Walton v. Walton, C016397

• Decision Date: 03 January 1995
• Docket Number: No. C016397,C016397
• Citation: 31 Cal.App.4th 277,36 Cal.Rptr.2d 901
• Court: California Court of Appeals Court of Appeals
• Parties: A. Bruce WALTON III et al., Plaintiffs and Respondents, v. Beverly WALTON, as Administrator, etc., Defendant and Appellant.

Page 901

36 Cal.Rptr.2d 901

31 Cal.App.4th 277

A. Bruce WALTON III et al., Plaintiffs and Respondents, v. Beverly WALTON, as Administrator, etc., Defendant and Appellant.

No. C016397.

Court of Appeal, Third District, California.

Jan. 3, 1995.

Certified for Partial Publication ^*

Eisen & Johnston, Jay-Allen Eisen, Marian M. Johnston, Karen Leaf and Ann Perrin Farina, Sacramento, for defendant and appellant.

Hennelly & Grossfeld, Pacific Palisades, Brian M. Englund, Fredrick S. Cohen and Daniel P. Whaley, Sacramento, for plaintiffs and respondents.

SIMS, Acting Presiding Justice.

Defendant Beverly Walton, as administrator for the estate of A. Bruce Walton II ("Bruce Jr."), ¹ appeals from a judgment awarding specific performance of an oral contract to make a will in consolidated actions brought by plaintiffs A. Bruce Walton III ("Bruce III") and Richard L. Walton ("Rick"). Defendant contends the trial court erred in denying her a jury trial and in granting specific performance on the merits.

In the published portion of the opinion, we conclude the trial court properly adjudicated the dispute without a jury. In the unpublished portion of the opinion, we conclude the trial court properly granted specific performance. We shall therefore affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In May 1992, Bruce III and Rick filed separate complaints against defendant in her capacity as administrator of their father's estate, claiming entitlement to specific percentages of the stock in the family business, SBC Industries, Inc., pursuant to an oral agreement by Bruce Jr. to devise the stock to plaintiffs in his will. By amended complaints, plaintiffs each alleged the following counts: (1) breach of contract, (2) quasi-specific performance of an oral contract to make a will, ² (3) common count--money had and received, and (4) restitution.

The two complaints were consolidated, per stipulation of the parties.

Plaintiffs moved to sever and try separately the equitable claim for quasi-specific performance, pursuant to Code of Civil Procedure sections 598 ³ and 1048. ⁴ Defendant demanded a jury trial and opposed severance on the ground she would be denied her right to jury trial. The trial court granted the motion to sever and set the case for nonjury trial of the quasi-specific performance claim, with a later date set for jury trial of the legal claims if needed.

The following evidence was adduced at trial (with quoted matter taken from the trial court's statement of decision):

In the early 1970's, plaintiffs owned stock in a family-held corporation, State Box Company. Bruce III owned 37.042 percent of the stock. Rick owned 12.775 percent, held in trust for him, with Bruce Jr. as trustee. The remainder of the stock of State Box Company (50.183 percent) was owned by Bruce Jr.

Bruce III worked at State Box Company until 1970, when he returned to college. Rick also worked at the company but stopped due to health reasons.

"... In late 1973, Bruce III discussed with Bruce Jr. the possibility that Bruce Jr. might purchase Bruce III['s] and Rick's shares in State Box Company. Bruce III believed that State Box Company was worth approximately $3 million.

"... In early 1974, Bruce Jr. offered that State Box Company would redeem the shares of Bruce III and Rick for $40.00 per share, most of which would be paid for with promissory notes at an interest rate of 4%.

"... Bruce Jr. also entered into an oral contract in early 1974, providing that if Bruce III and Rick would agree to allow their shares to be redeemed on the terms offered by Bruce Jr., then upon Bruce Jr.'s death, he would return the shares to them, provided he still owned them. Accordingly, Bruce III and Rick agreed to the terms of redemption offered by Bruce Jr.

"... Bruce Jr., Bruce III and Rick understood this oral contract to mean that Bruce Jr. would return their respective percentage ownerships (Bruce III--37.042%; Rick--12.77%) to them, upon Bruce Jr.'s death, provided he still owned the family business that owned the real property at 840 S. River Road, West Sacramento, California. This real property was the principal asset of State Box Company, and Bruce III and Rick did not believe that Bruce Jr. was likely to dispose of that asset."

The deals were consummated in February 1974 in the form of a stock redemption by State Box Company. Plaintiffs were each represented by counsel but neither mentioned to his attorney that Bruce, Jr. had agreed to bequeath the stock back to plaintiffs. As found by the trial court, plaintiffs considered the oral agreement to be a "private, family matter, that did not need to be documented and that should not be discussed outside of the Walton family."

