text:
    [Sac. No. 4751.
    In Bank.
    June 28, 1934.]
    In the Matter of the Estate of ADAM PUTNAM, Deceased. W. M. PUTNAM, Respondent, v. WELLS FARGO BANK & UNION TRUST CO. et al., Appellants.

      Heller, Ehrman, White & McAuliffe and Martin Minney, Jr., for Appellants.
    H. C. Nelson and J. F. Quinn for Respondent.
   SHENK, J.

Adam Putnam died on June 24, 1930, at the age of about eighty-two years. He was a resident of Ferndale, Humboldt County, and left real and personal property of the value of nearly $300,000. Two children survive him, a daughter, Edna Putnam, and a son, the contestant, William Mason Putnam. The decedent made a will dated November 15, 1927, and a codicil thereto dated October 19, 1928. These instruments were filed for probate. The son, W. M. Putnam, filed an opposition to the probate thereof, alleging general insanity sufficient to deprive the decedent of testamentary capacity, and insane delusions directly affecting the testamentary acts. Answers to the opposition were filed by the contestant’s son, W. M. Putnam, Jr., a legatee under the will; by the Wells Fargo Bank & Union Trust Co., named as executor and trustee therein; by Edna Putnam, the decedent’s daughter, and by Mabel C. Putnam and Thomas M. Putnam, Jr., cousin and grandnephew, respectively, of the decedent, who also are legatees under the will. Testimony on both issues were received. A motion for a directed verdict was made on behalf of the proponents and denied. The jury found that the decedent was not of sound and disposing mind when the will and codicil were executed. The proponents moved for a judgment notwithstanding the verdict, which was denied. A motion for a new trial was denied. The persons answering said contest and opposition, who will be called the proponents, appealed from the judgment entered on the jury’s verdict and from the order denying their motion for judgment notwithstanding the verdict.

Adam Putnam was born in Nova Scotia in 1847 and became an orphan at the age of four years. He came to Humboldt County, California, when he was about seventeen years of age and pursued the business of ranching and cattle raising. He was industrious, thrifty and energetic. In the course of years he acquired several ranches and dairy properties. In 1875 he married the daughter of “Dickey” Johnston and settled in Ferndale, where, in 1879, 1881 and 1882, two sons and a daughter were born. One son, Ed, predeceased the testator. In 1893 the decedent had accumulated a fortune and in that year participated in the organization of the Ferndale Bank, of which he was president until the time of his death.

By his will the decedent made the following disposition of his property: He devised and bequeathed the home in Ferndale with its furnishings and his automobile to his daughter, Edna. All of the rest of his property and estate he devised and bequeathed to Wells Fargo Bank & Union Trust Co., as trustee, to collect and pay the income thereof to the following persons: To Edna, his daughter, $500 per month during her lifetime; to his son, the contestant herein, $250 per month during his lifetime; to his grandson, W. M. Putnam, Jr., the sum of $25 per month during his life; to Bertha Johnstone, Mabel Putnam, Thomas M. Putnam, Jr., and Amelia Weir, each the sum of $25 per month during life; to the Ladies Club of Ferndale, $25 a month for a period of five years; to a specified cemetery, $50 a year for the care of the graves of the testator’s parents. Pie directed that in case the income became insufficient to make the foregoing payments, they should be made from principal. All the rest of the income and profit from the estate and the income payable to each beneficiary upon his death or otherwise were to be paid to “such societies and corporations in the state of California as are maintained mainly for the benefit and relief or uplift of the orphans of the state of California as my said trustee may, in its discretion, from time to time select as being worthy of assistance, in such amounts and in such manner as said trustee may in its discretion determine”. The instrument contains a provision that any amount so left for the benefit of orphan institutions which shall be in excess of legal limitations shall vest in the decedent’s heirs at law in accordance with the laws of succession then in force. The testator forgave all unpaid loans stated to have been made to his son W. M. Putnam, and canceled promissory notes signed by his son evidencing such loans. There is a provision against the validity of any assignment or garnishment of the income in the hands of the trustee, and a provision for the payment of inheritance and other taxes out of the residue. By the codicil the bequest of a life income to W. M. Putnam, Jr., was increased to $50 a month.

In presenting this appeal the proponents assert an absence of any evidence in the record to the effect that the testator was not capable of transacting his business affairs until shortly before his death and they rely on evidence which shows that despite the testator’s daily use of intoxicating liquors during the latter forty years of his life, he continued as president of the Ferndale Bank and was capable of handling business affairs intelligently; that he was aware of the extent of his property and of the objects of his bounty and the relationship in which he stood toward those who had claims upon him, and was in fact an unusually intelligent, shrewd and energetic man despite his advanced years; and that until his last illness, which commenced a few weeks before his death, he went every day to attend to his business affairs at the bank. On the issue of general insanity the contestant relies mainly upon the habitual use of intoxicating liquors by the decedent, and the effect which the use thereof is stated ordinarily to have upon the physical and mental powers of the user. It may be said at the outset that the evidence is insufficient to support the claim of general insanity. There was no showing that because, of the use of intoxicating liquors the decedent had become so weakened in his physical and mental powers that he was incapable of the testamentary act. Although it was in evidence that he collapsed at the preliminary conference with the trust officer of the Wells Fargo Bank & Union Trust Company, whom he requested to assist him in the preparation of his will, no showing was made or attempted that he was under the influence of intoxicating liquor at that time or when he executed the will and codicil, or that his habitual use of intoxicating liquor had any bearing upon the testamentary act. Nor was there any showing that the testamentary act was influenced by the cause of death, stated to have been arteriosclerosis, accentuated by influenza which attacked him a few weeks before death. On this state of the record the presumption of general sanity has not been overcome. (Estate of Fraser, 177 Cal. 266 [170 Pac. 601]; Estate of Russell, 189 Cal. 759, 770 [210 Pac. 249]; Estate of McDonough, 200 Cal. 57, 67 [251 Pac. 916].)

If the verdict may stand, it must necessarily be supported by the evidence relating to the second ground of the contest, viz., that the testator was laboring under an insane delusion with respect to Ms children and directly affecting the testamentary act. There is no substantial conflict in the evidence introduced in support of and in opposition to this ground of contest. The question is whether the undisputed acts and conduct of the decedent evidence an insane or any delusion in fact. It may be conceded that the beliefs and opinions' which the testator held respecting Ms children influenced the disposition of his property as to them. It is the proponents’ contention that the record discloses more than sufficient evidence to serve as a foundation of fact for such beliefs and opinions which removes them from the realm of being insane or any delusion in fact.

The contestant insists that the testator was possessed of an insane delusion which he described as an unexplained, intense and unwarranted hatred and hostility toward Ms wife and her blood relatives, particularly the contestant; an unfounded and fixed belief that Ms children were worthless and incompetent; that they had “too much Johnson” and that they had no Putnam blood in them; an unfounded and fixed belief that whoever might marry his children had designs only on the testator’s property and were awaiting his death to get hold of it; an unwarranted, unfounded and fixed belief that his children were spendthrifts and would dissipate and squander his estate within three years after his death and become public charges.

The following facts are claimed to support the foregoing statement: When Mason and Ed were boys, on one occasion the father beat them so severely with a cane that blood was drawn on Ed’s leg. In 1916 or 1917 one witness saw Adam Putnam as he was walking from his home turn around and shake his clenched fist in the direction of his house and utter an opprobrious epithet. It was in evidence that Putnam repeatedly stated that Edna had no business ability and showed a lack of judgment in handling business matters; that he spoke of his children as being all Johnston, and that there was no Putnam blood in them; that neither his wife nor any of the Johnstons was any good; that he had no use for Mason’s present or his divorced wife; and that he cursed Allison, a friend of Edna’s whom he accused of waiting for him to die so that he could get part of the Putnam estate; that he talked around town of Allison and his intentions, also cast reflections upon the relations between Allison and his daughter until he was admonished by one witness that he was killing his own daughter by his unfounded remarks. After he made his will he wrote to the bank requesting that if it be in order a codicil to his will be prepared to provide against Allison’s ever obtaining anything from the bequest to Edna.

On many occasions, beginning as early as 1905, Putnam, in the presence of others, made disparaging and profane remarks to his wife about her family which caused her to leave the room and weep. He accused his wife of being too much like her father “Dickey” Johnston, who was concededly honest but not much of a business man, and of spending all the money she could get her hands on. It was in evidence that the effect of liquor would make the decedent more cross and overbearing. He often stated that his children had no capacity for handling money; that Mason had no business ability; that there was too much “Dickey” in him; that he would not let any of them handle his money, and that his children would only squander his money. He often said that his children were “no good”, were spendthrifts, had too much Johnston blood in them, and were a “barrel of expense” and worthless. He had been heard to state frequently that he was not going to leave the boys anything because they did not know how to spend money, and that to speak to him about the Johnston family was like waving a red flag in front of a bull; that on one occasion he became so angry he was livid and trembled when the witness disagreed with him on the subject; that on another occasion he turned red in the face and gritted his teeth when he stated that there was “too much damned Johnston”; that he often became profane in connection with the subject; that on another occasion he jumped on his hat; and that he jumped up and down and gritted his teeth; and that on occasions he came home drunk.

