text:
    [Crim. No. 4149.
    In Bank.
    May 27, 1938.]
    THE PEOPLE, Respondent, v. CATHERINE A. McKENNA, Appellant.

      Catherine A. McKenna, in pro. per., and Charles Ostrom for Appellant.
    U. S. Webb, Attorney-General, John O. Palstine, Deputy Attorney-General, for Respondent.
   EDMONDS, J.

The defendant has appealed from a judgment of conviction upon each of seven counts of an indictment, and from an order denying a new trial. By the first count of the indictment the defendant was charged with perjury; in the next two it is alleged that she offered false evidence in violation of the provisions of section 132 of the Penal Code; by two other counts she was charged with preparing false evidence in violation of the provisions of section 134 of the Penal Code; and in the last two counts it is alleged that the defendant committed forgery.

In 1915 George W. Pierson and his wife executed and delivered two notes payable to EdAvard Russek, each secured by a mortgage on real estate in which he was named as mortgagee. Later the defendant, who is an attorney at law, acquired the property described in these mortgages, and the notes and mortgages, passed to Louie S. Dexter. Thereafter a foreclosure action Avas commenced by Mrs. Dexter. In this action a decree of foreclosure was rendered in favor of H. B. Busing, as administrator of Mrs. Dexter’s estate, she having died while the litigation was pending. This decree was affirmed upon appeal. (Busing v. Pierson, 1 Cal. (2d) 495 [36 Pac. (2d) 116].)

Some time later and before the property had been sold under the decree of foreclosure, the defendant conveyed it to W. P. Nichols, her daughter, and commenced two actions, one to enjoin the sale of the real property and the other to quiet title. In each of these eases the daughter was named as plaintiff. When they came on for trial, they were consolidated and Mrs. McKenna on behalf of the plaintiff offered two written documents in evidence, each of which was received and marked as an exhibit. The charges upon which the defendant has been convicted are based upon them.

One of the exhibits is a letter to the defendant dated July 16, 1936, written by Stephen B. Dexter, who was the husband of Louie S. Dexter, and acknowledged before a notary public. It reads as follows:

“Dear Mrs. McKenna:
" In keeping with the proposition made to you on yesterday touching upon certain quitclaim deeds to be issued to you covering the certain properties contained in two mortgages for $800 each, given a number of years ago by one George Pierson, said properties being located in the Ela View Tract, this City and County, I am enclosing said deeds, which are intended to and do convey all interest in and to said mortgages and notes, to grantee.
“In further keeping with our understanding on this matter, I have notified the Administrator of the Estate of Louie S. Dexter, deceased, of my course of action in this matter, as above stated, and have stated to him that any and all equity that Louie S. Dexter might have in this property as evidenced by that certain suit of Louie S. Dexter vs. George M. Pierson, et al., #200705, Superior Court, Los Angeles, California, should be identified and considered by him as having been passed over to yourself, as all of Louie S. Dexter’s interest was passed to Golden State Holding Co. prior to her death. This statement is given under Notary Seal at your request.
“Very truly yours,
“ (Signed) Stephen B. Dexter
‘ ‘ Stephen B. Dexter. ’ ’

Another document offered in evidence by the defendant is a photostatic,copy of a purported “Assignment of Mortgage” signed by Louie S. Dexter. This instrument recites that “I, Louie S. Dexter, do by these presents grant, bargain, sell and assign, transfer and set over unto the Golden State Holding Company those two certain Indentures of Mortgages”, executed by George M. Pierson and wife to Edward Russek. A certificate signed “Elliott IT. Barrett”, Notary Public, states that Louie S. Dexter acknowledged to him that she executed this assignment. The contention of the prosecution is that the defendant inserted the italicized words in the letter after it was received by her from Mr. Dexter and that she made the photostat, or had it made under her direction, by photographing parts of several writings and signatures affixed to them.

After the cases were submitted for decision, they were reopened for further evidence. The defendant then testified that the letter offered and received in evidence was in the same form as when she received it from Mr. Dexter and that she had obtained the “Assignment of Mortgage” from the corporate records of Golden State Holding Company.

The defendant advances a number of points which she relies upon for reversal. First, she contends that her demurrer to counts VI and VII, which charged her with forgery, should have been sustained since neither of the documents offered and received in evidence could be the subject of forgery within the meaning of section 470 of the Penal Code. Next, she claims that the evidence is insufficient to sustain the verdicts. Another contention is that neither of the documents were material to any issue in the cases in which they were offered and received in evidence. Other claims of error relied upon concern the admission or rejection of evidence and the refusal of' the trial court to give certain instructions offered by the defendant. She also asserts that the district attorney was guilty of misconduct when, during the trial of the case, he released to the press information that the files in the courtroom where defendant was being tried had been rifled.

The crime of forgery consists either in the false making or alteration of a document without authority or the uttering (making use) of such a document with the intent to defraud. (Sec. 470, Pen. Code.) Whether the forged instrument is one of a particular name or character or, if genuine, would create legal liability, is immaterial; the test is whether upon its face it will have the effect of defrauding one who acts upon it as genuine. (People v. Gayle, 202 Cal. 159 [259 Pac. 750]; People v. Thorn, 138 Cal. App. 714 [33 Pac. (2d) 5]; People v. Munroe, 100 Cal. 664 [35 Pac. 326, 38 Am. St. Rep. 323, 24 L. R. A. 33].) A deed which conveys no title may be the subject of forgery. (People v. Baender, 68 Cal. App. 49 [228 Pac. 536].)

Measured by these rules each instrument is one which could be the basis for a charge of forgery. The “Assignment of Mortgage” purports to transfer notes and mortgages, the subject of dispute in the consolidated eases, from Louie S. Dexter to Golden State Holding Company. This transfer was a necessary link in the chain of title sought to be proved by W. P. Nichols. The letter might, and possibly did, pass as a binding declaration against interest in the consolidated cases. The making of the alterations and the introduction of the letter in evidence clearly show that the person doing these things intended to defraud another. Whether the letter could have had any actual legal effect is immaterial. The demurrers to counts VI and VII charging the defendant with forgery of these two instruments were properly overruled.

Upon the merits there is substantial evidence to support the verdicts. On behalf of the People, Mr. Dexter, the writer of the letter, testified that as signed by him it did not include the portions which the indictment charges the defendant with adding. As the president and manager of Golden State Holding Company, he testified that the records of the corporation did not include the “Assignment of Mortgage” which the defendant claimed was copied from its minute book. An expert examiner of questioned documents testified that the alleged additions to the letter were written upon the same typewriter as that used in writing a pleading which had been signed by the defendant and filed in the quiet title action. He also presented photographs which he said positively show that the photostatic copy of the claimed “Assignment of Mortgage” had been produced by photographing several different writings which were made on the same typewriter as that used for the pleading. As against this evidence there is the testimony of Mrs. McKenna denying the charges against her. The jury decided the issue raised by this direct conflict in the evidence adversely to the defendant and this court is bound by its verdict.

Defendant’s argument that the altered and fabricated documents were not material to any of the issues in the consolidated cases goes only to those counts charging her with preparing and offering false evidence. However, an analysis of the pleadings in those cases clearly shows that the two documents were material. In prosecuting the actions brought in the name of her daughter it was the contention of Mrs. McKenna that in 1927, after the filing of the foreclosure suit, Louie S. Dexter had transferred the notes and mortgages to Golden State Holding Company, a corporation, which subsequently conveyed its interest in the property by quitclaim deeds to W. P. Nichols. It was alleged iu one of the complaints “that subsequent to the filing of” the foreclosure suit by Louie S. Dexter, “this plaintiff acquired all of the interest and title of the said Louie S. Dexter, in and to the said lands described in said action, and in and to the two said certain notes and mortgages and notes therein described by deeds of conveyances duly recorded . . . , and that the said Louie S. Dexter duly assigned, transferred and conveyed, and this plaintiff has by such conveyances become the owner and entitled to all of the right, title, or interest of said Louie S. Dexter in and to the said notes and mortgages described in the said complaint by conveyances duly made prior to the death of said Louie S. Dexter, and that this defendant H. B. Busing, as administrator of the estate of said Louie S. Dexter, deceased, has no right, title or claim in or to the said notes or mortgages ...”

The answer of the defendant Busing specifically challenged these allegations. He denied that subsequent to the filing of the foreclosure suit, “the plaintiff, W. P. Nichols, acquired all the interest and title of the said Louie S. Dexter in and to the lands described in said action and . . . that she acquired any or all interest in two certain notes and mortgages described in said action No. 200705; and they [Busing and another defendant] further allege that whatever deeds are referred to in the complaint on page 1 thereof, were obtained, as these defendants are informed and believe, from divers persons; that the deeds do not describe nor purport to be an assignment of said notes and mortgages, but purport to be quitclaims as to the real estate covered by said mortgages, and were not assignments of said notes and mortgages, and that the said W. P. Nichols acquired no interest in said notes and mortgages by virtue of said deeds”. It is apparent from these pleadings that the main point in issue was whether Louie S. Dexter had transferred the notes and mortgages to the Golden State Holding Company. The “Assignment of Mortgage” supported the plaintiff’s claim to title and was material evidence upon that issue. Akin to this question is appellant’s further claim that by the additions to the letter, the effect of the instrument was not changed in any material way. It is clear that the effect of the letter with the statements concerning transfer of title to the notes and mortgages is much different than it is without those statements. The charge of preparing and offering false evidence in this particular was, therefore, fully sustained, and no error was committed in instructing the jury that the alterations were material.

