author: CARTER, J.

text:
    [L. A. No. 17214.
    In Bank.
    March 21, 1940.]
    LULA G. LAWRENCE et al., Respondents, v. I. N. PARLIER ESTATE COMPANY (a Corporation) et al., Appellants.

      Hay hurst & Gibson for Appellants.
    W. M. Conley, Philip Conley, Matthew Conley, R. Z. Lamberson and Conley, Conley & Conley for Respondents.
   CARTER, J.

This is an appeal by defendants from a judgment of the Superior Court of Fresno County in an action brought pursuant to section 315 of the Civil Code to determine the legality of the removal of five previously elected members, and the election of three new members of the board of directors of the I. N. Parlier Estate Company, at a special meeting of the stockholders of said company.

The I. N. Parlier Estate Company is a California corporation, organized in 1915 by I. N. Parlier and members of his family. The properties of said corporation consist principally of valuable vineyards situated in the San Joaquin Valley. Since the death of I. N. Parlier, the major portion of the company’s stock has remained in the hands of members of his family and the company has been under the management of C. A. Parlier, a son of I. N. Parlier.

A special meeting of shareholders was called by the board of directors for October 15, 1938, at the written request of two of the shareholders under the provisions of section 313 of the Civil Code.

At the time of said meeting, the company had issued 2499 1/9 shares of its capital stock. Nora Ousterhoudt, the owner of 415 6/9 of said shares, had died and in the probate of her estate this stock had been distributed to the corporation. It was agreed by all parties that this stock, being owned by the corporation itself, assumed the status of treasury stock and could not be voted at a shareholders’ meeting. It was found by the trial court that Bessie N. Parlier, formerly an owner of one share of stock, was not a shareholder at the time of the meeting. This left 2082 4/9 shares of issued stock which might be represented and voted at the special meeting.

On October 15, 1938, the books of the company showed the following ownership of the issued stock: Lula G. La wren pp 277 7/9 shares; Carrie A. Thomas, 277 7/9 shares; C. A. Pa. lier, 277 7/9 shares; C. A. Parlier, as trustee for I. N. Par lier Estate Company, 275 7/9 shares (the latter stock was pledged by G. W. Parlier to secure his indebtedness to the I. N. Parlier Estate Company) ; J. B. Parlier, 277 7/9 shares; Ada Sharp, 415 7/9 shares; National Bankitaly Company, 275 7/9 shares; G. W. Parlier, 2 shares, and W. W. Parlier, 2 shares.

The 275 7/9 shares of stock registered in the name of the National Bankitaly Company were transferred to that company by W. W. Parlier in 1927. It will here be noted that by an “agreement of merger” made October 15, 1930, the National Bankitaly Company was merged with the Corporation of America, and all the property of the former passed to the merged Corporation of America. No change in the names of the corporate owners of this stock was ever made on the books of the Estate Company, bnt proxies of the Corporation of America had been permitted to vote said shares of stock without objection since the date of the merger. The 277 7/9 shares of stock registered in the name of Carrie A. Thomas are still owned by her although she has assumed the name of Procter since her marriage.

With regard to the stock registered in the name of C. A. Parlier, as trustee, the evidence shows that long prior to the special shareholders’ meeting o£ October 15, 1938, G. W. Parlier, J. B. Parlier and Ada Sharp had each borrowed considerable sums of money from the I. N. Parlier Estate Company, and that each of them to secure repayment of such loans, had endorsed the certificates of stock representing their shareholdings (with the exception of two shares of G. W. Parlier’s stock) to the I. N. Parlier Estate Company, or to C. A. Parlier, as trustee for the I. N. Parlier Estate Company. These certificates, so endorsed, had been delivered to the company, or to C. A. Parlier to hold for the company. The G. W. Parlier stock certificate had been so endorsed and delivered in 1935. Prior thereto, the certificates of J. B. Parlier and Ada Sharp had likewise been endorsed and delivered.

No transfer on the books of the Estate Company was made as to any of this stock before July 22, 1938, and G. W. Parlier, J. B. Parlier and Ada Sharp attended annual shareholders’ meetings in the years 1935, 1936, 1937, and 1938, and, at each of said meetings, voted the stock represented by the certificates standing in their respective names, without challenge or objection. On July 22, 1938, without direction from the board of directors and without notice to G. W. Parlier, C. A. Parlier caused a cancellation of the stock certificate issued to G. W. Parlier and the issuance to “C. A. Parlier, as trustee for the I. N. Parlier Estate Company”, of a certificate representing the 275 7/9 shares formerly held by G. W. Parlier.

At the special meeting held on October 15, 1938, the shareholders divided into two groups, which, it has been stipulated, voted against each other consistently on all measures. C. A. Parlier in his individual capacity and as trustee, J. B. Parlier, Ada Sharp and W. W. Parlier, whom we will designate as the defendant group, voted as one unit. The other shareholders, whom we will describe as the plaintiff group, voted as another unit. According to the stock books of the company, after the transfer of the G. W. Parlier stock, the defendant group represented 1249 1/9 shares, and the plaintiff group 833 3/9 shares.

The special meeting was called to order by the president of the company, and, as a quorum was present, the meeting proceeded to the consideration of business. There was then-presented and filed, a written request and direction to C. A. Parlier to vote all the stock held by him or standing in his name ‘‘as trustee or in any other fiduciary capacity” for the removal of all the directors of the company and thereafter to vote in favor of G. W. Parlier, Lula G. Lawrence, and E. B. Campbell as new directors. This request was signed by Lula G. Lawrence, Corporation of America by E. B. Campbell, Philip Conley and H. L. Jacobs, its proxies, Carrie A. Procter, by Lula G. Lawrence, her proxy, and G. W. Parlier.

A motion was made by C. A. Parlier to adjourn the meeting for two weeks to October 29, 1938. Again, as trustee, he was requested and directed by the plaintiff group of stockholders to vote all the stock so held by him against adjournment. The chair refused to recognize the right of the Corporation of America to vote the shares claimed by it, and refused to recognize the right of G. W. Parlier to vote more than two shares of stock, ruling that C. A. Parlier, as trustee for the I. N. Parlier Estate Company had the right to vote the other 275 7/9 shares claimed by G. W. Parlier.

All of the stock of the defendant group (as of record, 1249 1/9 shares) was voted in favor of the motion for adjournment. It was declared carried, the meeting was declared adjourned for two weeks and the defendant group left the meeting.

Refusing to recognize the meeting as adjourned, the plaintiff group of shareholders remained. They proceeded to elect a temporary chairman and a temporary secretary, passed a motion removing all of the then members of the board of directors, consisting of W. W. Parlier, J. B. Parlier, G. W. Parlier, C. A. Parlier, and Lula G. Lawrence, and elected Lula G. Lawrence, G. W. Parlier and E. B. Campbell as directors. At this meeting, the stock standing on the books in the name of the National Bankitaly Company was voted by the proxies of the Corporation of America, and that in the name of Carrie A. Thomas was voted by the proxy of Carrie A. Procter, formerly Carrie A. Thomas. G. W. Parlier also voted the 275 7/9 shares of stock pledged by him to secure his debt to the I. N. Parlier Estate Company, and for which a certificate had been issued to C. A. Parlier as trustee, on July 22, 1938.

It is apparent that this case turns on the question of whether each of the plaintiffs herein legally had the right to vote his stock, for if any one of them did not, the motion to adjourn the meeting for two weeks to October 29, 1938, was carried, and no further business could have been transacted by the shareholders on October 15, 1938.

The trial court found that G. W. Parlier was the owner and holder and entitled to vote the 275 7/9 shares pledged by him to the corporation; that the proxies of the Corporation of America had the right to vote the 275 7/9 shares standing on the books of the company in the name of National Bankitaly Company and that the proxy of Carrie A. Procter had the right to vote the 277 7/9 shares standing on the books of the company in the name of Carrie A. Thomas; that a special meeting of the stockholders of said corporation was duly and regularly called and held on October 15, 1938, at which meeting G. W. Parlier, E. B. Campbell and Lula G. Lawrence were elected members of the board of directors of said corporation.

Judgment was entered in favor of plaintiffs in accordance with the findings of fact decreeing that the three directors above named constitute the board of directors of said corporation and that any and all claims and assertions of defendants J. B. Parlier, G. A. Parlier, Ada Sharp, W. W. Parlier, and Bessie N. Parlier, to the contrary are without right or justification and said last-named parties are enjoined and restrained from doing any act in support or furtherance of any such claim or assertion.

In the presentation of their appeal to this court, the defendants do now, and have throughout maintained, that only persons in whose names shares stand on the stock records of the corporation on a certain designated date before a stockholders’ meeting may be entitled to vote and that said stock records are conclusive. Furthermore, defendants challenge the sufficiency of the call for and notice of the meeting, claiming that a board of directors cannot be removed and new directors be elected unless the call and notice state specifically that said matter will be taken up at the meeting.

On the other hand, the plaintiffs contend that the mere surface showing of shareholders on the books of a corporation is not binding and conclusive; especially when such showing is fraudulently procured by minority shareholders to perpetuate their control of the corporation; and, that in a proceeding under Civil Code section 315, the trial court may ■determine the shareholders legally entitled to vote at the election in question. Plaintiffs further contend that when a shareholder has pledged his stock to the corporation with the understanding that his stock certificate is not to be cancelled and a new one issued, a “trustee” for the corporation who has control of the books cannot secretly and fraudulently cancel said certificate and issue a new one in his own name for the purpose of controlling an election of directors. Plaintiffs also assert that a corporation cannot vote its own stock, either directly or indirectly through a trustee and thereby control the election of directors.

Since the right of G. W. Parlier to vote the stock which he had pledged to the I. N. Parlier Estate Company and which now stands on the company records in the name of C. A. Parlier, as trustee for the company, is the one most strongly disputed, we shall proceed first to a consideration of this proposition.

