WEINER v. ROOF ET AL (1941)

This is an appeal from a judgment in favor of the Citizens National Trust and Savings Bank of Los Angeles, hereinafter called the bank, in an action to rescind a contract of purchase of a lot in Los Angeles county, and to recover the money paid on the purchase price.

This controversy grew out of a subdivision trust in which one Connolly was trustor, the Farmers and Merchants National Bank of Los Angeles was trustee, and Connolly and J. B. Roof, Incorporated, were beneficiaries. The Citizens National Trust and Savings Bank of Los Angeles succeeded to the office of trustee in 1929 and thereafter operated under its own declaration of trust, dated June 14, 1929. All prior contracts of purchase, including plaintiff's, were assigned to this bank. Plaintiff had purchased a lot in one of the subdivisions under the trust and had made payments to the original trustee. He paid the bank, as trustee, $1,890.

Plaintiff brought suit against J. B. Roof, J. B. Roof, Incorporated, and the bank to rescind his contract of purchase because of fraud, and to recover the money he had paid on the purchase price of the lot. He was successful in his action and recovered judgment against J. B. Roof and J. B. Roof, Incorporated, in the sum of $3,807.01 and against the bank in the sum of $1,890. The bank alone appealed from that judgment which was reversed as to it with the following directions:

“That portions of the judgment awarding plaintiffs $1,890 as against the appellant Citizens National Trust and Savings Bank, as trustee, is reversed, with directions to the court below to permit said appellant, if it be so inclined, to offer evidence as to the disposition of the money paid to it by the respondent, and the court is further directed, upon such showing being made, to make its findings and enter judgment as between said two parties in conformity with the views herein expressed.” Weiner v. Roof, 10 Cal.2d 450, 74 P.2d 736.

On the second trial the evidence was confined solely to the question of the disposition of the money paid to the bank by Weiner, and whether or not the bank retained any part of that money so that it could be held personally liable for the money so remaining in its possession under the “unjust enrichment” doctrine, which doctrine was first announced in California in Speck v. Wylie, 1 Cal.2d 625, 36 P.2d 618, 95 A.L.R. 760, which was decided after the first trial of this action. This doctrine is now well established in California. See Greenberg v. Du Bain Realty Corp., 2 Cal.2d 628, 42 P.2d 628; Id., Cal.App., 35 P.2d 579; Graham v. Los Angeles First National Trust & Savings Bank, 3 Cal.2d 37, 43 P.2d 543; Harnischfeger Sales Corporation v. Coats, 4 Cal.2d 319, 48 P.2d 662; Weiner v. Roof, supra; Longway v. Newbery, 13 Cal.2d 603, 91 P.2d 110; Curtis v. Title Guarantee, etc., Co., 3 Cal.App.2d 612, 40 P.2d 562, 42 P.2d 323; Wagaman v. Clifford F. Reid, Inc., 5 Cal.App.2d 168, 42 P.2d 678; California Mutual Co. v. Voigt, 5 Cal.App.2d 204, 42 P.2d 353; Tullis v. Title Guaranty & Trust Co., 11 Cal.App.2d 391, 54 P.2d 65.

The rule was thus applied to the facts of this case in Weiner v. Roof, supra [10 Cal.2d 450, 74 P.2d 737]: “The fact that respondent's [[[[Weiner's] written contract to purchase a lot contained a clause restricting the representations to those therein set forth, did not preclude the respondent, under the foregoing rule, from rescinding the contract for the false representations of the selling agent and recovering the money paid thereunder from the principal or any trustee to whom the same had been paid. However, inasmuch as the rule in Speck v. Wylie, supra, is grounded upon unjust enrichment, and was announced subsequent to the trial of this cause, we are of the view that the appellant, as trustee of the money paid to it by respondent, should be afforded the opportunity of showing, as it asserts it can, that it has paid over to the beneficial owner the money for which judgment has been taken against it. Such a showing, if made, will disclose that the appellant, an innocent party to the fraud, has not been unjustly enriched and will preclude the entry of a monetary judgment against it under the rule mentioned.”