He spoke unkindly to Edna about her friend Allison and his intentions and caused her to cry on several occasions. On other occasions he was heard talking and arguing on the subject in his room when no one else was present. Prior to the making of his will he had announced to witnesses that he was going to put his property in trust for the benefit of his children and inasmuch as he had been an orphan he would leave the rest to orphan asylums, that his own children would squander the money; that Allison was hanging around Edna only to get his money; that Edna was no longer of an age when a man would be likely to marry her for herself alone; that Mason’s wife was an adventuress; that he did not care if the orphans squandered it, but he would fix it so his own children w’ould not squander it.

The following further undisputed facts appear: Putnam placed Mason in Tamalpais Military Academy in San Eafael for two years before he reached his majority. Thereafter Mason attended business school in Eureka. In 1902 he started working for his uncle at the Bayside Lumber Co. in Humboldt County at $40 a month as a bookkeeper. About this time he took out a $5,000 life insurance policy on which his father paid the initial and most of the subsequent premiums. During this time his father apparently objected to some associates of Mason’s whom the latter appeared to be assisting financially. Mason in answer to such objections wrote to his father that he was not proud of such associations, but that he realized he had obtained all the advantages he could expect from his parents and would look for no further financial assistance from his father. During this period Mason continued to visit the family during week ends.

In 1906 Mason went to Alaska and worked in copper mines, for a time underground and later as a bookkeeper and accountant, until 1911. During this period he sent between $3,000 and $4,000 to his father. Before he left Alaska he became interested in the fur business and with two others took a lease on Green Island for the purpose of raising fur-bearing animals. In 1911 "he returned to California and lived in the Putnam family home in Oakland. He began drawing on his credit with his father and by November of that year had used up his savings. In that year he married Nina Putnam and continued to live in the Putnam home in Oakland. In 1911 and 1912 he obtained sums of money from two of his uncles and from a third party on his promissory notes for $350, $125 and $250. In June, 1912, he borrowed $1,055 on the life insurance policy, $400 of which he turned over to his father to discharge a note executed to Professor T. M. Putnam of Berkeley, and went back to Alaska with his wife. The fall of that year was spent on Green Island. That venture, representing an investment of $700 to $1,000, was sold out for $1,200. Thereafter • until 1915 he and his wife lived at Kachemak Bay without income, engaged in hunting and fishing expeditions. Mason and his father continued to correspond and Adam Putnam was advised of these activities. In fact, Mason continued to write to his father in affectionate terms during the latter’s lifetime and kept him informed of his activities and the details of his domestic life.

Mason borrowed money in Juneau in the spring of 1915 and he and his wife returned to the family home in Oakland. Mason spent part of that year in an attempt to raise money for a fox propagating venture in Alaska and a corporation was organized for the purpose. Nothing came of it and Mason never returned to Alaska. From this time and while he was looking for work.he incurred numerous debts, borrowed money and gave his notes, many of which his father discharged. Professor Putnam, to whom Mason went for assistance, often acted as a sort of intermediary between Mason and his father. At Adam Putnam’s request he obtained information as to Mason’s indebtednesses, including an amount which had been advanced to Mason to pay his transportation to Florida to take a position which had been offered him and which money he had spent. Professor Putnam discharged these obligations with money sent to him by the decedent. All of the details of this period and all of the correspondence between Mason and his father and the decedent and T. M. Putnam need not be recounted. During the Christmas holiday of 1915 Mason worked at Hale’s in San Francisco at $15 per week. About March, 1916, he was employed as a bookkeeper by the Pacific Gas and Electric Company in San Francisco at a salary of $75 a month. From this time Mason visited the home at Ferndale during summer vacations and Christmas holidays. A son, W. M. Putnam, Jr., was born to the Mason Putnams in 1918. Prior to the birth of the child Nina Putnam worked for three months to obtain money to pay for the child’s layette and clothes for herself. After the arrival of the baby the family sent down from Ferndale boxes of food. Periodically as a birthday gift Adam Putnam purchased a suit of clothes for Mason.

In 1923 Nina Putnam divorced Mason on the ground of nonsupport. Nina discussed with Adam Putnam her difficulties with Mason and the regularity of week-end drinking parties at their apartment over a period of eight years. Adam Putnam paid the expenses of the divorce and paid also the expenses of three operations performed on the child. At this time Mason was receiving a salary of $165 a month. So far as the record shows he has continued in the employment of the Pacific Gas and Electric Company. In 1923 Adam Putnam investigated Mason’s chances for advancement in the company and received a report from its then president that Mason could not be advanced inasmuch as he showed no executive ability. In 1926 Mason married Mrs. Strange.

The foregoing is but a portion of the testimony with which the record is replete and which the proponents contend supports any belief which Adam Putnam possessed that Mason had no business ability and was incapable of any wise handling of money. His lack of knowledge of simple business transactions, despite his bookkeeping and accounting experience, is indicated by his own testimony.

It was in evidence that Edna Putnam, who always lived at home and managed the household after her mother’s death, had extravagant tastes, and although Adam Putnam often complained of them, he nevertheless was indulgent by giving her expensive automobiles, a $1450 Steinway piano and a $2,150 diamond ring. He took her on trips to the Orient and elsewhere, even when her mother was living, and gave her shares of stock and Liberty Bonds, bought her a one-half interest in a gasoline service station, and allowed her to spend nearly $10,000 in remodeling and refurnishing the home at Ferndale.

It appears that as early as the year 1915 the decedent formed the intention of leaving his property in trust. In that year he wrote to Professor Putnam asking him to act as a trustee under his will.

From the foregoing brief statement and other evidence in a voluminous record, it is obvious that there was abundant ground to support a normal parental belief that the children were incapable of the wise handling of large amounts of capital. It cannot be said that the will is unnatural in view of the evidentiary facts. No case is cited by the contestant which goes so far as to hold that when a foundation in fact for the testator’s belief is disclosed, such belief constitutes an insane delusion, or any delusion at all. The cases are to the contrary. The only reasonable conclusion from the record before us is that the testator was possessed of a parental belief, not abnormal or unfounded under the facts, relating to his son’s ability to handle money, and that he took steps to protect him with an income adequate to his needs in addition to his own earnings for the balance of his life. Even though there may have been discord in the family during the decedent’s lifetime or even injustice in the division of income between the children, that alone would not be sufficient to set aside a will executed by one in full possession of his mental faculties and otherwise competent to make a will. An insane delusion has been defined to be the conception of a disordered mind which imagines facts to exist of which there is no evidence and the belief in which is adhered to against all evidence and argument to the contrary, and which cannot be accounted for on any reasonable hypothesis. “One cannot be said to act under an insane delusion if his condition of mind results from a belief or inference, however irrational or unfounded, drawn from facts which are shown to exist.” (Estate of Scott, 128 Cal. 57, 62 [60 Pac. 527]; Estate of Shay, 196 Cal. 355 [237 Pac. 1079]; Estate of Perkins, 195 Cal. 699 [235 Pac. 45]; Estate of Powell, 113 Cal. App. 670 [299 Pac. 108].) The facts in this case do not meet the tests prescribed by our law and are inadequate as a foundation for setting aside the testamentary acts in question.

The judgment is reversed. The order denying the motion for a judgment notwithstanding the verdict is reversed.

Preston, J., Langdon, J., Curtis, J., and Waste, C. J., concurred.

Rehearing denied.


source: Caselaw Access Project

author: SHENK, J.

license: Public Domain

text:
    [L. A. No. 14049.
    In Bank.
    June 28, 1934.]
    BANKERS TRUST COMPANY (a Corporation), Appellant, v. FRANCES WEST PATTON et al., Respondents.

      Overton, Lyman & Plumb for Appellant.
    Everett W. Mattoon, County Counsel, S. V. 0. Prichard and Beach Yasey, Deputy County Counsel, Libby & Sherwin, Warren E. Libby, Roane Thorpe and Louis Thomsen, for Respondents.
   SHENK, J.

This is an appeal from a judgment in favor of the defendants in an action to impress a trust upon certain real property or the proceeds thereof.

Pending trial in the action and pursuant to stipulation the real property was sold and the net proceeds of the sale impounded with the clerk of the court subject to the judgment of the court. After judgment for the defendants was rendered and before notice of appeal was filed, the defendant Prances West Patton, through her counsel the defendant Louis Thomsen, withdrew the proceeds represented by two warrants, one drawn to the defendant Thomsen in the sum of $506 as attorney fees allowed by the court, and the other in the sum of $2,609.71, in favor of the defendant Frances West Patton. An order to show cause why the moneys should not be restored, directed against the county clerk, the county auditor and the county treasurer, was discharged. The plaintiff also has appealed from that order and has joined said county officers as respondents in that appeal.

Chase West and the defendant Prances West Patton were the surviving children and the only heirs at law of Mary Chase West, who died on March 2, 1930, a resident of Des Moines, Polk County, Iowa. Prances West Patton and Chase West were appointed by the District Court in Iowa as the administrators of the estate. While the estate in Iowa was in course of administration and on March 24, 1930, there was filed on behalf of the defendant Prances West Patton, in the county of Los Angeles, her petition for letters of administration for the purpose of administering on certain real and personal property here belonging to said estate. The defendant Prances West Patton did not disclose to the probate court in Los Angeles County that the estate of Mary Chase West was also in process of administration in Iowa, nor any of the other facts the failure to disclose which is claimed by the plaintiff to constitute a fraud by said defendant as against the plaintiff, who was a creditor of the estate in Iowa.