The provisions of the Civil Code pertaining to the origin and government of corporations were amended in 1931. (Stats. 1931, p. 1762 et seq.)

Section 310 of the Civil Code provides that a board of directors of a corporation “may be removed from office by a vote of shareholders holding a majority of the outstanding shares entitled to vote at an election of directors”.

Section 313 of the Civil Code authorizes the calling and holding of special meetings of the shareholders.

Section 316 of the Civil Code provides that the presence of a majority of the shares entitled to vote at any meeting shall constitute a quorum for the transaction of business. After the meeting is once regularly opened with a quorum present, the withdrawal of part of the shareholders does not interfere with the power of those remaining to transact business until the adjournment of the meeting.

Section 330.1 of the Civil Code provides the manner in which title to certificates and the shares represented thereby may be transferred.

Section 320a of the Civil Code contains the following:

“Subject to the provisions of sections 320b and 320c of this title, only persons in whose names shares entitled to vote stand on the stock records of the corporation on the day three days prior to any meeting of shareholders, or, if some other day be fixed for the determination of shareholders of record, then on such other day shall be entitled to vote at such meeting. ’ ’

Section 320b of the Civil Code contains the following:

“(1) Shares standing in the name of any person or persons or pledgee, trustee or other fiduciary may be voted and all rights incident thereto may be exercised only by such pledgee, trustee or other fiduciary in person or by proxy, and without proof of authority. ’ ’

Preliminarily, we may say that an action under Civil Code section 315 is in the nature of an equitable proceeding in which the court will consider all matters necessary to a proper determination of the validity of the contested election, and also all matter necessary to a just direction of the relief required in each instance. (Whitehead v. Sweet, 126 Cal. 67 [58 Pac. 376] ; Smith v. California Thorn Cordage, Inc., 129 Cal. App. 93, 102 [18 Pac. (2d) 393]; Peterson v. Taggart, 1 Cal. App. (2d) 468 [36 Pac. (2d) 1086].)

We recognize that under the provisions of the above-mentioned Civil Code section 320a, stock records are now regarded as conclusive upon election officers as to the right to vote, provided the shares are valid and entitled to recognition as the records disclose. (6A Cal. Jur. 852.)

The purpose for which this section was enacted, however, was to relieve election officers from the embarrassing and awkward position of having to determine at every election who had the right to vote the shares of stock claimed by more than one stockholder, or the validity of the claims of others whose right to vote was challenged.

It was never intended to decide finally ■ and conclusively the right to vote stock of a corporation irrespective of the method by which the recitations of stock ownership on the books of the corporation were procured. To so hold would be to fashion from the statute a cloak for fraud which it cannot be presumed was the legislative intendment.

This construction is borne out by the fact that such stock records are not conclusive on the courts as to the ownership of stock and the fact that remedies are provided by which rival claimants may litigate their disputes. (6A Cal. Jur. 852 et seq.) So, also, it is provided that a shareholder may contest an election for invalidity, whereupon all factors requisite to a determination of the legality of the election will be reviewed, including, where necessary, the question of whether or not certain votes were properly cast.

The facts as to the pledge of his stock to the I. N. Parlier Estate Company to be held by C. A. Parlier, as trustee, are not disputed by G. W. Parlier. He does, however, claim that as a part of the said pledge contract it was implied that the pledged property should not be registered in the name of the pledgee or the trustee of said pledgee and that the pledgor was to retain the right to vote the stock which he owned, subject to the lien of the pledgee.

It is elementary that every pledge has its inception in contract. (Civ. Code, sec. 2987.) Likewise, it is not now, and it was not under former law, essential to the creation of a valid pledge that a transfer on the books of a corporation be made. A pledgee of corporate stock, even though the pledge be not entered on the books, becomes vested with a legal interest or special property therein. The stock certificate assigned to him is recognized as evidence of right and ownership and confers upon the legal holder thereof the right to protect that interest. (6A Cal. Jur. 720.) Therefore, it was not essential to the validity of the pledge in question that the stock certificate be canceled, reissued by the company, and registered in the name of its trustee.

Of course, a pledgee has a right to register the shares to himself when he holds the certificate by proper endorsement or assignment, but we see no reason why he should not be allowed to contract not to exercise such right. .And it is-still the rule that a pledgee may vote the pledged shares only . if they have been registered in his name (Civ. Code, sec. 320b), for if the shares be not registered to him, the pledgor remains the voting registered owner. In addition, a pledge contract need not be in writing or express, but it may be implied from the facts and circumstances of the case. (12 Fletcher, Cyclopedia Corporations, Perm. Ed., vol. 12, pp. 832, 833.)

In order to sustain their contention that as part of the pledge contract an implied agreement existed that G. W. Parlier was to retain the right to vote his stock, plaintiffs point out that the conduct of the corporation over a period of years, as to all the shareholders from whom it had accepted pledges of stock, was to refrain from a cancellation and reissuance of the stock certificates and to permit such pledgors to retain their voting rights. Not only did G. W. Parlier vote his stock for three and one-half years after the last date of the renewal of his pledge, but Ada Sharp, and J. B. Parlier, the other pledgors, likewise did and still do vote the stock which they so pledged.

By the finding that each of these pledgors retained the right to vote his own stock, the trial court in effect found such an agreement to exist. Viewing all of the circumstances surrounding this case, namely: That this corporation is a family corporation, managed and controlled principally by the members thereof; that the practice over a period of years had been to permit those who pledged their stock to the company as security for loans to vote said stock; that the only stock cancelled and reissued was that of the one pledgor whom the trustee and manager of the corporation admitted on the witness stand supported the group of stockholders opposed to him,- that said cancellation was made without direction from the board of directors and without notice to said pledgor,—we are constrained to agree with the trial court and sustain the finding that G. W. Parlier had the right to vote the stock which he owned at the time of the special shareholders’ meeting on October 15, 1938.

In this connection, we deem it well to point out that it has ever been the rule that the powers of officers and directors of a corporation must be exercised in good faith and with a view to the best interests of the shareholders as well as of the corporation.

While it is not our purpose in this opinion to outline specifically what C. A. Parlier should have done with respect to the stock certificates pledged to the corporation for the purpose of protecting the rights and interests of the corporation therein, we do wish to state unequivocally that he should not have so manipulated said stock certificates as to gain any personal advantage to himself to the detriment of either the corporation or its stockholders or the owners of said stock.

The relationship of the director of a corporation to the corporation and its stockholders and the standard of conduct required of him has often been defined: In the case of Schwab v. Schwab-Wilson Machine Corp., 13 Cal. App. (2d) 1, 3 [55 Pac. (2d) 268], the court said:

“A corporate director acts in a fiduciary capacity, not only towards the corporation itself (Cal. Jur., vol. 6A, p. 1100), but also towards the stockholders. As expressed in Wickersham v. Crittenden, 93 Cal. 17, 29 [28 Pac. 788] : ‘The directors of a corporation hold a fiduciary relation to the stockholders, and have been entrusted by them with the management of the corporate property for the common benefit and advantage of each and every stockholder, and by their acceptance of this office they preclude themselves from doing any act or engaging in any transaction in which their private interest will conflict with the duty they owe to the stockholders, and from making any use of their power or of the corporate property for their own advantage.’

See, also, Cooper v. Spring Valley Water Co., 171 Cal. 158, 162 [153 Pac. 936] ; Angelus Securities Corp. v. Ball, 20 Cal. App. (2d) 423, 431 [67 Pac. (2d) 152] ; Angelus Securities Corp. v. Ball, 20 Cal. App. (2d) 436, 439 [67 Pac. (2d) 158].

In reviewing the evidence, we find that by way of explanation of his conduct in transferring to himself as trustee the G. W. Parlier stock only, C. A. Parlier testified that he believed that all of the pledged stock should have been reissued to himself as trustee, but that he had had time to transfer only that of the one pledgor admittedly hostile to him—and this, in spite of the fact that he had had the pledged stock in his hands for some four or five years, and did in fact transfer the G. W. Parlier stock approximately eighty-five days before the special meeting of October 15, 1938. The fact that on cross-examination C. A. Parlier admitted that he had discussed the transfer with his attorney prior to the date thereof on July 22, 1938, and that he “knew there was going to be trouble of some kind, but I didn’t know what is .was” completes a picture which smacks altogether too much of manipulation of stock records by an officer of the corporation for the purpose of advancing his own interests.

If there had been no implied contract not to register the pledgee’s interest, and C. A. Parlier, as general manager of the company, had in good faith believed it his duty for said company’s protection to register its interest as pledgee, he should have been required to do so in an impartial and equable manner and have been precluded from exercising his powers solely in the interest of keeping himself in control of the corporation. Such a standard of conduct is approved in Italo Petroleum Corp. v. Producers’ Oil Corp., 20 Del. Ch. 283 [174 Atl. 276], Western States Life Ins. Co. v. Lockwood, 166 Cal. 185, 190 [135 Pac. 496], and Wickersham v. Crittenden, 93 Cal. 17, 29 [28 Pac. 788].

The question has been raised as to the right of C. A. Parlier, as trustee, to vote the pledged stock held by him in trust for the corporation. The conclusion which we have reached on the other issues renders it unnecessary to determine this question. However, we wish to point out that the rule has long been established that a corporation cannot vote either directly or indirectly, stock of which it is the owner (Brewster v. Hartley, 37 Cal. 15 [99 Am. Dec. 237] ; Ex parte Holmes, 5 Cowen (N. Y.), 426; American Railway-Frog Co. v. Haven, 101 Mass. 398, 402 [3 Am. Rep. 377] ; 5 Fletcher Cyclopedia of Corporations, Perm. Ed., p. 152), and we do not believe that the legislature intended by its enactment of Civil Code section 320b to change this long-established rule, the obvious purpose of which is to secure honesty and fairness in the administration of corporate business.

