Marshall v. Marshall

• Decision Date: 15 February 1965
• Citation: 232 Cal.App.2d 232,42 Cal.Rptr. 686
• Parties: John A. MARSHALL, Plaintiff and Respondent, v. Gardner MARSHALL and Elliot Marshall, Executors of the Estate of Emily V. Marshall, Deceased, Defendants and Appellants. Civ. 21333.
• Court: California Court of Appeals Court of Appeals

Page 686

42 Cal.Rptr. 686

232 Cal.App.2d 232

John A. MARSHALL, Plaintiff and Respondent, v. Gardner MARSHALL and Elliot Marshall, Executors of the Estate of Emily V. Marshall, Deceased, Defendants and Appellants.

Civ. 21333.

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

Feb. 15, 1965.

Rehearing Denied March 10, 1965.

Hearing Denied April 14, 1965.

Berry, Davis, Lewis & McInerney, Robert M. Davis, Oakland, Richard G. Logan, Oakland, of counsel for appellants.

Joseph L. Alioto, Walter F. Calcagno, San Francisco, for respondent.

SULLIVAN, Presiding Justice.

Defendants appeal from a judgment declaring plaintiff to be the sole owner of certain real property in Santa Barbara subject to a lien in favor of defendants for reimbursements in the amount of $3,179.79.

The present action was commenced on November 9, 1954, by plaintiff against his mother Emily V. Marshall to impress a constructive trust on the subject property. Basically, the dispute between son and mother revolves about real property in Berkeley, California, known as the Casa Bonita Apartments, subsequently exchanged for the Santa Barbara property. The case has been tried three times. Judgment entered after the first trial in 1956, determining that each of the parties was entitled to an undivided one-half interest in the property was reversed by Division Two of this court. (Marshall v. Marshall (1958) 165 Cal.App.2d 669, 332 P.2d 107.) ¹ In the meantime defendant Emily V. Marshall had died on June 10, 1956. Thereafter the special administrator of her estate and finally the executors of her will, defendants herein, were substituted as defendants in the action.

The case was tried for the second time before another judge in 1959. He signed a memorandum opinion and interlocutory decree which awarded the property to plaintiff but retired from the bench without having signed findings of fact, conclusions of law and a final judgment. The case was therefore ordered to be retried, resulting in the judgment which we now review.

We set forth the facts in accordance with the settled rule that an appellate court will view the evidence in the light most favorable to the respondent and will indulge in all intendments and reasonable inferences to sustain the findings and the judgment. (Peterson v. Grieger, Inc. (1961) 57 Cal.2d 43, 51-52, 17 Cal. Rptr. 828, 367 P.2d 420; McCarthy v. Tally (1956) 46 Cal.2d 577, 581, 297 P.2d 981; Berniker v. Berniker (1947) 30 Cal.2d 439, 444, 185 P.2d 557; Monell v. College of Physicians & Surgeons (1961) 198 Cal.App.2d 68, 47-48, 17 Cal.Rptr. 744; Clark v. Redlich (1957) 147 Cal.App.2d 500, 504, 305 P.2d 239.)

In 1927 plaintiff purchased from his mother an unimproved lot in Berkeley upon which he thereupon built the Casa Bonita Apartments. Legal title to this property remained in plaintiff until 1935. After refinancing, the property was subject to the following encumbrances: a first deed of trust securing a $50,000 loan to plaintiff from the Prudential Insurance Company of America and a second deed of trust securing plaintiff's indebtedness to his mother in the amount of $32,600. ²

In 1931 plaintiff acquired property at Pyramid Lake, Nevada, which he operated as a resort. However he continued to live in Berkeley until 1932 when he moved to Nevada in order to manage the resort and eventually try to sell it. At about this time, as additional security for the obligations which Mrs. Marshall held against him, plaintiff transferred to her the possession of the Casa Bontia Apartments and authorized her to collect the rents. During the years 1931 to 1935, while plaintiff was in the resort business at Pyramid Lake, there was certain correspondence between the parties. In some of these letters, according to plaintiff, his mother spoke 'about the apartment house going to pieces and running downhill and making a great deal of work, and then she started in to ask me if I would turn the apartment house over to her while I was in this business. She felt it was risky, * * *.' (Emphasis added.) In substance Mrs. Marshall said: '[T]urn the apartment over to me while you are up at Pyramid Lake; it will be in safekeeping and you can trust your mother, and when you come back I will turn it back to you.' (Emphasis added.) Mrs. Marshall did not deny the occurrence of these events or the statements attributed to her. Mrs. Oliphant, her bookkeeper, confirmed that the parties had corresponded while plaintiff was in Nevada.

