BANK OF CALIFORNIA NAT ASS v. SUPERIOR COURT IN AND FOR CITY AND COUNTY OF SAN FRANCISCO (1940)

This proceeding in prohibition grows out of the following factual situation: Sara M. Boyd, widow of Colin M. Boyd, died in June, 1937, leaving an estate valued at more than $200,000, which she disposed of by will. In July, 1937, the will was admitted to probate, and The Bank of California, National Association, was appointed executor. The dispositive clauses of the will created upwards of twenty cash legacies and bequests of jewelry and other articles of personal property, and the residue was bequeathed to St. Luke's Hospital of San Francisco. Four of the beneficiaries named by the testatrix were religious or charitable institutions, and the rest were individuals. On October 14, 1937, Bertha M. Smedley, a niece to whom the testatrix had bequeathed $10,000, instituted a suit to recover all of the property belonging to the estate, based on allegations to the effect that in 1910 Mrs. Boyd and her husband (who died in 1912) agreed to bequeath and devise their entire estates to the said Bertha M. Smedley and her sister (who predeceased Mrs. Boyd) or to the survivor of them. Having directed her suit against all of the property disposed of by the will, the plaintiff joined as parties defendant to the suit all of the beneficiaries named in the will and the executor. The relief prayed for was that a decree be entered in plaintiff's favor establishing said agreement and decreeing thereupon that the plaintiff is the owner and entitled to the distribution of the entire estate of the decedent after the payment of just debts and expenses of administration; “that her title thereto be quieted, and that the defendants, and each of them, be ordered and decreed to execute to plaintiff good and sufficient deeds granting and conveying to said plaintiff all of the real and personal property, and upon failure so to do, the clerk of this court execute under seal of this court such an instrument, and for such other and further and definite relief as may be just and equitable in the premises”. However, only the residuary legatee and the executor were served with summons; and on November 15, 1939, the cause came on for trial upon the issues raised by the amended complaint and the separate answers filed thereto by the residuary legatee and the executor. No appearance was ever made by any of the others named as parties defendant; and at the opening of the trial the answering defendants moved, under the authority of section 389 of the Code of Civil Procedure, for an order to bring in the other parties defendant, and to that end that summons be served upon them. Among the grounds urged in support of the motion were that a complete determination of the controversy presented by the suit could not be had without the presence before the court of the other parties defendant; that they were indispensable parties to the action; that a trial of the cause without first having acquired jurisdiction over them would engender a multiplicity of suits; and that therefore, without having said absent parties defendant before it, the court was without jurisdiction to proceed with the trial of the cause. The motion was denied; and thereupon, without making any further order respecting the parties defendant who had not been served with summons, the court directed that the trial proceed; whereupon the answering defendants joined in an application for a writ of prohibition to stay the trial until all of said parties were brought within the jurisdiction of the court.

In neither respondents' answer to the petition for the writ, nor in the briefs filed in their behalf, is it intimated that it was or is the intention to cause dismissals to be entered during the course of the trial or at the conclusion thereof as to any of the absent parties defendant; and because of the adverse position taken by counsel for respondents at the time of oral argument before this court with respect to the matter of the dismissal of the absentees, it must be assumed for all the purposes of this proceeding that no such action was contemplated or would have been taken. We are of the opinion that in the state of the record as it stood at the time of the denial of the motion the trial court was without jurisdiction to proceed with the trial.

