Lillian R. DANDINI, Plaintiff, Cross-Defendant and Appellant, v. J. Edward JOHNSON, W. Glenn Harmon, and all persons, etc., Defendants, Cross-Complainants and Respondents.
This action, instituted by plaintiff to quiet title to certain real property, resulted in a judgment determining that defendants own an undivided one-half interest in the property and that plaintiff owns the other undivided one-half interest therein.1
Plaintiff claims that defendants acquired and hold their one-half interest solely as security for the payment of attorney fees and subject to a life estate owed by plaintiff.
The half-interest in question, plaintiff received from her mother by will; the other half, from the same source, as trustee for her sister Emma Remillard.2
In 1935, plaintiff by a deed of gift conveyed her undivided half-interest to her husband, A. O. Dandini, reserving life estates in favor of herself and her sister. The reservation, which immediately followed the granting clause and was really a part of that clause, was couched in these words: ‘Reserving, however, to the party of the first part, and to Emma Remillard, the sister of the party of the first part, the right to use and occupy said lands during the terms of their respective natural lives.'3
By those words plaintiff intended, we infer, to reserve for herself and her sister, jointly with the right of survivorship, lifelong rights of use and occupancy which would have legal sanction and could be protected and enforced. Such rights are those of a life tenant. (See Civ.Code § 818.) It would seem quite unrealistic to read into those words an intent to create a mere personal right, enforceable only by an action for damages, perhaps only against the grantee and not against his successors, in case of a violation of that right. We conclude that by this reservation plaintiff became a life tenant of her undivided one-half interest in the property.
The applicable canons of interpretation lend support to this view. ‘The modern tendency, almost universally accepted, is to abandon the strict common-law rule of construction [of deeds]. The cardinal requirement in the construction of deeds now, as in the construction of other instruments, is that the intention of the parties as gathered from the whole instrument must govern.’ Basin Oil Co. v. City of Inglewood, 125 Cal.App.2d 661, 663, 271 P.2d 73, 75. See also Paddock v. Vasquez, 122 Cal.App.2d 396, 399–400, 265 P.2d 121; Weber v. Graner, 137 Cal.App.2d 771, 774–775, 291 P.2d 173; Biescar v. Czechoslovak-Patronat, 145 Cal.App.2d 133, 142–143, 302 P.2d 104; Kraemer v. Kraemer, 167 Cal.App.2d 291, 300–301, 334 P.2d 675. Added support for the view that plaintiff intended to and did reserve a life estate is furnished by statute: a ‘reservation in any grant * * * is to be interpreted in favor of the grantor’ (Civ.Code § 1069). Moreover, when, as here, a qualifying clause is a part of or immediately follows the granting clause, it is persuasively suggestive of an intent to cut down or limit the grant. City of Los Angeles v. Savage, 165 Cal.App.2d 1, 5–6, 331 P.2d 211, and authorities therein cited. When the qualifying clause, as in the instant case, is in the form of a reservation to the grantor of a right of use and occupancy for life, the fair intendment is that the grantee shall not come into enjoyment of his estate until the death of the grantor, making him the holder of an estate in remainder.
Persuasive, also, is the view taken in Woman's Home and Foreign Missionary Society v. Bank of America, 15 Cal.App.2d 682, 59 P.2d 1060. The court in that case held that a grantor intended a life estate when she reserved “the free use and occupancy of the said premises as a residence for herself so long as she may live.” At page 683, 59 P.2d at page 1061. Defendants herein rely heavily upon LeBreton v. Cook, 107 Cal. 410, 40 P. 552, which involved the use of similar language in a will. The will vested all of the property of the estate of the testatrix in trustees and directed them to ‘deliver possession of’ the family residence to a sister, ‘She * * * to be allowed to occupy and use the same until her death, free of rent.’ At page 414, 40 P. at page 552. The court said: ‘This provision does not create a ‘life estate’ in the occupant, as has been assumed by counsel. The entire estate, as said above, remains in the trustee, and the beneficiary has a mere personal right of occupancy without rent.' At page 419, 40 P. at page 554. However, that ‘right’ was recognized as continuing throughout the life of the beneficiary. The trustees were directed by the will to sell all the property after ten years. The judgment as modified by the Supreme Court in the LeBreton case declared that if the sister were still living (upon the expiration of the ten-year period) the sale of the property in question would be ‘subject to the right of * * * [the sister] to occupy and use the same until her death, free of rent * * *.’ At page 422, 40 P. at page 555. So, whatever the court meant when it said the sister did not have a ‘life estate,’ it certainly did not mean that she had an unenforceable right of use and occupancy.4 We do not consider that remark of the court authority for a different interpretation from that which we placed upon the reservation involved in the instant case.
