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Dollar v. Tooley

Court of Appeal of California, First District, Division One
Sep 24, 1941
46 Cal.App.2d 832 (Cal. Ct. App. 1941)

Opinion

Docket No. 11536.

September 24, 1941.

APPEAL from a judgment of the Superior Court of the City and County of San Francisco. Sylvain J. Lazarus, Judge. Affirmed.

Action on promissory note. Judgment for plaintiff affirmed.

Byron Coleman, Abraham Setzer, George C. Hadley, Carl E. Day and Robert E. Hatch for Appellant.

Keith R. Ferguson, Robert E. Burns and Brobeck, Phleger Harrison for Respondent.


This is an appeal by defendant, as executor of the will of Mrs. Carrie M. Botts, deceased, from a judgment in plaintiff's favor in an action to recover on a promissory note executed by Mrs. Botts.

The note was dated November 1, 1935, and made payable to the plaintiff. It was given for the principal sum of $20,000, payable in monthly installments of $500, commencing November 1, 1941, without interest, and provided that in the event of the death of the maker the whole remaining unpaid balance was to become due and payable and from that date to bear interest at 6% per annum. Mrs. Botts died January 20, 1938, and plaintiff presented his claim for payment of the note to the executor of her will. It was rejected, and this action followed. The defenses interposed were that there was no consideration for the note, and that it was given by Mrs. Botts under a mistake of law or fact. The trial court found against defendant on both issues, and thereupon entered judgment for plaintiff for the principal of the note, interest and costs. The real question presented by the appeal is whether the evidence is legally sufficient to support the trial court's findings on those issues.

There is no dispute as to the essential facts, and for all the purposes of the appeal they may be stated as follows: James M. Botts and the deceased Carrie M. Botts were married in 1906; and Botts died on March 1, 1934. For many years prior to his death he and his wife were the president and secretary, respectively, of the American Marine Paint Company, owned practically all of its outstanding stock, and operated the business, Mrs. Botts taking an active part therein. Botts left a will whereunder he bequeathed to his wife her community interest in his estate; to the plaintiff, who was a close friend of long standing, $20,000; to John Parker, for many years manager of the company, 20% of the stock standing in Botts' name at the time of his death; and the balance of his estate to his brothers and sisters. He appointed plaintiff executor of his will, and plaintiff qualified and served as such until the estate was finally distributed. During the entire administration proceedings Mrs. Botts was represented by independent legal counsel, and throughout his administration of the estate plaintiff adhered strictly to the practice of never signing or approving any petition or claim without first having it approved in writing by Mrs. Botts.

At the time of Botts' death 1953 shares of the capital stock in said company stood in the names of Botts and his wife in joint tenancy with the right of survivorship; and in August, 1934, plaintiff filed an inventory in the estate in which the assets were appraised at $1969.92. None of the stock was included. Botts personally and the company were heavily in debt at the time of his death; and following the filing of the inventory a serious question arose as to whether the 1953 shares of stock were community property or held in joint tenancy. The creditors were demanding payment of their claims and threatening litigation. Some of the heirs had already retained an attorney who had examined the company's certificate books and afterwards advised Mrs. Botts that his clients claimed that the stock was community property. In fact Parker, who became the president of the company upon Botts' death, testified that "there had already been an action just about started with the relatives as to the joint tenancy stock." It was also ascertained that stock certificates previously issued to Botts, covering some 1700 shares of the 1953 shares issued to Botts and his wife in 1933 in joint tenancy, had never been endorsed by him. Mrs. Botts became much alarmed over the situation. She was very desirous of maintaining control of the company, and on account of existing conditions she was fearful she would lose the stock. She so expressed herself to Parker. In this connection she stated to him that the stock would be jeopardized if it remained in joint tenancy; and on several occasions she discussed with him what might happen if the creditors "attacked the joint tenancy," stating that if they were successful she would be obliged to sell the stock; and finally in one of those conversations she told him "she was going to have the stock placed in the estate as community property." It also appears from the record that during the probate proceedings in her husband's estate Mrs. Botts filed a suit against the executor to determine that she was the owner in joint tenancy of all the property of the estate. The defendant filed an answer, but so far as the record here shows, no trial was ever had, nor any judgment entered. In any event, she proceeded to acquire the interests of all legatees (except Parker's) and the claims of all creditors. Large sums of money amounting to more than $59,000 were advanced to her by the company for that purpose, some of the assignments being made to the company, and to some of the parties she gave her note in payment. In that manner she acquired all outstanding interests against the estate except Parker's, and all of this was done under the advice and guidance of her counsel.