Also, the ownership of the notes and mortgages is of no consequence so far as the defendant’s responsibility for her acts is concerned. Title to these instruments was the question in controvers) in the consolidated cases. The jury by its verdicts impliedly found that the defendant manufactured the “Assignment of Mortgage’’. The instrument was offered in evidence as a basis for the determination of property rights. Conceding that there may have been other evidence that W. P. Nichols owned the notes and mortgages, this fact would not excuse the preparation and offering of forged instruments tending to prove the same title.

The defendant also urges that the trial court erroneously excluded a photograph which she offered in evidence, and which it was claimed would show that one of the People’s exhibits was not a correct representation. The exhibit was received in evidence upon proof that it had been made in a certain way. However, the undisputed testimony in connection with the defendant’s exemplar established that the paper used in making it was not the same as that used in making the picture introduced in evidence by the district attorney. To be admissible in evidence it must be shown that an exemplar was made under the same conditions as the one which it seeks to disprove. (Sonoma County v. Stofen, 125 Cal. 32 [57 Pac. 681]; People v. Halbert, 78 Cal. App. 598 [248 Pac. 969]; Western Soil Bacteria Co. v. O’Brien, 49 Cal. App. 707 [194 Pac. 72].)

Complaint is made that the trial judge allowed the district attorney in cross-examining the defendant’s character witnesses to ask them whether their opinion of her reputation for truth, honesty and integrity in the community in which she lives would be changed if they had heard her character questioned because of certain acts done or statements made by her. In the absence of a showing of bad faith it is always within the scope of legitimate cross-examination to ask a character witness whether he has heard the person whose reputation is under investigation accused of conduct inconsistent with the character attributed to him by the witness. (People v. Stevens, 5 Cal. (2d) 92, 99 [53 Pac. (2d) 133].) The court properly allowed the questions asked by the district attorney.

The appellant next contends that prejudicial error was committed by the trial court in admitting into evidence the decree in the consolidated cases in favor of H. B. Busing and against W. P. Nichols, and in allowing it to be read to the jury. No objection to its introduction was made by the appellant, and although the decree was not final, an appeal having been taken from it, this fact was shown as the defendant introduced the notice of appeal therefrom. In any event, it was evidence tending to show that H. B. Busing, who was alleged to have been defrauded, had a valid claim of title to the property and no erior was committed by the trial judge in his rulings.

The appellant also urges that the court committed prejudicial error in giving certain instructions and in refusing to give others. Complaint is first made of an instruction stating that it is the right of the trial judge or counsel to comment on the failure of the defendant to explain or deny any evidence against her. No such comment was made and the appellant was not prejudiced by the general statement complained of. Another general instruction defining conduct which amounts to aiding and abetting another in the commission of a crime was a correct statement of the law and was properly given. 'Under the evidence the jury might have found that the defendant did not personally type the letter or prepare the “Assignment of Mortgage” but that she aided and abetted another in doing so.

The court also instructed the jury that a mortgagor and mortgagee may each have separate and distinct interests in the same property at the same time. Appellant’s criticism of this instruction has no merit, for in attacking it she fallaciously assumes that a complete title by merger in W. P. Nichols had been proved. However, no such title was established and the court did not err in giving the challenged instruction.

In the general charge the jury was instructed that the testimony of a witness is corroborated when it is shown “to comport with some facts otherwise known or established by the evidence”. If the word “known” appearing in the transcript is not a typographical error made in copying “shown” and the instruction was given as it is written, no prejudice resulted from this mistake inasmuch as the jurors were elsewhere clearly charged that they must render their verdict upon the evidence. Nor can the appellant complain of the instructions which assume that she had offered the letter in evidence, for this fact was not denied. In her testimony the defendant admitted that the letter was introduced in evidence by her in the consolidated eases. Another instruction complained of relates to the materiality of the defendant’s testimony upon the reopening of the consolidated cases concerning the genuineness of the letter and the “Assignment of Mortgage”. As has been stated, each of these instruments was material to the cases on trial when they were offered; hence the instruction was properly given.

All of the numerous instructions offered by the appellant and refused by the court have been examined. Many of these contain erroneous statements of law. Some of them were undoubtedly correct in whole or in part, but these were fully and fairly covered by the trial judge in other instructions given to the jury, and there is no error in the rulings upon them.

During the trial of the defendant, the Los Angeles newspapers printed reports that certain files of evidence in the chambers of the trial judge and the offices of the district attorney had been “ransacked”. Judge Valentine and Deputy District Attorney Fredericks were quoted as saying they were positive some person facing trial had sought to locate and destroy incriminating documents or other evidence. None of the articles mentioned the defendant and the record does not show that any one of them was ever seen by any member of the jury. The defendant has made no showing whatever of any prejudice to her resulting from these publications.

Another of defendant’s contentions is that the expert witness who testified on behalf of the People based his opinion that the “Assignment of Mortgage” was forgery upon an examination of the negative of a photograph of it. But this fact does not impeach the opinion. The negative was sufficiently identified, and the witness explained that certain things which cannot be seen on a positive print appear on a negative one because each additional photographic process eliminates a certain amount of detail in the subject photographed.

The appellant’s final point is wholly unintelligible. She complains of the exclusion of a certain decree quieting title in a case entitled Dexter v. Lockwood, setting forth the decree verbatim, in her brief without any references to the transcript and without any showing as to whether it was even offered in evidence. A careful examination of the entire transcript discloses no mention of such a decree. The defendant states in her brief that a motion was made to set the decree aside, but the disposition, if any, of this motion is not given. The only effect of this decree would be further evidence of her daughter’s title to the property, and it would not necessarily be a defense to the criminal prosecution.

The judgment and order appealed from are and each of them is affirmed.

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

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


source: Caselaw Access Project

author: WASTE, C. J.

license: Public Domain

text:
    [L. A. No. 16399.
    In Bank.
    May 31, 1938.]
    In the Matter of the Estate of WILLIAM W. WALLACE, Deceased. ELLEN RUTH O’MARA et al., Appellants, v. THE FARMERS AND MERCHANTS NATIONAL BANK OF LOS ANGELES et al., Respondents.

      Meserve, Mumper, Hughes & Robertson and Roy L. Herndon for Appellants.
    Eckman & Lindstrom and Morton L. Barker for Respondents.
   WASTE, C. J.

The final decree of distribution entered in decedent’s estate followed closely the provisions of his will concerning the creation of a trust and the payment by the trustee of the net income from the trust property to decedent's widow and two daughters, and further provided: “Upon the death or remarriage of said widow, the said trust shall terminate and said trustee shall distribute (italics added) the balance remaining in said trust fund to the two above-named daughters of decedent, in equal proportions, share and share alike.” Margaret 0’Mara, one of the daughters, predeceased the widow, and there was distributed to the Farmers and Merchants Bank, as trustee, the entire residue, to pay $50 a month to the widow of Wallace, a second wife, and any excess of $50 to be paid to his daughters by a former marriage, Jessie W. Buchanan and Margaret W. 0 ’Mara, and, in the event of the death or remarriage of the widow, then the trustee should turn over the balance remaining to these two daughters. The question for determination is whether the daughters, under the decree of distribution of the father’s estate, acquired contingent or vested remainders in the trust property. Both the trial court and the District Court of Appeal held that they were contingent remainders, the effect of which, obviously, is intestacy as to one-half of the trust property because of the lapsing of one daughter’s interest in the remainder by reason of her death prior to the termination of the trust.

A construction favorable to testacy should obtain where the language used reasonably admits of such construction. (Estate of Dunphy, 147 Cal. 95-99 [81 Pac. 315]; Estate of Ingram, 104 Cal. App. 1-8 [285 Pac. 365].) In support of the contention that a contingent remainder only was created in the daughters, it is argued that to create a vested remainder it is necessary that there be a present conveyance of a future estate to the beneficiary; that the language employed in the decree of distribution here involved (which varies slightly from but is now controlling of the language of the will) (Keating v. Smith, 154 Cal. 186 [97 Pac. 300]), required independent actipn on the part of the trustee before title passed to the beneficiaries and that it contains no language giving to the daughters a present vested interest in the corpus of the estate.

The question presented is one of construction and turns principally upon the meaning of the words “shall distribute” appearing in the decree of distribution. The District Court of Appeal construed these words to be the equivalent of “to transfer and convey” and “shall deliver”, appearing in cited cases, and held no vested estate in remainder was created. On the other hand, the words “shall distribute”, employed in the present case, may reasonably be interpreted to mean that upon the death of decedent’s widow the trustee shall distribute or deliver possession of the trust res in which the decedent’s daughters already had a vested remainder. In construing the word “distribute” in Estate of Dunphy, supra, as used by the testator in that case, we stated: ‘ ‘ There is no direction whatever to the trustees to convey the property to the remaindermen and no direction to them at all upon that subject. There is nothing in the language used (as there was in the will of Fair) which necessarily means that title could pass only by a conveyance by the trustees, or which embarrasses the court in upholding the will by construing the language as constituting valid devises and not an invalid trust to convey. In each of the three cases, in the latter part of the language, clear words of direct devise —‘go to’—are used; and to support appellant’s contention it must be rigidly held that prior words—in two instances ‘ shall be transferred and distributed’, and in the other ‘shall be paid’—necessarily mean that the title to the property could pass only by the trustees’ conveyance. The word ‘distributed’ is not a technical word in conveyancing and is not usually found in deeds. If it have any legal technical meaning, it has such meaning with reference to decrees of distribution in probate courts. The use of this word, therefore, contains no intimation of an intent to create a trust to convey, or that the testator supposed that a conveyance by the trustees was necessary to pass title. Neither does the word ‘transfer’ necessarily mean a passing of the title to land by a trustees’ conveyance, and it would not have that meaning even if there had been a direction to the trustees to transfer. And the words ‘shall be paid’, while inapt as applied to real property, simply mean, unless we are to defeat the testator's will by holding them to have no meaning, that the property is devised to the remaindermen. There is nothing in them implying a conveyance of the title by the trustees. The contention of appellant that because the property is devised in the first instance in trust to trustees, therefore it could be ‘distributed’ or ‘transferred’, or ‘paid’ only by a conveyance executed by them, and that therefore the will must necessarily be construed as an invalid trust to convey, is not maintainable. A trustee takes only such estate as is necessary for the performance of his trust, and it terminates when the trust ends. Of course, as the trustees would be in possession of the property at the time of the death of any one of the persons named, they would have to transfer it by delivering possession thereof to the remaindermen.” (147 Cal. 100, 101.)

