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District Court of Appeal, Second District, Division 1, California.


Civ. 13334.

Decided: June 12, 1942

Walter R. Powers and Lewis C. Teegarden, both of Los Angeles, for appellant. Newlin & Ashburn, of Los Angeles, for respondents.

Appeal from a judgment against plaintiff after an order sustaining a demurrer without leave to amend.

The complaint alleges that the plaintiff is the sole beneficiary of a testamentary trust of which the defendant bank was trustee; that in 1931 the trustee sold securities belonging to the trust for which the trustee received $10,000; that for this $10,000 the trustee purchased a promissory note for $50,000 secured by deed of trust; that the defendant transferred the note and trust deed to itself and created a participation trust; that thereafter the defendant issued a $10,000 participation trust certificate therein and transferred it to itself as testamentary trustee, see § 104, Bank Act, Deering's Gen. Laws, vol. 1, 1931, act No. 652, as it then read; that after a renewal of the participation certificate in the name of the testamentary trustee, it was finally assigned to plaintiff.

Then the complaint alleges that no permit was ever issued by the Commissioner of Corporations authorizing the issuance or sale of said participation certificate, and that therefore it was and is void, and that by reason of the conduct of the defendant, the plaintiff was damaged.

In a second cause of action, it is additionally alleged that the defendant made certain representations to plaintiff relative to the value of the participation certificate, including a representation that it was sold under a valid permit by the corporation commissioner, all of which representations were false, fraudulent and untrue; that the plaintiff believed these representations and thereby failed to discover the true state of facts concerning the issuance of the participation certificate, also to her damage.

For a third cause of action it is additionally alleged that the defendant became indebted to the plaintiff.

It will be noted that all of the allegations in the three causes of action in the complaint have to do with the acts and conduct of defendant as trustee of a testamentary trust. Section 1120 of the Probate Code provides that the probate court shall retain jurisdiction of a testamentary trust for the purpose of determining to whom the property shall pass, of settling accounts and passing upon the acts of the trustee.

Section 1123, Probate Code, provides a decree rendered under the provisions of this chapter when it becomes final shall be conclusive upon all persons in interest.

There are no allegations of extrinsic fraud in the complaint, or of any other matters, which would give the superior court equitable jurisdiction, and it must be apparent that therefore the demurrer to the complaint was properly sustained.

It is true that nothing beyond the jurisdiction specifically granted by the Code may be exercised by the court in probate. In re Estate of Hubbell, 121 Cal.App. 38, 8 P.2d 530. But, as stated, the language of the statute includes the acts and conduct of the trustee as set forth in the complaint here in question. In Re Estate of Smith, 4 Cal.App.2d 548, 552, 41 P.2d 565, 567, it is said: “We believe the language employed [in § 1120, Prob.Code] was intended to broaden the jurisdiction of the probate court so as to give that court jurisdiction over practically all controversies which might arise between the trustees and those claiming to be beneficiaries under the trust.” Nothing in Re Estate of McLellan, 8 Cal.2d 49, 63 P.2d 1120, is contrary to the decision hereunder, because all of the acts and conduct of the testamentary trustse as alleged in the complaint in this case fall within the expressed jurisdiction in probate conferred by section 1120 of the Probate Code.

Having come to this conclusion, further questions discussed in the briefs as to res adjudicata, judicial notice, necessity for the certificate of the corporation commissioner, constitutionality of section 104 of the Bank Act, statute of limitations, and grounds of special demurrer, need not here be discussed.

The judgment is affirmed.

DRAPEAU, Justice pro tem.

YORK, P. J., and DORAN, J., concurred.