author: SEAWELL, J.

text:
    [L. A. No. 15879.
    In Bank.
    December 21, 1937.]
    In the Matter of the Estate of WILLIAM A. RATH, Deceased. KENYON TUDOR FAY et al., Appellants, v. HARRY B. RILEY, as State Controller, etc., et al., Respondents.

      Henry O. Wackenbarth for Appellants.

      W. H. H. Gentry, Inheritance Tax Attorney, and Clyde C. Triplett, Assistant Inheritance Tax Attorney, for Respondents.
   SEAWELL, J.

This appeal is from an order fixing the amount of inheritance taxes to be paid upon devises made by the will of William A. Rath, deceased, to appellants, Kenyon Tudor Fay and Sheldon Paige Fay. Appellants are the nephews of Nellie Fay Rath, predeceased wife of the decedent.

On June 27, 1934, Mr. and Mrs. Rath entered into a written agreement whereby Mrs. Rath agreed to will four parcels of real property owned by her as her separate property to her husband in the event he survived her. Mr. Rath, in turn, agreed that he would make a will devising said property “or such portion thereof as has not been used or consumed by him during his natural life for his support and livelihood, in whatsoever form the same may then be in”, to his wife’s two nephews. In the event of the death of either nephew before Mr. Rath, he was to devise the share of such nephew to his issue, or in default of issue to the surviving nephew, or his issue.

Mrs. Rath died on February 8, 1935, leaving a will wherein she devised all property owned by her to her husband in fee simple absolute. He died five months later, on July 8, 1935. By his will he devised to his wife’s two nephews the real property which was the subject of the agreement of June 27, 1934. Thus Mr. Rath fully performed his agreement with his wife.

In the five months intervening between his wife’s death and his own death, Mr. Rath used no part of his wife’s estate for his support. By decree of final distribution in the wife’s estate, filed on November 27, 1935, all property was distributed to the heirs or devisees of William A. Rath, subject to the administration of his estate. The husband’s estate, of which appellants are executors, is now in course of administration, and the appeal herein is taken from the order fixing the inheritance tax upon the devises contained in his will in favor of appellants, his wife’s nephews.

Appellants contend that the will of Nellie Fay Rath and the contemporaneous agreement of June 27, 1934, should be read “as one document”, with the result that under said will the husband received a life estate, with power to use and consume the principal for his support, and with remainder to the wife’s two nephews of the portion unconsumed at his death. This species of life estate has been recognized when created by the terms of the will of a testator. (Cases cited, infra.) In this interpretation the two nephews would take as remaindermen under the wife’s will, and would be allowed a greater exemption from taxation as relations of the wife than if, as held by the court below, their succession is referred to the husband, to whom their status, under the Inheritance Tax Act, is that of strangers. They would further profit from the construction for which they contend in that the rates of taxation prevailing when Mrs. Bath died were lower than those in effect on the death of Mr. Bath. The difference involved is $812.94.

If appellants’ contention is correct, then an inheritance tax should have been charged against their interests in the probate of the estate of Nellie Fay Bath, and no tax would then have become due from them in the estate of Mr. Bath. In the estate of Nellie Fay Bath the court fixed the inheritance tax as upon a transfer in fee simple absolute to Mr. Bath. The net value of the estate for inheritance tax purposes was $12,875.74. After allowing Mr. Bath the exemption of $10,000 permitted to a husband by the Inheritance Tax Act in force at the date of Mrs. Bath’s death (sec. 6, Inheritance Tax Act of 1921, Stats. 1921, p. 1500; Stats. 1929, p. 1840), the tax amounted to $28.75 at the rate of one per cent on the balance of $2,875.74. No tax was assessed against appellants herein in the estate of Mrs. Bath. They had informed the inheritance tax appraiser in said estate of the agreement. Appellants now state in their briefs that they are not seeking to escape taxation through this appeal in the estate of Mr. Bath, but they are willing to pay a tax based on their relationship to Mrs. Bath and at the rates prevailing at the time of her death.

We are of the view that appellants are entitled to prevail, but not precisely on the theory advanced by them. The will of Mrs. Bath, executed with the formalities required for testamentary instruments, and the agreement not shown to have been thus executed, cannot be construed together “as one document”. The provisions of an instrument not complying with the requirements for testamentary documents, and not incorporated by reference in the testator's will, cannot be imported into or become a part of the will, as such. The court in the estate of Mrs. Rath properly ordered distribution in accordance with her will, which disposed of her property in fee to Mr. Rath. {Estate of Everts, 163 Cal. 449, 454 [125 Pac. 1058]; Curdy v. Berton, 79 Cal. 420 [21 Pac. 858, 12 Am. St. Rep. 157, 5 L. R. A. 189]; In re Sharp’s Estate, 17 Cal. App. 634 [120 Pac. 1079]; 26 Cal. Jur. 975.)

Had Mrs. Rath devised the property to her husband, with a provision in her will that the portion unconsumed for his support should pass to her nephews, the husband’s estate under the will would have been a life estate, with power to use and consume principal, and with remainder over to her nephews. This species of life estate has been recognized in a number of decisions in this state. {Colburn v. Burlingame, 190 Cal. 697 [214 Pac. 226, 27 A. L. R. 1374]; Hardy v. Mayhew, 158 Cal. 95 [110 Pac. 113,139 Am. St. Rep. 73]; Luscomb v. Fintzelberg, 162 Cal. 443 [123 Pac. 247]; Adams v. Prather, 176 Cal. 33 [167 Pac. 534]; Estate of Tooley, 170 Cal. 164 [149 Pac. 574, Ann. Cas. 1917B, 516]; see, also, Chestnut v. Chestnut, 300 Pa. 146 [151 Atl. 339, 75 A. L. R. 66]; In re Wettengel’s Estate, 278 Pa. 571 [123 Atl. 488]; Allen v. Hirlinger, 219 Pa. 56 [67 Pac. 907, 123 Am. St. Rep. 617, 13 L. R. A. (N. S.) 458].)

In the case herein the estate devised to the husband by the will of his wife was an absolute estate in fee simple. But said estate was subject to the charge of the valid contract, enforceable in equity, that the husband should use and consume the estate only for “his livelihood and support”, and that the unused portion should be devised by him to his wife’s nephews. Had he either died intestate or devised the property to other persons, such persons would have held the property as constructive trustees for said nephews, and could have been compelled in an equitable action to turn over the property to the nephews. {Estate of Bolls, 193 Cal. 594 [226 Pac. 608]; McCabe v. Healy, 138 Cal. 81 [70 Pac. 1008]; Owens v. McNally, 113 Cal. 444 [45 Pac. 710, 33 L. R. A. 369]; 25 Cal. Jur. 152; 26 Cal. Jur. 834.)

By virtue of the contract the husband’s beneficial interest was limited to his wife. He was a trustee for his wife’s nephews, for whose benefit the contract expressly was made. In so far as the equitable estate is concerned, rather than the bare legal title, he had a life estate with power to consume, and the nephews had the interest in remainder.

This brings us to the core of the problem in the instant case. Must the probate court in fixing inheritance taxes consider only the legal interest passing under a will or by intestate succession, or may it also take cognizance of trusts depending on valid extrinsic agreements to determine the persons entitled to the beneficial enjoyment of the property ?

A testator may devise his property absolutely to one who bears him no relationship, subject to a valid trust depending on an extrinsic agreement under which a near relative, perhaps a wife or child, has the sole beneficial enjoyment of the property. In such a case must the court in assessing the tax look only to the will? In view of the fact that a stranger to the blood succeeds to an absolute estate under the will, must the court apply the rates applicable to strangers ?

Conversely, the testator may make an absolute bequest to a near relative, who by virtue of an extrinsic agreement may hold subject to a valid trust for the sole benefit of a stranger to the blood of the testator. The transaction may have taken this form without an intent to escape taxation, but if in fixing the tax the court may look only to the will, the bequest of which the stranger has the beneficial use will escape taxation in whole or in part.

The Inheritance Tax Act contains no express provision with regard to taxation where trusts or charges extrinsic to the will exist. However, considering the act as a whole, we are of the view that the intent is that the tax shall be measured by beneficial succession. The tax provided for is a succession tax. It is a tax on the privilege of succeeding to property. (Estate of Miller, 184 Cal. 674 [195 Pac. 413,16 A. L. R. 694]; Estate of Watkinson, 191 Cal. 591 [217 Pac. 1073]; 24 Cal. Jur. 425.) The amount of the tax is proportionate to the benefit received. The rate of taxation, as well as the amount of exemption, depends on relationship to the decedent. Transfers “in possession or enjoyment, present or future”, are taxable. (Sec. 1, subd. 3, Inherit. Tax Act.) ■ The rates of taxation under section 4, are dependent on relationship to the decedent of any person “entitled to any beneficial interest”.

The Inheritance Tax Act reaches transfers by instruments which are nontestamentary, as well as those which arise by will, or by intestate succession. (Sec. 2, subd. 3.) Distribution may be ordered only in accord with the instrument which is testamentary. But for purposes of fixing the inheritance tax beneficial succession is the measure. For such purpose we are of the view that the court may consider agreements extrinsic to the will which limit the absolute estate devised by will. Section 15 expressly recognizes that in fixing the inheritance tax the probate court may consider matters not before it in the distribution of an estate. Where the decedent has made transfers inter vivos in contemplation of death, the probate court determines the tax on such transfers of property which constitutes no part of the estate for probate, as well as the tax due on transfers by the will of the decedent. The order fixing inheritance taxes, which may incidentally determine questions in regard to succession and beneficial ownership, is not binding except for tax purposes as between those who claim the' estate, whether as heirs, legatees, or beneficiaries of a trust extrinsic to the will. (In re Lloyd’s Estate, 106 Cal. App. 507 [289 Pac. 892].)