In that case the court again said: “It is a fundamental principle that a construction of a will favorable to testacy will always obtain when the language used reasonably admits of such construction.” Such a construction here would appear to be in line with the Restatement of the Law of Property (sec. 157, comment h, p. 548), where it is stated that “when an otherwise effective conveyance of either land or a thing other than land creates one or more prior interests, the maximum duration o£ which is measured by lives, or by years, or by a combination of lives and years, and then provides, in substance, that upon the expiration of such prior limited interests, the ownership in fee simple absolute of the land, or the corresponding interest in the thing other than land, shall belong to a person who is presently identifiable, such person has an indefeasibly vested remainder."

The above discussion covers the present case. Here, by the decree of distribution there was created a prior interest in the trustee, measured by the widow’s life for a period of years terminating with her remarriage, for the purpose of paying over the income as designated, and upon the expiration of such prior limited interest, the absolute ownership was to pass to then identifiable persons (testator’s two daughters) ; hence each daughter, under the decree of distribution, by the application of the above stated rule and illustration, acquired an indefeasible vested remainder which did not lapse upon the death of either daughter prior to the expiration or termination of the prior limited estate in the trustee.

Moreover, the suggested result would seem to be more in harmony with the testator’s desire and intention. Instead of dying intestate as to one-half the trust property, such one-half devolved upon the heirs (children in this case) of the daughter who died before the termination of the prior limited interest in the trustee.

The judgment is reversed.

Langdon, J., Curtis, J., Houser, J., and Seawell, J., concurred. '

Rehearing denied.


author: HOUSER, J.

text:
    [L. A. No. 16443.
    In Bank.
    May 31, 1938.]
    LEWIS S. HART et al., Appellants, v. CITY OF BEVERLY HILLS (a Municipal Corporation) et al., Respondents.

      Desser & Rau, Michael I. Nessen, Milton N. Sherman and Jack L. Rau for Appellants.
    Richard C. Waltz, City Attorney, C. Richard Maddox, Assistant City Attorney, for Respondents.
    Everett W. Mattoon, County Counsel, and Beach Vasey, Deputy County Counsel, as Amici Curiae, on Behalf of Respondents.
   HOUSER, J.

From the record herein, it appears that by the terms of a zoning ordinance, a specified portion of the City of Beverly Hills is set apart as a residential district. In substance, by the terms of a separate ordinance of said city it is provided that no auction sale of personal property shall be held in such an area, but that “all auction sales except for the sale of real property are required to be held in the retail business district, ...” It further appears that Andrew Rice maintains his home in a residential district of said city; that at a time after said last-mentioned ordinance became effective and was in force, he employed one Lewis S. Hart to conduct at said residence an auction sale of certain household goods of which Rice was then the owner,—in pursuance of which Hart made application to the said city for a license to conduct said auction sale at the home of said Rice, and thereupon, in proposed payment thereof, tendered to the said city the sum of $10 which was the appropriate fee for that privilege, in accordance with the requirements of the said ordinance. The said city refused to accept the fee so tendered, or to issue to said Hart a license for which he had thus applied. Thereupon, on the application of the said Rice and Hart, an alternative writ of mandate was issued out of the superior court in and for the county of Los Angeles, by which the respondent city and its proper officials were required either to issue to the said petitioners a license to sell the aforementioned personal property at auction, or on a date specified, to show cause why they should not do so. A general demurrer to the application for the writ which was interposed by the said defendants was sustained “without leave to amend”. It is from the ensuing judgment that the instant appeal has been presented to this court.

Appellants contend, that the ordinance is unconstitutional in that it is in violation of the guaranties of their personal rights which are expressly conferred upon them both by the provisions that are contained in section 13 of article I of the state Constitution, and in the Fourteenth Amendment to the Constitution of the United States, in that the effect of the ordinance is to deprive them of their property “without due process of law”.

By judicial determination, evidenced by many legal precedents, the principle of law is thoroughly established that the constitutional rights of the individual to acquire and to possess property includes the right to dispose of it,—ordinarily in such innocent manner as he may see fit to do so, and that no statutory restriction upon such personal liberty is permissible, excepting only in that regard, that the exercise of the police power may be invoked in derogation thereof when it is founded upon valid and substantial considerations relative to the health, the morals, the safety or the “general welfare” of the public. (Ex parte Quarg, 149 Cal. 79 [84 Pac. 766, 117 Am. St. Rep. 115, 9 Ann. Cas. 747, 5 L. R. A. (N. S.) 183]; 8 Cyc., p. 886; People v. Davenport, 21 Cal. App. (2d) 292, 296 [69 Pac. (2d) 862]; Roystone Co. v. Darling, 171 Cal. 526, 532 [154 Pac. 15]; 12 C. J., pp. 945, 946; 5 Cal. Jur., pp. 728, 729; People v. Pace, 73 Cal. App. 548 [238 Pac. 1089]; People v. Bosse, 21 Cal. App. (2d) 276 [68 Pac. (2d) 990]; Matter of Yun Quong, 159 Cal. 508, 511 [114 Pac. 835, Ann. Cas. 1912C, 969].)

But it is not with reference either to the expression of principles of the law, or to a desire to jealously safeguard human liberties, that the respective parties to the instant controversy are at issue. Each of the representatives of the parties to this proceeding is learned in his profession, and each vies with the other in the extent or the proportion of his devotion to protection from encroachment by legislative enactment upon the constitutional personal rights of the individual. In the abstract, the line of demarkation between the respective parties is indicated merely by a difference in opinion with respect to the proper application of the constitutional guaranty to the facts before this tribunal. More particularly, on the one hand, the discussion relates to a consideration of the question of the limitations that properly should attach to the exercise of the police power, as judicially construed to embrace statutes enacted in the interest of health, morals, safety, or the “general welfare” of the public; and on the other, to a reflection concerning the apparently increasing tendency to expand and to accord the utmost elasticity to the power to legislate on a subject where either the avowed or the implied purpose is to promote the well-being of humanity ; and as an incidental and possible consequence regarding the latter situation, it is asserted that, pursuant to such tendency and on suitable occasion, not only may constitutional guaranties be distorted beyond recognition of their original intent and purpose, but if deemed advisable or expedient by such legislative bodies, they may be utterly disregarded. Covering a period of decades, the exercise of the police power was limited to conditions wherein either the health, the morals, or the safety of the general public was seriously and unquestionably involved. As long as any or either of such requirements were or was respectively maintained, personal liberties were not seriously endangered,— but not so, necessarily, upon the advent of the addition of the element of “general welfare” to those constituents which theretofore solely had constituted a justifiable excuse of warranty for the destruction of natural rights. It is obvious that in its liberal and untrammeled construction, “general welfare” has an infinite range,—nearly, if not as completely beyond the contemplation of the human mind as is the universe itself. At least, it is so inclusive that to ordinary intelligence, its scope is all-embracing and impossible of limitation. In its simplicity, it knows no bounds; it is as changeable as the “vagrant breeze”. That which to one generation might appear to be most promising of the public good, by the succeeding might be denounced as so harmful as to constitute a public menace.

Thus, if the meaning of the words “general welfare” be accorded their utmost significance, the original “due process” protector of human rights may be so endangered by the attacks made thereon by the “police power” destroyer that, considering present legislative tendencies, within the lives of those now in being, if utter annihilation of the substance of constitutional guaranties do not ensue, no more than a shadow ultimately may remain.