In the course of time differences developed between plaintiff and her husband. In 1939 she retained defendants as attorneys to represent her interests, individually and as a stockholder in Remillard Brick Company, which in turn owned stock in the Remillard-Dandini Company. A stockholder's derivative suit was brought against A. O. Dandini by Remillard Brick Company in its own name and in name and in behalf of Remillard-Dandini Company, resulting in a judgment in 1943 for approximately $50,000 in favor of Remillard-Dandini and a direction that attorney fees in the sum of $10,000 be paid out of anything recovered from A. O. Dandini. A transcript of judgment was promptly recorded, creating a lien in this property in favor of the judgment creditor, Remillard-Dandini Company.
In 1946, execution was levied upon the judgment debtor's interest in this property. At the sheriff's sale defendants, in the name of Remillard-Dandini, made the successful bid in the sum of $11,000, approximately the amount to which accumulated interest had augmented the $10,000 fee that had been awarded them. Remillard-Dandini assigned its interest in the certificate of sale to Remillard Brick Company and defendants Johnson and Harmon, as their interests might appear. Remillard Brick then assigned to Johnson and Harmon. Accordingly, the sheriff's deed, when issued, transferred the judgment debtor's title to defendants J. Edward Johnson and W. Glenn Harmon.
That title, as we have seen, consisted of an undivided one-half interest in the property, subject to the life estate of plaintiff and her sister. There is substantial evidence that the interested parties, intended that defendants take title as proprietors and not as security holders. The majority directors5 of Remillard-Dandini favored making a low bid at the execution sale. They had an appraisal of $20,000 for the entire property, did not favor acquiring an undivided half-interest, believed a partition suit would be necessary because plaintiff, who held the other half-interest, indicated unwillingness to buy or sell. They were also confronted with the right of occupancy which plaintiff had reserved in her deed to A. O. Dandini. They were inclined at first to bid no more than $3,500; later, $5,500. Finally, they did make a bid of $7,500. Meanwhile, defendant Johnson urged plaintiff to bid $6,500 or $7,500 and thereby acquire the property for herself but she refused, saying ‘No, it isn't worth it.’ So, for her protection, as well as to create a fund from which the attorney fee could be paid, he did $11,000 for and in behalf of Remillard-Dandini Company.
Negotiations which ensued between Johnson and Remillard-Dandini culminated in an agreement that defendants would take the property in lieu of cash, at the amount of the bid. The company then made the assignment with the intention of thereby paying the attorney fee. There is substantial evidence that plaintiff participated in these transactions and was kept fully informed and advised throughout.
Thereafter, defendants conducted themselves as proprietors, not as mere security holders, and plaintiff dealt with them as such. Defendants managed the walnut grove, which occupied ten acres of this thirteen acre property. The remaining three acre portion is devoted to buildings, grounds and gardens. Defendant Johnson testified, ‘[w]e have always given her [plaintiff] a free hand as relates to the garden part, the building part, and we have taken full charge of the walnut grove.’ He did have the main residence painted. The paint was paid for by defendants and plaintiff equally. They shared other expenses, including taxes, in like fashion. They operated this property throughout the years as a joint enterprise, sharing equally the expenses and dividing the profits and losses equally between plaintiff and the defendants respectively. The parties had been thus managing the property for a continuous period of twelve or thirteen years immediately preceding the filing of the complaint herein. Such conduct is persuasive of the view that defendants took and held title as proprietors, not as mere security holders.
Plaintiff complains that defendant Johnson failed to advise her that the judgment for separate maintenance which he obtained for her became a first lien upon the property here involved. The answer is that it did not become such. It was rendered and recorded in 1946, three years after the rendition and recording of the Remillard-Dandini judgment against A. O. Dandini, hence subordinate to the lien of the latter. It happened that at one of the meetings of the board of directors of Remillard-Dandini it was reported that A. O. Dandini was willing a quitclaim this property to that company. Defendant Johnson informed the board that if such a deed were accepted it would activate a lien in favor of plaintiff herein. Accordingly, the offer was not accepted. Plaintiff was not present at that board meeting. Defendant did not later mention this incident to her, nor did he advise her that acceptance of that offer by the company would activate the lien of her judgment for separate maintenance. We do not see here a basis for complaint. Defendant Johnson as a director of Remillard-Dandini had a duty to disclose this information to the company and his fellow board members. Plaintiff as a fellow board member had no right to suppress that information. We do not see that this incident was of such a character as would, as a matter of law, constitute defendants trustees for plaintiff in the ownership and holding of the property conveyed to defendants by the sheriff's deed.
