HANSEN v. BEAR FILM CO (1945)

Plaintiff, the respondent on this appeal, is the daughter of Oscar C. Hansen. Oscar (throughout this opinion the various members of the Hansen family are, for convenience, referred to by their first names) in 1919 was an employee of Wakelee's Drug Store in San Francisco and Warren S. Quinn was its manager. In that year Oscar and Quinn started a small photo-finishing business. In 1921 this business was incorporated as Bear Film Co. with a capital stock of 5000 shares, 2500 thereof being issued to Oscar and 2500 to Quinn. At the time of incorporation the assets of the business were stated in an application to the corporation commissioner to have a value of approximately $9,775. Oscar was elected president of the corporation, a position which he occupied continuously to the date of his death, and at all times was in the active charge and management of the corporate business, Quinn taking no active part therein. In 1924 the articles of incorporation of Bear Film Co. were amended to change its stock from a single class to 2500 shares of preferred and 2500 shares of common stock, the holders of the preferred being entitled to 70% of the assets on distribution. The old stock was thereupon surrendered and the new preferred stock was issued to Oscar (one share being issued to his nominee) and the new common stock was issued to nominees of Quinn, thereby in effect increasing Oscar's interest in the assets of the corporation from 50% to 70% and correspondingly decreasing Quinn's interest therein.

Virginia, Oscar's only child, was born October 18, 1916. She lived with her mother Fay and Oscar until some time in 1920 when Fay left Oscar and went to live in Michigan, taking Virginia with her. From that time until his death, on April 26, 1929, Oscar saw Virginia only twice, each time when a business trip enabled him to see her in Michigan. Oscar secured a final decree of divorce from Fay in San Francisco on the ground of desertion and Fay thereafter married one Bixby in Michigan. Oscar, after the divorce, contributed the sum of $25 per month for Virginia's support.

From the date of the separation from his wife in 1920 until the time of his death Oscar lived in San Francisco with his mother, Josephine. On or about November 2, 1926, Oscar signed an instrument in writing, reading, so far as material, as follows:

‘Whereas, the undersigned, O. C. Hansen is the owner of twenty-four hundred and ninety-nine (2499) shares of the preferred stock of the Bear Film Co. evidence by certificate No. 1, standing in his name, and

‘Whereas the undersigned, O. C. Hansen, is also the owner of one share of the preferred stock of the said Company evidenced by certificate No. 2 * * * endorsed * * * to O. C. Hansen, and

‘Whereas O. C. Hansen intends to divest himself of title to the said stock and vest such title absolutely in Josephine T. Hansen,

‘Now, Therefore, for value received O. C. Hansen hereby transfers and assigns all his right, title and interest in the said twenty-five hundred (2500) shares of the preferred stock of the Bear Film Co. evidenced by the said certificates number 1 and 2 to Josephine T. Hansen.’

The trial court found that on or about November 2, 1926, Oscar delivered this document to Josephine and at the same time surrendered the certificates referred to therein, properly endorsed, and caused to be issued a certificate numbered 4 for 2499 shares of the preferred stock in Josephine's name and delivered said certificate to Josephine and caused to be issued in his own name a certificate numbered 3 for one share of the preferred stock.

Following the date of these transfers and on November 8, 1926, Joseph was elected a director and vice-president of the corporation. At a directors' meeting on November 16, 1926, Oscar's salary, which had theretofore been $500 per month, was increased to $1250 per month ‘same to be retroactive from January 1st, 1926,’ and Oscar was also voted a bonus of $10,000 ‘in consideration for services rendered in the past.’ On November 24, 1926 a dividend of $4.20 per share on the preferred stock and $1.80 per share on the common stock was declared payable January 10, 1927. This was the first dividend declared by the company since 1922 when a dividend of 50 cents per share had been declared and paid.

On February 5, 1927, Oscar and Quinn entered into an agreement whereby Quinn agreed to sell the 2500 shares of common stock to Oscar for $30,000, of which $10,000 was to be paid in cash and the balance of $20,000 in monthly instalments of $750 each with interest on overdue instalments at the rate of 7%. To secure the payment of this balance Oscar agreed: 1. To execute and deliver to Quinn a promissory note. 2. That the payment of this note should be guaranteed by the Bear Film Co. 3. As collateral to assign to Quinn certain policies of insurance on Oscar's life aggregating $13,000 and to procure an additional policy for $2000 and assign the same as collateral to Quinn.

One of the provisions of the promissory note so agreed to be executed and delivered by Oscar to Quinn was in the following language:

‘It is further agreed that the entire unpaid balance of the principal sum shall immediately become due and payable in the event that the undersigned shall voluntarily dispose of the controlling interest of Bear Film Co., a corporation * * *.’

At a meeting of the directors of Bear Film Co. on February 5, 1927, the same day as the execution of Oscar's agreement with Quinn, all directors including Josephine being present, a resolution was unanimously adopted reciting that:

‘Whereas O. C. Hansen is about to execute to Warren S. Quinn a promissory note in words and figures following, to-wit: (Then follows a complete copy of the note.)

‘Now, Therefore, it is hereby Resolved that the president and secretary of this corporation in its name, and on its behalf, contemporaneously with the execution of the said promissory note by O. C. Hansen execute a guarantee of the said promissory note in the following form * * *.’

The trial court found that in performance of said agreement of sale Quinn ‘delivered all the certificates evidencing his ownership of all said common stock to Oscar C. Hansen on or about February 18th, 1927, and Oscar C. Hansen caused 2490 of said shares to be immediately placed in the name of Josephine T. Hansen and ten of said shares in the name of Nieta Drake, a nominee of Oscar C. Hansen on the books of the corporation. The certificates evidencing said 2490 shares of common stock were delivered to Josephine T. Hansen at the time of said transfer.’

The court further found that the down payment of $10,000 was made to Quinn by a personal check of Josephine and that the source of this $10,000 was the payment to Josephine on January 10, 1927 of the dividend of $4.20 per share declared in November on the preferred stock of Bear Film Co.; and that the first monthly payment of $750 was paid by Josephine's check and that this $750 was derived from a salary check of $750 delivered to Oscar by the corporation and by Oscar endorsed and delivered to Josephine who deposited it in her account. All subsequent monthly payments up to the time of Oscar's death were made by Bear Film Co. to Quinn and charged by Bear Film Co. against Oscar's salary on its books. At Oscar's death a balance was still owing to Quinn. This balance was paid by checks of the Bear Film Co. as follows: April 20, 1929, $750; May, 1929, $750; and June, 1929, the balance with the accumulated interest, $1413.10. Each of these payments made after Oscar's death was likewise charged against Oscar's account.