As pointed out by the authorities dealing with the subject, the right to maintain a suit to enforce an alleged agreement or promise to make a will has its origin in equitable principles, the theory upon which the right is based being that if such an agreement or promise is established a court of equity may, under special circumstances, impress a trust upon the property of the estate in favor of the promisee, decree that the heirs or beneficiaries to whom the estate otherwise would have descended by will or by the law of succession take title thereto merely as trustees for the promisee, and compel such disposition of the property as will carry out the intent of the agreement. McCabe v. Healy, 138 Cal. 81, 70 P. 1008; Stewart v. Smith, 6 Cal.App. 152, 91 P. 667; Rundell v. McDonald, 62 Cal.App. 721, 217 P. 1082. Therefore such a suit must be tried and determined in conformity with equitable doctrines (Stewart v. Smith, supra); and one of the fundamental principles of equity jurisprudence is that a court of equity will not permit litigation by piecemeal. The whole subject-matter and all of the parties should be before the court, and their respective claims determined once and forever. O'Connor v. Irvine, 74 Cal. 435, 16 P. 236, 239. In the case last cited the court goes on to say: “Generally, in suits between cestuis que trust and trustees, all the parties interested should be before the court. Barb. Parties, 439, 442, 444. If the necessary parties to a full determination are not before the court it is the duty of the court on its own motion to order them brought in; and this, although the defendants in the action have omitted to raise an objection of defect of parties by demurrer or answer. The failure of the court so to do is fatal to the judgment. [Citing cases.]” The same doctrine was declared in many of the other earlier cases. For example, in McPherson v. Parker, 30 Cal. 455, 89 Am.Dec. 129, the court said: “It is the constant aim of Courts of equity to do complete justice, by deciding upon and settling the rights of all persons interested in the subject matter of the suit, so that the performance of the decree of the Court may be perfectly safe to those who are compelled to obey it, and, also that future litigation may be prevented. * When all the parties are before the Court the whole case may be seen, but it may not where all the conflicting interests are not brought out upon the pleadings by the original parties thereto.” Hence the common expression that “a court of equity in all cases delights to do complete justice, and not by halves”. Newhall v. Bank of Livermore, 136 Cal. 533, 69 P. 248, 250. Another of the earlier cases which may be cited to the same effect is Wilson v. Castro, 31 Cal. 420, wherein the court after restating the doctrine last above quoted continued as follows: “For this purpose all persons materially interested, either legally or beneficially in the subject-matter of the suit, ought generally to be made parties thereto, either as plaintiffs or defendants, so that there may be a complete decree which shall bind them all. * There is a distinction made in some of the authorities between subject-matter of the suit and object of the suit, and it has been said that it is not all persons who have an interest in the subject-matter of the suit, but in general those only who have an interest in the object of the suit who are ordinarily required to be made parties. * The general rule on the subject may be stated to be that all are necessary parties who have an interest in the subject-matter which may be affected by the decree. * This rule is founded in the principle of preventing future litigation and avoiding a multiplicity of suits by adjudicating upon the rights of all parties upon whom a decree may or ought to operate.” It is also a well-recognized rule that when a court of equity has acquired jurisdiction “for one purpose it will retain that jurisdiction to the final adjustment of all differences between the parties arising from the cause of action presented”. Newport v. Hatton, 195 Cal. 132, 231 P. 987, 995.

By the enactment of section 389 of the Code of Civil Procedure the legislature continued in force substantially all of the foregoing equitable doctrines (Mitau v. Roddan, 149 Cal. 1, 84 P. 145, 6 L.R.A.,N.S., 275; Ambassador Petroleum Co. v. Superior Court, 208 Cal. 667, 284 P. 445), the section being made to read in part as follows: “The court may determine any controversy between parties before it, when it can be done without prejudice to the rights of others, or by saving their rights; but when a complete determination of the controversy cannot be had without the presence of other parties, the court must then order them to be brought in, and to that end may order amended and supplemental pleadings, or a cross-complaint to be filed, and summons thereon to be issued and served.” (Italics ours.) And in passing upon the question of the mandatory effect of said section the courts have definitely declared that “* when the trial court finds, or the record indisputably shows, that a ‘complete determination of the controversy cannot be had without the presence of other parties,’ such parties become necessary and indispensable parties, and the section is mandatory, and the question then becomes one of jurisdiction in that the court may not proceed without bringing them in. If, nevertheless, it assumes to do so it may be subjected to the prohibitory writ quousque, that is to say, until the performance of a certain act, or the happening of a certain event”. Ambassador Petroleum Co. v. Superior Court, supra [208 Cal. 667, 284 P. 447], citing Carter v. Superior Court, 176 Cal. 752, 169 P. 667, and Ash v. Superior Court, 33 Cal.App. 800, 166 P. 841; see, also, Morrow v. Superior Court, 9 Cal.App.2d 16, 48 P.2d 188, 50 P.2d 66. Some of the earlier decisions, in classifying parties to equitable proceedings, differentiate between so-called necessary but not indispensable parties, and necessary parties who are indispensable, but as will be noted from the language last above quoted, it is now well settled that a party is deemed to be a “necessary and indispensable party” and must be brought in where a complete determination of the controversy cannot be had without his presence. Moreover, it is held that the mere naming of a person as party defendant without any further attempt to bring him within the presence of the court does not make him a party before the court. San Francisco Protestant Orphan Asylum v. Superior Court, 116 Cal. 443, 48 P. 379.

