IN RE: LOS ANGELES COUNTY PIONEER SOC.

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

IN RE: LOS ANGELES COUNTY PIONEER SOC. PEOPLE v. LOS ANGELES COUNTY PIONEER SOC. et al.*

Civ. 18920.

Decided: July 25, 1952

Morris Lavine, Los Angeles, for appellant Los Angeles County Pioneer Soc. Ray Howard, Los Angeles, for appellant H. J. Lelande. Lawler, Felix & Hall, Oscar Lawler, Los Angeles, for Historical Soc. of Southern California.

The Los Angeles County Pioneer Society brings this appeal from an order appointing Historical Society of Southern California as its trustee. Both are corporations and are respectively referred to herein as ‘Pioneer’ and ‘Historical.’

Pioneer was incorporated in 1910. Its membership having exceeded 600 finally dwindled to 58. All but three members favored its dissolution and a distribution of its assets. To that end, despite the resistance of the three objectors, Pioneer caused a declaratory judgment dated May 25, 1949 to be entered to the effect that its assets were subject to no trust and that the corporation might wind up its affairs and distribute its net assets ratably among its members. The objectors contended that Pioneer was a charitable corporation, that its assets constituted a trust fund for certain charitable uses, and that a new trustee should be appointed. That action was followed by a liquidation of its assets, after which the corporation published notice of intention to wind up its affairs and voluntarily dissolve. Thereupon, it initiated the instant proceeding for dissolution in order to distribute its money among its members.

After trial, but before judgment, with the consent of all parties, the court authorized the attorney general to proceed against Pioneer as a charitable corporation. To the ensuing petition in intervention on behalf of the People, Pioneer made answer denying the trust, but admitting its purpose to distribute the assets among the membership. Also, it pleaded affirmatively the declaratory judgment (May 25, 1949), that it had caused to be entered. Upon the evidence submitted, the court on May 19, 1950, made findings and entered judgment that Pioneer is a charitable corporation whose $95,000 are dedicated to charitable and benevolent purposes; that it had abandoned the trust by attempting wrongfully to divert trust assets in its keeping to the private use of its members and that a trustee be appointed to carry out the purposes of the trust.

No appeal having been taken from such judgment, pursuant to petition, on October 18, 1950, Historical was appointed by the court to be trustee of Pioneer. Upon respondent's acceptance of the office, the court ordered the trust fund to be transferred to the new trustee. Notwithstanding the appeal is from the order of October 18, not a single argument is presented against the propriety of respondent's appointment or as to its ability competently and faithfully to perform the duties of trustee.

On the contrary, Pioneer's total effort has been directed to the task of up-setting the ‘interlocutory’ judgment of May 19, 1950, from which no appeal was taken and which is, therefore, conclusive as to all matters thereby determined. The fact that the court labeled the May, 1950, judgment ‘interlocutory’ is determinative of neither its finality nor its appealability. Peninsula Properties Company v. County of Santa Cruz, 106 Cal.App.2d 669, 678, 235 P.2d 635. The substance and effect of a decree, not its form or label, determines its definitive character. Lyon v. Goss, 19 Cal.2d 659, 670, 123 P.2d 11. It is final if no further judicial action is necessary to a complete adjudication of the rights and obligations of the parties. Ibid. By virtue of the foregoing doctrine, the May judgment was final and therefore appealable. While certain ‘judicial action’ was reserved with respect to the appointment of a new trustee, such reserved action did not concern the rights of the parties to the proceedings or relate to the issues determined by the judgment. That Pioneer was a ‘charitable and benevolent corporation’ as declared in the ‘interlocutory’ judgment, and not a non-profit, private corporation as contended by Pioneer, and that its assets were held in trust for ‘charitable and benevolent purposes,’ were fully determined and adjudged on May 19, 1950. Inasmuch as that decree is final and conclusive this court is powerless to announce a different judgment or otherwise to interfere, even if persuaded so to do.

Appointment of Trustee Not Abuse of Discretion

In view of Pioneer's sober presentation of its attack upon the ‘interlocutory’ judgment, it is deemed advisable to consider the appeal as an affirmative declaration that the court abused its discretion in appointing Historical as trustee of Pioneer's assets. Upon that basis only Pioneer's points are considered.

