*1 manly More ground by surveying made instruments. on any over, to the his use information revealed planimeter questions was not reli conclusive duty pursue inquiry further, ance or view Gamble, (Feckenscher positive defendant’s reassurances. ; Shermaster v. 885] California Bldg. Co., 40 Cal.App. Home Loan is our conclusion that there substantial evidence support finding record could rely representations did t found to have been false. No contention made that plaintiff did not sustain damages specified the amount of in the judgment. is affirmed. J.,
Gibson, Curtis, J., Edmonds, J., Traynor, J., C. Peters, J., pro tern., concurred. A. No. 3, 1943.] 18478. In Bank. Mar.
[L. BIRDETTA WILLSON, Appellant, v. SECURITY-FIRST
NATIONAL BANK (a OF National LOS ANGELES Banking Association) al., Respondents. et *2 Teegarden Appellant. Lewis C.
Walter R. Powers and & Respondents. Newlin Ashburn A. W. Ashburn and pro tem.—Plaintiff PETERS, appeals J. from general special for defendant entered after demurrers amend. were without sustained to leave to that defendant bank was formerly in 1916 testamentary trustee of trust created Willson, plaintiff, A. after the will Calvin of which June beneficiary. alleged was that defend- the sole It is ant property $10,000, for the which in- sold sum of participation in a vested certificate issued without se- curing permit Corporations. from the Commissioner of is, plaintiff’s analysis, The result valueless, certificate was void and to re- she is entitled paid position cover the amount therefor. issued 104 of under section Act,
Bank required that no from the Cor- poration Commissioner. Section as it existed March issued, when the certificate was bank authorized a issuing sell certificates to them to administered trusts *3 (Stats. 1925, 312, it. chap, 510, at p. p. 526; Peering’s 652.) Laws, Gen. 1931, Act It is averred that the certificate herein was one of several against $50,000 issued note for a executed one Woodruff bank, favor defendant and was secured a deed of real property, on and that bank transferred the note and deed of trust to itself as trustee and Par- created ticipation Trust 6800-13, with note and deed of trust constituting corpus. 28, 1931, On March it issued Par- ticipation Certificate 17207 in $10,000 the sum of to itself as trustee of Willson trust, August 30, 1940, and on made a out new certificate therefor, substitution which it assigned plaintiff. alleges to Plaintiff that she did not discover that the was authority issued without Corporation Commissioner August until after 30, 1940. 17, April 1934,
Between September and 12, 1937, de- fendant bank paid taxes and assessments on the property covered trust, the Woodruff deed of the owner’s de- fault discharging them, paid and to itself from the funds of the Willson trust a pro expenses. rata of such Plaintiff damaged avers that she has been in the $10,000, amount paid the sum for participation certificate, plus making total assessments, for taxes and expended amounts judgment. prays she interest, for which $12,094.06, with alleges that Plaintiff May 1941. 2, filed complaint was 1940, including 25, June and up defendant was trustee 1940, defend- August 30, above, forth that on and, as set her. $10,000 participation certificate assigned ant under which to the circumstances is silent as it ever trustee, to whether and as ceased to be accounting. averred It is not any accounting, filed final im- a termination is terminated, except as trust has that the cer- assignment of the allegation of plicit in the ground are made a uncertainties plaintiff. tificate These special demurrer. allegations incorporates the plaintiff In a second count on represented count, and that defendant the first also avers July August 1932, and stated dates between was authorized purchase participation certificate by law, carefully and made the best and was selected and was issued plaintiff, that the certificate interests of the Commissioner; granted by Corporation sold under untrue; false, fraudulent that these statements were proper not a hazardous, speculative and investment was property funds; one for trust that the market value of sixty per note less than cent securing the Woodruff alleged the amount of the loan. It further dis- failed to representations relied the defendant’s subsequent August 1940. cover facts until the true made, why nor true alleged discovery how the facts not discovered sooner. were last alleges years simply
A that within two third count in the amounts past defendant became indebted in- $12,094.06. purport does not totaling probate jurisdiction court. voke the sitting Code, the court section Probate Under testamentary jurisdiction of the accounts has aby “When a trust created provides: trustee. The section *4 not distribution, superior court shall will continues after the distribution, jurisdiction but shall lose final of estate the to whom jurisdiction determining for of purpose retain the pass upon partial final or property the shall and be delivered that determina- trust, termination to the extent settling distribution, tion of concluded the decree of passing the trustee and upon the accounts and acts of the .” fore- forth . . . set purposes hereinafter the other Pro- 1699, was section Code Civil provision runner of this jurisdiction grant authority, Except for this cedure. equity. testamentary trustee would accounts of 1120]; Park- 49, 55 McLellan, 8 (Estate Court, Cal.App. Superior man v. Bk., Cal.App.2d Security-First McLaughlin Nat. In Bank, Security-First Nat. and Ormerod herein sued 469], defendant Cal.App.2d testamentary other equity paid itself from amounts certificates issued purchase