Between the time of the transfers of the shares of the preferred and common stock to Josephine and Oscar's death he was in practically complete control of the corporation. With the exception of the disputed minutes of December 31, 1928, and March 29, 1929, hereafter discussed, the minute book shows the minutes of no meeting from February 21, 1927, until after the date upon which Oscar died. It does show two resolutions authorizing the borrowing of money under date of March 30, 1927, and February 16, 1928, with no supporting minutes, and it contains during that period 25 slips, uniform in language, reciting that there being no quorum present at the regular monthly meeting the meeting was adjourned. At the end of 1927 a bonus of $10,000 was credited to Oscar on the books and at the end of 1928 a similar credit was given him, both without any formal corporate action. The court found in this regard that:

‘There was not during that time a total disregard by Oscar C. Hansen of the corporate entity, but there was a disregard of the corporate entity in this: that during all said time the board of directors of said corporation was under his complete dominance, control and direction and all the members of said board relinquished entirely to him their discretion and judgment in all corporate matters, and were not called upon to give, and did not give, any suggestions or advice respecting the control or management or direction of said corporation, nor did they assert their right to do so.’

On February 21, 1927, Oscar and Josephine executed a document consenting to the reduction of the number of directors of the corporation from four to three. In this, over their signatures, it is recited that Josephine is the owner and holder of 2499 shares of the preferred stock and 2490 shares of the common stock and Oscar is the owner and holder of one share of the preferred stock of Bear Film Co.

Oscar died suddenly of a heart attack on April 26, 1929. Two brothers survived him, Charles, who was an invalid living in the San Francisco Bay area, and Albert, who was a member of the faculty of Purdue University in Indiana. Albert came immediately to San Francisco and was asked by Josephine to look after her interest and manage the Bear Film Co. He demurred to giving up his professional career which included in addition to his professional work at Purdue the writing of scientific articles for various publications. According to the books and records of the corporation Josephine was the apparent owner of all of the stock of Bear Film Co. Albert declined to give up his professional career unless Josephine transferred this stock to him. On June 25, 1929, Josephine and Albert entered into a written agreement which recited that because Albert agrees to sacrifice his professional career at Purdue University and discontinue his work as author of articles for various magazines and other publications in order to take over the active management of the Bear Film Co. Josephine agrees ‘to sign over’ all the stock of the Bear Film Co. now in her name, provided: 1. That Josephine be placed on the payroll of the corporation for life at a salary of $300 per month. 2. That Albert shall have no interest in any other property of Josephine. And 3. That either before or after Josephine's death Albert shall contribute $10,000 to establish a trust fund for the benefit of Charles. Some shares of stock had already been transferred to Albert before the date of this agreement and the transfer of all of them was completed some time in September.

Charles was dissatisfied with the transfer of the stock to Albert without further provision for him and in December, 1929, Charles was put on the payroll of the company at $100 per month. Charles, still dissatisfied, induced his mother to employ an attorney and, after negotiations, a new agreement was entered into on March 19, 1930 between Josephine, Albert and Charles. This agreement confirmed the transfer of the stock to Albert and contained elaborate provisions for the benefit of Josephine, Charles and Charles' children, reserving the right to Albert to terminate his obligations thereunder at any time by retransferring the stock to Josephine. Following this agreement Albert continued to be the record owner of all of the stock, in his name and through nominees, except that in 1939 he transferred 500 shares of the preferred and 500 shares of the common stock to the Bear Film Co. as trustee for his son Robert. Albert thereafter remained in active management of the corporation until his death, March 25, 1940.

The day following Oscar's death an attorney who had done some legal business for Oscar and for Bear Film Co. was appointed assistant secretary at $200 per month. He advised Josephine and to some extent Albert during the transition period in the corporation's affairs. This attorney advised the appointment of Josephine and one Uhle who was the manager of the Oakland branch of Bear Film Co. as administrators of Oscar's estate and in petitioning for their appointment and during their administration of the estate he acted as their attorney. This attorney, whose good faith is not impugned by the findings or judgment of the court, entered into correspondence with Virginia and her mother Fay Bixby concerning Oscar's estate. He represented to them that the estate was small and that Josephine owned all of the stock of Bear Film Co. We assume that these representations were honestly made on the attorney's part. Fay Bixby was appointed guardian of Virginia by a Michigan court in order to receive and care for the property expected to be distributed to Virginia from her father's estate. Her attorney in Michigan also had correspondence with the attorney for the administrators in San Francisco. In due course the estate was distributed to Virginia and she received a few thousand dollars and a piece of land in Oakland from which she ultimately realized an additional small amount by its sale.

Thus matters rested until after Albert's death in 1940. After Albert's death Charles again sought legal advice. He consulted Mr. Silen, one of Virginia's attorneys in this action. Certain facts were disclosed to Silen which caused him to write a letter to Virginia in Michigan under date of June 27, 1940. In July, 1940 Virginia came to San Francisco to consult Mr. Silen and on August 16, 1940 the original complaint was filed in this action.

The action went to trial on an amended complaint filed February 17, 1941. The amended complaint was in six counts. In two of these counts it was alleged that the preferred stock and common stock of Bear Film Co. respectively was never delivered by Oscar to Josephine. The trial court found against the plaintiff in these counts as recited above. One count was for a money judgment and will be discussed hereinafter. Two counts alleged that the preferred stock and the common stock respectively were transferred to Josephine by Oscar upon an express oral trust to transfer it back to Oscar at his request or to the plaintiff Virginia upon Oscar's death. The sixth count alleged a resulting trust for Oscar in the common stock. The trial court found that the preferred stock was held by Josephine upon an oral trust ‘to be delivered and transferred back to the said Oscar C. Hansen at his request’ but that Josephine ‘did not promise or agree that she held said stock in trust for the heirs of Oscar C. Hansen or for the said daughter of Oscar C. Hansen upon his death.’ The court further found that Oscar was at all times the equitable owner of this stock and upon his death it became Josephine's duty to transfer it into his name or to his administrators for the benefit of his estate. The judgment ran against the widow of Albert, individually and as executrix of his will, his children and Bear Film Co., who are the appellants.

