Kohn v. Kohn

• Decision Date: 26 January 1950
• Citation: 214 P.2d 71,95 Cal.App.2d 708
• Court: California Court of Appeals Court of Appeals
• Parties: KOHN v. KOHN et al. Civ. 14017.

Page 71

214 P.2d 71

95 Cal.App.2d 708

KOHN v. KOHN et al.

Civ. 14017.

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

Jan. 26, 1950.

Rehearing Denied Feb. 25, 1950.

Hearing Denied March 23, 1950.

Philip S. Ehrlich, Albert A. Axelrod, R. J. Hecht, San Francisco, for appellant.

Erskine, Erskine & Tulley, Morse Erskine, San Francisco, Gavin McNab, Schmulowitz, Aikins, Wyman & Sommer, Nat Schmulowitz, Peter S. Sommer, Sidney DeGoff, San Francisco, for respondent.

DOOLING, Justice.

Doris and Marion Kohn were married in 1927, separated in 1941, and in 1942 executed a property settlement agreement which was incorporated into the interlocutory decree of divorce obtained in the same year. The agreement was also made a part of the final decree of divorce in 1944.

This action was tried upon an amended complaint filed November 15, 1946 by Doris (hereafter called plaintiff), for the enforcement of the agreement against Marion (hereafter called defendant), alleging on the basis of information and belief that defendant had misstated his income for the years 1943, 1944 and 1945 and had concealed his true income. She asked in the amended complaint that the agreement be enforced; for an accounting; for judgment in the amount found to be owing her; for an order declaring her right to inspect defendant's accounts in the future; for a restraining order and injunction against altering, concealing or destroying records; for costs; and other relief generally.

The agreement provides that defendant is to pay to plaintiff each year 30% of his net income for the year previous to payment, in 12 monthly instalments. It further settles the property interests of the parties. The pertinent provisions follow.

Paragraph 5 defines 'net income' for the purposes of the agreement as '(a) The gross yearly receipts * * * in cash or its equivalent, less the amounts paid * * * as income taxes * * * and without deduction for capital losses (except when realized upon the sale of stocks or bonds) and * * * without the addition or inclusion of capital gains and profits, unless such capital gains and profits be reduced to cash or other liquid form, in which latter event, any profit realized by capital sales or conversions, or otherwise, shall constitute income.

'(b) Provided that the amount to which (plaintiff) shall be entitled monthly (hereunder) shall remain in excess of $350.00, any income derived * * * from rentals of the real property situated in the County of Marin * * * and any income derived * * * as compensation for personal services * * * and any income derived * * * from additional inheritances or from voluntary gifts hereafter made to (defendant) shall not be considered or constitute for the purpose hereof any part of the income * * *.

'(c) In the event, however, that (the amount payable as above defined falls below $350.00, defendant) shall pay * * * from the sums excluded from income in subparagraph (b) * * * such portion thereof not to exceed 30% as, when added to said sum of less than $350.00 monthly, will total not to exceed $600.00 monthly * * *.'

Paragraph 11 settles various property interests of the parties. By it plaintiff assigns to defendant all her interest in: '(a) The moneys and property received (by defendant) by way of compromise of the will contest * * * in the Estate of George Kohn * * * and of the claims (of defendant) to share in said estate, and in and to any and all stocks, bonds, securities and other property purchased with any moneys received by way of said compromise and the substitutes for and reimbursements of any and all property purchased with any portion of said moneys received by way of compromise;

'(c) The interest of (defendant) in and to the estate and assets thereof of Eva Heller Kohn, deceased, including all trusts and the properties, real and personal, constituting the corpus thereof, but excepting therefrom any rights of (defendant) to the income from said trusts after the same is paid to (defendant);

'(e) The certain real property situated in the County of Marin * * *.'

The court after trial in which, over defendant's objection, transactions for the year 1946 were also inquired into gave judgment for the plaintiff for certain additional amounts based on defendant's income as found by the court for those years. From this judgment both plaintiff and defendant have appealed. We shall consider these appeals separately taking up first

Defendant's Appeal.

The issues presented upon this appeal will be discussed and treated under separate headings.

I. Was it error to include as income under the agreement, income from the property received by defendant from the estate of George Kohn?