“Revenue or taxation acts are not to be approached with a spirit of hostility and with a purpose of ignoring the intention of the legislature. . . . The interpretation of tax statutes must in all eases be reasonable. (Riley v. Havens, 193 Cal. 432 [225 Pac. 275].) No construction should be given a statute which would make its application impracticable, unfair or unreasonable.” (Estate of Parrott, 199 Cal. 107 [248 Pac. 248].)

Research has revealed only a few decisions bearing on the question herein involved. The appellate court in In re Holt’s Estate, 61 Cal. App. 464 [215 Pac. 124], said by way of dictum that it found “persuasive” argument in the authorities which look beyond the will to ascertain the ultimate vestiture of beneficial interest.

In People v. Tombaugh, 303 Ill. 591 [136 N. E. 453], the purchaser of real property caused title thereto to be taken in the name of his wife upon her agreement at her death to will the property to his seven children, six of whom were children of a prior marriage, and hence strangers to the blood of the wife. She performed her promise. The court held that although the deed was absolute, by virtue of the oral agreement the wife held the property in -trust for the children, whose beneficial interests passed to them from their father, and were exempt from an inheritance tax, being below the statutory exemption allowed children.

In People v. Schaefer, 266 Ill. 334 [107 N. E. 617], the court considered a ease where a devise absolute by will was subject to an extrinsic agreement to use the entire bequest for valid charitable purposes, which would have been exempt if provided for by will. Anthony Wagner devised his property to his brother, James Wagner, subject to the extrinsic trust for charitable purposes. The brother died sixteen days after Anthony Wagner, himself leaving a will wherein he devised the property received from his brother Anthony to Peter P. Schaefer, subject to an extrinsic agreement with Schaefer to carry out the benevolent purposes of Anthony Wagner. The court considered the existence of the valid charitable trust and ruled that no tax was due in either estate.

The decisions in In re Romney’s Estate, 60 Utah, 173 [207 Pac. 139, 143], and Winn v. Schenck, (Ky.) 110 S. W. 827, are to the same effect. Where the first taker appears by deed or will of the donor to have an absolute title, but said title is subject to a trust resting on an extrinsic agreement, the succession of those for whom the first taker holds is referred to the donor, rather than to the first taker.

The only decisions which have come to our attention in which the court in assessing the tax has refused to look beyond the will are in New York. (In re Edson, 38 App. Div. 19 [56 N. Y. Supp. 409], affirmed by memo, opinion, 159 N. Y. 568 [54 N. E. 1092]; In re Kane’s Estate, 218 App. Div. 278 [218 N. Y. Supp. 131]; Trustees of Amherst College v. Ritch, 151 N. Y. 282 [45 N. E. 876, 894, 37 L. R. A. 305] (dictum); these cases are contra to earlier decisions in In re Murphy, 4 Misc. 230 [25 N. Y. Supp. 107], and In re Farley’s Estate, 15 N. Y. St. Rep. 727.)

Decisions such as In re Grogan, 63 Cal. App. 536 [291 Pac. 87], In re Gould’s Estate, 156 N. Y. 423 [51 N. E. 287], and In re Kidd’s Estate, 188 N, Y. 274 [80 N. E. 924], do not consider the problem determined herein. Said decisions are to the effect that a transfer made by will is taxable although in pursuance of a contract, in payment of a debt, or for services rendered. Said decisions had reference to a situation where the testator is disposing of his own property, not of property held by him in trust for others, as to which his will is a mere conduit of title.

In the instant case, having regard for the agreement of June 27, 1934, Mr. Rath took only a life estate for inheritance tax purposes. The tax due upon the interests of the nephews was a matter for consideration in the estate of Mrs. Rath. The order fixing the inheritance tax in her estate has not been, included, in the record herein. However, it is conceded by the parties that in said proceeding no tax was charged upon the interests which the nephews of Mrs. Rath, appellants herein, had by virtue of the agreement of June 27, 1934.

An order fixing inheritance taxes has the incidents of a final judgment. (Secs. 16 and 18, Inheritance Tax Act; Estate of Brown, 196 Cal. 114 [236 Pac. 144]; Kelshaw v. Superior Court, 137 Cal. App. 189 [30 Pac. (2d) 432]; Estate of Edwards, 138 Cal. App. 162 [32 Pac. (2d) 179].) Conceding for purposes of discussion that the order as to inheritance taxes made in the estate of Mrs. Rath would, in the circumstances appearing, bar collection of an inheritance tax from appellants on the estate derived by them through the will of Mrs. Rath and the agreement of June 27, 1934, considered together, we are of the view that appellants must be deemed to have waived any bar created by said order. Appellants have reiterated in their briefs that they are not seeking to escape taxation altogether upon their interests, but that they stand ready to pay a tax based on their relationship to Mrs. Rath and at the rates in effect at her death. In the absence of any bar which may have been created by the inheritance tax order in the estate of Mrs. Rath, the tax which should have been assessed therein against the interests of appellants would, remain a lien upon the property until paid. (See. 3 and see. 8, subd. 1, Inheritance Tax Act.) Since appellants will now receive the property through the will of Mr. Rath as a conduit of title, and since they must be deemed to have waived any bar to collection of the tax arising from the inheritance tax order in the estate of Mrs. Rath, the court in the estate of Mr. Rath may now require payment of a tax on appellants’ interests based on their relationship to Mrs. Rath and at the rate in effect at her death prior to distribution to appellants.

If Mr. Rath had not died the problem of assessing the interests of the nephews would have been difficult, but it would have been the same had Mrs. Rath by her will devised to Mr. Rath a life estate, with power to consume principal for his support, and with remainder over to her nephews. The assessment of contingent interests, or vested interests liable to divest on a contingency, is in its nature a difficult matter. The act contemplates that the assessment shall be made as therein provided for, with provision for postponing the fixing of the tax, upon the filing of a bond, until the maturing of the contingency shall permit exact valuation of the interest, for refunds under some circumstances where subsequent events demonstrate that the tax paid was too large, and for compromise and settlement of taxes on contingent interests. (Sec. 8.) In the instant case there is no difficulty in now assessing the tax, since Mr. Bath died without using any part of the property.

The portion of the order appealed from is reversed.

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


source: Caselaw Access Project

author: HOUSER, J.

license: Public Domain

text:
    [L. A. No. 16475.
    In Bank.
    December 22, 1937.]
    JOHN F. McALPINE, Petitioner, v. JOHN W. BAUMGARTNER et al., Respondents.

      Loren A. Butts for Petitioner.
    Robert J. Stahl, as Amicus Curiae, on Behalf of Petitioner.
    Ray L. Chesebro, City Attorney, and Leon Thomas David and William H. Neal, Assistant City Attorneys, for Respondents.
   HOUSER, J.

From the record herein, the fact is disclosed that by the various provisions of article XXXIV which includes sections 500 to 513, inclusive, of the charter of the city of Los Angeles, a retirement system for specified classes of employees of said city was created. Therein, after provision had been made to the effect that the management and control of said system should be vested in and entrusted to a “Board of Administration”, and in connection with the duties of said board, that annually it should prepare a budget, which among other things, should show the financial necessities for the operation of the system for the ensuing year,—by the provisions of section 506 of the charter, relating to the method by which such moneys were proposed to be made available for the purpose of carrying out the manifest intent of the system, it was provided as follows:

“For the purpose of providing funds to meet the budget for said City Employees’ Retirement Fund the Council or Controller shall annually levy, in addition to all other taxes levied by the City, a tax clearly sufficient to provide the total amount of all items in said budget; provided, however, that said City Council may appropriate from any available funds, all or any part of the total amount of all or any of the items in the budget for said City Employees’ Retirement Fund, in which event the tax levy to be made for said fund shall be clearly sufficient to provide the difference between the amount so appropriated and the total amount of all items in said budget.”

In addition to such special provisions of the charter, by the terms of section 352 thereof, in substance the city council was required to adopt a general tax ordinance for each (fiscal) year not later than the “last day of August”. And by the terms of each of several different sections of the charter, the mayor of the city was authorized to exercise a veto upon such ordinance; subject, however, to “passage by the council over the mayor’s veto by a two-thirds vote”. It also appears that although in due course, and preceding “the last day of August”, 1937, the city council adopted an ordinance by the terms of which in effect a tax was levied for the purpose of providing funds for general and some special uses, no provision was made therein “for the purpose of providing funds to meet the budget for said city employees’ retirement fund”. Nor has any ordinance, either in substance or at all, to the latter effect, .ever been so adopted. Section 504 of the city charter includes a provision that ‘ ‘ In order that the system created by this Article may become operative as of the 1st day of July, 1937, the Controller is authorized and directed to loan to the retirement fund from the reserve fund such sums as may be required, such loan to be repaid by the retirement fund from the first available money therein”. And by the provisions of subdivision 10 of section 47 of the Charter of the City of Los Angeles, the controller is authorized to maintain ‘ each fund on a parity with its obligations at all times by transferring from the reserve fund as a loan to any fund which may become depleted through tardy receipt of revenues. He shall, in all cases, upon receipt of revenues sufficient to make such allocation as will restore each such fund to parity, retransfer the amount of such loan to the reserve fund.”

In such circumstances, at the instance of one of the retired employees of the city of Los Angeles, who apparently was entitled to benefit by the terms of the said retirement plan, this court caused its alternative writ of mandate to issue, directed to the several respondents therein named, by which they were required generally to perform the various and respective acts thus specified, or on a designated date, that they show cause before this court why they had failed in that regard. The several respondents having answered herein, the matter is now ready for determination.

One of the allegations that is contained within the petition for the issuance of the writ herein is that, “The principal and only question to be determined is whether or not it is the mandatory duty of the Council of the City of Los Angeles to provide funds to meet the costs of the items set forth in the budget adopted by the Board of Administration of said retirement system.”

