WELLS FARGO BANK v. TOWN OF WOODSIDE

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

WELLS FARGO BANK, N.A., a national banking association as Trustee under the Will of Lloyd A. Johnson, deceased; and Anna I. Johnson, by Evelyn Doyon, Conservator of her Person and Estate, Plaintiffs and Respondents, v. TOWN OF WOODSIDE, a municipal corporation, et al., Defendants and Appellants.

Civ. 50623.

Decided: December 31, 1981

Paul B. Smith, Town Atty., Harold S. Toppel, Deputy Town Atty., Atkinson-Farasyn, Mountain View, for defendants and appellants. Robert A. Biorn, Crist, Crist, Griffiths, Bryant, Schultz & Biorn, Palo Alto, Kelly C. Wooster, Brobeck, Phleger & Harrison, San Francisco, for plaintiffs and respondents. James P. Botz, County Counsel, Kathleen Farrelly, Deputy County Counsel, Santa Rosa, for amicus curiae.

Appellant Town of Woodside appeals from the summary judgment granted to respondent Wells Fargo Bank.

Lloyd Johnson died in 1963. His will, admitted to probate the same year, created a trust and named his widow, Anna Johnson, and Wells Fargo Bank as trustees. To the trust he gave the family residence with its 39.5-acre lot in the Town of Woodside (referred to herein as “the 39.5-acre parcel”),1 directing that the trustees sell it at an opportune time but, in any event, within three years of his death. The parcel was the community property of Mr. and Mrs. Johnson.

In 1964, an attorney for Mrs. Johnson inquired of an official of the town if the municipal subdivision ordinance would apply to the creation of a “probate homestead” out of the 39.5-acre parcel. The attorney was referred to the Town Attorney and Planning Consultant, but he did not seek or obtain an opinion from them.

In 1965, during the administration of the estate, Mrs. Johnson petitioned the probate court to set aside for her benefit as surviving spouse a probate homestead consisting of the house with 6.6 acres (“the 6.6-acre parcel”). The petition was not opposed and was granted in November 1965 by an order setting apart probate homestead.

In 1966 the decree of final distribution distributed the remainder of the 39.5-acre parcel (i.e., “the 32.9-acre parcel”) to the testamentary trustees. The trustees later obtained instructions relaxing the requirement of sale within three years.

The probate file-of which judicial notice has been taken-indicates the trustees' efforts to sell the 32.9-acre parcel in 1966-1967 and 1974-1975 and difficulties which were encountered relative to the Town's subdivision ordinance. In 1978, the trustees sent the Town manager a notice of sale of the 32.9-acre parcel, to which the manager replied, saying that such parcel would not be recognized as a separate parcel until there had been compliance with the subdivision ordinance. An offer to buy the 32.9-acre parcel of 1979 was contingent on the trustees' obtaining “all necessary approvals from the Town of Woodside ... of land division.” At a hearing to confirm the sale, a third party overbid, and the sale was confirmed to him, subject to the same contingency and that the division be accomplished before January 1, 1980. The Town manager was informed and he continued to insist on compliance with the subdivision ordinance.

The trustees thereupon brought the instant action for declaratory relief, seeking a declaration that the subdivision “ordinance had and has no application to the creation in 1965 of the probate homestead (i.e., the 6.6-acre parcel), and that the (32.9-acre parcel) and the (6.6-acre parcel) are separate parcels of real property.”

The Town demurred on the grounds, among others, of failure to state a cause of action and that the trustees had failed to exhaust their administrative remedies by appealing the Town manager's “decision” to the Town Council (the trustees did not file a tentative map or otherwise follow the procedures specified by the subdivision ordinance). The demurrer was overruled.

At the hearing on the trustees' motion for summary judgment, the attorney for the Town described the 32.9-acre parcel as “vacant hillside land” and indicated what the “problem” was with treating it as separate: “Well, in an application for approval of a parcel map, there are certain considerations that would have to be satisfied, one of the primary of which being ingress or egress to the remaining parcel.” (Elsewhere in the record it is indicated that the 32.9-acre parcel “does not have direct access to Moore Road but has access ... via an easement over ... property which lies to the north ....” The court expressed the view that problems such as ingress and egress could be solved by exercise of the Town's discretion to grant or deny a building permit, to which the attorney for the Town replied that “there are a whole series of other problems as well.” In the Town's reply brief, it is pointed out that “the exercise of such police power incident to the issuance or denial of a building permit is considerably more limited than the scope of regulation available to a municipality which may be imposed as a condition for approval of a land division” and that “for example, a municipality may properly require the creation of an open space easement as a condition for approval of a subdivision map ....” Another problem perceived by the Town was that it had no voice in the determination of the boundary between the 32.9 and 6.6-acre parcels.

