll, it must be on the ground that it is a finding. (Code Civ. Proc., sec. 670.) We find from the code that a reference may be had either to try an issue or to ascertain a fact necessary to enable the court to determine an action or proceeding. (Code Civ. Proc., sec. 638.) And in section 639 of the Code of Civil Procedure: 1. To decide the whole issue or determine a specified part; 2. To take an account for the information of the court before or after judgment; 3. To determine a question of fact not arising from the pleadings; and 4. When necessary for the information of the court in a special proceeding. The finding of a referee upon the whole issue must stand as the finding of the court, and judgment may be entered thereon. (Code Civ. Proc., sec. 644.) This must be the finding referred to in section 670 of the Code of Civil Procedure. As the report made under the first order of reference is not such a finding, it does not constitute a part of the judgment-roll.
Appellant, to sustain the proposition that the report is a part of the judgment-roll, cites Thompson v. Patterson, 54 Cal. 542. That case was decided in Department, and the opinion was written by Mr. Justice McKee. In that opinion he used the following language: “But errors ‘ shown and illustrated by the findings and report of a referee on its face ’ are part of the judgment-roll of
“When a referee,” says the court in Harris v. San Francisco etc. Co., 41 Cal. 393, “reports his decision in the whole case, his report stands as a special verdict.” “The finding and report of a referee are, therefore, part of the judgment-roll of a case.” The court was evidently considering the case of a referee to try a case and report a judgment, when it is true the findings and decisions take the place of findings and decisions of the court, and such papers and no others constitute the judgment-roll when the case is tried by a referee as would if the case were tried by the court.
The ambiguous use of the word “ report” is taken from Harris v. San Francisco etc. Co., 41 Cal. 393, where section 187 of the Practice Act was under consideration. In that section the word “report” is evidently used for finding or decision. In section 670 of the present code the word “finding” was substituted for report. That case, therefore, is not authority for appellant, and this appeal must be considered upon the judgment-roll alone.
Appellant contends that there is no finding upon certain issues; conceding, however, that upon all those issues findings had been for the plaintiff, they could not affect the conclusion which it seems to me must be reached in the case.
In addition to the facts found on the first trial the court now finds: That Hendy conducted the business in which he and plaintiff were jointly interested under the belief that Hendy was the sole owner of the goods, and that Steen only had the right to compensation for his services, which it was agreed should be one-half the net profits. That prior to the second day of June, 1875, Hendy was the owner of a large amount of real and personal property, greatly in excess of the value of the property in which Steen was interested, and subsequently to that date became the owner of large amounts
The corporation defendant was organized by Hendy, and he practically owned all the stock and had entire control and management of it. No notice need, therefore, be taken of it as an entity distinct from Hendy, further than to say that there is no foundation for appellant’s charge that it was organized to .confuse the accounts and prevent plaintiff from following his property, or that it did have any such effect. On the contrary, it was found,, and must be taken as true, that Hendy did not suppose that the moneys were received or held by him as the trustee of Steen. The court having found that the actual profits cannot be ascertained, gave the plaintiff interest in lieu of profits, calculated as directed by this court on the first appeal, but allowed only simple interest from the date of the first judgment.
Appellant is not satisfied with this decree. He says the former judgment of this court gave him the option to accept a judgment for interest, or to claim actual profits; that he exercised this privilege by. electing
It is true plaintiff was given an option, either to accept a modification of the judgment, or to have a new trial; and he elected to have a new trial; and his rights must now be determined from the facts as shown upon the new trial. Upon the last trial an important fact was established which was not found upon the first trial, to wit: that it is impossible to ascertain the actual profits, either upon the money held in trust, or upon the fund with which such money was mingled. So far as this new fact can effect the determination of the case, the former decision is not controlling.
Appellant gives certain figures showing an increase in the value of Hendy’s assets, which he claims should be taken as profits. But no such figures appear in the findings, nor can we say in the absence of a statement that there was any evidence from which any such conclusion could be reached. On the contrary, the finding is that such profits cannot be ascertained. All presumptions are in favor of the correctness of these findings, in the absence of the statement. We may suppose, as the respondent contends the facts were shown to be, that the defendant had for years been conducting a large business, in which he had invested a capital in comparison to which the trust fund was insignificant; that in this business he was making large profits in the manufacture and sale of machinery, invented and patented by himself; that it was shown that the profits
Now, if these facts were shown, admitting, as it does not appear from the findings was the case, that such profits can be determined, is it a profit which in any sense was earned by the use of the trust fund? Lord Brougham, in Docker v. Somes, 2 Mylne & K. 655, answers this question. He says such gains are not profits, but the earnings “of skillful labor very highly paid, and no reasonable person would ever dream of charging a trustee, whose skill, thus bestowed, had so enormously augmented the value of capital, as if he had only obtained from it a profit.”
The English cases hold that profits earned because of the goodwill of a business cannot be shared by a beneficiary under such circumstances, and that allowances should also be made for the amount earned by the business management of the members of a firm in whose business trust money has been wrongfully used—not as compensation for managing the fund, but because the profits are taken, not as a right in the beneficiary, but pursuant to a principle of public policy, which is to take from the trustee all advantage which he has gained through the misappropriation of the trust money. (See Brown v. De Tastat, 1 Jacob, 284; Crawshay v. Collins, 2 Russ. 325; Featherstonhaugh v.. Turner, 25 Beav. 382; ( Willett v. Blanford, 1 Hare, 253.)
Trusts are as various as human affairs, and these rules might not hold in all cases, as, for instance, where the trustee is required to invest the fund for his beneficiary, or where the money was invested in a single venture or constituted the trading capital. Often, as here, the trustee is under no obligation to earn a profit for the beneficiary, and the wrong done to him consists in not paying the money and in risking it in his busi
Nor is this going against the conclusion reached on the former appeal. It was there simply held that Hendy held the money in a fiduciary capacity, and must account for all profit made from it or pay compound interest. It now appears that though the money has been used by Hendy, no profits have been made which can justly be said to be profits made by the use of the trust fund. I think it also appears pretty conclusively that the judgment takes from Hendy all possible advantage he could have gained through the use of the trust money. Steen gets all that justly belongs to him, and the rule of public policy applicable to the matter is fully vindicated.
I think, however, the court erred in providing that compound interest should be allowed only until the entry of the first judgment. The rule for casting interest indicated in the former judgment of this court was upon the hypothesis that there would be no new trial or new judgment. It provided for a modification of the existing judgment. Of course, then, the court would not provide for compounding interest after the entry of the judgment, for the code determines the interest which judgments shall bear. Since that judgment was set aside, however, the date of its entry becomes an immaterial circumstance. Interest should have been compounded to the date of the present judgment; but a new trial will not be required.
The case being in equity, the allowance of costs was a matter "within the discretion of the court. Without a statement or bill of exceptions that discretion cannot be reviewed here.
I think the case should be remanded, with directions to the trial court to modify the decree by allowing com
Haynes, C., and Searls, C., concurred.
For the reasons given in the foregoing opinion, the cause is remanded, with directions to the trial court to modify the decree by allowing compound interest up to the entry of the judgment, and in all other respects the judgment is affirmed.
Garoutte, J., McFarland, J., Van Fleet, J.
Hearing in Bank denied.