Louis BERNKRANT, Florence Bernkrant and Alfred Bernkrant, Plaintiffs and Appellants, v. Dorothy Black FOWLER, as Executrix of the Estate of John Granrud, Deceased, Defendant and Respondent.*
This is an action against the executrix of the Estate of John Granrud, Deceased, to cancel a promissory note and for reconveyance of the trust deed securing said note, both executed by plaintiffs in favor of said John Granrud, the action being based upon an oral agreement wherein said decedent agreed to provide by will for the forgiveness of any unpaid balance of said note at the time of his death.
Plaintiffs appeal from a judgment in favor of defendant. The appeal is on the clerk's transcript only which includes the judgment roll and certain designated papers and records, including the written opinion of the trial judge, it being contended that the conclusions of law and judgment are not supported by the findings of fact.
The trial court found that on July 1, 1951, plaintiffs were the owners of certain real property in Las Vegas, Nevada, commonly known as the ‘Granrud Garden Apartments'; that at said time the property was subject to a first deed of trust in favor of David O. Parks and Lenabel Parks given to secure a note of $17,820, payable in monthly installments and that the then unpaid balance was approximately $11,000. That at the same time the property was subject to a second deed of trust in favor of John Granrud given to secure a note issued by the plaintiffs dated July 25, 1952, and payable to John Granrud in the amount of $32,871.61, payable in monthly installments, and that the then unpaid balance of said note was approximately $24,000. That on or about July 1, 1954, in Las Vegas, Nevada, the deceased, John Granrud, orally stated to the plaintiffs that he would ‘make a sporting proposition and provide in his Will that any debt at the time of his death which remained on the purchase price’ of the John Granrud Garden Apartments ‘would be forgiven and cancelled in exchange for a partial payment and refinancing’ of the second trust deed note. That at said time the deceased, John Granrud, requested plaintiffs to refinance for the purpose of enabling him to purchase a trailer park. That plaintiffs did refinance by obtaining a new first trust deed loan of $25,000 at a cost of $800.90. That they paid off the note in favor of David O. Parks and Lenabel Parks, and applied the balance of the new loan in the amount of $13,114.20 in part payment of the second trust deed note. That on October 27, 1954, plaintiffs executed a note in favor of John Granrud for the then balance of the loan in the amount of $9,227 payable in monthly installments and secured by a second trust deed. That the deceased subsequently used the part payment made on or about October 27, 1954, for the purchase of a trailer park.
The court further found that John Granrud died testate on March 4, 1956, and that at the time of his death was a resident of the County of Los Angeles; that he left a will dated January 23, 1956; that said will was duly admitted to probate in the Superior Court of the State of California, in and for the County of Los Angeles on April 9, 1956, and that Dorothy Black Fowler was named in said will as executrix, and that at all times since April 9, 1956, she has been and now is the executrix of the Estate of John Granrud, Deceased. Finally, the court found that the will of said deceased contained no provision for the cancellation of said note executed by the plaintiffs and that the balance due on March 4, 1956 was $6,425.
From the foregoing findings of fact, the court concluded: (1) That the action is barred by the Statute of Frauds of both the State of Nevada and the State of California unless removed from the operation thereof by estoppel or performance; (2) That in order to remove the bar of the Statute of Frauds the action must be founded in quasi-specific performance and to maintain such an action an heir or beneficiary under the will is an indispensable party; (3) That the oral agreement upon which the action is based is not of such nature as to estop the defendant-executrix from asserting the Statute of Frauds or to cause a court sitting in equity to enforce the oral agreement quasi-specifically; and (4) That the defendant is entitled to judgment against plaintiffs with costs.
Judgment was thereupon entered that plaintiffs take nothing and defendant have judgment for her costs. Thereafter, plaintiffs' motion to vacate the judgment and to enter a new and different judgment was denied.
The oral agreement to testamentarily cancel the indebtedness upon which plaintiffs predicate their cause of action was made in Nevada. Because, as a general rule, a will is and remains ambulatory during the lifetime of the testator, no breach of an agreement to make a testamentary provision, absent a repudiation, can or does occur until the death of the testator and the breach therefore occurs in the state of his demise, in this case, California. The testator's will was here admitted to probate and plaintiffs' action to enforce the oral agreement was here filed and pursued.
