SEARS ET AL v. RULE ET AL

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

SEARS ET AL. v. RULE ET AL.

COTTON v. RULE.

Civ. 14280.

Decided: August 28, 1944

Edwin J. Miller, Ralph W. Miller, and Edwin L. Smith, all of Los Angeles, for plaintiffs and respondents. Howard E. Forster, of Terminal Island, for respondent Cotton. Kenneth E. Grant, of Los Angeles, George T. Warren, of Enciho, Henry H. Draeger, of Beverly Hills, and A. A. Goldstone, of Los Angeles, for appellant.

Plaintiffs commenced this action to impress a trust upon property left by Sarah E. Weber, who died on January 21, 1936. They also asked for an accounting. A cross–complaint was filed by Minnie B. Cotton and upon trial the court rendered judgment against defendant granting the relief sought by plaintiffs and the cross–complainant, including a money judgment in the sum of $93,206.26. Defendant has appealed from this judgment. There is also a purported appeal from the order denying his motion for a new trial.

Sarah E. Weber was married to Charles F. Weber on April 12, 1904, and they continued to be husband and wife until Mr. Weber's death on January 25, 1934. Mr. Weber in his will left all of his property to his wife. During their married life the Webers accumulated property of a value greater than $250,000, one–half of which was contributed by each.

Mrs. Weber left a will in which, after making certain specific bequests, she willed the residue of her estate to her brother, Charles T. Rule, defendant herein, in the following paragraph:

“All the rest, residue and remainder of my estate, of whatever kind and character, and wheresoever situated at the time of my decease, I give, devise and bequeath as follows, to wit:

“(a) To my brother, Charles T. Rule, of Los Angeles, California, the whole thereof; and in the event he should fail to survive distribution to him, then to my heirs in accordance with the laws of succession of the State of California.

“(b) The reason of making my brother, Charles T. Rule, aforesaid, the sole beneficiary of my estate, is that I am confident, and place my trust in him to the extent, that he will distribute my estate in accordance with my wishes he and I have often discussed.”

Defendant presented the will for probate and was appointed executor. He conducted the administration proceedings and on March 15, 1937, an order for final distribution was entered distributing the entire estate to him as the sole beneficiary named in the will.

Mrs. Weber left as blood relatives, in addition to defendant, two brothers and a daughter of a deceased sister. Defendant transferred to the niece and to one of the brothers the sum of $5000 each and a larger sum to the other brother.

Plaintiffs are the heirs at law of the predeceased husband of Mrs. Weber. They commenced the present action approximately eighteen months after the entry of the decree for final distribution. In their complaint they charge fraud on the part of defendant in failing to notify them of the pendency of the probate proceedings, in failing to disclose to the probate court his knowledge of the fact that Mrs. Weber intended to will to him the residue of the estate in trust only with an agreement on his part to distribute the property according to previous understanding. They allege that Mrs. Weber had attempted to devise to defendant the remainder of her estate in trust but that the trust had failed because the “subject, purpose and beneficiary of the trust” were not mentioned. They assert that a part of the estate reverted to them in accordance with the provisions of section 229 of the Probate Code. The trial court sustained a demurrer to the first amended complaint without leave to amend and entered a judgment of dismissal. Plaintiffs appealed and on June 16, 1941, the judgment was reversed by the Third District Court of Appeal. 45 Cal.App.2d 374, 114 P.2d 57, 61. Reference is made to that decision for a more complete statement of the allegations of the proffered second amended complaint and of additional provisions of Mrs. Weber's will. It was therein held: “It appears to us that not only was the effort to create a voluntary trust by the use of precatory language void, but it also seems clear the testator did not intend to devise and bequeath the property mentioned in the fifth clause of the will to her brother absolutely, and the conveyance of that property therefore fails. If the probate court erred in construing the will in that regard then the bulk of the estate was undisposed of and since it was wrongfully distributed to Charles T. Rule, a resulting trust was automatically created for the benefit of the heirs according to the rules of succession.”