On November 14, 1930, the defendant Prances West Patton filed her first and final account in the probate proceedings in Los Angeles County and her petition for distribution to her as the assignee and sole distributee of the property in this state belonging to the decedent. Her account and report were settled and allowed and a decree of distribution in accord therewith was granted on December 1, 1930. That decree became final. The present action was filed on January 28, 1932. The plaintiff herein sought to have the defendants Prances West Patton and Louis Thomsen, who acted as her attorney in the administration proceedings in Los Angeles County, declared trustees and to have the proceeds from the sale of the property in this state, without deduction for administratrix’s or attorney’s fees, transmitted to the probate court in Iowa for adminisration in the proceedings pending therein. The complaint alleged facts which admittedly disclose that the estate in Iowa is insolvent and that the assets there are insufficient to pay all of the allowed claims of creditors. As grounds for the relief sought the plaintiff charged that the defendant Prances West Patton intentionally and wilfully concealed from the probate court in Los Angeles County the fact of the administration of the estate in Iowa and the fact of its insolvency, which the plaintiff contends constituted a fraud against it and other creditors in Iowa.

The trial court found that the defendant Prances West Patton did not wilfully or intentionally conceal any facts in connection with either of said estates which she was by law required to disclose or state, but that she at all times acted in good faith; that she believed in good faith at the time of filing said account and at the time of distribution of the California estate and at all times involved that the assets of said Iowa estate were and would be sufficient to pay all Iowa claims including the claim of the plaintiff herein.

It may not be seriously questioned that the case alleged by the plaintiff is one which, if proved, would afford it the relief sought. It is assumed that the wilful suppression in bad faith of material facts in probate proceedings by which the plaintiff and other creditors would be deprived of property and assets to which they would otherwise become entitled in satisfaction of their claims would constitute an extrinsic fraud against which equity could grant relief by discharging the distributees as trustees, even though the decree of distribution itself be not disturbed. (Estate of Hudson, 63 Cal. 454, 457; Wickersham v. Comerford, 96 Cal. 433 [31 Pac. 358] ; Curtís v. Schell, 129 Cal. 208 [61 Pac. 951, 79 Am. St. Rep. 107].) We indulge this assumption without discussion of what might have been done under section 1040 of the Probate Code if the facts herein had been disclosed to the court in Los Angeles County at the time distribution was ordered. A discussion of that question is unnecessary in view of the determination of other questions presented.

The principal question for determination is whether certain findings of the trial court are supported by the evidence. These findings are that Frances West Patton did not know, on December 1, 1930, when the decree of distribution was made, or at the other times herein involved, that the assets of the estate in Iowa were or would be insufficient to satisfy the claims of creditors in Iowa, but that she believed in good faith at all of such times that the assets of the estate in Iowa were and would be sufficient to pay all Iowa claims including the claim of the plaintiff, and that she did not learn of the plaintiff’s deficiency judgment until subsequent to December 1, 1930. Under the particular facts of this case the question whether the defendant Frances West Patton was acting in good faith was primarily for the trial court to determine; and if there is support in the evidence for its conclusion, i. e., unless it be shown that there is no substantial evidence to support the conclusion that she did not know, or unless it be shown as a matter of law that she should have known the facts, the judgment may not be disturbed.

The Iowa estate of Mary Chase West consisted of real and personal property. The personal property was sold on March 28 and October 7, 1930, for a total sum of approximately $5,100. It was stipulated that in the course of administration in Iowa, claims against the estate totaling $13,691.85 were filed and allowed. Of this sum $9,333.07 represented deficiency judgments under mortgage foreclosures. The balance of $4,358.78 represented general claims against the estate. The plaintiff held a mortgage in the sum of $10,000 on a piece of property belonging to the estate the value of which, at the time of taking the mortgage, it had appraised at the sum of $27,000. A mortgage for $35,000 held by Penn Life Insurance Company on a portion of the real property was foreclosed on September 10, 1930, and a sale under foreclosure held on November 1, 1930, and no deficiency judgment taken. The mortgage held by the plaintiff was foreclosed by decree on October 8, 1930, and at foreclosure sale held on November 15, 1930, one day after the final account in the California proceedings was filed, the plaintiff bid in the property covered by the mortgage at $5,000 and took a deficiency judgment in the sum of $5,833.07. The' balance of $3,500 of the claims represented by deficiency judgments is the amount of a deficiency judgment taken against the estate resulting from a foreclosure sale, held on January 17, 1931, of property which the decedent prior to her death had conveyed to her son subject to a $15,000 mortgage, and which was sold under foreclosure for the sum of $12,500.

The defendant Prances West Patton arrived in Iowa in January, 1930, and remained there until October of the same year, when she came to California and has not since returned to Iowa. Notice to creditors in the California proceeding was duly published. Prances West Patton has not been charged with, and she is not chargeable with, any act to prevent the plaintiff’s acquiring knowledge of the California proceedings, nor any act calculated to mislead the plaintiff or to prevent it or the other creditors acting in accordance with their best interests in respect thereto. On the contrary, it appears that the plaintiff had actual knowledge of the administration in California but filed no claim in the probate proceedings here. It further appears that at the time petition for letters of administration was filed in this state, there existed a $7,500 mortgage against the real property to be administered which was owned by six members of the Chase family, including Chase West and the defendant Prances West Patton, through administration of the estate of Charles Chase in Iowa. The defendant Prances West Patton was able to settle the claims of all owners of the mortgage and discharge the lien on the real property for the total sum of $1,064.

The record supports the trial court’s conclusion that neither of the coadministrators of the Iowa estate had actual knowledge, or sufficient information which as a matter of law might be said to give them notice, of the plaintiff’s intention to take a deficiency judgment under its mortgage. In some respects the evidence is conflicting, but it cannot be said that the findings of the trial court that the failure to inform the probate court here was neither wilful nor in bad faith are without support in the evidence.

The cases relied upon by the plaintiff do not compel a different conclusion. In those cases, such as Wickersham, v. Comerford, supra, Curtis v. Schell, supra, Sohler v. Sohler, 135 Cal. 323 [67 Pac. 282, 87 Am. St. Rep. 98] , and Simonton v. Los Angeles T. & S. Bank, 192 Cal. 651 [221 Pac. 368], acts clearly amounting to a wilful suppression of a material fact were involved. The plaintiff contends that the defendant Patton must have intended to do what she actually did, viz., fail to divulge the facts to the court in California, and that this state of her mind was sufficient to constitute a wilful suppression under the eases relied upon. There was, however, no absolute duty on her part under the provisions of section 1040 of the Probate Code to present the facts involved unless the failure to do so amounted to active suppression in bad faith, or other circumstances were present which would constitute such act or omission a fraud upon the plaintiff. Bad faith, therefore, was a necessary additional element under the facts of the case which must be shown before the defendant may be found guilty of any fraudulent act or omission as to the plaintiff so as- to charge her as a trustee. As stated, there is support in the evidence for the trial court’s conclusion on this phase of the case.

Furthermore, pursuant to said section 1040 of the Probate Code the plaintiff itself, had it so chosen, could have applied to have the court exercise the discretion vested in it. The plaintiff had actual knowledge of the condition of the probate proceedings in California from their inception and could have filed a creditor’s claim in the proceedings here. It did nothing until more than a year after final distribution and nearly two years after letters issued in this state, and after the mortgage on the real property in this state had been satisfied. On any view of the case, therefore, no compelling reason is presented which would justify us in disturbing a judgment that the plaintiff is not entitled to any equitable relief as against the defendant Frances West Patton.

This conclusion renders it unnecessary to consider the findings respecting the good faith of the defendant Louis Thomsen, as attorney for his co-defendant in the matter of the probate proceedings in this state. The record shows that his knowledge was no different from hers and no contention is made that he may be held to have acted in bad faith so as to be liable to the plaintiff, if the finding as to the good faith of his client be upheld. Inasmuch as the judgment must be affirmed, the same result would follow the order discharging the order to show cause.

Judgment and order affirmed.

Curtis, J., Preston, J., Langdon, J., and Waste, C. J., concurred.


author: CURTIS, J.

text:
    [S. F. No. 15114.
    In Bank.
    June 29, 1934.]
    MARIE VOORHEES, Petitioner, v. H. C. MORSE, as City Treasurer, etc., Respondent.

      Nowland M. Reid, City Attorney, Geo. W. Trammell, Jr., Assistant City Attorney, and John 0. Palstine, Deputy City Attorney, for Petitioner.
    Denio, Hart, Taubman & Simpson and Matthew C. Simpson for Respondent.
   CURTIS, J.

On January 17, 1934, the city council of the City of Long Beach passed and adopted ordinance No. C-1244, entitled, “An Emergency Ordinance Providing for the Registration and Redemption of Warrants Drawn upon the City of Long Beach; Providing for the payment of Interest upon Such Registered Warrants, and Providing for the Priority of the Payment of Such Registered Warrants.” On February 17, 1934, said city council passed and adopted Ordinance No. C-1251, amending Ordinance No. C-1244, which later enacted ordinance was entitled: “An Emergency Ordinance Amending Section One of Ordinanee No. C-1244 Providing for the Registration and Redemption of Warrants Drawn upon the Treasurer of the City of Long Beach; Providing for the Payment of such Registered Warrants, and Providing for the Priority of the Payment of such Registered Warrants.”