Here, as stated, the plaintiff Bertha M. Smedley by her suit is seeking to impress a trust upon the estate of the decedent as a whole, in which each of the parties defendant not served with summons admittedly has a substantial interest, and in addition she is asking that her title to the whole estate be quieted and that all named as parties defendant to the suit be directed to convey to her their respective interests, or upon their failure so to do, that conveyances to that end be made by the clerk of the court. In other words, plaintiff is demanding a decree which to all intents and purposes would operate as a judgment in rem against all property belonging to the decedent's estate and as a judgment in personam against all the parties defendant, directing them to convey their interests in said property to plaintiff. And such being the purpose and the scope of the suit, it would appear certain that under the decisions above cited all parties who are shown by the complaint to own interests in the property and against whom the plaintiff has demanded personal relief, are necessary and indispensable parties to a complete determination of the cause of action thus presented. Furthermore, it would appear equally certain that if a decree were rendered in plaintiff's favor in the present form of the action, without having the absentees properly before the court, it would injuriously affect their respective interests, because it would be subject to attack upon the ground of the failure to serve summons on all parties defendant against whom the decree was directed, and upon the annulment thereof as to the absentees on that ground the cause of action would stand open and undecided as to them, which would give rise at once to the question of whether the plaintiff might not thereupon serve summons on the absentees and prosecute the suit de novo against them, singly or collectively; or, if not annulled, it would, ostensibly at least, have some binding effect upon their interests without giving them their day in court. On the other hand, assuming that in the state of the record as it now stands, the cause should be decided adversely to plaintiff on the merits, the same question would remain undetermined, namely, whether the plaintiff could not thereupon pick out one or more of the parties defendant upon whom summons had not been served and prosecute the suit de novo against them. And in any event, until there was a final determination of the question of the right of plaintiff to prosecute the suit de novo against the absentees, a decree in any of the forms above mentioned would stand as a cloud upon the title to those portions of the estate to which the absentees would be entitled to succeed under the will and constitute a bar to the final settlement of the estate.

We think it apparent, therefore, that the trial and determination of the cause in the condition of the record as it now stands would not only contravene the established equitable doctrine forbidding litigation by piecemeal, but would injuriously affect the rights of the absent parties defendant, and necessarily engender a multiplicity of suits to ascertain and determine their rights under the decree and under the will; and that being so, the situation calls for the granting of prohibitory relief.

It is contended on behalf of respondent in opposition to the issuance of the writ that the interests of the residuary legatee are separable from those of the other beneficiaries, and that therefore plaintiff may properly proceed against the interests of the residuary legatee alone. Two cases, Rundell v. McDonald, supra, and Oles v. Wilson, 57 Colo. 246, 141 P. 489, are relied upon by respondents to support their contention. An analysis of those cases shows, however, that the factual situation in each is essentially different from the one now before us. In the former case the plaintiff, prior to the commencement of the trial, dismissed the suit as to all heirs having any interest in the property sought to be recovered except the single one against whom he was seeking the decree; whereas here plaintiff has in effect refused to dismiss as to the other parties having interests in the subject-matter of the suit, notwithstanding that without first having served summons upon them she is demanding a decree affecting their interests. And in the Colorado case the plaintiff sought to recover but one-third of the estate of the decedent and the suit was directed only against the interests of the residuary legatees, and they alone were made parties defendant to the suit; whereas here the suit is directed against the entire estate and all beneficiaries named in the will are made parties defendant to the suit, but only one, the residuary legatee, has been served with summons. If here it was plaintiff's purpose to proceed against the interests of the residuary legatee alone, she could have easily accomplished such purpose in the beginning, as was done by the plaintiff in the Colorado case, by confining the scope of her suit to the interests of the residuary legatee and making the residuary legatee alone the party defendant, or at the time of the hearing of the motion in question, as was done in the Rundell case, by dismissing as to all parties defendant except the residuary legatee. But she has declined to follow either of those courses, and insists on trying the cause against the interests of all beneficiaries, without first having acquired jurisdiction over any of them except the residuary legatee. That being so, it would be contrary to equitable doctrines to allow her to maintain the suit in such form as would leave open the question of whether she could prosecute the same against any of the parties defendant not served with summons, after having prosecuted it, either successfully or unsuccessfully, against the beneficiary upon whom summons has been served.