Appellants attack the finding of an oral trust in the preferred stock as not supported by the evidence. Respondent admits that she is compelled to rely solely on circumstantial evidence to support this finding. The trial court made elaborate findings that the transfer of the preferred stock to Josephine's name, the declaration of the dividends and the voting of the $10,000 bonus in 1926 were all a part of a single plan conceived and carried out by Oscar to enable him to acquire the common stock from Quinn and thereby to own for himself all of the stock, preferred and common, of the corporation. Oscar had built up the business of the corporation by his own efforts from almost nothing to a value of something like $100,000 by 1926. He had no other property of any considerable value. It is argued that he would not, as a prudent and indeed shrewd business man who had devoted so many years of his life to this single enterprise, have stripped himself of ownership and control of the business and transferred title absolutely by way of gift of all of the preferred stock to his mother. Weighing the probabilities there is much force in this contention. It is also argued that he would not have entirely cut off his daughter, for whom the court found he had ‘a paternal affection’ to make his mother the exclusive beneficiary of his bounty, but while the court found that Oscar had a paternal affection for his daughter it was found that at all times he ‘entertained a great love and affection for his mother * * * and was devotedly attached to her.’ Respondent also points to Oscar's continued management and domination of the business. But wherever the probabilities may lie the fundamental question upon this phase of the case is this: can a court, under the settled rules of law laid down by our California courts, spell out of circumstances however strong an express oral trust, in the absence of any specific evidence of any character of the terms or conditions of the trust?

In Lefrooth v. Prentice, 202 Cal. 215, 227, 228, 259 P. 947; and Chard v. O'Connell, 7 Cal.2d 663, 666, 62 P.2d 369, our Supreme Court quoted the following with approval from Pomeroy on Equity Jurisprudence, 4th Ed., sec. 1009:

‘The declaration of trust, whether written or oral, must be reasonably certain in its material terms; and this requisite of certainty includes the subject-matter or property embraced within the trust, the beneficiaries or persons in whose behalf it is created, the nature and quantity of interests which they are to have, and the manner in which the trust is to be performed. If the language is so vague, general, or equivocal that any of these necessary elements of the trust is left in real uncertainty, then the trust must fail.’

In Estate of Gaines, 15 Cal.2d 255, 266, 100 P.2d 1055, 1060, the Supreme Court said:

‘The most that can possibly be inferred from the evidence is that the decedent may have intended to create a trust, for some purpose, or for someone's benefit, but failed to disclose that purpose, or the beneficiary, and therefore failed to create the trust. (Citations.) Since the question is one of admissibility of the evidence, the proof of a trust must be clear and convincing before it could be deemed sufficient to overcome the legal effect of the joint tenancy agreements.’

There would seem to be no purpose in the multiplication of citations. Many of the earlier cases on the same subject are collected in the three cases above cited. They all announce the rule that in order to support a finding of an express trust the evidence must disclose the terms of the trust with reasonable certainty. If a court cannot discover support for a finding of an express trust in the language of the parties where that language does not express the terms of the trust with certainty, we fail to see how support for such a finding can be discovered in the complete absence of evidence of any language of the parties whatsoever. Conceding that the transaction viewed as an outright gift by Oscar to Josephine is completely unnatural and that Oscar must be assumed to have had some oral agreement with Josephine for his protection the question still remains unanswered by any shred of evidence what were the terms of that oral agreement. We may suppose another oral agreement equally possible with the one found by the trial court and which would equally protect Oscar during his lifetime: that Oscar and Josephine agreed that Josephine would hold in trust for Oscar during his lifetime but that it was likewise agreed between them that if Oscar died before Josephine the property should become hers absolutely. Such a trust agreement could as well be spelled out of the circumstantial evidence as the one actually found by the court, but neither can be spelled out with the reasonable certainty required for the establishment of an express oral trust.

Respondent in support of the finding of an express oral trust from purely circumstantial evidence cites: Gunter v. Janes, 9 Cal. 643, 655; Airola v. Gorham, 56 Cal.App.2d 42, 48, 133 P.2d 78; Arnold v. Loomis, 170 Cal. 95, 98, 148 P. 518; 2 Bogert on Trusts and Trustees, § 453, p. 1353; 1 Scott on Trusts 146; and 65 C.J. 268.

In Airola v. Gorham, supra, and Arnold v. Loomis, supra, the terms of the trust were shown with certainty by express language of the parties. In the Airola case by admissible declarations and in the Arnold case by a written agreement and oral evidence of conversations. Each case went no further than to hold that where the existence and terms of the trust are established with certainty a party may be bound by the trust where he accepts a conveyance of the property with knowledge of the existence and terms of the trust agreement. In Gunter v. Janes, supra, in addition to other circumstances the trustee, Starkey, not only described himself as ‘trustee’ in written documents but he entered a charge upon his books against the beneficiary which the court held ‘inexplicable upon any other theory than the one which supposes Starkey to have acted for Gunter in making the arrangement with Wells.’ 9 Cal. at page 657. The full passage from the text of 65 C.J. reads (pp. 265–268):

‘The creation of a trust depends upon intention; some act evidencing the intention is essential, but unless otherwise required by statute, no particular formality or form of words is necessary, so long as the intent is sufficiently expressed, but it must be clear that a trust was intended, and it is also necessary that there be an unequivocal, explicit declaration of trust, or circumstances which show beyond reasonable doubt that a trust was intended to be created.’

An examination of the cases cited in note 19 at p. 268 indicates that one of the necessary ‘circumstances which show beyond reasonable doubt that a trust was intended to be created’ is language by way of declarations, admissions or otherwise from which the terms of the trust can be certainly determined. The passages cited from Bogert and Scott are not supported by citation of authority and are not inconsistent with our conclusion that the evidence in this case is not sufficient to support the finding of the express oral trust in the preferred stock found by the court.

