VAI v. Bank of America National Trust and Savings Association and Henry G. Bodkin, as Co-executors of the Estate of Giovanni Vai, Deceased, Bank of America National Trust and Savings Association, a national trust and savings association, as Trustee under the Will of Giovanni Vai, Deceased, Shriners Hospital for Crippled Children, Inc., Missionary Sisters of the Sacred Heart, a corporation, also known as Villa Cabrini Academy, Madeline L. Vai, an incompetent person, by Mary Conello and Maria Conello, guardian of the Estate of the said incompetent person, Loyola University of Los Angeles, a corporation, and Childrens Hospital Society of Los Angeles, a corporation, Respondents.*

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District Court of Appeal, Second District, Division 3, California.

Tranquilla VAI, Plaintiff and Appellant, v. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national trust and savings association, et al., Defendants, Bank of America National Trust and Savings Association and Henry G. Bodkin, as Co-executors of the Estate of Giovanni Vai, Deceased, Bank of America National Trust and Savings Association, a national trust and savings association, as Trustee under the Will of Giovanni Vai, Deceased, Shriners Hospital for Crippled Children, Inc., Missionary Sisters of the Sacred Heart, a corporation, also known as Villa Cabrini Academy, Madeline L. Vai, an incompetent person, by Mary Conello and Maria Conello, guardian of the Estate of the said incompetent person, Loyola University of Los Angeles, a corporation, and Childrens Hospital Society of Los Angeles, a corporation, Respondents.*

Civ. 24107.

Decided: October 10, 1960

Martin & Camusi, Los Angeles, and Kenneth D. Holland, Beverly Hills, for appellant. George M. Breslin, Michael G. Luddy, Henry G. Bodkin, Jr., and E. E. Hitchcock, Los Angeles, for respondents Henry G. Bodkin and Bank of America Nat. Trust and Savings Assn. Cosgrove, Cramer, Diether & Rindge and Samuel H. Rindge, Los Angeles, for respondent Childrens Hospital Society of Los Angeles. Wallace & Wallace and W. Woodson Wallace, Los Angeles, for respondent Missionary Sisters of the Sacred Heart. Alden Reid, San Bernardino, for respondent Madeline L. Vai.

Appeal by plaintiff from a judgment for defendants in a suit to annul a property settlement agreement on the ground of fraud, for recovery of part of the property received by the husband under the agreement, and for damages in the event recovery could not be had.

The agreement was entered into between plaintiff Tranquilla Vai and her husband, Giovanni Vai, called, John, on March 16, 1953. They had an incompetent daughter, Madeline, who was 27 years of age at that time. John died on February 14, 1957. Plaintiff and Madeline survived him. This suit was filed March 18, 1957. Defendants are the executors of John's will, the trustee named in his will, Madeline who is a beneficiary of the trust, and legatees named in the will.

At the time the agreement was entered into all property of plaintiff and John was community property. The agreement stated the items constituting the community property of the parties as set out in footnote 1.1 1.1

Under the terms of the agreement plaintiff received a residence and two apartment buildings, including furnishings, in the Lincoln Heights district of Los Angeles, called the ‘Parkside property,’ valued at $150,000; a Dodge automobile; $1,204 balance in lincoln Heights Branch of Bank of America; $25,000 in cash; half of Italian lire on deposit in a bank in Italy; John's agreement to pay all the community obligations and the support of Madeline, and to pay all taxes, assessments, insurance, maintenance, and repairs on the Parkside property and, in the event the rental received from that property after income taxes was less than $6,000 annually, to pay plaintiff an amount which would make up the difference each year during her lifetime; John's agreement to pay plaintiff's attorneys' fee in the amount of $10,000; John's agreement to secure a release from Bank of America of a continuing guarantee executed by plaintiff and John under which they were obligated to pay the debts of Padre Vineyard Company up to $300,000, which John obtained; John's agreement to secure the consent of Bank of America as John's main creditor to the conveyance by John to plaintiff of the property she received under the agreement, free of any claim or lien by that bank; John's agreement to hold plaintiff free and harmless from any liability of any nature by reason of the continuing guarantee to Bank of America and by reason of any debt or obligation of Padre. The stock of Padre was owned half by John and half by his brother James. At the time, Padre was indebted to Bank of America in the sum of $480,896.04 and had other liabilities of about $363,000. Plaintiff and John were indebted to Bank of America in the sum of about $53,000, and they were indebted otherwise in the sum of $33,687.21. John received the remainder of the properties.

Among other things, the court found: On February 6, 1953, plaintiff, without prior notice to John, commenced an action for separate maintenance, in which she was represented by a leading Los Angeles law firm, individually selected by her, without suggestion by John or his attorneys or agents. During the pendency of that action the property settlement agreement was prepared and executed. Plaintiff was generally familiar with the nature and extent of the community property. Prior to instituting the suit for separate maintenance, plaintiff and her attorneys obtained the descriptions of all the properties of the parties and obtained Dun and Bradstreet reports on Padre Vineyard Company, Cucamonga Valley Wine Company and El Camino Ranch, which showed with substantial accuracy the condition of each of those companies at that time. At the inception of the negotiations leading to the property settlement agreement, John and his attorney advised plaintiff and her attorneys that they should make their own investigation of all the facts concerning the assets, and offered to make available to them all the books and records of John, of the businesses conducted by him, and of Padre Vineyard Company in which he owned a half interest; and, at all times during the negotiations, all of those books and records were available to them. Plaintiff and her attorneys secured from John a list of the securities owned by them, various financial reports, and information concerning the individual businesses of John. Plaintiff and her attorneys at all times had means equal to those available to John and his attorney for determining the true facts concerning the community assets. Plaintiff's attorneys employed the services of a reputable and skilled appraiser, independently selected by them, to make an appraisal of certain of the assets owned by John and plaintiff as their community property.

The court further found: No act or conduct of John or his attorney induced or invited them not to make a complete appraisal of all the community properties. Plaintiff and her attorneys had full, free and unrestricted opportunity to make a complete investigation of each and every asset and the values of all the properties. No interference was placed in the way of their investigation thereof. Plaintiff and her attorneys made such investigations as they deemed necessary in the exercise of their own judgment Plaintiff and her attorneys deliberately elected not to wait for any further financial statements before entering into the agreement They relied on their own investigation, their own independent judgment, and their own knowledge of values; and in making the agreement, did not rely upon any alleged misrepresentation made by John or his attorney. Plaintiff and her attorneys discontinued further investigation when, in their independent judgment, they deemed it advisable so to do.

The court also found: Plaintiff wanted to live separate and apart from her husband, wanted to have a feeling of security in respect to the financial and property sources of her maintenance, and, to that end, wanted certain of the community property set apart as her own and wanted her husband committed to or placed under certain obligations for her support. Plaintiff, after the preliminary stage of the negotiations for the agreement, did not seek or ask for an equal division of the community estate or any particular percentage thereof, but wanted and sought to acquire the home and apartment houses on Parkside Avenue in Los Angeles, free and clear; financial security in reference to her maintenance; to be relieved from all liability for the indebtedness of John and herself and of Padre Vineyard Company; and to be entirely relieved of any and all personal and financial burden for the care and support of the daughter, Madeline. Plaintiff so advised her attorneys, and her attorneys followed her wishes and sought to obtain those results for her. During the negotiation of the agreement the parties thereto were dealing at arm's length, each represented by lawyers of his or her own choosing, and plaintiff relied solely on the investigations made by her attorneys and on their judgment and advice in entering into the agreement. Plaintiff had no direct dealing whatsoever with John or any attorney or agent of John in the negotiations leading to the agreement or in connection with her consideration or execution thereof; but was represented in all such matters by her attorneys through whom she acted except only for her personal execution of the agreement. In executing the agreement ‘plaintiff relied upon the advice of her attorneys, who were men of high professional standing and wide experience in all the practical affairs that enter an able lawyer's office and were generally informed as to property values and trends and movements in respect to real property in and near Los Angeles County, and were in a position to secure such information as to values as they may have desired or considered necessary or useful.’ In view of the circumstances surrounding the family of John and plaintiff, the condition of Madeline, the losing operations of the business of John and Padre, the age and condition of plaintiff and her primary desire for what she regarded as security, and the age and physical condition of decedent, the agreement was a fair and equitable one.

