Hillman v. Stults

• Decision Date: 12 July 1968
• Court: California Court of Appeals Court of Appeals
• Parties: Wayne HILLMAN, Plaintiff and Respondent, v. Genie H. STULTS et al., Defendants and Appellants. Civ. 27538, 27814, 28208, 30550.

Page 295

70 Cal.Rptr. 295

263 Cal.App.2d 848

Wayne HILLMAN, Plaintiff and Respondent, v. Genie H. STULTS et al., Defendants and Appellants.

Civ. 27538, 27814, 28208, 30550.

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

July 12, 1968.

Rehearing Denied Aug. 5, 1968.

Hearing Denied Sept. 5, 1968.

Muller & Woolpert, by Wickson R. Woolpert, San Luis Obispo, for plaintiff and respondent.

Morris Lavine, Los Angeles, for defendants and appellants.

NUTTER, Associate Justice pro tem. ^*

This case involves consolidated appeals from certain orders involving a conservatorship and a receivership and a judgment holding that extensive ranch holdings, real and personal property of respondent Hillman in San Luis Obispo County were held in trust for him by his sister, Genie Hillman Stults. The dispute resulted from an effort by Hillman who had been convicted of murdering his wife ¹ to retain and preserve his property holdings during his imprisonment by conveying and transferring his property to his sister as trustee. The sister is now deceased. Her estate has been substituted through her husband Walter Stults who is now a party as administrator and an individual appellant. After many years of complex litigation, the trial court, in giving judgment to respondent held that Hillman was the owner of the real and personal property; he had transferred his property to his sister in trust, other than a Cadillac which he gave to her in recognition of her services to him. The trust was terminated. The court ordered the sister to return to Hillman jewelry with an alternative that if it was not returned by June 1, 1965, he should recover the value of the items which was fixed at $10,000; the court also approved certain ranch leases and ordered appellant's sister to pay to respondent the sum of $30,570.55 on an accounting but denied appellants any trust administration fees; the court imposed an order for sanctions against appellant's estate in the sum of $40,000 for the expenses of plaintiff in proving title and $20,000 for the expense of proving the accounting.

The consolidated appeals require a determination of the right of a prisoner to be involved in the creation of a trust as a beneficiary; the jurisdiction of the Adult Authority to partially restore the civil rights of an inmate and parolee so that he may conserve and protect his property; the rights of the court to establish a conservatorship in his home county for the property of a prisoner confined in a county other than his home residence; the validity of a subsequent receivership and the settlement The following is a brief summary of the most pertinent events:

of the receiver's account; orders of reference and accounting; the validity of lease transactions involving the ranch and finally sanctions of $60,000 imposed against the sister's estate for expenses imposed in proving the title and accounting. We are of the opinion that the orders and judgment should be affirmed except for the amount of sanctions.

In January 1955, respondent, the owner of a 6,480 acre ranch in San Luis Obispo County, murdered his wife. In April of the same year during the murder trial, respondent appointed his sister, Genie Stults, guardian of his children and she took possession of the bulk of plaintiff's separate real and personal property. On April 22, 1955, respondent gave her a general power of attorney before his sentence following his murder conviction. However, it was agreed by respondent and his sister that the power of attorney was inappropriate because of administration problems and difficulties in obtaining credit for the extensive operations of the ranch. To avoid these problems on June 9, 1955, it was decided by respondent and his sister to set up a simple trust. Cornish, the sister's attorney, drafted a trust letter from the sister to respondent, describing the nature of the prospective transaction and relationship between them.

In a letter to the Adult Authority on June 8, 1955, enclosing the deed, and bill of sale, Cornish stated: 'Also enclosed is a letter in which it is proposed Mrs. Stults will sign and deliver to Wayne Hillman so as to prove his beneficial interest in the property.' The letter, dated June 9, 1955, stated:

'On the face of these documents (deed and bills of sale) they purport to convey absolute ownership to me, and it is thoroughly understood that the reason you are transferring this property to me in that manner is to enable me to more effectively deal with it for the purpose of administering the property, collecting the income, borrowing on it, or take other necessary steps to preserve it while you are confined in the state penitentiary, and although on the face of the record I appear to have a complete title, I hold it strictly in trust for you and acquire no beneficial interest save and excepting to the extent it may be necessary to protect me to the extent that I may hereafter find it advisable to pledge my personal credit on your behalf.

