IN RE: WAY'S ESTATE. BANK OF AMERICA NAT. TRUST & SAVINGS ASS'N et al. v. WETHERELL et al.
Decedent's two daughters, Geraldine Wetherell and Athelyn Wetherell, appeal from an order determining that all property standing in the name of decedent at his death is subject to § 201.5 of the Probate Code, with the result that his widow, respondent Clara H. Way, is entitled to one-half thereof. The section provides: ‘Upon the death of either husband or wife one-half of all personal property, wherever situated, heretofore or hereafter acquired after marriage by either husband or wife, or both, while domiciled elsewhere, which would not have been the separate property of either if acquired while domiciled in this state, shall belong to the surviving spouse; the other one-half is subject to the testamentary disposition of the decedent, and in the absence thereof goes to the surviving spouse, subject to the debts of the decedent and to administration and disposal under the provisions of Division III of this code.’
The decedent died on January 28, 1943, at the age of 88 years, a resident of San Mateo County. His estate was appraised at $68,184.96. By will dated October 15, 1942, he bequeathed $100 to his son, ‘this amount only being left him for personal reasons with which he is familiar.’ The residue he bequeathed to the San Francisco Bank as trustee. The bank was directed to pay to decedent's wife the difference between $150 a month and what she received from her separate property, and to pay $60 a month to each of decedent's two daughters, the appellants herein. The widow was 84 years of age at the time of trial in December, 1943, and was living with the son. The San Francisco Bank was appointed guardian of her estate on June 15, 1942, and thereafter the Bank of America replaced The San Francisco Bank. In the guardianship proceeding, in December, 1942, her estate was appraised at $47,029.23. Claiming that under § 201.5 the decedent did not have testamentary power over all the property of which he attempted to dispose of by will, the widow individually, and the bank as guardian of her estate, filed petitions requesting a determination of the widow's rights.
The decedent, John H. Way, and his wife, Clara H. Way, married in Connecticut in 1884 and lived there until 1910. At the time of his marriage decedent was working for the Waterbury Clock Company as a bookkeeper and had been employed by that company for two years. In 1910, at the age of 56 he retired from his position as purchasing agent for that company, and the family moved to Denver. About 1922 Mr. Way came to California from Colorado and his family followed the next year. It is agreed that decedent never worked after he left Connecticut, and that all real and personal property of which he died possessed is the proceeds of what he owned when he left Connecticut. That state is not a community property state, so that such property when acquired was the sole property of the husband, subject only to the wife's dower rights, and it remained his sole property (known here as ‘separate property’) when the parties became domiciled in California. Estate of Thornton, 1 Cal.2d 1, 33 P.2d 1, 92 A.L.R. 1343. It was admittedly separate property of the husband at the time of his death. But the widow contends, and the trial court found, that it was the peculiar type of separate property defined in § 201.5, that is, it was property of a type that had the parties been domiciled here when the property was acquired it would have been community property. The trial court concluded that under that section, upon the death of her husband, the widow had the same rights as if it were community property, and was therefore entitled to one-half thereof, over which the husband had no power of testamentary disposition.
On this appeal the appellants make several contentions. It is first urged that § 201.5 applies only to that portion of the estate of the decedent that was personal property at the time of death and can have no application at all to the real property in such estate. It is next contended that respondents had the burden of proving the facts necessary to bring § 201.5 into operation, and that they failed to sustain this burden in that they failed to prove that the estate owned by her husband at the time of his death did not have its origin, in part at least, in property owned by him before his marriage. The last major contention of appellants is that the uncontradicted evidence demonstrates that decedent and his wife entered into an oral contract to the effect that, regardless of § 201.5, each should have the unlimited right to dispose of his or her separate property by will to the exclusion of the other. The trial court found against appellants on all three points.
The decedent's estate consists of cash in the amount of $6,250.11, of five promissory notes secured by deeds of trust on California realty, and of seven parcels of California realty.