Plaintiff contends these findings are unsupported by the evidence. The point cannot be sustained.

During the negotiations leading to the execution of the agreement, plaintiff was represented by the late Mr. Earle M. Daniels and the late Mr. Burdette J. Daniels, former Judge of the Superior Court, of the then firm of Daniels and Daniels, and Mr. Hallam Mathews of that firm. John was represented by Mr. Henry G. Bodkin.

There was evidence of the following facts: Plaintiff and John were married in Italy in 1907. They came to the United States and Los Angeles in 112. She became a United States citizen in 1918. She was 66 years of age at the time the agreement was executed. She testified at the trial in the English language. She had employed counsel independent of any connection with John or his business enterprises. Some years prior to the execution of the agreement a bank employee referred her to Mr. Julius Patrosso, now a Judge of the Superior Court. She talked with him and he introduced her to Mr. Earle Daniels. On January 7, 1953 she consulted Mr. Daniels, who introduced her to Mr. Hallam Mathews. Mr. Mathews represented her in the negotiations thereafter.

On February 6, 1953 a separate maintenance action was filed by plaintiff, and John was served the same day. John's deposition was set for January 20, 1953 and an order to show cause was set for hearing on February 24, 1953. By stipulation they were continued.

Plaintiff had a number of interviews with Mr. Mathews. She told him John owned a half interest in Padre Vineyard Company and that John's brother James owned the other half interest; she mentioned the Parkside and Lake Arrowhead properties; she informed him of the apartment houses at Parkside and the approximate income from them, although she did not know the expenses; she told him of the Italian lire; she discussed the Alta Loma property, explaining that John had spent considerable money on the lemon grove surrounding the house, that his experience with citrus had been very limited and she was concerned about his ability to manage it; she told Mr. Mathews there was acreage in San Bernardino County, some of which was planted in grapes, but that she did not know whether it was owned by John or by Padre. There was evidence plaintiff knew John owned various stocks and bonds.

Mr. Mathews secured a Dun and Bradstreet report on Padre Vineyard Company and a combined report on Cucamonga Valley Wine Company and Rancho El Camino, John's individual businesses. He secured descriptions of the San Bernardino County real properties and a description of the Parkside property.

Mr. Mathews had a series of consultations, telephone conversations, and correspondence with Mr. Bodkin, John's counsel. He visited the Padre winery at Cucamonga. He conferred with John and Mr. Bodkin at Alta Loma. He drove by El Camino Rancho vineyards. During the course of these discussions, Mr. Mathews received the following from Mr. Bodkin: (a) an interim financial statement of Padre of January 31, 1953; (b) supplemental information showing certain accounts of Padre to March 6, 1953; (c) certified annual audit report for Padre for the year ending March 31, 1953; (d) personal financial statement of John, dated April 30, 1952, which had been filed with Bank of America; (e) a memorandum listing certain assets and liabilities of John based on information secured by Mr. Bodkin from John's bookkeeper on March 10, 1953. Mr. Mathews testified whatever he asked for he received. He felt the values of two properties were in excess of the amounts stated to him. As to the other properties, he thought the values were ‘about right.’

Mr. Bodkin testified: Mr. Mathews said he would make his own investigation; ‘I told him that he [John] was heavily indebted to the bank, and he could get that information from the bank. * * * I told him on a number of occasions he could make his own investigation. * * * He had access to the bank with our consent. * * * We were willing to let him get whatever information he desired’; both he and John told Mr. Mathews they felt he should have an appraisal made of all the assets.

Mr. Mathews told Mr. Bodkin the settlement was contingent on an appraisal of the Parkside property and that was the only property he intended to have appraised. He obtained an independent appraisal of the Parkside property; he did not obtain an appraisal of any of the other properties. He testified he had previously suggested to plaintiff that she should attempt to secure a part of the vineyard lands in San Bernardino County. She stated she did not desire any interest in them, and he obtained the appraisal of Parkside only because that was the property she wanted. On February 25, 1953 Mr. Mathews rejected an offer of settlement made by Mr. Bodkin and on March 9, 1953 submitted a counteroffer. Thereafter the agreement was drawn with terms more favorable to plaintiff than those offered by Mr. Mathews.

After March 9, 1953 Mr. Mathews made no further demands for information. He did not take John's deposition nor did he proceed with the order to show cause. When asked why he did not take John's deposition, he testified: ‘I had been in communication with Mr. Bodkin about it and as our negotiations progressed I felt that the deposition of Mr. Vai was not necessary, and, in addition, as I understood it from him, Mr. Vai was not in a physical condition to go through the order to show cause procedure.’ He redrafted Mr. Bodkin's original draft of the proposed settlement. He inserted a paragraph titled ‘Representations by Husband’ but did not include any language indicating that any representations as to value or financial indebtedness had been made; he inserted a paragraph which denied any representations had been made except as stated in the agreement; and he inserted a paragraph which provided that any after-discovered property would be divided between John and plaintiff in equal shares.

The agreement was executed on March 16, 1953. Both Mr. Mathews and Mr. Earle Daniels were present when plaintiff signed the agreement. Mr. Mathews read it ‘word for word’ to her. He explained the legal effect of it to her. He explained to her that if the agreement was executed she would have no right of inheritance and John could make a will leaving his property to whomever he desired.

Plaintiff testified: she had told Mr. Mathews she wanted the Parkside property and wanted to be sure she would have enough to live on for the rest of her life; she signed the agreement because Mr. Mathews and Mr. Daniels advised her to; John never told her to sign it; she knew when she signed the agreement she was to have the Parkside property, $500 a month guaranteed income over the expenses and taxes on the property, and $25,000 in cash.

Mr. Mathews testified he was well aware John was going to get the majority of the assets dollarwise on the valuations that had been placed on them. He did not believe or intend that plaintiff would receive fifty per cent of the community property in the final settlement. He was aware that inflation and industrialization had occurred in that part of San Bernardino County where the vineyards were located and that the land might well greatly appreciate in value. He did not demand part of it because plaintiff did not want it. There were certain assets she could take that she did not have to gamble on.

In respect to the evaluation of the community assets, Mr. Mathews testified: ‘After all, I was asking Mr. Bodkin for information and I assumed that in the representation of his client he was going to make as good a deal as he possibly could for him and if the $20,000 [an amount shown in Mr. Mathews' notes in respect to the Alta Loma house] was low it was up to me to perhaps take that into consideration. Q. That was true with respect to all the facts you say you received, isn't that right? A. Generally so, although at the time I somewhat concurred although I have no basis upon which to place it. The other valuations were about right. * * * Q. I believe you stated at the time that you recommended to Mrs. Vai that she settle on the basis which was finally agreed upon you felt that you had sufficient information to advise her; it that right? A. Yes. I felt that I had sufficient information to advise her.’

At another point in his testimony Mr. Mathews stated: ‘I wasn't particularly satisfied with all of the information that I had, but from the conversations that I had had with Mrs. Vai I felt that the information that I had was sufficient upon which to predicate this offer. * * * Mrs. Vai was particularly interested in the Parkside property and in an income that would not be subject to the possible financial encroachment by either Mr. Vai or the corporate obligations in the event there was financial difficulty by either.’

The evidence fully supports the findings we have related. Collins v. Collins, 48 Cal.2d 325, 309 P.2d 420, is directly applicable to the facts at bar as found by the court. In Collins the trial court found (48 Cal.2d at pages 328, 332, 309 P.2d at page 421):

‘Plaintiff and her attorney began an investigation of the community property of the parties before the execution of the property settlement agreement, but plaintiff did not pursue the investigation because she was satisfied with the terms of the agreement. Defendant did nothing to preclude plaintiff or her attorney from investigation of the property of the parties. Plaintiff when the property settlement was executed relied on the advice of her counsel, and not upon any statement of defendant. Plaintiff desired to obtain the property settlement agreement in order that she could have it approved in her Nevada decree and in order that she could obtain such decree and be free to marry Blankenship.’