participation trusts for the from the it, that had been obtained ground complaints in actions Corporation those Commissioner. purchase reported in the trustee’s showed that the had been filed, objections accountings, that no had been and that approved by probate court. It was accounts had been complaints held action for failed to state cause of in probate settling the reason the orders the trustee’s judicata propriety of invest- accounts were res as to the validity certificates, in the participation ment and as determining for the trustee’s certificates liability beneficiary. personal Section Probate Code, provides: provisions “A under decree rendered chapter, final, when it becomes shall be conclusive persons interest, they being.” all are in whether or not complaints equity both cases the courts held that the ground state a for relief on failed to ease of extrinsic accounts; probate fraud from the orders trustee’s in the the beneficiaries their absence of such fraud object the investment opportunity to settled, accounts certificates when trustee’s were they were concluded the order of settlement. complaints equity specifically al-
In the cited cases the purchase reporting leged that trustee’s accounts complaint in the approved. certificates had been purchase has been case is silent as whether the present in fact it has been reported to the court. That brief, and, in its in ef- reported by respondent forth set appellant contend fect, appellant, although does conceded by, immaterial. that such fact is copies set forth respondent’s brief are supplement In a September accounts, filed between eight trustee’s
710 July 22, 1940, and also the orders the accounts
as rendered. The of last these accounts is a final account. beneficiary’s receipt distribution, on order of discharge thereon, of the trustee are in also included supplement. final beneficiary account that of trust, plaintiff herein, brought an equity action in
for its
25, 1940,
termination. On June
the court made
effect,
order to that
wherein it decreed that
sitting
should forthwith file its final account in the court
probate.
in
A copy
of the order of
at-
June
was
tached to the final
equity
account.
action in
Doubtless the
brought
termination was
Estate
authority
under the
Hubbell, 121
38
Cal.App.
P.2d
[8
The account
September 28,
reported
pur-
filed
chase
Participation
of the “Trust
Certificate” as follows:
$10,000
“
trustee including June that on Au gust 30, 1940, assigned it the participation plain certificate to tiff, indicate that defendant has ceased to trustee. be This action May 2, was filed 1941. is uncertain and incomplete in it that appear does not whether the trustee has accounted and been discharged. While appears it that longer defendant is no trustee and that the participation cer assigned tificate has been plaintiff, it does not appear whether this an is action brought after the trustee has ac counted and his accounts settled, have been or whether an accounting proceeding pending, is or whether no account has been filed. allegations The absence of as to these matters ground was made a of special demurrer. In the event the trustee accounted, the inference would be that it had performed duty reported purchase of the certifi in cate, allegation absence of an affirmative that it had not; and if reporting the account purchase had been ap proved, the order approval judicata would be res as to the liability trustee’s therefor. special demurrer based on these omissions is well taken. sought
Plaintiff leave to file an complaint, amended which, however, was identical with original except that specific allegations added purported certificate be issued under section 104 of Bank Act. Plaintiff made no offer up to clear uncertainties, pointed above out
712 special circumstances in its demurrer. these 472c, under court, is not a case this section Code
this where Procedure, permitted Civil should direct amend, matter re- from uncontradicted spondent’s forth the as to brief that had set facts they inevitably matters must have demonstrated that these personally liable plaintiff’s right to hold the defendant purchase trust funds invested approving defendant’s was foreclosed orders accounts. discussing plaintiff’s
No useful would be served right bring equity had the trustee not ac action court, juris or probate counted to the to consider whether sitting section diction conferred on the court Code, exclusive, with supra, Probate concurrent (As bearing jurisdiction sitting equity. exercise Superior Court, 183 question Dowdall v. Cal. see: Chase, 207]; 420 685]; King 159 P. 348 P. v. Cal. [115 [191 499]; McLennan, Cal.App.2d 29 666 Estate [85 442]; Barber Shattuck, Cal.App. P. Turney 952]; Superior Court, Cal.App. Colden v. 959]; Costello, Cal.App.2d 363 Howard v. Ben 1012].) Assuming nett, Cal.App.2d *7 sought equity pro in as in accounting could be well as bate, present general accounting, action is not but the single seeks relief as ato transaction. although in sitting probate, true that the court
It is liability of trus determining extent of the individual the the tee, may money judgment against him personal not render a (Estate may McLellan, which execution 8 be had. of 1120]; Superior Court, 49 137 Cal. Cal.2d Costa v. 840]; Rey, Cal.App.2d Estate of by probate may appro enforced But decree be by priate means, if is contempt pay, as the trustee able to or by decree, an action at law based like man ner as an order accounts and for final distribution of may contempt the estate a decedent be made basis of proceedings (11b 1148, p. 617; action law. or an at Cal.Jur. § see, also, 1310-1312, 818-821, citing eases; 1021, pp. Prob. § §§ Code.)