The first point urged is that § 201.5 has no application at all to real property in the estate regardless of its source. In the trial court appellants' contentions in reference to the proper interpretation of the section was much broader. In addition to contending that the section has no application to real property in the estate, it was urged that as to personal property the section applies only when specific personalty acquired while the spouses were domiciled elsewhere remains part of his estate in the same form on his death. In other words, it was contended that personal property acquired while domiciled elsewhere under such circumstances that § 201.5 would otherwise be applicable, but brought to this state and transmuted into another form of personalty, and in the transmuted form constituting part of the estate, is not governed by the section. Upon oral argument, and in a memorandum filed thereafter, appellants withdrew their contention in reference to personal property, and expressly admitted that the section applies to personal property in the estate which had its origin in personal property acquired by the husband or wife while domiciled elsewhere and which would not have been the separate property of either if acquired while domiciled in this state. This concession is in accord with the clear meaning and purpose of the section, and the point as to personal property need not be further considered. This leaves for consideration only the question as to whether the section applies to real property in the estate which had its origin in personal property acquired under circumstances set forth in the Code section.
In our opinion, when the language of the section is considered in view of its history and in light of its obvious purpose, there can be no reasonable doubt that the Legislature intended and expressed the intent that the section applies to all property of the estate that had its source in personal property acquired by the husband or wife while domiciled elsewhere and which would not have been the separate property of either if acquired while domiciled in this state.
Section 201.5, although first enacted as part of the Probate Code in 1935, has had a long and interesting history. Ever since 1917 the Legislature has attempted to apply to property acquired in common law states under circumstances that it would have been community property had it been acquired here by parties domiciled here, when the parties become domiciled here, the rules of community property. This the Legislature attempted to do by certain amendments in 1917 and 1923 to § 164 of the Civil Code. The obvious purpose of the legislation was to equalize fairly the rights of husband and wife in marital property. If property is acquired in a common law state by a husband from his earnings it is his sole property, but his wife has certain very important rights in the property known as dower rights. Prior to 1917 it had been established that, if such a couple, after so acquiring marital property, became domiciled in California, and brought the property with them, the property remained the sole and separate property of the husband, but the rights of the husband became much greater than they were in the common law state in that the wife's dower rights were entirely lost. In an attempt to correct this obvious injustice the Legislature in 1917 attempted to redefine community property by amending § 164 of the Civil Code. As then amended community property was defined as ‘all other property acquired after marriage by either husband or wife, or both, including real property situated in this state, and personal property wherever situated, acquired while domiciled elsewhere, which would not have been the separate property of either if acquired while domiciled in this state.’ The Supreme Court held this amendment did not apply retroactively to the property of persons who had become domiciled in this state and brought their property here prior to the date of the amendment. Estate of Frees, 187 Cal. 150, 201 P. 112; Estate of Arms, 186 Cal. 554, 199 P. 1053; 10 Cal.L.Rev. 154. In 1923, in the very next legislative session after these decisions were rendered, the Legislature announced its desires in the matter by amending the section to expressly provide that the section applied to property ‘heretofore or hereafter acquired.’ This section, as thus amended, first came before the Supreme Court in Estate of Drishaus, 199 Cal. 369, 249 P. 515; 15 Cal.L.Rev. 399. The question there presented was whether the amended section could constitutionally apply to property owned by a husband in a common law state and brought by him to this state when he and his wife became domiciled here prior to 1917. The court held that when the property was brought here prior to 1917 the husband's rights therein were unlimited, and that to abridge those rights by attempting retroactively to convert the property into community property was unconstituional. Thereafter the court was called upon to determine the constitutionality of the section where the change of domicile to California took place after the 1917 amendment. It was held that to attempt to thus convert separate into community property, even prospectively, was an unconstitutional impairment of the husband's vested rights. Estate of Thornton, 1 Cal.2d 1, 33 P.2d 1, 92 A.L.R. 1343. Thus ended the Legislature's attempts to directly convert separate property into community. In a dissenting opinion in the Thornton case Mr. Justice Langdon suggested a way in which the purpose of the statute could be in part accomplished without contravening constitutional principles. He urged that since the Thornton case involved a problem of succession, and since it is well settled that there is no vested right to have property descend in any particular manner, § 164 should be construed as valid to the extent of regulating succession to property of the kind described in the section. Although Mr. Justice Langdon was unable to convince a majority of the court that § 164 of the Civil Code was valid as a statute of succession, the Legislature in 1935, at the very next session after the decision in the Thorton case, passed § 201.5 of the Probate Code. It is perfectly clear that § 201.5 was adopted to accomplish what the dissenting opinion in the Thornton case had correctly indicated could be done lawfully, and what the author of the dissent thought had been done by § 164. There is also no doubt that by § 201.5 the Legislature was attempting to accomplish everything that lawfully could be done to carry out its fundamental purpose, so clearly indicated by the prior history of § 164, of equalizing the rights of husband and wife in marital property.