“That plaintiff, at the time that she signed the said property settlement agreement and deeds and at the time she obtained her divorce on the 17th day of August, 1953, had knowledge of the contents of such documents and was satisfied with the disposition of the property of the said parties which had been made in said property settlement agreement and by the said deeds. That the failure of plaintiff and her said attorney to seek any different property settlement agreement than that evidenced by the agreement dated August 13, 1953, was not due to either plaintiff's lack of knowledge of the existence, nature or value of properties of the said parties but was due solely to the fact that plaintiff was at said time satisfied with the terms and provisions of said property settlement agreement and was desirous of having such agreement signed and in her possession for presentation to the court in Nevada at the hearing on her Nevada divorce proceeding against defendant.”

The Supreme Court held (48 Cal.2d at pages 329, 333, 309 P.2d at page 421):

‘Plaintiff urges that on August 13, 1953, when she executed the property settlement and deeds, defendant had a fiduciary duty to her and was required to fully diclose to her the value and character of their property.

‘Plaintiff, however, had ample opportunity to investigate, with the aid of independent counsel, the character and value of the property of the parties. Plaintiff had contemplated obtaining a divorce for some time before she made the property settlement agreement and obtained the divorce. Defendant did nothing to hinder her investigation of the property or to cause her to execute the agreement precipitately. Defendant owed plaintiff no duty to force her to investigate the properties when she announced that she was satisfied with the agreement prepared by defendant's counsel.

‘The situation is similar to that in Jorgensen v. Jorgensen (1948), 32 Cal.2d 13, 22–23, 193 P.2d 728. It is there held that ‘A husband at the time of divorce or separation is entitled to take a position favorable to his own interest in claiming as his separate property assets that a court might hold to be community property. Confronted with the assertion by the husband that certain assets are his separate property the wife must take her own position and if necessary investigate the facts. [Citations.] If the wife and her attorney are satisfied with the husband's classification of the property as separate or community, the wife cannot reasonably contend that fraud was committed or that there was such mistake as to allow her to overcome the finality of a judgment. * * * Plaintiff is barred from obtaining equitable relief by her admission that she and her attorney did not investigate the facts, choosing instead to rely on the statements of the husband as to what part of the disclosed property was community property.’

‘The situation here is similar also to that in Cameron v. Cameron (1948), 88 Cal.App.2d 585, 593–595, 199 P.2d 443, where a judgment setting aside a property settlement agreement at the instance of plaintiff wife was reversed. It is there held that ‘[1] When one undertakes an investigation [as Mrs. Cameron did before she made the property settlement agreement] and proceeds with it without hindrance it will be assumed that he continued until he had acquired all the knowledge he desired and was satisfied with what he learned. He cannot be heard to say that he relied on the representations of the other party [Citation.] * * * [3] The decision of plaintiff's attorneys to accept defendant's proposal without a contest, although now claimed to have been ill-advised and unfair to her was her decision and she is bound thereby.’

‘We recognize and it appears that the trial court here recognized, the principles, stated in such cases as In re Estate of Cover (1922), 188 Cal. 133, 144, 204 P. 583, that ‘in those transactions between husband and wife, where admittedly the husband secures an advantage over the wife, the confidential relation existing between them may be invoked to bring into operation the presumption of the use and abuse of the relation. In short, a husband, by reason of the marital relation, is bound in his dealings with his wife to the highest and best of good faith and as a consequence is obligated in such dealings not to obtain and retain any advantage over her resulting from concealment or adverse pressure, and he must, if he would avoid the presumption of undue influence emanating from the procurement of any advantage over her, make full and fair disclosure to her of all that she should know for her benefit and protection concerning the nature and effect of the transaction, or else he must deal with her at arm's length and as he would with a stranger, all the while giving her the opportunity of independent advice as to her rights in the premises. [Citations.]’ (Italics added.) Here the parties were dealing with one another at arm's length—or at least the husband gave the wife every opportunity to deal at arm's length—when the settlement agreement was negotiated. The wife had independent advice. The fact that it appears that she was eager to secure a Nevada divorce and that therefore she did not obtain, or have her counsel obtain, a complete listing of the properties of the parties is not chargeable to the husband. As the Cover case, supra (p. 144[6] of 188 Cal., at page 588 of 204 P.), recognizes, when the parties to a marriage are negotiating a property settlement with recognition that their interests are adverse and are dealing at arm's length, neither spouse owes to the other the duty of disclosure which he or she would owe if their relation remained in fact a confidential one.'

‘Plaintiff apparently has concluded that she made a mistake and that she would like to be re-established in the bargaining status which she occupied before she negotiated the property settlement agreement and divorced defendant. That she made a mistake can be inferred but that she is entitled to rescind, or is otherwise not bound by, the property settlement agreement cannot be.’

Also see Estate of Bialy, 169 Cal.App.2d 479, 491–492, 337 P.2d 511; Rose v. Rose, 175 Cal.App.2d 585, 346 P.2d 460.

Plaintiff, in the present case, and ample opportunity to investigate, with the aid of independent counsel, the character and value of the property of the parties. Through her able counsel she made such investigation as she desired. She wanted the Parkside property unencumbered, and security. She received both. Mr. Mathews asked for and obtained the terms of settlement his client desired. Except for the Parkside property, those terms did not include a demand for any share in any of the properties, of which Mr. Mathews and plaintiff were well aware. The court reasonably concluded that neither Mr. Mathews, in advising his client to sign the agreement, nor plaintiff, in signing it, acted in reliance on information supplied by John or his counsel. Neither he nor his client considered the maximum worth of the community assets as material to the negotiations. Plaintiff was unwilling to gamble. She wanted to be assured of security in her old age: security in the form of income property in which she had lived for many years; security in the assurance she would not be liable for any community indebtedness; and security in the assurance that after John's death she would not be called on to support Madeline. Neither John nor Mr. Bodkin did anything to hinder her investigation or to cause her to execute the agreement. At the time, there was no confidential or fiduciary relation between the parties. They were dealing at arm's length. Plaintiff cannot now be heard to say she relied on any representation of John or of Mr. Bodkin. She made her decision and is bound thereby. Colton v. Stanford, 82 Cal. 351, 379, 23 P. 16; Smith v. Brown, 59 Cal.App.2d 836, 837–838, 140 P.2d 86. The trial court's findings we have related are fully supported by the evidence and may not be disturbed.

The court made detailed and exhaustive findings to the effect that plaintiff was not induced to enter into the contract by fraud. She challenges the sufficiency of the evidence to sustain these findings. A detailed statement of the evidence with respect to them would serve no useful purpose. The bone of contention is merely the evaluation of that evidence. The findings we have stated in detail adequately support the judgment (Panzich v. Gaylord, 39 Cal.2d 52, 55, 244 P.2d 3; 23 Cal.Jur.2d 87, § 36), and the suffiency of the evidence to support the findings to the effect there was no fraud need not be considered. If a judgment is amply supported by findings which are unobjectionable, findings on other issues become immaterial, and it is not ground for reversal that such other findings are unsupported by the evidence. Carlson v. Brickman, 110 Cal.App.2d 237, 248, 242 P.2d 94.

Plaintiff contends that in any event she is entitled to further relief under the provision of the agreement for an even division of any property not listed in the agreement and discovered subsequent to the date of its execution. The items are these:

1. The agreement lists cash in Bank of America ‘with a balance of $10,000.00 after payment of all issued and outstanding checks on March 10, 1953.’ John was to receive the bank account under the agreement. On March 10, after payment of all checks issued and outstanding, there was on deposit in the account $42,625. On March 16, 1953 when the agreement was executed three checks totaling $35,000 were drawn against the account: a $25,000 check dated March 9, 1953 endorsed to plaintiff; $5,000 to Daniels and Daniels; $5,000 to Bodkin, Breslin and Luddy. Mr. Mathews received the first two checks. It was apparent to him at that time that the bank balance necessarily exceeded $10,000. He testified the $10,000 figure was inserted in the agreement the day it was executed. Substantially less than $10,000 remained in the account after the three checks were honored. We agree with the trial court that as to any excess of $10,000 on deposit in the bank account on March 10, 1953, there was no failure to list an existing asset. As the trial judge stated: ‘When the property settlement agreement was executed, Mr. Mathews knew of three checks totalling $35,000 against the account and he knew, of course, that they could not be paid from a $10,000 account.’ Obviously the $10,000 figure was intended by the parties to approximate the balance after payment of these checks.