Defendant and plaintiff are in agreement that plaintiff has no right to any of the property obtained by defendant from the estate of George Kohn, deceased, because plaintiff has relinquished all such claims by paragraph 11(a) of their property settlement agreement. The issue raised here is whether the income derived from that property by defendant is to be included in his 'net income' as defined by, and for the purposes of, the property settlement agreement.

Although the above mentioned paragraph 11(a) deals specifically with this property, it says nothing whatsoever about the income from such property, hence it is no help in itself. It is pointed out by defendant that with respect to the estate of Eva Heller Kohn (paragraph 11(c)), plaintiff has relinquished all rights to the corpus, but specifically reserved her interest in the income from the trust. It is argued by defendant that had the intention been to reserve such a right to income in the estate of George Kohn, there would have been a similar specific reservation of income in paragraph 11(a) dealing with that property. It seems quite apparent, however, that neither of these paragraphs is primarily concerned with income, inasmuch as the provisions for income are set out specifically and in detail in paragraph 5. The purpose of paragraph 11 is manifestly to settle property interest as such. Therefore the fact that it seemed advisable to reserve rights to income in relinquishing rights to the corpus of a trust (par. 11(c)) is not convincing that omission of a right to income in relinquishing rights to property to be held by defendant outright is dominantly significant in the construction of the contract.

Good reason for the express reservation of the right to participate in income from the trust appears in the fact that under the trust defendant has no legal title to any part of the corpus of the trust, his principal right being to receive income therefrom, and in the absence of such express reservation plaintiff's assignment to defendant of 'the estate and assets * * * of Eva Heller Kohn, including all trusts * * *' might well have been construed to include the income from such trust, the right to receive which constituted defendant's principal property right therein. In the case of money and property received from George Kohn's estate defendant had the legal title thereto and the assignment of plaintiff's interest therein would carry no similar implication of a waiver of the right to receive income derived therefrom.

It is a well established rule that a contract must be read from its four corners, and emphasis should not be given to a particular part of a contract so as to make nugatory another part thereof. Civil Code sec. 1641; 6 Cal.Jur. 258 and cases cited therein. To place emphasis upon paragraph 11, in ascertaining the items of income for the purposes of the agreement, would be to ignore the paragraph which, by the very terms of the contract itself, was intended to govern the accounting of income. Such a mode of construction cannot be followed, as it is the duty of the courts to construe a contract according to the manifest intent of the parties. Civil Code secs. 1636-1639; 6 Cal.Jur. 252-255 and cases cited therein.

Paragraph 5, in defining 'net income' for the purposes of this contract, is drafted in inclusive terminology, so as to include all 'gross yearly receipts' unless specifically excepted. There is no provision in paragraph 5 by which the income from the property received from the estate of George Kohn could be excepted.

It further appeared at the trial that the practical construction of the contract by both defendant and plaintiff, and the construction and interpretation by which defendant was guided even after the initiation of this action, and until during the actual progress of the trial counsel for defendant for the first time suggested the construction now contended for, was that the income under discussion here was subject to the claims of plaintiff as income under the agreement. Such conduct will not be ignored unless the contract is very clear that the parties have misconstrued it. As stated in Mitau v. Roddan, 149 Cal. 1, 14, 84 P. 145, 150, 6 L.R.A.,N.S., 275: 'It is to be assumed that parties to a contract best know what was meant by its terms, and are the least liable to be mistaken as to its intention; that each party is alert to his own interest, and to insistence on his rights, and that whatever is done by the parties contemporaneously with the execution of the contract is done under its terms as they understood and intended it should be, * * *.' See also Barham v. Barham, 33 Cal.2d 416, 423, 202 P.2d 289; Lemm v. Stillwater Land & Cattle Co., 217 Cal. 474, 481, 19 P.2d 785; Woodbine v. Van Horn, 29 Cal.2d 95, 104, 173 P.2d 17; Moore v. Wood, 26 Cal.2d 621, 629, 160 P.2d 772; Roy v. Salisbury, 21 Cal.2d 176, 184, 130 P.2d 706; Tanner v. Title Ins. & Trust Co., 20 Cal.2d 814, 823, 129 P.2d 383; Commercial Discount Co. v. Cowen, 18 Cal.2d 610, 615, 116 P.2d 599; Thew v. Thew, 35 Cal.App.2d 691, 695, 96 P.2d 826; 20 Am.Jur., Evidence, sec. 1144, p. 998; 1 Rest. Contracts, sec. 235(e).

II. Was it error to include as income under the agreement the profits made by defendant in real estate transations, a...