In drafting § 201.5 the Legislature was faced by the rule of the Thornton case that property acquired by a married couple domiciled in a common law state remains the husband's ‘separate’ property when the parties become domiciled here, and with the further holding of that case that upon the death of the husband that property or its proceeds were governed by the laws of succession of this state relating to separate property. This meant that the husband by will could entirely exclude his wife from any interest in that portion of his estate which had its origin in property that had been acquired by their joint efforts in a common law state. The Legislature obviously desired to remedy this unfortunate and unfair situation. It did so by creating a special class of separate property as defined in the section and by providing that as to that property the wife's rights, so far as the laws of succession were concerned, should be governed by the same rules that apply to community property. So far as succession is concerned, this was clearly within the legislative power, and no contention is made to the contrary. But appellants say that the section only applies to personal property existing as such at the time of death, and does not apply to real property in the decedent's estate even though it had its source in personal property acquired while domiciled elsewhere. No reason has been suggested as to why the Legislature would want to so limit the section. In view of the history of the section it is inconceivable that the Legislature intended to thwart its main purpose by so unreasonably and illogically restricting the operation of the section.
It is true that § 164 of the Civil Code in attempting to fix the rights of living husbands and wives in such marital property provided that the section applied to ‘real property situated in this State and personal property wherever situated,’ while the comparable phrase in § 201.5 is ‘personal property, wherever situated.’ Why the Legislature omitted the express reference to real property does not appear. But the decisive question is what was meant by the phrase ‘personal property, wherever situated’? If the adjective ‘personal’ be interpreted as referring to the source of the property existing at the time of death, then the section refers to all property regardless of whether it has been transmuted into real or personal property if its source was ‘personal property’ of the type described in the section. Such an interpretation results in practically all marital property of the type here involved becoming subject to the section. Such an interpretation, particularly in view of the history of the section, makes effective the demonstrated intent of the Legislature, and is fair, just, and equitable. In our opinion this is the proper interpretation of the section.
Appellants now admit that the section applies to personal property acquired in a common law state and brought to California when the parties become domiciled here, and here transmuted into another form of personal property. That concession is in accord with a common sense interpretation of the section. But, say appellants, § 201.5 is a statute of succession which by its terms relates only to personal property and of necessity relates only to property as it exists at the time of death, and that such property must, therefore, be personal in character at that time. If this technical limited interpretation be given to the section then, by the same token, the property in the form in which it existed at death must have been acquired ‘while domiciled elsewhere.’ Such a technical limited interpretation would defeat the fundamental purpose of the section, by limiting it to that relatively rare situation where personal property is brought from a common law state and where such property retains its precise form until death. The estate of John H. Way consists of real property purchased with the proceeds of personal property after the Ways came to California to live, of notes secured by deeds of trust from loans made here, and of cash received here. If the section requires not only that the property be personalty, but also that it must have been acquired while domiciled elsewhere, then the section has no application in this case at all. Yet this is the necessary conclusion if appellants' contention that the section refers to personal property as it exists at the time of death and not to the source of such property is sound. There is no middle ground. Yet, even appellants concede that the section applies to personal property that in California has been transmuted into another form of personalty. This concession is compelled by the realities of the situation. If it was the intent of the Legislature, as it obviously was, that marital property acquired elsewhere and thereafter brought to California when the parties became domiciled here should be disposed of on death in the same manner as community property, it would be anomalous indeed that property acquired in this state from the proceeds of such property should not also be included. This would be in direct contradiction of the fundamental tenet of our community property system that the nature of property as community or separate depends on the nature of the property which is its source. For these reasons the real question involved is whether the property at the time of death must be personal property acquired elsewhere, or whether the words ‘personal property’ refer to the origin of the property. We think that the only reasonable interpretation of the section is to hold that the requirements that the property must be personalty and must have been acquired elsewhere refer to the source of the property that is before the court for distribution. Stated another way, if personal property is acquired by a husband or wife while domiciled elsewhere under such circumstances that it would have been community had it been acquired in this state, and the parties afterwards become domiciled here and the husband dies, then § 201.5 is applicable to such property whether it be in its original form or whether it be transmuted into other property, real or personal, after the parties become domiciled here. In such event the rights of the husband or wife in such property, upon the death of either, are similar to their rights in community property, in that either may dispose of only one-half by will, the other one-half going to the survivor. In the absence of a will the survivor takes all.