2. Plaintiff claims half the balance owing on a promissory note of Padre payable to John, doing business as Cucamonga Valley Wine Company, and half of the wine inventory of that company. The agreement lists the real property of Cucamonga Valley Wine Company by legal description and adds ‘together with the buildings thereon, wines and brandies stored thereon, all supplies of wines and alcoholic beverages therein, and office equipment as well as trucks and equipment used in conducting the business of Cucamonga Wine Co., at 1101 East A Street, in Ontario, California, as well as all trade names used in connection with said business, and bank account in name of Cucamonga Valley Wine Co. at Ontario Branch of Bank of America National Trust & Savings Association, with a bank balance after payment of outstanding debts of $261.19 as of March 10, 1953.’ The agreement also states plaintiff agrees to assign all her right, title and interest in certain described properties to John as his sole and separate property. Included in the properties described is: ‘Cucamonga Valley Wine Company, including land, buildings, equipment, stocks of wines, brandies, accounts receivable, equipment and delivery truck as more particularly described as Parcel V in said Exhibit ‘A’ [the list of community assets].' It is apparent the wine inventory is expressly referred to in the body of the agreement and in the list.

Specific mention is not made either in the body of the agreement or in the list of a promissory note of Padre on which a balance of $41,990.33 was owing to John, doing business as Cucamonga Valley Wine Company. Plaintiff contends she is entitled to half of this sum, or $20,995.16. Defendants contend the balance owning on the note was included in the foregoing quotation from the agreement under ‘accounts receivable.’

Plaintiff agreed to surrender her right in the business itself. Since the note was an asset of the business and John assumed the liabilities of the business, it is reasonable to infer that the note was included in the general term ‘Cucamonga Valley Wine Co.’ Whether the specific listing of other assets of the business negatives this conclusion is a question of interpretation. Where the meaning to be given a writing is ambiguous or uncertain, the court may consider other evidence to show the meaning intended by the parties. Mr. Mathews received a memorandum listing certain assets and liabilities of John based on information secured by Mr. Bodkin from John's bookkeeper on March 10, 1953. The second item on the memorandum states: ‘Padre Vineyard Company is indebted to Mr. Giovanni Vai, doing business as Cucamonga Valley Winery, upon a promissory note upon which there is a balance due March 1, 1953, of ..... $54,338.91.’ In view of the facts that Mr. Mathews redrafted the agreement, that the agreement purported to include all of the known community property, and that Mr. Mathews was fully aware of the promissory note, it follows the trial court reasonably construed the part of the agreement to convey the winery and its accounts receivable to include the transfer to plaintiff's community rights in the promissory note to John as his separate property.

3. Plaintiff claims half the purchase price of Rancho El Camino, including interest paid thereon. Rancho El Camino was expressly listed in the agreement and plaintiff conveyed it to John. Rancho El Camino was listed in the agreement as ‘645.03 acres or thereabouts of vineyard located at Foothill Boulevard and known as El Camino Vineyard.’

None of these items in which plaintiff claims a half interest can be classified as property ‘discovered subsequent to the date of the execution’ of the agreement.

Affirmed.

I dissent.

The complaint charged that in the negotiation of the property settlement John Vai was guilty of actual fraud, consisting of allegedly false representation and intentional concealment of material facts, by which the wife was deceived and defrauded. It also charged constructive fraud, consisting of breach of Vai's duty as a fiduciary to make a free and full disclosure of all important and relevant facts. The trial court ruled that Vai was not a fiduciary, the parties dealt at arms' length, there was no issue of constructive fraud and there was no proof of actual fraud. The majority opinion adopts this theory of the case and the law, holds the evidence to be sufficient to support the findings that there was no actual fraud, and does not mention the issue of constructive fraud.

I cannot agree with this theory of the trial court, which is adopted by the majority. The evidence established, without contradiction, and the court found, that Vai concealed the most vital facts, which were well known to him and unknown to his wife and her attorney. The court also found that the facts were not concealed with an intent to defraud. I shall not in this dissent undertake to give full consideration to all the evidence of actual fraud. It is my opinion, however, that the only reasonable conclusion from the admitted facts of concealment is that Vai had an intent and purpose to deceive and defraud his wife and that actual fraud was established as a matter of law. But there is a more important question.

It will be my purpose to show that the elimination of the issue of constructive fraud presents a question so grave and ominous as to completely overshadow the question of actual fraud. I propose to show that upon the admitted facts constructive fraud was conclusively established.

I shall have occasion to make application of certain well established principles of law to controlling facts which were established by uncontradicted evidence.

John Vai and his wife were fiduciaries with respect to the community property. Civ.Code, § 158. As a fiduciary Vai had a duty to deal with the utmost fairness, without taking advantage of his wife by the slightest misrepresentation, concealment or adverse pressure of any kind. Civ.Code, §§ 2228, 2231. A breach of the foregoing duty constituted constructive fraud, regardless of Vai's motive. Civ.Code, §§ 1573, 2234.

A fiduciary must show that in a settlement with his beneficiary the latter was fully advised of all facts known to the trustee and unknown to the beneficiary which might have influenced the latter's judgment. Civ.Code, § 2230; Restatement Trusts, Second, § 170(2).

From these general principles it follows that (a) dealing at arms' length must be mutual. The trustee may not treat his beneficiary as a stranger while the latter is relying upon him to fulfill his fiduciary duties; (b) the rule that parties dealing at arms' length must make their own investigation of the facts and the rule that one who commences an investigation, and is unhindered, is chargeable with whatever he might have learned in a reasonable investigation are inapplicable to dealings between trustees and their beneficiaries. Statements of facts by a fiduciary to his beneficiary may be relied upon by the latter without investigation for truth. Hobart v. Hobart Estate Co., 26 Cal.2d 412, 159 P.2d 958. (c) Statements of opinion by one who has superior knowledge of the facts not readily ascertainable may be regarded by one who is without knowledge of the facts as statements of fact. (d) In an action by a beneficiary to annual a settlement with his trustee the former will not be charged with knowledge of facts that might have been discovered by an investigation unless it is shown that the circumstances imposed upon him a duty to make an investigation. Sime v. Malouf, 95 Cal.App.2d 82, 212 P.2d 946, 213 P.2d 788. (e) In such an action the defenses of laches and estoppel are unavailable to a trustee without a showing of prejudice suffered by him. (49 Cal.Jur.2d 280.)

I would consider the citation of additional authority in support of the foregoing principles to be a reflection upon the legal knowledge of those who read this dissent. For these principles there is, of course, a wealth of precedent but failure of the trial court to apply them properly is without precedent. I invite the lawyers of California to study this case with great care. In my opinion it presents as grave and far-reaching a problem for them as any within my recollection in nearly 60 years of experience in the law.

The judgment in this case should be reversed for the reason, if for no other, that it was tried and decided upon an erroneous concept of the law respecting transactions between husband and wife.

The court found that no confidential relationship in fact existed between John Vai and his wife. It also found that in making their property settlement they dealt at arms' length. The latter finding means that no fiduciary relationship existed, Vai had no duty to make a disclosure of the community property which stood in his name, or of any information relating to the same which might have influenced his wife in reaching an agreement; the burden was upon his wife to make her own investigation, unaided by him; and that Vai had no duty whatever except to refrain from misrepresenting or concealing facts with an intention to deceive and defraud his wife. By this finding the trial court eliminated from the case all question of constructive fraud and rested its judgment upon findings that there was no actual fraud.

The majority opinion adopts this view of the law, holds the evidence to be sufficient to support the findings that there was no actual fraud and does not even consider the vital issue of constructive fraud.

This theory of the absence of a trusteeship as to the community property is based solely upon the fact that Mrs. Vai was represented by an attorney in the negotiations, who made a perfunctory investigation, and acted upon his advice. If it should happen that the law in California now is that the employment of an attorney by a beneficiary to advise him in obtaining a settlement with his trustee releases the trustee of all fiduciary duties and permits him to take advantage of his beneficiary by any means short of actual fraud, the entire bar of the state would be dumbfounded and frustrated. They would be at a loss to understand how a wife unrepresented by an attorney, would be entitled to a full disclosure by the husband of all community property, while a wife who was receiving legal advice in connection with a property settlement could be treated as a stranger and left to her own investigation and devices. At the same time they would realize that a husband who made a settlement with his wife while she was without legal advice would have difficulty in establishing the validity of the settlement.