Proceeding upon the hypothesis that it is a nonprofit corporation and not a charitable or benevolent corporation, Pioneer insists that the court below was without jurisdiction to order a delivery of its assets to respondent. Such hypothesis is based upon a mere assumption on the part of appellant, grounded wholly in error and is contrary to the pronouncement of the Supreme Court, to the provisions of the Corporations Code and to the practices of Pioneer in its activities with respect to its property. In 1921 a testamentary gift was provided for Pioneer by one Dol who died less than 30 days after the execution of his will. The bequest was held to be of a charitable and benevolent nature in violation of the Civil Code, section 1313. Estate of Dol, 186 Cal. 64, 198 P. 1039. The court observed in 186 Cal. at page 66, 198 P. 1039, 1040, that the purposes of Pioneer as evidence by its articles of incorporation are to collect and preserve data bearing upon the early history of Los Angeles County and upon the state of California, to collect and preserve articles, specimens and materials illustrative of the customs, manners and habits of the people in California; to perpetuate the memory of those who, by their sacrifice and heroism contributed to the making of the history of the state and county. The declared aims of Pioneer were ‘obviously purposes tending to the benefit of the public at large,’ and regardless of the charter provisions for Pioneer's members ‘to cultivate social intercourse and friendship among its members' such activities would not remove Pioneer from the charitable and benevolent class.

Inasmuch as Pioneer's operations, in the main, tended to benefit the public at large, it was governed by that portion of the Corporations Code, Title 1, Division 2, Part 3, sec. 10200 et seq. relating to charitable corporations, and not by Part 1, section 9000 et seq. relating to nonprofit corporations. By virtue of the fact that Pioneer was so governed, the property it acquired from its benevolently-minded donors constituted the res of a charitable trust which Pioneer was obligated to administer in the interest of the trust. Also, the fact that the members of Pioneer received some direct benefits as a result of its administering the trust res did not detract from the fact that the general public was at the same time benefited.

Pioneer protests the citation of Estate of Dol as authority that Pioneer is a charitable trust contending that such holding is not res judicata. Such contention is error. In the Estate of Dol the court was governed by Pioneer's Articles of Incorporation. All surplus vestments were stripped from its corporeal remains and the court found from the lineaments of its being that it holds property as a charitable trust. But, says Pioneer, the trial court did not have the benefit of the facts in evidence on the trial of the present contest; that the proof of the social activities of its members and of their freedom from charitable activities would have made a different judgment in the Estate of Dol. Such argument is based solely upon speculation and flies in the face of the final judgment which determined that Pioneer is a charitable corporation and that effectually its holdings constitute the corpus of a charitable trust. That pronouncement is binding upon this court. ‘There is no compelling reason * * * for requiring that the party asserting the plea of res judicata must have been a party, or in privity with a party, to the earlier litigation. * * * Many courts have abandoned the requirement of mutuality and confined the requirement of privity to the party against whom the plea of res judicata is asserted.’ Bernhard v. Bank of America, 19 Cal.2d 807, 812, 122 P.2d 892, 894. The quoted language leaves no doubt that the holding in Estate of Dol, 186 Cal. 64, 198 P. 1039, is conclusive and binding upon Pioneer on the issue as to whether the assets of Pioneer are the res of a charitable trust.

There is one more fact that affects the position of Pioneer in the present controversy. The final judgment of the Supreme Court in the Estate of Dol was June 6, 1921. Pioneer was thereby advised that the highest court of the state regarded it as a charitable corporation. Both the corporation and its members knew of that judgment and that it might be the inducing cause for strangers to make charitable contributions to Pioneer. If its members entertained contrary views they or their board of directors owed a duty to the public promptly to effect such a change in the corporation as would prevent deception. They will not now be heard to repudiate the lofty principles enunciated in their charter.

The attorney general was authorized to intervene. The facts that Pioneer was a charitable corporation and its members undertook to divert its assets by causing a judgment to be entered repudiating the trust and authorizing its dissolution were cause for alarm. When those facts were brought to the attention of the attorney general, it became his duty to proceed with such measures as would restore the assets of the trust to their original purpose. Corporations Code, sec. 10207; People ex rel. Ellert v. Cogswell, 113 Cal. 129, 142, 45 P. 270, 35 L.R.A. 269; 2 Perry on Trusts, 7th Ed., sec. 744.