After the briefs were filed in this case the case of Estate of Schnell, Cal.App., 154 P.2d 437, was decided and called to our attention. The facts there show that the husband and wife lived together for many years in New York where the husband ran a coffee business; that he ‘made’ most of his money in that business; that he bought three parcels of real property apparently with the profits so earned; that in 1918 or 1919 they became domiciled in California; that he sold the New York realty and brought the proceeds to California which he invested and re-invested. It was properly held that § 201.5 applied to this transmuted property. The case supports the concession made by appellants herein that transmuted property is covered by the section, and for that reason supports, for reasons already stated, the conclusion that when the source property is personalty the section is applicable regardless of whether the property is transmuted into personalty or realty.
Appellants next contend that respondents failed to prove facts necessary to bring § 201.5 into operation, in that it was not shown that the estate of decedent did not have its origin in part in property owned by him before his marriage or acquired thereafter by gift, devise, bequest or descent. The estate consisted of property, both real and personal, that had been acquired in California with funds brought from Connecticut and Colorado. It stood in the name of the husband at the time of his death. The evidence shows that he had worked for the Waterbury Clock Company two years before his marriage. After marriage he worked for that company twenty-six years at increasing compensation before retiring.
It was not incumbent upon respondents to prove that the property standing in the husband's name at the time of his death was within § 201.5. It is the law of this state that upon the death of the husband there is a presumption that property acquired during marriage and standing in his name is community property. Estate of Duncan, 9 Cal.2d 207, 70 P.2d 174; Estate of Bryant, 3 Cal.2d 58, 43 P.2d 529; Fountain v. Maxim, 210 Cal. 48, 290 P. 576; Estate of Jolly, 196 Cal. 547, 238 P. 353; see 3 Cal.Jur.Supp. p. 553, § 61. This presumption is not based upon statutory declaration but upon the reasonable probabilities. When a husband dies after many years of married life, and here the parties were married 58 years, it is reasonable to presume that the estate left by the husband was acquired as the result of the joint efforts of the spouses. The burden of proof in such a case is and should be upon the party contending that the estate is separate. The presumption is in the nature of a protection to the surviving wife, whose rights are so favored as to place the burden of proof upon the one claiming the property is separate. While it is true that the property here involved is not community but separate property, because acquired in a common law state, so far as the right of the wife to succeed is concerned the property is treated the same as community property. The same reasons that have induced the courts to indulge in the presumption in reference to community property exist as to property governed by § 201.5. Under such circumstances we think the burden was on appellants to show what part of the source property, if any, was owned by decedent before marriage, or was acquired thereafter by gift, devise, bequest or descent. In the absence of such showing we think the presumption is that the Connecticut source property would have been community property if the parties had been domiciled in California when it was acquired.