Further contention is made by counsel for respondents that prohibitory relief is not available to petitioners herein because, as respondents claim, neither is a “person beneficially interested” within the meaning of section 1103 of the Code of Civil Procedure. This contention is based upon the proposition that if the court has acquired jurisdiction to hear and determine the controversy between plaintiff and the petitioners, the latter may not complain of any injurious effect the trial and determination of the action may have upon the rights of others. As already pointed out, however, in the state of the record as it is brought before this court, the absentees are shown to be necessary and indispensable parties to a complete determination of the controversy presented by the amended complaint and the answers thereto, and it is well settled that where such is the case, it becomes the mandatory duty of the court of its own motion to bring in the absentees before the court (O'Connor v. Irvine, supra; Hutchins v. Security Trust, etc., Bank, 208 Cal. 463, 281 P. 1026, 65 A.L.R. 1059; Lake v. Dowd, 207 Cal. 290, 277 P. 1047); and that if the court fails to perform such mandatory duty and nevertheless proceeds with the trial, it does so without jurisdiction, and prohibitory relief will be granted. Ambassador Petroleum Co. v. Superior Court, supra. The remaining point made by respondents is that petitioners' remedy is by way of appeal and not prohibition; but the negative answer to this contention is to be found in that part of the decision in the case last cited, to which reference has just been made.

Petitioners make the additional contention that the rendition of any decree in the present state of the record, without bringing in the absentees, would injuriously affect the rights of the executor by subjecting it to undue inconvenience and danger of financial loss; but in view of the conclusion reached on the controlling issues above discussed, it is unnecessary to consider the effect of petitioners' contention relating to the rights of the executor.

For the reasons above stated, it is ordered that a peremptory writ of prohibition issue herein prohibiting the respondent court from proceeding with the trial of the action in the present state of the record.

I dissent.

In my opinion, the facts set forth in the petition herein do not warrant the issuance of the writ of prohibition. That writ is a jurisdictional writ, and will lie only where the court below has no jurisdiction or has exceeded its jurisdiction. County of Sutter v. Superior Court, 188 Cal. 292, 204 P. 849; Fitts v. Superior Court, 4 Cal.2d 514, 51 P.2d 66, 102 A.L.R. 290; Klement v. Superior Court, 21 Cal.App.2d 456, 69 P.2d 869. The majority opinion holds that when a plaintiff brings an action against the several legatees named in a will to establish a trust against the individual interest of each legatee, that all of the named legatees are not only proper parties but are indispensable parties, and that the trial court has no jurisdiction to proceed with the trial against one of the legatees unless all legatees are served and brought before the court.