But in that connection it now appears that by each of the several parties that are affected by the proceeding, it is expressly conceded that with respect to the several requirements specified in section 506 of the charter, the duty of the city council either to levy a tax or to appropriate available funds “to meet the budget for said City Employees’ Retirement Fund”, is mandatory; also, that in accord with the provisions of the charter, as far as concerns the date before which the city council might have included such special tax levy, or the several items thereof, within the general tax ordinance to wit, “the last day of August” 1937, has long since expired; and that as a consequence of the existence of such latter situation, as far as it may or does relate to the specified date of August 31, 1937, no power may or can compel the obedience of the said city council to the plain mandate of the said charter provision. As far as concerns the controller, although in reliance upon the terms contained within section 506 of the charter, mandatory relief originally was prayed by the petitioner against that official of the city, by the express statements of the petitioner that are contained within his brief filed herein, particularly for the asserted reason that in accord with former adjudications by this court on analogous facts, that part of the charter provision is unconstitutional, his prayer with regard to the controller has been withdrawn;—notwithstanding which, although the several respondents do not admit the illegality of the charter provision in that particular, or that the controller ordinarily would not be legally qualified to act, for the asserted reason that by the provisions of sections 353 and 506 of the charter, the right of the controller to levy a tax becomes operative only when the city council has failed to make any levy “at all”,—and since the fact herein is' that the city council did make a levy (omitting therefrom the budget item of the city employees’ retirement fund) the respondent members of the city council concede the law to be that the controller is lacking in authority to make any levy at this time. In addition to the foregoing, all the respective parties are in accord one with the other to the effect, that as to the city council, not only is mandate a proper remedy to be invoked in the premises, but also that if such remedy be exercised herein,— the duty of the said respective respondents being a “continuing ’ ’ one, any order that may be made by this court with reference thereto may be made applicable not only as far as may concern future appropriations, but also future tax levies, to be made or ordered respectively by ordinance of the city council of the city of Los Angeles. And in that regard, the several rulings by this court with reference to that situation apparently support their position. {Union Safe Deposit Bank v. Menlo Park, 3 Cal. (2d) 264, 266 [43 Pac. (2d) 811]; American Securities Co. v. Forward, 220 Cal. 566, 571, 572 [32 Pac. (2d) 343, 96 A. L. R 1268]; Pasadena J. G. Dist. v. Board of Supervisors, 216 Cal. 61 [13 Pac. (2d) 678].) So that, other than as may relate to the respondent members of the city council of the city of Los Angeles, acting as such, it does not appear that either of the remaining respondents has ever failed or refused to perform his official duty in the premises. Particularly is that true with reference to the duty of the mayor of said city. As hereinbefore has been stated, no tax ordinance that relates to the city employees’ retirement fund has ever been adopted by the city council; and as a consequence of such dereliction in duty, the mayor has had no opportunity either to approve or to reject any proposed legislation in connection with the plan to make money available for that fund. And the situation of the controller in the matter, if not identical with, at least is analogous to, that of the mayor. Other than the controller’s allegations that are contained in his answer herein to the effect that he is “informed and believes and therefore alleges that under the terms of section 353 and section 506 of the charter, it is his duty thereunder to proceed, as provided in said section 353, to make a supplemental tax levy for the purpose of raising the funds required by the City Employees’ Retirement System for the fiscal year 1937-1938, but that his power so to do has been denied by the other respondents herein and that unless ordered so to do by this Honorable Court he will not proceed to make such levy in the manner provided in said section 353 of the City Charter”; also, that “the City Controller has power to maintain the said City Employees’ Retirement Fund on a parity with its obligations by transferring from the Reserve Fund enough to meet the said obligations until such time as receipt of revenues is had sufficient to restore such fund to parity and permit of transfer of the amount of the loan to the Reserve Fund . . . —the record fails to disclose anything upon which a mandate of this court, by which the controller might be ordered to perform any duty in the premises, might properly be based. Neither in the petition for the writ, nor in the answer of either the mayor or the controller may any allegation be discovered which either unequivocally, or at all, states the essential fact that a demand heretofore has been made by a specified and properly authorized official or body of the city of Los Angeles that the mayor or the controller respectively perform either or any of the acts which, by the provisions of the charter he is charged with the duty to perform ; or in that regard, that he either has failed, neglected or refused to perform such act. In that connection, as hereinbefore has been set forth, the most that is disclosed is that which appears in the separate answer of the controller, to wit, that although by the express provisions of section 353 of the charter, on the failure of the city council to perform its duty, the controller is authorized “to make a supplemental tax for the purpose of raising the funds ... ”, the power to do so “has been denied by the other respondents”'. But nowhere within either the petition, or the answer of either of the several respondents, may be found any allegation that “the other respondents” are, or that either of them is, clothed with any authority in that regard. As far as is indicated by any pertinent charter provision to which the attention of this court has been directed, neither the mayor nor the city council has any greater right or authority than has any private citizen to “deny” or to prevent the performance of any authorized act of the controller, or in any manner to influence him with reference to his official act or acts as it or they may concern a mandate or direction by virtue of the provisions of the city charter as it or they may affect the city controller with relation either to a possible levy by him of a “supplemental tax”, or to his “power to maintain the city employees’ retirement fund on a parity with its obligations”. However, by the prayer attached to the answer of each of the several respondents, it appears that they are and each of them is desirous that this court render a decision wherein the several duties of each of the said different city officials may be not only clearly defined, but also that forthwith he be ordered to perform each of such duties. In the circumstances here presented, it is clear that this court should not comply with either or any of such suggestions.

The only point that is now presented by the petitioner, and which is founded upon allegations that are supported by sufficient facts set forth in the petition, is whether, in consideration of the situation that hereinbefore has been outlined, the city council is now authorized to make an appropriation “for the purpose of providing funds to meet the budget for said city employees’ retirement fund” for the fiscal year 1937-1938, and if so, whether this court will order the city council to make the appropriation which it is asserted is contemplated by the provisions of section 506 of the city charter.

To that end, it becomes advisable that the several pertinent provisions of the charter be examined. In that connection, it will at once appear that the provisions of section 506 of the charter furnish the foundation. Without herein quoting that section in full, it may suffice to state that the greater part thereof relates to the duties of the board of administration, particularly with reference to the time when it shall prepare and submit to the mayor and the controller a budget which shall include therein specified items of expense with respect to the estimated cost of maintaining the city employees’ retirement fund; following which is the provision hereinbefore set forth which relates to the method by which the money necessary for the maintenance of the fund is authorized to be provided. By reference thereto, it will be noted that for that purpose, the city council is directed to “annually levy, in addition to all other taxes levied by the city, a tax clearly sufficient to provide the total amount of all items in said budget ... ”. Concerning the date or the time within which the city council is thus restricted in its official act in the premises, although solely by the terms of section 506 of the charter, the city council is required to act “annually” only, the provisions of section 352 of the charter limits the date of such performance to “on or before the last day of August of each year”. So that in any event, as far as may concern the levying of a tax for the purpose of providing funds to meet the budget for the city employees’ retirement fund, it is clear that in the instant matter, the time limit fixed by the charter having expired, in the absence of qualifying charter provisions or other authority in the matter, and particularly in consideration of that which may be understood as the stipulation of the parties herein, it well may be that at this time this court is powerless to make an order by which the dereliction of the city council in that regard may be corrected. However, as hereinbefore has been set forth, by the terms of section 506 of the charter, in lieu of providing funds for the city employees’ retirement fund by including a required percentage within the general tax levy, the city council was authorized to adopt an alternative method, in that for the intended purpose it might “appropriate from any available funds, all or any part of the total amount of all or any of the items in the budget . . . ”. Had the charter provision stopped at the close of the language just quoted, and had no qualifying words appeared either in the section under consideration or elsewhere in the charter, it is conceivable that even though the time limit for adopting the annual general tax ordinance had expired, the language thus employed in said section possibly might have admitted of a construction by which the city council might have been empowered “after the last day of August” to appropriate funds to be used for the specific purpose of maintaining the city employees’ retirement system during the current year. But unfortunately as far as such a conclusion is concerned, not only in accord with a rule of construction, but also by other language that is contained in section 506 of the charter, it appears that in adopting the charter provisions, the intention of the electors of the city of Los Angeles was not to confer upon the city council the right to make such appropriation excepting at a time which preceded the date when the city council was required to adopt the general tax ordinance.

It may be remembered that the authority of the city council to levy the necessary tax for the purpose of providing money for the fund is followed by a “provided, however”, which purports to authorize the city council to make an appropriation for the same purpose. In that connection, it is well established that in general, the purpose of a “proviso” in a statute, or in an ordinance, is to create merely an exception to the principal provision of the statute or ordinance which precedes such proviso; with the result that the principal part of the statute or ordinance thus modified remains intact excepting as it may be thus qualified. In other words, the proviso may, and usually does, limit the principal part of the statute or ordinance only as far as it expressly or impliedly purports to do so. In California Jurisprudence, volume 23, page 744, it is said that the office of a proviso “is to explain, qualify, or restrain the operation of a preceding provision”. And it is to “be read in the light of the subject-matter” of the act. (People v. Morrill, 26 Cal. 336, 355.) Also, in Dufton v. Daniels, 190 Cal. 577, 580 [213 Pac. 949], it is said, “The language of the section is plain and unambiguous, and it is not necessary to invoke the settled rule of construction that an exception contained in a statute to a general rule laid down therein is to be strictly construed (Black on Interpretation of Laws, p. 275; Lewis’ Sutherland on Statutory Construction, 2d ed., sec. 352). ...” And further, in the case of Forbes v. City of Los Angeles, 101 Cal. App. 781, 788 [282 Pac. 528], it is said: “ ‘Where the enacting clause is general in its language and objects, and a proviso is afterwards introduced, that proviso is construed strictly, and takes no case out of the enacting clause which does not fall fairly within its terms. In short, a proviso carves special exceptions only out of the enacting clause; and those who set up any such exception, must establish it as being within the words as well as within the reason thereof. ’ (United States v. Dickson, 40 U. S. [15 Pet.] 141 [10 L. Ed. 689].)” With that in mind, it becomes obvious that the proviso that occurs in section 506 of the charter with respect to the power of the city council simply to make an appropriation cannot adversely affect the time limit within which either the general tax levy may be provided by ordinance by the city council, or an appropriation may be made; and since in accord with other provisions of the charter the general tax levy must be made “before the last day of August”, it follows that the making of an appropriation is similarly limited. Attention is also directed to the clause in section 506 of the charter, to the effect that instead of providing for the raising of funds by taxation, the city council may appropriate either the whole or any part thereof “from any available funds; ... in which event (the making of an appropriation) the tax levy to be made for said fund shall be clearly sufficient to provide the difference between the amount so appropriated and the total amount of all items in said budget”.