In actual practice, and in the first instance, the necessary determination of the substantial effect resulting from' legislation to be enacted under the guise of the police power, with reference to the “general welfare” of the public, theoretically confided to the sound judgment of a wise and capable legislative body, in reality and eventually, may reside either in scheming and corrupt politicians, or in a careless or a fanatical constituency, with the consequence that the public good may become “the mob’s-football”. But such results may ensue only in the absence of conservative and conscientious judicial construction and interpretation of legislative acts. As hereinbefore has been indicated, it should be noted that the words “general welfare” have been grafted upon the original stock of “health, morals and safety”, with the resulting incident that they must be interpreted in accord with the rule that requires that when words of a general character follow those of special meaning the former must be governed in their significance by that which inheres in the latter. Otherwise stated, in the construction of a statute, special words employed therein are the guiding, if not the controlling force as regards general and succeeding words. (Sec. 3534, Civ. Code; Hunt v. Manning, 24 Cal. App. 44 [140 Pac. 39] ; In re Johnson, 167 Cal. 142 [138 Pac. 740]; In re Flesher, 81 Cal. App. 128 [252 Pac. 1057]; Pasadena University v. County of Los Angeles, 190 Cal. 786 [214 Pac. 868]; Coleman v. City of Oakland, 110 Cal. App. 715 [295 Pac. 59]; People v. McKean, 76 Cal. App. 114 [243 Pac. 898]; Fisher v. Los Angeles Pac. Co., 21 Cal. App. 677 [132 Pac. 767]; 23 Cal. Jur., pp. 755, 756; In re Marquez, 3 Cal. (2d) 625, 629 [45 Pae. (2d) 342].) With such reversion to legal principles of statutory construction, their application to the instant situation must result in the conclusion that the inclusion of the words “general welfare” as an element either essential, or which may be relied upon as affording a justification for that which otherwise properly might be termed a violation of the personal rights of the individual, has the effect only of enlarging or expanding the significance that formerly was deemed properly attachable to the grounds originally deemed necessary to the expedient exercise of the police power of the state. In such a light, were it not for that which by eminent authority repeatedly has been shed in similar situations, it might be deemed appropriate meticulously to inquire into, and to determine as accurately as practicable, the “metes and bounds” of the words “health, morals and safety”, as modified and perhaps liberalized by the additional words “general welfare’’ when applied to legislation initiated and enacted with the express or the implied intention of exercising the police power of the state in derogation of individual, vested and personal rights guaranteed by constitutional provision. In that regard, the formulated rule seems well established in substance, that a statute having been enacted, the presumption will be indulged not only that it was inspired by a general intention to add needed protection to the health, morals, or safety of the public, but that the statute would be corrective of some specific, if not specified evil;— from which significant, if not controlling influence, has been evolved the additional principle that unless the questioned legislation bears the unmistakable imprint of arbitrary or oppressive action on the part of the legislators, or some characteristic inducement closely akin thereto, the statute must be deemed to have been enacted in accordance with the implied powers of the legislative body. In other words, no presumption of invalidity of the statute will obtain; but to the contrary, every intendment will be indulged in favor of its validity. (23 Cal. Jur. 783, 5 Cal. Jur. 628, Rainey v. Michel, 6 Cal. (2d) 259 [57 Pac. (2d) 932, 105 A. L. R 148]; Cuthbert v. Woodman, 185 Cal. 43 [195 Pac. 673], People v. Hayne, 83 Cal. 111 [23 Pac. 1, 17 Am. St. Rep. 211, 7 L. R. A. 348], Galeener v. Honeycutt, 173 Cal. 100, 103 [159 Pac. 595], E. Clemens Horst Co. v. Industrial Acc. Com., 184 Cal. 180, 193 [193 Pac. 105, 16 A. L. R. 611], In re Makings, 78 Cal. App. 58 [247 Pac. 923], In re Spencer, 149 Cal. 396 [86 Pac. 896, 117 Am. St. Rep. 137, 9 Ann. Cas. 1105], and Title etc. Restoration Co. v. Kerrigan, 150 Cal. 289 [88 Pac. 356, 119 Am. St. Rep. 199, 8 L. R. A. (N. S.) 682].)

In the application to the instant situation of such thoroughly recognized legal principles, and in the absence of any showing on the part of the appellants that in the adoption of the questioned ordinance there obtained or was present any semblance of conditions of that adverse and deleterious character to which reference hereinbefore has been had, inevitably the validity of the ordinance should be adjudged.

But apart and aside from implied legal inducement for the adoption of the ordinance, the questioned action of the legislative body may be entirely justified on the assumption that as a matter of fact it was in response to a laudable suggestion that it would tend not only to the greater safety of the general public, not only from a standpoint of protection of its members from physical injury, but also from the possibility of their being .the individual victims of fraud or crime. It is common knowledge of which a reviewing tribunal may take judicial notice, that the City of Beverly Hills is the place of residence of numerous “stars” and “executives” of the motion picture industry. Ordinarily, a well-advertised auction sale of personal property will attract a motely throng, not only of possibly intending purchasers, but also of the curious and of idle and unemployable persons. Where great crowds are gathered, with the prevailing necessary incident of automobile transportation, accidents are almost inevitable, with usual resulting injury to persons and to property. Furthermore, with regard to a sale at auction in said city, of the personal effects of persons who are well known to the public, among whom may be “stars” of the motion picture profession, it is asserted that heretofore, by unscrupulous persons in charge of such a sale, upon occasion, articles of merchandise from retail establishments have been intermingled with the personal effects of the owner thereof, and thereupon have been represented to the purchasing public and offered for sale as, the personal property of the “star” or other well-known person whose effects were the subject of such auction sale. An implied fraud may thus have resulted to an enthusiastic bidder, who in his admiration perhaps, for the person whose property presumably was being sold, may have been induced to pay much more for a given article than its real or its sentimental value warranted. With regard to such a situation, in the case of Cofman v. Ousterhous, 40 N. D. 390 [168 N. W. 826, 18 A. L. R. 219], it was said: “The police power of the state is not limited to the regulations necessary ‘for the preservation of good order or the public health or safety. The prevention of fraud and deceit, cheating and imposition, is equally within the power, and a state may prescribe all such regulations as in its judgment will secure, or tend to secure, the people against the consequences of fraud’.” An opportunity also is presented for operation by the pilferer, the pickpocket or even the “finger man”. It therefore is readily conceivable that the ordinance of which complaint here is registered, resulted from an honest and praiseworthy effort on the part of the legislative body of the City of Beverly Hills to faithfully perform its official duty and better to insure the safety of its residents and the ‘‘sojourners within its gates”.

But the validity of the ordinance need not be made to rest solely upon such grounds. Considering its language, the ordinance is not, nor does it purport to be, either destructive or confiscatory of the rights of the appellants. No inhibition may there be discovered regarding the right of the owner of the personal property to sell or “to dispose” of it. In effect, the ordinance is merely regulative of that right, in that it ordains that no auction sale of such personal property shall take place within a specified area of said city. The manner, together with the place of sale only are prescribed; the ultimate and controlling right of dispositign remains wholly unaffected. In addition to the case of Cofman v. Ousterhous, supra, the legal precedents are legion which, although denying the power to a legislative body to destroy a given constitutional right, nevertheless accord full recognition to the authority to regulate its exercise. (Riley v. Chambers, 181 Cal. 589 [185 Pac. 855, 8 A. L. R. 418]; Quong Ham Wah Co. v. Industrial Acc. Com., 184 Cal. 26; 37 [192 Pac. 1021, 12 A. L. R. 1190]; Gregory v. Hecke, 73 Cal. App. 268, 277, 278 [238 Pac. 787]; In re Stoltenberg, 21 Cal. App. 722 [132 Pac. 841]; Graham v. Kingwell, 218 Cal. 658 [24 Pac. (2d) 488]; 5 Cal. Jur., pp. 704, 705; Greenberg v. Western Turf Assn., 148 Cal. 126 [82 Pac. 684, 113 Am. St. Rep. 216]; Matter of Application of Barmore, 174 Cal. 286 [163 Pac. 50, L. R. A. 1917D, 688].)

The judgment is affirmed.

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

Edmonds, J., and Langdon, J., concurred in the judgment.

Rehearing denied.


text:
    [S. F. No. 16000.
    In Bank.
    June 1, 1938.]
    J. A. BRIED, Petitioner, v. THE SUPERIOR COURT OF THE CITY AND COUNTY OF SAN FRANCISCO et al., Respondents.
    Leo R. Friedman for Petitioner.
    Carlton D. Dethlefsen and C. F. Eschwig for Respondents.
   WASTE, C. J.

Application for writ of mandate. On September 14, 1937, plaintiff Oscar Nelson brought an action in the superior court against J. A. Bried (petitioner herein), as defendant, for damages for alleged slander. Coincident with the filing of the complaint in that action, the plaintiff filed an undertaking for costs in the sum of five hundred dollars, conditioned as required by the pertinent statute, which provides that a defendant in such an action, within ten days after service of summons, may give notice that he excepts to the sureties on the bond and requires their justification before a judge of the court at a specified time and place to be not less than five nor more than ten days thereafter, except by consent of the parties. Each of the sureties must appear before the judge at the time and place designated, and be examined on oath as to his sufficiency as a bondsman in such manner as the judge may determine. The act further provides that if the “Judge find the undertaking sufficient, he shall annex the examination to the undertaking and indorse his approval thereon. If the sureties fail to appear, or the Judge finds the sureties or either of them insufficient, he shall order a new undertaking to be given. ... In ease a new or additional undertaking is ordered, all proceedings in the case shall be stayed until such undertaking is executed and filed, with the approval of the judge. ’ ’ If the undertaking as required be not filed in five days after the order therefor, the judge or court shall order the action to be dismissed. (Act 4317, Deering’s Gen. Laws 1931.)

The defendant in the slander suit excepted to the sureties on the bond, and demanded that they justify before a judge of the superior court. On November 15, 1937, the court made the following order: “Order exception to justification of sureties sustained—five days to file new bond.” Three days later, plaintiff filed an undertaking with the same sureties as had appeared on the previous bond, the second undertaking being in all essentials identical with the first one filed with the exception of the dates and the notary public before whom the sureties appeared. According to the agreed statement of facts filed herein, no other undertaking has been filed by or on behalf of the plaintiff in said action. Defendant served on plaintiff notice of motion for an order dismissing the action for failure to comply with the order of the court to file a new hond. That motion came on for hearing and was denied. Petitioner applied to the District Court of Appeal for a writ of mandate to compel respondent court to dismiss the action, which application was denied without opinion. He then applied to have the matter heard in this court, and an alternative writ was issued. By way of return to the writ, the respondents filed a demurrer and answer, in which it is alleged that an undertaking as required by the statute was filed on November 18th; that subsequently and on the 26th of November, petitioner herein demurred to the complaint and then filed his exceptions to the sureties on the new bond and a notice of motion to dismiss the action (which motion was denied), and that on the same day the plaintiff in the action served and filed a notice of justification of the sureties on the bond. Respondents herein therefore contend that a bond is on file in the slander suit, and that it was filed within five days after the order of the court requiring a new undertaking to be filed.

