Lucas v. Hamm

• Decision Date: 06 March 1961
• Court: California Court of Appeals Court of Appeals
• Parties: Robert LUCAS, Helen Lucas, Cyrene D. Lucas, Annette Lucas, and Cyrene D. Lucas, as Guardian of the Estates of Robert B. Lucas II, Cyreme Denison Lucas and James Lucas, Minors, Plaintiffs and Appellants, v. L. S. HAMM, Defendant and Respondent. Civ. 18966.

Page 727

11 Cal.Rptr. 727

Robert LUCAS, Helen Lucas, Cyrene D. Lucas, Annette Lucas, and Cyrene D. Lucas, as Guardian of the Estates of Robert B. Lucas II, Cyreme Denison Lucas and James Lucas, Minors, Plaintiffs and Appellants, v. L. S. HAMM, Defendant and Respondent.

Civ. 18966.

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

March 6, 1961.

Hearing Granted May 3, 1961.

Opinion vacated 15 Cal.Rptr. 821.

Reginald G. Hearn, San Francisco, for appellants.

Philip H. Angell, Scott Elder, Robert M. Adams, Jr., Angell, Adams, Gochnauer & Elder, B. E. Kragen, San Francisco, for respondent.

SHOEMAKER, Justice.

This is an appeal from a judgment of dismissal entered after an order sustaining without leave to amend defendant L. S. Hamm's demurrer to plaintiffs' second amended complaint.

The appellants are beneficiaries under the last will of Eugene H. Emmick, deceased. Respondent L. S. Hamm is a practicing lawyer in San Francisco, and has been engaged in his profession for more than 40 years last past. The complaint, which is phrased in three counts, seeks to recover damages from respondent and others for malpractice and breach of contract in the drawing of the will, and negligence in certain proceedings in connection with the handling of the estate.

The first cause of action speaks in negligence and alleges that appellants and others are beneficiaries under the will of Eugene H. Emmick, and that respondent, as attorney for Emmick for approximately 30 years and thoroughly familiar with his estate and his expressed desire and direction that appellants receive by testamentary instruments specified portions of his estate, prepared the said will; that paragraph Eighth of the will set up a residual testamentary trust of which the appellants were beneficiaries, and subdivision (c) thereof stated: 'This trust shall cease and terminate at 12 o'clock noon on a day five years after the date upon which the order distributing the trust property to the trustee is made by the Court having jurisdiction over the probation of this will. * * *' The complaint then goes on to allege that this provision was invalid by virtue of the following Civil Code sections: 715.1 (restraints upon alienation), 715.2 (rule against perpetuities), and 716 (suspension of the power of alienation); that the respondent was negligent in so drawing the will and that by reason thereof an attack was made thereon, which involved the said residual trust; that respondent advised appellants that the said provision of paragraph Eighth was invalid for the reasons aforementioned, and that appellants, who were designated beneficiaries thereunder, would be deprived of the entire inheritance to which they would have been entitled but for this invalid provision, and that unless they compromised the matter with the blood relatives of the decedent they would receive nothing under the will and codicils of Emmick; that he advised a settlement whereby appellants would accept an inheritance of $75,000 less in amount than that to which they would otherwise have been entitled; that guided by said advice and recommendation appellants did so settle the matter, to their damage, in the said sum.

The second cause of action is based upon the theory of the third party beneficiary contract entered into between Emmick and respondent Hamm for the benefit of the appellants. It incorporates all of the allegations of the first cause of action and then alleges that decedent entered into an oral contract with respondent Hamm whereby respondent agreed to and did prepare the will and codicils thereto wherein Emmick was testator and appellants were designated as beneficiaries of the residual trust therein created; that the respondent was duly compensated therefor, but that in carrying out the said contractual employment respondent negligently performed his duties in that he included an invalid provision in the will which rendered the residual trust null and void, and prevented the carrying out of the testator's expressed intent and direction to respondent that appellants receive by way of said trust a specified portion of his estate, and that by reason of respondent's breach of the contract appellants were damaged in the sum of $75,000, for which they seek judgment.