These facts raise the major and, as we have concluded, controlling problem presented in this review, which is a choice of law question as to whether the Statute of Frauds of California or that of Nevada is applicable in determining the enforceability of the oral agreement to make a testamentary disposition.
The pertinent provisions of the Statute of Frauds of California are stated both in the Civil Code1 and the Code of Civil Procedure.2 Indisputably, the instant oral agreement is within these provisions of the California Statute of Frauds and plaintiffs so concede. See: Hagan v. McNary, 70 Cal. 141, 143, 148 P. 937, L.R.A.1915E, 562; Loper v. Flynn, 72 Cal.App.2d 619, 621, 165 P.2d 256; Bogan v. Wiley, 72 Cal.App.2d 533, 536, 164 P.2d 912; Burke v. Bank of America, etc., Ass'n, 34 Cal.App.2d 594, 597, 94 P.2d 58.
If the California Statute of Frauds is here applicable, the instant agreement is not enforceable in an action in our courts in the absence of an estoppel to assert a bar of the Statute and appellants so concede.
No definitive authority of the courts of this State as to the applicability of the California Statute of Frauds raised as a defense in an action pending in our courts on a contract entered into in another state has been cited by either counsel nor discovered in our independent research. In determining a question without the guidance of precedent of our own courts, it is our duty to adopt a rule which in our opinion agrees with the ascertainable public policy of this State. However, we are mindful that in so doing we must not be blind to the comity between sovereign states in passing upon the enforceability of contracts made and obligations incurred in accordance with the laws of a sister state and sought to be enforced in California. See: Blythe v. Ayres, 96 Cal. 532, 561, 31 P. 915, 16 L.R.A. 40. Comity, as distinguished from obligations imposed by the full faith and credit clause of the Federal Constitution (U.S.Const., Art. 4, § 1) does not compel us to follow a statute of a sister state in direct conflict with a statute on the same subject matter of this State (Hudson v. Von Hamm, 85 Cal.App. 323, 326, 259 P. 374), or to follow foreign laws which are contrary to the settled public policy of the forum. Biewend v. Biewend, 17 Cal.2d 108, 113, 109 P.2d 701, 132 A.L.R. 1264.
Statutes requiring contracts to be in writing or evidenced by a written memorandum thereof do not deprive the parties of the right to contract with respect to matters therein involved, but merely regulate the formalities of the contract necessary to render it enforceable and the constitutionality of such statutes is incontestable. For although the Legislature may not interfere with the absolute individual right to contract, except on the ground of public policy, it may regulate the manner in which that right shall be exercised, and, in so doing, require that contracts or certain classes of contracts shall be in writing. Peterson v. Panovitz, 62 N.D. 328, 243 N.W. 798, 801, 84 A.L.R. 1290; Adinolfi v. Hazlett, 242 Pa. 25, 88 A. 869, 871, 48 L.R.A.,N.S., 855; Gideon-Anderson Lumber Co. v. Hayes, 348 Mo. 1085, 156 S.W.2d 898, 899–900; Baker v. Gillan, 68 Neb. 368, 94 N.W. 615, 616; Ross v. Kaufman, 48 Wash. 678, 94 P. 641.
We find that the only unanimity of opinion among text writers relating to the Statute of Frauds from a standpoint of conflict of laws is that the adjudicated cases on the subject are in confusion and conflict. 11 Cal.Jur.2d p. 195; 11 Am.Jur. p. 514; 105 A.L.R. 652; 1 Witkin, California Procedure, p. 506; Lorenzen, The Statute of Frauds and the Conflict of Laws, 32 Yale L.J. pp. 311 and 314; Comment, The Statute of Frauds in the Conflict of Laws, 43 Cal.L.Rev. p. 295.
