GORDON ET AL v. SANTA CRUZ PORTLAND CEMENT CO ET AL

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District Court of Appeal, First District, Division 2, California.

GORDON ET AL. v. SANTA CRUZ PORTLAND CEMENT CO. ET AL.

Civ. 12171.

Decided: October 16, 1942

W. H. Metson, P. H. McCarthy, Jr., and E. B. Mering, all of San Francisco, for appellants. Morrison, Hohfeld, Foerster, Shuman & Clark, Herbert W. Clark, and Boice Gross, all of San Francisco, for respondents.

The plaintiffs have appealed from a judgment denying them relief in an action based on a charge of acts of purported trespass and a prayer asking for damages and injunctive relief. The plaintiffs framed their complaint in seven separate counts. For many reasons it will be necessary to discuss the counts separately.

Since about the year 1907 the Santa Cruz Portland Cement Company, hereinafter called the Cement Company, and the Santa Cruz Lime Company, hereinafter called the Lime Company, have owned opposite sides of San Vicente Canyon which consists of a deposit of lime rock located in Santa Cruz County, California. The canyon was presumably formed by the action of San Vicente Creek and the original deeds described the line of the bed of that creek as a part of the boundary line separating the adjoining properties. In the first count the plaintiffs alleged that without compensating the Lime Company, the Cement Company entered the lands of the former and appropriated limestone, took large quantities of the corpus of the Lime Company's property, constructed railroad tracks on said property, enlarged the tunnel on said property, excavated additional tunnels on said property, extended other tunnels on said property, made excavations on said property, diverted the course of San Vicente Creek and Kelly Creek, destroyed certain easements on the property, and obliterated and destroyed a portion of the boundary line on said property.

In the second count the plaintiffs alleged facts showing that the action was brought by the plaintiffs as stockholders of the Lime Company for the reason that the Cement Company is a party to and approves the wrongs committed by the Cement Company. Otherwise, except as to the amount of the damages, said count repeats the alleged wrongs contained in the first count.

In the third count the plaintiffs alleged that the directors of the Lime Company have exercised and continue to exercise their power and authority as directors of the Lime Company in the interest of the Cement Company and against the best interest of the minority stockholders of the Lime Company. The plaintiffs then alleged the commission by the defendants of the same acts hereinabove set forth. In connection with the allegations contained in the third count, the plaintiffs stress the fact that they alleged that the Lime Company has 500 shares of stock issued and outstanding and that 362 shares or 72.4 per cent thereof is owned by the Cement Company, and that the plaintiffs together own only 26.8 per cent of the capital stock of the Lime Company. They further alleged that certain persons are officers of the Lime Company, that certain persons are directors of the Lime Company, and that the same persons are directors and officers of the Cement Company. Calling attention to the foregoing facts, the plaintiffs contend that the Cement Company wrongfully exercised power over the Lime Company. The difference between counts three and four is in the third count it is alleged that the directors of the Lime Company “* * * have exercised and continue to exercise their power and authority as directors of the said Lime Company in the interest of the said Cement Company,” whereas, in the fourth count, the allegation is that the directors of said Lime Company “have refused to protect the rights and interests of the Lime Company” in its property. In the fifth count it is alleged “that the said Cement Company has refused and continues to refuse through its officers, agents and its dummies and directors, officers and agents of the Lime Company, to market, sell or possess the limestone * * * on the property of the Lime Company.” In the sixth count the plaintiffs alleged that the refusal just mentioned “is the reesult of a conspiracy entered into by and between the officers and directors and agents of the Cement Company and their agents, towit: the directors, officers and agents of the Lime Company in order to confiscate and absorb the limestone on said property of said Lime Company for its own operations.” The seventh count is based on a set of facts quite different from the other counts. It is alleged “upon information and belief the said Lime Company has a surplus of over $25,000 at the present time far in excess of the needs of said Lime Company for taxes, reserves or any other corporate expense or reason.” It is followed by a prayer that the court order the directors to declare a dividend which shall be meet and proper under the circumstances.

In their answers the defendants denied all of the material allegations contained in plaintiffs' complaint. On the trial they admitted an entry on the property of the plaintiffs but claimed such entry was made pursuant to the provisions of leases duly executed in 1907, 1916, 1921, 1933 and 1938. As to officers and directors the defendants admitted that at times the Lime Company and the Cement Company had officers and directors in common but they vigorously contended that such officers and directors at all times and in all matters acted with the utmost fidelity to both corporations. The defendants pleaded the statute of limitations and laches of the plaintiffs. On all said issues the trial court made findings in favor of the defendants and against the plaintiffs. Each and all of said findings is and are sustained by the evidence. Nevertheless as will hereinafter be noted the plaintiffs contend that certain findings are not sustained by the evidence.