As hereinbefore has been indicated, in the matter of adopting an ordinance by which the annual general tax levy is made, the city council is required to act “on or before the last day of August”. In that regard, it is granted no extensive or permissive leeway; and included within that ordinance (whenever adopted) must be either “the total amount of all items in said budget" for said city employees’ retirement fund, or “the difference between the amount (so) appropriated and the total amount of all items in said budget". Furthermore, concerning the limitation of time within which the city council is authorized to make an appropriation, and particularly in determining the meaning that should be attributed to section 506, the word “difference”, which is used in connection with the authority of the council, is significant. As used, it connotes that before the amount to be allowed for the city employees' retirement fund may be properly ascertained as an item to be considered in making the general tax levy, the amount of any appropriation which up to that, time may have been made by the city council must be deducted from the figures which shall have appeared in the budget that theretofore should have been prepared by the board of administration and transmitted by it to the mayor and the controller. In effect, that is to say that the or any appropriation for any given fiscal year must have been made before the general tax levy ordinance may be adopted. Furthermore, as is expressly declared within section 506 of the charter, one of the purposes of the general tax levy is to provide “funds to meet the budget". It will again be noted that the method b3which that result is proposed to be finally accomplished is by means of a general tax levy; “provided, however”, that it is within the power of the city council to reduce the amount of the total tax, or the percentage of the general tax levy, by officially ordering by its ordinance, that either the whole or any part of the amount which ordinarily would have to be included within the general tax levy, may be taken from “available funds" of the city and used “for the purpose of providing funds to meet the budget". But however the desired result may be accomplished, that is, either by means of taxation, or by the appropriation of available funds, or by both means, it is manifest, as in effect is declared by the provisions of section 506 of the charter, that if by tax only, the tax shall be “clearly sufficient to provide the total amount of all items in said budget"; and that “if the funds to meet the budget" have been only partly secured or made available b3 means of an appropriation, then the tax shall be based upon “the difference between the amount so appropriated and the total amount of all items in said budget”. It is obvious that if “before the last day of August” the city council is required to levy a general tax which must include an item that will provide for the total amount specified in the budget of the city employees’ retirement fund, less any appropriation that theretofore may have been made in support of that fund, the city council may properly do so only on the basis of previous knowledge on its part of facts that may be contained within, and conveyed to the city council by means of, said budget, together with like knowledge of the amount of money (if any) which theretofore may have been appropriated to the fund. Within the contemplation of the provisions of section 506 of the city charter the general tax levy is the final act for providing the funds necessary for the proper maintenance of that fund. Any tax that might be based upon either a greater or a lesser sum than that which would be so represented and calculated, clearly would be in violation of the express terms of the charter provision. And if proper in amount, as required by the charter provision, it is equally manifest that any appropriation in aid of the fund, that might be made after the last day of August, in effect would amount to double taxation. It thus appears that in adopting the charter, it must have been within -the legal contemplation and the intention of the electors that if the money that was necessary for the support of the fund had not theretofore been appropriated by the city council for that purpose, the required total amount would be provid°d by the levy of a general tax, and that the ordinance which would be adopted by the city council to that end would be its final act in the premises; and, as hereinbefore has been stated, when the general tax ordinance was adopted “on or before the last day of August”, and no provision having been made in said ordinance with respect to the fund that here is the subject of consideration, and since the powers of the city council are limited by the express or the implied terms of the charter provisions of the city, it follows that in the absence of any charter provisions other than those contained in section 506 thereof, by which the city council is authorized to appropriate funds “to meet the budget for said city employees’ retirement fund”, it now has no power to make an appropriation for that purpose as far as such an appropriation may directly affect the budget for that fund for the fiscal year 1937-1938. However, solely in that connection, such conclusion should not be understood as indicative of a ruling by this court that the city council is entirely lacking in authority to minister to the financial necessities of the city employees’ retirement fund. In that regard (although not to be accepted as anything more than a suggestion by this court) among other possible means of relieving an embarrassing situation, the attention of respective counsel is directed not only to the opening sentence, but also to subdivision 3, and the closing sentence of section 506 of the city charter, wherein it may appear that “annually” (apparently without express limitation as to the date thereof) thé board of administration shall prepare a budget for the apparent purpose of furnishing information to the city council to the end that it may levy a tax “clearly sufficient to provide the total amount of all items in said budget”; also, that at a time “before the last day of August” the city council is authorized to “appropriate from any available funds, all or any part of the total amount of all or any of the items in the budget for said city employees’ retirement fund”, which for the fiscal year 1938-1939 may include an item for “The amount of any deficit which may remain in said retirement fund in the event the appropriation of any previous year shall have proved insufficient to pay the demands drawn against said retirement fund.”

As a result of the foregoing considerations, and especially in reliance upon the authority that is contained within the adjudicated cases hereinbefore cited, to wit, Union Safe Deposit Bank v. Menlo Park, supra; American Securities Go. v. Forward, supra; Pasadena J. G. District v. Board of Supervisors, supra, it is ordered that “before the last day of August”, 1938, each of the several individual respondents herein (other than Frank L. Shaw, as mayor of the city of Los Angeles), and Dan O. Hoye, as controller of the city of Los Angeles), acting each with the others in their official collective capacity as the city council of the city of Los Angeles, levy a general tax which, in addition to all other taxes levied by the city of Los Angeles, shall include a tax sufficient to provide the total amount of all items in the budget of the city employees’ retirement fund for the fiscal year 1938, which budget theretofore shall have been prepared and transmitted to the mayor and the controller of said city by the board of administration of the said city employees ’ retirement fund; or as an alternative thereof, that if before the last day of August, 1938, the said city council of the city of Los Angeles shall have appropriated from any available funds all or any part of the total of all or any of the items in the said budget for said city employees’ retirement fund,—in that event, it is ordered that before said last day of August, 1938, the said individual respondents, acting as aforesaid as said city council, shall levy a tax for said city employees’ retirement fund which shall be clearly sufficient to provide the difference between the amount so appropriated (if any)- and the total amount of all items in said budget.

Shenk, J., Langdon, J., Waste, C. J., Seawell, J., and Edmonds, J., concurred.


author: LANGDON, J.

text:
    [L. A. No. 15526.
    In Bank.
    December 27, 1937.]
    AGNES S. PARRY, Plaintiff and Appellant, v. BERKELEY HALL SCHOOL FOUNDATION (a Nonprofit Corporation) et al., Respondents; CHARLES EATON, Cross-Defendant and Appellant.

      William Schreider and J. Wiseman Macdonald for Plaintiff and Appellant.
    Conroy & Conroy and Edward L. Conroy for Cross-Defendant and Appellant.
    William M. Bryne and Henry G. Bodkin, as Amicus Curiae, on Behalf of Appellants.
    Girard F. Baker, Macfarlane, Schaefer, Haun & Mulford, Gibson, Dunn & Crutcher and Robert F. Schwarz for Respondents.
   LANGDON, J.

This is an action to quiet title against conditions subsequent in deeds.

Rodeo Land and Water Company owned a 77-acre tract of land in Beverly Hills, California. Defendant Berkeley Hall School Foundation, a nonprofit corporation, maintained a children’s school. The Foundation desired to secure new quarters in an undeveloped district which would give it room for the school and also for a residential district for parents and others interested in the school, under proper building and use restrictions. Accordingly it entered into an arrangement with Rodeo Company for the purchase and subdivision of this tract into 375 lots. All of the lots, save those retained for school purposes, were sold in the following manner: Rodeo Company as trustor conveyed to Bank of America as trustee under a subdivision trust, with the Foundation as beneficiary. The trustee was authorized to sell at specified prices; a certain amount went to the Rodeo Company in payment of the land, and the balance of the proceeds went to the Foundation. Plaintiff bought threQ lots, receiving three separate deeds from the trustee bank.

The original deed of Rodeo .Company to the trustee bank contained various restrictive provisions in the form of conditions subsequent with right of reentry, including one prohibiting the use of the property for the purpose of selling intoxicating liquors. The declaration of trust provided' that all lot sales should be subject to these conditions, and required the trustee bank to reserve to itself, for the benefit of the Foundation, a right of reentry for breach of such conditions. The deeds to the .lot owners, including plaintiff, contained the conditions and reserved rights of reentry.

Plaintiff constructed a building on one of her lots, which she leased to cross-defendant Baton. The latter operated a cafe in which he sold intoxicating liquors. The Foundation notified plaintiff and Baton that it would exercise its right of reentry unless the violation ceased. The sale of liquor nevertheless continued, and plaintiff thereafter brought this action to quiet title to her lots against the asserted rights. The Foundation cross-complained, seeking to enforce the condition by a reconveyance of the land to it, and asking also damages against plaintiff and Baton, for failure to give up possession and convey title upon notice of breach of condition. Rodeo Company answered, but sought no affirmative relief. The lower court gave judgment for defendant Foundation, declaring it to be the owner of the lot which had been improperly used and ordering plaintiff to convey the same. The court also decreed that the title to the three lots was subject to the restrictive conditions, and gave an award of damages against plaintiff and cross-defendant Baton in the amount of the rental value of the property wrongfully used.

Plaintiff appealed, and Baton subsequently filed a disclaimer. The only interested parties, therefore, are the Foundation and plaintiff Parry.