Nowhere in the record filed in this court is there any showing as to what preceded the making of the order by the trial judge sustaining petitioner’s exceptions to the justification of the sureties on the original bond. In response to the alternative writ issued out of this court, both parties appeared for argument, and the statement was made for the first time by counsel for the respondents that the judge’s refusal to justify the sureties arose out of the fact that they had not appeared until the eleventh day—the tenth day falling on a Sunday; and that the judge, while admitting the point was rather technical, held that be althe filing of a new bond, and wjluui luj.cc uaj-» hucu undertaking was filed with the same sureties as appeared on the rejected bond. lowed to justify. Thereupon ¡der for

Respondents’ position is that a dismissal of the case would be an abuse of discretion, in that, it “will result in plaintiff’s suffering a bar of the statute of limitations”; that the law favors a trial on the merits, especially where, as here, “plaintiff in good faith originally endeavored to comply with the statute”. The sole question seems to be: Was the second bond tendered by plaintiff a “new bond” as contemplated by the statute; if not, was it mandatory upon the trial court to dismiss the action for failure to file such undertaking for costs within the time specified in the order of the court ?

The object of the statute requiring the plaintiff in an action for slander to give an undertaking for costs is of course to protect the defendant and to secure to him the costs and charges he may be awarded if the judgment is in his favor. The giving of the bond is not jurisdictional. Even after a motion has been made to dismiss the action for lack of a proper undertaking, the court has power to permit the filing of such bond, and then may overrule the motion. (Stinson v. Carpenter, 78 Cal. 571 [21 Pac. 304].) It cannot be said that “no attempt” was made to file an undertaking in the case before us.

The case of Shell Oil Co. v. Superior Court, 2 Cal. App. (2d) 348 [37 Pac. (2d) 1078], relied on by petitioner, was a proceeding in prohibition to preclude the superior court from trying a libel case until the plaintiffs therein had first filed adequate cost bonds as required by the statute. The libel action was instituted by a number of employees of the Shell Company, and five defendants were made parties to the suit. The plaintiffs joined in one complaint, but their causes of action Were kept separate, and each sought $25,000 damages from the defendants. But one bond for costs in the sum of $500 was filed. After answers had been filed, motions were made on behalf of the defendants to dismiss the action or require the filing of sufficient bonds to secure the defendants for their costs against each plaintiff. The appellate court held that the bond given was insufficient; that the lower court was without authority to proceed to try the case without first requiring the plaintiffs to file adequate bonds, reserving to the petitioners (defendants) the privilege of moving to dismiss the cause if the plaintiffs failed to file such bonds after order therefor was made. See, also, Carter v. Superior Court, 176 Cal. 752 [169 Pac. 667],

There is sufficient in this case to distinguish it from the Shell Oil Company ease, supra, for it is apparent, if the argument of counsel for respondents be correct, that the undertaking on file .here was sufficient, the trial court’s refusal to justify the sureties rested on a mere technicality. There is no showing that the bond was in any way defective or the sureties insufficient. Apparently, according to the statement of counsel for respondents, there was some doubt in the mind of the trial judge as to the propriety of permitting the sureties to justify on the eleventh day.

This court is not inclined to dismiss an action where it appears that a party, in good faith, originally endeavored to comply with the statute by filing an undertaking when the suit was commenced. (Becker v. Schmidlin, 153 Cal. 669, 672 [96 Pac. 280].) We assume, there being nothing in the record to the contrary, that the trial court was not of the view that the sureties, as individuals, were not sufficient to execute the bond. (Carter v. Superior Court, 176 Cal. 752, 755 [169 Pac. 667].) In view of the fact that the court denied the motion of defendant to dismiss the cause, we must-assume that the second bond met with his approval, although, under the statute, supra, the judge was required to “annex the examination to the undertaking and indorse his approval thereon”, which he apparently failed to do. However, even had the sureties been deemed insufficient at the time of the presentation of the original bond, their status may have changed between the time of the making of the order and the filing of the second undertaking to such an extent that they were then fully competent to justify as sureties. Their sufficiency to execute the second bond should have been passed upon by the trial court. There appears to be a conflict in the record as to whether the second undertaking was ever approved by the judge.

We are of the view that the case should be allowed to go to trial on its merits, and that the second bond filed by plaintiff, although identical in terms with the first undertaking filed, is under the circumstances of record a sufficient compliance with the statute and with the order of the court, if in fact the order was based on the technicality above referred to, that is, that the sureties failed to appear to justify until the eleventh day. Our determination in this regard is strengthened by the fact that if we hold otherwise the plaintiff will be prevented by the statute of limitations from commencing a new action. He should not be deprived, under the circumstances herein set forth, of the right and opportunity to prove any meritorious claim for damages he may have against the defendant, which right would be defeated by a dismissal of the cause.

The alternative writ of mandate issued herein is discharged, and the petition for a peremptory mandate is denied.

Langdon, J., Curtis, J., Houser, J., Seawell, J., and Shenk, J., concurred.

Rehearing denied.


author: SEAWELL, J.

text:
    [L. A. No. 15021.
    In Bank.
    June 1, 1938.]
    MARY BOWEN KELLY et al., Appellants, v. EDWARD RUDOLPH KELLY, Respondent.

      John H. McCorkle, Hamilton, Lindley & Higgins for Appellants.
    No appearance for Respondent.
   SEAWELL, J.

Plaintiff individually and as guardian and trustee of her two minor sons brought this action to compel defendant, her former husband, to .pay to her one-half of all money and property received by him upon the termination of a testamentary trust, under which said defendant and others became entitled to share in the distribution of the corpus of the trust property. Plaintiff Mrs. Kelly claims this right against defendant by virtue of a property settlement executed prior to the termination of the trust and while they were husband and wife. The court below upheld defendant’s contention that by reason of the fact that the instrument creating the trust contained a spendthrift clause plaintiffs were not entitled to receive any part of the trust estate from defendant. Plaintiffs appeal from the judgment for defendant. Pending this appeal defendant died and Thomas McCarty, special administrator of his estate, has been substituted as defendant and respondent.

The property settlement under which plaintiff Mrs. Kelly claims on behalf of herself and her minor sons was executed on March 30, 1928, by the Kellys ‘ ‘ for the purpose of forever settling their property rights”. It provided that property of record in the name of either party should be the separate property of such party. Under this provision the wife received the home in San Diego in which they resided and also a quarter block in the Point Loma district in San Diego, and Mr. Kelly was the owner of a house and lot in San Diego.

The agreement contained the following provision, which is the basis of the instant action:

“SECOND, the party of the first part [Mr. Kelly] hereby grants and assigns to the party of the second part a one-half interest in any and all property of any and every kind to which first party may now be entitled, or of which he may hereafter receive or become entitled to, by gift, inheritance, bequest, or as beneficiary of any trust, of which one-half, one-third of such half shall belong to the party of the second part [Mrs. Kelly], in fee and in perpetuity, and to her heirs and assigns forever, but the other two-thirds of such one-half interest, the party of the second part takes and shall take in trust, holding for her own use only for herself the rents, issues, and profits for her life only, the remainder to be held by her in trust for Robert Bowen Kelly and Charles Edward Kelly, children of the parties hereto, share and share alike, and to their heirs and assigns forever.”

Said agreement further provided that in the event of a divorce between the parties, the provisions of the agreement should be deemed a property settlement, and should be incorporated in the decree of divorce in lieu of any and all other provisions for either division of property or alimony.

In October, 1928, seven months after the agreement was executed, Mrs. Kelly commenced suit for divorce. Upon defendant’s filing an answer in which he alleged that the property agreement was void, Mrs. Kelly dismissed the action before trial. The parties were subsequently divorced, but neither the time, place, nor party on whose application the divorce was granted appears herein. Nor does it appear whether said agreement was approved, nor whether other provision was made for the support of Mrs. Kelly and the two children by the decree of divorce.

The provision of paragraph Second above set forth was made in anticipation of the termination of two trusts upon the death of defendant’s mother, and not in anticipation of any other expected contingencies. Said two trusts were created by the wills of Thomas Smith and Mary E. K. Smith. Under said wills the income of the trust property was to be paid to named beneficiaries for life, and upon the death of the last survivor of said beneficiaries the trust was to terminate and the corpus distributed to the descendente of the life beneficiaries per stirpes. Defendants’ mother, Elizabeth B. Kelly, was the last survivor of the named life beneficiaries. She died in December, 1928. The two trusts were being administered by the Pennsylvania Company for Insurance of Lives and Granting Annuities, as trustee named in said wills. The Thomas Smith trust contained a spendthrift clause as follows:

“By my present testamentary provisions, it is my desire to benefit only the respective beneficiaries, to the utter exclusion of their creditors and alienees, past, present and future, and it is my wish to guard them against themselves, and their own waste and improvidence. I therefore direct that every bequest, annuity, and devise herein made and given shall be taken as made and given, to the persons respectively entitled, free and clear of his or her debts, contracts, engagements, alienations and anticipations, and of all responsibility therefor. Such legacies, annuities and devises shall be paid and conveyed, to the respective beneficiaries without regard to any liens or attachments.”

Mrs. Kelly admitted that when the property settlement was executed in 1928 she was informed of the spendthrift clause in the will of Thomas Smith. Thomas Smith died on May 20, 1883, a resident of Pennsylvania. No contention is made that any part of the trust property was ever located in California. Following the death of defendant’s mother, the last survivor of the named life beneficiaries, the trustee filed its petition in the orphans’ court of Philadelphia County, Pennsylvania, in which the will of Thomas Smith had been probated and the trust property distributed to the trustee, wherein said trustee prayed for distribution of the trust propertj’’ in accordance with the will of the testator. Both plaintiff herein, Mary Bowen Kelly, and defendant, Edward Rudolph Kelly, appeared separately by their respective attorneys in this proceeding in the orphans’ court in Pennsylvania. On March 4, 1930, the auditing judge ruled that by virtue of the spendthrift clause in the will of Thomas Smith the defendant’s share of the corpus was required to be paid by the trustee directly to Edward Rudolph Kelly, and refused to order distribution of any part of his share to the claimant Mary Bowen Kelly. Mrs. Kelly filed exceptions to this order of the auditing judge, but it was confirmed on May 2, 1930.