Fortunately, this is not the law.

In Jorgensen v. Jorgensen, 32 Cal.2d 13, 21–22, 193 P.2d 728, 733, the Supreme Court stated the law, as previously declared in an unbroken line of decisions throughout the entire history of the court, as follows: ‘As the manager of the community property the husband occupies a position of trust (Civ.Code secs. 172–173, 158), which is not terminated as to assets remaining in his hands when the spouses separate. It is part of his fiduciary duties to account to the wife for the community property when the spouses are negotiating a property settlement agreement. The concealment of community property assets by the husband from the wife in connection with such an agreement is therefore a breach of a fiduciary duty of the husband that deprives the wife of an opportunity to protect her rights in the concealed assets and thus warrants equitable relief from a judgment approving such agreement. When community property is entrusted to the wife, she likewise occupies a position of trust. It has therefore been held that a husband may obtain equitable relief from a divorce decree incorporating a property settlement agreement obtained by the fraud of the wife in concealing community assets entrusted to her control. Boullester v. Superior Court, 137 Cal.App. 193, 195, 30 P.2d 59. It is immaterial whether the husband or the wife has submitted the property settlement to the court for approval; the fraud of one spouse in concealing the assets, if not discovered by the other, precludes the latter from protecting his or her rights as to the concealed assets in the divorce proceeding * * *. There is no allegation in the complaint that defendant concealed assets that were part of the community property.’

The majority understand, as the trial court did, that this is no longer the law, and that although the husband is a trustee as to the interest of his wife in the community property until they undertake to make a division of it, they cease to be fiduciaries as soon as they become represented by attorneys, and from that time on they deal at arms' length, neither having a duty toward the other that would not be due to a stranger. The majority understand that this doctrine was laid down by the Supreme Court in Collins v. Collins, 48 Cal.2d 325, 309 P.2d 420.

Respondents contended throughout the trial and now maintain that Vai had no duty to disclose material facts known to him and unknown to his wife, since he was dealing with her at arms' length and they say ‘The recent and leading case of Collins v. Collins, 48 Cal.2d 325 [309 P.2d 420], could well be completely determinative as to the law on this point.’ Another division of this court evidently gave the same interpretation to that opinion. Campbell v. Campbell, 157 Cal.App.2d 548, 321 P.2d 133.

In speaking of the concealment by Vai of a pending sale of acreage for $525,000, which I shall refer to later, the trial court said in its memorandum opinion: ‘When we remove the confidential relationship, when the wife is the aggressor in litigation, and each side is represented by advocates armed heavily with experience, knowledge and intelligence, just what duty the husband has to report an incipient and uncertain transaction is a question for which the decisions of our appellate courts have not produced a certain and consistent answer. With these thoughts, I happily leave counsel free to continue their mulling of Collins v. Collins, 48 Cal.2d 325, 309 P.2d 420 and Jorgensen v. Jorgensen, 32 Cal.2d 13, 193 P.2d 728.’

There is no conflict in the opinions in the two cases. The court in Collins did not overrule anything it had said in Jorgensen. In Jorgensen the parties dealt at arms' length; in Collins a fiduciary relationship existed but Mrs. Collins waived her right to receive information from her husband. The finding in the instant case that Vai and his wife dealt at arms' length is contrary to the holding in Jorgensen and finds no support in the Collins opinion.

It is surprising to me that the opinion in Collins should be so interpreted. Evidently it has received only casual analysis. The court did not hold that when a husband and wife undertake to negotiate a property settlement, each being represented by an attorney, the fiduciary relationship ceases to exist, and that the parties deal with each other at arms' length; it did not hold that in those circumstances a husband holding community property in his name need not make a full disclosure of the same, with all relevant information known to him and unknown to his wife which might affect her judgment in the negotiations. The court did hold that there was sufficient evidence to support the trial court's finding that Mrs. Collins waived her right to receive from her husband complete information as to the extent and value of the community property, and that she thereby released him from the duty to impart that information.

The interpretation of the opinion in Collins, with which I disagree, is due to the failure to understand that in its discussion of the law the court was dealing with the particular facts of that case. These are in the records, available for the use of any one who may wish to learn the factual background to which the opinion related. The opinion must be read in view of those facts, which were, in brief, the following. Dr. Collins and his wife each desired a divorce, in order to remarry. The community property consisted of numerous parcels of real estate which Dr. Collins had acquired, the identities and values of which were unknown to Mrs. Collins; her Las Vegas attorneys requested a statement from Dr. Collins of the community property, which he refused to give; Mrs. Collins, not upon the advice of her attorneys, but contrary to their advice, and unaccompanied by them, returned to Los Angeles, made a settlement with Dr. Collins, notwithstanding his refusal of information as to the community property, and without renewing the request which her attorneys had made. (See letter of attorneys to Dr. Collins, margin pages 157–158, Collins v. Collins, Cal.App., 305 P.2d 155.) The record disclosed that Mrs. Collins asked only for the home of the parties and a promise of support, which she received in the settlement; the home did not exceed in value $32,500; the properties in which she conveyed her interest to Dr. Collins had a value of about $174,000. In Mrs. Collins' suit for rescission, the trial court held that it was immaterial that Dr. Collins obtained a great advantage over his wife in the settlement and that it was immaterial whether the agreement was a fair one, since Mrs. Collins received what she asked for. The court said: ‘Under the facts existing in this case, it is immaterial whether the property settlement agreement resulted in the defendant's receiving more of the community assets than the plaintiff received. * * * Possibly the agreement which she signed did not constitute an equal or possibly even on the face of things a fair division of the community property. Yet it was what the plaintiff wanted, bargained for and accepted, other factors then possibly being more important to her.’ The record shows that the trial court undertook to determine the issue of the validity of the Collins settlement, independently of any question of fairness. The case was tried and decided upon that theory.1

The trial court found that Mrs. Collins had waived her right to a full disclosure of the community property; the judgment cannot be accounted for in any other manner.

The Supreme Court felt itself bound by the findings of the trial court, the controlling finding being that Mrs. Collins had waived her right to a disclosure. The court said: ‘We have concluded that to reverse the judgment would entail usurpative interference with the function of the trier of fact * * *. Defendant owed plaintiff no duty to force her to investigate the properties when she announced that she was satisfied with the agreement prepared by defendant's counsel.’ 48 Cal.2d at pages 327, 329, 309 P.2d at page 420. The only ultimate fact found as a basis of the judgment was a finding of waiver.

The trial court had proceeded to hold that since the fiduciary duty had ceased to exist, through Mrs. Collins' waiver of her right, the burden rested upon Mrs. Collins to make her own investigation of the property, and that Dr. Collins had no greater duty toward her than he would have had in any business transaction conducted at arms' length; the agreement could not be assailed for constructive fraud. The issue of actual fraud remained and the trial court, and also the Supreme Court, applied the rules applicable to dealings conducted at arms' length. In this situation, said the Supreme Court, the cases of Jorgensen v. Jorgensen, supra, and Cameron v. Cameron, 88 Cal.App.2d 585, 199 P.2d 443, were in point. In each of those cases the court held that in a controversy consisting of claims by the wife to a community interest in property which the husband claimed to be his separate property the parties dealt at arms' length, and that the respective husbands fulfilled their duties when they misrepresented or concealed no facts and afforded the wives a full opportunity to make their own investigations. Upon their facts the cases did not present a question of constructive fraud.

The misinterpretation of the Collins opinion is no doubt due to the failure to understand that the court was speaking of a factual situation in which the fiduciary duty of disclosure had ceased to exist.

The verbose, evidentiary findings read more like a news story of the disruption of the Collins marriage, and an argument supporting the court's view that since Mrs. Collins received what she asked for, she forfeited her right to receive more. The fact that Mrs. Collins waived her right was expressed in a variety of ways, but without use of the word ‘waiver.’ Neither is the word to be found in the opinion of the Supreme Court. But, as previously stated, the Supreme Court must have referred to the findings of waiver when it said it considered itself to be bound by the trial court's findings.

Another reason for misinterpretation of the opinion in the Collins case could well be that although it had been determined that Mrs. Collins waived her right as a beneficiary to a full disclosure of the facts, no mention was made of any of the principles of law pertaining to waiver, the most fundamental of which is that before one can be held to have waived a right it must be shown that he understood the nature and extent of his right, and being fully advised, elected not to stand upon or enforce it. There can be no intentional waiver of a right by one who is ignorant with respect to what he is giving up. (51 Cal.Jur.2d 307.)