The four principal and differing theories or views in the cases involving the choice of laws between the law of the forum and foreign law in respect of questions arising in connection with the Statute of Frauds are: (1) The view originally resting upon the authority of Leroux v. Brown (1852), 12 C.B. 801 which makes the question as to the governing law turn upon the point whether the particular provision in question is drawn in a procedural form, such as ‘no action shall be brought’, or in a substantive form which declares the contract shall be ‘invalid’ or ‘void’; (2) The view which, for purposes of conflict of laws, rejects the distinction based upon procedural or substantive form, and treats the provisions of the Statute, regardless of its form, as essentially substantive, the consequence of which is that the Statute of the forum, whether procedural or substantive in form, does not apply to a foreign contract, and the validity and enforceability of the contract is tested exclusively by the foreign Statute; (3) The view which rejects the distinction based upon the procedural or substantive form of the Statute but treats the same regardless of form as essentially procedural and not substantive, the consequence of which is that the Statute of Frauds of the forum, if otherwise applicable, governs enforceability; and (4) The view that it is contrary to the public policy of the forum to enforce a contract, though valid by the foreign law, if invalid by the Statute of Frauds of the forum, whether procedural or substantive in form. 11 Am.Jur. § 198, p. 515; Lorenzen, The Statute of Frauds and the Conflict of Law, supra, p. 315, et seq.; Comment, The Statute of Frauds in the Conflict of Laws, supra, p. 296; Annotations 105 A.L.R. 652 and161 A.L.R. 820; 3 Beale, The Conflict of Laws, p. 1618.
Fundamental to the solution of a problem involving a choice of laws is the established rule that the forum ‘should determine the case in conformity with its own laws governing the matter’ (Estate of Patterson, 64 Cal.App. 643, 648, 222 P. 374, 376) or, as stated in the Comment on Clause (b), § 7, Restatement, Conflict of Laws: ‘When an action is brought in one state upon a contract made in another state, the court at the forum must decide, by its own rule of Conflict of Laws, by the law of what state the situation is to be controlled.’
In connection with the applicability of the substantive or procedural aspects of the problem, it is a general rule in conflict of laws that where there is a conflict between the law of the jurisdiction in which the litigation occurs, the lex fori, and the law of the place in which the circumstances arose out of which the litigation is based, the lex lici, the lex loci will govern as to matters pertaining to the basis of the right of action, while the lex fori controls all that is connected with the remedy. Klaffki v. Kaufman, 52 Cal.App. 48, 50, 198 P. 36; 11 Am.Jur., § 14, p. 314. Morespecifically, it is established that the affording of remedies in one state for enforcing a contract made in another depends entirely upon comity and that the remedies and procedures are governed entirely by the lex fori. 11 Am.Jur. § 120, p. 408; Restatement, Conflict of Laws, § 585; 1 Beale, The Conflict of Laws, p. 86; 11 Cal.Jur.2d, p. 184.
We are not inclined to apply the ‘language of the statute’ test established in Leroux v. Brown, supra, for the reason that although said section provides: ‘The following contracts are invalid * * *.’ it has been uniformly held that the section is not substantive but procedural, the contract not void but voidable. For example: Subdiv. 1 (agreement not to be performed within one year) see Pao Ch'en Lee v. Gregoriou, 50 Cal.2d 502, 505–506, 326 P.2d 135; subdiv. 2 (promise to answer for debt of another) see Salomon v. Ellis, 34 Cal.App.2d 672, 679, 94 P.2d 393; subdiv. 4 (agreement for sale of interest in real property) see Coleman v. Satterfield, 100 Cal.App.2d 81, 84, 223 P.2d 61. Subdivision 6 (agreement to devise property or provide by will) was enacted in 1905 and the Supreme Court was called upon in O'Brien v. O'Brien, 197 Cal. 577, 241 P. 861, to determine for the first time if said subdivision should be given the same force and effect as other provisions of the Statute of Frauds. The court said at page 586 of 197 Cal., at page 864 of 241 P.: ‘It is the general rule, however, that a contract falling within the operation of the statute, but made in contravention thereof, is not invalid in the sense that it is void. It is merely voidable. The statute is said to relate to the remedy only and not to affect the validity of the oral contract. ‘Such a contract, if otherwise valid, remains so, and the sole effect of the statute is to render it unenforceable by one party against the will of the other who abandons or repudiates it.’' Thus it is clear that subdivision 6 of Civ.Code § 1624 here involved is a remedial statute and an application of the general rule that the lex fori controls the remedy impels the conclusion that in this action the California Statute of Frauds is controlling.