A charitable corporation is forbidden to take or hold property for any purpose other than charitable. Corp.Code, sec. 10206(c). Property that is consecrated to charitable uses is, in a measure, a part of the public resource of the state and it is dedicated to the beneficial public purposes of the corporation. Mormon Church v. U. S., 136 U.S. 1, 59, 10 S.Ct. 792, 34 L.Ed. 481. The trust does not fail; neither is it extinguished by forfeiture or expiration of the charter of a corporate trustee or by the latter's inability, failure or refusal to administer the trust res. People v. Cogswell, supra, 113 Cal. 141, 45 P. 270. In the event the trustee abandons the trust or attempts to divert the trust funds to private uses, equity will prevent the diversion and remove the offending parties. (Ibid.) Therefore, when a majority of the members of Pioneer undertook to dissolve the corporation and to distribute its assets among themselves, their acts were an effective renunciation of the trust and a hostile abuse of the corporation's benevolent purposes. Inasmuch as the corpus of the trust is a resource of the state the attorney general would have been derelict not to prevent the spoliation.

Pioneer asserts that the judgment in declaratory relief was conclusive against the state as well as Historical; that the trust res was thereby freed from the trust, leaving nothing for a controversy with respondent or the state. As indicated above, such judgment was ineffective by virtue of the absence of the attorney general from the proceeding. By reason of the fact that that official was an indispensable party in an action brought for the purpose of despoiling the treasury of a charitable trust, 14 C.J.S., Charities, § 62 b, p. 528, the entry of such judgment was an idle act, see Mitau v. Roddan, 149 Cal. 1, 9, 84 P. 145, 6 L.R.A.,N.S., 275, and did not render the corpus of Pioneer's trust estate free of its charitable nature.

A separate appeal was filed by H. J. Lelande, a member of Pioneer and one of the original objectors to the corporation's proposed plan of dissolution. He appeals from the Order Appointing Trustee ‘insofar as it fails to define the powers and duties' of the new trustee. The answer to that appeal is not far to seek. At the time of the hearing for appointment of a trustee of Pioneer, after its benevolent aims had been rejected by its membership, the ‘Sons and Daughters of the Los Angeles Pioneers' also sought to be selected as Pioneer's trustee. As if to forestall the efforts of its active rival, Historical introduced in evidence a resolution of its board declaring that in the event it were designated as trustee of Pioneer, it would use the funds of the trust estate for the purchase of a site and the erection of a building which should provide offices for the Native Sons of the Golden West and the Native Daughters of the Golden West, both of which were supporters of the efforts of the Sons and Daughters of Los Angeles Pioneers. The resolution committed Historical to the policy of housing all three of the last named groups and of cooperating in arrangements for the community use of the proposed building.

When the hearing was finished and the order made appointing Historical as trustee, the provisions were included that the Pioneer assets be delivered to Historical to be used only for the charitable purposes outlined in Pioneer's articles of incorporation. Because the order made no reference to the resolution introduced into evidence by Historical, appellant Lelande contends that the court thereby abused its discretion. Such is not the law. The court had only to be reasonably satisfied of the benevolent, honorable and competent character of the membership of Historical and reasonably certain that it would administer the assets of Pioneer in accordance with the latter's declared plan. The resolution adopted by Historical was some evidence which contributed to enlighten the court as to the likelihood that the new trustee would deport itself in a manner consistent with purposes of Pioneer but the incorporation of the Historical resolution into the order of appointment would not have been an appropriate addition thereto. No proof having been cited to show that Historical is not competent properly to administer the trust, this court is powerless to disturb the order appointing Historical as trustee.

The order is affirmed.

It is further ordered, however, that with respect to the accounting necessary in connection with the dissolution, the Superior Court is directed to award to Historical Society and Harry J. Lelande court costs incurred by each of them, in both the Superior Court and on appeal, in the protection of said fund against the wrongful use thereof, and such costs may be paid therefrom notwithstanding the commitment of Historical Society to use the fund according to its resolution.

MOORE, Presiding Justice.

McCOMB and FOX, JJ., concur.