The trustees' motion for summary judgment was granted by an order which declared that the subdivision ordinance has no application to the creation of the probate homestead or to the existence of the 6.6 and 32.9-acre parcels as separate parcels, that they are separate parcels, and that the Town has no power to refuse a permit or to do any act on the ground that the separate parcels constitute a subdivision in violation of the ordinance.

DISCUSSION

1. Applicability of subdivision ordinance

The Town's subdivision ordinance provides it “shall apply to the subdivision or other division of land for any purpose whatsoever within the Town of Woodside” and then, somewhat inconsistently, that “for the purposes of this ordinance the division of land shall mean the division of a lot, tract or parcel of land ... into two or more lots, plots, sites or parcels for the purpose, whether immediate or future, of sale, transfer, lease, or building development.”

The trustees take the position that the setting apart of the 6.6-acre parcel was not for the purpose of selling it and, therefore, the subdivision ordinance does not apply to that division of land. The Town maintains that the purpose of the division was to enable the trustees to sell the 32.9-acre parcel, and thus the ordinance does apply.

We need not decide whether the division of the property was for the purpose of “sale” because, clearly, the division of the property was for the purpose of “transfer.” The effect of the court order creating the probate homestead was to transfer the 6.6-acre parcel from the estate to Mrs. Johnson. (See 24 Cal.Jur.3d (1975) Decedent's Estates, s 474, p. 771.)

No significance can be attached to the fact that it was the order of the probate court which effected the division for it was Mrs. Johnson who petitioned for the setting apart of a probate homestead and thereby caused the division of the parcel. (See Pratt v. Adams (1964) 229 Cal.App.2d 602, 605, 40 Cal.Rptr. 505.)

2. Preemption by the probate homestead law

Respondents' theory on the motion for summary judgment and appeal is that the state has occupied the field of probate law, pursuant to which the 6.6-acre parcel was set apart, and that the Town's subdivision ordinance is therefore preempted and void.

There are three tests to determine whether a municipal ordinance has been preempted by the general law: “(1) the subject matter has been so fully and completely covered by general law as to clearly indicate that it has become exclusively a matter of state concern; (2) the subject matter has been partially covered by general law couched in such terms as to indicate clearly that a paramount state concern will not tolerate further or additional local action; or (3) the subject matter has been partially covered by general law, and the subject is of such a nature that the adverse effect of a local ordinance on the transient citizens of the state outweighs the possible benefit to the municipality.” (In re Hubbard (1964) 62 Cal.2d 119, 128, 41 Cal.Rptr. 393, 396 P.2d 809, overruled on another point in Bishop v. City of San Jose (1969) 1 Cal.3d 56, 63, fn. 6, 81 Cal.Rptr. 465, 460 P.2d 137.)

Clearly, the Town's subdivision ordinance is not preempted under the third test.

Nor is it preempted under the first test. Not only is subdivision regulation not “fully and completely covered” by the Probate Code, but the general law expressly reserves to local authorities the right to regulate division of land not covered by the state act. (Gov.Code, s 66411; see 55 Ops.Cal.Atty.Gen. (1972) 414, 420, see also Code Civ.Proc., s 872.040.)

The question, then, is whether the ordinance is preempted under the second test-that is, whether the general law is “couched in such terms as to indicate clearly that a paramount state concern will not tolerate further or additional local action.” (In re Hubbard, supra, 62 Cal.2d at p. 124, 41 Cal.Rptr. 393, 396 P.2d 809.)

There is no such clear indication in the Probate Code. Section 664 of the Probate Code provides that “in selecting and setting apart the homestead, the court shall consider” certain factors and in the light of those factors “and other relevant considerations as determined by the court in its discretion, shall select as a homestead the most appropriate property available that is suitable for use as a dwelling and shall set apart in addition to the dwelling such adjoining property as appears reasonable ....” (Emphasis added.)2 One “relevant consideration” would be whether the homestead and the parcel from which it is set apart have qualified or can qualify as separate parcels under the subdivision ordinance. If one or the other parcel cannot qualify, it would be “reasonable” to set apart more or all of the adjoining property. (See Estate of Levy (1904) 141 Cal. 646, 75 P. 301; Estate of Knight (1926) 76 Cal.App. 618, 245 P. 454.) Thus, there is not necessarily a conflict between the provision of the Probate Code relating to the setting apart of homesteads and the Town's subdivision ordinance.