In the instant action in this state Mary Bowen Kelly lays claim to one-half of the money and other personal property distributed to Edward Rudolph Kelly by the above decree of the Philadelphia county court. The instant action does not concern any property derived by defendant from the Mary E. K. Smith trust. This trust did not contain a spendthrift clause. Relying on the property settlement, Mary BoAven Kelly has collected more than $11,000 from the trustee of said trust.

On October 25, 1929, after filing of their separate appearances in the Pennsylvania court, EdAvard Rudolph Kelly commenced an action in this state against Mary Bowen Kelly as the sole defendant, in AA'hieh he prayed that the court adjudge the property settlement of March, 1928, invalid, and enjoin said defendant from asserting any right to trust funds. The court granted a temporary injunction. This action came to trial in July, 1930, after the Pennsylvania decree had been confirmed. The trial court adjudged in the action in this state that the property settlement was a valid contract and dissolved the temporary injunction. This judgment was affirmed on appeal. (Kelly v. Kelly, 129 Cal. App. 325 [18 Pac. (2d) 781].) Plaintiff Edward Rudolph Kelly had contended therein, among other points, that the agreement was void for uncertainty, that he had entered into it under a mistaken knowledge of the law, and of his legal rights, and that it was invalid because there was “no guaranty that the supposed object of the parties in executing this agreement, to wit, the provision for the care and maintenance of the minor children, would be carried out".

Plaintiff did not allege nor contend in said action that by virtue of the spendthrift clause in the will of Thomas Smith his interest in the corpus of the trust estate was not subject to said property settlement, nor pray that on such ground Mary BoAven Kelly should be restrained from collecting any portion of his share in the corpus of the Thomas Smith trust. As noted above, prior to the trial of this former California action in July, 1930, it had been determined by decree of the Pennsylvania court that by virtue' of the spendthrift clause the property settlement agreement did not operate upon Edward Rudolph Kelly’s share in the corpus of the trust estate in the hands of the trustee, and said property was required to be distributed directly to Edward Rudolph Kelly. The Pennsylvania court had held that the spendthrift provision applied to the corpus AA’hieh was to be paid to defendant upon the death of the life beneficiaries, as well as to the income paid to the life beneficiaries, and exempted the entire interest of Edward Rudolph Kelly in the corpus in the hands of the trustee from the property settlement agreement. Pennsylvania decisions sustain the validity of spendthrift provisions as applied to the corptis. (Beck’s Estate, 133 Pa. 51 [19 Atl. 302, 19 Am. St. Rep. 623]; Goe’s Estate, 146 Pa. 431 [23 Atl. 383, 28 Am. St. Rep. 805]; Re Estate of Hall, 248 Pa. 218 [93 Atl. 944, 2 A. L. R. 855]; see, also, Boston Safe Deposit & Trust Co. v. Collier, 222 Mass. 390 [Ill N. E. 163, Ann. Cas. 1918C, 962]; Hopkinson v. Swaim, 284 Ill. 11, 25 [119 N. E. 985]; Von Kesler v. Scully, 267 Ill. App. 495.) The Pennsylvania court further held that the agreement that Mary Bowen Kelly should receive a share of Edward Rudolph Kelly’s interest in the trust property was not analogous to a court decree for support and maintenance, recognized under certain circumstances 'in Pennsylvania as not subject to limitation by a spendthrift clause. (Moorehead’s Estate, 289 Pa. 542 [137 Atl. 802, 52 A. L. R. 1251].) As pointed out above, Pennsylvania was the residence of the testator, and there is no suggestion that any of the trust estate, real or personal, was ever located in California. Nor did defendant ever bring said property to this state after its receipt by him, according to his testimony.

Thus the question whether the spendthrift clause in the will of Thomas Smith rendered the interest of Edward Rudolph Kelly inalienable while in the hands of the trustee was determined in the proceeding in Pennsylvania in which the trustee and also plaintiff and defendant herein appeared separately. That question was not open for determination in the proceeding subsequently tried in this state in July, 1930, and in fact no attempt was made to relitigate this matter in said former proceeding, the judgment in which was affirmed by the appellate court. (Kelly v. Kelly, supra.)

The 1930 action in this state, brought to obtain an adjudication that the property settlement Avas invalid and to restrain Mrs. Kelly from collecting funds- in the hands of the trustee, had a purpose notwithstanding the entry of the Pennsylvania decree before the California action came to trial. Plaintiff Edward Rudolph Kelly in said California action was seeking to restrain Mrs. Kelly from collecting any part of his share in the Mary E. K. Smith trust, which was ready for settlement, and which contained no spendthrift provision. The Pennsylvania decree concerned only the Thomas Smith trust.

The present action was commenced by Mrs. Kelly on August 14, 1933, more than three years after the order of the Pennsylvania court denying the claim of Mrs. Kelly for payment to her by the trustee of one-half of Mr. Kelly’s share in the corpus of the Thomas Smith trust. She prayed that Edward Rudolph Kelly be declared trustee for her and her two minor sons of one-half of all money and property received by him as his share of the Thomas Smith trust, that he be required to turn over to her one-half of said property, and if this was impractical that she have judgment against him for the value of said one-half of the property.

In the present action plaintiff contends that the Pennsylvania decree simply determined that plaintiff could not reach Edward Rudolph Kelly’s share of the Thomas Smith trust while it remained in the hands of the trustee; that said decree was not intended to determine plaintiff Mary Bowen Kelly’s right to reach the trust property after it had left the possession of the trustees and had been turned over to Kelly. The trial court found in accordance with this contention, but it nevertheless held that plaintiff Mary Bowen Kelly had no rights in the fund in the hands of her former husband paid to him from the Thomas Smith trust.

It is of the essence of a spendthrift trust that it is not subject to voluntary alienation by the cestui, nor subject to involuntary alienation through attachment or other process at the suit of his creditors. (McColgan v. Walter McGee, Inc., 172 Cal. 182 [155 Pac. 995, Ann. Cas. 1917D, 1050]; Seymour v. McAvoy, 121 Cal. 438 [53 Pac. 946, 41 L. R. A. 544]; San Diego Trust etc. Bank v. Heustis, 121 Cal. App. 675 [10 Pac. (2d) 158]; Canfield v. Security First Nat. Bank, 8 Cal. App. (2d) 277 [48 Pac. (2d) 133]; 1 Bogert, Trusts and Trustees, p. 75; 43 Harvard Law Review, 84; 21 Cal. Law Rev. 142; 22 Cal. Law Rev. 482.) But it is everywhere agreed that after the beneficiary has actually received the trust property his creditors may reach it and he may dispose of it as he wishes. (Beck’s Estate, supra; Goe’s Estate, supra; Board of Charities etc. v. Lockhard, 198 Pa. 572, 574 [48 Atl. 496, 82 Am. St. Rep. 817]; 1 Bogert, Trusts and Trustees, p. 717; 43 Harvard Law Rev. 84; 22 Cal. Law Rev. 492; 21 Cal. Law Rev. 143.) A voluntary assignment executed before payment to the beneficiary confers on the assignee no right to demand payment or delivery from the trustee as it becomes due to the beneficiary. The Pennsylvania court in a proceeding in which the trustee and Mr. and Mrs. Kelly, separately, appeared, has determined that Mr. Kelly’s entire share of the corpus in the possession of the trustee was subject to the spendthrift clause and all payable directly to him. But does the assignment to Mrs. Kelly ex-'t ecuted during the continuance of the trust nevertheless give her as such assignee a claim upon the trust property after it shall reach the hands of the beneficiary?

It is the intent of the trustor in creating a spendthrift trust that the benefits shall reach the hands of the cestui free from liens and attachments. A provision commonly found in spendthrift clauses is that the beneficiary shall not “anticipate” his right to receive trust benefits. The provision in the Thomas Smith will was that every bequest should “be taken as made and given, to the persons respectively entitled, free and clear of his or her debts, contracts, engagements, alienations and anticipations and of all responsibility therefor”. If, as contended by Mary Bowen Kelly herein, the one-half of the property received by Edward Rudolph Kelly from the Thomas Smith trust is held by him in trust for her by virtue of the antecedent property settlement, then Edward Rudolph Kelly has not received said property free and clear as directed by the trustor, but subject to a charge in favor of Mary Bowen Kelly, and said Edward Rudolph Kelly has anticipated his interest in the trust estate.

We are of the view that the intention of the trustor that ] the beneficiary should receive the trust property free and | clear of specific liens and charges may and should be given i1 effect. But although it cannot be held that the beneficiary, upon receipt of trust property, in turn holds said specific property, or its proceeds, in trust for his assignee under an assignment made prior to his receipt of the trust property without doing violence to the intent of the trustor to the effect that the beneficiary shall receive the property free of liens and charges, we are of the view that an assignment by the beneficiary, in the nature of a promise to pay or turn over trust property when received by him, is not wholly invalid. Although such an assignment or promise gives the promisee no right in specific trust property received by the beneficiary, or in its proceeds, such promisee has available to him the usual remedies for breach of contract and may sue to recover damages for breach of said contract, in which the damages will ordinarily be the value of the property the promisee would have received had the beneficiary performed his promise to turn over a fraction of the trust property upon its receipt. Having obtained a judgment for damages the promisee may levy upon property of the promisor not exempt from execution, including property received by him from the trust, since such property after receipt by the promisor-beneficiary is subject to attachment and execution for debts and engagements contracted before as well as after the receipt of the trust property by the beneficiary.

