Lovetro v. Steers

• Decision Date: 19 May 1965
• Citation: 44 Cal.Rptr. 604,234 Cal.App.2d 461
• Court: California Court of Appeals Court of Appeals
• Parties: Joan LOVETRO, Plaintiff, Cross-Defendant and Appellant, v. Gene W. STEERS and Geraldine Steers, Defendants, Cross-Complainants and Respondents. Civ. 21826.

Page 604

44 Cal.Rptr. 604

234 Cal.App.2d 461

Joan LOVETRO, Plaintiff, Cross-Defendant and Appellant, v. Gene W. STEERS and Geraldine Steers, Defendants, Cross-Complainants and Respondents.

Civ. 21826.

District Court of Appeal, First District, Division 1, California.

May 19, 1965.

O. Leland Osborne, of Miller, Osborne, Miller, Bartlett & Tallett, San Mateo, for appellant.

William A. Sullivan, San Mateo, Samuel L. Fendel, San Francisco, for respondents.

MOLINARI, Justice.

Plaintiff, Joan Lovetro, appeals from a judgment in her favor for $2,000, plus $500 in attorney's fees in an action wherein she sought to recover the sum of $9,500 plus interest and attorney's fees upon a promissory note executed by defendants, Gene W. Steers and Geraldine Steers, to plaintiff and her deceased husband, Sam Lovetro, as joint tenants. ¹

Defendants admitted the execution of the note but denied that there was due thereon any more than the sum of $1,782.85, which sum they tendered to plaintiff, and upon its being refused, deposited with the clerk of the court. The position taken by defendants was that the Lovetros had executed a written release purporting to release defendants from all obligations on the note excepting the sum of $2,000, against which defendants sought to offset the sum of $217.15 as an indebtedness owing from Sam to defendants. With respect to the purported release plaintiff contended that it was a forgery as to her and that it was executed without her knowledge or consent. With regard to the alleged indebtedness of $217.15, plaintiff asserted that it was her husband's personal obligation and that no claim on account thereof was made in the probate of his estate. The position taken by plaintiff at the pretrial conference was that $6,000 had been paid on account of the $25,000 principal of said note, leaving a balance of $19,000; and that the release executed by Sam was not binding on her one-half interest in said balance, that is, the sum of $9,500.

The factual background developed at the trial showed that Sam and Gene had been partners in an auto parts business; that Sam sold his interest to Gene; that pursuant to the partnership dissolution agreement the Steers executed a promissory note dated October 1, 1958, by which they promised to pay to the order of Sam and Joan, 'as joint tenants with the right of survivorship,' the principal sum of $25,000 with interest at the rate of 6 percent; that between November 19, 1958 and November 19, 1959, the Steers made monthly payments of $500 totalling the sum of $6,000; that following the dissolution Sam continued to work for Gene as a bookkeeper; that during the course of his employment Sam took money from Gene without the latter's consent; that when the shortages were discovered by Gene, he and Sam agreed that the monies taken should be credited against the balance due on the promissory note; that an amount was agreed upon by Gene and Sam based upon an independent audit; that thereupon Gene and Sam executed an instrument entitled 'Mutual Release' and a letter acknowledging that the remaining indebtedness due on the note was $2,000; ² and that the release, although purporting to be an agreement between Gene and Sam, contains in addition to their signatures one purporting to be the signature of Joan.

At the trial plaintiff called a handwriting expert who testified that the signature on the release purporting to be Joan's was not her signature. In addition, Joan testified that it was not her signature and that the release was executed without her knowledge and consent. The record discloses further that Sam died on March 11, 1961, that his will was probated, that his entire estate devolved to Joan, that the estate was closed, and that no claim was filed by defendants against the estate.

Before adverting to the trial court's findings it should be here pointed out that it is the established law in California that in order for a promissory note which is held in joint tenancy to be extinguished, either in part or in full, the consent of both of the obligees must be obtained. (Stark v. Coker, 20 Cal.2d 839, 844-845, 129 P.2d 390.) In Stark, the wife of the plaintiff, who, with her husband, was named as a joint tenant on a promissory note executed by the defendant corporation, had entered into an accord and satisfaction with the defendants, whereby the $12,000 note was to be discharged for $3,000. The plaintiff had no knowledge of the purported accord and satisfaction and did not authorize it. In allowing the plaintiff to recover on the note, the Supreme Court held that Civil Code section 1475, ³ which provides that 'An obligation in favor of several persons is extinguished by performance rendered to any of them, except in the case of a deposit made by owners in common, or in joint ownership, which is regulated by the Title on Deposit,' was not applicable under the circumstances there presented. It should be here noted that in Cober v. Connolly, 20 Cal.2d 741, 128 P.2d 519, 142 A.L.R. 367, decided by the Supreme Court just a month prior to Stark, section 1475 was held to be applicable where payment on a note was made to one of the three payees thereof. Stark makes no reference to Cober. The two cases are clearly distinguishable, however, since Cober did not involve a note held in joint tenancy but one in which the payees were merely joint payees.