On the second trial the evidence was confined to the disposition made of the money which the trustee had received from plaintiff. This was properly done under the order of the Supreme Court on the former appeal which sent the cause back for retrial on that sole issue. 10 Cal.2d 450, 74 P.2d 736. Under this order no other question remained for decision in the trial court.

The only witness examined at the second hearing was an officer of the bank who testified that the $1,890 received from plaintiff had been disbursed by the trustee by depositing part of it in different accounts in the bank in exact accordance with the terms of the trust and by applying the greater portion of it on the payment of a note of $225,000 which Connolly owed the bank, payment of which was secured by his interest in the trust. This same witness testified that when plaintiff made his last payment the trust had expended over $7,000 more than it had received, which sum the trust had borrowed from the bank.

With this evidence before him the trial judge very properly found that the trustee had paid over to the beneficial owners all the money it had received from plaintiff and rendered judgment for the bank.

Plaintiff attacks the evidentiary support of this finding on several grounds. His principal argument is based on the fact that the money was not actually paid to the beneficiaries themselves, but was deposited in accounts in the bank and was applied on the Connolly note.

The fact that there was not a manual tradition of the money to the beneficiaries and an actual deposit of it in the various accounts by them and actual payments made by Connolly on his note cannot assist plaintiff. If the trustee had actually handed Connolly the money to which he was entitled and Connolly had then delivered the money to the bank to be applied on his note, the legal effect of the situation would not be changed. When the trustee, under express authority of the trust, applied the money on the note, that money passed out of the trust and was in fact paid to a beneficiary under the trust. But, plaintiff argues, Connolly was trustor and not a beneficiary under the trust so these payments were not made to a beneficiary. This argument overlooks the clear terms of the trust under which Connolly was both trustor and a beneficiary. Such dual relationship is permissible. Atkinson v. Foote, 44 Cal.App. 149, 186 P. 831; Touli v. Santa Cruz County Title Co., 20 Cal.App.2d 495, 67 P.2d 404. The same reasoning applies to the other allocations made of the Weiner moneys by the trustee.

Plaintiff argues that the finding as to the allocation of the money received from him is contrary to the evidence. He points to evidence that $97 was allocated to the general account, $549 to the improvement release account, and $1,292.40 to the bank release account, which figures vary from those found by the trial court, and which sums total $1,938.40.

It is true that there is such evidence in the record but it relates to the allocation of the unpaid balance on the Weiner contract at the time the bank took over the trust, if that balance had then been paid. There is other evidence supporting the finding of the allocations made of the $1,890 actually paid by plaintiff, which evidence sufficiently supports the challenged finding.

Plaintiff urges that he is entitled to a personal judgment against the bank because there is considerable property still in the trust and because other purchasers are still paying into the trust on their contracts.

This argument cannot assist plaintiff. The order of the Supreme Court on the former appeal precludes such relief here. The case was reversed so that it might be intelligently determined whether or not the doctrine of unjust enrichment might be applied against the bank. When it was made to appear that the trustee did not hold any money paid by plaintiff there was no unjust enrichment of the trustee and no personal judgment could be rendered against the bank. Weiner v. Roof, supra.

If it is true, as argued by plaintiff, that the trust still has assets of considerable value, he is not without his remedy. He has his judgment against J. B. Roof and J. B. Roof, Incorporated, the latter a beneficiary under the trust. Its interests in the trust, if any, may be subject to levy and sale under execution.

Plaintiff devotes a considerable portion of his brief to a review of the evidence on the first trial and to the change of position of the bank on the second trial. This change of position was made necessary by the decision of Speck v. Wylie, supra, which overruled earlier cases. Weiner v. Roof, supra.

He asks us to review the transcripts and briefs on the former appeal. There are several reasons why we may not do this. First, the law of the case was established on the first appeal, assuming that doctrine still has vitality in California. See England v. Hospital of Good Samaritan, 14 Cal.2d 791, 97 P.2d 813. Second, the judgment against this defendant was reversed and the cause sent back for retrial on one issue which did not include these questions now argued here. Weiner v. Roof, supra. Third, we do not have the records on the former appeal. They were not offered in evidence nor were they marked for identification at the second trial.

The judgment is affirmed.

MARKS, Justice.

We concur: BARNARD, P. J.; KELLY, J., pro tem.