In the event she was not entitled to judgment for one-half of the specific trust property, or its proceeds, the plaintiff herein prayed for judgment for the value of the property she would have received had defendant performed his promise. We are of the view that she was entitled to such judgment.

There is no difficulty in construing the property settlement agreement as a contract to pay over one-half the trust benefits when received, although words of present assignment are used. In fact such construction is authorized by the principles laid down by this court in Bridge v. Kedon, 163 Cal. 493 [126 Pac. 149, 43 L. R. A. (N. S.) 404], holding that the attempted assignment by an heir of his expectant interest in the estate of his mother, although nonassignable under the provisions of the Civil Code, could be enforced in equity as a contract to assign after the mother’s death against the property which actually descended to him. It is there said: “The California cases . . . state the rule as a general one that equity will uphold assignments, not valid at law, of any future interests, as a rule applying alike to those which are vested but relate to property to come into existence in the future, and those which rest only in possibility, provided they are fairly made and not against public policy.” (See 21 Cal. Law Rev. 394, and 22 Cal. Law Rev. 446.) In Cheek v. Farmers etc. Nat. Bank, 14 Cal. App. (2d) 176 [57 Pac. (2d) 1325], this rule was applied to the assignment of the interest of a beneficiary under a trust. It is trué that in both tb.e cited cases the courts went further and held that the contract created a lien which attached to the assigned property as it reached the hands of the assignor but, for the reasons already given, to enforce a .lien in the present case would defeat the purpose of the trustor. However, the treatment of the assignment as a contract to assign does no violence to the trust intent.

The application of these principles to the attempted assignment of his interest by the beneficiary of a spendthrift trust is suggested by the Restatement of the Law of Trusts, section 152, subdivision K; Griswold on Spendthrift Trusts, section 375, pages 340-342, and in an article by the same author appearing in 43 Harvard Law Review, 63. As in Bridge v. Kedon, supra, it is there recognized that the question of the application of these principles in a particular situation is one of policy. We find no requirements of public policy which preclude their application here or compel the protection of the proceeds of a spendthrift trust after they have reached the hands of the beneficiary from the incidents of an otherwise valid engagement entered into during the life of the trust. Especially is this conclusion strengthened by the consideration that it is the policy of this state to limit the protection of the spendthrift clause to the extent necessary to support and educate the cestui in the manner to which his station in life has accustomed him. (Canfield v. Security First Nat. Bank, 8 Cal. App. (2d) 277 [48 Pac. (2d) 133]; see, also, 22 Cal. Law Rev. 471; 21 Cal. Law Rev. 142; Bogert, Trusts and Trustees, vol. I, sec. 222.)

For the reasons given, we are not impressed by the argument of the court in Bixby v. St. Louis Union Trust Co., 323 Mo. 1014 [22 S. W. (2d) 813], which reaches a contrary result and is criticized by Professor Griswold in the articles cited above.

The plaintiffs are entitled to judgment for breach of the contract to assign, in which the measure of damages is the value of the property which the defendant would have turned over to them had he kept his promise.

The judgment is reversed.

Curtis, J., Waste, C. J., and Houser, J., concurred.-


author: CURTIS, J.

text:
    [S. F. No. 15656.
    In Bank.
    June 1, 1938.]
    PHILIP DAVIS CARR, Appellant, v. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (a National Banking Association), Respondent.

      Hubert Wyckoff, Jr., for Appellant.
    Sullivan, Roche & Johnson, Keyes & Erskine, Rea, Free & Jacka, Louis Ferrari and G. D. Schilling for Respondent.
   CURTIS, J.

This litigation is the outgrowth of the financial misfortunes of the Carr family resulting from the 1929 stock market crash and the falling value thereof of Transamerica stock. The basic question is whether or not the appellant, Philip Carr, can recover from the Bank of America, acting as executor of the will of his father, Harry Cummings Carr, and acting as trustee of a trust created by said will for said Philip Carr, as beneficiary, for the loss occasioned by the failure of the bank to sell Transamerica stock until it was so devaluated that the purposes of the trust could not be fulfilled.

The facts are as follows: Harry Cummings Carr from 1903 to 1927 was a banker in Porterville. In that year he became vice-president of the Bank of America in San Francisco and removed his family residence to Palo Alto. On August 23, 1929, he died testate, leaving a widow, Ethel Carr, two adult sons, John and Jesse, and two minor children, Harriette, then 19 years of age, and Philip, then 17 years of age. His estate, which was but little indebted, was appraised as of the date of his death at $120,103.77. $109,532.63 thereof consisted of 1961 shares of Transamerica stock. The will of decedent appointed the Bank of America executor and also trustee of certain trusts created therein. The will created four trusts for the benefit of the two minor children; a $7,000 educational trust for each, the income and principal to be used for their education; a $20,000 trust for Harriette with payment of the income to her for life and the principal to her issue; and a $15,000 trust for Philip, the income to be paid to him until he reached the age of 25 years and then the principal to be distributed to him. The will also left $15,000 to each of the adult sons, which amount had been received by them as advancements prior to his death. His wife was named as residuary legatee. He had previously made a gift in contemplation of death to her of real and personal property amounting to some $21,321.85, and she also received insurance in the amount of $37,000 upon his death. The will was admitted to probate on September 23, 1929, and the bank thereupon qualified as executor. On October 25, 1929, occurred the stock market crash. The following table shows the subsequent devaluation of the Transamerica stock: August 23, 1929 (date of decedent’s death).....$109,532.63 May 29, 1930................................. 81,000.00 August 30, 1930........................ 45,616.50 September 30, 1930........................... 38,013.75 December 31, 1930....................... 24,790.25 December-31, 1931............................ 4,905.00 June 6, 1934 (date of filing action).............. 11,000.00

On May 29, 1930, the estate, except for the payment of a deficiency income tax of $5,200, assessed by the federal government for the year 1928, was ready to be closed out, and although the market value of the stock had declined to approximately two-thirds of its market value at the time of the death of decedent, the bank at that time could have sold the Transamerica stock owned by the estate for approximately $31,000 in excess of the amounts required to satisfy the trust legacies in full. On that day the bank filed its first and final account of the administration of the estate, and a petition that the Transamerica stock held by the bank as executor be distributed to it as trustee in lieu of the payment of the trust bequests in cash because of the low market value of the stock then prevailing. The petition was set for hearing for June 12, 1930, and was later continued. Thereafter, and before the hearing of the final account and petition, by reason of the continued decline in the value of the stock upon the market, the total market value of the stock owned by the estate became insufficient to satisfy the trust legacies by some $4,000. On August 4th a conference was held in which the trust officer of the Bank of America, and the widow and three children, Jesse, • Harriette and Philip (John being absent from the state) participated to determine what course should be pursued. At this time the Transamerica stock was worth only $44,000 and to close the estate there was required $5,200 for an income tax delinquency, plus $49,000 for the trust legacies, or a total of $54,000. On August 30,1930, an agreement, suggested by the trust officer of the bank, and drafted and prepared by the attorney for the estate, was signed by the widow, as party of the first part, and the two minor children of the deceased, Harriette and Philip, as parties of the second part. A consent to said agreement was signed by the two adult sons, John and Jesse. This agreement provided, in effect that the shares of stock, instead of being sold and the proceeds turned over in cash to the trustee to establish the trusts in part, should be distributed to the trustee and allocated by the trustee to the different trusts in the same proportions as each trust bequest bore to the aggregate thereof as set out in the will. The agreement further provided that the widow should advance to the executor out of her insurance money sufficient money to enable the executor to pay the deficiency income tax and, in order that she might be reimbursed out of the estate for this expenditure, that the shares of Transamerica stock should not be sold until the market value of the shares exceeded the amount necessary to satisfy the trust bequests in full, after which she, at her option, might demand that the stock be sold and the excess turned over to her. The agreement further provided that all of the residue of the estate should be turned over to her. This agreement was presented to the probate court by the bank upon an amended petition for distribution filed on September 20, 1930, and distribution in accordance with said agreement prayed for. The bank also filed at the same time a supplemental account as executor. On September 30, 1930, the probate court made its order settling the bank’s account as executor and distributing to the bank as trustee the shares of Transamerica stock instead of cash, subject to the right of Mrs. Carr to cause said shares to be sold when the market price thereof should exceed the aggregate of the trust bequests and to take any excess. The minor children partially completed their college courses under financial limitations and some 462 shares of the Transamerica stock were subsequently sold by the bank as trustee to furnish funds for this purpose. Thereafter Philip Carr and his sister Harriette disaffirmed said agreement, and filed two separate actions against the bank to recover the cash value of the trusts in their favor, aggregating $49,000, created by the will of their father, less the amounts of money already received by them from the bank in its administration of the trusts.

The complaints charged that the bank as executor negligently and fraudulently refrained during the administration of the estate from selling shares belonging to the estate in order to support the market for similar shares held by the bank as collateral security for loans theretofore made by it, and that the bank as trustee of the trusts created by the will negligently and fraudulently failed during the administration of the estate to apply for partial or final distribution to it of the trust bequests in cash as required by the terms of the will. The complaint further charged, in order to state an extrinsic fraud which would justify the vacating of the decree of final distribution and the setting aside of the order settling the final account of the executor, that the bank, in order to avoid, upon the settlement of the final account, an investigation of whether the executor’s account should be surcharged for the loss occasioned by its failure to sell said shares, fraudulently secured an agreement of all the parties interested in the estate providing that the shares should be distributed to the bank as trustee and that the bank should continue to hold the shares in trust, and alleged that the final decree of distribution was made by the probate court in accordance with said fraudulently procured agreement. At the trial of the consolidated actions, the plaintiffs called two witnesses, who had been officials of the respondent bank during the period of time involved here, in an attempt to prove that the bank during the period of administration of the estate following the market crash was fraudulently retaining the estate’s shares to support the market for its collateral. An objection by the respondent bank to the admissibility of this testimony was sustained by the court. At the conclusion of the presentation of the plaintiff’s case, a motion for a non-suit was made by the bank, which was denied by the court. The bank thereupon, before any further evidence was taken, submitted the case to the court for its decision upon its merits, and judgment was rendered in favor of the bank. Subsequently the appeal taken from said judgment by Harriette Carr was dismissed, and there is now before this court only the appeal of Philip Carr.

