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

BAUER v. BAUER et al.

Civ. 11339

Decided: April 04, 1940

William J. O'Brien and John F. Poole, both of Los Angeles, for appellant. William C. Jensen, of Los Angeles, for respondent. Clyde C. Triplett, of Los Angeles, for defendant S.A. Best.

Plaintiff sought to quiet title to twenty-three bonds issued by the Southern California Telephone Company. Defendant O.W. Bauer, who is the brother of plaintiff and will be hereinafter referred to as the defendant, filed his answer and cross-complaint, denying the material allegations of the complaint and alleging that in 1919, the father of plaintiff and defendant created a trust with respect to said bonds and transferred them to said defendant as trustee. He alleged that said bonds were in the possession of William C. Jensen, who was made a cross-defendant. He therefore prayed that plaintiff take nothing by her action and that it be ordered that said bonds be delivered to him as trustee for the purposes of the trust. Defendant S.A. Best filed his answer and cross-complaint, claiming an interest in said bonds by reason of certain dealings with plaintiff. The trial resulted in judgment in favor of plaintiff and against defendant and from said judgment, defendant appeals.

It appears that the transaction giving rise to this litigation occurred in 1919. Some years prior thereto, plaintiff had married one Kitts, but, prior to 1919, these parties had been divorced. The father found that plaintiff was in financial difficulties and he testified that he decided to help her “by giving her bonds enough to keep her in good circumstances and I also bought a house for her for a home”. There is some conflict in the evidence regarding the exact nature of the bond transaction in 1919. It is admitted by all that the bonds were delivered to plaintiff by her father at that time and that they remained in her possession, or the possession of those claiming under her, ever since that time. It is further admitted by all that while said parties caused said bonds to be registered in the name of “O.W. Bauer, trustee for Alice R. Kitts”, said defendant never had possession of said bonds or collected the maturing interest coupons during the seventeen years intervening between 1919 and the time of the trial. Plaintiff, defendant and the father testified regarding the conversations had by the parties in 1919. It was plaintiff's theory and her testimony tended to show that it was the father's intention to make an unconditional gift of said bonds to plaintiff and that he delivered them to plaintiff for that purpose; that the parties discussed the desirability of protecting said bonds from any possible claims made by creditors of her divorced husband and decided to register the bonds as above indicated but without any intention of creating a trust. There was ample testimony given by plaintiff to sustain this theory and there was further support for this theory in the testimony relating to the acts and declarations of the parties during the seventeen years which followed. It was defendant's theory, on the other hand, that a trust had been created. Defendant and the father gave testimony concerning the terms of this alleged trust, but it is significant to note that their testimony is not entirely in accord concerning these terms.

The trial court's findings sustained plaintiff's theory. It found that plaintiff was the owner of the bonds; that the father “made a gift” of said bonds to plaintiff in 1919 at which time said bonds “were delivered unconditionally to plaintiff”; that about said time, plaintiff caused said bonds to be registered as above set forth but that no trust was created or intended by the parties or any of them; that it was not intended by said parties that such registration should have any legal effect or that said defendant should act “in any capacity other than as mere agent and dummy for plaintiff”; that there were creditors of plaintiff's former husband, none of whom were creditors of plaintiff, and said bonds were caused to be registered in defendant's name “for the purpose only of protecting plaintiff and her property from harassment by the creditors of her said former husband”; that the acts performed in registering said bonds as above set forth “were a fiction and a sham” done only for the purpose above stated which was at all times known to all of said parties.

The trial court's conclusions and judgment were in accord with the findings. It was ordered, adjudged and decreed that defendant O.W. Bauer had not “either in his individual or in his claimed representative capacity as trustee” any right, title or interest in said bonds; that plaintiff's title be quieted against said defendant “both individually and as such claimed trustee”; that said defendant had never been trustee and that no trust had ever been created with respect to said bonds; and that said defendant be directed and ordered to execute and deliver to plaintiff proper endorsements and transfers of said bonds within ten days after the signing of the judgment.

Practically all of defendant's contentions on this appeal are based upon the assumption that a trust had been created and upon the claim that the evidence was insufficient to support the trial court's findings to the effect that there had been an unconditional gift of the bonds to plaintiff free of any trust. We find no merit in these contentions. It was plaintiff's claim that no trust had been created and she therefore brought this action against defendant individually. The claim that a trust had been created was raised by the allegations of said defendant's answer and cross-complaint. Plaintiff never claimed or admitted that a trust had been created. On the contrary, plaintiff claimed that she was the owner of the legal and equitable title to the bonds by virtue of said unconditional gift and she sought to quiet her title against the adverse claim of said defendant. This was entirely proper and the trial court found in accordance with plaintiff's claims upon evidence which in our opinion was sufficient to support the findings. Defendant cites and relies upon Buchner v. Malloy, 155 Cal. 253, at page 255, 100 P. 687, at page 688, where the court said, “That an action to quiet title will not lie in favor of the holder of an equitable title as against the owner of the legal title is a proposition settled by repeated decisions of this court.” But this rule can have no application where the plaintiff in such quiet title action claims and the trial court finds that no trust was created and that the plaintiff was the owner of both the legal and equitable title. The mere fact that the bonds were registered by the parties in the name of defendant under the designation of “trustee” did not conclusively show that a trust had been created or that the legal title had passed to defendant. Other evidence was introduced to show that such registration was not intended to have any such effect and such evidence was properly admitted for that purpose. P.A. Smith Co. v. Muller, 201 Cal. 219, 256 P. 411; Cooper v. Cooper, 3 Cal.App.2d 154, 39 P.2d 820; Texas Company v. Berry Garage, 121 Cal.App. 455, 9 P.2d 241. Defendant points to certain testimony of plaintiff in which she used the word “trustee” but we believe that a reading of the entire testimony shows that she used said word merely with reference to the admitted designation of defendant as trustee in the registration and not in its technical, legal sense.

One further contention raised by defendant requires consideration. The trial was had and the judgment was entered in 1936. The bonds in question were called as of May 1, 1936. The trial court, after ordering the endorsement and transfer of the bonds by defendant, adjudged that “from and after May 1, 1936, and until such time as defendant and cross-complainant fully and completely complies with said provisions of this decree, plaintiff shall have and recover from said defendant and cross-complainant interest at the rate of seven per cent per annum upon the sum of twenty-three thousand ($23,000.00) dollars”. Defendant contends that the trial court erred in entering judgment requiring the payment of interest as indicated but we find no merit in this contention. It is true, as pointed out by defendant, that no claim for interest or for a money judgment was made in the complaint. Said complaint was filed prior to May 1, 1936, and the bonds had not then been called. The judgment was entered after May 1, 1936, and after the bonds had been called. Defendant admittedly refused to release his alleged claim upon said bonds and he thereby prevented plaintiff from obtaining the proceeds of said bonds following the calling thereof. We believe it was entirely proper for the trial court to include in the judgment the above-mentioned provision for the recovery of interest from the time of the calling of said bonds. Such provision was necessary in order to afford complete relief to plaintiff and it is a well-settled rule that once a court of equity has obtained jurisdiction of a cause, it will dispose of the entire controversy and grant complete relief in order to avoid a multiplicity of actions. 10 Cal.Jur. 496, sec. 41.

The judgment is affirmed.

SPENCE, Justice.


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