Nor did defendants make a profit, secret or otherwise, in violation of any duty to plaintiff. They paid $11,000 for an undivided one-half interest in a piece of property the whole of which was valued at $20,000 by an independent appraiser. The fact that in the course of time it has increased in value does not relate back to the date of acquisition and infect that purchase with the taint of unjust enrichment.
This brings us to the question whether or not defendants have by adverse use for the five-year prescriptive period acquired plaintiff's life tenancy and thereby merged it into the fee. The trial court interpreted the reservation in the 1935 deed from plaintiff to her husband as creating a mere personal right, not an estate in the land. The court also found that since the execution and recording of the sheriff's deed to defendants in 1947 they have paid all taxes and assessments levied against their interest in the property and have been in continuous, quiet and peaceable possession of said interest, holding and claiming the same for all purposes adversely to the plaintiff and all other persons. Such findings and the evidence upon which they are based might, in the absence of a fiduciary relationship, support an adjudication that plaintiff's life tenancy was lost by adverse possession for the prescriptive period.
The sheriff's certificate of sale and his deed each recited that the interest transferred was ‘subject to a life estate in Lillian R. Dandini and Emma Remillard.’ That would not create a theretofore nonexistent life estate but it did serve to describe the kind of title defendants did in fact acquire. That would not prevent them from becoming adverse possessors, but when a client is concerned, as in this case, the law imposes a duty to fully informe and advise the client in every particular. ‘All dealings between an attorney and his client for the benefit of the former are not only closely scrutinized, but are presumptively invalid on the ground of constructive fraud, and such presumption can be overcome only by the clearest and most satisfactory evidence. Not only must the attorney offer clear and satisfactory evidence that the transaction between himself and his client was fair and equitable, and no advantage was taken by him, but he must also offer proof that the client was fully informed of all matters relative to the transaction, and was so placed as to the able to act understandingly and to deal with the attorney at arm's-length.’ Estate of Witt, 198 Cal. 407, 419, 245 P. 197, 202. Evidence that defendants met these requirements is neither clear nor satisfactory.
Plaintiff testified that from the latter part of 1939 until 1959 she had no other attorneys, nor any one else, to handle her business affairs, and had no opportunity to discuss any of her legal problems with any other attorneys.
Asked how it happened that defendant Johnson took over the operation of the walnut grove, plaintiff said: ‘He was handling all my business. And so he took that over too.’ She also said that the defendants never interfered with her going on the property any time she wanted to. Defendant Johnson confirmed this, saying, ‘[w]e have always given her a free hand as relates to the garden part, the building part * * * [of the property].’ He was sure that he told her that he and his partner would in no manner interfere with her having the full enjoyment of the house and gardens in the way she always had enjoyed them. She testified she understood she had a life estate, meaning the right to go on the property and use it. She said she was never told by the defendants that she might not have a life estate. She said it was her home since she was eleven years old.
Defendant Johnson testified that he considered that his rights were adverse to those of plaintiff. He does not appear to have so informed plaintiff in so many words; he relied on defendants' actions and conduct, their method of doing business, to indicate the adverse nature of their claims. He was asked if, when plaintiff executed the assignment from Remillard Brick Company to defendants, he told her he did not consider that she had a life estate in the half-interest that had belonged to her husband. He replied, ‘I don't believe it was discussed. I am sure that I said to her that Johnson and Harmon would in no manner interfere with the full enjoyment of the houses and gardens * * * the way she always had had and her sister. I'm sure I said that.’ He also testified that although he considered his interest hostile to hers he and she had always been friendly personally.
No evidence has been brought to our attention, nor have we found any in the record, indicating that either of the defendants ever told her that in their opinion the reservation of a lifetime right of use and occupancy in the deed to her husband was ineffectual, inoperative or unenforceable, or that they claimed a right of possession adversely to any right of possession she might have under that deed, or that if she suffered them for five or more years to participate in the management and operation of the property, sharing the profits and losses, without filing an appropriate lawsuit against them, she would or might lose any rights she may have reserved in the deed to her husband, or that they ever urged or advised or ever suggested it would be well that she seek and obtain independent legal advice covering these several matters, or that defendants themselves ever sought independent legal advice upon any such matters. Under such circumstances it does not become the defendants to claim adverse possession or to assert that plaintiff has lost her rights as a life tenant by her own estoppel and laches.