The major point raised by appellant is the proposition that the Foundation had no right of reentry to enforce, and by necessary inference that the condition which it imposed in the deed to plaintiff was void. The reasoning advanced is that a right of reentry is an estate in reversion; that the Rodeo Company had already reserved that very estate by its deed; that consequently the trustee bank had no sucli estate to reserve for itself or its beneficiary, the Foundation, for that would result in having the identical estate in two parties, an impossibility.

No authority has been found either in favor of or against this specific proposition, but it is apparent that it would frequently defeat the objectives of those creating restricted tracts of land for various types of residential or other development. In the present case, for example, Rodeo Company obviously has no interest in the tract which it has sold; but the Foundation has a vital interest in maintaining its restricted character, and the imposition of conditions and the reservation of rights of reentry on behalf of the Foundation was in pursuance of a plan of development admittedly legal, and not unusual. If it is a legal impossibility for successive grantors to reserve rights of reentry for breach of conditions subsequent in deeds, it seems strange that it has never been so decided. And, upon reflection, we find no difficulty in holding these interests valid.

Plaintiff’s argument commences by making the assumption that a right of reentry for breach of a particular condition is an estate in reversion, a definite, identified part of the fee which is left in the grantor and his successors after transfer of a lesser estate to the grantee. It is true that decisions occasionally characterize the right of reentry as a “reversionary interest” or “ contingent reversionary interest”, and it is so regarded for some purposes. (See Strong v. Shatto, 45 Cal. App. 29 [187 Pac. 159]; Barkhaus v. Producers’ Fruit Co., 192 Cal. 200 [219 Pac. 435]; Backus v. Duffy, 103 Cal. App. 775 [284 Pac. 954].) But the situations with which these cases were concerned bear no resemblance to the facts of the instant case. Thus, in Barkhaus v. Producers’ Fruit Co. and Backus v. Duffy, supra, the court upheld a sublease for the entire unexpired portion of the lessee’s term on the ground that the lessee (sublessor), reserving a right of reentry for breach of conditions, did not part with the entire term. And in Strong v. Shatto, supra, the decision was simply that the rule against perpetuities did not apply to rights of reentry.

A more accurate analysis of the interest involved discloses that when the grantor conveys the fee simple on condition subsequent, he has no actual estate remaining with him. The grantee takes the entire estate of the grantor, and unless he breaches the conditions is in the same position as an owner in fee simple absolute. The interest of the grantor in such case is not, strictly speaking, a residue of the estate left in him; it is merely a right or power to terminate the estate of the grantee and retake the same, if there is a breach of condition. (Restatement, Property, sec. 45, Comment a; sec. 154; 1 Simes, Future Interests, sec. 159, p. 281.) In the Restatement of Property the right of reentry is called a “power of termination”, and is clearly distinguished from the ordinary reversion. (Restatement, Property, secs. 154, 155.) The distinction is illustrated by the rule that the grantor may transfer an estate with a right of reentry, and also keep a reversion. For example, the grantor may transfer land to the grantee for life, subject to a condition subsequent restricting its use. In such case the grantor has the reversion in fee and also a right of reentry (or power of termination), and they do not merge. (Restatement, Property, sec. 155, Comment c; 1 Simes, Future Interests, sec. 165, p. 293.)

Regardless of terminology, however, there is no reason in principle or authority why successive grantors may not reserve rights of reentry for breach of conditions subsequent, whether these conditions be identical in form, similar in form, or different in form. In each instance the grantee takes the whole fee, with the same rights as a grantee in fee simple absolute, as long as the conditions are obeyed. Bach grantor has the right or power to terminate the estate which he granted, upon breach of any condition or conditions imposed by him. Whatever be the correct term to describe the interest of the grantor,—“right”, “power”, “estate” or “reversion”, that interest is unaffected by the form or content of the conditions imposed on the granted estate. If the first grantor imposed a condition requiring set-back lines in building on the property, and the second grantor imposed a condition against the sale of liquor, can it be contended that the two conditions created identical rights of reentry amounting to estates in the grantors? Such a contention would mean that only one grantor can ever attach conditions subsequent to an estate, because there can be but one reversion resulting from the right of reentry. Yet this absurdity is matched by the implications from plaintiff’s actual contention, for if two identical or similar conditions against sale of liquor, each imposed by a different grantor, create identical reversionary estates, while two different conditions do not, then it follows that there are innumerable different reversionary estates which may be created, depending upon the particular condition imposed upon the grantee’s estate. This proposition demonstrates its own falsity. There is no such interest in real property as a “right of reentry for breach of condition subsequent prohibiting sale of liquor in a certain manner as set forth in a particular deed in certain language”, as distinguished from a “right of reentry for breach of condition subsequent prohibiting the building of homes without setback lines as set forth in a particular deed in certain language”. In short, the law does not recognize thousands of different types of reversionary estates, including new ones which may be developed at any time, depending upon the ingenuity or objectives of the persons imposing the particular conditions subsequent. What the law does recognize is that conditions may be imposed which qualify or make subject to divestment the estate granted, but the right of reentry reserved to the grantor is not divided into separate interests for each condition. The law further recognizes that each owner of an estate may grant it, in whole or in part, absolutely or on condition; and if he grants it on condition, the right of reentry for breach is a separate right of that grantor, and never identical with a right of reentry reserved by a prior grantor for breach of conditions imposed by him.

With respect to other questions raised, such as alleged waiver of the restrictions and changed conditions of the neighborhood, we think the trial court’s findings are supported by the evidence.

The judgment is affirmed.

Seawell, J., Shenk, J., and Waste, C. J., concurred.

Rehearing denied.


author: EDMONDS, J.

text:
    [L. A. No. 16165.
    In Bank.
    December 27, 1937.]
    DANIELA ARAIS, Respondent, v. LOUIS KALENSNIKOFF, Appellant.

      Roger Marchetti, Charles A. Winter and Ed. S. Green for Appellant.
    M. C. Spicer and Eugene P. Pay for Respondent.
    Allen Spivock, Philander B. Beadle and Samuel Hauser, as Amici Curiae, on Behalf of Respondent.
   EDMONDS, J.

The defendant appeals from a judgment determining that he is the father of a child born to Daniela Aráis. The principal contention of the appellant is that the judgment must be reversed because the results of a blood test, received in evidence, show his nonparentage; in other words, that the medical evidence is conclusive upon the question.

The mother of the child testified that she met the defendant in November, 1930, and at his request moved to a different house for which he paid the rent and bought the furniture and equipment—“furnished everything I needed to keep myself and children”. The defendant, she said, came to her home at least twice a week during the next three years and had frequent relations with her. The child was born in November, 1932. She testified that after the birth of the child, “I quit my job at the restaurant at defendant’s request and upon his promise to support me”. Thereafter she moved to another location. The defendant, she said, “continued to pay my rent and support me. He usually brought groceries with him when he came. He arranged at the store ... to let me have groceries or anything I needed on his credit. . . . This arrangement . . . continued until in February, 1936, when defendant refused to support me any more or support Elsie. . . . When defendant came to see me after the baby was born he would hold it and later when she was older he would take her to the playground. He always brought something for the baby. Later he took the baby and had her picture taken. . . . Before the baby was born defendant asked me not to say that he was the father of the child but to use another name. He said he would support the child and make a nice home for her. ’ ’

A number of witnesses declared that they saw the defendant at the mother’s home on many occasions and that he either “always” or “often” brought a basket or bundle with him. Two witnesses testified that the defendant told each of them that he was the baby’s father. Others said that at Various times they had seen him carrying the baby from the mother’s house. A nurse who eared for the mother at the birth of the child testified that the defendant paid her for her work and that on several occasions while she was in the house the defendant came and brought groceries and clothing for the baby. The grocer named by the mother as having supplied her with food said that he had done so for about two years, commencing early in 1934, at the request of the defendant, who always paid the bills.

The defendant testified that he was never at the home of the mother and had never had any relations with her; “ [I] do not know her.” He declared that he gave her no groceries or furniture, but “at one time” felt sorry for her and told the grocer to give her some food. As part of his defense he applied to the court for the appointment of a physician to make a bloodgrouping test of the mother, the child, and himself. This application was granted upon the consent of the mother. The blood test was made by a physician selected by the court, who thereafter testified that, according to the doctrine of such tests, the defendant is not the father of the child.

In recent years, what is generally called the Landsteiner or Bernstein blood-grouping test, has been presented to the courts as evidence in paternity cases. This test is predicated upon the medical theory that the red corpuscles in human blood contain two affirmative agglutinating substances, and that every individual’s blood falls into one of four classes and remains the same through life. According to the Mendelian law of inheritance, this blood individuality is an hereditary characteristic which passes from parent to child, and no agglutinating substance can appear in the blood of a child which is not present in the blood of one of its parents. (Tale Law Journal, vol. XLIII, p. 651.) According to the testimony of the physician in this case, the blood of the child ‘ ‘ contains the agglutinogen B which is not present in the blood of the mother and therefore must have been present in the blood of the father”, but the blood of the defendant does not contain this element. The physician also said that “the factors A and B cannot appear in the blood of the child unless present in the blood of one or both parents”, and that therefore, if the child was born to Daniela Aráis, the defendant cannot be the father.

The blood test as legal evidence has apparently been considered by only one American court of last resort, State v. Damm, 62 S. D. 123 [252 N. W. 7, 104 A. L. R. 430]. The defendant was charged with rape resulting in the birth of a child. At the trial he offered to be tested and asked the court to require the prosecutrix and the child to undergo the same test. The request was denied and it was held that there had been no abuse of discretion. In the opinion upon rehearing 64 S. D. 309, 266 N. W. 667, the court extensively reviewed the medical literature on the subject of blood tests, but adhered to its former ruling “to the effect that the trial court did not err in refusing to make the order requested”. This case therefore, passes upon an entirely different question from the one here presented.