More fundamentally, however, it must be recognized that land may be divided among separate owners without effecting a division of land for the purposes of state or local regulation of land use. In Hill v. City of Manhattan Beach (1971) 6 Cal.3d 279, 98 Cal.Rptr. 785, 491 P.2d 369, for example, an owner purported to divide a parcel into two parcels and sold them to separate parties. One party built a house on one parcel, and later acquired the other. When the house was built, both parcels were of a “minimum lot size” but subsequently that size was increased by city ordinance so that the second parcel, which was unimproved, did not meet the minimum. After the increase, the city enacted an ordinance prohibiting division and sale of a lot without approval by the city. A city ordinance defined a “lot” as a parcel plotted or mapped as such or of the minimum lot size. The owners sought approval and, when it was denied, declaratory relief. The Supreme Court held that “There is nothing in the nature of the acquisition of the two parcels ... or other circumstances which renders the property two separate and distinct ‘lots' within general definitions of that term.... (U)nder the controlling definition in the instant case only the entire property qualifies as a ‘lot’ for development purposes and ... neither of the two parcels, considered separately, does.” (Id., at p. 283, 98 Cal.Rptr. 785, 491 P.2d 369.)

Similarly, when a testator devises a quarter of a three-acre tract to each of four persons or when the probate court so distributes, the result is not a “legal subdivision” in an area with a one-acre minimum lot size. Title to specific “parcels,” in the sense in which they “actually exist ... upon the surface of the earth” (Vetter v. Zoning Board of Appeal of Attleboro (1953) 330 Mass. 628, 116 N.E.2d 277, 278), passes, but four less-than-one-acre “parcels,” having the character of legal building sites, have not been created. Their creation depends upon compliance with subdivision regulations.

Such regulations are concerned with the orderly development of land in accordance with a community plan (see Bright v. Board of Supervisors (1977) 66 Cal.App.3d 191, 194, 135 Cal.Rptr. 758), not with ownership. The Probate Code is concerned with ownership of land, not with development. The probate court determines one, the municipality the other. There is no conflict between them.

Thus, in a New Hampshire case, it was held that a testator's attempt to devise to her children a tract of land in four parcels, which had not been approved under a town's subdivision regulations, was not void, but neither did it result in separate parcels capable of transfer or development: “Subdivision regulations are not a means of controlling the alienability of land, but of promoting the orderly and planned growth of a municipality.... (P) The focus of our laws relating to the testamentary disposition of property is on the passage of title in accordance with the intent of the decedent.... (A) testator's division of property by devise does not fall within the statutory definition of (subdivision) .... Furthermore, the passage of title to a devisee has no bearing on the use or development of that property. Devisees must still comply with local subdivision regulations if they wish to develop or transfer their property. Compliance with subdivision regulations is neither excused nor obviated by the division of property under the terms of a will.” (In re Estate of Sayewich (1980) 120 N.H. 237, 413 A.2d 581, 583.) The reasoning is persuasive and we see no reason why it should not apply equally to the creation of a probate homestead.

When the probate court set aside to Mrs. Johnson the 6.6-acre parcel as a probate homestead, it divided ownership of the 39.5-acre parcel between her and the trustees, the owners of the remaining 32.9-acre parcel. It did not create separate parcels for purposes of the Town's subdivision ordinance.3