Ordinance C-1244 provided that whenever the city auditor of the City of Long Beach draws his warrant upon the City Treasurer of said city payable out of any fund in the city treasury and such warrant represents an amount in excess of the unapplied money in said fund, the city auditor shall, upon the date that such warrant is drawn, present such warrant to the City Treasurer, who shall indorse upon the back thereof the date of presentation by the city auditor and that the same is not paid for want of money in the fund upon which such warrant is drawn, and bears interest at the rate of six per cent per annum from date of registration to and including the date upon which the City Treasurer advertises that such warrant is payable upon presentation, after which indorsement the City Treasurer shall return such warrant to the city auditor for distribution. Thereafter whenever the city auditor deems that there are sufficient moneys in any fund in the city treasury upon which warrants have been drawn and registered to pay in the order of their priority, all or some of the registered warrants outstanding against said fund, together with interest thereon as provided, the city auditor shall notify the treasurer of such fact and of the number of warrants which can be redeemed. The City Treasurer shall immediately publish notice that such warrants are redeemable by advertising one time in the official newspaper of said city. Warrants registered in accordance with the provisions just recited shall cease to bear interest -on the date following said publication. Warrants registered as provided in said ordinance, together with interest thereon as provided in said ordinance, shall constitute a prior lien, in the order of registration of said warrants on any moneys thereafter received into the fund in the city treasury upon which such warrants are drawn, and such warrants and interest thereon as provided in said ordinance shall be paid in the order of their registration. It is further provided that such registered warrants shall not take priority over unregistered warrants drawn upon the same fund and outstanding at the time of such registration, and that the auditor shall furnish the treasurer a list of all unregistered warrants drawn and unpaid prior to the effective date of said ordinance. Upon the presentation of any registered warrant to the City Treasurer for payment, after said City Treasurer has published notice that such warrant is redeemable, the City Treasurer shall pay to the payee of said warrant, or his assignee, the amount for which said warrant is drawn, together with interest thereon at the rate of six per cent per annum from date of registration of said warrant to and including the date upon which said City Treasurer advertised that such warrant would be payable upon presentation, said interest to be paid from the city fund. It is further provided that “unapplied money” as used in said ordinance means money in any fund in the city treasury for which outstanding warrants have not been already drawn, and which would remain in such fund if all outstanding warrants drawn upon such fund were paid. Section 2 of said ordinance purports to set forth a statement showing that said ordinance was an emergency measure, and section 3 thereof provides that the city clerk should cause the same to be posted in three conspicuous places in said city and that it should thereupon take effect.

Ordinance No. C-1244 was amended by Ordinance No. C-1251 in two respects. The provision in Ordinance No. C-1244 that “whenever the city auditor deems that there are sufficient moneys in any fund in the city treasury upon which warrants have been drawn and registered to pay in the order of their priority, all or some of the registered warrants outstanding against such fund, he shall notify the city treasurer which warrants are to be redeemed,” was amended to read as follows: “Whenever from time to time, there are sufficient moneys in any fund in the treasury upon which warrants have been drawn and registered, to pay in the order of their priority, all or at least five or more of the registered warrants outstanding against such fund, together with interest thereon as herein provided, the city auditor shall notify the city treasurer of such fact and of the number of warrants which can be redeemed.” The other change made in Ordinance No. C-1244 by the amendment thereof by Ordinance No. C-1251 related principally to the fund out of which the interest on registered warrants should be paid. By Ordinance No. C-1244 this interest is to be paid by the City Treasurer from the city fund. By Ordinance No. C-1251 this provision was changed to read as follows: “ . . . said interest to be paid from the same fund out. of which the principal of said warrant is paid, and the city treasurer shall be entitled to credit for the amount of the interest so paid.” Section 2 of Ordinance No. C-1251 as to the emergency of said ordinance, and section 3 as to the effective date thereof are the same as those contained in Ordinance No. C-1244.

The petition herein set forth three distinct causes of action based upon three separate warrants drawn by the city auditor against the public welfare fund of said city and registered by said City Treasurer. The warrant set forth in the first cause of action was issued and registered under Ordinance No. C-1244, and those set forth in the second and third causes of action were issued under Ordinance No. C-1251. By her first cause, of action the petitioner seeks to compel the City Treasurer to pay the amount of said warrant out of the public welfare fund, together with interest thereon out of the city fund. By her second and third causes of action the petitioner seeks to compel the payment of two of said warrants, together with interest on the first of said warrants from the respective dates of their presentation, out of the public welfare fund of said city. The facts under which the petitioner asks payment of the warrant upon which the third cause of action is based differ materially from those under which payment of the other two warrants is demanded. This difference in the facts involving these warrants will be considered in detail when we come to the discussion of the third cause of action. A return of the alternative writ issued by the court on the filing of the said petition makes no denial of any of the alleged facts. The questions therefore presented for decision are purely questions of law.

We will, for reasons which we think will later appear in the course of the opinion, devote our attention in the first instance to petitioner’s second cause of action and the warrant upon which this cause of action is predicated. This warrant, as we have already, intimated, was drawn, registered and presented for payment under the provisions of Ordinance No. C-1251. The amount thereof was the sum of $66.25. It was issued by the city auditor upon the City Treasurer in payment of the claim of the Long Beach Community Hospital against the City of Long Beach. It bears date, February 17, 1934, and was drawn on the public welfare fund of said city. The amount stated in said warrant was at said time due, owing and unpaid from said City of Long Beach out of the public welfare fund to the payee therein named. At the time it was drawn it represented an amount in excess of the unapplied money in the public welfare fund in the city treasury of said city, that is, at the time said warrant was drawn there was not in said public welfare fund sufficient money to pay said warrant as well as all outstanding warrants drawn upon said fund. Thereupon, pursuant to said Ordinance No. C-1251, said city auditor, on said seventeenth day of February, 1934, and after the effective date of said ordinance, presented said warrant. to the said City Treasurer, who thereupon, on said seventeenth day of February, 1934, indorsed upon the back thereof the date of such presentation by said city auditor and that the same was not paid for want of money in said public welfare fund and that said warrant bore interest at the rate of six per cent per annum from the date of said indorsement to and including the date upon which the City Treasurer should advertise that said warrant was payable upon. presentation. Such indorsement, according to the terms of said Ordinance No. C-1251, constituted a registration of said warrant. Said warrant was the first warrant drawn upon said public welfare fund which was registered pursuant to said Ordinance No. C-1251 and was registered under registration No. A 13a. Prior to the registration of said warrant and prior to the effective date of said Ordinance No. C-1251, the City Treasurer had registered against said public welfare fund pursuant to Ordinance No. C-1244 thirteen warrants which were numbered consecutively A 1 to A13, both inclusive, all of which were outstanding and unpaid at the time of the registration of Warrant No. A 13a. After the registration of warrant No. A 13a by the City Treasurer it was returned to the city auditor and by the city auditor delivered to the payee therein named, who for a valuable consideration assigned and delivered the same to the petitioner herein, who was the legal and lawful owner thereof at the institution of these proceedings. On February 19, 1934, there were sufficient moneys in said public welfare fund to pay said warrant No. A 13a, together with interest thereon as provided in said Ordinance No. C-1251, as well as sufficient moneys to pay said warrants Nos. A1 to A 13, both inclusive, and also all unregistered warrants drawn upon said public welfare fund and outstanding at the time of the registration of any of the said above-mentioned registered warrants, and said moneys in said public welfare fund at said time had been properly apportioned to said fund. On said day the city auditor notified the City Treasurer of the condition of the public welfare fund as stated above and thereupon the City Treasurer, on February 20, 1934, gave notice by publication, pursuant to said Ordinance No. C-1251, that all such warrants, including warrant No. A 13a, were payable upon presentation to the City Treasurer of the City of Long Beach. On February 21, 1934, petitioner presented said warrant No. A 13a to the City Treasurer and demanded payment thereof together with interest thereon from date of registration to the date upon which said City Treasurer advertised that such warrant would be payable upon presentation, at which time there were sufficient moneys in said. public welfare fund to pay said warrant and said interest, as well as sufficient moneys to pay all warrants registered against said fund prior to the registration of warrant No. A 13a and also all unregistered warrants drawn upon said fund and unpaid at the time petitioner demanded payment of warrant No. A 13a. The City Treasurer then and there refused, and continues to refuse, to pay said warrant No. A 13a, or any part of the principal or the interest thereon.