In dealing with plaintiff, Mrs. Botts first asked him if he would be willing to accept her note in payment for an assignment of his legacy and the amount of fees to which he would be entitled as executor; and he told her he would. Plaintiff testified that at that time he knew the value of the estate depended on whether the American Marine Paint Company stock was in joint tenancy or was community property; that Mrs. Botts showed him the company's records disclosing the unendorsed certificates covering the 1700 shares; that before closing the transaction he referred the matter to his attorney for an opinion, and was advised that the stock was not held in joint tenancy. He also testified positively that he believed he would receive from the estate his legacy of $20,000; that he was "perfectly satisfied" in his own mind that his legacy "was perfectly good and was worth its value, its full face value," and that he understood that the legal effect of the transaction was that he was selling and transferring to Mrs. Botts all of his interest in the $20,000 legacy and in the fees he would receive as executor of the estate. The evidence also shows that the transaction with plaintiff relating to the execution of the note and the assignment was initiated by Mrs. Botts' attorneys, and was consummated after several consultations between Mrs. Botts, her attorneys, plaintiff, and his attorney. In this connection plaintiff's attorney testified that one of Mrs. Botts' attorneys informed him that Mrs. Botts desired to acquire all of the estate and would like to purchase the claims; and that in order to have all the estate assigned to her it would be necessary for her to pay for the claims and the legacies; that the terms of the note were discussed, and he informed Mrs. Botts' attorney that plaintiff would not insist upon any interest during the time other notes were being paid which she had given in payment of certain claims; that her attorney drew the note and the assignment; that he, plaintiff's attorney, received the assignment from Mrs. Botts' attorneys, presented it to plaintiff, who signed it, and returned it to Mrs. Botts' attorneys, who delivered to him the promissory note.

Several months after the note and assignment transaction was closed, and on May 12, 1936, plaintiff filed an amended inventory in which 1749 shares of said stock were listed as community property (the remaining 204 shares as the separate property of Carrie M. Botts), and the estate was appraised at $206,509.18; on July 23, 1936, plaintiff filed his first and final account and petition for distribution, and on August 4, 1936, the decree of final settlement and distribution was entered. All of these documents were filed only after Mrs. Botts had approved the same on the advice of her attorney.

The petition for distribution set forth the community interest of Mrs. Botts in one-half of the property of the estate, including the 1749 shares of said stock, the assignment of plaintiff's legacy of $20,000 to Mrs. Botts, and the assignment of his executor's fees to her. And the decree of final distribution set forth that all of the property in the estate was community property; that plaintiff was bequeathed a legacy of $20,000; that his legacy and his commissions as executor were assigned to Mrs. Botts; and that by reason of this and other assignments, Mrs. Botts was the sole distributee, except for the legacy to John Parker. The property of the estate was distributed as decreed, the executor was discharged, and no appeal was taken; moreover, at no time from November 1, 1935, the date of the note, up to the time of her death on January 20, 1938, did Mrs. Botts question the validity of the note or any part of the transaction had with plaintiff; nor did she return to him the legacy or executor's fees which he had assigned to her as consideration for the note; and in the present case there is no charge of fraud, undue influence or misrepresentation. The question of the validity of the note was raised after Mrs. Botts' death by the rejection of plaintiff's claim by the executor of her estate, the defendant herein, who had been the accountant for the James Botts estate.