Plaintiff are not ex- does not contend that the facts actly by position it her stated defendant. Rather is as dis- having these as to accounted and been facts defendant charged present present on the suit. The bearing have action, trustee, but says against as plaintiff, is not defendant urged as It participation the issuer of the certificate. capacity trustee was the issuer individual certificate, it against and that action is as an individual. this Again contends is not that the basis this suit by anything trustee, done but is for acts done bank as as an individual. As bank trustee the Willson trust the purchased certificate, capacity but its individual trustee, issued and sold the certificate to as itself plaintiff’s analysis. pur- as if the as had It is bank trustee chased the person, plaintiff certificate from third contends. is, however,
The fact of the matter that the certificate was purchased party. from a third is of the of a essence in an accounting decree proceeding, equity whether or probate, liability determines the individual trustee. The whole fix proceeding trustee, amount for which or personal representative a decedent, is individually trustee, liable. If personal or representative, has acted in an unauthorized manner and reason greater thereof is in a liable than sum that for which charges himself, he surcharged. his will pur- account chase of the trans- herein a trust action. liability We are view that individual the trustee transaction, reason of that whether purchaser as seller, accounting involved in and concluded decree. liability The individual as bank concluded, any transaction is the matter which means liability all in respect individual thereof. It would be if two separate proceedings required anomalous were de- liability termine person the individual same on ac- to the single count of a transaction of one who acted as trustee. Assn., Bank America, Carr v. etc. A.L.R. the defendant bank was named both executor and trustee of a created An will. *8 agreement legatees the was made and beneficiaries that stock in the estate be distributed to the in kind in trustee cash, lieu and of the distribution thus made. One brought against beneficiaries thereafter an bank action the to show extrinsic fraud. It was held which he failed capacity as probate protected the bank in its the decree trustee, as as well executor. subject present par- not the
The action is one assets issued, to trust, against ticipation which the certificate damage. plaintiff’s claim of further decree of contends accounting
probate proceeding cannot determine court securities, and that a of the validity of determination validity is, a fortiori, a determination title, probate question court. which cannot be had is whether the on the settlement of the trustee’s account individually amount trustee shall be liable expended For de funds the certificate. termining monetary liability probate pass court can validity security, though such determina upon the even beneficiary, would tion, binding as between the trustee se party who had issued and sold the not conclude third liability individual curity. In the case herein the it, party, a third as is concluded since not bank issuer security. created the discussion that count from above first
It follows ground demurrer on that is uncertain and the from in re- It further facts stated was well taken. record, public are as which spondent’s brief to matters uncertainty any attempt up clear disputed, that not accounting probate bar the that the orders would reveal in the first count. stated cause action incorporate first ref- and third counts The second allegations contains additional as to de- erence. The second having represented that a fendant Corporation Commissioner. In the procured been uncertainty inhere as in the second counts the same and third relief from the does to secure first. The seek ground probate of extrinsic fraud. contains orders any as foundation for no orders reference allegations extrinsic relief therefrom. the absence of such pleaded. cause of action has been is affirmed. Gibson, J., Shenk, J., Curtis, Edmonds, J., Tray- J., C. nor, J., concurred. *9 In it the
CARTER, this case that J. —I dissent. express testa- corporation, defendant was the trustee of mentary beneficiary. capacity trust. Plaintiff is that the indi- $10,000 to itself it transferred of the trust funds making by it in and which was used capacity vidual to be by a a loan was secured person; loan it made to a third the complete the loan property. trust on real In order deed put $10,000, established a trust other funds with the and by It then given the trust the debtor. hold note and deed trust, last-mentioned participating issued certificates the for the benefit one of which transferred to it as trustee was allegations in chief question. trust two here obtained de- permit are that no was first corporation fendant from to issue trans- commissioner pursuant fer trust to the participating certificate to the Corporate Peering’s 673; Gen. (Stats. 1917, p. Securities Act. falsely Laws, 1937, 3814), and, that defendant Act second represented 1935, 1936, 1937, 1933, 1934, in 1932, participating certifi- that the sale cate by law, carefully that it was was authorized selected, and that a permit therefor had been obtained corporation commissioner. Plaintiff believed and relied upon representations damage. those to her false majority opinion settling holds an order that the ac- count judicata of the is upon trustee named the trust res the validity purchase participating certificate trustee, plaintiff’s and therefore is bar to however, action. It question refuses to determine whether or not the certificate was embraced within the Cor- porate Act, hence, permit Securities that was neces- sary. That issue should have been decided. permit required
If none obtained, the sale of the certificate to the trust de falling void. A fendant was transaction within terms of the Corporate Securities Act is declared Act to be (Stats. 1917, void if no p. therefor is obtained. 16.)