A few months later, State Box Company ceased to exist. Bruce, Jr. merged it with another company he owned, Pres-to-Logs, to gain tax advantages. The new corporation was named SBC Industries, Inc. It continued to own land formerly owned by State Box Company and continued to use the State Box Company logo and bank accounts.

In 1982, Bruce Jr. executed a will disinheriting plaintiffs. Although plaintiffs heard rumors they were disinherited, they believed the disinheritance affected only property other than the stock affected by the agreement.

In 1984, Bruce, Jr. suffered a severe stroke, which left him physically incapacitated.

In October 1991, Bruce Jr. died. At his death he held 100 percent of the stock of SBC Industries, Inc.

In March 1992, Bruce III and Rick filed claims against Bruce Jr.'s estate in the probate court. Bruce III demanded $4,445,040, as the value of the stock Bruce Jr. promised to devise to him; Rick demanded $1,440,000. The claims were rejected, and the present actions were filed.

Following the bench trial of the quasi-specific performance claim, the trial court issued a statement of decision in plaintiffs' favor, finding (1) plaintiffs and Bruce Jr. entered an agreement whereby plaintiffs allowed their stock to be redeemed on the terms offered by Bruce Jr., who agreed to devise the shares to plaintiffs upon his death if he still owned the family business, (2) the fair market value of plaintiffs' stock at the time of redemption was $73.17 per share, (3) Bruce Jr.'s promise to return the stock to plaintiffs was additional consideration on which plaintiffs agreed to sell at $40 per share. The court also found the oral contract was definite, complete and sufficiently clear to be enforceable; the contract was fair, just and reasonable and supported by adequate consideration; plaintiffs fully performed the contract; Bruce Jr. breached the agreement; and plaintiffs' remedy at law was inadequate.

The trial court further found the merger of State Box Company with Pres-to-Logs Distributors and the subsequent name change to SBC Industries did not prevent the court from awarding equitable relief. The merger was done for tax reasons, which benefited Bruce Jr. There was no significant change in the operations of the corporation after the merger. Both before and after the merger the principal asset of the company was real "The parties did not contemplate that the oral contract could be avoided by the pretext of a change in corporate form. Further, the Court, sitting in equity, has considerable discretion, which it chooses to exercise, in determining the appropriate relief.

property constituting 99.7 percent of the company's assets.

"The nature of the oral agreement is such that quasi-specific performance is the appropriate remedy."

Plaintiffs dismissed all other causes of action.

The trial court entered judgment that the "Estate of A. Bruce Walton II holds 37.042% of the outstanding shares of stock of SBC Industries, Inc. in trust for A. Bruce Walton III and 12.775% of the outstanding shares of stock of SBC Industries, Inc. in trust for Richard Lynn Walton." The court ordered defendant to deliver the share certificates to plaintiffs and reserved jurisdiction to supervise and compel compliance.

DISCUSSION

I. Right To Jury Trial

Defendant contends the trial court erred in denying her a jury trial in violation of California Constitution, article I, section 16, which provides: "Trial by jury is an inviolate right and shall be secured to all...." ⁵ We disagree.

A. No Waiver

We first dispose of plaintiffs' assertion that defendant waived the right to a jury trial by failing to renew her demand for jury trial at the commencement of the court trial and by failing to post jury fees. We find no waiver.

The case was originally set for a trial by jury (at plaintiffs' request) to begin on April 19, 1993. Before trial, plaintiffs moved for severance and a separate court trial of the quasi-specific performance claim. Defendant responded with a written demand for a jury trial. Defendant also filed a written opposition arguing the existence and interpretation of the alleged oral contract must first be determined by a jury, as a prerequisite to equitable relief.

On March 8, 1993, the court granted plaintiffs' motion, ordered the quasi-specific performance claim to proceed to a court trial on April 19th, the date originally set for trial of the entire action, with a jury trial of any remaining legal issues to commence May 17th, if necessary.

Defendant apparently did not deposit jury fees for the April 19th trial date, though she did deposit jury fees in advance of the May 17th trial date. ⁶

Under these circumstances, there was no waiver. Plaintiffs cite no authority requiring defendant to renew the jury demand at the commencement of the court trial. There can be no waiver of jury trial by implication. (Cohill v. Nationwide Auto Service (1993) 16 Cal.App.4th 696, 700, 19 Cal.Rptr.2d 924.) The exclusive methods of waiver are set forth in section 631. (Ibid.) Section 631, subdivision (c), provides that where, as here, the party who initially demanded a jury trial waives his right to jury trial after the assignment for trial to a specific department of the court,...