'I am furnishing you with this letter so that at any time you desire the property back to administer it yourself, or in the event of my death, you will have this to show that you are the real owner of the property and that neither I nor my estate has any beneficial interest in the property save and excepting to the extent that my personal credit may have been pledged in your behalf.'

In his petition for partial restoration of his civil rights so that he could deed and transfer the property, Hillman stated that the purpose of the request was 'So that my sister can have a free hand to handle my business affairs, and I fully believe that she will act in my best interest.' The application was approved by the assistant warden, and respondent executed deeds and bills of sale to the sister, for the real and personal property.

Respondent's sister gave respondent an executed copy of the letter and respondent retained a copy. The trial court held that this letter was an integrated part of the trust transaction and there was a full disclosure of the intended transaction to prison officials.

It found that: 'It was the intention of both the plaintiff and the said defendant, when said documents were exchanged, that the transfer was not a conveyance for consideration but instead was strictly in trust pursuant to the express, written trust agreement dated June 9, 1955. It was further the intention of the parties thereto that the trust was to be a gratuitous, sisterly effort on the part of Genie H. Stults, compensation not being intended, but reimbursement and security being provided said In 1956, the law firm of Muller and Woolpert was retained by respondent's sister to represent respondent in a civil suit brought against him by his stepson for the wrongful death of his mother. Muller and Woolpert insisted that respondent's sister assume the obligation of respondent's fee.

defendant pursuant to said June 9, 1955 letter.'

Respondent and his sister had several disputes concerning the administration of the ranch properties. In 1959, Muller and Woolpert sought unsuccessfully to obtain a voluntary accounting from appellants of their administration of respondent's ranch interests. Finally, on September 24, 1959, plaintiff applied to the Adult Authority for permission to petition for appointment of Muller and Woolpert as conservators of plaintiff's property in San Luis Obispo County. Mr. Cornish, the sister's attorney who prepared the trust letter of June 9, 1955, opposed the petition as unnecessary. The Adult Authority granted permission as requested and on January 18, 1960, the San Luis Obispo Superior Court appointed Muller and Woolpert as conservators of the property.

On April 6, 1960, the sister's husband, Walter Stults, sued his wife as trustee for the expenses of the administration of the trust for respondent's property.

On May 12, 1960, Muller and Woolpert as conservators, filed an action to establish title to the real and personal property, to declare a trust, compel a conveyance and accounting of the property deeded and conveyed to the sister in June 1955.

On June 14, 1960, Muller and Woolpert as conservators obtained a receiver for the ranch property because of conflicts between respondent and appellants concerning rental payments and problems concerning disposal of the crops. On April 5, 1961, respondent filed a request for admissions of the genuineness of the June 9, 1955 trust letter. Appellants denied the validity of the letter or its delivery to respondent; they also denied certain judicial and extra-judicial admissions concerning the status of the trust by appellant's sister or her prior attorneys.

On February 23, 1962, plaintiff was released on parole. He appeared and testified at the trial. On June 7, 1962, the trial court made an interlocutory judgment holding that the real and personal property was held in trust by the sister but there was no agreement for trustee's fees. The court ordered an accounting and reference. On September 13, 1963, respondent received a further partial restoration of civil rights from the Adult Authority and was given permission to substitute as personal party plaintiff in place of Muller and Woolpert. The court approved the substitutions on October 22, 1963. Testimony on the accounting reference was closed on December 16, 1964.

In its final judgment on May 3, 1965, the court decreed the trust terminated and found defendant had breached her trust to the plaintiff so that it was inequitable for her to receive fees for herself or her attorney.

Basically, appellants argue that no trust was ever created; it violated the statute of frauds; the trust letter was never delivered by the sister to respondent; respondent was civilly dead and lacked the capacity to create any trust because of his conviction and sentence to life imprisonment; that if the parties attempted to create a trust it was void and all subsequent and ancillary proceedings in support thereto were...