Considered as legal evidence, the blood test is expert opinion because the conclusions reached by the examiner are based upon medical research and involve questions of chemistry and biology with which a layman is entirely unfamiliar. (1 Univ. of Chicago Law Review, 798 (1934).) The complex biological processes on which the inferences of paternity are made by experts are reviewed and discussed at length by Professor Wigmore in the 1934 Supplement to his work on Evidence. He says that in the present state of scientific discovery, it is generally accepted that the test can be used only negatively; that is, to show that a particular man is not the father of a particular child. He also presents tables showing the probabilities of proving nonpaternity when the blood group of a wrongfully accused man is known, and concludes that tests for negative proof “may after all not be determinative in a given case.” (P. 58.)

Whatever claims the medical profession may make for the test, in California “no evidence is by law made conclusive or unanswerable unless so declared by this code”. (Sec. 1978, Code Civ. Proc.) Expert testimony “is to be given the weight to which it appears in each case to be justly entitled”. (State Compensation Ins. Fund v. Industrial Acc. Com., 195 Cal. 174 [231 Pac. 996].) The law makes no distinction whatever between expert testimony and evidence of other character. (Treadwell v. Nickel, 194 Cal. 243 [228 Pac. 25].) Although it encourages the demonstration of the truth of the issues before a court by any means which are generally accepted as tending to prove the facts in dispute, “when there is a conflict • between scientific testimony and testimony as to facts, the jury or trial court must determine the relative weight of the evidence”. (Rolland v. Porterfield, 183 Cal. 466 [191 Pac. 913].)

These are fundamental rules which are firmly embedded in the law of evidence. However, the appellant contends that an exception has been made of medical testimony by the decision in William Simpson Const. Co. v. Industrial Acc. Com., 74 Cal. App. 239 [240 Pac. 58, 59], and cases which have followed it, and relies particularly upon a statement in the Simpson case to the effect that medical evidence is, in certain cases, “conclusive upon the question in issue”. There the cause of death was in dispute. A workman fell from a scaffold and an autopsy performed by two physicians showed a hemorrhage in his brain and a fracture of his skull. Each physician testified that, in his opinion, a stroke of apoplexy caused the hemorrhage prior to the fall and was the cause of death. The Industrial Accident Commission disregarded this testimony and found that death resulted from the fractured skull. In reviewing the case the court discussed the effect of medical evidence “where the subject is one for experts or skilled witnesses alone”, and held that “the Commission was not bound by the opinion of the medical experts that the proximate cause of the death of the deceased was the stroke of apoplexy”. However, it annulled the award because there was no evidence of any kind tending to prove that death resulted from the fall. The decision is, therefore, directly contrary to the position of the appellant here, although some of the language of the opinion taken out of context seems to support it.

In discussing the subject of expert testimony in the Simpson case, the court cited several eases in which damages were claimed because of the alleged malpractice of a physician, and then said: “The rule to be drawn from these decisions, as we understand them, appears to be that whenever the subject under consideration is one within the knowledge of experts only, and is not within the common knowledge of laymen, the expert evidence is conclusive upon the question in issue. It follows that in such eases, neither the court nor the jury can disregard such evidence of experts, but, on the other hand, they arc bound by such evidence, even if it is contradicted by nonexpert witnesses.” (P. 243.) The general rule is that the law does not require expert testimony to be offered wherever relevant. Malpractice cases are an exception. In such a case the plaintiff must prove by members of the defendant’s profession the standard of care or skill ordinarily used in the practice of that profession at a particular place. (Perkins v. Trueblood, 180 Cal. 437 [181 Pac. 642]; Callahan v. Hahnemann Hospital, 1 Cal. (2d) 447 [35 Pac. (2d) 536].) The reason for the exception is obvious. Only physicians who practice their profession at a particular place could have any knowledge of the method of treatment customarily used by the other members of the profession practicing there; the subject, therefore, calls for expert opinion only. But the testimony of an expert in such a case is not conclusive in the sense that it must be accepted as true. Indeed, there is often considerable disagreement between different witnesses concerning the standard of care or skill ordinarily used and the trier of fact must resolve the conflict thus raised. It is conclusive, however, to the extent that it may not be contradicted by the testimony of a non-expert witness.

In Hines v. Industrial Acc. Com., 215 Cal. 177 [8 Pac. (2d) 1021], the uncontradicted testimony of a physician concerning the cause of a physical disability was said to be conclusive. In Hartford A. & I. Co. v. Industrial Acc. Com., 140 Cal. App. 482 [35 Pac. (2d) 366], an award of compensation for an alleged injury was annulled because, in the opinion of the physicians who testified, the appellant’s disability had not been caused by his employment, and the expert evidence was held to be conclusive upon the question. It is clear that there is nothing in these cases or the Simpson case which supports the contentions of the defendant that the medical evidence presented on his behalf must be accepted as conclusive. Parentage is not exclusively a subject for expert evidence. The trial judge heard the testimony of the mother of the child and the witnesses who corroborated her concerning the numerous visits of the appellant to her home, and his actions with the child. The admissions of the defendant as related by these witnesses are also a part of the evidence. It was the duty of the judge to determine the fact of parentage upon all this evidence and to resolve the conflict arising from the testimony of the mother and her witnesses on the one hand and the evidence of the defendant, including the blood test, on the other. The finding so made was based upon substantial evidence and may not be successfully challenged upon appeal.

In the birth certificate, the mother caused John Morales to be named as the father of the child; but this does not raise an estoppel against her and require a reversal of the judgment, as the defendant contends. There is no evidence that she led the defendant to believe that this statement was true. On the contrary, the record supports the implied finding of the trial judge that she gave a fictitious name for the father at the request of the defendant and for the purpose of protecting him.

As there is ampTe evidence to support the finding of parentage, the trial judge did not abuse his discretion in denying the motion for a new trial. Also, as section 196a of the Civil Code requires a father to support his child, the trial court had power to order him to pay attorney’s fees in the action brought to enforce that obligation. The amount which the defendant was ordered to pay is not excessive in view of the evidence concerning his financial ability and was properly allowed. (Paxton v. Paxton, 150 Cal. 667 [89 Pac. 1083].)

The judgment is affirmed.

Shenk, J., Seawell, J., Waste, C. J., Langdon, J., and Nourse, J., pro tem., concurred.
      Reporter’s Note.—On January 25, 1938, a rehearing was denied by the Supreme Court and the opinion was corrected to read as above reported.


author: THE COURT.

text:
    [S. F. No. 15652.
    In Bank.
    December 29, 1937.]
    MICHAEL F. BANKS et al., Appellants, v. CIVIL SERVICE COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO et al., Respondents.

      Charles B. Stone for Appellants.
    John J. O'Toole, City Attorney, and Thomas P. Slevin, Deputy City Attorney, for Respondents.
   THE COURT.

In this matter, on the 23d day of July, 1937, an opinion and decision was rendered by this court which in its effect was an affirmance of the judgment from which the appeal had been taken. Thereafter, on the petition of the appellants, an order of rehearing of the cause was granted. In due course, following further argument and briefing by the respective parties herein, the appeal again has been submitted for determination. After further consideration thereof this court adheres to the conclusion which heretofore was expressed by it in the matter, and with the exception of an explanatory statement which is interpolated in the latter part thereof, now adopts as its present opinion that which formerly was prepared by Mr. Justice Curtis of this court. That opinion with the said additional statement thereto is as follows :