Respondent seems to argue also for a constructive or resulting trust in the preferred stock. Insofar as this argument is based on the claimed confidential relations of the parties no overreaching of Oscar by Josephine appears in the evidence. Quite to the contrary Oscar went to his own lawyer without Josephine and had him draw the agreement of transfer quoted above and it should be noted that that document drawn by his attorney at Oscar's direction contained an express recital that ‘O. C. Hansen intends to divest himself of title to the said stock and vest such title absolutely in Josephine T. Hansen’; and Oscar according to the evidence was the dominant one in their dealings and relations and Josephine the subservient one. If the claim is based on the failure of an express trust it was a failure because no agreement of the parties to create a trust was proved and the following language from Estate of Gaines, supra, 15 Cal.2d at page 266, 100 P.2d at page 1061, furnishes the answer:

‘The argument that appellant may be considered a constructive trustee simply begs the question. If an attempt were made to create a trust and the record showed the basic elements of intent, purpose, and subject matter, but it was unenforceable because of the statute of frauds or some other invalidating cause, the trustee could not keep the property individually, but would be declared a constructive trustee. This result, however, presupposes the establishment of the basic elements of a trust. Here the evidence is wholly insufficient to establish these elements, for the object or purpose of such a trust is entirely lacking. The record does not therefore support respondent's claim that the written transfer in joint tenancy was accompanied by and subject to a collateral trust agreement. The writing creating the joint tenancy remains the sole competent evidence of the agreement between the parties, and respondent's assumption of an unproved trust agreement as the basis for the further assumption of its breach, as ground for imposing a constructive trust, must necessarily fail.’

We should perhaps refer to evidence of declarations, oral and written, of Oscar not made in the presence, or to the proved knowledge, of Josephine that Oscar owned the stock of Bear Film Co. These declarations were made after the transfer to Josephine. They were properly admissible on the issue of delivery to Josephine. Williams v. Kidd, 170 Cal. 631, 648–652, 151 P. 1, Ann.Cas.1916E, 703; Dinneen v. Younger, 57 Cal.App.2d 200, 205, 134 P.2d 323. But here the court found against respondent's claim of non-delivery. Upon the delivery as found the legal title passed to Josephine and it did not lie in the power of Oscar to disparage that title by any subsequent declaration. Francoeur v. Beatty, 170 Cal. 740, 746, 747, 151 P. 123; Chard v. O'Connell, supra, 7 Cal.2d at page 667, 62 P.2d 369; Taylor v. Bunnell, 77 Cal.App. 525, 534, 247 P. 240; Miller v. Miller, 55 Cal.App.2d 199, 207, 130 P.2d 438.

With reference to the common stock the court found both an express oral trust and a resulting trust. We may dismiss the finding of an express oral trust by reference to the discussion of the similar finding with regard to the preferred stock.

The validity of the finding of a resulting trust in the common stock depends upon whether the evidence will support the conclusion that 1. The consideration was paid by Oscar and 2. The conveyance was made to Josephine. 25 Cal.Jur. p. 178; Civ.Code, sec. 853. While the code section refers only to real property a resulting trust may nevertheless be created in personal property. 25 Cal.Jur. p. 181; Goes v. Perry, 18 Cal.2d 373, 379, 115 P.2d 441.

Appellants argue that neither of these necessary conditions exists in this case. They point to the court's finding above quoted that Quinn delivered all of the certificates to Oscar, and that Oscar caused 2490 of said shares to be immediately placed in the name of Josephine on the books of the corporation. They point out that a resulting trust cannot be created by the voluntary transfer by the owner of property to another (Tillaux v. Tillaux, 115 Cal. 663, 667, 669, 47 P. 691; Smith v. Butler, 84 Cal.App. 90, 257 P. 581) and to the rule that title to shares of stock is transferred by the delivery of the certificate properly endorsed. Powers v. Pacific Diesel Engine Co., 206 Cal. 334, 337, 274 P. 512, 73 A.L.R. 1398; Fowles v. National Bank of California, 167 Cal. 653, 658, 140 P. 271. From this they argue that no trust could result because Quinn transferred to Oscar and Oscar in turn transferred to Josephine. In making this argument appellants take too narrow and technical a view of the finding. The finding is quoted fully hereinabove. The court found that Quinn delivered the certificates to Oscar and that Oscar immediately caused 2490 shares to be transferred on the corporate books to Josephine and the certificates evidencing said shares were delivered to Josephine at the time of such transfer. The transfer from Quinn to Josephine was one continuous transaction. In receiving the physical delivery of the certificates from Quinn Oscar had the present purpose and intent to take legal title in the name of Josephine and he immediately effectuated that purpose and intent by causing the transfer to Josephine to be made on the books of the corporation.

The practical effect of Oscar taking the certificates from Quinn and immediately causing the transfer of legal title to Josephine was no different than if Quinn had delivered them directly to the secretary of the corporation and Oscar had directed the secretary to make the transfer of legal title to Josephine. Purchase money resulting trusts are based upon ‘the ancient equitable principle that the beneficial estate follows consideration and attaches to the party from whom the consideration comes.’ 4 Pomeroy's Equity Jurisprudence, 5th Ed., p. 71, sec. 1037. The mere incident that Oscar made himself the medium by which legal title was transferred from Quinn to Josephine should not affect the operation of that equitable principle.

Appellants also argue that the down payment of $10,000 and the first instalment of $750 were each paid to Quinn by Josephine with her own money and that at least pro tanto there could be no resulting trust in Oscar's favor. 25 Cal.Jur. pp. 188, 189. The payment of $750 may be summarily disposed of. The obligation to make the payment was Oscar's under his agreement with Quinn. The source of the payment was Oscar's money. He endorsed his salary check for that amount to Josephine and she in turn paid Quinn with her own check. The trial judge acted well within his sound discretion in drawing the inference that this payment of $750 was in fact made by Oscar through the agency of Josephine.

The down payment of $10,000 was made by Josephine's check from the dividend received by her on the preferred stock. The dividend was earned before the transfer of the preferred stock to Josephine but it was declared and paid after the stock stood in her name. The right to receive dividends is an incident to ownership of stock and the owner of the stock at the date the dividend is payable is entitled to receive it without regard to when the earnings were accumulated. Smith v. Taecker, 133 Cal.App. 351, 24 P.2d 182. In the absence of other facts it would follow that the $10,000 down payment was made by Josephine with her own money.