Appellants failed to sustain this burden. They failed to make a showing that would have supported a finding that any specific portion of the estate had its source in property acquired by him before marriage or was thereafter acquired under circumstances that it would have been his separate property had the parties been domiciled here at the time of acquisition. The only evidence on the issue was that decedent was thirty years of age when he married, and at that time had worked two years for the clock company. Perhaps it can be inferred that he worked prior to that time, although there is no evidence on this point. Perhaps it can be inferred in view of the evidence of his demonstrated capacity to save during his married life, that he had accumulated something before his marriage. But whatever this undisclosed amount may have been it must have been small compared to what was accumulated during his fifty-eight years of married life, twenty-six of which were spent with the clock company after marriage at ever increasing compensation. It is the rule in this state, that, where community and separate funds are intermingled, at least where the community funds are not small in proportion to the separate funds, the burden is on the one claiming rights in separate property to offer proof to support his claim. Fountain v. Maxim, 210 Cal. 48, 290 P. 576; Estate of Fellows, 106 Cal.App. 681, 289 P. 887; Falk v. Falk, 48 Cal.App.2d 762, 120 P.2d 714; see 3 Cal.Jur.Supp. p. 524, § 40. For reasons already stated a similar rule should prevail when § 201.5 is invoked. Appellants did not meet this burden by evidence which indicated merely a possibility that some small undefined portion of the decedent's estate may have been acquired before marriage.
Appellants cite Scott v. Austin, 57 Cal.App. 553, 207 P. 710, for the point that there is no presumption as to time when property is acquired. In that case the question was as to the validity of a gift of property made by the husband. The present case does not involve any question as to where lies the burden to show the date of acquisition of property with reference to the amendment of § 172, Civil Code, prohibiting gifts without the consent of the wife. Insofar as the case may seem to imply that the burden is on the wife where she is plaintiff or petitioner to show that property standing in the name of the husband is community, and to that end show that it was acquired after marriage, the language is dicta and is inconsistent with the long line of decisions cited above, where the point was directly involved.
There remains appellants' contention that § 201.5 is not applicable because the undisputed evidence shows an oral agreement between decedent and his wife that each should have the right to do as he or she pleased with his or her property, including the right to dispose of it by will as he or she saw fit.
Appellants contend that such an agreement was made in Denver about 1915, when the wife received property of a value of $40,000 upon the death of her mother, and that the agreement continued in effect after the Ways moved to California. Appellants testified that in addition to this inheritance their mother in 1915 owned securities worth $30,000 which she had acquired with her savings from money which their father had given her to run the household, and it is assumed by appellants, although no direct evidence was offered on the issue, that these savings constituted a gift by decedent to his wife to which the agreement of 1915 would relate.
Appellants quote in their briefs a provision of Colorado law that neither husband nor wife could will away more than one-half of his or her property unless there be filed in the estate written consent of the other executed after death of the testator or testatrix. Session Laws of 1913, Chap. 164, p. 636. In 1915 the provision was amended to provide that the survivor might elect in writing to take as survivor and failure to elect was conclusive evidence of consent to the will. Session Laws of 1915, Chap. 178, p. 513. It is not stated when the 1915 amendment became effective with reference to the date of the alleged contract. The courts of this state take judicial notice of the laws of another state. § 1875, sub. 3, Code of Civ.Proc.; see, 3 Cal.Jur.Supp. p. 723, § 10a. Notwithstanding the oral agreement may not have been effective in Colorado if the Ways had continued to reside there, if they intended it to regulate their rights upon becoming residents of California, their continuing understanding would be operative as a contract made in this state if valid under our laws. Here oral contracts whereby the spouses mutually agree to release rights in the estate of the other are valid. Doxsee Co. v. All Persons, 3 Cal.2d 609, 45 P.2d 192; Perkins v. Sunset Tel. & Tel. Co., 155 Cal. 712, 103 P. 190; Estate of Patterson, 46 Cal.App. 415, 189 P. 483; 13 Cal.Jur. p. 848, § 47. But in this state there is a further problem with reference to the agreement. It has already been held that in the absence of an agreement such as appellants contend was made here, Mrs. Way, under California law, had rights in the separate property of her husband because it was of the type to which § 201.5 applied. But Mr. Way did not have a corresponding right in the separate property of his wife, since it was not of the type to which the section related. Her property had been acquired by gift and bequest from her mother and gift from her husband, and was not, therefore, property which would have been community if she had been domiciled in California when she acquired it. The consideration for her release of rights guaranteed her by § 201.5 would be her husband's release of a mere expectancy to succeed to one-half his wife's estate if she happened to die intestate. There would be a serious question as to the validity of so unequal a bargain to the profit of the husband, especially since there is no evidence that either was aware of their succession rights under California law. However, the trial court found against the existence of the agreement, and, since we are of the view that the trial court was justified in so finding, it is unnecessary to determine its validity either in Colorado or here.