When the matter came on for trial the judge was apparently of the opinion that the views of the reviewing court on the first appeal became the law of the case. This is stoutly disputed by defendant, who points to the fact that the order reversed was an order sustaining a demurrer and that, according to the opinion of the reviewing court, the provisions of the will were “viewed in the light of the facts alleged in the complaint.” The trial court found that the property left by Mrs. Weber was community property of herself and her previously deceased spouse and that defendant held one–half thereof in trust for the heirs at law of Mr. Weber; and that defendant was guilty of fraud in procuring disposition of the residue of the estate to himself. Defendant contends that the findings are without support in the evidence.

The judgment must be reversed because of the error of the court in sustaining a demurrer to the special defense set up in defendant's answer, wherein he alleged that after the death of Mr. Weber plaintiffs conveyed and transferred to Mrs. Weber all of their interest in Charles F. Weber's estate. Two instruments of similar purport were presented to the court. One of them is as follows: “This Agreement made and entered into by and between Sarah Ellen Weber, hereinafter called ‘Party of the First Part,’ and Edwin E. Weber, hereinafter called ‘Party of the Second Part,’ Witnesseth That, Whereas, Charles F. Weber, died on or about January 25th, 1934, in the City of and County of Los Angeles, State of California; and that, Whereas, thereafter diligent efforts were made by the Party of the First Part to ascertain whether decedent left a last will and testament, but none could be found; and that thereafter the estate was offered for probate on or about February 4th, 1934; and Whereas, subsequently thereto, to wit August 28th, 1934, the Party of the First Part discovered an holographic will of the decedent, devising all of his property to the Party of the First Part, and designating the Party of the First Part Executrix of his Estate without bond; that thereafter said will was filed for probate; and Whereas, the party of the second part claims there exists certain grounds of contest against the same and is about to file a petition of contest thereon, Now, Therefore, for the purpose of forever settling and determining the dispute concerning said will, and to prevent the contest thereof, and to forever settle and determine any and all interest of any character or nature whatsoever that the party of the second part, may now, or hereafter, have in the estate of Charles F. Weber, deceased. It is Hereby Mutually Agreed by and between the parties hereto, that for and in consideration of the sum of one Dollar ($1.00) and other good and valuable considerations in hand paid to party of the second part by the party of the first part, the receipt of which considerations are hereby acknowledged, the party of the second part does hereby forever rescind, remise, release, relinquish and quitclaim any and all claims, interests, rights, bequests and/or devises that he may now, or hereafter, have, or acquire, in and to the estate of Charles F. Weber, deceased; and the party of the second part further agrees that he will not file, of cause to be filed, any other or further petition or action against said estate, or the administrators thereof, or the party of the first part, or in any other way hinder or embarrass the party of the first part in the administration of said estate. This agreement shall be binding upon the heirs, executors and administrators of the parties hereto. In Witness Whereof the parties have hereunto set their hands this 12th day of November, 1934. Sarah E. Weber, Party of the First Part Edwin E. Weber, Party of the Second Part.”

Respondents assert that the instrument in question could have no greater effect than a quitclaim deed and that under the general rule a conveyance by a quitclaim deed will not operate to pass a subsequently acquired title of the grantor. The general rule is, however, subject to the qualification that if language is used in the quitclaim deed showing an intention on the part of the parties to convey any different interest and showing an intention not to limit the interest conveyed to the interest which the grantor then had, the grantor must be estopped from asserting an after acquired interest in contradiction of the intention of the parties as expressed in the instrument. The rule is stated in 58 A.L.R. p. 362: “Thus, although an ordinary quitclaim deed will not estop the grantor from asserting an after–acquired interest, yet a distinct recital in such a deed, showing that the parties proceeded on the theory that a particular interest was thereby conveyed, may be as effectual to create an estoppel as a warranty.”

If the court had permitted defendant to present evidence in support of his special defense, the presentation of the two instruments would have furnished proof that plaintiffs had during the lifetime of Mrs. Weber divested themselves of all interest, both present and future, in the property which they seek to obtain in the present litigation. There can be no question but that the parties intended to settle all property rights in the estate of Charles F. Weber and that Mrs. Weber acquired from plaintiffs all the interest which they then had or would thereafter have in the estate. It is set forth in the instruments that it was the purpose of the parties “to forever settle and determine any and all interest of any character or nature whatsoever that plaintiffs then had or would have in the future in the estate of Charles F. Weber.” It is further set forth that the plaintiffs for valuable considerations relinquish and quitclaim “any and all claims, interests, rights, bequests and/or devises that he may now, or hereafter, have, or acquire, in and to the estate of Charles F. Weber, deceased;” The language is clear and unambiguous and is made binding upon the heirs of the parties.