Although it is the settled rule that a pledgor retains the ownership of his stock, and that a pledgee has a mere lien thereon, it is provided by statute in this state that a pledgee may register as such and secure thereby the right to vote said stock. If stock pledged to a corporation, and held by a trustee to prevent its merger, might be registered in the name of such trustee and accorded the naked legal right to vote, since ownership remains in the pledgor subject only to said pledgee’s lien, it might, by this means be possible to circumvent the rule prohibiting the voting of stock by a corporation in which it has the beneficial ownership.

The substance of the correct rule to be followed was stated by the Supreme Court of New York in Ex parte Holmes, 5 Cowen (N. Y.), 426, 434, where, under a general statute stating that shares of stock should be voted only by those in whose names it stands on the transfer books of the company at the time of an election, the court said:

“No doubt the company may, from necessity, as in this case, take their own stock in pledge or payment; and keep it outstanding in trustees to prevent its merger; and convert it to their security. But it is not stock to be voted upon within the meaning of the charter, or the general act upon which we are proceeding. It is not to be tolerated that a company should procure stock, in any shape, which its officers may wield to the purposes of an election; thus securing themselves against the possibility of removal.”

We have examined and found little merit in defendant’s- contention that the Corporation of America was not entitled to vote its stock at the special meeting on October 15, 1938, because the stock was originally issued and remained on the company’s records in the name of the “National Bankitaly Company”.

With regard to the merger of the National Bankitaly Company, we wish to point out that according to section 361 of the Civil Code, subdivision 7, upon merger of two corporations, the surviving corporation ‘ ‘ shall succeed, without other transfer, to all the rights and property of each of the constituent corporations”. This lack of necessity for formal transfer is illustrated also in the case of Estate of Barreiro, 125 Cal. App. 153 [13 Pac. (2d) 1017], where it was held that even where a corporation has been nominated executor of an estate, its successor by merger succeeds to said office without further approval of the probate court or the taking of a new oath of office.

Of course, under the statute as it now stands, the better practice would be for any person or corporation to register a change of name with the proper officer in charge of the stock records of the corporation in which it is the holder of shares to obviate the possibility of dispute, but where a person or corporation has the same identity as one registered on the corporate books, said person or corporation should not be denied the right to vote because of a mere change in name. This rule applies equally to the argument that the stock registered in the name of Carrie A. Thomas should not have been voted by the proxy of Carrie A. Procter, formerly Carrie A. Thomas.

Furthermore, in the instant ease, the Corporation of America voted its stock without objection from the date of its merger in 1930, until the date of the special meeting of October 15, 1938; all of the shareholders knew of the merger and the Corporation of America was recognized in the minutes of numerous meetings as among the shareholders present; the proxies presented at the meetings began “That the undersigned, Corporation of America, formerly National Bankitaly Company, does hereby ... ”, and C. A. Parlier himself on at least one occasion held and voted such a proxy; in addition, representatives of the Corporation of America were permitted to examine the books of the I. N. Parlier Estate Company. There seems to be little reason in either law or equity for denying the Corporation of America its right to vote herein.

We have examined the call of the special meeting which is criticized by defendants as being insufficient in that it did not state specifically that one of its purposes was to be for the election of a board of directors. The purpose of the special meeting was stated in the call and notice as follows :

“The general nature of the business to be transacted at said special meeting of the shareholders is to consider and determine all questions relating to the property, management and business policy of the corporation, including the property derived from the estate of Nora Osterhoudt, deceased, and the interest of the corporation in Parlier Bros., a co-partnership, and to take such action as may be deemed expedient or necessary in connection therewith.”

We feel no hesitancy in deciding that upon receipt of the notice stating that there would be considered at the meeting “all questions relating to the property, management and business policy of the corporation . . . and to take such action as may be deemed expedient and necessary in connection -therewith”, the shareholders had ample notice that such consideration might involve a change of the officers and directors responsible for such management.

The judgment of the trial court is therefore affirmed.

Gibson, J., Houser, J., Curtis, J., Shenk, J., Edmonds, J., and Waste, G. J., concurred.


source: Caselaw Access Project

author: SHENK, J.

license: Public Domain

text:
    [L. A. No. 16839.
    In Bank.
    March 26, 1940.]
    IRVING M. WARD, Respondent, v. FANNY WARD, Appellant.

      I. Henry Harris, I. Henry Harris, Jr., and John K. Ford for Appellant. "
    David L. Sefman and Jerome D. Rosenfield for Respondent.
   SHENK, J.

This is an appeal by the defendant from that portion of the judgment as modified which denied her separate maintenance and from the order of modification.

The plaintiff and the defendant were married in Troy, New York, on June 3, 1917. They separated about twenty years later. On July 12, 1937, the plaintiff husband commenced this action for a divorce on the ground of extreme cruelty. The defendant wife answered with a general denial and filed a cross-complaint for separate maintenance. The court found that she was entitled to a decree of separate maintenance, awarded to her most of the community property, including a retail infants’ wear store, a going business, and found that the plaintiff was financially able and ordered him to pay the defendant $85 a month. On the plaintiff's motion for a new trial the court modified the judgment by striking therefrom the order for the payment of $85 a month.

The appeal is on the judgment roll alone. It is the defendant’s contention that the modified judgment is not supported by the findings of fact and particularly paragraph VII, which states in substance that the plaintiff is financially able to pay support money and that the defendant has no income other than from the community property; and also that the judgment is not supported by the conclusions of law where, in paragraphs II and IV, it is stated that the defendant is entitled to a decree of separate maintenance against the plaintiff and to the payment of $85 per month for that purpose.

In passing upon the motion for a new trial the court undoubtedly assumed to exercise the power granted by section 662 of the Code of Civil Procedure, enacted in 1929, which authorizes the court to modify the judgment on the motion for a new trial. The order of modification is referred to in the judgment roll opposite the paragraph which directed the plaintiff to pay $85 per month to the defendant for separate maintenance. The reference to the order is in the following language: “Modified by Order of Court filed 5/18/38—$85.00 mo. for support of Cross-complainant stricken from judgment. ’ ’ The findings of fact and conclusions of law above referred to do not appear to have been specifically modified, hence the basis for the contention of the defendant that the modified judgment is not supported.

Attached to the respondent’s brief is a complete copy of the order of May 18, 1938, wherein the court stated that it appeared that the defendant “may properly maintain herself on the income from the community property allotted to her”, and the modification, “pursuant to sec. 662 C. C. P.”, was accordingly ordered.

There is also attached to respondent’s brief the copy of a stipulation entered into during the trial, wherein it was agreed, among other things, that the operating profit of the infants’ apparel store set aside to the defendant and being operated by her was $2,207 for the calendar year 1937, and that during the period of thirty weeks from July 7, 1937, to January 31, 1938, the defendant withdrew from the store accounts the sum of $2,125, which was about $300 per month.

While not disputing the stipulation or the substance of the order of May 18, 1938, the defendant nevertheless contends that these documents may not be taken into consideration on an appeal on the judgment roll. In this the defendant’s position is well taken, inasmuch as the court, on this kind of an appeal, is precluded from considering any matters of fact not a part of the judgment roll, and the documents referred to are not included. If the order of May 18th had been included, the finding of the court therein would demonstrate the ineffectiveness of the appeal. Since it is not and the appellant has elected to prosecute the appeal on the judgment roll alone, she necessarily excludes us from a consideration of anything except that which is included therein and requires the court to resort to the inferences and established rules applicable to appeals on the judgment roll, among which are that the findings are to be liberally construed and will be given a construction which will, uphold, rather than defeat, the judgment; and that any ambiguities or inconsistencies in the record properly before the reviewing court will be resolved in favor of sustaining the judgment. (Ochoa v. McCush, 213 Cal. 426 [2 Pac. (2d) 357], Menghetti v. Dillon, 10 Cal. (2d) 470 [75 Pac. (2d) 596], and cases there cited.)

It affirmatively appears on the face of the judgment roll that the trial court by the order dated May 18, 1938, modified the judgment by striking out the provision for payment as separate maintenance. That order is not set forth in full in the judgment but is referred to in substance and effect. Applying the foregoing rule to that order, it is assumed that there were facts before the court when it was made which would support it and that it contained findings of fact and conclusions of law adequate to support it. The reference to it in the judgment is sufficient to justify the inference that everything was done which would render it an effectual modification of the judgment and that the findings and conclusions elsewhere in the judgment roll and inconsistent therewith are not controlling. If the appellant desired that the rules be not thus applied to the record she presents, she should have enlightened the court with a record of contrary import, if such a record could have been produced. There is nothing in the judgment roll which would warrant a reversal of either the judgment or the order.

The judgment and order are therefore affirmed.

Edmonds, J., Gibson, J., Carter, J., Waste, C. J., Curtis, J., and Houser, J., concurred.


author: EDMONDS, J.

text:
    [L. A. No. 17114.
    In Bank.
    March 26, 1940.]
    JOHN H. KNAPP, Appellant, v. CHARLES W. KNAPP et al., Respondents.

      Ray D. Johnson, Cyril F. Marelia and William T. Eckhoff for Appellant.
    Childers & Roberts for Respondents.
   EDMONDS, J.

The appellant asserts that he has a canse of action for the recovery of his share of the proceeds from the sale of certain real estate once owned by him and his brother, Charles W. Knapp, one of respondents. He sued to secure an accounting and exemplary damages. The demurrer to his complaint was sustained without leave to amend, and the judgment appealed from followed that order.

The amended complaint alleges the following facts: The appellant and Charles W. Knapp are brothers. In 1911 they were the sole owners, in equal undivided shares, of certain real property, record title to which was taken in the names of the brother and his wife, who took the title to the appellant’s undivided one-half interest as trustee for him. Shortly thereafter the appellant left California and since has not been in the state.