There is no doubt evidence in the record that would support a finding that such an agreement existed, but, after reading the record, it cannot be held that such evidence established such agreement as a matter of law. Appellant Geraldine Wetherell testified that her father was worth $50,000, at least, when he retired in 1910, at the age of 56 and moved to Colorado. This estimate she based on his statements to her that he would not retire until he had that amount. It was not shown how decedent invested his savings during the years he worked. A broker through whom Mr. and Mrs. Way invested their funds in Denver testified to their purchase of irrigation and school district bonds and to their loaning funds through him on notes and mortgages. They maintained separate accounts with the broker. When Mr. Way left for California he owned securities of a value of about $81,000, according to the witness. As bonds and notes were retired or paid off apparently the Ways made their investments locally in California.
The practice of keeping their property affairs strictly separate was adhered to after they came to California. They kept separate bank accounts. Mr. Way paid all household expenses. At one time after coming to California they lived in a house owned by Mrs. Way. Mr. Way paid his wife rent of $75 a month. The appellant Geraldine Wetherell and her child seem to have been largely supported by the Ways, each contributing one-half. Bills for repairs on houses were rendered in the name of the spouse owning the house. At one time the household included seventeen dogs. The record in the form of an account book shows that their expenses were divided equally. Upon two occasions they bought real property in both their names and each contributed to the purchase price. The statement of the title company issued when one of these parcels was resold by the Ways shows that two separate checks were made out, paying one-half the net proceeds to Mr. Way, and one-half to Mrs. Way. The conclusion is inescapable that money occupied a large place in their thoughts, and that both must have been of an exceedingly thrifty and economical disposition.
This evidence clearly established that Mr. and Mrs. Way were scrupulous in keeping their financial affairs separate, both in Colorado and in California. It may also be admitted that there was positive and uncontradicted evidence that this arrangement was pursuant to an oral agreement. Such agreement, of course, was in exact accord with their legal rights in such property under California law since the property of each was admittedly their separate property. However, the fact that the parties had agreed to keep their respective properties separate while each was alive does not even support the inference, far less prove as a matter of law, that they had agreed that neither should inherit from the other, or that the benefit of statutory provisions restricting the testamentary power of either or both had been waived. Appellants do not contend for such an inference. It is their position that they proved without contradiction that there was an express oral agreement that Mr. and Mrs. Way should have the right to dispose of all of their property by will as he or she saw fit. The great bulk of the testimony introduced on this issue falls far short of proving the existence of such an agreement. Most of it simply proved that the parties had agreed, largely upon the insistence of Mrs. Way, that each should have full control of their separate properties free from the control of the other. An examination of the evidence on this point will demonstrate the correctness of this conclusion.
The testimony of appellant Geraldine Wetherell is that it was the understanding of her parents that their affairs were to be kept separate, that each could do what they pleased. Her account of the arrangement is as follows: ‘She [Mrs. Way] said that she wanted her affairs separate, that she said she wanted to be able to do as she pleased, and that he could do the same, that she was independent, that she had plenty of money, and that her grandfather always felt that a husband and wife's affairs should be separate, and she said that he could do what he pleased, and she wanted to do the same.
‘Q. And what was your father's reaction to that statement? A. Well, it was agreeable to him, he always said that he never wanted anything of mother's, that he felt that was * * * agreeable to her. It was always that way. They never had a joint account, they never had their affairs together. But they did not agree upon having their affairs separate until after she inherited this money from my grandmother.’