[1] The facts above narrated amply support the trial court's findings and judgment in favor of plaintiff. Regarding the issue of consideration, section 1605 of the Civil Code provides: "Any benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise." As will be noted, said section reads in the alternative; that is, it declares that the consideration is good if the promise results either in a benefit to the promisor or a detriment to the promisee; and in the present case there is both. Mrs. Botts, as promisor, received the benefit of the assignment and afterwards the full measure of the property covered thereby. It is true that at the time she obtained the assignment there was a question as to whether the stock was community property. But at that time also litigation over the question was threatened by the heirs of her husband and numerous creditors of both Botts and the company; and in order to avoid such litigation and the uncertainty of the outcome thereof, and being motivated by a desire to retain control of the stock at all events, Mrs. Botts, under the advice of her counsel, took the initiative of protecting herself by inducing plaintiff to assign to her his rights as legatee in consideration for which she gave the note in suit. As a legatee, plaintiff would have had the same right as other parties taking under the will and the creditors to institute litigation against her as to the stock; therefore a settlement with him under such conditions constituted a perfectly binding and valid contract, requiring no other consideration. On the other hand, the detriment to plaintiff, as promisee, was the transfer by him to Mrs. Botts of his legacy under the will, which he and Mrs. Botts both considered good, and the assignment to her of his executor's fees, and the acceptance by him in payment therefor of her unsecured note extending payment for a period of six years, or until her death.

[2] Defendant's contention that there was no consideration for the note is based upon the theory that at the time it was given the stock was not part of the estate; that the appraised value of the estate stood at only $1969.92, as shown by the first inventory; that consequently such was the actual value of the estate; that this sum was insufficient to pay the claims against the estate, to say nothing of the legacies; and that therefore plaintiff's legacy lapsed and adeemed, and being worthless the assignment thereof did not constitute a good consideration for the execution of the note. As already pointed out, however, the first inventory was filed in August, 1934, and the transaction involving the giving of the assignment and the note did not take place until November 1, 1935; and subsequent to the filing of the first inventory and prior to the consummation of that transaction the controversy arose over the question of whether the stock was community property and hence constituted part of the assets of the estate. In determining the question of consideration, therefore, the conditions existing at the time of the execution of the assignment and the note are controlling rather than those prevailing at the time of the filing of the first inventory; and as shown thereafter the stock did become part of the assets of the estate and was distributed as such.

Appellant calls attention to the fact that since the filing of the briefs herein the federal court, in reviewing a decision of the United States Board of Tax Appeals, fixing the amount of taxes claimed to be due the government, held in part that said stock passed to Mrs. Botts as surviving joint tenant rather than through the decree of final distribution entered in the matter of her husband's estate. It would seem to require no comment to demonstrate that that decision has no bearing whatever on the issues involved in this appeal.

The facts above narrated serve also as a complete answer to defendant's remaining point that there was a mistake in law or fact. Plaintiff contends that there are other grounds upon which the trial court's decision may be properly sustained, among them being estoppel and the finality of the decree of distribution. But in view of the conclusion reached on the issues of consideration and mistake, it becomes unnecessary to inquire into the merits of the other grounds urged.

The judgment is affirmed.

Peters, P.J., and Ward, J., concurred.

A petition for a rehearing was denied October 24, 1941, and appellant's petition for a hearing by the Supreme Court was denied November 17, 1941.


Summaries of

Dollar v. Tooley

Court of Appeal of California, First District, Division One
Sep 24, 1941
46 Cal.App.2d 832 (Cal. Ct. App. 1941)
Case details for

Dollar v. Tooley

Case Details

Full title:R. STANLEY DOLLAR, Respondent, v. HOMER H. TOOLEY, as Executor, etc.…

Court:Court of Appeal of California, First District, Division One

Date published: Sep 24, 1941

Citations

46 Cal.App.2d 832 (Cal. Ct. App. 1941)
117 P.2d 39

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