Apart from the substantive or procedural characterization approach to this choice of law question, we feel that sound policy both with respect to the purpose of the Statute of Frauds and the interest of the state in the control of testamentary dispositions of property require that the California Statute of Frauds should govern in any judicial proceedings brought in this State with respect to agreements to devise or bequeath property or to make any provision for any person by will. The historic English Statute of Frauds was entitled ‘An Act for the Prevention of Frauds and Perjuries'. It, and its counterparts in the United States, are designed ‘to prevent those frauds and perjuries which are so likely to be committed in the consummation and enforcement of concords between men which are not reduced to written form.’ Stowe v. Fay Fruit Co., 90 Cal.App. 421, 426, 265 P. 1042, 1044. Our Statute expresses the procedural public policy of this State that its courts shall not become the instruments of injustice in the enforcement of certain agreements, the existence and terms of which rest solely in the tenuous memory of man. The same public policy of prevention of frauds in connection with estates of decedents is found also in the so-called ‘dead-man statute’, Code of Civ.Proc. § 1880, subd. 3, predicated upon the unfairness to permit a claimant to give testimony as to facts which the deceased has no opportunity to contradict. We believe it is sound public policy that in resorting to our courts to establish agreements to make testamentary dispositions that a litigant be obliged to establish his claim in accordance with our procedural laws. Hence, whereas such an oral agreement may be valid in the state where made, the policy behind the Statute of Frauds is of such importance that the Statute of the forum should apply in the enforcement of any such agreement. In this connection it is interesting to note the reason prompting the enactment of said subdivision 6 as stated by the Code Commissioner and quoted in O'Brien v. O'Brien, supra, 197 Cal. 577, at page 586, 241 P. 861, at page 864 as follows: “The change consists in the addition of subdivision 7 [now subdiv. 6]. The cases in which it [is] sought to establish by parol evidence alleged agreements to provide for a person by will are becoming so numerous as to warrant the assumption that the reasons inducing the original enactment of the statute of frauds apply with especial force to agreements of this class and that they ought to be brought within that statute.”
Another and equally cogent reason for holding that the particular subdivision under consideration be held applicable to judicial proceedings in this State is that it is expressive of a deeply rooted policy of this State with respect to testamentary dispositions by domiciliaries to which conflicting rules of choice of law must give way. An expression of this policy is found in the statutory law that a will of a domiciliary decedent must be executed according to the law of this State (Prob. Code, § 26). The same public policy would lead us to conclude that in a choice of law question we should accept and apply the law of this State requiring an agreement of a domiciliary decedent to make a will or to provide by will to be in writing. Although we are without controlling authority of our own state we find two carefully reasoned and persuasive decisions from other states, each deciding that the Statute of Frauds of the testator's domicile at death applied to oral agreement elsewhere made obligating the testator either to make a testamentary disposition or not to revoke the provisions of a will already in existence. The first of these cases in point of time is Emery v. Burbank, 163 Mass. 326, 39 N.E. 1026, 1027, 28 L.R.A. 57, decided in 1895, the opinion by Mr. Justice Holmes. The case involved an action to enforce an oral agreement to leave property by will, the agreement having been entered into in Maine by defendant's testatrix. The Massachusetts statute, St.1888, c. 372, provided that no such agreement ‘shall be binding’ unless in writing. Recognizing the fundamental principle that a contract valid where made is valid everywhere, the opinion points out that even though valid it is not necessarily enforceable contrary to the policy of the forum. Although the decision reasons that the Massachusetts statute is substantive, nevertheless the court declines to follow the substantive-procedural test and applies the Massachusetts statute to the Maine contract on the grounds of the policy of the forum, saying (39 N.E. at page 1027):
‘But the statute [Mass.] evidently embodies a fundamental policy. The ground, of course, is the prevention of fraud and perjury, which are deemed likely to be practiced without this safeguard. The nature of the contract is such that it naturally would be performed or sued upon at the domicile of the promisor. If the policy of Massachusetts makes void an oral contract of this sort made within the state, the same policy forbids that Massachusetts testators should be sued here upon such contract without written evidence, wherever it is made.
‘If we are right in our understanding of the policy established by the legislature, it is our duty to carry it out so far as we can do so without coming into conflict with paramount principles.
‘The law of the testator's domicile is the law of the will. A contract to make a will means an effectual will, and therefore a will good by the law of the domicile. In a sense the place of performance, as well as the forum for a suit in case of breach, is the domicile. We do not draw the conclusion that, therefore, the validity of all such contracts, wherever sued on, must depend on the law of the domicile. That would leave many such contracts in a state of indeterminate validity until the testator's death, as he may change his domicile so long as he can travel. But the consideration shows that the final domicile is more concerned in the policy to be insisted on than any other jurisdiction, and justifies it in framing its rules accordingly.’