This appellant is the daughter of Mr. and Mrs. Way, and the evidence shows that she came to California shortly after her parents, and resided near them, and part of the time in their home. Yet this witness failed to mention that she had ever heard of any agreement relating to testamentary control over the property.
Mrs. Louise Walker, daughter of appellant Geraldine Wetherell, testified that when her grandfather would question an expenditure made by her grandmother she would reply that she would do what she pleased with her property. Burnett Walker, husband of Louise Walker, recalled conversations of the same tenor.
Mrs. Eva MacDonald, who nursed Mr. Way for eight months at his home in 1941, said that Mrs. Way talked about her personal affairs very frequently and almost daily repeated that she did not care what her husband did with his money because his money was his own and hers was hers, and that she had an agreement with her husband that he could do as he liked with his property. The testimony of Mrs. Fulk, another nurse, was to the same effect. A builder who built one of the houses in which the Ways lived in San Mateo, had heard Mrs. Way say that she had her estate and her husband had his.
The witness, Donald Larke, owner of the Hot and Cold Shop, did considerable repair work for the Ways on their property commencing in 1928, and was very friendly with, and fond of, both of them. He had heard Mrs. Way say to Mr. Way many times when he disagreed with what she proposed to do in connection with her property, as he often did, ‘that his money was his own and he could do as he pleased with his own and for him not to interfere with her.’ That she said over and over again that ‘what was his was his and hers was hers.’ Both Mr. and Mrs. Way had stated that they had an agreement or an understanding to that effect. There was introduced in evidence the deposition of Mrs. Jaquith, a Denver friend, who said that she often heard Mrs. Way in the presence of Mr. Way speak of their financial arrangement that each was to take care of his or her own property. This testimony, above sumarized, while proving the existence of an agreement to keep their affairs separate, falls far short of proving the existence of an agreement that either could make a will free of whatever statutory restrictions might exist. This was all the testimony introduced on this issue by appellants during the December, 1943, hearings. The trial was resumed on February 29, 1944. Apparently, during the interim, appellants realized the lack of evidence on this vital issue, because at this hearing three witnesses were produced who did testify as to the existence of such an agreement. Their testimony, if it had been believed, would have supported a finding favorable to appellants on this issue.
Mrs. Athelyn Wetherell, the other daughter of the Ways and an appellant herein, gave the following testimony as to an occurrence in Denver in 1915: ‘Well, I came in just in time, we were all in the home, and I heard my mother tell my father, they were having a discussion, and she said she wanted an agreement, she said that she wanted an agreement to where their affairs would be entirely separate, and that each would have full control over each of their affairs, and giving them the right to leave their money to whoever they pleased. Those were the words and I heard that.
‘Q. Now, your father was there, is that true? A. Oh, my father, and my father said that, he said, ‘If that is the way you wish to have it,’ he said ‘that is perfectly agreeable with me,’ he said, ‘I do not want any of my wife's money.’ And that I have heard many times.'
When she visited her parents in California she heard discussion between them as to the agreement, ‘that their affairs were separate and each had full control, and that they could each leave their money to whom they pleased, that it was agreeable to both.’ A week before her father's death she was present at a discussion which she recounted as follows:
‘* * * she [her mother] said, ‘Well, I have made my will the way I want it,’ and she said, ‘John is going to make his,’ she said, ‘That was our agreement,’ and she said, ‘It is none of your business.’
‘Q. And what did your father say? A. My father said, ‘No, I have no control whatsoever over your affairs, Clara, that was our agreement,’ and he said, ‘It is entirely up to you.’'
Her husband also recalled a conversation shortly after the grandmother died in which Mrs. Way said that she and her husband ‘had agreed that they each handle their affairs themselves separately, their investments and expenditures for the maintenance of their properties, and that they would also leave their assets to whomever they pleased.’