In stating the grounds justifying the institution of this proceeding in the first instance to this court, petitioner alleges that the financial condition of the city treasury of the City of Long Beach is such and will so continue for some time that additional warrants totaling several hundred thousands of dollars will be drawn and must be registered awaiting the receipt of money in the city treasury sufficient to pay the same and that the same condition prevails in many if not all other municipalities in the state. From this and other statements contained therein, and in the return of respondent, and the briefs of the respective parties hereto, it appears that grave doubts existed as to the validity of the registration of warrants as provided in the ordinances ■herein referred to and particularly as to those provisions thereof which create a liability against the city to pay interest on said warrants after their registration. It further appears from these same sources that due to the economic conditions prevailing in the state it would be difficult, if not impossible, for many municipalities of the state to function as such unless the plan adopted by the City of Long Beach and set forth in said ordinances, or some plan similar thereto, can be devised and followed whereby such municipalities can meet the current expenses of maintaining and carrying on their governmental affairs. In fact, many of the municipalities of the state, including the city of Long Beach, have found themselves in the condition similar to. that which prevailed in the state by reason of which the last legislature found it necessary to enact legislation for the purpose of relieving the state’s financial distress. This legislation is contained in chapter 605 of the Statutes of 1933 (Stats. 1933, p. 1547) and is entitled, “An Act to add Section 441 to the Political Code, relating to the registration of warrants and the payment of obligations of the State to make an annual appropriation therefor, and to repeal an act entitled, ‘An act concerning the office of Treasurer of State, ’ approved March 16, 1855, and to declare that this act shall take effect immediately.” By this act the legislature provided a plan or scheme of registering warrants of the state when there were insufficient moneys in the state treasury in the several funds on which they were drawn to pay them at the respective date when they were drawn. A reading of this act will show that the plan or scheme provided by the state for the registration and payment of warrants and the payment of interest thereon when there were insufficient moneys in the state treasury to pay the same .is in principle practically the same as that adopted by the City of Long Beach and set out in Ordinance No. C-1251 of said city. This act of the legislature was before this court in the recent proceeding entitled Riley v. Johnson, reported in 219 Cal. 513 [27 Pac. (2d) 760]. It was held in the opinion in that proceeding that there was no provision in the Constitution prohibiting the registration of state warrants and the payment of interest on said unpaid warrants, and therefore the legislature had full power to provide for the registration and indorsement of warrants unpaid for the lack of funds and for the payment of interest on such unpaid warrants. Petitioner relies upon our decision in that proceeding and contends that a similar determination should be made in the present action.

The City of Long Beach is governed by a freeholders’ charter adopted and in effect long prior to the enactment of either of the ordinances involved herein. In said charter it availed itself of the provisions of the Constitution, sections 6 and 8 of article XI thereof, “to make and enforce all laws and regulations in respect to municipal affairs, subject only to the restrictions and limitations provided in” its charter. By the provisions of its charter the City of Long Beach has made itself independent of general laws in all matters of exclusively municipal concern, and its power to enact laws and regulations in respect to its municipal affairs is subject only to the limitations provided in its charter and in the Constitution. (Bank v. Bell, 62 Cal. App. 320 [217 Pac. 538] ; Civic Center Assn. v. Railroad Com., 175 Cal. 441 [166 Pac. 351].) It is conceded that regulations as to the registration of warrants for lack of funds and the payment of interest thereon are a matter of exclusively municipal concern. Any limitation upon the City of Long Beach to exercise this power, if any exists, must be found in the Constitution of the state or in the charter of said city.

The only section of the Constitution which respondent contends renders void or illegal the provision in Ordinance No. C-1251, providing for the payment of interest on unpaid warrants is section 18, article XI, which prohibits the incurring by a municipality of an indebtedness or liability exceeding the income and revenue for that year. Respondent argues that the obligation to pay the interest is unlimited in that it cannot be escaped so long as there are insufficient funds to pay all of said warrants, and that the period for which the city obligates itself to pay interest on said warrants may, and in all probability will, extend beyond the fiscal year, the revenues of which must be resorted to exclusively for the payment of the expenses incurred during said year. We are unable to agree with respondent in this contention. The interest is payable when there is money in the treasury legally applicable to the payment of the warrant, and if the warrant is to be paid out of the year’s revenues, as it is conceded it must be, so must the interest. • It was so held in Riley v. Johnson, supra. There we said, “The act contemplates but one payment by the treasurer with relation to any one warrant—one payment of an amount which represents principal and interest due.” Therefore, if the warrant must be paid out of the. year’s revenue in which the liability, which the warrant represents, is incurred, so must the interest. In our opinion, the ordinance contemplates payment of the registered warrants and the interest thereon only from such funds as might lawfully be applied to the payment of both the principal and interest of such warrant. We see no violation of the constitutional section above cited in any of the terms of the ordinance.

■Several sections of the city charter of Long Beach are cited by respondent in support of his contention that Ordinance No. C-1251 is invalid. The first of these cited sections is section 37a of the charter, which provides for the borrowing of money to pay warrants issued in the months of July, August, September, October and November of each year and to pay interest on the amounts borrowed at the rate of six per cent per annum. This section provides for an outright grant of power to said city to borrow money and pay interest thereon during certain months of the year. It limits the period of time during which interest may be paid to five months. It contains no express prohibition upon the city to borrow money at other times and pay interest thereon. The most that can be said is that there is an implied inhibition in the section against the city borrowing money and paying interest at any other times than those specified in said section. It must be admitted that this section of the charter is susceptible of such construetion.. But this section of the charter must be construed with other sections of the charter bearing upon the powers of the city in order to arrive at the intent of the charter as a whole. Section 25 of said charter expressly confers upon said city the power “To exercise all municipal and police powers necessary to the complete and efficient management and control of municipal property, and for the efficient administration of the municipal government.” The question very properly arises as to whether under these broad powers the city of Long Beach may not provide for the registration of its warrants and the payment of interest thereon when the money in the treasury is insufficient to pay said warrants at the time they were drawn. The crux of this whole proceeding is whether the city may .bind itself to pay interest on these outstanding warrants. Without a provision for the payment of interest, it would be difficult to satisfactorily dispose of them. Bankers and other investors would be slow to accept them without exacting a substantial, if not an unreasonable deduction from their face value. This would impose an undue hardship on the employees of said city and those furnishing needed supplies to the different departments of the municipality, and render it extremely difficult, and on occasions impossible, for the city to properly perform the duties imposed upon it by its charter and the Constitution of the state. As we have seen, the city by section 25 of its charter is given power to exercise all municipal and police powers necessary to the complete and efficient management and control of its municipal property, and for the efficient administration of the municipal government. In construing a charter provision no less comprehensive than section 25 of the charter of the City of Long Beach, the Supreme Court of the state of Washington upheld an ordinance enacted thereunder providing for the payment of interest on warrants registered and indorsed “not paid for the want of funds”. (State v. Stout, 43 Wash. 501 [86 Pac. 848, 10 Ann. Cas. 208].) In the face of the broad and comprehensive powers expressly conferred upon the City of Long Beach by the provisions of section 25 of its charter, taken in connection with the construction of a similar section by the Supreme Court of Washington, we feel justified in holding that such powers were not in any way limited by the provisions of section 37a of said charter.

There is no merit in respondent’s contention that said ordinance conflicts with sections 293 and 294 of the charter. Section 293 provides that said City of Long Beach shall not be bound by any contract except in certain cases not necessary to mention here, unless said contract is made in writing by order of the city council and signed by the city manager. Section 294 requires that all contracts with certain exceptions must be made by the city manager with the lowest responsible bidder. It further provides for the publication of notice calling for bids and the opening of said bids not .more than thirty days after such publication. It is apparent, we think,» that these sections of the charter have no application to a transaction involving the payment of interest on unpaid warrants of the city. If the agreement to pay interest may be treated as a contract, it is a contract that can only be made with one person, and that person is the holder of the warrant. In such a transaction there can be no competitive bidder, for no person other than the holder of the warrant has any interest, nor can he acquire any interest in said warrant by competitive bidding, or otherwise, except by consent of the warrant holder. It would, therefore, be an idle act to publish notice calling for bids, and to follow such procedure would simply entail an additional expense to the city without any compensating results. The law never requires an idle act, and it is not to be presumed that the framers of the charter ever intended to make applicable these sections of the charter to transactions like those herein involved in which no benefit whatever would result to the city, or to anybody else, by a compliance with their requirements.

It is next contended that said Ordinance No. C-1251 is void by reason of the fact that section 307 of the charter provides that no ordinance shall go into effect before the expiration of thirty days from the time of its passage. Section 45 of said charter provides for the passage of emergency measures to take effect at the time indicated therein. Ordinance No. C-1251 was passed as an emergency measure and in its enactment the city council complied with all the provisions of said section 45 of said charter relative to the passage of measures of that nature. There is no merit, in our opinion, in this contention.

Equally untenable is the point made by respondent that no interest can be paid on said warrant No. A 13a for the reason that no separate warrant was ever drawn for said interest. Certain sections of the charter provide that all public moneys belonging to said city shall be disbursed upon warrants drawn on the City Treasurer by the city auditor. There are certain exceptions to this requirement but they are not pertinent to any question involved in this proceeding. The warrant drawn and registered covered the principal sum due the payee therein. The interest thereon was but a mere incident to the principal and, in our opinion, no separate warrant was required to be drawn for its payments. The warrant when indorsed by the City Treasurer fixed the date at which the interest should commence to run, and the ordinance fixed the date when the interest ceased. The city council at the time it directed the warrant to issue intended that it should bear interest as provided in said ordinance. We think that under this state of facts it can well be said that the warrant as issued covered the interest as well as the principal.