The majority opinion holds that a peremptory writ of prohibition should issue herein prohibiting the respondent court from proceeding with the trial “in the present state of the record”. It is implied that, if the plaintiff shall see fit to dismiss as against those legatees not served, the cause may proceed to trial against the residuary legatee alone. It is also implied that, if the complaint had named the residuary legatee as the sole defendant, the cause could properly have proceeded to trial against such legatee alone. These implications arise from the discussion of Rundell v. McDonald, 62 Cal.App. 721, 217 P. 1082, and Oles v. Wilson, 57 Colo. 246, 141 P. 489, appearing in the majority opinion. Apparently the theory of these cases is approved. If this be so, it demonstrates, in my opinion, the basic weakness in the decision of my associates. Those cases recognize that a trial court has jurisdiction to try an action by a plaintiff against one of several legatees where the plaintiff is seeking to have a trust declared against the defendant legatee on the ground that the testator entered into a contract to will the property to plaintiff. Those cases hold, and properly so, that the trial court has jurisdiction of such an action although all of the legatees are not named as parties defendant. Does this not conclusively demonstrate that the other legatees are not indispensable parties? I think it does. If the party is indispensable the cause may not proceed to trial without him. If all the legatees are not indispensable parties it can make no difference, so far as jurisdiction is concerned, whether all of the legatees are named as defendants but only one served, or whether but one is sued and served with process.

It seems quite clear to me that in such an action all of the legatees are proper parties, but they are not indispensable parties. The respondent court could have ordered all legatees to be brought before the court, but in the exercise of its discretion, refused to do so.

In Oles v. Wilson, 57 Colo. 246, 141 P. 489, under statutes substantially similar to those here involved, it was specifically held that a trust could be imposed against the interests of one group of legatees, and that other legatees interested in the estate were proper but not indispensable parties. The court stated (141 P. page 498): “While, no doubt, it would have been proper and, perhaps, wise to have joined, as defendants, all the legatees under the will, still the rights of the residuary legatees can be ascertained and settled in this suit without the presence of the others, and the case may proceed.”

Rundell v. McDonald, 62 Cal.App. 721, 217 P. 1082, is also directly in point. In that case suit was commenced against all of the heirs of an estate to impose a trust against their respective interests in the estate. Prior to trial, plaintiff dismissed as to certain of the heirs. Whether this dismissal was with or without prejudice does not appear. On appeal it was contended that the judgment should be reversed because all of the heirs of the deceased were not before the trial court, and that the court had no jurisdiction to proceed without their presence. The court recognized that, if the other heirs were indispensable parties, within the meaning of section 389 of the Code of Civil Procedure, the contention of appellant was sound. It was held that the other heirs were not indispensable parties and that appellant could not complain that they were not before the court. At page 728 of 62 Cal.App., at page 1085 of 217 P., it is stated: “If, on the other hand, as appellant contends, an action such as this can be maintained only against the heirs, appellant nevertheless is in no position to complain of any defect of parties defendant, since the decree cannot injudiciously affect the other heirs. Though the heirs succeeded to the legal title as tenants in common, they held their respective undivided moieties by several and distinct titles. The principle upon which courts of equity undertake to enforce the execution of an agreement to dispose of property in a particular way by last will and testament is one which is referable to the subject of specific performance. But a court has no power to compel a person to execute a last will and testament carrying out an agreement to bequeath or devise his property, for this can be done only in the lifetime of the testator. No breach of the agreement can be assumed so long as he lives, and after his death he no longer is capable of doing the thing agreed to be done by him. The theory on which the courts proceed, therefore, is to fasten a trust on the property in favor of the promisee, and to enforce such trust against the heirs of the deceased. Under this theory each heir holds the title to which he has succeeded in trust for the promisee. In the instant case the effect of the judgment against appellant as the surviving husband was to fasten a trust on the title to which he succeeded and to compel a conveyance of that title to respondent. If, as appellant contends, an action such as this lies only against the heirs of the deceased promisor and not against his estate or personal representative, then the judgment cannot be pleaded against any of the heirs as to whom the action was dismissed. It follows, therefore, that the decree in no wise affects the rights of appellant's coheirs, and that they were not indispensable parties to the action.” (Italics ours.)