About January 1, 1917, the respondents represented to the plaintiff, who was then in Illinois, that they had sold the property for the sum of $4,000 and forwarded to him a promissory note for $2,000 endorsed across the face: “In full settlement for J. H. Knapp’s interest in Cucamonga Cal. orange grove which was owned by payer and payee hereto.” According to its terms, the holder might extend the time of payment without notification to the maker.

By other allegations, the appellant charges that he believed these representations and accepted the promissory note. However, as he now knows, the representations were in fact untrue, and the note was sent- to him as part of a fraudulent scheme on the part of the respondents to abscond with the money realized from his interest in the sale of the property from which they realized more than $10,000. The true facts concerning the sale of the land were only discovered by him about October 1, 1938, during the preparation for trial of a suit upon the promissory note. Until that time, he says, he had “no knowledge, information or suspicion of the falsity of said representations, nor of the existence of any of the facts or circumstances in connection with the transaction

In addition to the demand for an accounting, the appellant asks judgment for $20,000 as exemplary damages.

The respondents demurred upon a number of grounds. They specify that the action is barred by section 338, subdivision 4, section 343, and section 339, subdivision 1, of the Code of Civil Procedure; that the plaintiff has been guilty of laches; that there is another suit pending between the same parties for the same cause; and that there is a misjoinder of parties defendant, in that it appears from the complaint that Florence R. Knapp never had any interest in the property. As against these contentions, the appellant asserts that in the case of a voluntary trust, the statute of limitations does not commence to run until the equitable owner acquires knowledge of its repudiation, and that mere lapse of time does not affect the rights of the equitable owner. lie also maintains that the three-year statute limiting action for fraud or mistake has not run upon his cause of action because he filed suit within ten days after his discovery of the facts constituting the fraud.

The respondents assert that the demurrer was well taken because the complaint shows no excuse for the delay in bringing the action. They point out that there is no direct allegation that appellant had any confidence in his brother, and that his recitals concerning his reliance upon his brother because of family relationship refer only to his acceptance of the note in 1917. They also assert that the complaint does not state a cause of action upon the theory of a resulting trust because there is no allegation that the appellant ever paid any part of the consideration for the property in which he now claims an interest. Further, they say, that so far as appears in the complaint, the property may have been sold at a loss. Another point raised in support of the demurrer is that there is no offer on the part of the appellant to do equity.

According to the allegations of the complaint, “on or about February 14th, 1911, plaintiff and defendant Charles W. Knapp became and were the sole owners, in equal undivided shares, of certain real property and . . . that the record title to said real property was taken in the names of defendants ; that defendants and each of them took such record title to plaintiff’s undivided one-half interest therein, the income therefrom and to the proceeds thereof in trust and as trustees for plaintiff”. These allegations fall far short of the facts from which the law will imply a resulting trust (Woodside v. Hewel, 109 Cal. 481 [42 Pac. 152]; Simpson v. Gillis, 1 Cal. (2d) 42 [32 Pac. (2d) 1071]), but in the absence of a special demurrer may be sustained as sufficient to allow proof of an express trust made for the benefit of the appellant as trustee.

However, such pleading is not to be commended, particularly in the statement of a cause of action based upon transactions occurring more than twenty-five years ago; it adds difficulties and delay to litigation and tenders issues framed with scant facts. One who has a cause of action should frankly state the facts upon which he relies and not bring them out of a fog of doubt and uncertainty only when required by the lash of a special demurrer.

But if the respondents were ever trustees for the benefit of the appellant, that relationship terminated when the trust property was sold. The appellant knew of the sale. A note was given to him representing the amount which the trustees claimed was his share of the proceeds. At any time before the termination of the trust, the appellant could have demanded an accounting, because while the trust remains in effect there is a continuing duty on the part of the trustee to account (Lezinsky v. Mason Malt M. W. Co., 185 Cal. 240 [196 Pac. 884] ; Benoist v. Benoist, 178 Cal. 234 [172 Pac. 1109] ; Pearl v. Pearl, 177 Cal. 303 [177 Pac. 845]; Lamb v. Lamb, 171 Cal. 577, 578 [153 Pac. 913]; Sacramento Bank v. Murphy, 158 Cal. 390 [115 Pac. 232] ; Norton v. Bassett, 154 Cal. 411 [97 Pac. 894, 29 Am. St. Rep. 162]), and the statute of limitations does not ordinarily begin to run upon a cause of action until it is terminated. (Marston v. Kuhland, 151 Cal. 102 [90 Pac. 188] ; Chapman v. Bank of California, 97 Cal. 155 [31 Pac. 896].) But not having taken any steps for more than twenty years to challenge the accounting made by the trustee, the statute of limitations has run upon that cause of action.

However, his complaint goes further than one for an accounting. The respondents are charged with having made fraudulent representations inducing him to accept a note for $2,000 although the property was sold for a sum in excess of $10,000. These allegations assert a cause of action which it is claimed did not accrue until the discovery of the facts concerning the fraud. (See. 388, Code Civ. Proc.)

The form of such action is immaterial. (Lightner Min. Co. v. Lane, 161 Cal. 689 [120 Pac. 771, Ann. Cas. 1913C, 1093].) But a plaintiff who sues to recover damages for fraudulent representations made more than three years prior to the commencement of his action is required to affirmatively plead that he did not discover the facts constituting the fraud until within the statutory period of limitation. lie must also allege when and how the facts concerning the fraud became known to him. A further element of his cause of action is a statement of facts showing that he had no notice or means of knowledge which, if followed by inquiry, would have shown the true facts. (Lady Washington C. Co. v. Wood, 113 Cal. 482 [45 Pac. 809]; Consolidated R. & P. Co. v. Scarborough, 216 Cal. 698 [16 Pac. (2d) 268] ; Turner v. Liner, 31 Cal. App. (2d) 196 [87 Pac. (2d) 740].) However, the latter requirement has been relaxed in cases involving confidential relationship, because facts which justify investigation in the ordinary ease would not excite suspicion where the circumstances show a right to rely upon the representations of another and the same degree of diligence should not be required. (Rutherford v. Rideout Bank, 11 Cal. (2d) 479 [80 Pac. (2d) 978, 117 A. L. R. 383]; Barron Estate Co. v. Woodruff Co., 163 Cal. 561 [126 Pac. 351, 42 L. R. A. (N. S.) 125]; Tarke v. Bingham, 123 Cal. 163 [55 Pac. 759]; Lataillade v. Orena, 91 Cal. 565 [27 Pac. 924, 25 Am. St. Rep. 219].)

The appellant is entitled to the benefit of this exception to the general rule. As has been stated, the allegations of the complaint are unsatisfactory, but they charge that for some years the respondents were the trustees of an express trust in his favor. One of their duties in that relationship was to honestly account for the trust property; and the appellant was entitled to rely upon their report to him without making any independent investigation. Moreover, although family connection alone is not sufficient to support a finding of a confidential relationship, it may be considered with other evidence upon that issue. (Johnson v. Clark, 7 Cal. (2d) 529 [61 Pac. (2d) 767]; Odell v. Moss, 137 Cal. 542 [70 Pac. 547].)

Nor is the plea of another action pending available to the respondents as a ground for their demurrer. The suit alleged to have been previously brought is said to be one upon the promissory note. This is not the same cause of action as the one here sued upon and does not constitute a bar to it.

Because of these conclusions, the other points made by the respondents do not require discussion. The judgment is reversed with directions to overrule the respondents’ demurrer and allow them to answer.

Gibson, J., Shenk, J., Carter, J., Curtis, J., and Waste, C. J., concurred.

Houser, J., concurred in the judgment.

Rehearing denied.


text:
    [L A. No. 16181.
    In Bank.
    March 27, 1940.]
    BANK OF AMERICA NATIONAL TRUST AND SAVINGS AND TRUST ASSOCIATION (a National Banking Association), Plaintiff, Cross-Defendant and Respondent, v. P. M. REIDY et al., Defendants, Cross-Defendants and Respondents; HAMMOND LUMBER COMPANY (a Corporation), Defendant, Cross-Complainant and Appellant ; ONNIK TIMOURIAN, Defendant and Respondent.

      Horton & Horton and Joseph K. Horton for Appellant.
    Ereston & Piles, Edmund Nelson, Howard Waterman, Benjamin I. Block, Ralph E. Lewis, William Ellis Lady, H. C. Millsap and T. B. Arsen for Respondents.
   EDMONDS, J.

This controversy presents only the question whether the appellant, which had a junior lien upon certain real property, is entitled to the income of the property while the respondent bank was foreclosing its senior encumbrance.

The first mortgage was executed in 1925 by the then owner of the property to secure the payment of a note for $80,000 in favor of the respondent Reidy and his wife. About the same time several junior encumbrances were recorded, one being a deed of trust to secure a note of the owner in favor of Hammond Lumber Company. Later, the Reidys borrowed $70,000 from the bank’s predecessor, and to secure the loan gave the $80,000 note and mortgage as collateral security.

Upon default in the payment of the note of which he was a payee, and notwithstanding the fact that the mortgage was still under pledge to the bank, P. M. Reidy commenced a suit for its foreclosure. The bank, which was named as a defendant in this action, filed a cross-complaint against the mortgagor and several encumbrancers, including the Hammond Lumber Company, asking that it be permitted to foreclose the mortgage in order to protect its security as the pledgee thereof. While the cause was awaiting trial, Hammond Lumber Company, which had meanwhile foreclosed its junior encumbrance, a deed of trust, and became the purchaser at the sale, received the trustee’s deed to the property. Later, when the foreclosure action came to trial, the Hammond Company stipulated that the pledged mortgage was prior to any lien or interest in the property which it might assert.

