NEUSTADT v. SKERNSWELL

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

NEUSTADT v. SKERNSWELL.

No. 12494.

Decided: September 28, 1944

Marcel E. Cerf, Robinson & Leland, of San Francisco, for appellant. Joseph A. Brown, of San Francisco, for respondent.

This action was one to establish an oral trust in a parcel of real property in the city and county of San Francisco, to determine that defendant held an undivided one–half thereof in trust for plaintiff, for an accounting of “the rent and income thereof” and for a partition and sale of the property. The complaint was anything but a model of good pleading. However, a general and special demurrer to the complaint was overruled and after answer filed thereto a trial was held and an interlocutory decree was entered adjudging plaintiff and defendant to be each the owner of an undivided one–half interest in the property, determining that The Hibernia Savings and Loan Society had a first lien upon the property for the satisfaction of a mortgage held by it, appointing a referee to take an accounting “for all transactions between plaintiff and defendant since the purchase of said property * * * including all rentals in connection therewith,” appointing the same person a receiver to take charge of the property to “manage and operate the same and cause the same to be remodeled and rebuilt as is necessary on account of injury to said real property by recent fire,” and likewise appointing the same person sole referee in partition and directing him to sell the property. The court in the interlocutory decree also allowed a $750 attorney's fee to plaintiff's counsel “for his services herein.”

From this interlocutory decree defendant appealed on July 18, 1941. On the appeal from this decree appellant attacks the sufficiency of the complaint, and the sufficiency of the findings and of the evidence to support the interlocutory decree.

The case was tried throughout on the theory that plaintiff advanced to defendant $2,000 as the down payment for the purchase of said property on the oral agreement of the parties that while title would be taken in the name of defendant, the parties would be equal owners of the property, that plaintiff and defendant would share equally in the expense of remodeling it for apartment house purposes, that plaintiff would contribute his personal work and services thereto and that they would share equally in any profits. The evidence while sharply conflicting is sufficient to support the trial court's conclusion in plaintiff's favor. Appellant, relying on the rule that the terms of a trust must be clear and unequivocal and established by convincing evidence (Lefrooth v. Prentice, 202 Cal. 215, 227, 228, 259 P. 947) points to certain inconsistencies and contradictions in the plaintiff's testimony which appellant claims make it so uncertain and unconvincing that it is not sufficient to support a finding of a trust. The rule adverted to is, however, primarily a rule for the guidance of the trial court. If there is substantial evidence which if believed will support a finding of an oral trust the terms of which as found are clear and unequivocal, the rule is satisfied and the evidence is sufficient to support the judgment before an appellate court. Title Ins. & Trust Co. v. Ingersoll, 158 Cal. 474, 484, 111 P. 360; Steiner v. Amsel, 18 Cal.2d 48, 53, 54, 112 P.2d 635. Viewing the plaintiff's evidence in this light, despite some inconsistencies, it is sufficient, particularly in view of the corroborative evidence of other witnesses in several material particulars, to support the trial court's conclusion in plaintiff's favor.

The findings were made by reference to the complaint and the sufficiency of the findings is therefore dependent on the sufficiency of the complaint. Miller v. Gusta, 103 Cal.App. 32, 283 P. 946. The complaint contained an allegation “that the title to the said property was taken in the name of Jospeh Skernswell and he holds the same as Trust for plaintiff and defendant and that plaintiff furnished the money with which to buy the same and performed the work and labor to put the said property in good and rentable condition.” The allegation, and the finding that it is true, are each in our judgment too uncertain under the rule of Lefrooth v. Prentice, supra. The complaint contained the further allegation “that the plaintiff seeks this court to decree and determine that plaintiff is the owner of an undivided one–half interest in said property.” The trial court likewise found this allegation to be true. The allegation is not that plaintiff is the owner of an undivided one–half, but only that he seeks the court to so decree. It is, as appellant says, only a misplaced prayer for relief, not an allegation of ownership. The finding that it is true is subject to the same vice. In our judgment the demurrer to the complaint should have been sustained and the findings by reference to the complaint do not support the judgment.