It seems crystal clear that if the opinion of the majority is accepted as the present law with respect to the negotiation of property settlements, it would set our state entirely apart from the doctrine that prevails in every other jurisdiction in which the fiduciary relationship is recognized, and the doctrine which is affirmed without deviation by all the writers of texts on the subject, that such settlements must be fair and just and arrived at by fair means. 42 C.J.S. Husband and Wife § 593, pp. 170–172; 17A Am.Jur. 85–6; 5 A.L.R. 823; 1 Nelson, Divorce and Annulment, 2d Ed. 539–41.

Of all the confidential relationships that of husband and wife is the most intimate, the most trusting and the most deserving of preservation. It touches the lives of the most people. And I may ask, if a husband may at will discard his fiduciary relationship toward his wife whenever she is represented by counsel, settle with her for as little of the community property as she is willing to accept, and keep the remainder, why should not any trustee, whether executor, trustee of an express trust or one holding title to property for the benefit of another, also be free in similar circumstances to shed himself of fiduciary responsibilities and make a settlement that would be greatly to his own advantage and to the disadvantage of his beneficiary. However, I have no fear that the doctrine espoused by the majority will ever become the law of California. It has never been held that because a beneficiary is acting under legal advice in dealing with his trustee the trusteeship is dissolved and the parties deal as strangers.

There is no basis for comparison of the facts of the present case with those of the Collins case. Dr. Collins refused to impart any information; in our case there was the promise of complete information. No doubt a beneficiary can excuse his trustee from a duty to furnish information relative to the trust estate, but there could be no waiver of the right when the trustee has furnished what he represented to be full information, and the beneficiary believed and acted upon that representation. In Collins, on the appeal and upon the findings, there was no question of constructive fraud. In the present case, while the court found there was no actual fraud, there still remained the question of constructive fraud, although it was eliminated from the court's consideration by the finding that the parties dealt at arms' length.

The court found that from the time of the separation of Mr. and Mrs. Vai January 1, 1953, no confidential relationship existed between them. The finding was as follows: ‘The court specifically finds that at all times since the separation of plaintiff and Decedent on or about January 3, 1953, no confidential relationship existed between them, and that at no time during said period was plaintiff under the domination and/or control of Decedent.’ This was a finding against the existence of a confidential relationship, in fact, which arises from confidence reposed by one in another and accepted by the latter. Civ.Code §§ 2216, 2228. When confidence is withdrawn or destroyed, the confidential relationship, in fact, ceases to exist. The above finding is inconclusive as to the existence of a trustee relationship, which unquestionably existed as a matter of law, regardless of confidence reposed, by reason of the marital relationship, and by reason of the fact that Vai held in his name all the community property, one-half of which was held for the use and benefit of his wife. However, the finding that the parties dealt at arms' length negates the existence of a fiduciary relationship in law.

The findings of the court are 43 in number; they cover 51 pages of the clerk's transcript and contain some 19,000 words; also included in the clerk's transcript is a ‘Notice of Decision’ of the trial judge. I am unable to discover that the court imposed upon the husband any duty whatever except to refrain from misrepresenting or concealing material facts with an intent to defraud his wife.

Under the settled law of this state, John Vai was a trustee of his wife with respect to her interest in the community property. Even upon the facts found, he was guilty of concealment of material facts and of constructive fraud, the particulars of which I shall proceed to discuss.

Vai was represented in the negotiations by his attorney, Mr. Henry G. Bodkin. When I speak of concealment of facts I have reference to facts concealed by John Vai and not to any facts concealed by Mr. Bodkin, who was merely the spokesman of his client. There was no basis whatever in the trial for a contention that Mr. Bodkin, for himself, misstated or concealed any fact; he imparted to Mr. Mathews the information he received from his client which Mr. Mathews requested; when he spoke with respect to the facts, or to matters of opinion, his statements were not his own but those of his client, and were so understood. Neither Mr. Bodkin nor Mr. Mathews pretended to have personal knowledge of the vineyard and wine making business or the financial stability of Padre.

I may say that in the present discussion it is immaterial whether any facts were misrepresented or concealed with an intent on the part of John to deceive his wife. While deceit is an element of actual fraud, it is not a necessary element of constructive fraud. Sterling v. Smith, 97 Cal. 343, 32 P. 320.

In the property settlement Mrs. Vai received less than 10% in value of the community property, the guarantee of support, and the promise of her husband to support their incompetent daughter. This disparity in the division placed the husband and those claiming under him, who would justify the great advantage gained over the wife, under a stern duty to prove affirmatively the utter fairness of the settlement and the methods by which it was accomplished. In my opinion they failed in their efforts.

The situation was one in which John Vai had a great advantage over his wife. He had a lifetime experience as a vineyard operator and vintner. He and his brother had built up a large business and had extensive technical knowledge of values and the ups and downs of the industry. In this field Mrs. Vai and her attorney were mere ‘babes in the woods.’

Throughout the negotiation of the settlement, the value of the community assets was minimized and the potential liabilities were exaggerated. Mrs. Vai and her attorney were led to believe that the operations of the business were headed toward disaster and insolvency, which might so impair the community assets as to leave Mrs. Vai without security in her remaining years. She was caused to fear that eventuality, and to be satisfied with a share of the community property which would afford her that security. To undertake to set forth in detail the ominous implications of John's financial affairs as they were pictured by John would unduly extend this dissent. Suffice it to say at present, that the settlement itself in which Mrs. Vai received perhaps as much as $175,000 in value, while her husband retained in value more than a million and a half dollars must be convincing to an impartial mind that Mrs. Vai accepted the settlement through fear of financial disaster and in ignorance upon her part, and upon the part of her attorney, as to the true value of the community assets and the financial stability of Padre Winery.

Respondents place great emphasis upon the fact that during the negotiations Mrs. Vai changed her mind respecting her demands, and instead of seeking her half of the community property, was willing to settle for an amount that would give her security. This is a most significant fact, and the inescapable inference is that she felt herself in the situation of one who takes to a lifeboat with a jug of water and a little hardtack, rather than remain aboard a sinking ship.

The court found that the value of the community assets, exclusive of the value of the capital stock in Padre Vineyard Company, one-half of which belonged to the community, was approximately $1,270,000. The court declined to make a finding as to the value of the stock for the reason that it was not shown to have a market value. However, it was shown that the net value of the winery company assets was in excess of one million dollars, and I see no reason why this would not have furnished a satisfactory basis for a valuation of the stock owned by the community, which was one-half of the issued stock.

The court found: ‘That it is true that Decedent and his attorney informed Plaintiff and her attorney that Padre Vineyard Company was in danger of insolvency, and in this regard the court finds that such information was, in fact, true in view of the losses extending over the years, by said company.’ The court also found that in the five years last past Padre operations had lost about one million dollars. However, in better times it had made as such, and during the losing period its real estate holdings had increased in value so as to largely offset the amount of the losses. I shall presently point out that Mrs. Vai's fear of insolvency was built upon concealment of facts, which, if they had been disclosed, would have proved to Mrs. Vai that the pictured danger of insolvency was completely false.

Rancho El Camino was the name given to the vineyard operations of John Vai, which included 645 acres in one parcel, 80 acres across from the Alta Loma home, the Assinelli vineyard of 18 acres and also 120 acres known as the Giovanni Vai Rancho. In an interview in the earlier stages of the negotiations, Vai was questioned by Mathews as to his opinion of the value of the vineyard lands and, according to Mr. Mathews' recollection, Vai placed a value on them of $200 per acre, or $160,000. It was Mr. Bodkin's recollection that Vai said only that the lands had cost $200 per acre. However, this honest conflict of memory is immaterial. Mr. Mathews was given valuations that were contained in a financial statement of Vai which he had given to the Bank of America in April 1952. This listed 800 acres of vineyard land at $160,000 with improvements of $15,000. Mr. Mathews relied upon these valuations, although he suspected they might be somewhat low.