In Rubin v. Irving Trust Co., 305 N.Y. 288, 113 N.E.2d 424, decided by the New York Court of Appeals in 1953, that court unanimously held that an oral contract not to change or revoke a will which favored plaintiff was unenforceable under the Statute of Frauds of New York, Personal Property Law, § 31, where the decedent was domiciled, even though it allegedly was valid in Florida where made. The New York Statute of Frauds provides that an agreement to bequeath property or to make testamentary provision of any kind ‘is void’ unless in writing. Recognizing that the choice of law question was an unsettled problem in New York, the court discusses the characterization approach and said ‘the principle, concerned as it is with nebulous legal conclusions, does little more than restate the problem’. 113 N.E.2d at page 427. The court continued (113 N.E.2d at page 427):
‘However, as we view the case, we need not decide whether the statute is substantive or procedural. If it be the latter, there is no problem for the law of the forum surely would apply. If it be the former, we must conclude that it is expressive of a deeply rooted policy of the forum with respect to the bequeathing of property or making testamentary provisions by its domiciliaries to which the ordinary rules of choice of law and comity must give way. * * *
‘It should be realized at the outset that we are not dealing with the ordinary contract. A contract to make or to refrain from altering a will amounts for all practical purposes to a testamentary disposition. If enforceable, it is little different from a will and, as often as not, will result in the complete subversion or nullification of a will executed in accordance with the stringent requirements surrounding the making of such an instrument, Decedent Estate Law, Consol.Laws, c. 13, § 21. The nature of the contract is such that actions for its enforcement are instituted after the death of the promisor and consequently the difficulty of disputing the claim is enormous. Since claims based upon such oral contracts are frequently asserted and are unusually suspect, [Citations] they tend to hamper the expeditious and orderly administration of estates.’
‘To enforce an oral contract to make or to refrain from altering a will is to write or rewrite a will for a decedent in complete disregard of the strict and salutary requirements of the Statute of Wills, Decedent Estate Law, § 21, and the dangers of injustice are as great as those which militate against the allowance of oral wills.
‘* * * No authority need be cited for the settled proposition that the law of the testator's final domicile is the law of the will and controls the devolution of estates at least insofar as personalty is concerned. The State is vitally interested in preserving the integrity of the cherished privilege which it has conferred (the power of testamentation) and of the estates of which its courts have assumed jurisdiction.’ 113 N.E.2d at page 428.
Recognizing that other types of agreements embraced within our Statute of Frauds may require a different appraisal in the choice of applicable law, yet as to agreements to bequeath property or to make testamentary dispositions as embraced within subdivision 6, we are convinced that where the mouth of the alleged promisor is sealed by death and refutation of spurious claims against estates of decedents fraught with difficulty, the California Statute should be controlling as a matter of consistency with the public policy of this State.
Both in their opening and closing briefs plaintiffs have conceded that the present action is barred if the California Statute of Frauds is applicable unless the action is removed from the operation of the Statute by a performance or estoppel. Their concession in this regard as stated in their opening brief is that: ‘If it were held that California law is applicable, the action would be barred because the Statutes require a writing where there is a promise to make any provision by will (in the absence of estoppel or performance). Thus a promise to cancel a debt by will would come within the statute, even though it is not a promise to devise or bequeath property * * *.’ Notwithstanding such concession, the plaintiffs advance the apparently inconsistent contention that an oral promise to cancel a note secured by a deed of trust does not come within the Statute of Frauds. They cite and rely principally upon Wright v. Donaubauer, 137 Tex. 473, 154 S.W.2d 637. The case is clearly distinguishable in that it did not involve an agreement to make a provision by will but merely an agreement that an unpaid balance of a note should be cancelled upon the death of the promisor. It does not appear from the decision that the Texas Statute of Frauds contained any provision comparable to Civ.Code, § 1624, subdiv. 6. Symonds v. Sherman, 219 Cal. 249, 26 P.2d 293, and Cadigan v. American Trust Co., 131 Cal.App.2d 780, 281 P.2d 332, cited by plaintiffs, are likewise distinguishable in that each was an action to cancel an indebtedness based upon an inter vivos written agreement that any unpaid balance of the obligation involved should be cancelled upon the death of the promisor. Not only was there in each of those cases ‘some note or memorandum thereof, * * * in writing and subscribed by the party to be charged’ (Civ.Code, § 1624) but neither case involved an agreement such as alleged in plaintiffs' complaint and found by the court that decedent herein orally agreed that ‘he would provide in his Will that upon his death any sums remaining outstanding and unpaid * * * would be forgiven, cancelled and discharged’. It is obvious that the oral agreement alleged and found by the court comes directly within the provisions of the Statute of Frauds.