In the light of the rule announced in Stark, defendants could only prevail on some theory which would permit them to urge the subject release in discharge of the obligation even though plaintiff did not sign the release or agree to its terms. The theories advanced by defendants for this purpose were (1) that the promissory note was in actual fact a community asset, the note having been executed in the form of joint tenancy as a matter of convenience, and (2) that plaintiff by her conduct led defendants to believe that Sam had authority to act for her in any dealings involving the note, and that he was therefore her agent in executing the release. As to both of these theories, the trial court found in favor of defendants. ⁴ The major issue on appeal therefore is whether or not these findings are supported by the evidence contained in the record. We deal first with the theory that the subject note was in actuality an asset of the community.

When property is conveyed to a husband and wife as joint tenants, the form of the conveyance is such as to destroy the statutory presumption that the property is community even though the consideration for such conveyance consists of community funds or assets; such an instrument creates a tenancy in which the interests of the husband and wife are separate property. (Siberell v. Siberell, 214 Cal. 767, 773, 7 P.2d 1003; Mears v. Mears, 180 Cal.App.2d 484, 500, 4 Cal.Rptr. 618.) However, the form of the instrument under which a husband and wife hold title is not conclusive as to the status of the property; property acquired as joint tenants may be shown to be actually community property or the separate property of one spouse according to the intention, understanding or agreement of the parties. (Gudelj v. Gudelj, 41 Cal.2d 202, 212, 259 P.2d 656; Socol v. King, 36 Cal.2d 342, 345, 223 P.2d 627; Tomaier v. Tomaier, 23 Cal.2d 754, 758-759, 146 P.2d 905; Delanoy v. Delanoy, 216 Cal. 23, 26, 13 P.2d 513; Mears v. Mears, supra, 180 Cal.App.2d p. 500, 4 Cal.Rptr. 618.) In Socol, we find the following language: 'When there is an oral or written agreement as to the ownership of the property [citations], or where such an understanding may be inferred from the conduct and declarations of the spouses [citations], it is true that the terms of the [joint tenancy] deed are not controlling. But where such circumstances do not exist, a true joint tenancy is created by a conveyance to husband and wife in that form, although the property is purchased with community funds [citations].' (36 Cal.2d p. 346, 223 P.2d p. 630.)

The evidence presented against the presumption arising from the form of the deed is not restricted solely to evidence of the source of the funds used to purchase the property but may consist of any substantial credible and relevant evidence showing the intention, understanding or agreement of the parties. (Gudelj v. Gudelj, supra, 41 Cal.2d p. 212, 259 P.2d 656; Socol v. King, supra, 36 Cal.2d p. 346, 223 P.2d 627; Mears v. Mears, supra, 180 Cal.App.2d p. 500, 4 Cal.Rptr. 618.) The presumption, however, cannot be overcome by testimony of a hidden intention not disclosed to the other grantee or transferee at the time of the execution of the conveyance or instrument in question. (Gudelj v. Gudelj, supra, 41 Cal.2d p. 212, 259 P.2d 656; Socol v. King, supra, 36 Cal.2d p. 346, 223 P.2d 627.) Whether the evidence is sufficient to overthrow the presumption arising from the form of the instrument is a question of fact. (Gudelj v. Gudelj, supra, 41 Cal.2d p. 212, 259 P.2d 656; DeBoer v. DeBoer, 111 Cal.App.2d 500, 504, 244 P.2d 953.) Subsequent to Socol, a number of decisions emanating from the District Courts of Appeal have analyzed the particular facts before them in order to determine whether a finding that the joint tenancy presumption had been rebutted found support in the evidence. (Among these are: Jenkins v. Jenkins, 147 Cal.App.2d 527, 305 P.2d 289; Bowman v. Bowman, 149 Cal.App.2d 773, 308 P.2d 906; Blankenship v. Blankenship, 212 Cal.App.2d 736, 28 Cal.Rptr. 176; Taliaferro v. Taliaferro 217 Cal.App.2d 211, 31 Cal.Rptr. 690.) Of particular interest, insofar as the present case is concerned, are the Jenkins and Blankenship cases. In Jenkins, the spouses acquired property in joint tenancy with funds derived from the husband's earnings. The parties took title in joint tenancy at the suggestion of friends and the escrow clerk to avoid probate proceedings in the event of the death of either of them. Neither of the spouses knew the difference between joint tenancy and community...