Lugene Daniels, nephew of Mrs. Way, resided in Denver in 1915. He testified that he often heard his aunt and her husband discuss financial matters, that he had heard them agree that ‘they were to do with their moneys as they saw fit, even as to willing it, or giving it away, each, in turn, to take their moneys and leave them to any one of us, as they cared to, and that was agreeable to both of them at that time.’ He called upon the Ways briefly when he came from Bakersfield in 1939 to visit the San Francisco Fair. The Ways were then getting ready to move to the house in San Francisco to the purchase of which both had contributed. Mrs. Way said she owned one-half, and her husband one-half. This prompted him to ask whether they were still living under the agreement and she said that they were. On cross-examination he said that the agreement was that his aunt was to handle her moneys, as she saw fit, and do what she pleased with hers. His uncle was to do as he pleased with his, that they were to leave their money to whom they cared to, in the enent of the death of either. In response to the question, ‘Now they talked of disposing of their property by will and each to do as he saw fit?’ he answered: ‘A. That is right, that was the gist of the conversation.’ The trial judge did not believe these witnesses. He found against the existence of such agreement. In weighing the testimony of those three witnesses the trial judge was entitled to consider many factors. He, of course, saw and heard the witnesses and observed them, very important factors in passing upon their credibility. He was entitled to consider the fact that Athelyn Wetherell has a financial interest in the outcome of the case, that one of the other witnesses who testified on this issue was Albion Wetherell, her husband, and that the third witness was Lugene Daniels, her cousin. He was entitled to consider the fact that the testimony of these three witnesses was in variance with the testimony of the many other witnesses who testified as to the existence of the alleged agreement but failed to mention that the agreement related to testamentary control of the property, the vital question at issue. He was entitled to consider the fact that one of the appellants, Geraldine Wetherell, who had lived with or near her parents all her life, failed to mention the existence of any agreement relating to testamentary control. He was also entitled to consider the fact that none of the testimony relating to this phase of the alleged agreement was produced at the first part of the trial, but was not produced until the last day of the trial after a several months' recess. Under such circumstances the trial judge acted well within his powers in refusing to believe these three witnesses. ‘The trier of the facts is the exclusive judge of the credibility of the witnesses. § 1847, Code Civ.Proc. While this same section declares that a witness is presumed to speak the truth, it also declares that ‘This presumption, however, may be repelled by the manner in which he testifies, by the character of his testimony * * * or his motives, or by contradictory evidence.’ In addition, in passing on credibility, the trier of the facts is entitled to take into consideration the interest of the witness in the result of the case. See cases collected 27 Cal.Jur. 180, § 154. Provided the trier of the facts does not act arbitrarily, he may reject in toto the testimony of a witness, even though the witness is uncontradicted. Blank v. Coffin [20 Cal.2d 457, 126 P.2d 868], supra; Hinkle v. Southern Pacific Co., 12 Cal.2d 691, 87 P.2d 349; Barsha v. Metro-Goldwyn-Mayer, 32 Cal.App.2d 556, 90 P.2d 371; Burke v. Bank of America, etc., Ass'n, 34 Cal.App.2d 594, 94 P.2d 58; People v. La Fleur, 42 Cal.App.2d 50, 108 P.2d 99; see cases collected in 27 Cal.Jur. 182, § 156; Kelly v. Jones, 290 Ill. 375, 125 N.E. 334, 8 A.L.R. , 796.' Hicks v. Reis, 21 Cal.2d 654, 659, 134 P.2d 788, 790.
No evidence was offered in this case on behalf of respondent widow except the testimony of the son as to his parents coming to California and residing in this state as husband and wife until the death of Mr. Way in 1943. Respondents, therefore, rely on the weakness of appellants' case. Appellants contend that since respondent widow did not testify it is to be presumed that her testimony, if given, would have been adverse to her own position. Whether this presumption was rebutted was for the trial court. The evidence shows that the widow was 84 years of age at the time of trial, and at least incapacitated to the extent that a guardian of her estate had been appointed shortly before the death of her husband.
The order appealed from is affirmed.
PETERS, Presiding Justice.
KNIGHT and WARD, JJ., concur.