On January 31, 1929, a decree of foreclosure was entered, adjudging that the sum of $70,000 borrowed by the Reidys from the bank was due and owing; that payment thereof was secured by pledge of the mortgage sought to be foreclosed; and that the sum due on the mortgage was $87,512, exclusive of certain items of interest and costs. Among other things, the decree ordered a sale of the property by a commissioner, and application of the proceeds of sale as follows: (1) To payment of costs and expenses of sale; (2) to payment of the amount due the bank from the Reidys; (3) to payment to the Reidys of any amount due them after paying the claim of the bank; and (4) the surplus, if any, to be paid into court. Upon appeal by a junior encumbrancer, the decree was affirmed, with a slight modification not here material. (Reidy v. Young, 119 Cal. App. 322 [6 Pac. (2d) 112].) At the foreclosure sale thereafter held, the bank bid in the property for $70,000 and on March 5, 1930, at the expiration of the period of redemption, received a commissioner’s deed. The present action was commenced by the bank for the purpose of foreclosing this deed as a mortgage.

The complaint alleged that although the certificate and deed were absolute in form, they were accepted by the bank as additional security for the Reidy loan, and constituted “a further mortgage of the real property”, and that payment of the balance due on the loan was in default. The prayer was for foreclosure and judgment against the Reidys in the amount of any deficiency.

Separate answers were filed by the several defendants, and Reidy and the Hammond Lumber Company each filed a cross-complaint. The latter alleged that, unknown to it, the bank had accepted the commissioner’s certificate and deed only as security, and they constituted nothing more than a further mortgage; that, therefore, it, the Hammond Company, was the owner of the property at all times subsequent to April 3, 1928 (the date of the trustee’s deed to it), and as such owner was entitled to recover from the bank all rents, issues, and profits of the property subsequent to March 5, 1929, the date of the certificate of sale under the decree of foreclosure.

The cause was tried in September, 1932, but was reopened several times for the admission of further evidence, with the result that findings and decree were not signed until June, 1936. The decree granted the bank the relief which it sought and directed a foreclosure as prayed.

With respect to the issues made by the cross-complaint of the Hammond Lumber Company, it was conceded that the net income in controversy received from the operation of the property from June 30, 1930, to February 1, 1936, amounted to $15,866, but the court concluded that the Hammond Company was not entitled to this profit. It found that a receiver appointed in the prior foreclosure action had operated the property from a time prior to March 5, 1929, to April 26, 1930; that on the latter date possession of the property was delivered to the bank, and the bank thereafter continued to operate it “as the holder of the first mortgage lien” thereon, and “as agent of said P. M. Reidy”. It is not true, the court expressly found, that the Hammond Company has at all times since April 3, 1928, or at any time since March 5, 1929, been the owner of the property, and it is not true that at all of said times, or at any time since March 5, 1929, that company was entitled to rents, issues, and profits thereof, or that the bank was indebted to it in any sum. The decree adjudged that the company had no right, title, interest, lien, or claim to the property, or right of redemption therein.

The Hammond Company alone appealed from the decree. In support of its claim that it should have been given judgment against the bank for income received from the property it contends that it was not debarred of its rights in the property by the foreclosure of 1929 and the issuance of the commissioner’s certificate and deed, because as to it that foreclosure was collusive, fraudulent, and ineffective for any purpose.

The charge of fraud is grounded upon the following facts which, appellant states, were established on the trial by uncontradicted evidence: At the time of the 1929 foreclosure sale the value of the real property, according to the bank’s appraisal, was from $35,000 to $40,000. The bank planned to bid up to the latter sum for it, and to take a deficiency judgment against P. M. Reidy for the balance due on his loan. On the morning of the sale, however, Mr. Reidy called at the bank and persuaded it to-increase its bid to $70,000 in order to “protect him with reference to possible redemption by other parties that were interested”. In return he agreed to give the bank $10,000 and additional security. The bank carried out its part of the agreement but all of Mr. Reidy’s promises were not fulfilled and the bank was therefore compelled to seek redress by filing the present action for further foreclosure.

The court found that immediately prior to the commissioner’s sale, at the request of P. M. Reidy, the bank agreed that for the benefit of P. M. Reidy it would bid in the property for the sum of $70,000 and that the commissioner’s certificate of sale and the deed to be subsequently delivered would be held by the bank as security for the payment of his indebtedness to it.

The effect of this bid, the appellant urges, was to stifle competition and to deprive it of an opportunity to either bid for or redeem the property; hence the foreclosure sale was irregular and unfair. Moreover, says the appellant, it did not conform to the foreclosure decree because the bank did not credit the amount bid for the property upon the Reidy loan, as the decree directed, but, instead, sued to foreclose its commissioner’s deed as a mortgage.

It is the general rule that courts have power to vacate a foreclosure sale where there has been fraud in the procurement of the foreclosure decree or where the sale has been improperly, unfairly or unlawfully conducted, or is tainted by fraud, or where there has been such a mistake that to allow it to stand would be inequitable to purchaser and parties. Sham bidding and the restriction of competition are condemned, and inadequacy of price when coupled with other circumstances of fraud may also constitute ground for setting aside the sale. (Haley v. Bloomquist, 204 Cal. 253 [268 Pac. 365]; Dealey v. East San Mateo Land Co., 21 Cal. App. 39 [130 Pac. 1066] ; Bernheim v. Cerf, 123 Cal. 170 [55 Pac. 759] ; Packard v. Bird, 40 Cal. 378; Goodenow v. Ewer, 16 Cal. 461 [76 Am. Dec. 540].) However, where on foreclosure of a mortgage a deficiency judgment cannot be had, and that was the situation confronting the bank (Beidy v. Young, supra), it is not unusual for a mortgagee to make a bid for the property in the amount owing on the debt. The sale is not rendered fraudulent by the fact that such bid exceeds the value of the property at the time of sale and was made with the intent of discouraging bidding or redemption by junior encumbrancers in the hope of finally securing payment of the debt because of a rise in value of the property in the future. So long as a bid is legitimately made, there is no theory which requires the creditor to bid only a small amount, raising it by degrees only to that required to meet competition. And the situation is not altered where a pledgee of a mortgagee, acting in good faith for the best interests of both, makes the same bid the mortgagee would himself have made.

Moreover, the appellant is not entitled to the relief demanded by its cross-complaint even if it were correct in its contention that the bid of the bank was fraudulent. The Hammond Company was a party to the foreclosure action and the pleadings fully disclosed the relations of the other parties and showed that the bank was asking for a decree of foreclosure as a pledgee of the mortgage. The terms of the mortgage and also those of the bank loan were known to the appellant. It also knew, or should have known, the approximate value of the property. Yet it did not challenge the foreclosure decree, which was affirmed on appeal (Reidy v. Young, supra), nor did it complain at the time of the foreclosure sale that the bank’s bid was excessive, or that it should bid only an amount equal to the actual value of the property and rely upon a deficiency judgment for the balance of the debt. It made no effort to set aside the sale either by motion or by an independent action in equity or seek to establish a right of redemption. It advanced no claim whatsoever until the present action was brought by the bank revealing a private agreement with the pledgor as to the manner in which the pledge should be collected, and even then it did not seek to have the foreclosure sale vacated, nor did it offer to redeem the property for an amount equal to its value at the time of the foreclosure sale.

Upon no theory may it be held that appellant is entitled to the rent collected by the bank. The foreclosure sale was at most voidable, and a purchaser at súeh a sale is entitled to the income of the property during the period of redemption. (Sec. 707, Code Civ. Proc.; Reidy v. Young, supra.) The fact that the bank made the purchase and took title as a pledgee of the mortgagee was a matter of concern only to itself and its pledgor. It conferred no additional rights upon junior encumbrancers, and it did not render either the foreclosure decree or the sale vulnerable to attack by other parties.,

Section 3006 of the Civil Code declares the right of a pledgee to collect collateral security held in pledge, and it is the law of this state that a pledgee who becomes the purchaser at a foreclosure sale under a collateral mortgage acquires absolute title to the property, although he is under a duty to account to the pledgor for the proceeds. (Kelly v. Matlock, 85 Cal. 122 [24 Pac. 642] ; Hoult v. Ramsbottom, 127 Cal. 171 [59 Pac. 587]; Johnson v. Mortgage Guar. Co., 117 Cal. App. 416 [4 Pac. (2d) 208]; McArthur v. Magee, 114 Cal. 126 [45 Pac. 1068]; Beatty v. Pacific States etc. Co., 4 Cal. App. (2d) 692 [41 Pac. (2d) 378]; Reidy v. Young, supra.) Here the duty of the bank to account to its pledgor, as affected by the pledgor’s failure to carry out the terms of the agreement at the time of the sale has been met by the provisions of the decree of foreclosure, from which no appeal has been taken by either the bank or the pledgor.

The decree is affirmed.

Gibson, J., Carter, J., Shenk, J., Curtis, J., and Waste, C. J., concurred.


author: SHENK, J. CARTER, J., Concurring.

text:
    [L. A. No. 17318.
    In Bank.
    March 28, 1940.]
    N. FUNK, Respondent, v. MARY A. CAMPBELL (a Widow) et al., Appellants.
    Robert Cochins for Appellants.
    Bender & Cullinan for Respondent.
   SHENK, J.

Judgment was entered in this action on July 12, 1939, in favor of the plaintiff. On July 18, 1939, the defendants filed a notice of motion to vacate and set aside the judgment and to enter a new and different judgment, on the ground that the conclusions of law were incorrect and erroneous and not consistent with or supported by the findings of fact. The motion was denied and the defendants appealed from the order denying the same. They also appealed from an order denying their motion for new trial.

The motion to dismiss is made on the grounds, (1) that an appeal does not lie from an order denying a motion for a new trial and (2) that an appeal does not lie from an order denying a motion to set aside a judgment when the grounds of such motion existed prior to the entry of the judgment. And it is stated that such grounds existed in this case.

The order denying the motion for a new trial was not appealable and the appeal therefrom should be dismissed.