Section 254 of the charter provides that, “On or before the fourth Monday of August in each year, the city council shall pass an annual appropriation ordinance which shall be based on the budget submitted by the city manager. The total amount of appropriations shall not exceed the estimated revenues of the city.” It is contended that the appropriation ordinance for the year 1933-1934 made no specific provision for the payment of interest on warrants nor did the budget submitted by the city manager. There is nothing before us which would substantiate this contention. The return of the respondent purports to set forth a portion of the budget for that year submitted by the city manager, and a copy of the appropriation ordinance enacted for that year. The appropriation ordinance for the fiscal year 1933-1934 set forth in respondent’s return shows an appropriation for “Department of Public Welfare, $44,790.” This item of $44,790 appropriated to the department of public welfare is not itemized either in said appropriation ordinance or in that portion of the budget set forth in said return. While it is true that the appropriation made no specific provision for the payment of interest on warrants it also appears that it made no specific provision for the payment of any other item of expense which the public welfare department might incur. The same may be said regarding the budget submitted by the city manager as shown by the portion thereof before us. Evidently it was not the custom of said city to require the items of appropriation to be itemized either in the budget or appropriation ordinance, and no provision of the charter has been called to our attention requiring that the items be itemized. This contention of the respondent cannot, therefore, be sustained.

Respondent’s final contention is that warrant No. A 13a cannot be paid because there was not sufficient moneys in said fund upon which said warrant was drawn to pay the same if the moneys now on deposit in such fund had been properly allocated. In support of this contention, respondent in his return states that the city auditor, after the registration of said warrant A 13a erroneously allocated to the public welfare fund a greater proportion of the public funds from the city treasury than by law should have been allocated to said fund, and that had the city auditor not made said erroneous allocation there would not have been sufficient moneys on deposit in said fund to pay said warrant when presented for payment. It appears, however, from said return that prior to the allocation of funds complained of, the city auditor had' not allocated to said fund the proportionate amount of public funds to which said public welfare fund was legally entitled. The return concludes with the frank statement “That the ‘Public Welfare Fund’ has not, however, received more than its proportionate share of all moneys allocated during this fiscal year, the earlier allocations having given the ‘Public Welfare Fund’ less than its proportionate share.” In view of this statement in the return, we think the contention of respondent that there was not sufficient money in the public welfare fund to pay said warrant cannot be sustained. Sufficient money was in said fund at the time said warrant was drawn and presented and the return of respondent shows that only its proportionate share of public moneys had been allocated to said fund during said fiscal year.

As a result of the foregoing discussion we conclude that there is nothing either in the state Constitution or in the charter of the City of Long Beach inconsistent with the terms of .said Ordinance No. C-1251, providing for the .payment of interest on warrants registered for insufficient funds. While this question has not been directly passed upon by the appellate courts of this state in any previous decision, the same question has been before courts of other jurisdictions with the result that it has invariably been held that in a chartered city in the absence of constitutional or charter limitations the city council has the power to provide for the payment of interest upon its registered warrants in the event the funds of the city are insufficient to pay warrants at the time they are drawn. (6 McQuillin, Mun. Corps., 2d ed., p. 85, sec. 2409; 2 Dillon, Mun. Corps., 5th ed., p. 1319, see. 867; 44 Cor. Jur., p. 1170, see. 4131; State v. Stout, supra; Alabama, etc. Ry. Co. v. City of Gadsden, 185 Ala. 263 [64 So. 91, Ann. Cas. 1916C, 573]; Shipley v. Hacheney, 34 Or. 303 [55 Pac. 971]; Merchants Loan & Tr. Co. v. City of Chicago, 264 Ill. 76 [105 N. E. 726].) These authorities are in accord with our own decision in Riley v. Johnson, supra, involving the right of the state to pay interest on registered warrants and in our opinion they announce the correct rule to be applied in the present proceeding. Ordinance No. C-1251 is, therefore, valid, and warrant No. A13a issued in pursuance thereof, together with the interest thereon as provided in said ordinance, is a legal claim and charge against the city of Long Beach, and it is the duty of respondent to pay said warrant together with said interest.

Warrant No. A3 involved in the first cause of action was issued and registered pursuant to Ordinance No. C-1244. The only difference between said ordinance and Ordinance No. C-1251 in so far as the present proceeding is involved is that in Ordinance No. C-1244 the interest on registered warrants was made payable out of the city fund, while in the amended Ordinance No. C-1251, this interest was made payable out of the fund upon which the warrant itself was drawn. Warrant No. A3 was one of thirteen warrants issued against the public welfare fund under Ordinance No. C-1244, and registered pursuant to said ordinance. Thereafter and when there was sufficient money in the public welfare fund to pay said thirteen warrants, together with interest thereon as provided' in said ordinance, and also to pay all unregistered warrants drawn against said fund, and the City Treasurer had published notice that said warrants were redeemable, the. city council ordered that a warrant be drawn in favor of the City Treasurer on the city fund for the aggregate amount of interest on said thirteen warrants. Such a warrant was so drawn by the city auditor, and delivered to the City Treasurer for the purpose of providing him with sufficient funds with which to pay the interest on said thirteen warrants. Thereupon the petitioner herein, who was the owner of said warrant No. A3 presented said warrant to said City Treasurer and demanded payment thereof, together with interest thereon as provided in Ordinance No. C-1244, and the treasurer refused to pay either the principal or interest of said warrant. The only reason assigned for the nonpayment of said warrant No. A3 and the interest thereon, in addition to those already considered in discussing the legality of warrant No. A 13a was that the interest on warrants issued pursuant to Ordinance No. C-1244 is made payable out of the city fund rather than the fund against which the original warrant is drawn. This point is relatively unimportant as Ordinance No. C-1244 has been amended so as to overcome this objection. It only affects the thirteen warrants drawn pursuant to said ordinance prior to its amendment, the interest on the whole number only amounting to $1.85. They were thus of comparatively small amounts. It is insisted by respondent that that part of said ordinance is invalid which directs interest on warrants to be paid out of the city fund rather than out of the fund upon which the original warrants were made payable. It is conceded that the City of Long Beach has provided a “City Fund”, and that there was sufficient money in said fund to pay said interest warrant at the time it was drawn and presented to the treasurer for payment. This fund covers various items of expenditures such as insurance and bond premiums, compensation insurance and refunds. The largest item, however, included in this fund, as shown by the budget recommendation for the fiscal year 1933-1934, was shown as “miscellaneous,” which then amounted to the sum of $100,000, or thereabouts. Evidently this fund was used largely, as the budget recommendation indicates, to meet miscellaneous items of expense not otherwise provided for by express appropriations. If this was its purpose, it would seem perfectly proper for the city council to draw on this fund to meet the interest on warrants, which could not be paid when issued on account of insufficient money in the funds on which they were drawn. There is no provision in the charter so far as we are able to ascertain that prohibits the use of said fund for that purpose. Ordinance No. C-1244 is not invalid for this reason. The other objections to its validity have already been considered and found untenable. We are, therefore, of the opinion that Ordinance No. C-1244 was a valid exercise of power by the city council of Long Beach and that warrant No. A3, together with interest thereon as in said ordinance provided, is a legal claim against said city and should be paid by the City Treasurer.

In the third cause of action petitioner asks that the respondent City Treasurer of the City of Long Beach be required to pay warrant No. A54, drawn in her favor by the city auditor against the City Treasurer. This warrant was registered subsequently to the fourteen warrants involved in the other two causes of action herein. It was drawn against the public welfare fund, and was registered for the reason that there was insufficient money in said fund to pay said warrant. At the time it was presented for payment, there was sufficient money in said fund to pay warrants Al to A13a, being the warrants involved in the first two causes of action herein, together with interest due thereon, and also sufficient money in said fund to pay all unregistered warrants drawn on said fund prior to the registration of said warrant No. A54. There was also at said time sufficient money in said fund to pay said warrant No. A54, but there was not during any part of the day on which said warrant No. A54 was presented for payment sufficient money in said fund to pay said warrant and also all of the warrants registered against said public welfare fund prior to the registration of said warrant No. A54. At the time said warrant was presented for payment by petitioner, the owner and holder thereof, said petitioner waived all claim for interest on said warrant. It will readily be seen that the point involved in this proceeding is whether petitioner was entitled to payment of warrant No. A54 when at the time she presented said warrant to the City Treasurer and demanded payment thereof, there was insufficient money in the public welfare fund, on which said warrant was drawn, to pay the same and also all of the warrants registered against said fund' prior to the registration of said warrant No. A54, notwithstanding the provisions of said Ordinance No. C-1251 pursuant to which said warrants were drawn requiring the payment of registered warrants in the order of their registration, rather than in the order of their presentation after such registration.

No provision of the city charter has been called to our attention which expressly places any restriction upon the power of the City of Long Beach through its city council, to provide for the payment of city warrants in the order of their registration. The charter of said city does contain a complete provision for the fiscal management and control of the city, but it is entirely silent upon the power of the city to create priorities in the payment of warrants. In the case of Riley v. Johnson, supra, 219 Cal. 513 [27 Pac. (2d) 760], this court upheld the act adopted at the last legislature providing for the payment of state warrants in the order of their registration. In the case of Pacific Gas & Electric Co. v. Cole, 32 Cal. App. 266, 274 [162 Pac. 435], the appellate court sustained an act of the legislature providing for the order of payment of registered warrants of reclamation districts. In other jurisdictions the question has uniformly been decided in favor of the exercise of such power by a municipality. (44 Cor. Jur. 1174; First National Bank of Northampton v. Arthur, 10 Colo. App. 283 [50 Pac. 738]; Eidemiller v. City of Tacoma, 14 Wash. 376 [44 Pac. 877] ; First National Bank of Buhl v. Village of Buhl, 151 Minn. 206 [186 N. W. 306]; Phillips v. Reed, 109 Iowa, 188 [80 N. W. 347].) We consider these authorities decisive of the question. It follows, therefore, that petitioner is not entitled to have warrant No. A54 paid until all prior registered warrants and all of said unregistered warrants against said public welfare fund have been paid.