Pratt v. Adams, supra, 229 Cal.App.2d 602, 40 Cal.Rptr. 505 is not inconsistent with this view. There a group of 12 owners held a 46.237-acre4 parcel in joint tenancy. In a frank attempt to avoid the requirements of the state Subdivision Map Act and local ordinances, which applied to division of land into 5 or more parcels, one member filed a partition action against the others, resulting in an order of court partitioning the land into 12 parcels. Then the individual members of the group, without compliance with the subdivision laws, divided the 12 parcels into 38 parcels, none of the 12 being divided into more than 4. Three days later, a county zoning ordinance went into effect, establishing a 3-acre minimum lot size in the area, but excepting preexisting parcels. The county denied a building permit to one of the owners of the 38 parcels on the ground that such parcels were not preexisting because they were created in violation of the subdivision laws. The owners sought mandate. Their theory was that the partition into 12 parcels was the act of the court, which did not violate the law, and the division into 38 parcels was done by individuals, no one of whom divided his land into 5 or more parcels, and therefore the subdivision laws did not apply. This court held that the partition was caused by the owners, and the subsequent division into 38 parcels was “part of the general scheme” which “should be construed as a whole” (id., at p. 605, 40 Cal.Rptr. 505) as a plan to circumvent the law, which the court would not countenance. (Id., at p. 606, 40 Cal.Rptr. 505.) Pratt can be read narrowly to apply to the division into 38 parcels, not the partition into 12, and to apply only where there is collusion among the owners, and thus to imply that, at least where there is no collusion, the partition did not fall under the subdivision laws but created 12 legal parcels for development purposes. That is not a necessary implication, however, and although the specific question of whether the partition created parcels which could be developed without compliance with the subdivision laws was not before us, we did say that the purposes of those laws “would be defeated if the courts were to recognize avoidance of the statutes by use of an action in partition as was devised here.” (Ibid.)5

It is unnecessary to decide appellants' contention that there was, at least, a triable issue of “collusion” under Pratt.

3. Collateral attack

The foregoing discussion disposes of respondent's contention that the probate proceedings were in rem and bind the world and are final and immune from attack except a direct attack on the ground of extrinsic fraud. The orders of the probate court determined Mrs. Johnson's and the trustees' respective titles to the 6.6-acre and 32.9-acre parcels but it did not determine whether they were parcels for the purpose of the subdivision ordinance. The Town has not attacked the validity of the setting apart of the probate homestead. It has rather performed its duties under Government Code section 66499.34 not to recognize a division of land not in compliance with the subdivision laws where “development of such real property is contrary to the public health or the public safety.

The judgment is reversed and remanded for such proceeding as may be appropriate and not inconsistent with the views expressed herein.

FOOTNOTES

1.  The term “parcel” is used herein not as a term of art but to refer to what the Town's subdivision ordinance refers to as a “piece of land.”

2.  “Section 664 was added to the Probate Code in 1980-- that is, after the setting apart of the homestead in this case. (Stats. 1980, ch. 119, s 10.) It, however, “codifie[d] the homestead and may take into account a wide variety of factors in exercising its discretion. See, e.g., Estate of Claussenias, 96 Cal.App.2d 600, 216 P.2d 485 (1950); Estate of Barkley, 91 Cal.App. 388, 267 P. 148 (1928).” (Comment by Law Rev. Com. to s 664.)

3.  In Hill,supra, the parcel on which the house was built qualified as a “lot” under a provision for a portion of a lot containing dwellings and under separate ownership as of the enactment of the minimum-lot size ordinance. It would not appear that any such exception is present here, and therefore neither the 32.9-acre nor the 6.6-acre parcel is a “lot” for purposes of the ordinance. The importance of this point is that, in order to create two lots, application must be made for subdivision approval relating not onlyto the 32.9-acre but also th the 6.6-acre parcel, and conditions can be attached to the approval as to the latter, such as a grant of access to the former. Of course, as the matters stand, the 6.6-acre parcel belongs to Mrs. Johnson absolutely and no part of it can be taken away from her involuntarily as a condition of granting an application for subdivision as to the 32.9-acre parcel; she need not apply for subdivision, but the 6.6-acre parcel cannot be treated as a lot for purposes of sale, etc., until an application is granted, and an application as to the 32.9-acre standards, such as that relating to access.

4.  The official report says 46,237 acres, but this is an error-see 40 Cal.Rptr. at p. 507.)

5.  Even if we were to hold that the trustees stand in the position of the innocent purchaser in Keizer v. Adams (1970) 2 Cal.3d 976, 981, 88 Cal.Rptr. 183, 471 P.2d 983, and have a separate parcel without regard to the subdivision law, equity would require, as it did in that case, that they, “as a condition to the issuance of a building permit, comply with such reasonable conditions as the (municipality) may require in the public interest and for the protection of (their) property and of neighboring property, and perform or agree to perform or construct such reasonable improvements with respect to (their) lot as could have been required of (their predecessor in title) as a condition of subdividing the latter's tract of land under the provisions of the ... subdivision ordinance at the time of (their acquisition of their lot).” (See 2 Bowman, Ogden's Revised Cal. Real Property Law (1975) s 25.21, p. 1224.)

FEINBERG, Associate Justice.

WHITE, P. J., and BARRY-DEAL, J., concur.