Costello v. Wells Fargo Bank

• Decision Date: 22 January 1968
• Citation: 65 Cal.Rptr. 612,258 Cal.App.2d 90
• Court: California Court of Appeals Court of Appeals
• Parties: Joseph V. COSTELLO, Jr., Charles B. Strain and John L. Levinsohn, copartners doing business under the firm name of Hill & Co., Plaintiffs and Appellants, v. WELLS FARGO BANK, a California banking corporation, Defendant and Respondent. Joseph V. COSTELLO, Jr., Charles B. Strain and John L. Levinsohn, copartners doing business under the firm name of Hill & Co., Plaintiffs and Appellants, v. MANA & BUGATTO, a copartnership, Stephen L. Mana and Benito J. Bugatto, individually and as copartners doing business under the firm name of Mana& Bugatto, Defendants and Respondents. Civ. 23761, 23839.

Page 612

65 Cal.Rptr. 612

258 Cal.App.2d 90

Joseph V. COSTELLO, Jr., Charles B. Strain and John L. Levinsohn, copartners doing business under the firm name of Hill & Co., Plaintiffs and Appellants, v. WELLS FARGO BANK, a California banking corporation, Defendant and Respondent.

Joseph V. COSTELLO, Jr., Charles B. Strain and John L. Levinsohn, copartners doing business under the firm name of Hill & Co., Plaintiffs and Appellants, v. MANA & BUGATTO, a copartnership, Stephen L. Mana and Benito J. Bugatto, individually and as copartners doing business under the firm name of Mana& Bugatto, Defendants and Respondents.

Civ. 23761, 23839.

Court of Appeal, First District, Division 2, California.

Jan. 22, 1968.

Hearing Denied March 20, 1968.

Knight, Boland & Riordan, San Francisco, for appellants.

Brobeck, Phleger & Harrison, San Francisco, for respondent Wells Fargo bank.

Elke, Farella, Braun & Martel, San Francisco, for respondents Mana & Bugatto.

SHOEMAKER, Presiding Justice.

Plaintiffs appeal from two separate judgments, each of which was entered after the court sustained a demurrer to the original complaint without leave to amend. The two cases involve related issues and were consolidated on appeal by order of this court.

The complaint in the first of the two actions subject of this appeal alleged that plaintiffs Joseph Costello, Jr., Charles Strain and John Levinsohn were licensed real estate brokers and partners in the firm of Hill & Co.; that defendant Wells Fargo Bank was the executor of the wills of Dorothy Johnson and of Byron Johnson, deceased; that the assets of each of the two estates included an undivided one-half interest in certain San Francisco real property; that on March 2, 1965, defendant, acting in its capacity as executor of the two estates, published notice that offers would be received for the sale of said property until 3:00 p.m. on April 5, 1965; that in reliance on said notice, plaintiffs solicited, procured and delivered to defendant, prior to the stated deadline, an offer to purchase the property and a deposit to be applied against the purchase price; that on April 5, 1965, defendant accepted the offer in writing, subject to court confirmation of the sale, and agreed that upon such confirmation, plaintiffs would be paid a real estate brokerage commission in the total amount of $5,650.30; that defendant was obligated under the agreement with plaintiffs to report the sale to the court and to petition the court for confirmation of said sale within 30 days from the date thereof in accordance with section 755 of the Probate Code; that defendant failed to file the report and petition until May 10, 1965, and that the court refused to confirm the sale upon the ground that said petition and report of sale were not filed within the time required under section 755 of the Probate Code; that plaintiffs were thereby deprived of the real estate commission which defendant had agreed to pay upon the sale of the property. Plaintiffs sought damages in the amount of the commission agreed upon and alleged, as alternative theories of recovery, that defendant's failure to file the report and petition within the 30-day period constituted (1) a breach of the written agreement of April 5, 1965, and (2) negligence.

Plaintiffs contend that their complaint states a cause of action against the executor on a contract theory because every contract imposes upon each contracting party an implied duty to do everything that the contract presupposes that he will do to accomplish its purpose. (Harm v. Frasher (1960) 181 Cal.App.2d 405, 417, 5 Cal.Rptr. 367.) Since defendant executor was thus impliedly obligated to see that the report and petition for confirmation of sale were timely filed, plaintiffs reason that its failure to do so constituted a breach of contract for which it was personally liable to plaintiffs. This argument is obviously unsound, since section 760 of the Probate Code ¹ expressly provides that 'By the execution of any such contract no personal liability shall attach to the executor * * *.'

Plaintiffs' contention that defendant executor was liable to them on a tort theory under section 759 of the Probate Code ² is likewise untenable. It is apparent, first of all, that the contract with plaintiffs affords the sole basis for the imposition of the 'duty' which defendant was alleged to have negligently breached. Thus, whether plaintiffs' cause of action against defendant be stated in terms of contract or negligence, it still constitutes an attempt to impose personal liability upon the executor '(b)y the execution of' the contract and is thus violative of section 760. In any event, section 759 authorizes the bringing of a tort action against the executor only by a 'person interested in the estate.' Plaintiffs were not persons interested in the estate, since the sale to the purchaser procured by plaintiffs was never actually made and confirmed by the court, and section 760 thus affords no basis for the imposition of liability of any kind upon the Johnson estates. In Estate of Rule (1944) 25 Cal.2d 1, 9--10, 152 P.2d 1003, 155 A.L.R. 1319, the court, in analyzing section 760, stated, 'The * * * language providing against liability 'unless an actual sale is made and confirmed by the court' clearly indicates that in the contemplation of the statute the sale is not regarded as 'made' unless and until it is confirmed by the court. Hence, strictly speaking, the purchaser cannot be regarded as 'secured' until the sale has been confirmed, nor, by the other * * * language of the section, is the contract valid or binding for any purpose unless and until the sale is confirmed' (p. 10, 152 P.2d p. 1007).

The complaint in the second action alleged that defendants Stephen Mana and Benito Bugatto were attorneys employed by the executors of the estates of Dorothy and Byron Johnson; that in connection with the sale agreement discussed above, defendants had the obligation and duty to cause a report of said sale and petition for the confirmation thereof for each estate to be prepared, executed by the executors and filed with the court within 30 days from said sale in accordance with the provisions of section 755 of the Probate Code; that defendants negligently failed to cause the filing of said reports and petitions within the time required and, as a result of such failure, the court refused to confirm the sale and the real property in question was subsequently sold to a buyer not procured by plaintiffs for a net price substantially less than the price procured by plaintiffs; that defendants' negligent conduct was the proximate result of plaintiffs' sustaining damages in the amount of the real estate commission to which they would otherwise have been entitled.

In support of the complaint in the second action, plaintiffs rely solely upon Lucas v. Hamm (1961) 56 Cal.2d 583, 15 Cal.Rptr. 821, 364 P.2d 685, wherein the court held that an attorney who was employed by a testator to prepare a will and who was negligent in the performance of this task was liable to the intended beneficiary even though there was no privity of contract between the attorney and the beneficiary. The court stated that the determination whether a defendant would be held liable to a third party not in privity of contract was a matter of policy which involved the balancing of the following factors: 'the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to...