The point now under discussion was presented for decision in Re Estate of Wilson, 40 Cal.App.2d 229, 104 P.2d 716, 718, a case in which the facts are parallel to the facts in the present case, and the question of the effect of a quitclaim deed given by an heir was there decided adversely to the position now taken by plaintiffs. In the Wilson case Mr. and Mrs. Wilson had accumulated community property. The wife died in 1920 and after her death the surviving husband, in consideration of the sum of $500, obtained from Mrs. Enke, Mrs. Wilson's only heir other than himself, a quitclaim deed in which it was set forth that Mrs. Enke “remised, released, and forever quitclaimed” certain specific property. The instrument further set forth: “And in further consideration of the money received as hereinbefore referred to, said first party does hereby transfer, set over, and assign unto the said second party all of her right, title, and interest in and to all of the property, personal and otherwise of the estate of Martha Wilson, * * * and request that when distribution of said estate is made that the whole thereof be distributed to her surviving husband, Charles J. Wilson.” Mrs. Enke died during the administration of Mr. Wilson's estate and prior to its distribution. The heirs of Mrs. Enke asserted a claim to one–half of the estate left by Charles J. Wilson upon the ground that the property to be distributed was community property of the decedent and of his predeceased spouse. The argument was made that the instrument by which Mr. Wilson acquired Mrs. Enke's interest was strictly a quitclaim deed passing present title only. The action of the trial court in denying the claims of Mrs. Enke's children was affirmed on appeal. The position of defendant in the present case is stronger than was the position of Mrs. Wilson's heirs, for here the instrument in question specifically states that plaintiffs relinquish any interest in the estate of Charles F. Weber which they may hereafter acquire.

A different situation is presented by the cross–complaint of Minnie B. Cotton and the judgment rendered thereon. Mrs. Cotton is a blood relative of Mrs. Weber and in the absence of a will would be entitled to inherit one–fourth of her property. She made allegations of fraud similar to those made by plaintiffs in their amended complaint and also additional charges, among them that defendant shortly after Mrs. Weber's death made false representations to her as to the size of the estate left by Mrs. Weber; falsely told her that the estate was his to do as he liked with it; and fraudulently induced her to accept the sum of $5000 as her share of the estate.

The judgment in favor of cross–complainant must be reversed for the reason that it is barred by section 338 sub. 4 of the Code of Civil Procedure. Mrs. Cotton came to Los Angeles from her home in Nebraska three months after the death of Mrs. Weber and visited at the home of defendant for ten or twelve days. She testified that during this time she asked defendant for a settlement of her rights in Mrs. Weber's estate; that defendant told her he could do anything with the property of the estate that he wished to do and that she was not an heir and was not entitled to anything; that Mrs. Weber's deceased husband had “gone through with a lot of the estate and there wasn't so awful much left”; that defendant told her that he would settle with her in accordance with Mrs. Weber's wishes; that defendant did not give her a copy of Mrs. Weber's will nor of the inventory filed nor did he tell her the size of the estate; that defendant told her that each of the heirs would receive $5,000; that she accepted $5,000 and signed a settlement with defendant.

Cross–complainant returned to Nebraska after making the settlement with defendant. Plaintiffs named cross–complainant as a party defendant in their amended complaint, to which was attached a copy of the inventory filed by defendant showing the value of the estate, and served a copy of the amended complaint and summons upon her in Nebraska on December 19, 1938. Thereupon cross–complainant and her husband drove to Los Angeles, arriving within thirty days from the time of the service of the amended complaint. She stated that she was ignorant of both business and legal matters; that when she was served with the amended complaint she looked it over but did not read it all because she did not understand it; that she did not talk to her husband about its contents and did not notice the statement in the account of defendant that John Rule, one of the heirs, had received $13,700. On arrival in Los Angeles she went to the office of plaintiffs' attorney, Edwin J. Miller. She testified that she thought she must come to California as a witness; she was informed by Mr. Miller that the action had been dismissed and that an appeal had been taken to the Supreme Court; she did not talk with Mr. Miller about the estate; when she arrived in Los Angeles she did not see defendant or ask him any questions about the estate or Mrs. Weber's will; she learned in August, 1941, that the judgment dismissing the plaintiffs' complaint had been reversed; she did not become interested in the case until after the reversal of the first judgment and after the second amended complaint was served on her in October, 1941.