If the purchase price is paid for the beneficiary by the grantee a trust will result in the beneficiary's favor. Breitenbucher v. Oppenheim, 160 Cal. 98, 103, 116 P. 55; Watson v. Poore, 18 Cal.2d 302, 318, 115 P.2d 478. In this case the obligation to make the payments had been assumed by Oscar by his agreement with Quinn. It is sufficient to raise a resulting trust that the beneficiary has assumed a binding legal obligation to pay for the property. 2 Restatement of the Law of Trusts, sec. 456; 3 Scott on Trusts, p. 2297, sec. 456. If the evidence in this case will support the inference that Josephine made the $10,000 payment for the benefit of Oscar and in pro tanto satisfaction of Oscar's obligation to Quinn such payment would in legal effect operate as a payment by Oscar.

In this connection it may be pointed out that the source of the dividend from which the payment was made was Oscar's voluntary transfer of his preferred stock to Josephine. In view of their close and affectionate relationship and Josephine's natural gratitude as the recipient of Oscar's bounty it would not be unnatural for Josephine to repay Oscar in part by making the $10,000 payment for him out of the money which he had made available to her by his generosity. When we add to this Josephine's knowledge of the condition of the promissory note given by Oscar to Quinn, that the full unpaid balance would immediately become due and payable in the event that Oscar should voluntarily dispose of his controlling interest in Bear Film Co. a strong inference arises that Josephine did, in fact, make the $10,000 payment for the benefit of Oscar.

Josephine knew that legal title to only one share of the preferred stock stood in Oscar's name. She therefore knew that unless he had the beneficial interest in all of the common stock which was being acquired from Quinn he would not own a controlling interest of Bear Film Co. She participated in the meeting of February 5, 1927, at which the resolution was adopted authorizing the guarantee of Oscar's note, including the condition referred to. She thereby acquiesced in the representation that upon the acquisition of Quinn's stock Oscar would own the controlling interest in the corporation. These facts are inconsistent with any conclusion other than the one that Oscar upon its acquisition would own the entire beneficial interest in all of the common stock. Considering all of the circumstances we are satisfied that the evidence supports the finding that the $10,000 payment was in legal effect made by Oscar.

The payments of the other instalments were all made by the corporation and charged to Oscar's account. They were in actual fact payments by Oscar.

Appellants also made the point that by reason of the relationship of the parties we must presume that Oscar made a gift of the common stock to Josephine. We need not decide whether a voluntary transfer from son to mother raises such a presumption. See 3 Scott on Trusts, p. 2258. If there is any such presumption the circumstances in this case amply rebut it. It would be completely unnatural for Oscar to strip himself completely of control of the business which was the result of years of effort on his part, and at the same time divest himself of practically his entire assets. The condition in the promissory note to Quinn against Oscar voluntarily disposing of his controlling interest is persuasive that he did not do so. His domination of the affairs of the corporation with the acquiescence of Josephine including the payment to himself of a $10,000 bonus in 1927 without formal corporate action and his guaranteeing notes of the corporation, thus risking his personal credit for the corporate liabilities, all argue against any such presumption. Add to this that Oscar had already transferred to Josephine the preferred stock representing 70% of the corporate assets. He had for his daughter, the respondent herein, a paternal affection and he owed her a natural and legal duty of care and support. The fact that other objects of the payor's bounty would be unjustly discriminated against if the transfer was construed as a gift is entitled to be weighed against the claimed presumption. Parks v. Parks, 179 Cal. 472, 478, 479, 177 P. 455. If there is any presumption of gift in this case it was sufficiently rebutted. 25 Cal.Jur. p. 194.

It is next urged that in any event Albert was a purchaser for value and without notice of any trust. The trial judge found that Albert did not in good faith believe that the stock belonged to Josephine as her own property; that as president, director and manager of the corporation he had access to and controlled the books of the corporation and became possessed of sufficient knowledge and information to put him, as a prudent man, on inquiry as to the true ownership of the stock; that among other facts that he learned was the fact that the purchase price of the common stock was paid for by the money and earnings of Oscar, that the instalments had all been, and were still being, charged against Oscar even after his death; and that at all times after the transfers to Josephine Oscar had continued, as theretofore, to control and manage the corporation and that Josephine had taken no part whatever in such control and management. The finding is ample to show that Albert took with notice of the equities of Oscar's estate, and finds ample support in the evidence. Taking with notice of the equities it is immaterial whether the transfers to Albert were for legal or adequate consideration. 25 Cal.Jur. pp. 222–225.

Appellants by amendment to their answer after trial set up as an affirmative defense that the transfers of stock from Oscar to Josephine were made to evade payment of Federal income taxes. The trial court made no finding on this defense. The only support in the evidence for this defense is found in the saving of income tax on the dividend declared on the preferred stock, since Quinn received the dividend on the common. With our holding that the evidence does not support the finding of a trust for Oscar in the preferred stock the failure to find on this issue becomes immaterial. Oscar saved no income tax by the transfer of the common stock to Josephine. Instead of causing dividends to be declared on that stock after its transfer, he caused a $10,000 bonus to be paid to himself by the corporation in 1927 and one to be credited to him in 1928, and paid income tax on both.

Appellants pleaded as defenses the statute of limitations and laches. The trial court found against them on both issues. The court found in this connection that as early as May, 1929, Albert wrote plaintiff informing her that Oscar owned no stock in the corporation at the time of his death and that all of said stock belonged to Josephine; that the attorney for the corporation and for the administrators of Oscar's estate informed plaintiff through her guardian Fay Bixby and her guardian's attorney in 1929 and 1930 that Oscar owned none of said stock and that Josephine owned all of it; that plaintiff and her guardian and her guardian's attorney relied upon these statements and were influenced by such statements; that they had no other source of injormation than the statements of Albert, Josephine and the attorney; that plaintiff, who was thirteen years old at the time of Oscar's death, believed that her father owned the Bear Film Co. and deemed it strange and peculiar that she did not receive whatever would represent or show her interest in said business but that she had the utmost confidence in her grandmother, Josephine, and confidence in her uncle Albert and their attorney, and in the other persons in control of the business all of whom had been closely associated with and close friends of her father, and having such confidence she was not suspicious that her rights had been violated because of such confidence and a definite conviction that neither her father, nor her grandmother, nor her uncle Albert, nor any of her father's friends or business associates would do anything to cause her rights to be violated; that as early as 1933 plaintiff received an anonymous letter telling her that her father, Oscar, had been the owner of said corporation at the time of his death and that she had been defrauded of property which rightfully belonged to her and that she should start an investigation. The court further found that plaintiff had no further information concerning the facts than she learned from the representations of Josephine, Albert and their attorney, except the statements heretofore referred to, until she came to San Francisco in 1940 after receiving Mr. Silen's letter. From these facts the court concluded that the action was not barred by the statute of limitations.