This conclusion does not necessarily end the inquiry on appeal. We have already stated that the trial was conducted throughout on the theory of an oral trust repudiated by defendant. This issue was fully and elaborately tried by both parties. The failure of the complaint to state a cause of action is not fatal to the judgment unless the appellant can show that the error has resulted in a miscarriage of justice. Baker v. Miller, 190 Cal. 263, 267, 268, 212 P. 11; Bonney v. Petty, 125 Cal.App. 527, 530, 13 P.2d 969. We can find no miscarriage of justice here because the true issue between the parties was apparent during the entire trial and no claim was made that appellant wished to or could produce any additional testimony to controvert plaintiff's evidence on that issue.

This being so this court has power to amend the findings, if necessary, to support the judgment. Sec. 956a, Code Civ.Proc. It is perfectly apparent from a reading of the entire transcript that the only theory on which the trial court could and did adjudge the plaintiff to be an owner of a one–half interest in the property was the conclusion by that court that plaintiff's evidence of an oral agreement between the parties and his performance of that agreement was true. This issue would have been sufficiently tendered had plaintiff alleged that he was the owner of an undivided one–half interest. Costa v. Neves, 12 Cal.2d 121, 126, 82 P.2d 600; Calkins v. Calkins, 63 Cal.App. 292, 300, 218 P. 611. Instead he alleged in paragraph IV of his complaint, in the language above quoted, that plaintiff seeks this court to decree that plaintiff is the owner of an undivided one–half interest and the court found this allegation to be true. Under the authority of Costa v. Neves, supra, and Calkins v. Calkins, supra, the finding would have supported the judgment if it had found that plaintiff is the owner of an undivided one–half interest. This court accordingly orders a finding added to the findings of fact in the following words:

“That plaintiff is the owner in fee of an undivided one–half interest in the property described in plaintiff's complaint.”

Appellant also attacks the complaint because it does not expressly allege the respective interests of the parties, which is required in a suit for partition. Sec. 753, Code Civ.Proc. The error in this respect was not prejudicial since the whole issue made on the trial was whether plaintiff had an equitable undivided one–half interest or not.

The allowance of an attorney's fee in the interlocutory decree was error. Such fee can only be allowed in the final judgment. Broome v. Broome, 179 Cal. 638, 645, 178 P. 525. The interlocutory decree is accordingly modified by striking therefrom the paragraph awarding a $750 fee to plaintiff's attorney.

The court as pointed out ordered a reference to take an accounting “for all transactions between plaintiff and defendant since the purchase of said property on May 10, 1937, including all rentals in connection therewith.” The complaint alleged in this regard “that the defendant herein has taken all of the rent and income from said property and that plaintiff desires an accounting therefor.” The finding is that this allegation is true. The reference is obviously too broad, not supported by the finding nor by the theory on which the case was tried. The finding is not supported by the evidence since plaintiff himself testified to periodic accountings and adjustments of account between the parties. The findings are accordingly modified by adding to the finding “that each and all of the allegations of paragraph V of the complaint of plaintiff are true” the words “except that it is not true that defendant has taken all of the rent and income from said property, but an accounting is necessary to determine what, if any part, of said rent and income received by defendant has not been accounted for, and his one–half thereof paid, to plaintiff or credited against plaintiff's obligation to pay one–half of the costs of improving and operating said property.” The interlocutory decree is ordered modified by striking therefrom in the order of reference for an accounting the words: “for all transactions between plaintiff and defendant since the purchase of said property on May 10, 1937, including all rentals in connection therewith” and inserting in their place: “of all rentals and income received from the operation of said property.”

The effect of this modification will be to limit the accounting to those matters alleged in the complaint and as to which the only issue was tendered by the pleadings or on the trial with regard to an accounting between the parties.

Appellant complains that the decree as to the amount of the lien of The Hibernia Savings and Loan Society as found in the decree is not supported by findings or evidence. The complete answer is that no appeal was taken from this portion of the decree, the notice of appeal reciting only: “that defendant Joseph Skernswell hereby appeals * * * from the judgment heretofore made and entered * * * in favor of plaintiff and against said defendant * * *.”

The Hibernia Savings and Loan Society was a defendant and the portion of the decree in its favor was not included in the notice of appeal.

After the appeal was taken from the interlocutory decree on July 18, 1941, a series of subsequent proceedings were had in the trial court, over the objection of defendant, that the appeal from the interlocutory decree stayed all further proceedings in the trial court. As a result of these proceedings we have before us for review on subsequent appeals taken by defendant Skernswell the following orders made after July 18, 1941: Order setting time for hearing accounting; order directing referee to take possession of real property and to collect all rents and income; order directing referee to sell real property; order requiring bond on appeal; order denying motion to set aside report of referee; order denying exceptions and objections to report of referee; order overruling objections to sale of property; and order confirming sale and fixing fee of referee. There is also an appeal from the final decree in partition.