“This action is for declaratory relief and for a writ of mandate directed to respondents requiring them to perform their respective duties, enjoined upon them by law, relating to the salaries of the plaintiffs as jailers of the City and County of San Francisco. Plaintiffs claim that their salary is $197 per month for each plaintiff. The defendants, on the other hand, contend that the salary of each plaintiff is the sum of $170 per month and no more. Plaintiffs, under legal appointment, entered upon the discharge of their duties as jailers of said' city and county in April, 1932, and have regularly received the sum of $170 per month. They ask judgment in addition to declaratory relief and for the issuance of a writ of mandate for the difference between the sum of $197, the amount they claim as a monthly salary, and the sum of $170, the amount paid them as salary, or the sum of $27 per month each from April, 1932, to date of judgment. The action came on for trial and resulted in a judgment for the defendants, from which judgment the plaintiffs have appealed.
“There is no dispute as to the facts of the case. They are all contained in a stipulation of facts which is before us in a bill of exceptions. The plaintiffs, prior to the year 1932, had passed the civil service examination for the position of jailer and were placed on the eligible list for appointment to that position. On January 8, 1932, the City and County of San Francisco adopted a new charter. On January 6, 1932, the board of supervisors of said city and county passed the annual salary ordinance, which was approved by the mayor on January 13, 1932. This ordinance was No. 9136 (new series), and will be referred to hereafter as ordinance No. 9136. By this ordinance there was appropriated the sum of $197 per month for each position of jailer, beginning January 8, 1932, and ending June 30, 1932. A similar ordinance containing a similar appropriation was passed by said board of supervisors for the fiscal year beginning July 1, 1932. On January 22, 1932, the sheriff of said city and county, being authorized to make said appointments, requisitioned the Civil Service Commission for four jailers, stating the salary therefor at the sum of $197 per month each. The commission returned said requisition to the sheriff, stating that the commission would not approve or file the requisition unless the sheriff changed the salaries stated in said requisition to the sum of $170 per month each ‘in conformity with and as provided by the terms of sections 71 and 73 of the charter of the City and County of San Francisco and section 73 of the annual salary ordinance passed by the Board of Supervisors ... on January 6, 1932'. Thereupon the sheriff resubmitted said requisition, changing the salary from $197 to $170 per month for each of said positions. The commission then selected plaintiffs for said four positions and they were permanently appointed at the salary of $170 per month each. They began work as such jailers on the twenty-second day of April, 1932, except plaintiff Gibbons, who began his employment in the month of July of’that year, and they have continued ever since to fill said positions and to perform the services thereof at the salary of $170 per month each.
“ The positions to which the plaintiffs were appointed and are now holding are permanent positions, as distinguished from seasonal positions mentioned in ordinance No. 9136. Therefore any limitations placed upon either the Board of Supervisors or the Civil Service Commission by the terms of said ordinance respecting seasonal positions have no application to the permanent positions to which plaintiffs were appointed. Furthermore, plaintiffs were appointed subsequent to the adoption of ordinance No. 9136 to fill vacancies in said positions occurring prior to their appointment, and the provisions of the charter and those of ordinance No. 9136 applying to vacancies must control the actions of the Board of Supervisors and the Civil Service Commission in determining the salary to be received by the plaintiffs appointed to such vacancies.
“ Plaintiffs rely upon section 71 of the charter, which reads in part as follows: ‘Pending the adoption of salary standard's as in this charter provided, the salary and wage rates for positions subject to such standardization shall be as recommended by the officer, board or commission having appointing power for such positions and fixed by the budget and annual salary ordinance; . . . ’
“It is stipulated that since the effective date of the present charter of the City and County of San Francisco there has been no salary standardization ordinance adopted by the Board of Supervisors of said city and county.
" Petitioner contends that under the above-quoted provision of section 71 of the charter, the salary recommended by the sheriff, who was the appointive power in this instance, and who recommended a salary of $197 per month for each position, fixed the salary of the plaintiffs after their appointment to such positions. But it will be seen by a reading of the above provision of the charter that it is the salary recommended by the appointive power ‘and fixed by the budget and annual salary ordinance ’ which controls the compensation of such appointees. It is therefore necessary for us to examine the provisions of the budget and the annual salary ordinance to determine the amount of such compensation. No reference is made in the record or in the briefs to the budget or to the amount of salary ‘fixed by the budget’. We will therefore assume that neither party to this controversy makes any point as to what the budget does or does not contain. We have already referred to the fact that the salary ordinance adopted January 6, 1932, and approved by the mayor on January 15, 1932, appropriated the sum of $197 per month for each position of jailer, and thereby fixed the salary for such position at that amount. This provision of the ordinance applied to all persons then holding the position of jailer. It would undoubtedly apply to persons subsequently appointed to fill such positions unless the ordinance provided otherwise. We think the ordinance has made such provision. We have noted above that the plaintiffs were appointed to fill vacancies then existing in the positions of jailer. Section 73 of the salary ordinance, in our opinion, governs the amounts of salary for such persons in said municipality who may be appointed to fill vacancies in any position therein. This section reads as follows:
“ ‘ When a vacancy occurs in any position created by this ordinance which is subject to salary standardization, the person appointed to such vacancy shall receive only the salary of the entrance grade of the class to which the position belongs, as specified in the salary standardization ordinance; but in the event that said salary standardization ordinance has not yet been adopted when such vacancy occurs, the rate paid shall not exceed the rate fixed for such position in the proposed schedule of compensations issued by the civil service commission under date of April 9, 1930, or as amended or extended by the civil service commission as provided in Section 71 of the Charter. . . . ’
“As stated herein no salary standardization ordinance had at the time plaintiffs were appointed been adopted by said Board of Supervisors. By this section of the ordinance it will be seen that until such an ordinance has been adopted, the person appointed to fill a vacancy shall receive a salary at a rate not exceeding that fixed in a proposed schedule of compensation issued by the Civil Service Commission under date of April 9, 1930, ‘or as amended or extended by the Civil Service Commission ’. No claim is made that there has been any amendment or extension of the schedules of compensation issued April 9, 1930, by the Civil Service Commission. It is further conceded that the proposed schedule of compensation of the Civil Service Commission of April 9, 1930, fixed the entrance grade salary for the position of jailer at the sum of $170 per month, and a maximum grade salary of $190 per month. As we construe this provision of said proposed schedule the entrance grade salary ’ is the salary to be paid those appointed to fill vacancies occurring in the positions of jailer, while those who have served for longer periods of time may eventually be entitled to receive the ‘maximum grade salary’. We can see no legal objection to the action of the Board of Supervisors in referring to this proposed schedule of the Civil Service Commission and in adopting by reference the salary schedule contained therein. The plaintiffs objected to this proposed schedule when offered in evidence by the defendants. Their objection was overruled and plaintiffs now assign this action of the court as erroneous, relying upon the case of King v. Leavy, 124 Cal. App. 422 [12 Pac. (2d) 661], in which case the court held that this proposed schedule of compensation was not evidence in that case for either party. The ease of King v. heavy, supra, did not involve the salary of one appointed to a vacancy and section 73 of the salary ordinance was not involved in that action. The case is not, therefore, controlling. As section 73 expressly refers to said proposed schedules and limits salaries of those appointed to vacancies occurring before the adoption of a salary standardization ordinance to the rates therein fixed, we entertain no doubt as to its admissibility in evidence in this case and that its provisions are controlling to the extent that it was approved by section 73 of the .salary ordinance and made a part of said ordinance by reference. There is no question as to the validity of an ordinance which by reference adopts an existing statute, ordinance, or other public document. {In re Burke, 190 Cal. 326 [212 Pae. 193]; In re Kinney, 53 Cal. App. 792 [200 Pac. 966].) As section 73 of the salary ordinance has fixed plaintiffs’ salary at the amount of $170 per month, its provisions are binding upon both the plaintiff and the officials of said municipality.”

In the case of Francis v. Leavy, 131 Cal. App. 620, 622, 623 [21 Pac. (2d) 979], it is held that the power to fix compensation for officers and employees of the City and County of San Francisco rests with its Board of Supervisors. Assuming that such ruling is correct, necessarily it would follow that the provisions that are contained in the several salary ordinances that yearly have been adopted by the Board of Supervisors, are controlling. In accord with that situation, as far as is pertinent to the instant matter, the salary of each of the plaintiffs was fixed as follows: for the fiscal year 1932-1933, by the provisions of the salary ordinance the rate of compensation for jailers generally was fixed at $197 per month. But by reason of the fact that each of the plaintiffs was appointed to fill a vacancy, by virtue of the provisions contained in section 73 of the salary ordinance, in accordance with the “proposed schedule of compensation issued by the Civil Service Commission under date of April 9, 1930”, the salary of each of the plaintiffs was fixed at $170 per month for that year.

In each of the fiscal years of 1933-1934, 193til935 and 1935-1936, by the provisions of the salary ordinance for those respective years, the salary of each of the plaintiffs was fixed at $170 per month; consequently in neither of those years could the provisions of said section 73 of the salary ordinance, as far as they related to the recommendations of the Civil Service Commission, take effect or be operative in any way. But by the provision that was contained in the salary ordinance of 1936-1937, the salary of each of the plaintiffs was fixed at $190 per month. By the time that ordinance became effective, each of the plaintiffs long since had passed not only the beginners’ stage, but also the two succeeding years in his position, with the result that the provision in said section 73 of the salary ordinance which related to one who had been appointed to fill a vacancy, had no application. But since the judgment- from which the appeal herein was taken was rendered on July 29, 1935, it follows that at that time it was in complete accord with the law.

“ Plaintiffs complain that there are some fifty-eight other jailers serving the City and County of San Francisco, all of whom receive a salary of $197 per month, and only the four plaintiffs are limited to a salary of $170 per month. Apparently this is an inequality of which the plaintiffs may well complain, but the power to fix salaries of persons holding positions like or similar to those held by plaintiffs has been lodged by the charter in the Board of Supervisors. Plaintiffs’ remedy lies not with the courts but with the authority upon whom the charter has imposed the duty of fixing the salaries of its officers.”

The judgment is affirmed. It is further ordered that the appeal from the order by which the motion for new trial was denied be and it is dismissed.


author: SHENK, J.

text:
    [L. A. No. 16337.
    In Bank.
    December 29, 1937.]
    GREAT WESTERN DISTILLERY PRODUCTS, INC. (a Corporation), Appellant, v. JOHN A. WATHEN DISTILLERY COMPANY (a Corporation) et al., Respondents.

      Goldenhorn & Komins, I. Faerber Goldenhorn, Robert Komins and Solomon Rosenbaum for Appellant.
    Michael F. Shannon and Thomas A. Wood for Respondents.
   SHENK, J.

A petition for hearing was granted for the purpose of giving further consideration to the contention that the contract sued on was void under section 1673 of the Civil Code. Upon such further consideration we adopt as a portion of the opinion of this court the opinion of the District Court of Appeal prepared by Mr. Presiding Justice Grail as follows:

“A general demurrer to the plaintiff’s first amended complaint was sustained without leave to amend and judgment was entered accordingly. The appeal is taken from said judgment.
“Under the allegations of one of the counts of the complaint the parties entered into an agreement which, when boiled down, reads as follows: The defendant enters into an agreement with the plaintiff whereby the defendant agrees with the plaintiff that as long as the plaintiff purchases and continues to purchase from the defendant all of its John A. Wathen Distillery Company warehouse receipts for whiskey that it may require and sells and exploits in California said warehouse receipts, and refrains from selling and exploiting warehouse receipts from any other distillery, the defendant will not sell in California any of the said warehouse receipts [for resale to investors] to any other person except one in San Francisco. The complaint further alleges that the plaintiff, relying upon the said agreement, purchased from the defendant a quantity of said warehouse receipts at the time of entering into said contract and that thereafter the plaintiff continued to purchase quantities of said receipts from the defendant and at all times has been and now is and will continue to be ready, willing and able to purchase additional receipts and will refrain from purchasing receipts from other distilleries; that in reliance upon said agreement the plaintiff expended large sums of money for the purpose of advertising, circularizing and exploiting the defendant’s warehouse receipts, and further large sums of money for opening branch offices in California for the purpose of carrying on the business contemplated by said contract, stating the amounts; that the defendant breached said contract, stating the facts, and that by reason thereof the plaintiff was damaged in certain sums, naming them.
“In another count plaintiff, in addition to the above, alleges that the defendant did wilfully, falsely and fraudulently enter into said contract with intent to deceive and defraud the plaintiff and to induce the plaintiff to purchase and agree to purchase in the future and sell, advertise, circularize and exploit said warehouse receipts. That said representations, agreements and covenants of the defendant were fraudulent and false and known by the defendant to be fraudulent and false in that the defendant never intended to perform the same, and that defendant did, during the term of said representations, wilfully and maliciously and with intent to injure the plaintiff’s business sell and dispose of large numbers of said warehouse receipts to others.
“ The first contention of the defendant is that the foregoing contract is void as a contract and unavailing as a representation, in this, that it violates section 1673 of the Civil Code, which provides, in effect, that every contract by which anyone is restrained from exercising a lawful profession, trade or business of any kind is to that extent void. In our view of the contract its terms indicate that it was entered into, not for the purpose of restricting any trade or business, but for the purpose of promoting one. It is true the contract makes the plaintiff, except one other, the exclusive purchaser in California of the defendant’s warehouse receipts, but obviously, both the purpose and effect of the contract are, not to restrict the sale of the defendant’s receipts, but to create an instrumentality by which the receipts will be exploited and sold. The contract does not restrain anyone from exercising a trade or business of any kind within the purview of section 1673 of the Civil Code.
“Statutes are interpreted in the light of reason and common sense, and it may be stated as a general rule that courts will not hold to be in restraint of trade a contract between individuals, the main purpose and effect of which are to promote and increase business in the line affected, merely because its operations might possibly in some theoretical way incidentally and indirectly restrict trade in such line. This view has often been sustained by the Supreme Court of the United States in analogous cases. (See numerous cases cited and digested in J. W. Ripy & Son v. Art Wall Paper Mills, 41 Okl. 20 [136 Pac. 1080, 51 L. E. A. (N. S.) 33.].)
“The defendant’s next contention is that the contract was fatally uncertain in that there is no agreement as to the price of the merchandise to be sold by the defendant and purchased by the plaintiff. There is no fatal uncertainty in this respect. The rule is that when no price is specified in a contract for the sale of goods, whether ex-ecutory or executed, the price is supplied by the implication that a reasonable price is intended. (Dickerman v. Ohashi Importing Co., 63 Cal. App. 101 [218 Pac. 458]; Williston on Sales [2d ed., 1924], see. 171.) This rule was adopted in the Uniform Sales Act and has been incorporated into our law by section 1729 (4) of the Civil Code, which provides as follows: ‘Where the price is not determined in accordance with the foregoing provisions the buyer must pay a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case. ’
“The final contention of the defendant is that the contract was for an indefinite time and therefore was terminable at the will of either party thereto. The failure to specifically limit the duration of the contract did not fatally affect it and did not give rise to a right to terminate the contract at will without a liability for damages. Even where a contract for the sale of goods is silent as to its duration, the party seeking to terminate it must give the other party reasonable notice thereof, and such termination cannot be effected until at least a reasonable time has expired. (Southern Pac. Co. v. Spring Valley Water Co., 173 Cal. 291 [159 Pac. 865, L. R. A. 1917E, 680]; 13 Cor. Jur. 604, see. 630.)
“In the instant case the contract is not silent with regard to its duration. On the contrary, it provides that ‘ as long as the plaintiff purchases and continues to purchase . . . ’, etc., the contract will remain in effect. The contract is very similar to the one involved in the case of Noble v. Reid-Avery Co., 89 Cal. App. 75 [264 Pac. 941], In that case the agreement was that the plaintiff was to purchase for resale from the defendant a large quantity of welding rods, and would, from time to time, purchase additional amounts as necessity required and ‘it was distinctly understood at- the time of the first order of goods that the plaintiff should have exclusive right to sell the goods and represent the defendant in Southern California, as long as they were able to give faithful service and a business management to the trade and produce the trade that was warranted in the territory allowed to them, and no longer’. The court said, ‘Such provisions for the duration of the contract are sufficiently certain and valid. As a general proposition the failure of an executory contract to state a time presently definite for its termination does not render it void for uncertainty. ’ Citations for the rule are given and the question is rather fully discussed. ’ ’

The defendants particularly rely on Morey v. Paladini, 187 Cal. 727 [203 Pac. 760], and Chamberlain v. Augustine, 172 Cal. 285 [156 Pac. 479], as compelling a contrary conclusion on the question whether the agreement is in restraint of trade. In Morey v. Paladini, supra, the contract was that the plaintiff’s assignor was to deliver to the defendant at San Diego five tons of live and boiled lobsters each week during the “closed” season between April 2, 1917, and October 15, 1917; and the defendant was granted the exclusive right to sell the lobsters in a portion of California, and in Oregon, Washington and Nevada. The defendant refused shipments after May 15th. Judgment for the plaintiff was reversed. The ground of the reversal was that the evidence showed that the purpose of the plaintiff’s assignor was to control the entire shipment of lobsters into the territory during the season noted, and that the reason for the refusal of the defendant to abide by the contract was the failure of the plaintiff’s assignor to obtain that control of the fisheries and the shipments, as a consequence of which the market became overstocked. It was held to have been conclusively established by the evidence that in the inception of the transaction it was contemplated by the parties that the contract was one which would result in at least a partial restraint of trade. The facts concerning the real intent of the parties were thus brought to light upon the framing of the issues of fact and a. trial on the merits.

The purport of the agreement in the case of Chamberlain v. Augustine, supra, as interpreted by the court, disclosed a contract directly within the contemplation of said section 1673. The defendant, upon the sale of certain corporate stock by him, had agreed not to engage in a business to compete with the corporation’s business within a three-year period. It was held that the sale of stock was not a sale of the good will and did not bring the agreement within the exception of section 1674 of the Civil Code.

Likewise in Endicott v. Rosenthal, 216 Cal. 721 [16 Pac. (2d) 673], the facts surrounding its execution showed the contract to be part of a scheme to restrain competition in the business of clothes dyeing and cleaning in Los Angeles and Orange Counties.

A distinction between contracts tending solely to promote the business of the parties to the contract and those, such as involved in Morey v. Pdladini, supra, wherein a similar object is designed to be accomplished by stifling competition and securing a monopoly, is recognized in Associated Oil Co. v. Myers, 217 Cal. 297, at page 304 et seq. [18 Pac. (2d) 668]. In that case the defendant had agreed to sell at retail on premises leased to him by the plaintiff, only the petroleum products vended by the plaintiff. The contract was held to be valid. Any inconsistent announcement made in the case of Coombs v. Burk, 40 Cal. App. 8 [180 Pac. 59], also relied upon by the defendant herein, was rejected as “not controlling”.

The decisions in this state have recognized and applied the distinction made by authority elsewhere that if the public welfare be not involved and the restraint upon one party be not greater than protection to the other requires, the contract will be sustained although it in some degree may be said to restrain trade. (Associated Oil Co. v. Myers, supra, p. 306; D. Ghirardelli Go. v. Hunsicker, 164 Cal. 355 [128 Pac. 1041]; Grogan v. Chaffee, 156 Cal. 611 [105 Pac. 745, 27 L. R A. (N. S.) 395]; Herriman v. Menzies, 115 Cal. 16 [44 Pac. 660, 46 Pac. 730, 56 Am. St. Rep. 81, 35 L. R. A. 318]; Twomey v. Peoples’ Ice Co., 66 Cal. 233 [5 Pac. 158]; Schwalm v. Holmes, 49 Cal. 665; Noble v. Reid-Avery Co., 89 Cal. App. 75 [264 Pac. 341]; Appalachian Coals, Inc., v. United States, 288 U. S. 344, 360, 361 [53 Sup. Ct. 471, 77 L. Ed. 825]; Board of Trade v. United States, 246 U. S. 231, 238 [38 Sup. Ct. 242, 62 L. Ed. 683, Ann. Cas. 1918D, 1207]; United States v. American Tobacco Co., 221 U. S. 106, 179, 180 [31 Sup. Ct. 632, 55 L. Ed. 663]; Gibbs v. Baltimore Gas Co., 130 U. S. 396, 409 [9 Sup. Ct. 553, 32 L. Ed. 979]; Peerless Pattern Co. v. Gauntlett Dry Goods Co., 171 Mich. 158 [136 N. W. 1113, 42 L. R. A. (N. S.) 843], and cases cited in note; J. W. Ripy & Son v. Art Wall Paper Mills, 41 Okl. 20 [136 Pac. 1080, 51 L. R. A. (N. S.) 33].)

In Grogan v. Chaffee, supra, at page 615, it was noted that the provisions of the code sections here involved must be construed in the light of such well-settled principles.

We conclude that the complaint in the present case alleges a contract which on its face discloses merely an intent to provide for the promotion of the business of the defendant in the sale of warehouse receipts issued by it on its stores of bourbon whiskey. It may not be supposed that the promotion of sales to investors by the plaintiff exclusively, in the territory designated of none other than bourbon whiskey storage receipts issued by the defendant, would have any tendency to stifle competition or create a monopoly in that class of commodity. Alone and in the absence of an attack upon the validity of the apparent purpose of the contract, it must be considered valid. (Pacific Factor Co. v. Adler, 90 Cal. 110, 121 [27 Pac. 36, 25 Am. St. Rep. 102].) The contract alleged is nothing more than an attempt by the parties to create a market, within a small designated territory, for the warehouse receipts of bourbon whiskey of one firm to investors in that type of security. Such a limited restriction does not appear to affect the public interests and is obviously designed only to protect the respective parties in dealing with each other. Furthermore, it does not appear that it was the intent of the parties to control by monopoly the market price of the securities or in any manner to interfere with the normal fluctuations resulting from the law of supply and demand. The practical effect of the contract was to make the plaintiff the exclusive agent of the defendant in the territory assigned. In other words the plaintiff was in reality employed by the defendant to develop a market for the sale of the commodity within the limited territory. The special character of the commodity indicates that the price in the market might tend to fluctuate from day to day. It should also be noted that under all the circumstances the parties no doubt intended to leave the matter of the price to be controlled by the existing market conditions at the several times of sale by the defendant to the plaintiff. This apparent intention, therefore, should govern in arriving at the conclusion that the contract alleged was complete and valid although no price was stated.

The judgment is reversed.

Seawell, J., Waste, C. J., Langdon, J., and Nourse, J., pro tern., concurred.