These cases are directly in point. They demonstrate that the other legatees or heirs, although proper parties, are not indispensable parties in the type of action here involved. The jurisdictional writ of prohibition will be granted to restrain trial only where indispensable parties have not been brought before the court. Where a judgment may be entered without prejudicing the rights of parties not before the court their absence does not go to the jurisdiction of the court, and prohibition will not be granted. Morrow v. Superior Court, 9 Cal.App.2d 16, 48 P.2d 188, 50 P.2d 66; Ambassador Petroleum Co. v. Superior Court, 208 Cal. 667, 284 P. 445

The reasoning upon which the Rundell and Oles cases are predicated is sound. Where there has been a breach of a valid contract to make a will, the remedy of the promisee is by suit in equity against those who take the estate. Administration proceeds under the will, but the interests of the devisees and legatees who are sued are subject to a trust in favor of the promisee under the agreement with decedent. The probate of the estate is not interfered with. Estate of Rolls, 193 Cal. 594, 226 P. 608; Estate of Berry, 195 Cal. 354, 233 P. 330; 26 Cal.Jur. p. 834, sec. 163. The action is a personal action against each legatee. A decision against any one legatee in no way affects the rights or interests of the other legatees. The majority opinion seeks to avoid the application of this reasoning, which it impliedly concedes is sound, by pointing out that in the present case the prayer of the complaint requests that the alleged agreement with the decedent be established, that it be decreed that the plaintiff is the owner of the entire estate, and that her title thereto be quieted. This prayer is obviously predicated upon the fact that all legatees are joined in the complaint. The action is a personal action against the legatees. No judgment could be entered against any defendant not served. Rundell v. McDonald, supra. We cannot presume the trial court will commit error. The action is in personam and not in rem. Under such circumstances, the prayer of the complaint cannot operate to change the rule above discussed.

The numerous cases cited by petitioners are not in conflict with the above reasoning. Many of them emphasize the propriety of bringing in all the parties necessary to a full determination of the entire controversy to prevent future litigation and multiplicity of suits. But here the trial court, in the exercise of its discretion, has determined that justice will not be served by requiring all the legatees to be served in this action. Under the cases already cited, if it is possible to enter a judgment which will not injuriously affect the missing parties, or where the absence of such parties will not injuriously affect the parties before the court, such absence does not go to the jurisdiction of the court and cannot be controlled by the jurisdictional writ of prohibition.

The difficulties envisaged in the majority opinion are more imaginary than real. If the action proceeds against the residuary legatee alone, and the plaintiff prevails, the plaintiff will be entitled to distribution of the share of the residuary legatee—the balance will be distributed to the other legatees named in the will. Such a judgment will not, and cannot, injuriously affect the other legatees, nor will the absence of the other legatees injuriously affect the residuary legatee. The mere fact that there may be a multiplicity of suits does not go to the jurisdiction of the trial court to try severable causes of actions separately.

It also is clear that the other petitioner —the executor of the estate—will not be adversely affected by any judgment or judgments that may be rendered against the legatees. It is quite clear that the executor is not a party beneficially interested in the action now pending in the respondent court. The California cases hold, without exception, that the executor or administrator has no legal interest in a will contest or in an action to enforce a contract to make a will. The cases establish that the executor or administrator is a mere stakeholder whose duty it is to conserve the assets of the estate and to turn them over to the parties designated by the court; that the executor or administrator has no legal interest in a controversy between claimants of the estate; that he cannot appeal from any judgment affecting the division of the estate between claimants thereto; that he is not entitled to receive fees for extraordinary services in any action concerning the rights of the claimants to the estate; that, although he is a proper party in a will contest or in an action to enforce a contract to make a will, he is not an indispensable party; that he is made a party for the sole reason that in this fashion he will be given notice of the pending action so that he will not distribute the estate while the action is pending. Estate of Murphey, 7 Cal.2d 712, 62 P.2d 374; Estate of Morgan, 203 Cal. 569, 265 P. 241; Estate of Babb, 200 Cal. 252, 252 P. 1039; Estate of Ross, 179 Cal. 358, 182 P. 303; Estate of Friedman, 176 Cal. 226, 168 P. 21; Estate of Ayers, 175 Cal. 187, 165 P. 528; McCabe v. Healy, 138 Cal. 81, 70 P. 1008.

Under these cases the executor has no legal interest in the action pending in the trial court, and is, therefore, not entitled to prohibition. The other petitioner, the residuary legatee, as already pointed out, cannot be adversely affected by the failure to serve the other legatees. The other legatees are not indispensable parties. For these reasons the writ should not issue.

KNIGHT, Justice.

I concur: WARD, J.