At the very threshold of the appeal, the important question is presented for decision as to whether or not the decree settling the bank’s account as executor is res judicata and conclusive against the appellant’s claims of negligence and fraud. In this action, the plaintiff seeks to hold the bank liable not only in its capacity as executor of the last will and testament of Harry Cummings Carr, deceased, but also in its capacity as trustee of the testamentary trusts created by the will of said deceased, and specifically prays for an accounting and for.the removal of said bank as trustee. The solution of this problem, therefore, requires a discussion of whether the order settling the bank’s account as execntor and for final distribution was conclusive not only with regard to its acts as executor but also with regard to its acts as trustee.

There can be no donbt that if the agreement of August 30, 1930, be eliminated from consideration, the order settling the executor’s account is res judicata against any claim of liability against the bank in its capacity as executor for negligence or fraud, and such determination is binding upon all the parties interested in the estate, including minors who were not represented at said hearing by a guardian. This is the direct holding of Ringwalt v. Bank of America etc. Assn., 3 Cal. (2d) 680, 681 [45 Pac. (2d) 967]. In that case an attempt was made to state a cause of action against the Bank of America, as executor of the last will and testament of Marie Louise Adams, for failure to sell assets of the estate consisting of stock in the respondent bank and the Bancitaly Corporation, which it was alleged depreciated in value during the course of administration of the estate in the sum of $33,211.87. No appeal was taken from the final decree of distribution. The opinion squarely holds that, by virtue of section 1637 of the Code of Civil Procedure, the substance of which is now incorporated into section 931 of the Probate Code, although minors would have had the right to move for cause to reopen an account before final distribution, nevertheless when final distribution had occurred and the decree had become final, it was conclusive as to all parties interested in the estate, including minors. The opinion also held that the duty to have a guardian for such minors appointed rested on the mother who was their natural guardian and that no such duty rested upon the respondent bank. Moreover, the court in that opinion specifically held that the issue of whether or not the bank was properly surchargeable for negligence in failing to sell was before the court and should have been heard upon the settlement of the final account of the bank as executor, as the fact was manifest, in the usual course of things, on the face of the final account and petition for final distribution as well as in the decree of distribution. It is to be noted, however, that in the Ringwalt case the bank simply filed its account and then stood mute and inactive. The opinion in the Ringwalt case expressly states that the court failed to find in the allegations of the complaint “anything done by the respondent bank to prevent, foreclose, or hinder” a hearing of the issue of whether the executor’s account was properly surchargeable. Appellant argues that in the instant case the agreement of August 30, 1930, whereby the parties agreed that the shares of Transamerica stock should be distributed to the bank as trustee, and such shares held by the bank for the benefit of the minor beneficiaries in lieu of the cash bequests of the will, as a matter of fact withdrew from the probate court the issue of whether the executor’s account was surchargeable, and that the procurement by the bank of the execution of the agreement of August 30, 1930, by the parties interested in the estate, prevented a real hearing of such issue, thereby constituting extrinsic fraud and supplying the allegations lacking in the Ringwalt case of something done by the respondent bank “to prevent, foreclose, or hinder” a hearing upon the issue of the bank’s liability, as executor, for negligence and fraud in the administration of the estate. The appellant argues that the fraudulent procurement and the use of the agreement upon settlement of the estate in view of the nondisclosure and concealment of its adverse interest by the respondent bank prevented a real adversary hearing of the executor’s account, and this being so, the decree so procured is now vulnerable to attack. The trial court found that the bank did not exercise any dominion or control over the parties interested to procure the execution of the agreement, and this finding finds support in the record. The extrinsic fraud relied upon by the appellant in this regard is therefore necessarily limited to the procurement by the respondent bank of the execution of the agreement by the minor beneficiary and the nondisclosure and concealment from him of the possibility that the executor’s account might be surcharged upon a claim of negligence and fraud in the administration of the estate by the bank, together with the presentation of such agreement to the probate court with no disclosure to the court of the bank’s interest adverse to the sale of the shares of Transamerica stock during the administration of the estate and the benefit to the bank of the agreement which would in all probability prevent the sale of the Transamerica shares if the shares continued to decline, since such sale would require a court order and the consent of all the interested parties, including the two adult sons.

In view of the fact that the probate court was possessed of the power and charged with the duty of scrutinizing with care the accounts of the executor, and inquiring generally into the truth and accuracy of the facts set forth therein, and was at absolute liberty to refuse to make the decree of final distribution in accordance with the said agreement if in its judgment the distribution agreed upon by the parties to said agreement was not a proper method of distribution, we cannot agree with the contention of appellant that the issue of the surchargeability of the executor’s account was withdrawn from judicial investigation. It was apparent to the probate court from the documents presented upon the executor’s account and petition for final distribution, that the respondent bank had retained said shares of stock during the administration of the estate and that they had greatly depreciated in value. It was also within the knowledge of the probate court that during all of the time under consideration the minor beneficiary, appellant herein, was under age and was not represented by a guardian, and that for this reason the accounts of the executor should be scrutinized more closely than if all the parties interested were adults. The agreement was presented to the probate court for its approval, and the question of whether or not such a plan of distribution was advisable and proper, in contravention to the terms of the will creating the trust bequests in cash, was directly presented. The probate court, regardless of the agreement, had the duty to inquire into the fairness of the ease, and we must presume that it performed its duty.

Moreover, the agreement itself was presented to the probate court for its approval and for its incorporation into the decree of distribution, and this fact compels the conclusion that any fraud in its procurement, now alleged, was necessarily within the issues of its fairness and the advisability of the approval of such agreement by the probate court, and, even if fraud were proven, it would constitute intrinsic, in contradistinction to extrinsic, fraud. In Caldwell v. Taylor, 218 Cal. 471 [23 Pac. (2d) 758, 88 A. L. B. 1194], we held: “It also seems to be the rule that the fraud alleged must not be the fraud which is in effect the issue in controversy, the fraud upon which the cause of action in the former suit was based. ’ ’ In the instant case, not only was the issue of whether the bank fraudulently retained the shares during administration presented to the probate court upon the executor’s account, but also the question of whether it fraudulently secured the agreement upon the petition for final distribution. It follows that the order settling the bank’s account as executor and for final distribution was conclusive with regard to its acts as executor.

Although the respondent bank has filed no account as trustee, and the order settling the executor’s account and for final distribution at first blush would not seem to be a bar against a claimed liability against the bank as trustee, nevertheless, there seems to be no escape from the conclusion that the court’s negative determination of the issue of the bank's liability as executor upon the ground of negligence and fraud, of necessity, settles that issue when the question of the bank’s negligence and fraud as executor is brought into question in the attempt to charge the bank as trustee. An analysis of the trustee’s claimed liability for failure to petition for final or partial distribution in order to get the trust assets out of the hands of the executor and into its own hands as trustee is based upon a duty owing by the trustee to prevent the estate from being mismanaged or despoiled during the course of administration. (Estate of O’Connor, 2 Cal. App. 470, 473 [84 Pac. 317].) We have no doubt that such a duty rests upon the trustee, but the order settling the executor’s account and for final distribution conclusively negatives the charge of mismanagement, negligence or fraud on the part of the bank as executor. If this be true, no duty devolved upon the trustee to move to obtain control of the trust assets. Likewise the issue of whether the trustee was liable as trustee in not protecting the interests of the minor beneficiaries, in the execution of the agreement of August 30, 1930, must be held to have been conclusively determined in the negative by the order decreeing final distribution inasmuch as that order conclusively determined that the method of distribution therein planned was proper and advisable. That this is the conclusive effect of the order settling the executor’s account and for final distribution is established by Price v. Sixth District Agricultural Assn., 201 Cal. 502 [258 Pac. 387],

However, the argument is presented that the trustee was liable as an insurer, regardless of any negligence or fraud on the part of the executor, by reason of its abdication of the control of the trust estate by virtue of the agreement of August 30, 1930, wherein it surrendered control of its power of sale if the stocks continued to decline and bound itself to sell only at the option of the widow if the stock should thereafter rise in value. The eases of Estate of Wood, 159 Cal. 466 [114 Pac. 992, 36 L. R. A. (N. S.) 252], and Gaver v. Early, 191 Cal. 123 [215 Pac. 394], are California cases cited in support of this doctrine. These were both cases where the trustee surrendered control of the trust assets to the surety on its bond. These cases are only applicable by analogy, and should not be applied to a trustee before distribution who acquiesces in an attempt by the executor to work out some scheme for the benefit of all the parties interested in the estate. In other words, although the office of trustee devolves upon the trustee upon the death of decedent, this harsh rule should only be applied to a surrender of control by the trustee after the trust funds come into his possession as trustee. In the instant case, the trust estate came to the trustee already burdened by the terms of the agreement of August 30, 1930, incorporated in the decree of final distribution. It cannot be held liable by virtue of the fact that it abided by the terms of said decree.

The judgment is affirmed.

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

Rehearing denied.