In support of her motion to dismiss the appeal from the order denying the motion to vacate, the plaintiff relies on the well-established rule that an appeal will not lie from an order refusing to vacate a judgment if the grounds upon which the party sought to have the same vacated existed before the entry of the judgment and were available on appeal from the judgment. The rule is stated in Lawson v. Guild, 215 Cal. 378 [10 Pac. (2d) 459], Estate of Siemers, 202 Cal. 424 [261 Pac. 298], Reynolds v. Reynolds, 191 Cal. 435 [216 Pac. 619], and numerous other cases to like effect.

But the rule and cases relied on by the plaintiff have no application to the appeal now under consideration. The motion to vacate was made pursuant to section 663 of the Code of Civil Procedure, which specifies as the sole ground on such a motion, “Incorrect or erroneous conclusions of law not consistent with or not supported by the findings of fact.” A specific and separate appeal from an order made on a motion under that section is accorded the aggrieved party by section 663a of the same code and the decisions construing that section. Appeals from orders made under section 663 are set apart from and are made an exception to the rule relied on by the plaintiff. (California Delta Farms v. Chinese American Farms, 201 Cal. 201 [255 Pac. 1097].) This subject is fully discussed in our opinion in the case just cited and that case is sufficient authority for the denial of the second part of the plaintiff’s motion.

The appeal from the order denying a new trial is dismissed. The motion to dismiss the appeal from the order denying the motion to vacate is denied.

Waste, C. J., Curtis, J., Edmonds, J., Gibson, J., and Houser, J., concurred.

CARTER, J., Concurring.

I concur in the conclusion reached in the opinion of Mr. Justice Shenk but desire to amplify my views on the proposition here involved in order to avoid confusion in the future.

On July 12, 1939, findings of fact and conclusions of law were filed and judgment entered in this action in favor of plaintiff, in the Superior Court of Los Angeles County. On July 18, 1939, appellants filed a “notice of motion to set aside judgment” on the ground that the conclusions of law were incorrect and not supported by the findings of fact and that' judgment be entered in favor of the defendants Isabella D. Campbell and Donald Campbell. This motion was subsequently made and denied on August 25, 1939. Notice of appeal from the order denying the defendants’ motion to set aside the judgment and for a new trial was filed August 30, 1939. A transcript on appeal was thereafter prepared and filed in this court on October 6, 1939. The appeal is taken on the judgment roll alone.

Respondent has moved to dismiss the appeal upon the ground that no appeal lies from an order denying a motion to set aside a judgment when the grounds of such motion existed prior to the entry of said judgment.

In support of his motion to dismiss the appeal from the order denying appellants’ motion to vacate the judgment, respondent relies upon the following cases: Lawson v. Guild, 215 Cal. 378 [10 Pac. (2d) 459]; Barry v. Learner, 113 Cal. App. 651 [299 Pac. 82] ; Barker v. Ackers, 29 Cal. App. (2d) 162 [84 Pac. (2d) 264]; Nagelmann v. McIntyre, 27 Cal. App. (2d) 621 [81 Pac. (2d) 466]; Reynolds v. Reynolds, 191 Cal. 435 [216 Pac. 619]. These cases lay down the rule that an appeal does not lie from an order refusing to vacate a final judgment if the grounds upon which the party sought to have the same vacated existed before the entry of judgment and were available on appeal from the judgment. If the rule announced in the above-cited cases is applicable to the case at bar, respondent’s motion to dismiss the appeal should be granted.

It is obvious from a reading of the transcript that the grounds upon which the appellants sought to have the judgment vacated existed before the entry of the judgment and are available upon an appeal from the judgment. However, there is another line of authorities upon which appellants rely which lay down a rule in apparent conflict with the rule announced in the above-mentioned eases. The authorities relied upon by appellants are: Lewith v. Rehmke, 215 Cal. 241 [9 Pac. (2d) 297]; California Delta Farms v. Chinese Ameri can Farms, 201 Cal. 201 [255 Pac. 1097]; Estate of Barton, 20 Cal. App. (2d) 648 [67 Pac. (2d) 695] ; Progressive Finance Corp. v. Vining, 115 Cal. App. 423, 425 [1 Pac. (2d) 1004]; Karsh v. Superior Court, 124 Cal. App. 373 [12 Pac. (2d) 658] ; Los Angeles Soap Co. v. Bossen et al., 122 Cal. App. 237 [9 Pac. (2d) 900] ; Westervelt v. McCullough, 64 Cal. App. 362 [221 Pac. 661] ; Condon v. Donohue, 160 Cal. 749 [118 Pac. 113]; Bond v. United Railroads of San Francisco, 159 Cal. 270 [113 Pac. 366, Ann. Cas. 1912C, 50, 48 L. R. A. (N. S.) 687].

The cases last cited hold that an appeal lies from an order denying a motion made under sections 663 and 663a of the Code of Civil Procedure to vacate a judgment upon the assumption that such an order is a special order made after final judgment and expressly made appealable as such under section 963 of the Code of Civil Procedure.

It is obvious that confusion has existed in the minds of those who have attempted to apply the rules laid down in the two lines of authorities above cited. This confusion is the result of some rather loose language used in the opinions in the group of cases first cited in describing the character of the order appealed from in those cases: It does not appear in the opinion in any of those cases that the order appealed from was the basis of a motion presented to the trial court pursuant to sections 663 and 663a of the Code of Civil Procedure. Each of said motions was made after the judgment in each of said cases had become final, and there was no legal basis upon which said motions could be made. The respective judgments in said eases were immune from direct attack at the time said motions were made. Appellants in those cases sought to maintain their appeals by contending that they were taken from orders made after final judgment pursuant to section 963 of the Code of Civil Procedure. However, instead of holding in those cases that the order appealed from therein was not appealable because there was no legal basis upon which the motion could have been made in the trial court, the court in those decisions held that an appeal did not lie from said orders because the grounds upon which the party sought to have the judgments vacated existed before the entry of judgment and were available on an appeal from the judgment. If this rule were applied to an appeal from an order denying a motion to vacate a judgment under sections 663 and 663a of the Code of Civil Procedure, the result would be that substantially all of the appeals taken from orders denying motions to vacate judgments would have to be dismissed, because it is usually the situation that the grounds upon which the party seeks to have the judgment vacated existed before the entry of judgment and are reviewable on appeal from the judgment. Such is the situation in the ease at bar.

However, in the list of authorities holding that an appeal will lie from an order granting or denying a motion to vacate a judgment under the provisions of sections 663 and 663a of the Code of Civil Procedure, it is held that a party aggrieved by such order may appeal therefrom even though the grounds upon which he sought to have the judgment vacated existed before the entry of the judgment and were available on an appeal from the judgment. It is obvious that there is a direct conflict in the reasoning in these two lines of authorities.

While it is impossible to harmonize this conflict, I may be able to clarify the situation by a pronouncement which may be helpful in guiding those who might otherwise be baffled by the confusion which now exists.

I think it was the obvious intention of the legislature that an appeal should lie from an order granting or denying a motion to vacate a judgment made pursuant to sections 663 and 663a of the Code of Civil Procedure, regardless of whether the grounds upon which said motion is made existed before the entry of judgment and are available on an appeal from the judgment, and that such an appeal lies notwithstanding an appeal is also taken from the judgment.

I think it proper to point out, however, that there is no basis in our law for a motion to vacate or set aside a judgment regular on its face, which has become final by reason of the time for appeal having expired, except in the field of default under section 473 of the Code of Civil Procedure, and all such motions are abortive. Such being the situation, it is obvious that when such motions are made and denied and appeals are taken therefrom, the appeal should be dismissed upon the ground that there was no legal basis for the motion which resulted in the making of the order, and consequently no basis for an appeal from such order, and not upon the ground that the order is not appealable because the grounds upon which the motion was made existed 'before the entry of judgment and were available on an appeal from the judgment, Such is the class of orders from which appeals were taken in the list of authorities upon which respondent is relying in the case at bar.

In view of the factual situation stated at the beginning of this opinion, it is obvious that the motion to set aside the judgment which was made by appellants in the trial court in the case at bar was made pursuant to the provisions of sections 663 and 663a of the Code of Civil Procedure, and therefore the order denying same is appealable even though the grounds upon which said motion was made existed before the entry of the judgment in said action and were available on appeal from the judgment, and therefore respondent’s motion to dismiss the appeal in this ease should be denied.

While defendants’ notice of appeal states that they are also appealing from an order denying them a new trial, the record does not disclose that a motion for a new trial was made, hence, this statement in the notice of appeal is surplusage and may be disregarded.


author: GIBSON, J. CURTIS, J., and HOUSER, J., Dissenting.

text:
    [L. A. No. 17037.
    In Bank.
    March 30, 1940.]
    In the Matter of the Estate of CHARLES A. GAINES, Deceased. FREDERICK ANDREWS, Coexecutor, etc., Appellant, v. CALIFORNIA TRUST COMPANY (a Corporation), Coexecutor, etc., Respondent.

      J. ,B. Irsfeld, Douglas Fawcett and James B. Irsfeld, Jr., for Appellant.
    Eckman & Lindstrom, as Amici Curiae, on Behalf of Appellant.
    George E. Farrand and Edward W. Tuttle for Respondent.
    Dryer, Castle & Richards, as Amici Curiae, on Behalf of Respondent.
   GIBSON, J.

This is an appeal by Frederick Andrews, co-executor of the estate of Charles A. Gaines, from a decision of the probate court after trial of issues arising upon exceptions to the accounts of the executors. The purpose of the proceedings was to determine the title to certain personal property comprising bank accounts, corporate stock, promissory notes and a few other items of personal property.

The decedent, Charles A. Gaines, was the great uncle of appellant Andrews. Gaines came to California in 1918 with a substantial fortune. In 1923 he established an office in Los Angeles where he took care of his property and investments. Appellant, who lived in Ohio, for some years saw his uncle only on visits, but in October of 1933 came to California where he operated a small business and saw him frequently. He performed a few personal services for decedent, but did not transact any business for him, nor did they discuss the estate.