The third cause of action again incorporates all of the allegations of the first cause of action and then continues to recite that subsequent to the admission to probate of the will and the codicils thereto of decedent, certain persons instituted a will contest and that thereafter the contestants and respondent arrived at a settlement of the said contest, wherein the parties agreed that upon the payment of $10,000 the contest would be dismissed and appropriate releases given by said contestants, the settlement to be subject to the approval of the probate court; that in carrying out the settlement respondent and others were again negligent in that they caused to be executed releases which did not protect the interests of the estate and those interested therein in that they did not preclude said contestants from making another attack upon the estate and the interests of the named beneficiaries therein, with the result that said contestants did challenge the validity of the testamentary instruments; that said proposed releases were submitted before execution to other counsel for their comment, who advised respondent and others of the lack of protection afforded thereby to the estate and the persons interested therein, and proposed certain phraseology that should be included in said releases to properly guard the interests of the estate and those interested therein, but that said advice and suggestion was completely ignored by respondent and others, and that said probate court, without being advised of the failure in the terms of said proposed releases, approved the settlement as presented by respondent and others; and that by reason of said negligence appellants suffered an additional monetary loss of $15,000, for which damages they ask recovery.

Respondent L. S. Hamm interposed a demurrer, both general and special, to said second amended complaint. On this appeal, respondent has argued his position solely upon the basis of his general demurrer, hence the only question involved is whether the appellants have stated facts sufficient to constitute a cause of action.

The appellants frankly state that they rely solely upon the case of Biakanja v. Irving, 1958, 49 Cal.2d 647, 651, 320 P.2d 16, 65 A.L.R.2d 1358, which they contend overrules the authority of Buckley v. Gray, 1895, 110 Cal. 339, 42 P. 900, 31 L.R.A. 862, or, as the appellants succinctly state it--unless Biakanja overrules Buckley, the complaint does not state a cause of action.

Basically the respondent's position, except for his contention that in view of the subject matter involved he could not be held negligent, is that Buckley has not been overruled by Biakanja, and the judgment must be affirmed.

Buckley v. Gray, supra, laid down the rule that legatees of a will could not sue an attorney for negligence in the preparation of the will which caused injury to them, since there was no privity between the attorney and the legatees, and hence no duty existed on the part of the attorney toward the legatees; and further, that the legatees possessed no rights as third party beneficiaries to maintain an action for damages resulting from a breach of the contract between the attorney and the client who employed him to draw the will because in the contemplation of section 1559, Civil Code, the contract was not one made expressly for their benefit.

It is apparent that if the Buckley case is still the law, appellants are without remedy.

However, in Biakanja v. Irving, supra, where a notary public had negligently drawn a will, with the result that the legatee, who was to receive all of the testator's estate, got only one-eighth thereof, the Supreme Court held that the beneficiary could recover from the notary for damage sustained by reason of the invalidity of the will due to the notary's negligence, even though there was no privity of contract between them.

In the closing paragraph of the opinion, the court states: 'We have concluded that plaintiff should be allowed recovery despite the absence of privity, and the cases of Buckley v. Gray, 110 Cal. 339, 42 P. 900, 31 L.R.A. 862, and Mickel v. Murphy, 147 Cal.App.2d 718, 305 P.2d 993, are disapproved insofar as they are in conflict with this decision.' [49 Cal.2d 647, 320 P.2d 19] While the Supreme Court uses the word 'disapproved,' one of the connotations of that word is 'reject,' and that this language constitutes an overruling has been declared in Johnson v. Holmes Tuttle Lincoln-Merc., 1958, 160 Cal.App.2d 290, 300, 325 P.2d 193, and hailed as a rejection of the old common law rule that privity of contract must exist in order for negligent performance of a contractual duty to give rise to liability for damage to an intangible economic interest. United States for Use and Benefit of Los Angeles Testing Laboratory v. Rogers & Rogers, D.C.1958, 161 F.Supp. 132, 135.

We are of the opinion that under the doctrine of the Biakanja case, the applicability of Buckley v. Gray to the appellants' causes of action no longer exists, for as we review the history of privity and the assault made upon it in the interval between Buckley v. Gray of 1895 and Biakanja v. Irving of 1958, we observe that the rule expressed in the Buckley case was that of the general doctrine prevalent at that time,...