The plaintiffs complain that the court failed to find facts sufficient to support its judgment. In this connection they stress the fact that it did not make a finding locating San Vicente Creek. As will hereinafter appear, that fact was immaterial. Again they contend that the defendants did not plead or prove, and the trial court made no finding, bringing defendants within the protection of section 311 of the Civil Code. That contention is not sustained by the record. The defendants introduced an abundance of proof on the subject and in finding IX the court found the facts in their favor. In this same connection the plaintiffs contend the court failed to find on the issue of the location of the main tunnel and of the use of tunnels and drifts and the value of the tunnels and drifts, and that it failed to find the amount of limestone removed from Lime Company property. It is a sufficient answer to state that in the pleadings no allegation was made thereon.

The plaintiffs contend that the findings of fact made by the court do not support the judgment. They claim that the court did not find what, if any, contracts or leases existed between the Lime Company and the Cement Company. The pleadings contained no allegations on the subject. The leases were introduced in evidence as a part of the proof of the defendants. Again it is claimed that the court did not find what portion of the property of the Lime Company said leases covered. That statement is not sustained by the record. A direct finding was made thereon. Further they contend that finding IX, which is to the effect that the leases were just and reasonable, was not a compliance with the provisions of section 311, subdivision (c) of the Civil Code because the finding did not expressly refer to the Lime Company. That criticism is not sound. The finding complained of did expressly refer to and was directly applicable to the Lime Company.

The first part of finding IX is to the effect that none of the officers or directors of the Lime Company are under the control of the Cement Company, that the latter has never controlled, directly or indirectly, the said officers or directors; that the Cement Company has never exercised any control in its interest as against the interest of the Lime Company, that the officers and directors of the Lime Company have always acted for its just interests and that the provisions of the leases were fair and reasonable. The plaintiffs contend that said findings are not supported by the evidence. The point has no merit. There was much evidence on the subject and the most that can be said would be to the effect that the evidence was conflicting. However we do not mean to intimate that there was any conflict.

Among the contested issues was the claim of the plaintiffs that the plaintiffs were overreached in setting the amount of the rental at $2,000 per year. The evidence thereon was conflicting. The plaintiffs contend that the testimony of the witnesses of the defendants was not worthy of credence. We find no merit in the contention. Said witnesses were informed as to the nature, accessibility, and other factors concerning lime deposits in general in this state and the testimony of such witnesses was entitled to credence.

In paragraph XIII of the plaintiffs' complaint, which is by reference made a part of counts two to six inclusive, the plaintiffs alleged a description of their lands by metes and bounds. One call is: “thence continuing down said San Vicente Creek on the easterly boundary of said San Vicente Rancho about 61.00 chains to the northeasterly corner of the lands conveyed by Fairbanks to Laird as aforesaid; * * *.” The plaintiffs call attention to the fact that the Cement Company in planning its quarry made excavations which changed the course of said creek, that defendants did not set up monuments indicating the former course of said stream, and that the plaintiffs were prejudiced as to their rights on each count, one to six inclusive. They further assert the trial court made no finding on said paragraph XIII and therefore the findings do not support the judgment. We think there is no merit in that assertion. Before the action was submitted the plaintiffs filed an amended and supplemental complaint. It amended said paragraph XIII. The trial court made a finding directly responsive thereto.

Moreover the defendants make the following contention: “The exact location on the ground of this boundary line is immaterial in this case. It is worth while to reflect here that in essence this action is one by appellants for alleged trespasses by the Cement Company on lands belonging to the Lime Company. No discussion is necessary to establish that one claiming a trespass must show his ownership. Appellants alleged that the Lime Company was the owner of certain real property as described in certain deeds. The court agreed with the appellants and found the ownership of the Lime Company was as alleged. But the court also found that, regardless of ownership of lands, regardless of where on the surface of the earth the boundary line lay, the entries upon and the use of the land of the Lime Company by the Cement Company were not wrongful but were made under fair and reasonable leases, and that the Cement Company had made fair, just, adequate and reasonable payment to the Lime Company for such use as it made of any of the Lime Company's land and for such of the Lime Company's rock as it took or used.