In weighing the evidence in support of this conclusion it is important to notice that Josephine was administratrix of the estate of her son Oscar, and that she occupied the inconsistent position at the same time of claimant of ownership of all of the stock of Bear Film Co. by gift from Oscar. On June 3, 1929 Josephine wrote a letter to Charles which said in part:

‘I am writing this to ask you not to write to Virginia, or at least look out that you are not unintentionally doing me harm that would mean that you would be doing harm to yourself too, because you and Albert get it after me.

‘If her mother should take another lawyer we are sunk. This morning a letter came here from Virginia to Albert, in it she says, that she heard Oskar say that he was the sole owner of the Bear Film Co., and if so (she says) it belongs to me, he kept Grandma all his life and she will be getting the furniture where she lives. Now Carl what do you think of that? Her mother would just love to throw me in the gutter and leave me there, but fortunately Oskar did not intend for her to do so.’

From this and other letters the trial court was justified in believing that Josephine deliberately set out to conceal the true facts from the thirteen year old plaintiff and her guardian. Josephine occupied a fiduciary position as administratrix. She was trusted by the plaintiff also because of their relationship. The facts justified the conclusion of the trial court that the statute of limitations did not commence to run before the plaintiff's actual discovery of the facts in 1940, by reason of the misrepresentations and wrongful concealment of Josephine, Albert and those acting under Josephine's direction. It is well settled by the decisions of our Supreme Court that ‘when the defendant is guilty of fraudulent concealment of the cause of action the statute (of limitations) is deemed not to become operative until the aggrieved party discovers the existence of the cause of action.’ Pashley v. Pacific Elec. Co., 25 Cal.2d 226, 229, 153 P.2d 325, 327; Kimball v. Pacific Gas & Electric Co., 220 Cal. 203, 30 P.2d 39; Kane v. Cook, 8 Cal. 449. This case falls well within this rule.

It was for the trial court to weight the evidence and determine whether the statute started to run before Virginia's actual discovery of the facts. In the face of the express representations made to her by those in whom she had confidence it was a question for the trier of the facts whether an anonymous letter in 1933 or her belief that her father had owned the Bear Film Co. at his death should have led her to sooner make an investigation, particularly in view of the fact that the action was actually commenced within less than three years after she attained her majority.

Appellants insist, however, that because Josephine's co-administrator Uhle could have brought action on behalf of Oscar's estate the statute of limitations commenced to run against the estate and therefore continued to run against plaintiff after distribution of the estate to her, citing: 16 Cal.Jur. 557; California Sav., etc., Soc. v. Culver, 127 Cal. 107, 111, 59 P. 292; Congregational Church, etc., v. Osborn, 153 Cal. 197, 203, 94 P. 881; McLearan v. Benton, 73 Cal. 329, 342, 14 P. 879, 2 Am.St.Rep. 814; Patchett v. Pacific Coast Ry. Co., 100 Cal. 505, 35 P. 73; Dennis v. Bint, 122 Cal. 39, 44, 54 P. 378 and other cases. It is a complete answer to this contention that Uhle himself testified that he made no independent investigation to ascertain what property belonged to Oscar's estate, but got his information entirely from Josephine, Albert, the attorney and an auditor who testified that after Oscar died Josephine was the boss and he took his orders from her. If the concealment of the facts from plaintiff, her guardian and her guardian's attorney operated to prevent the statute of limitations from running until actual discovery, the concealment of the facts from Josephine's co-administrator Uhle must be held to have had the same effect during the administration of Oscar's estate.

In view of our conclusion on the statute of limitations the question of laches was also one for the trial court's determination. Austin v. Hallmark Oil Co., 21 Cal.2d 718, 734, 735, 134 P.2d 777. It would not do to hold that a party was guilty of laches under circumstances tolling the statute of limitations until discovery, when the action was commenced almost immediately after discovery first started the statute to run.

This brings us to a consideration of the money judgment against the corporation. A part of the money judgment was for dividends paid on the preferred stock. This must be reversed because of our holding that the finding of the court that the preferred stock was held on an express oral trust is not supported by the evidence. The dividends actually paid on both classes of stock was found to be $61,000 and judgment was entered for that amount with $17,676.09 interest thereon. 70% of these amounts is referable to the preferred stock, amounting to $42,700 principal and $12,373.26 interest. The money judgment should accordingly be reduced by those amounts.

The balance of the money judgment was made up of the following items: The $10,000 bonus credited to Oscar on the books of the corporation at the end of 1928; $5000 which the court found was lent to the corporation by Oscar for the use of Its Oakland branch; $2250 representing balance of unpaid salary at $750 per month for February, March and April, 1929; a charge of $1500 made on the books of the corporation after Oscar's death with a corresponding credit to Josephine; and $200 paid to the attorney by the corporation after Oscar's death and charged against his account.

Concerning the latter two items appellants are compelled to admit that the procedure was irregular. The corporation, as a matter of law, was not entitled to pay alleged debts of Oscar after his death, and take credits for those payments in accounting to Oscar's estate. The law on the subject is clear. If Josephine asserted that Oscar owed her $1500 at the time of his death her proper recourse as an administratrix was to present a claim against his estate for that amount. The claim would then have faced the scrutiny of the probate judge, who could approve or reject it as the proof made to him warranted. Probate Code, sec. 703, formerly Code Civ. Proc. sec. 1510. If Oscar owed the attorney $200 the legal course was for him to present his claim for that amount for the approval of the administrators and the probate judge. Probate Code, secs. 710 and 711, formerly Code Civ. Proc. sec. 1496. Instead the corporation elected to pay these amounts and deduct them from the balance paid by it into the estate. It had no legal authority to do this. No claims for these amounts having been presented to the estate they are barred under the express provisions of our law. 11a Cal.Jur. p. 734. The corporation by its conduct having prevented the allowance and payment of these claims in the only manner contemplated by the law is not in a position to claim credit for them. It was a volunteer and must suffer the fate of an officious intermeddler in other men's affairs. Brown v. Ayres, 33 Cal. 525, 528, 529, 91 Am.Dec. 655. ‘One who thus officiously intrudes himself into business which does not concern him has no right to compel reimbursement in the absence of a subsequent promise on the part of the debtor to repay.’ 20 Cal.Jur. p. 907.