An action based upon fraud must be commenced within three years but the action is not to be deemed to have accrued until the discovery of the facts constituting the fraud. Cross–Complainant claims that she did not discover the facts of defendant's fraud until March of 1942, when she received a letter from her own attorney, whom she had employed shortly before, informing her that John Rule, a brother of Mrs. Weber, had received more than $5000 from defendant.

In Consolidated R. & P. Co. v. Scarborough, 216 Cal. 698, 701, 16 P.2d 268, it is said that the rules governing cases involving fraudulent transactions are “admirably stated” in Lady Washington C. Co. v. Wood, 113 Cal. 482, 486, 45 P. 809, 810, which in part are as follows: “He must show that the acts of fraud were committed under such circumstances that he would not be presumed to have any knowledge of them,––as that they were done in secret, or were kept concealed; that he must also show the times and the circumstances under which the facts constituting the fraud were brought to his knowledge, so that the court may determine whether the discovery of these facts was within the time alleged, and, the means of knowledge are equivalent to knowledge, if it appears that the plaintiff had notice or information of circumstances which would put him on an inquiry which, if followed, would lead to knowledge, or that the facts were presumptively within his knowledge, he will be deemed to have had actual knowledge of these facts.” [216 Cal. 698, 16 P.2d 269.]

Cross–complainant did not file her action until approximately six years after the fraudulent representations which she alleges were made by defendant and more than three years and three months after she had been served with plaintiffs' amended complaint. The record is devoid of any excuse for this delay. She came to Los Angeles shortly after Mrs. Weber's death to protect her rights as heir but according to her own statement she did not take the trouble to examine the will, which was a matter of public record, or ask anyone for a copy of it. She made no inquiries concerning the value of the estate. When she was served with a copy of the amended complaint in December, 1938, she was unquestionably given information concerning the facts which she claimed defendant had misrepresented to her. She then promptly came to Los Angeles and talked to the attorney for plaintiffs, taking the precaution to come within thirty days. Her statement that she drove the great distance from Nebraska to Los Angeles under the impression that she must come as a witness and that she did not discuss the charges in plaintiffs' amended complaint with her husband or with plaintiffs' attorney is so ridiculous that it should be characterized as of that type of testimony classed as inherently improbable. She admits that Mr. Miller informed her that the case was on appeal. Apparently she preferred to wait the outcome of the appeal rather than to engage a lawyer to protect her rights. But after the decision on appeal she continued to show inexcusable neglect in delaying until March, 1942, to file her cross–complaint. The argument that cross–complainant was ignorant and inexperienced is not persuasive in the present situation. A large part of the public, perhaps a majority, go through life without court experience, but it is a matter of common knowledge that the courts are open to all to right wrongs and to adjust legal differences and that lawyers are licensed for the purpose of assisting the “ignorant” to obtain their rights. No claim is made that cross–complainant sought the services of a lawyer to protect her rights, a natural course for her to take when she was served with the amended complaint. The only reasonable conclusion to be reached is that cross–complainant had not only means of knowledge but actual knowledge of defendant's alleged fraud more than three years before she filed her cross–complaint.

Defendant was not, as contended by cross–complainant, estopped from setting up the bar of the statute of limitations. He had no dealings with cross–complainant after the settlement made in April, 1936. If he defrauded her it was done at that time and no action was taken by him thereafter which can be characterized as an inducement to her to forego commencing an action against him. Indeed, no action of any kind was taken by defendant concerning his dealings with cross–complainant after the service upon her of the amended complaint, which was more than three years before the filing of the cross–complaint. If the argument of cross–complainant is followed to its logical conclusion, no party defendant could ever plead the bar of the statute of limitations in actions founded upon charges of fraud such as are made in the present litigation.

In view of our conclusions above set forth it is unnecessary to discuss other points presented by defendant.

The judgment is reversed. The purported appeal from the order denying the motion for a new trial is dismissed.

W. J. WOOD, Justice.

MOORE, P. J., and McCOMB, J., concur.

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