Informing Mr. Mathews only of the cost of the acreage was deceitful. Vai had sold acreage adjacent to El Camino for $566 per acre, and he concealed that fact from Mathews. Two days after the interview in which Mathews asked Vai's opinion of the value of the acreage Vai placed a valuation of $814 per acre upon 645 acres. When Mr. Mathews asked for Vai's opinion of values Vai's concealment of what he well knew, and Mathews did not know, was an inexcusable breach of duty.

On February 21, 1953, Vai received a check of a Mr. Duncan for $25,000 and signed a deposit receipt for the sale of 645 acres for $525,000, or about $814 per acre. The agreement called for a cash payment of $125,000, with the balance payable over five years at 4%, secured by a trust deed. All facts respecting this transaction were concealed by Vai, not only from Mr. Mathews and Mrs. Vai, but also from Mr. Bodkin. Four days after the property settlement an escrow was opened for the completion of this sale and at the time of trial the entire purchase price had been paid, except for about $17,000.

After numerous conversations and discussions of values, and upon the basis of the information received, Mr. Mathews placed a value of $50,000 upon one-half of the stock of the Padre Vineyard Company. In fact the net worth of the company was $1,062,796, although its book value was stated at $838,544.69.

Mr. Mathews learned that Vai had sold some acreage at $400 per acre, but was informed that the land was more valuable than the vineyard land, since it was closer to Fontana and the Kaiser steel plant.

Based upon the information which he had received from Vai, Mr. Mathews computed the value of the community assets at $711,000, before taking into consideration an indebtedness of $105,000, which he had been informed was owned to the Bank of America. The actual value of the net community assets exceeded Mr. Mathews' figures by a good million dollars.

Padre had wine and brandy worth more than $700,000, which was carried at a book value, at cost, of $470,000. In February and March 1953, wine prices were low and the prices of sweet wines were from 32 1/2 to 35 cents per gallon. Mr. Mathews was given to understand that there was little sale for about a million and three quarter gallons of wine and brandy that was on hand, which had a market value of $702,736.36, and was readily salable at market prices. Its salability was established by the testimony of Mr. Kyer, a wine broker since 1933. He testified that a stock of wine, even when the price is depressed, is very easy to sell at market or a cent a gallon below, and is ‘like money in the bank.’ Mr. Kyer's testimony was not contradicted in any respect.

In February 1953, Mr. Guerrieri, one of the proprietors of Santa Fe Vintage Company, became interested in the purchase of the Padre properties. He was buying bulk wine at 33 cents a gallon. He offered $850,000 cash for the inventory, winery property of some 38 acres, buildings and equipment, labels, brands, trade marks and good will and the empty corporate shell of Padre. The offer did not include receivables, nor the ranches, nor any trust deeds or farm equipment. He had heard that the Vais were asking $900,000 for the assets. The Vais refused the offer and informed Mr. Guerrieri that their price was $900,000.

On March 11, 1953, five days before the execution of the property settlement, a resolution was passed by Padre's board to give Roma Wine Company an option to purchase the winery property and equipment and inventory for $900,000. Roma was willing to buy, but the contemplated sale fell through because of the unwillingness of the Vais to work out some of the details.

John Vai concealed from Mrs. Vai and her attorney all the facts with respect to the offer by Guerrieri of $850,000 and the negotiations for the sale of the same assets to Roma Wine Company for $900,000.

Mr. Mathews and Mrs. Vai were informed that John and his wife were bound by a continuing guarantee up to $300,000 to the Bank of America for their own debts and those of Padre. Mrs. Vai was caused to fear that she might be called upon to make good upon this guarantee, and a part of the consideration for the agreement was that John would see that she was released from the guarantee. The facts were that the entire indebtedness of Padre to the bank was $348,879, to cover which the bank held as security assets worth $1,320.729. At book value, the wine inventory alone was worth $470,000 and exceeded the bank debt by over $100,000. The prospect of Mrs. Vai's being required to respond to the guarantee was illusory.

It is unmistakably apparent from the entire evidence that Mr. Mathews was given an entirely erroneous understanding of the financial condition of Padre Vineyard Company and the condition of the finances of John Vai and his wife with respect to the value of the community property. He could not have been so gravely misinformed and uninformed by Vai unless every unfavorable feature had been stressed and the favorable features suppressed or minimized. The company was in sound financial condition; its credit was good, and it had readily salable assets which would have discharged all its debts and left it with clear assets of nearly one million dollars. It is not questioned by respondents that Mr. Mathews was left in ignorance of these facts. It is contended that he should have found them out for himself.

The settlement was made by Mrs. Vai under grievous misinformation and lack of knowledge of the true value of Padre, the one-half interest in its stock, its financial strength, and the value of the community properties. In reliance upon the information received from her husband and with a minimum of independent investigation, Mrs. Vai received of the community assets properties worth some $175,000 or about three quarters of a million dollars less than her community interest was worth. In addition she received a guarantee of $6,000 a year for her support and the promise of Mr. Vai to relieve her from responsibility for the maintenance and care of an incompetent daughter, and yet the court found that the community assets were fully and equitably divided. With respect to Vai's promise to support the daughter the court found ‘said obligation had a value as of March 16, 1953, in a sum amounting to from $516,000.00 to $615,000.00.’ I do not understand this finding. If it means that the care of the daughter would possibly cost such an enormous sum, taking it out of the share of Mrs. Vai to cover an obligation which Vai assumed would scarcely seem quite fair.

When we look to the attempted justification of John's concealment of the pending sale of the 645 acres, we find respondents again urging their erroneous interpretation of the opinion in Collins and they say ‘John Vai had no duty to disclose his negotiations with Duncan for the sale of El Camino Rancho, since he was dealing at arm's length with appellant who was represented by counsel and who reposed no trust or confidence in him.’ In other words, if a beneficiary consults a lawyer and seeks an accounting by his trustee, he becomes an adversary and a complete stranger to the trust, and the cardinal principle of the law of trusts becomes a mere fiction. I have already shown the fallacy of this contention.

Respondents also contend that John's concealment of the pending sale of acreage was justified because the deposit receipt executed by John did not constitute a binding contract, enforceable by him, and that he did not know whether the buyer would consummate the purchase. To my mind this is not a reasonable explanation, nor even a plausible excuse. There was not a word of evidence that John doubted Duncan's intention or ability to consummate the purchase. Mrs. Vai and her attorney had a right to know of the pending sale, and an opportunity to decide for themselves whether it was likely to be consummated.

I have searched in vain for any justification of the concealment of the fact that Padre had quick assets, with buyers offering cash, in an amount that would have left the company with approximately a million dollars in assets and no liabilities. There is, of course, the oft-repeated assertion that John was not a fiduciary. Beyond that, respondents fall back upon the wholly unfounded supposition that it would have made no difference in the settlement if the facts had been divulged. They say Mr. Mathews should have been asked whether he would have advised the same settlement if he had known all the facts and ‘the trial judge was justified in inferring that if the question had been asked, it would have been answered in the affirmative.’ The argument accuses Mr. Mathews of gross incompetence. How could he in good conscience have advised his client to make the settlement that was made if he had realized the great value of the community property? The argument is also an attempt to represent to this court that no objection would have been made to the question or that an objection, if made, would have been overruled. The question would have called for a layman's opinion of the ultimate fact which was for the court's decision. There would have to be a better explanation of the concealment of facts that would have erased the false picture so artfully painted by John Vai, to make an impression upon my mind; and there is none. My respect for the able counsel for respondents leads me to believe that this puerile argument slipped into the brief unnoticed.

With respect to the failure to disclose the facts of the Duncan transaction, the court found: ‘The evidence does not establish a probability that if Decedent had informed Plaintiff or her attorneys of such deposit receipt, a property settlement agreement would not have been entered into by the parties, nor a probability of any certain kind of agreement if one had been executed.’ This finding certainly does not furnish justification for concealment of the facts. It was not incumbent upon plaintiff to prove how much more she would have demanded and obtained if she had had full knowledge of the facts.