Admittedly in accounting to the estate of Oscar the corporation did not include any unpaid salary after January, 1929. The court allowed $2250 at the rate of $750 for February, March and April. Appellants argue that the April salary should have been prorated to the date of Oscar's death. Apparently it was the practice of the corporation to pay Oscar $500 on account of his salary and credit the balance of $750 to him in advance each month. The only case which we have found on the precise question is Mendenhall v. Davis, 52 Wash. 169, 100 P. 336, 21 L.R.A.,N.S., 914, 17 Ann.Cas. 179. In that case the Supreme Court of Washington held that where an employee is prepaid and the employee then dies before the full period of service for which he has been paid the employer is entitled to a pro tanto recovery. The result seems just and we are satisfied to follow the same rule.

Appellant also points to evidence showing that Oscar after being credited with $750 per month for January, February and March 1926 and paid the $750 check which he endorsed to Josephine and from which she made the first $750 payment to Quinn, and that this $750 was not charged against Oscar. Respondent makes no satisfactory answer to this point. It results that the money judgment should be reduced by $958, $750 plus $208 referable to the part of April after Oscar's death.

The allowance of the $10,000 credited to Oscar on the books at the end of 1928 depends primarily on the finding of the trial court that the minutes of a purported meeting of March 29, 1929, were actually written and placed in the minute book after Oscar's death. Those minutes recite that:

‘Mr. Hansen (Oscar) stated that * * * he wished * * * to return the Bonus of $10,000.00 voted him for the year of 1928, as the Company was short of ready funds, and he wishes to make other investments for the Company, which he hoped would be more beneficial.’

The minutes then show a resolution adopted accepting the offered refund. The minute book also contains the purported minutes of a meeting of December 31, 1928 in which is recited the adoption of a resolution that the ‘customary yearly bonus of $10,000.00’ be paid to Oscar. The evidence is in dispute as to whether such meeting was held on December 31, 1928. The purported minutes of this December 31 meeting were admittedly typed after Oscar's death and pasted in the minute book to justify the position of the corporation in a dispute with the Federal income tax authorities over its deduction of this $10,000 item in its 1928 income tax return.

The witness Lida Mae Bolling who typed the minutes of both purported meetings testified that the minutes of the March 29, 1929 meeting were dicated to her by Albert after Oscar's death. Her testimony was contradicted by Neita Drake who was secretary of the corporation at the time of the purported meeting, by the auditor for the corporation and by an expert on disputed documents produced by appellants. The trial court chose to believe the witness Bolling. However appellants claim that the witness Bollins was so shaken on cross-examination that her testimony on direct furnishes no substantial support for this finding. It is for the trial court to weigh the evidence and even where the witness gives conflicting or inconsistent testimony on direct and cross-examination to determine which is true and which is false. High v. Pacific Gas & Electric Co., 52 Cal.App.2d 701, 709, 126 P.2d 911, 127 P.2d 588; Jones v. Re-Mine Oil Co., 47 Cal.App.2d 832, 836, 119 P.2d 219; Turner v. Whittel, 2 Cal.App.2d 585, 588, 38 P.2d 835. The testimony of Mrs. Bolling that the minutes of March 29, 1929 were dictated and typed after Oscar's death finds corroboration in the fact that the minutes of December 31, 1928 were admittedly typed after Oscar had died. It is difficult to believe that the minutes of the March 29 meeting would have been typed and pasted in the minute book at an earlier time than the minutes of the meeting of December 31, particularly in view of the fact that the minutes of the March 29 meeting dealt in large part with the subject matter of the December 31 meeting and rescinded the recited voting of the $10,000 bonus at the earlier meeting. The witness Drake attempted to explain the delay in typing the minutes of the December 31 meeting by testimony that because every one was busy celebrating the New Year the preparation of the minutes was overlooked. But it is obvious that the oversight, if there had been one, would have been noted when the meeting of March 29, if it in fact occurred, was held and the minutes of that meeting written up. It was for the trial court to weigh all of the evidence and determine the inferences to be drawn therefrom.

The trial court found that the purported meeting of December 31 did not in fact take place but that Oscar caused the $10,000 bonus to be credited to him without formal corporate action. Appellants seize on this finding to urge that the findings do not support the judgment for this item. A similar credit was given Oscar in 1927 without formal corporate action. Oscar was in complete control of the operations of the corporation with Josephine's consent. She was the only other stockholder. Oscar caused the income tax return for the corporation for 1928 to show the $10,000 bonus as an expenditure of the corporation and his own income tax return showed the bonus as income. The court was entitled to infer from all the facts and circumstances, including the payment of a similar bonus to Oscar in 1927 without formal corporate action, that Josephine knew of and consented to the crediting of the $10,000 bonus to Oscar in 1928.

The $5000 item depends on a credit originally given to Oscar on the books of the Oakland branch of the corporation for money lent by Oscar. At some later date Oscar's name was scratched out and Josephine's inserted over it in this entry. Respondent was able to produce the transcript of Oscar's bank account for this period which showed a $5000 check drawn by Oscar practically contemporaneous with the date of this entry. The check itself was not produced, to establish to whom it was drawn. No check for that amount drawn by Josephine was produced and she had no bank account of that amount at the time. The auditor testified that the erasure of Oscar's name and the substitution of Josephine's was made at Oscar's direction before his death. The evidence showed other changes made by the auditor in the same books to correct other errors of the bookkeeper in making her original entries and it is claimed that this was a similar correction of the bookkeeper's error. The testimony of the auditor as to this transaction was impeached by the court's finding that the entries made by him concerning the asserted surrender of the $10,000 bonus by Oscar were made after Oscar's death. The trial court weighed the evidence and concluded that the $5000 was actually advanced to the corporation by Oscar. This finding is sufficiently supported by the evidence and the reasonable inferences to be drawn therefrom.

After Oscar's death an action was commenced by Bear Film Co. against the administrators of Oscar's estate to determine the interest, if any, of Oscar's estate in Bear Photo Service of Oakland which was the name under which Bear Film Co. operated its Oakland branch. The decree in that case determined that Bear Photo Service was in fact a branch of Bear Film Co. and not the personal venture of Oscar. The trial court in this action reexamined the question and came to the same conclusion. As a part of the decree in the original action against the administrators the court directed and ordered the plaintiff, Bear Film Co. ‘to pay to said defendants the sum of Six Hundred and Forty-four Dollars and Forty-six Cents ($644.46) salary due to the said Oscar C. Hansen at his death and when such sum is so paid * * * it shall constitute a full and final settlement of the matter herein between the above named plaintiff and defendants as Administrators of the Estate of Oscar C. Hansen * * *.’ It is claimed by appellants that this judgment is res adjudicata of the $5000 item.