Plaintiff had stored all of these letters in the basement of the Casa Bonita in 1940 but when he made a search for them in 1954 after the present dispute arose, there was no trace of the boxes and trunk in which the letters and other personal belongings were placed.

On July 9, 1935, while in Nevada, plaintiff executed three documents: (a) a grant deed conveying the Casa Bonita property to his mother; (b) an affidavit referring to such conveyance and declaring that it was absolute; ³ and (c) an agreement between Mrs. Marshall and himself providing that if the former 'sells the property at a profit the profit shall be equally divided.' ⁴ All three documents had been prepared by Mr. George Clark who had been Mrs. Marshall's attorney for a number of years and who was advising both plaintiff and his mother at the time.

Plaintiff testified that the reason for the execution of all three documents was to protect him from his creditors in connection with the Pyramid Lake venture. Neither mother nor son was able to recall at the trial the precise reason for the profit-sharing agreement. ⁵ Plaintiff testified that he had no discussions with his mother about the agreement before he signed it and that he probably signed it because Mr. Clark must have indicated it was necessary for his protection. Mrs. Marshall had no recollection whatsoever of the profit-sharing agreement. Mr. Clark testified that he prepared all three documents at Mrs. Marshall's request and that the latter probably sent them to plaintiff who was in Nevada at the time. Although he stated that the various documents were drawn to protect Mrs. Marshall rather than plaintiff, he acknowledged that the reason for the 1935 transfer to Mrs. Marshall was that 'Mr. Marshall was running the Casa Bonita Apartments and he was going over there to run this Pyramid Lake resort' and that at about the time of the transfer 'There may well have been' a discussion about plaintiff's Nevada business being a speculative and somewhat dangerous one. ⁶ Although Mr. Clark recorded the 1935 grant deed for Mrs. Marshall he never recorded the profit-sharing agreement.

On August 1, 1936, approximately a year later, plaintiff sold his property at Pyramid Lake and returned to Berkeley. He moved back into the Casa Bonita and at his mother's request paid rent on the apartment which he occupied. He continued to do this regularly as long as he was there.

Mrs. Marshall kept records showing the net income or loss from the Casa Bonita during the period 1932 ⁷ through 1940. The trial court received in evidence two ledger sheets containing entries to this effect which were maintained for Mrs. Marshall by Mrs. Maybelle Oliphant, her bookkeeper for over 25 years. In reference to these records, Mrs. Oliphant testified on cross-examination by plaintiff's counsel ⁸ that plaintiff was credited with the entire (and not merely one-half of) income of the Casa Bonita after July 9, 1935, the date of execution of the aforementioned deed and the other two documents. She did not consider the credit entered under an account captioned 'J. A. Marshall, Jr.,' as a credit to John Marshall 'the personality' but at Mrs. Marshall's request 'I just set it up in the event--in the event that Albert did not waive his rights to it, that his mother would have a picture of the true condition of the--of the apartment house and that was all that it was set up for. It was never set up for any other purpose.' ⁹ The ledger sheets in question (plaintiff's exhibit 30) contains, among others, entries crediting plaintiff with all of the income from the Casa Bonita from January 1, 1935, to December 31, 1938, and also charging him with expenses, interest on and the unpaid balance of the Prudential Insurance Company loan. At the bottom of the ledger sheet containing these entries (p. 70a of plaintiff's exhibit 30) appears the pencilled notation: '(Not a portion of books) (Reference sheet only) To be used only if J A M II fails to sign waiver of title to Casa Bonita Apts as retained in original agreement of transfer to E.V.M.' Directly beneath it but in ink appears the following: 'Discontinued statement upon receipt of Waiver.' Mrs. Oliphant testified that such entries were in her handwriting and that the mother gave her the information on which she based the statement which she wrote in pencil. The record does not disclose when these notations were made on the ledger sheet in question. In reference to the above notations, she also testified that although title to the Casa Bonita was in Mrs. Marshall's name, the latter had made an agreement with her son which she wanted waived--'The agreement was that if she made any money on the apartment * * * she would take care of Albert. * * * I mean, she would have been entitled to her share of her equity in the apartment instead of the rental all being credited to Albert.' She stated that in crediting the income in full to she was handling it in the same way as it was credited from 1931 until the date of the plaintiff throughout the years 1936 to 1938 grant deed in 1935.

Nevertheless, as plaintiff admitted at the trial, from the time of the 1935 transfer of the apartment house to his mother until it was finally sold in October 1953, he never reported the income from such property on any of his income tax returns or paid any tax thereon.

When plaintiff sold his Nevada property, he did not ask his mother for the return of the apartment house. 'I spoke to my mother and she said she...