It was strenuously urged by the plaintiffs at the trial and likewise here that defendant is estopped to urge the bar of the Statute of Frauds by reason of plaintiffs' change of position in reliance upon the promise of the decedent. It is clear from the Memorandum Opinion filed by the trial judge that he gave this contention careful consideration before concluding that no sufficient grounds were established so to estopdefendant. Unless but one inference can be drawn from the evidence, estoppel is a question for the trial court. Sawyer v. City of San Diego, 138 Cal.App.2d 652, 662, 292 P.2d 233; Krobitzsch v. Middleton, 72 Cal.App.2d 804, 815, 165 P.2d 729; Lowe v. Copeland, 125 Cal.App. 315, 322, 13 P.2d 522. The trial court has a large discretion in determining whether allowing a party to set up the Statute of Frauds would be equitable and its determination will not be disturbed in the absence of an abuse of discretion. Goldstein v. McNeil, 122 Cal.App.2d 608, 612, 265 P.2d 113.
Reduced to fundamentals, plaintiffs' change of position in refinancing the property and paying the decedent a substantial amount upon the principal of the note consisted in substituting one debtor for another to the extent of the principal payment to the decedent on account and at a cost of $800.90. Plaintiffs have cited a large number of cases sustaining an estoppel to assert the bar of the Statute of Frauds involving either fraud, unconscionable injury or irreparable change of condition, none of which elements are here present. ‘Before a party can be estopped to assert the statute [frauds] due to the other's part performance, it must appear that a sufficient change of position has occurred so that the application of the statutory bar would result in an unjust and unconscionable loss, amounting in effect to a fraud.’ Anderson v. Stansbury, 38 Cal.2d 707, 715, 242 P.2d 305, 310. This appeal being on the clerk's transcript only, we cannot ascertain nor are we advised of what, if any, benefits accrued to the plaintiffs as a result of the refinancing which may have been an offset to the cost thereof although it does appear that the minimum monthly payments on the note held by the decedent were reduced. We must assume that the trial court considered all of the relevant factors as shown by the evidence in arriving at the conclusion that it was not inequitable to allow the defendant to assert the bar of the Statute of Frauds. No abuse of discretion has been shown and, therefore, we will not disturb the trial court's determination of that issue.
In view of the conclusions we have reached it becomes unnecessary to consider other questions raised by the appellants as to whether the oral agreement herein comes within the bar of the Nevada Statute of Frauds or whether an heir or beneficiary under decedent's will is an indispensable party defendant herein.
Plaintiffs' final contention that the findings do not support the conclusions and judgment is untenable in light of our determination that the trial court correctly concluded that the California Statute of Frauds should be applied, thereby barring the action and further concluded that the defendant was not estopped to assert such bar.
1. Civil Code, § 1624: ‘The following contracts are invalid, unless the same, or some note or memorandum thereof, is in writing and subscribed by the party to be charged or by his agent: * * * ‘6. An agreement which by its terms is not to be performed during the lifetime of the promisor, or an agreement to devise or bequeath any property, or to make any provision for any person by will;’
2. Code of Civil Procedure, § 1973: ‘In the following cases the agreement is invalid, unless the same or some note or memorandum thereof be in writing, and subscribed by the party charged, or by his agent. Evidence, therefore, of the agreement, can not be received without the writing or secondary evidence of its contents: * * * ‘6. An agreement which by its terms is not to be performed during the lifetime of the promisor, or an agreement to devise or bequeath any property, or to make any provision for any person by will;’
RICHARDS, Justice pro tem.
FOX, P. J., and ASHBURN, J., concur.