sec. approving order of the court transaction, void, is also if the in Hunter rule stated v. Su perior Court, 36 Cal.App.2d followed. It is judgment upon there declared that a based a void con (See tract is itself People void. Burke, Colo. Campbell McCownel, Ill.App. 1085]; 30 A.L.R. 677]; Am.Rep. Dial v. Pa. 241
342; Appeal, Bredin’s .92 If set- the order Kirkpatrick, 168 Okla. tling accounts is void then cannot defendant trustee’s judi- judicata judgment is not res as void res inasmuch (15 102.) cata. Cal.Jur. say foregoing proposition answer appear
invalidity participating certificate did and order proceedings roll in the the face may well account, because the the trustee’s *10 from equitable for relief alleging construed as action be an plaintiff should prayer A is not made but the order. therefor an action. permitted complaint amend her to state such be to Furthermore, is from appeal remembered must that be judgment sustaining a a entered an order demurrer as of plaintiff’s complaint. allegations All the that ruling upon must of be deemed admitted Hence, permit demurrer. it must admitted that be admission corporation from An obtained commissioner. invalidity by establishing judg- of a defendant the facts justifying therefrom, ment relief considered is read into and at- part judgment or roll record (Thompson 909].) Cook, tacked. v. Cal.2d Thus, the account we must read into the order permit participat- that no for the determination was obtained is its ing upon certificate. that the The result is order void hence, judicata. present Under the status face and not res may may of the ease we not concerned with what are now or action, may or what or be defense to the defendant’s may by not admit its answer.
Considering allegation complaint, second main part that charging misrepresentations fraudulent on the defendant, making of it is noted the time of to be that just those time representations each instance short by from prior filing annual defendant accounts 1932 to 1940. must true that at those times be taken as falsely plaintiff that a had been defendant stated corporation represen- from the commissioner. Such obtained by prevent tations her upon would be relied objection Certainly making any from she the accounts. if representations had she would falsity known those alleged that she It is the accounts. objections to filed have is al although it representations, rely upon those did she damage rather than her so to leged that she did reason, should she object to the accounts failed to allegation. to make such her amend permitted be determining guide for this court Liberality should be per should be pleadings that amendments upon appeal (See may be had. merits a trial mitted in order Med., Sch. Univ. Wennerholm Stanford 522, 141 A.L.R. repre- fraudulent assumes that the foregoing discussion make fraud and hence extrinsic would constitute
sentations equity. relief in subject to attack and the order doubted, if That fraud cannot be it would filed contesting accounts thereby from prevented day It was her in court. deprived of defendant. She was 471, 476 Taylor, 218 Cal. said this court Caldwell involving pro- attack on a an A.L.R. bate order: from prevented been party unsuccessful has
“Where the practiced exhibiting fully case, by deception his fraud away court, him opponent, keeping on him as his never promise compromise; a false or where being ignorance by the knowledge suit, kept fraudulently attorney plaintiff, acts of the or where *11 authority party and connives represent without assumes defeat, attorney regularly employed cor- at his or where the these, other ruptly sells out his client’s interest to the side— never been a cases which show that there has and similar hearing case, are reasons real contest in trial or may for which a new sustained to set and annul suit aside open judgment decree, the former the case for new hearing.” and fair Tracy,
See also A. the case Larrabee v. L. No. ante, p. decided this court on Feb- ruary 1943. my and the opinion should be reversed disposed
case its merits.