“It is patent that a finding as to where on the surface of the earth the exact line of the boundary lies, is immaterial. It is unnecessary to place the exact boundary line of the property in order to determine whether an entry was lawful or not. There was no issue in this case as to whether or not there had been entry. That was admitted. The issue was only whether the entry was rightful or wrongful. If the leases were valid, that issue was determined in favor of the defendants. The leases here in evidence gave the Cement Company the right to cross the boundary line of the Lime Company's property wherever on the earth's surface it lay. The leases also gave the Cement Company the right to take lime rock from the Lime Company's side of San Vicente Canyon. The maps of the canyon in evidence, the photographs introduced by plaintiffs at the trial and the evidence introduced by the defendants, show not only the payment of the minimum rental each year but that wherever there was any question as to whose lime rock was being taken, it was assumed by the Cement Company that it belonged to the Lime Company and the Cement Company paid for it at the rate of 3c per ton set in the various leases.” That contention we think is unanswerable. The location of the boundary line on the ground was, under such facts, wholly immaterial.

The defendants pleaded the statute of limitations. Code Civ.Proc. § 338, subds. 2, 3, and 4. It is not contended their pleading was defective. The trial court made findings on those issues in favor of the defendants. The findings follow the allegations of the answers of the defendants. The plaintiffs now contend the findings are insufficient. We think the plaintiffs are mistaken. The form used has frequently been approved. 16 Cal.Jur. 633. In support of their position the plaintiffs quote from section 458 of the Code of Civil Procedure as follows: “* * * and if such allegations be controverted, the party pleading must establish, on the trial, the facts showing that the cause of action is so barred.” That proposition the defendants admit, but they claim, and the record supports them, that they did, on the trial, establish said facts. Continuing the plaintiffs claim that the statute was tolled by an agreement made by the defendants to arbitrate. There was some evidence that such an agreement was made but no evidence that it was ever acted upon. Such showing was insufficient to toll the statute. Hornblower v. George Washington University, 31 App.D.C. 64, 14 Ann.Cas. 696. In the cited case, at page 75 of 31 App.D.C., at page 699, of 14 Ann.Cas., the District of Columbia Court of Appeals said: “If however, after the agreement was made to submit to arbitration, plaintiffs took no steps toward having the matter submitted, and did not insist upon the defendant's submission of the matter, such an agreement, we think, cannot be held to stop the running of the statute.” See, also, Curtis v. City of Sacramento, 70 Cal. 412, 414, 415, 11 P. 748; Taylor v. Harmon, 120 Okl. 145, 250 P. 887, 889.

Regarding the burden of proof on the issue of fair dealing the briefs contain many discussions. The issues are clearly two separate ones. Whether defendants complied with the provisions of Civil Code, section 311 was one issue. The burden of showing noncompliance therewith rested on the plaintiffs. San Diego, etc., R. Co. v. Pacific Beach Co., 112 Cal. 53, 44 P. 333, 33 L.R.A. 788. As to whether the Cement Company discharged its duty as trustee to its beneficiaries was distinctly different issue. If, as claimed, the trustee obtained any advantage from its beneficiary during the existence of the trust such transaction, it is presumed, was entered into by the beneficiary without sufficient consideration and under undue influence and the burden rested on the trustee to prove that its dealings with the beneficiaries were in the utmost good faith and unaffected by the influence of the confidential relation. 25 Cal.Jur. 127. But the record does not show that the Cement Company did not make that showing, nor does it show that it refused or neglected to do so. The trial court found the trustee acted in the utmost good faith and in the absence of any showing to the contrary we must assume the Cement Company duly assumed the burden of proof resting on it. The briefs do not show any failure on the part of the defendants to take up the burden of proof. The record is very long and this court is under no duty to search it to find error. However we have made such search and we find nothing showing or tending to show that the defendants neglected to introduce proof that the transactions in question were as to the beneficiaries just, fair, and reasonable, and that the consideration for the leases above mentioned was adequate.

The last point made by the plaintiffs is that the trial court's rulings constitute and are reversible error. It is an omnibus assignment. The plaintiffs enumerate over seventy rulings of the trial court and claim each one was error. Over thirty of said rulings were with reference to the location of the above mentioned boundary line. But, as we have shown, the location of said line on the ground was an immaterial matter. The other rulings were on questions regarding value. The rule on that subject is stated in City of Los Angeles v. Deacon, 119 Cal.App. 491, 7 P.2d 378. The plaintiffs on many occasions sought to apply a different rule. The defendants objected. In some instances their objections were overruled and in other instances they were sustained. Said rulings were more favorable to the plaintiffs than they were entitled to. They may not complain.

The judgment appealed from is affirmed.

STURTEVANT, Justice.

NOURSE, P. J., and SPENCE, J., concurred.

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