Prior to and during all of the alleged prescriptive period defendants, as plaintiff's attorneys, were under a duty not to ‘acquire an interest adverse to’ her. Rule 4 of the Rules of Professional Conduct of the State Bar of California.
An attorney's transactions with his client are those of a trustee with his beneficiary, giving rise to certain disputable presumptions: ‘All transactions between a trustee and his beneficiary during the existence of the trust, or while the influence acquired by the trustee remains, by which he obtains any advantage from his benficiary, are presumed to be entered into by the latter without sufficient consideration, and under undue influence.’ Civ.Code § 2235. The advantage which a fiduciary thus gains need not be an unfair advantage: ‘When a fiduciary enters into a transaction with a beneficiary whereby the fiduciary's position is improved, or he obtains a favorable opportunity, or where he otherwise gains, benefits, or profits, it may fairly be said that an advantage has been obtained. To declare that the advantage obtained must be shown to be unfair, unjust, or inequitable before the presumptions arise would result in the imposition of a condition which is not required by section 2235.’ Bradner v. Vasquez, 43 Cal.2d 147, 152, 272 P.2d 11, 14. A course of dealing with a client that would gain one a prescriptive title to property of the client would certainly be the obtaining of an ‘advantage’ within the meaning of this definition.
Quite similar to our case at that of Dettamanti v. Lompoc Union School Dist., 143 Cal.App.2d 715, 300 P.2d 78, an action against a school district and the driver of one of its buses for injuries to a student, allegedly caused by the negligence of the driver. It appeared from the complaint that the required verified claims were filed after the expiration of the prescribed ninety-day period. A general demurrer to the complaint was sustained despite allegations that plaintiff's father first consulted a person who was attorney for the district, that this attorney collected damages for plaintiff from the owner of another vehicle involved but failed to inform plaintiff's father that plaintiff had or might possibly have a cause of action against the district and its driver. Later, other counsel were consulted, who advised the bringing of this action.
In reversing the judgment, the reviewing court held that the facts alleged were sufficient to estop the defendants from relying upon the delay in the filing of the claim. In so ruling, the court said: ‘Defendants are confronted by the stark fact that Dettamanti allegedly failed to file a claim on behalf of his daughter within the prescribed time solely by reason of a breach of duty on the part of the attorney for the defendants to give him complete and unbiased advice. That should end the inquiry. Public policy cannot be defeated by the tenuous claim that the attorney temporarily relieved himself from his relationship to the school district and its officer. He could not do that; the law regards the shifting of loyalty and allegiance from one of two adverse interests to the other as impossible, and will have none of it. Defendants are bound by the conduct of the deputy district attorney. They cannot be heard to say that the attorney was not acting on their behalf and in their interests while he was also acting as attorney for Dettamanti and plaintiff. The presumption of law is to the contrary and it must be deemed conclusive.’ 143 Cal.App.2d at page 723, 300 P.2d at page 84.
In our case there is even greater reason for holding that defendants are estopped. It is their own failure, not that of an agent, to discharge their duty of fully advising their client, which gives rise to the statutory presumption and, in the absence of a satisfactory explanation upon their part, prevents them from founding a prescriptive title in their own favor thereon. Such failure also estops them from successfully asserting that plaintiff is guilty of laches or is in any way estopped from establishing title to the life estate she reserved in the 1935 deed to her husband.
The judgment is reversed.
1. The judgment also made a monetary award in defendants' favor but plaintiff has abandoned that portion of her appeal.
2. In 1956, after most of the events here involved, plaintiff acquired the latter half-interest in her own right upon the death of her sister.
3. The reservation was followed, not preceded, by these clauses: ‘Together with all and singular, the tenements, hereditaments and appurtenances thereunto belonging, or in anywise appertaining, and the reversion and reversions, remainder and remainders, rents, issues and profits thereof. ‘To Have and to Hold, all and singular the said premises, together with the appurtenances, unto the said party of the second part, his heirs and assigns forever.’
4. The court doubtless had in mind the difference between a legal estate and an equitable interest. According to section 863, Civil Code, ‘* * * every express trust in real property * * * vests the whole estate in the Trustees * * *. The beneficiaries take no estate or interest in the property’; interpreted as meaning that the Trustees take the legal estate and the beneficiaries the equitable estate. Lynch v. Cunningham, 131 Cal.App. 164, 172, 21 P.2d 154, 973.
5. Plaintiff and defendant J. Edward Johnson were minority directors of Remillard-Dandini.
WOOD, Justice pro tem.
TOBRINER, Acting P. J., and DUNIWAY, J., concur.