In January, 1934, decedent went to the Seaboard Bank and there procured a form of joint ownership contract covering a safe deposit box. The bank clerk at this time explained the nature of the contract and the effect of the survivorship clause. Decedent signed the card, and later requested appellant to come with him to the bank and put his signature on it. Appellant testified he could not recall any definite conversation taking place at that time, but declarations made by him prior to the trial, as well as his testimony show that he believed that his uncle was merely arranging for him to have access to the safe deposit box in order to make it easier to handle the estate.

Appellant did not see the box itself at this time. He knew nothing about its contents until some months later, when, at his uncle’s request, he put some papers into it and noticed some Gillette Safety Razor Company stock there. Appellant neArer used the box himself, paid no rent on it, never inquired as to its contents, received none of the income from the stock kept therein and in short, in his own language, “never gave a thought to it” from the time he signed the card until some months after his uncle’s death.

In September, 1934, decedent again called upon appellant to go with hint to the bank. This time he signed joint tenancy cards for two bank accounts. Appellant testified that there was no special conversation about the purpose of the signing but respondent offered evidence of declarations made by appellant, indicating that he understood decedent’s purpose was to facilitate the handling of the estate after his death. However, when decedent obtained the cards, their nature and effect were explained to him by bank employees.

In December, 1934, appellant went back to Ohio to live. Previous to this he gave his safe deposit key to his uncle. In October, 1936, his uncle died, and respondent California Trust Company, coexecutor under his will, delivered to appellant an envelope found in the decedent’s safe and addressed to appellant. The envelope contained the latter’s safe deposit key and a letter reading as follows:

“Dear Freddie:
"Enclosed please find the key to my safe deposit box in the Seaboard Nat. Bank, Hollywood Blvd. at Whitley, which is in our joint names, said box contains most of my securities, stocks, deeds, etc. from my bank account which is in the name of my wife and self you can draw checks for your and her allowance as provided by my will, all other beneficiary payments to be held up until my estate is settled. You can immediately get in touch with California Trust Company, co-executor and start work on settling the estate. Sincerely, Unele C. A. Gaines.”

Thereafter appellant participated in various conferences with officers of respondent trust company and its attorneys, at which time the will and its provisions were considered and plans for the administration of the estate discussed. During these conferences appellant repeatedly expressed the opinion that his uncle did not intend that the property should go to him individually. When the parties opened the safe deposit box and took out the contents, appellant permitted them to be held by respondent trust company, which was the special administrator, and respondent collected the income from the stock and included all of the contents of the safe deposit box in its account as special administrator, with no objection from appellant. Proceedings in administration thereafter went on in the usual manner.

In March, 1937, appellant, who had previously been represented together with the trust company by one firm of attorneys, retained new counsel to represent him individually. With the appointment of his new counsel appellant for the first time made a personal claim to the bank accounts and the safe deposit box as a surviving joint tenant. In order to test his right, a suit for declaratory relief was brought by appellant against respondent California Trust Company, but this was voluntarily dismissed after decision upon demurrer, on the ground that the probate court had exclusive jurisdiction. The issue was then raised in the following manner: Respondent California Trust Company filed its account as coexecutor and charged the executor with those items of personal property, namely, the bank accounts and the contents of the safe deposit box. Appellant took exceptions to the account asserting his claim of ownership to this property. Appellant filed his account as coexecutor in which he did not include this personal property, but set forth his claim of ownership. To this account respondent filed its exceptions. Thus the issue of title to the property was raised. Later by amendment to its exceptions to conform to proof, permitted over objection by appellant, respondent set forth the specific contention that there was never any intention on the part of decedent to make a gift of the property but that the parties entered into the arrangement merely to facilitate administration of the estate after- the death of the decedent.

After trial the probate court decided in favor of respondent and against appellant on the issue presented. The court specifically found that decedent had made the arrangement for the signing of the joint tenancy cards for both the safe deposit box and the bank accounts merely for the ease and convenience of appellant as executor in obtaining possession of the property and administering it; that it was not intended thereby to make a gift to appellant of the property or money; and that it was the intention and understanding of both parties that if appellant survived the decedent he would take and hold all of the property in trust for the estate. The issue presented by this appeal is whether these findings are supported by substantial and competent evidence.

The joint tenancy cards signed by the parties with reference to both the safe deposit box and the bank accounts would, standing alone, be sufficient to create joint tenancies, that is, joint interest with right of survivorship to the whole. Oases wherein such agreements have been upheld are frequent. (See, for example, Wallace v. Riley, 23 Cal. App. (2d) 654 [74 Pac. (2d) 807] ; Estate of Fritz, 130 Cal. App. 725 [20 Pac. (2d) 361]; Young v. Young, 126 Cal. App. 306, 313 [14 Pac. (2d) 580].) The attack upon the formal writing is based upon the theory that the decedent and appellant did not intend to create a joint interest in property nor did they enter into a contract; but that they merely sought to make a convenient arrangement for access to and handling of the property, or a transfer in trust for the benefit of the persons entitled to the property under the will, and not an absolute gift of the property itself.

The testimony chiefly relied upon was given by officers of respondent trust company, to the following effect: Appellant, after decedent’s death, told them that decedent stated at the time the cards were signed that this was' being done to facilitate handling of the estate after his death. Thus, J. C. Seaman, assistant trust officer, testified that at one conference appellant related that his uncle called him to the bank without telling him the object of the trip, and asked him to sign a safe deposit box card; and that “his uncle had said that he was fixing things this way to make it easy for Mr, Andrews to administer his uncle’s estate, because his uncle had told him that he had made him executor of his last will. We then questioned Mr. Andrews in regard to the bank accounts, and he said they were signed up similarly at later dates, and his uncle had told him that he was fixing the bank accounts the same way as the box, for the same purpose”. The witness further testified as to appellant’s story: ‘‘He did not know until he got to the bank, he told us, just what was required of him, but he went along in accordance with his uncle’s wishes, and it was only when he was asked to sign the card that his uncle said, ‘Fred, I want you to sign this so that you can take care of my affairs after I am gone. You know I told you I have made you executor of my will’ ”, B. L. Smith, vice-president of respondent trust company, testified to the same effect.

Appellant gave a different version of these conversations, consistent with his other declarations and conduct. He testified that his uncle made no direct statements of his intention, and that in relating the circumstances referred to he, appellant, was merely offering his own honest belief as to what his uncle probably had in mind. Appellant’s bewilderment at his uncle’s unexplained actions clearly appears in the testimony of all of these witnesses, and his expressions of opinion seem to be reasonable and natural. But in view of the court’s findings, we may, for the purposes of this opinion, accept the version of respondent, and proceed to determine the important question of the admissibility of this evidence.

First, it is hearsay, the witnesses testifying to statements made by another. Second, it is offered to prove the fact asserted, that is, the purpose of the joint tenancy agreements ; so it is prima facie within the hearsay rule and inadmissible unless it comes under one of the exceptions. Third, the witnesses were not testifying to a declaration made to them by decedent, but to a declaration made to them .by appellant. It is clear, then, that if the evidence was properly received at all, it came in as an admission. If appellant had told the witness that he, appellant, had entered into the agreement as a matter of convenience in the handling of decedent’s estate, and not intending a joint tenancy, this would unquestionably constitute an admission. What appellant actually told the witness, however, was that the decedent had said so. Ordinarily this type of statement would not be an admission; that is, a statement describing another’s declaration is normally not regarded as an admission of the fact asserted by the other. One does not admit everything he recounts or describes merely by reason of the relating of it.

On the other hand, it is equally well settled that there may be admissions other than statements made by the party himself ; that is, statements of another may in some circumstances be treated as admissions of the party. The situations are (1) where the person who makes the statement is in privity with the party against whom it is offered, as in the case of agency, partnership, etc.; and (2) where the statement of the other is adopted by the party as his own, either expressly or by conduct. Familiar examples of this second situation are the admissions by silence, where declarations of third persons made in the presence of a party give rise to admissions, the conduct of the party in the face of the declaration constituting the adoption of the statement to form an admission. (See 2 Wigmore, Evidence, secs. 1052, 1069, 1071.) It would seem that in the instant ease, when appellant repeated the declaration of decedent without challenging it, it became an admission against him.

This is, however, the only testimony produced by respondent having any substantial tendency to prove an intent different from that expressed in the joint tenancy instruments. An attempt is made to corroborate it by proof of other declarations of appellant, and by the conduct of appellant. The declarations were made to respondent’s officers and attorneys, and stated his belief that his uncle had not intended him to have any personal ownership of the property, but that the arrangement was intended solely for convenience of administration. Thus, Mr. Proudfit, of the law firm representing respondent, testified to a conference in his office shortly after Mr. Gaines’ death, at which Mr. Smith, respondent’s vice-president, explained the problems created by the joint tenancy agreements. Appellant said, according to the witness, “that he knew that his uncle had not intended that for himself individually, but that his uncle had not told him what he did have in his mind; that he felt that his uncle had intended that that money should be used for estate purposes. . . . ” Appellant was then told that if he wished to claim the property as his, “he would be in a very strong position”. He answered that “he did not care at all about that because he knew the property was not intended for him; that he did not expect to assert any claim about it, and therefore, whatever his technical rights might be, it was of no consequence to him”. The witness then testified to another conference a few days later at which he again raised the question of the possibility of conflicting interests of appellant and respondent, in view of the joint tenancy agreements, and again explained the case that could be made out in support of them. Appellant declared that “there could not be any doubt about it; that this money was not intended for him and he knew such to be the case”. Similar testimony was given by Mr. Seaman and Mr. Smith. As to the conduct of appellant, it is pointed out that he did not treat the contents of the safe deposit box as his own, made no claim to the property therein or to its proceeds, and neither asserted nor exercised any rights in the bank accounts; and that after the death of decedent, he participated in numerous conferences and in the business of administration of the estate, always recognizing the property as that of the estate, and making no personal claim thereto until some five months after the death.