To this contention it is sufficient to point out that the parties to the action were Bear Film Co., at that time dominated and controlled by Josephine on the one side, and Josephine as administratrix of Oscar's estate with Uhle, who testified that he made no independent investigation of the assets of the estate, on the other. The judgment under the circumstances could not conclude the plaintiff as Oscar's successor in interest.

In accordance with our conclusions hereinabove announced: All those portions of the judgment adjudicating any right of plaintiff in and to the preferred stock of Bear Film Co. are reversed, the trial court is directed to amend its findings to find that Josephine T. Hansen did not hold said, of any of said, shares of the preferred stock upon an oral, or any trust, and to modify the judgment accordingly to decree that defendants, as their interests appear, are the owners of all of the shares of such preferred stock free and clear of any trust; that portion of the judgment decreeing that ‘plaintiff do have and recover judgment against the defendant Bear Film Co. for the sum of $18,950.00, principal, together with interest thereon in the sum of $18,688.91’ is modified by reducing the principal sum to $17,992.00 and the interest to $17,744.11; that portion of the judgment decreeing that ‘plaintiff do have and recover against Bear Film Co. for the sum of $61,000.00, principal, representing dividends * * * together with interest thereon in the sum of $17,676.09’ is modified by reducing the principal sum to $18,300 and the interest to $5302.83; and the remaining portions of the judgment are affirmed.

On Petition for Rehearing.

On petition for rehearing appellants cite section 450, Restatement of Trusts, in support of their contention that the $10,000 down payment made by Josephine's check to Quinn could not operate to create a resulting trust pro tanto for Oscar. The argument is that if the payment was intended as a gift to Oscar it did not become effective because there was no delivery. If the obligation to pay Quinn had been Josephine's obligation the argument might be valid. Her payment of her own obligation intending a gift to Oscar might be held to fail for want of delivery. This is the situation covered by the illustration of sec. 450 in 2 Restatement of Trusts, p. 1371, and discussed in the second paragraph of Comment a (Id. p. 1370). Even in that situation the decisions are not in agreement. Scott cites four cases on each side of this question. 3 Scott on Trusts 2275, notes 2 and 3.

But in our case the contract to purchase the common stock was made by Oscar, not by Josephine, and Oscar, not Josephine, assumed the obligation to pay for it. One may satisfy the debt of another by payment to the creditor if the creditor accepts the payment. Martin v. Quinn, 37 Cal. 55; Dodds v. Spring, 174 Cal. 412, 163 P. 351. In paying Oscar's obligation, if Josephine intended to pay it for Oscar, she completely accomplished her purpose and she thereby satisfied the requirement of Civ.Code, sec. 853 that the consideration be ‘paid by or for another.’ We have held that the evidence supports the conclusion that this was her intention.

The further argument is made that Oscar assumed no obligation to pay the $10,000 because the agreement with Quinn recites that the $10,000 is ‘payable upon the execution of this agreement, receipt whereof is hereby acknowledged.’ The payment was made pursuant to the obligation of Oscar to pay ‘upon the execution of this agreement’, and in satisfaction of that obligation. The fact that the agreement acknowledges the payment indicates that the obligation was immediately performed, but does not change the fact that it was performed pursuant to the terms of the agreement by which Oscar bound himself to make the payment.

We wish to correct a statement of fact, in the opinion previously filed, concerning the $5000 item. When Oscar's name was scratched out in the entry in the Oakland cash book the words ‘Bear Film Co.’ were written over it, not the name of Josephine. The credit was actually given to Josephine in the books of the corporation kept in San Francisco. The effect of the transaction was the same, to give Josephine the credit instead of Oscar.

Appellants also argue that paragraph 6 of the judgment cancelling the dividends declared but unpaid should be modified to allow payment of such dividends on the preferred stock. We cannot agree. These dividends were declared at a time when the common stock was, under the portion of the judgment herein affirmed, wrongfully withheld from respondent and without her participation or consent. Equity can properly preserve the status quo as to the unpaid dividends until the respondent can assume her position as the owner of the common stock.

In view of our holding that there is no evidence in the record to support the finding that the preferred stock was held by Josephine in trust for Oscar, appellants have petitioned us to modify our order in this case to direct the trial court to enter judgment that the defendants as legal owners of the preferred stock hold the same free from any trust in favor of plaintiff. We have decided that this should be done. The trial court found that Oscar delivered the preferred stock to Josephine. The effect of that delivery was to vest legal title in her. The trial consumed many weeks and the parties were afforded every opportunity to produce all available evidence. Respondent called a great number of witnesses but she was not able to produce a single person to testify to any agreement by Josephine to hold the preferred stock in trust. On the evidence we are satisfied that the trial court should have entered judgment for appellants on the issue of the preferred stock and this court has the power to order that to be done. Code Civ.Proc. sec. 956a; Bacon v. Bacon, 21 Cal.App.2d 540, 69 P.2d 884; Hanchett v. Wiseley, 107 Cal.App. 230, 290 P. 311.

The order heretofore made herein is accordingly modified by striking therefrom the following portion thereof: ‘That portion of the judgment which decrees that ‘at the time of his death Oscar C. Hansen was the equitable owner of all the shares of preferred stock, towit 2500 shares of Bear Film Co., and that accordingly the plaintiff, Virginia J. Hansen, as his sole heir at law, is now the equitable owner of the whole thereof’ is reversed,' and inserting in place of the language so stricken the following: ‘All those portions of the judgment adjudicating any right of plaintiff in and to the preferred stock of Bear Film Co. are reversed, the trial court is directed to amend its findings to find that Josephine T. Hansen did not hold said, or any of said, shares of the preferred stock upon an oral, or any trust, and to modify the judgment accordingly to decree that defendants, as their interests appear, are the owners of all of the shares of such preferred stock free and clear of any trust.’

The petition for rehearing is denied.

DOOLING, Justice pro tem.

NOURSE, P. J., and STURTEVANT, J., concur.