It is now apparently conceded by appellant that the appeal from the interlocutory decree did not operate to suspend the functions of the receiver and it is settled that an appeal from a judgment does not suspend the powers of an ancillary receiver, in which class the receiver in this case falls. Julian v. Schwartz, 1 Cal.2d 269, 34 P.2d 487. The order directing the receiver to take charge of the property and collect the rents and income was no broader than the similar provision in the interlocutory decree and will be affirmed.

The notice of appeal from the interlocutory judgment of May 26, 1941, was filed on July 18, 1941. The validity of all of the other subsequent orders appealed from and of the final decree is attacked by appellant upon the ground, among many others, that the appeal from the interlocutory judgment operated as a stay of all further proceedings in the trial court. Under the authorities we are satisfied of the correctness of this claim. It is settled by the decisions of our Supreme Court that an appeal from an interlocutory decree of partition operates as a stay without bond. Born v. Horstmann, 80 Cal. 452, 22 P. 169, 338, 5 L.R.A. 577; Williams v. Wells Fargo Bank, 17 Cal.2d 104, 109 P.2d 649. It has likewise been held that where the property involved in the judgment appealed from is in the possession of a receiver appointed by the court, as in this case, an appeal from the judgment operates as an automatic stay. Zappettini v. Buckles, 167 Cal. 27, 30, 31, 138 P. 696; cf.: Jensen v. Hugh Evans & Co., 13 Cal.2d 401, 90 P.2d 72. The conclusion that all proceedings under the interlocutory judgment, with the exception of the functions of the receiver, were stayed by the first appeal follows necessarily from these decisions.

On August 1, 1941, the trial court made an order requiring a bond on the appeal from the interlocutory decree as a condition of a stay. It was therein provided that “if any stay of proceedings is desired by appellant * * * the appellant shall give and provide a good and sufficient bond to be approved by this court in the sum of five thousand dollars ($5000.00) conditioned that he shall indemnify the plaintiff against all loss, harm, damage or injury which may occur by virtue of a stay of proceedings and the sale of said real property, if judgment appealed from be affirmed or dismissed (sic).” This is one of the orders from which appellant has appealed.

Respondent points to no decision or code section giving the court power to exact a bond of this character on appeal from this type of judgment. The applicable section is 949, Code of Civil Procedure. Williams v. Wells Fargo Bank, supra; Zappettini v. Buckles, supra. It is true, as pointed out in the Williams case, that under section 949, as it now reads, the court may in its discretion in certain cases require an undertaking to stay proceedings pending such an appeal, the condition of such undertaking being, as provided in section 949, “for the performance of the judgment or order appealed from.” It is clear that the order for undertaking here in question was not of the character authorized by this section. It seems equally clear that the facts of this case did not fall within the ambit of cases in which such an undertaking may be required in any event, as the following quotation from Williams v. Wells Fargo Bank, supra, 17 Cal.2d at page 107, 109 P.2d at page 650, demonstrates:

“And although that section allows the court in its discretion to require an undertaking in an amount to be fixed by it ‘conditioned for the performance of the judgment or order appealed from’, this language has been expressly interpreted to mean ‘that a bond may be ordered in such of those cases where the appellant was adjudged to have money or other property in his possession belonging to the respondent, or was required to perform some act for the benefit of the respondent or in pursuance of the directions of the judgment or order appealed from, and in all other cases the provisions of the section should operate as a stay of proceedings without bond.’ ”

The conclusion that the appeal from the interlocutory judgment operated as an automatic stay of proceedings in the trial court makes it unnecessary for us to consider many other points urged by appellant. We have already pointed out that the reference for an accounting was too broad under the pleadings and findings of the court. A new reference, if one is had, will be limited by the scope of the interlocutory judgment as amended to conform to the pleadings and findings.

The interlocutory decree of partition as herein ordered modified is affirmed. The order directing receiver to take possession of the property and collect the income therefrom is affirmed. The other orders appealed from and the final decree in partition are, and each of them is, reversed. Appellant will recover his costs on appeal.

DOOLING, Justice pro tem.

PETERS, P. J., and WARD, J., concur.