Our conclusion as to the relief to be granted petitioner upon her three causes of action is that she is entitled to immediate payment of warrant No. A3, together with interest thereon pursuant to Ordinance No. C-1244, and also to immediate payment of warrant No. A 13a, together with interest thereon pursuant to Ordinance No. C-1251, but that she is not entitled to have warrant No. A54 paid at this time. It is, therefore, ordered that a writ of mandate issue as prayed for under petitioner’s first and second causes of action of her petition, but that said petition be denied as to the third cause of action and that petitioner take nothing by said third cause of action.

Preston, J., Langdon, J., Waste, C. J., and Shenk, J., concurred.


author: THE COURT.

text:
    [S. F. No. 15113.
    In Bank.
    June 29, 1934.]
    MARIE VOORHEES, Petitioner, v. MYRTELLE L. GUNSUL, as City Auditor, etc., Respondent.
    Nowland M. Reid, City Attorney, Geo. W. Trammell, Jr., Assistant City Attorney, and John 0. Palstine, Deputy City Attorney, for Petitioner.
    Denio, Hart, Taubman & Simpson and Matthew C. Simpson for Respondent.
   THE COURT.

This is a companion case to action S. F. No. 15114, entitled Marie Voorhees v. H. C. Morse, as City Treasurer of the City of Long Beach, this day filed (ante, p. 179 [34 Pac. (2d) 153]). By her petition, the petitioner herein asks for a writ of mandamus directed to the respondent as city auditor of said city commanding her to notify the city treasurer of said city of the fact that there were on the nineteenth day of February, 1934, and at the commencement of this proceeding, sufficient moneys in the city fund in the city treasury to pay all of the warrants outstanding against said fund on said nineteenth day of February, 1934, including warrant No. D-71, and to notify said city treasurer of the numbers of the warrants which could be redeemed by the application of said moneys in said city fund.

Petitioner at all times mentioned herein was. the owner of said warrant No. D-71. Said warrant was issued on the seventeenth day of February, 1934, in payment of a valid claim against said city pursuant to Ordinance No. C-1251 of said city, which ordinance and certain provisions thereof are referred to in detail in the opinion rendered in action S. F. No. 15114, above mentioned. At the time said warrant No. D-71 was issued there was not sufficient money in said city fund to pay the same and all other prior outstanding warrants against said fund. All necessary steps were taken as provided in said ordinance to register said warrant, and the same was on said seventeenth day of February, 1934, registered pursuant to the terms of said ordinance. Said warrant No. D-71 was at said time the only warrant drawn upon said city fund and registered pursuant to said Ordinance No. C-1251, and at the time of the demand hereinafter set forth no interest had accrued thereon. Thereafter there were sufficient moneys in said' city fund to pay said warrant, as well as all other outstanding warrants both registered and unregistered theretofore drawn upon said fund. Petitioner thereupon, and while there were sufficient moneys in said city fund to pay all outstanding warrants drawn on said fund, demanded of the city auditor that she notify the city treasurer that there were sufficient moneys in said city fund to pay all of the outstanding warrants drawn upon said fund, and that she notify said city treasurer of the numbers of the warrants which could be redeemed by the application of said funds thereto, and in particular that said city auditor notify said city treasurer that there were sufficient funds to redeem and that he should redeem said warrant No. D-71. The city auditor refused to .comply with said demand of petitioner. This proceeding was the result of said refusal and is brought to compel said city auditor to comply with said demand.

All questions raised by respondent in her defense to this proceeding were considered and decided by this court in the companion case of S. F. No. 15114, adversely to the contention of the respondent. Ordinance No. C-1251 of the City of Long Beach was held to be valid. A provision of said ordinance provides for the payment of registered warrants in the order of their registration. The validity of this provision of said ordinance was made a direct issue in said companion case, and determined adversely to the contention of the petitioner therein, who claimed that it was invalid and beyond the power of the City of Long Beach to enact. Nothing is to be gained by repeating here the discussion of the question found in said companion case. This provision of the ordinance makes it the duty of the respondent as city auditor to comply with petitioner’s demand. Being a duty enjoined by law upon the respondent as a public officer, its performance may be enforced by mandamus. (Sec. 1085, Code Civ. Proc.)

It is therefore ordered that the writ issue as prayed for.


author: WASTE, C. J.

text:
    [S. F. No. 15192.
    In Bank.
    June 30, 1934.]
    THE CALIFORNIA TEACHERS ASSOCIATION (a Corporation) et al., Petitioners, v. CHARLES J. COLLINS, as Registrar of Voters, etc., Respondent.

      J. M. Mannon, Jr., Allan P. Matthew, John 0. Moran and McCutchen, Olney, Mannon & Greene for Petitioners.
    John J. O’Toole, City Attorney, and Walter A. Dold, Deputy City Attorney, for Respondent.
   WASTE, C. J.

Petitioners apply for a peremptory writ of mandate, directed to respondent, ordering him to receive and file a section of an initiative petition which respondent refuses to accept upon the ground that it does not comply with the law, in that the “short title”, appearing on the top of each page after the first page of the petition, is not printed in eighteen-point gothic type, and exceeds twenty words in length. Respondent demurs to the petition.

The pages, after the first, of the petition tendered respondent for filing, contain, across the top, printed in twelve-point black-face type the following: “INITIATIVE CONSTITUTIONAL AMENDMENT, SUBMITTED DIRECTLY TO THE ELECTORS, MAKING STATE BOARD OF EDUCATION ELECTIVE; ABOLISHING SUPERINTENDENT OF PUBLIC INSTRUCTION, PROVIDING FOR DIRECTOR OF EDUCATION.” The Constitution (art. IV, see. 1) provides that initiative petitions proposing a law or amendment to the Constitution to- be submitted to the electors shall have printed across the top (first page) thereof in twelve-point black-face type the following: “Initiative measure to be submitted directly to the electors.” Such legend, in twelve-point type, appears on the initiative petition in this case, followed by the title and summary prepared by the attorney-general, as required by section 1197a of the Political Code. The statute (Pol. Code. sec. 1197b) provides that “across the top of each page after the first page of every initiative . . . petition or secuon thereof which may be prepared and circulated in accordance with law there shall be printed in eighteen-point gothic type a short title, in not to exceed twenty words, showing the nature of the petition and the subject to which it relates.” In this ease, the provision of the Constitution appears, from our examination of the first page, to have been correctly complied with. The requirements of the code section as to the pages “after the first page”, a matter on which the Constitution is silent, are not met, in the opinion of the respondent, as to the size of the type and the number of words used.

The requirements of both the Constitution and the statute are intended to and do give information to the electors who are asked to sign the initiative petitions. If that be accomplished in any given case, little more can be asked than that a substantial compliance with the law and the Constitution be had, and that such compliance does no violence to a reasonable construction of the technical requirement of the law. In two instances in the matter of the use of type on initiative petitions, the Constitution requires and permits the use of twelve-point type. One instance is noted above; the other pertains to initiative measures to be presented to the legislature. In the printing business, the size of type, as we understand it, is measured by a given number of points, there being numbered seventy-two points to an inch, “Twelve-point” type (the designation used in the Constitution) implies that when set up there will be six lines of type to an inch. “Eighteen-point”, as used in the statute (supra) implies that there will be four lines of type to the inch when set. In actual size there is a difference of but six-seventy-seconds of an inch. Only one with very poor eyesight would be unable to read a line printed in twelve-point type as readily as one printed in eighteen-point type. As to the first objection raised by the respondent, we are of the view there has been a sufficiently substantial compliance with the statute to require him to accept and file the petition.

The second objection, the use of more than twenty words in the “short title” appearing on each page after the first page of the petition, presents a more serious question, but one which we believe should be resolved in favor of petitioners in the present instance. At this point, let ns say that, in applying to this proceeding “the rule of substantial compliance,” we do so with the reservation that such interpretation as we have given must not be relied upon to determine every proceeding of similar nature. The procedure set up by the Constitution and the statute is simple, clearly expressed and may be exactly followed with little difficulty. “Substantial compliance” may be carried too far, in which case its application may not be relied upon to save carelessly or negligently prepared petitions.

In a recent proceeding in the District Court of Appeal of the Third Appellate District, the court applied the rule of liberal construction to the “short title” on an initiative petition then before it, and held that certain words included therein might “be disregarded as not descriptive for any purpose”. (Hunt v. Jordan, Secretary of State, Civ. 5192—June 11, 1934, 139 Cal. App. 200.) In the proceeding before us, the attorney-general was able to summarize the title of the proposed measure in seventeen words. We are of the view that the omission in the “short title” of the words “Constitutional Amendment” and the phrase “Submitted Directly to the Electors” would detract nothing from its descriptive feature. Therefore, regarding the inclusion of these words and the phrase as surplusage, we are of the view that the mandate of the legislature has been substantially complied with, and that the purpose of the “short title”, which is to prevent the deceiving of electors by the use of misleading pages and titles after the first page, which may strictly comply with the law, has been served. We are more strongly inclined to so hold in view of the fact that the present initiative petition was prepared and is being circulated in good faith, that many thousands of signatures thereto have already been secured, and the time is short within which the large number of required signatures can be again secured.