With respect to the concealment of the offers to buy Padre the court found: ‘That it is true that shortly before the execution of the Property Settlement Agreement of March 16, 1953, negotiations had been commenced between the officers of Padre and another wine company for the purchase of the winery, inventory and equipment thereof, at a proposed price in excess of the book value. In this regard the court finds that said sale was not consummated, and shortly after the execution of the property settlement agreement, said negotiations ended without a sale. That it is not true that Decedent intentionally withheld or concealed said negotiations, but at said time said negotiations were informal, no definite offer had been made, and no definite agreement as to a sale ever was made in or from those negotiations.’ If the finding means that the information was not withheld with a deceitful motive it is an indecisive finding. Deceit is not a necessary element of constructive fraud, consisting of breach of fiduciary duty. Moreover, respondents concede that Guerrieri made a cash offer of $850,000. If Vai had intended that his wife should know of pending offers that would prove there was no danger of financial distress, he would at least have given the information to Mr. Bodkin. But John Vai was after all he could get of his wife's interest in the community property. The best proof of that is that he took all he could get.

I have not stated in detail the evidence which tends to prove that Vai's representations and concealments were motivated by a purpose to deceive his wife. The objective of this dissent does not require it. But can anyone entertain the slightest doubt that findings of actual fraud would have been fully supported? Vai was a crafty man; he knew that Padre's assets could be sold any day for enough to pay its debts; he knew the winery, with the inventory, could be sold for enough to leave the company with almost a million dollars of clear assets; he knew the wine business, and that it was not necessary to sell upon a depressed market, and he refused to sell; he knew there was no fear of insolvency. Mrs. Vai knew none of these things.

I have mentioned only enough of the facts to enable the reader of this dissent to answer for himself the question: Was the division of community property, in which Vai retained 90% of it, one in which he gained no advantage by the slightest misrepresentation, concealment or adverse pressure of any kind? My answer to that question is that the defendants in the action failed woefully to meet the burden of showing that the settlement was a just and fair one, accomplished by fair means.

It seems to me that the defendants other than the executors realized the inequity of their case. They resorted to all available technical defenses. They say Mrs. Vai had an opportunity to test the truth of Vai's representations by her independent investigation and was chargeable with knowledge of whatever she could have learned. That is the rule in dealings between strangers. A fiduciary must come forward with all material and important information. He cannot shed himself of that duty—only the beneficiary can release him.

Assuming that Mrs. Vai had a duty to investigate, respondents contend that the action was barred by the statute of limitations for the reason that she could have discovered the alleged fraud within the statutory period. No facts came to her attention to put her on notice that she might have been defrauded until after her complaint had been filed. The investigation she then made led to the filing of her amended complaint, which set forth facts she had discovered through intense investigation by her attorneys. The finding that the action was barred by the statute of limitations is without support in the evidence. It is based solely upon a finding that in the spring of 1954 Maria Conello and Mary Conello visited Mrs. Vai and told her that El Camino Rancho had been sold and that Mrs. Vai could then have made an investigation and learned all about the sale. Was the fact that the land had been sold, with no information whatever respecting the selling price, sufficient to cause Mrs. Vai to suspect that she may have been defrauded? Certainly not.

The court sustained the defenses of laches and estoppel, but I find no basis in the evidence to support the findings. Respondents have not altered their positions; they have suffered no prejudice, and have shown no reason for application of the doctrines of laches and estoppel. These technical defenses are available to defendants in actions for breach of trust, but a trustee who relies upon them must doubt his own ability to justify his administration of the trust.

Respondents say that Mrs. Vai's rescission of the agreement was properly denied for the reason that there could be no restoration of the status quo. Their principal argument is that the will made ample provision for the daughter and that a rescission of the agreement would lessen the share of the estate that was placed in trust for her benefit. The argument is unavailing. If the agreement were rescinded the estate would be released from the obligation which John assumed to care for the daughter with his own funds, but, if, in granting a rescission, the court deemed it necessary or advisable to impose conditions to be met by Mrs. Vai for the benefit of the daughter it would have had full authority to do so. Mrs. Vai, of course, was not required as a condition to a rescission to restore that which in any event she would have been entitled to retain. The court would have authority to impose conditions which would do complete equity between the parties. 9 Cal.Jur.2d, § 49, p. 638.

In the trial court the respondents rested their hopes of success upon their interpretations of the opinion in Collins and upon their ability to resist the charge of actual fraud. In my opinion they were fortunate to prevail against that charge.

Again, respondents say that Mrs. Vai was given what she asked for and they compare that situation with the situation of Mrs. Collins. I have shown the dissimilarity of the two cases. Mrs. Vai and her attorney believed they had been given sufficient information to prove to them that Mrs. Vai's minimum requirements should be assured before disaster fell upon the vintage operations.

There is no rule of law or logic which would justify a court in holding that Mrs. Vai would have made the settlement which she did make if she and her attorney had been told the truth and the whole truth. The trial court made no such finding.

I have limited my discussion to the major features of the factual situation which I believe to be beyond contradiction. I doubt that this case would ever have gone to trial if the respondents who are beneficiaries under the will had realized they would have to meet a charge of constructive fraud. On the appeal, at every turn, they say that the Supreme Court has nullified the statutory rules and overruled the case law under which transactions between husband and wife are subject to the laws pertaining to trusts. I am sure the court will not feel flattered. But respondents could not be more mistaken.

In my opinion plaintiff made out a clear case of constructive fraud by uncontradicted evidence. That issue was not tried or determined. As I have said, it was put aside by the trial court. The court did not determine, nor even consider, whether Vai fulfilled or violated his duties as a fiduciary. The 51 pages of evidentiary matter which serve as findings must be read in the light of the finding that no fiduciary relationship existed. There has been no more than a half trial of the case. Mrs. Vai cannot be denied the right to a determination of the issue of constructive fraud.

I would reverse the judgment. In my opinion the case should never be permitted to go to another trial. The executors are performing their duties in defending the action. But the respondent beneficiaries under the will who have never contributed a penny toward the Vai fortune, should reappraise their position and that of Mrs. Vai. There is enough money to meet the fair claims of all. The respondents should ask themselves whether the faithful wife who stood by her husband for 46 years, and thereby earned ownership of three quarters of a million dollars' worth of property, has been fairly and justly treated. Now that they know the facts I would doubt that they would seek to hold Mrs. Vai to a settlement in which she was pensioned off with a small share of her own money.

FOOTNOTES

1.  (a) Residence and apartments, including furnishings, in the Lincoln Heights district of Los Angeles, called the ‘Parkside Property’; (b) a Dodge automobile; (c) bank account in Lincoln Heights Branch of Bank of America; (d) Italian lire in a bank in Italy valued at about $2,000; (e) home, furniture and furnishings at Alta Loma, San Bernardino County, California, including 120 acres of citrus grove and bare land with water rights; (f) 84 acres of vineyard across from the home at Alta Loma; (g) Cucamonga Valley Wine Company, a proprietorship, including land, buildings, equipment, stocks of wine and brandies, accounts receivable, delivery truck, trade name, and bank account; (h) 645.03 acres of vineyard, known as El Camino Vineyard; (i) 15 acres of vineyard, known as Assinelli Vineyard; (j) house and four lots at Arrowhead Lake, including furniture and furnishings; (k) real property, buildings and equipment of El Camino Real Wine Company; (l) half of the issued and outstanding stock of Padre Vineyard Company (2,760 shares); (m) 5,320 shares of marketable listed securities; (n) bank account of $10,000 after issuance of all outstanding checks on March 10, 1953 in Bank of America; (o) Cadillac automobile, speed boats, fishing boats, miscellaneous guns, fishing and hunting equipment. The agreement contained this provision: ‘That in the event any other property shall be discovered subsequent to the date of the execution hereof in which either of the parties hereto shall have any interest of whatsoever kind or nature, that such additional property shall be divided between the parties hereto in equal shares, share and share alike, upon the date of such discovery.’ The court found that through inadvertence and without any intention on the part of decedent to deceive plaintiff or to induce her to enter into any agreement, the following community assets were omitted from the agreement: 95 shares of common stock of Bank of America; a promissory note for $33,640 executed by Western Standard Steel Supply Company; an account receivable for $23,000 owed by Padre Vineyard Company; a balance of $25,630.44 owed on a promissory note executed by Padre Vineyard Company. The judgment awarded plaintiff half of the value of these properties and half of the interest and dividends which had accrued thereon.

1.  In personal injury actions it is a common practice to try first the question of liability, and the question of damages only if liability is established. It was a unique procedure for the trial of an action by a beneficiary to rescind a settlement with her trustee.

VALLEÉ, Justice.

FORD, J., concurs.

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