Although we have selected the strongest testimony the record offers in this connection, its essential weakness is apparent. With the exception of the statement of the decedent adopted by appellant, which has been discussed above, the declarations consist exclusively of speculations or impressions as to what his uncle had in mind, and legal conclusions of appellant as to his own rights. The evidence of the conduct of appellant is of the same character; he did not “feel” or believe that he had any claim, and therefore did not assert any. It may be observed that appellant testified that he was somewhat concerned about the possible effect of such a claim on his rights as a distributee under decedent’s will, in view of the disinheritance clause therein. Regardless of motive, however, neither the declarations just recited nor the conduct of appellant can be said to add any particular strength to the admission discussed above.

The evidence regarding decedent’s knowledge of the legal effect of his act in signing the joint tenancy agreements is uncontradicted. Miss Lapic, in the safe deposit department, testified that decedent asked for a safe deposit box, stating that he would like to have appellant sign the contract with him; that she inquired whether he wanted appellant to sign as' agent, or whether he wanted a joint ownership contract; and that she then showed him the two different forms and he selected the joint ownership contract. She also testified that as a part of her regular routine duty she explained that under the latter form, upon death of one party the contents belonged to the survivor. Miss Noyes, a clerk handling new accounts, testified that decedent asked for the proper signature card to make his account a joint one with a nephew, and she gave him the proper card. Mr. Ralston, manager of the bank, testified that he asked decedent if he understood the difference between joint tenancy with right of survivorship and an authority to draw checks on "the account; and decedent' replied that he did.

This evidence is, of course, highly probative; and if the court had found in favor of appellant, the finding could not have been successfully challenged on appeal. Whether the opposite is true, that is, whether the present finding of the court has sufficient support in the single admission proved against appellant, and discussed above, is a difficult question. It is true that the determination of the intention of decedent from these conflicting statements was the task of the trial court; but it is almost incredible that decedent, a man of considerable business experience, if he did not intend a joint tenancy with right of survivorship, would deliberately choose the joint tenancy card in the face of the explanation given him by the bank employees. If it were necessary to our decision that we decide this point, we would hesitate before holding that proof of the deliberate choice of a writing expressing an intent to transfer property, with full knowledge of its nature and effect, could be overcome by a single statement attributed to decedent and suggesting an undefined purpose of “convenience” in “care” of decedent’s estate. But regardless of the strength or weakness of the evidence, it cannot be considered at all unless it can meet the objection of the parol evidence rule.

The parol evidence rule, as is now universally recognized, is not a rule of evidence but is one of substantive law. It does not exclude evidence for any of the reasons ordinarily requiring exclusion, based on the probative value of such evidence or the policy of its admission. The rule as applied to contracts is simply that as a matter of substantive law, a certain act, the act of embodying the complete terms of an agreement in a writing (the “integration”), becomes the contract of the parties. The point then is, not how the agreement is to be proved, because as a matter of law the writing is the agreement. Extrinsic evidence is excluded because it cannot serve to prove what the agreement was, this being determined as a matter of law to be the writing itself. The rule comes into operation when there is a single and final memorial of the understanding of the parties. When that takes place, prior and contemporaneous negotiations, oral or written, are excluded; or, as it is sometimes said, the written memorial supersedes these prior or contemporaneous negotiations. (See Civ. Code, see. 1625; Code Civ. Proc., sec. 1856; Harding v. Robinson, 175 Cal. 534 [166 Pac. 808] ; Rottman v. Hevener, 54 Cal. App. 474 [202 Pac. 329]; Estes v. Delpech, 73 Cal. App. 643 [238 Pac. 1085] ; Hanrahan-Wilcox Corp. v. Jenison Machinery Co., 23 Cal. App. (2d) 642 [73 Pac. (2d) 1241]; 5 Wigmore, Evidence, sec. 2400, p. 236; 3 Williston, Contracts, sec. 631; Restatement, Contracts, sees. 237-244.)

The theory of the trial court seems to have been that it was competent to introduce the evidence discussed above to show that though title passed to appellant under the joint tenancy agreement, it went to him in trust. The cases relied upon are those which hold that though a writing purports to make an absolute transfer, extrinsic evidence may be offered of a collateral agreement to hold the property as security, or in trust. (See Wigmore, supra, sec. 2437; Williston, supra, sec. 635.) This exception to the parol evidence rule is, of course, well settled; and the evidence might be admissible under such a theory, if it established a collateral agreement on appellant’s part to hold the property in trust. However the court’s finding in general terms of such an agreement is not supported by the record. There is evidence of some vague kind of trust intent and a subject matter; but a specific trust purpose was entirely lacking. Respondent suggests that it might be a “dry” or “passive” trust, or one to convey. But there is no clear showing of an intention to create either of these types, nor was there a designated beneficiary. There is no indication as to what appellant would be required to do if he were held to be a trustee of the property. The record contains suggestions, mostly derived from appellant’s own speculations, of an intention to have some payments made, or some things accomplished with the money; but no specific directions were given by decedent.

The most that can possibly be inferred from the evidence is that the decedent may have intended to create a trust, for some purpose, or for someone’s benefit, but failed to disclose that purpose, or the beneficiary, and therefore failed to create the trust. (See Estate of Ralston, 1 Cal. (2d) 724 [37 Pac. (2d) 76, 96 A. L. R. 953]; Wittfield v. Forster, 124 Cal. 418 [57 Pac. 219].) Since the question is one of admissibility of the evidence, the proof of a trust must be clear and convincing before it could be deemed sufficient to overcome the legal effect of the joint tenancy agreements. Here it is wholly inadequate.

The argument that appellant may be considered a constructive trustee simply begs the question. If an attempt were made to create a trust and the record showed the basic elements of intent, purpose, and subject matter, but it was unenforceable because of the statute of frauds or some other invalidating cause, the trustee could not keep the property individually, but would be declared a constructive trustee. This result, however, presupposes the establishment of the basic elements of a trust. Here the evidence is wholly insufficient to establish these elements, for the object or purpose of such a trust is entirely lacking. The record does not therefore support respondent’s claim that the written transfer in joint tenancy was accompanied by and subject to a collateral trust agreement. The writing creating the joint tenancy remains the sole competent evidence of the agreement between the parties, and respondent’s assumption of an unproved trust agreement as the basis for the further, assumption of its breach, as ground for imposing a constructive trust, must necessarily fail.

It follows that the findings of the trial court cannot be sustained. The evidence clearly establishes that decedent, not acting under fraud or undue influence, and with full knowledge and understanding of the legal effect of his acts, made transfers of personal property to himself and appellant in joint tenancy. The writings effecting the transfers were clear and complete in their terms, and the record does not contain sufficient evidence to bring the case within any of the exceptions to the parol evidence rule.

It therefore becomes unnecessary to give extended consideration to the provisions of section 15a of the California Bank Act. (Deering’s Gen. Laws, Act 652.) This statute provides that the making of a bank deposit in the form of a joint tenancy with right of survivorship shall be conclusive evidence of the intention of the depositors to vest title in the survivor. The agreement involved herein was made in the form contemplated by the statute, and in the absence of fraud or undue influence, which are recognized as exceptions under the statute, cannot be challenged by other evidence of intent. This statute applies, of course, only to the bank deposit. A question of some interest is raised by respondent as to whether subsequent fraud, consisting of a repudiation of a prior promise to hold the property in trust, may be fraud within the meaning of the statutory exception, on the analogy of cases involving the statute of frauds (see Notten v. Mensing, 3 Cal. (2d) 469 [45 Pac. (2d) 198]), and the constructive trust cases. (See Lauricella v. Lauricella, 161 Cal. 61 [118 Pac. 430].) Because the evidence does not show any fraud at all on the part of appellant, we deem it inappropriate to discuss the meaning and effect of the fraud exception to section 15a of the Bank Act.

The judgment is reversed.

Carter, J., Edmonds, J., Shenk, J., and Waste, C. J., concurred.

CURTIS, J., and HOUSER, J., Dissenting.

We dissent. We are unable to agree with the conclusion reached by the majority opinion reversing the judgment in this case. The statement of the appellant, testified to by the witness, J. C. Seaman, as to the purpose of his uncle in executing the safe deposit card and the two joint tenancy bank accounts, was binding upon him, and was clearly admissible to show the intent of the uncle in executing said instruments. (Fanning v. Green, 156 Cal. 279 [104 Pac. 308] ; Kyle v. Craig, 125 Cal. 107 [57 Pac. 791]; Wharton on Evidence, sees. 482, 508, 955; Snow v. Paine, 114 Mass. 520, 526; Barnhart v. Fulkerth, 93 Cal. 497, 499 [29 Pac. 50].) In the case of Kyle v. Craig, supra, p. 114, it is stated that, “It is earnestly contended that the court erred in allowing Bright to testify, under the objections of defendant, as to his intentions when he executed the deed and transfers of property to defendant. We think the testimony was competent and material. The intentions and motives of Bright were the material matters being investigated. ■ In such eases the universal rule is to receive the witness’ testimony as to his intentions.”

This evidence was sufficient to support the finding of the trial court that these documents were executed for the purpose of facilitating the settlement of the uncle’s estate and not as executed gifts in favor of appellant. It is true that this evidence is not undisputed but the trial court resolved the conflict therein in favor of the respondent. In addition to the above statement of appellant, his acts and conduct immediately subsequent to his uncle’s death tended to show that his understanding of his uncle’s intention in the execution of those documents was simply to facilitate the settlement of said estate. In our opinion the judgment of the trial court should be affirmed.

Rehearing denied. Houser, J., voted for a rehearing.