The demurrer is overruled. Let a peremptory writ of mandate issue as prayed.

Seawell, J., Tyler, J., pro tem., Shenk, J., Curtis, J., Preston, J., and Langdon, J., concurred.


author: PRESTON, J.

text:
    [L. A. No. 13819.
    In Bank.
    July 2, 1934.]
    A. M. ROSENFELD, Respondent, v. ROBERT MILLER, Appellant.
    Willcox & Judson, George A. Judson, Heatherly, Orloff, Katz & Lewis, F. W. Heatherly, Joe Orloff and Oregon Smith for Appellant.
    Loucks & Phister, Harry J. Miller, John Perry Wood and John F. McCarthy for Respondent.
   PRESTON, J.

Plaintiff, a real estate broker, brought this action against defendant, a manufacturer of curled hair., for a commission, founded upon a written authorization signed by defendant, dated December 20, 1929, and purporting to authorize plaintiff to “negotiate for a tenant” for a period of thirty days. The property involved was owned by defendant and was a vacant lot situated in San Pedro, California. It was proposed to cause to be erected thereon, at a cost of not less than $220,000, a theater building, with stores and offices in connection therewith.

The authorization went into some detail as to the character of the contemplated building, its seating capacity, the amount of the anticipated rentals, etc., and it contained the following further paragraphs: “(4) That all increases in taxes over the present tax on the portion of the building used as a theater shall be paid by the tenant.” “(7) In event a lease is closed in accordance with the terms of this authorization, I hereby agree to pay you a commission in accordance with the Schedule of Commissions now in use by the Los Angeles Realty Board. (8) Stores and other buildings to be constructed along Pacific Avenue and Third Street frontage shall be included in the original plans and specifications but this authorization is to include only that portion of the premises to be used as a theater.”

It should be noted that the above authorization was the last of a series of three such documents, the second and third being renewals of the first one, with perhaps some minor changes. During the thirty-day period mentioned, as well as during the terms of the previous letters of authority, plaintiff was in touch with the Pox West Coast Theaters, a corporation, as a prospective tenant for said proposed building. Thinking he had brought the parties to an agreement, a lease was prepared in December, 1929, by the attorney for defendant, the exact date not appearing. It was executed by defendant and his wife but upon presentation to the prospective tenant was by it rejected. Thereafter negotiations lapsed for a period of weeks—the exact time cannot be ascertained from the evidence. The testimony of plaintiff is in a confused state on this question but it is clear that a distinct period elapsed before renewal of any negotiations between the parties. Por instance, plaintiff testified:

“ ... I talked to Mr. Miller in a few days after the first lease was rejected. I didn’t come back afterwards and take it up with him in February.” Again: “After this conversation the next time I talked to Mr. Sturzenacker or Mr. Miller was at least a month or more before the last lease was signed.”; and “I don’t recall going down there and telling them I wanted to make another try and see if I could get another lease on the place signed.”

Defendant testified that following the rejection of the first proposed lease, plaintiff told him the deal was off. His wife testified that plaintiff did not renew the negotiations until some time in February. It is also undisputed that plaintiff did not seek a renewal of his letter of authority as had been his practice—a practice he himself said was to protect him, among other things, in his claim for commissions.

Later, in the first part of March, 1930, plaintiff secured from the prospective tenant a lease which ha*d been prepared by its attorneys and he again came in contact with defendant. On March 10, 1930, some four hours were spent in the office of defendant’s attorney in the consideration of this proposed new lease, plaintiff being at all times present and also a Mr. Suggerman, who represented the prospective lessee. At the close of this conference of four hours, defendant executed the lease appearing in the record. However, it had at least two material provisions which differed from the written authorization above referred to: First, paragraph 4 respecting the assumption of the increase in taxes by the lessee was eliminated and, second, the lease included the stores and offices as well as the theater. The term of the lease, too, was different.

The evidence also shows without substantial conflict that during said four-hour conference it was definitely understood that the expense of construction of the building, the commission of plaintiff for his services, and attorney and architect fees, as well as other expenses, would be paid solely and alone out of a construction fund to be secured by a loan upon the property. Plaintiff himself produced defendant’s attorney, who testified in this respect as follows: “The agreement was at the time this lease was drawn, that the plans and specifications and commission for Mr. Rosenfeld, if .any, were all to be paid out of the financing. My fee was to be paid out of the financing when it was obtained. . . . The agreement was that the loan as eventually received should be sufficient to cover the cost of construction and all expense. . . . The commission was to be paid out of the loan, but whether to be repaid I don’t know. ... In the final analysis it was said at that time that Mr. Miller was not to be out any money for financing expenses, plans or commission, or your fee, and that the financing on the building was to be sufficient to take care of all expenses. All expenses were to come out of the loan. A loan sufficient to take care of all expenses was to be secured.”

There is a conflict in the evidence as to whether plaintiff himself was to procure the loan but plaintiff nowhere in any of his testimony undertakes to controvert the plain testimony of the attorney, above quoted. That all expenses, including plaintiff’s commission, were to come from a loan, was also testified to by the architect and several other witnesses. The evidence is abundant that thereafter all parties, including the procuring agent, attorney and architect, engaged in diligent and constant efforts to secure suitable financing for this building but that they and each of them wholly failed. The building was never constructed. The attorney has not received his fee nor has the architect received his. Plaintiff, however, was more aspiring and brought this action, seeking thereby to bring into the proceedings his said written authorization, which, by its own terms, expired on January 19, 1930, some fifty days prior to the meeting of the minds of the parties or the execution of the lease evidencing same. Plaintiff had findings and judgment in his favor in the court below and defendant appealed.

Since the case of Wilson v. Sturgis, 71 Cal. 226 [16 Pac. 772], the general rule has been that unless the failure to secure a purchaser or lessee upon terms proposed and within the time provided is due to the “negligence, fraud, or fault”, of the owner, the agent may not recover upon Ms contract. This rule has been steadfastly adhered to as shown by the following cases: Zeimer v. Antisell, 75 Cal. 509 [17 Pac. 642], Ropes v. Rosenfeld’s Sons, 145 Cal. 671 [79 Pac. 354], Hicks v. Post, 154 Cal. 22 [96 Pac. 878], Brown v. Mason, 155 Cal. 155 [99 Pac. 867, 21 L. R. A. (N. S.) 328], and Cline v. Carpenter, 83 Cal. App. 792 [257 Pac. 459].

An exact parallel to the ease at bar is the case of Howard v. Burrow, 77 Cal. App. 4 [245 Pac. 808], a case where the plaintiff was denied a recovery even though, after expiration of the stipulated period of agency, he actually participated in proceedings which, it was assumed, resulted in a binding lease. In fact, the broker was named as the procuring cause in the written agreement between the parties. This court denied a petition for transfer in said cause.

Respondent, however, relies upon three eases to bring the present case within an exception to the above rule: Estes v. Hotchkiss, 63 Cal. App. 284 [218 Pac. 605], Umphray v. Hufschmidt, 73 Cal. App. 140 [2'38 Pac. 749], and Moore v. Borgfeldt, 96 Cal. App. 306 [273 Pac. 1114].

The case of Estes v. Hotchkiss, supra, is of no value in this inquiry as there, after the expiration of the time limit in the agency agreement and after the agent had performed later services in the matter, and secured a binding contract of sale and purchase, the defendant gave him a new letter of authority which confirmed and modified the previous agreement and it was upon this latter- agreement that a recovery was sustained.

The ease of Moore v. Borgfeldt, supra, is likewise of little importance, for there, during the life of the agency agreement, the agent produced a purchaser ready, able and willing to buy upon the terms imposed, but because the owner was not ready to carry out his part of the bargain, negotiations, in which the agent actively participated, were continued after the expiration of the prescribed time and said agent finally secured a sale upon better terms for his principal.

Under the doctrine of such cases as Twogood v. Monnette, 191 Cal. 103 [215 Pac. 542], the commission was earned during the life of the contract and whatever was said in the opinion about waiver was unnecessary to a decision.

The ease of Umphray v. Hufschmidt, supra, is predicated upon the fact that negotiations of the broker continued without interruption, with the sanction of the owner, and within a few days an agreement was made on substantially the identical terms named in the agent’s undertaking. It was there held in view of these two elements that a waiver was properly made.

But here, as already pointed out, the negotiations lapsed for a considerable time. The custom of renewing the agency contract was not indulged; the lease as finally executed differed materially from that contemplated by the letter of authority and at least elimination of the item of taxes made the lease more burdensome to defendant owner. But more than this, as also pointed out above, the express understanding with plaintiff was that unless a loan on the property sufficient for all purposes was secured, he was to receive no commission. Whether it had been previously so understood is immaterial, for it was then made plain that unless and until the deal was properly financed, plaintiff was not to receive any commission. It follows that the finding of the court that plaintiff performed the written contract is unsupported by any competent evidence. This conclusion makes it unnecessary to discuss the other points made by appellant.

The judgment is reversed.

Curtis, J., Langdon, J., Shenk, J., and Waste, C. J., concurred.

Rehearing denied.