Osborn v. Osborn

• Decision Date: 01 March 1954
• Parties: OSBORN v. OSBORN et al. L. A. 22540.
• Court: California Supreme Court

Page 333

267 P.2d 333

42 Cal.2d 358

OSBORN v. OSBORN et al.

L. A. 22540.

Supreme Court of California, In Bank.

March 1, 1954.

Rehearing Denied March 25, 1954.

Guerin & Guerin and John J. Guerin, Los Angeles, for appellant.

Louis Warren, Los Angeles, for respondents.

TRAYNOR, Justice.

Plaintiff Merinoeth Osborn appeals from an adverse judgment on his complaint to quiet title to certain real property in Los Angeles County, known as Lot 97 of the Casa Verduga Villa Tract. Defendant Louise Osborn, plaintiff's stepmother, answered and cross-complained to have title to Lot 97 quieted in her. Judgment was entered for plaintiff on the cross-complaint, and defendant Louise Osborn has not appealed therefrom. The other defendants named in the complaint disclaim any interest in the property.

Lot 97 was originally acquired by Merinoeth's mother Chloie Osborn, in 1922. Chloie died intestate leaving her husband, Thomas D. Osborn, and their son, Merinoeth, surviving. On June 27, 1939, during the administration of Chloie's estate, Merinoeth and Thomas executed a 'Stipulation', subsequently approved by the court, to resolve their conflicting claims to Chloie's estate. The material part of this stipulation follows: 'It is further stipulated and agreed by and between the parties hereto that upon execution of the within Stipulation that Thomas D. Osborn will execute either by deed contract or declaration of trust sufficient documents, conveyances or declarations so that the property known as Lot 97, Casa Verduga Villa Tract, etc., will be retained in the name of Thomas D. Osborn, during his lifetime and that the same should vest in his son Merinoeth R. Osborn at the time of the demise of the said Thomas D. Osborn.' After the execution of the stipulation, the probate court distributed Lot 97 to Thomas.

On July 7, 1939, pursuant to the stipulation, Thomas and Merinoeth executed a trust agreement, and Thomas executed a deed 'in accordance with the terms and conditions of that certain trust agreement of July 7th, 1939, * * * and * * * subject to all conditions, exceptions and reservations as in said trust agreement provided.' (Italics added.) The deed granted Lot 97 to Merinoeth subject to a life estate in Thomas. The trust agreement provided that the deed to Lot 97 'shall be turned over and delivered to the Trustees to hold and keep possession of said deed, not to record the same during the lifetime of' Thomas. The trustees were instructed to 'turn over and deliver' the deed to Merinoeth on the death of Thomas. It was recited in the trust agreement that Thomas reserved a life estate in the property, and that he also reserved 'the right to revoke the deed in the event (Merinoeth) wilfully harms (Thomas), and (Merinoeth) reserves the right to cancel this agreement if (Thomas) wilfully harms' him. (Italics added.) Other material parts of the trust agreement are: 'The parties hereto further agree that in the event any attempt is made by either party hereto to break the terms of the within trust agreement, or to force the trustees to surrender the within described deed prior to the demise of (Thomas) by court action, or other proceedings, then, in that event, the party attempting to break the terms of the within trust agreement, shall pay in addition to expenses and court costs, a reasonable attorney's fee to the said trustees. The parties hereto further authorize and instruct the trustees herein mentioned to defend any attempts made by either parties hereto to break the terms of the within trust agreement, or to force the trustees to surrender the within described deed. * * * The wilfull failure or refusal on the party (sic) of either party hereto to carry out the terms and conditions of the within trust agreement, or the wilfull refusal or failure of either party to comply with the obligations herein prvided, on his part to be performed, shall permit either party to rescind this agreement and shall confer upon the grantor the right to cancel the within mentioned deed and this agreement by a declaration duly executed and recorded with the formality of a deed and a thirty day written notice thereof served on the grantee, or his attorney.' (Italics added.) The deed was deposited with defendants Franklin and Warner, who were named as trustees in the trust agreement.

Merinoeth had become indebted to Warner for legal services in the probate of Chloie's estate and the preparation of the trust agreement. In 1941, Warner resigned as trustee and assigned his claim against Merinoeth to his secretary, Champion, who recovered judgment thereon. Execution was levied on Merinoeth's interest in Lot 97, and the property was sold in 1942 to Champion for $336.37. Thereafter, at the request of Thomas, Champion transferred the certificate of sale to Louise Osborn for $415. Although Louise contends that Merinoeth had notice of these proceedings, he made no appearance and disclaims any knowledge of them.

In anticipation of a sale of Merinoeth's interest in Lot 97 to Thomas, an agreement purporting to cancel the trust agreement was executed on January 14, 1946 and then cancelled in March 1946. Thomas died intestate on December 31, 1946, leaving his second wife, Louise, and Merinoeth surviving. Merinoeth's subsequent demand upon the trustees for the deed executed by Thomas was refused.

In refusing to quiet title in either Merinoeth or Louise, the trial court concluded that Merinoeth had not acquired any interest in Lot 97 under the deed executed by Thomas and deposited with Warner and Franklin. Since Merinoeth had acquired no interest, the court concluded that Louise acquired none by reason of the execution sale.

Plaintiff's basic contention on this appeal is that the trial court erred in holding that he acquired no interest in Lot 97 under the deed executed by Thomas and deposited with Warner and Franklin to be transmitted to him on the death of Thomas. Plaintiff contends that the deposit with Warner and Franklin constituted a valid delivery immediately vesting in him a remainder interest in the property. The first issue to be resolved, therefore, is the validity and effect of the deed executed by Thomas.

It has long been established in this state that the deposit of a deed granting an estate in fee simple, with instructions that it be transmitted to the grantee upon the death of the grantor, conveys a remainder interest in fee simple with a life estate reserved in the grantor, if the grantor intended the deposit to be irrevocable. Bury v. Young, 98 Cal. 446, 451-452, 33 P. 338; Hunt v. Wicht, 174 Cal. 205, 206-208, 162 P. 639, L.R.A.1917C, 961; Wilkerson v. Seib, 20 Cal.2d 556, 560, 127 P.2d 904. The result is the same as if the grantor delivered to the grantee a deed reserving a life estate and granting a remainder in fee. The same result is also accomplished by the deposit of a deed in escrow pursuant to a binding contract of sale of a remainder and the grantee's performance of the conditions of the escrow. At the time of the execution of the contract of sale, the grantee acquires an equitable title to the estate being sold; the grantor retains the legal title as security for the purchase price. The legal title passes to the grantee at the time of his completion of the conditions precedent, whether or not the escrow holder gives him physical possession of the deed; the grantor's delivery to the escrow holder is absolute and cannot thereafter be disaffirmed. Cannon v. Handley, 72 Cal. 133, 140, 13 P. 315; McDonald v. Huff, 77 Cal. 279, 282, 19 P. 499; Bradbury v. Davenport, 120 Cal. 152, 154, 52 P. 301; see, also, Hagge v. Drew, 27 Cal.2d 368, 375, 165 P.2d 461.

In the present case, the deed from Thomas to Merinoeth was executed pursuant to a binding contract supported by adequate consideration. On the face of the deed, Thomas reserved a life estate and granted a remainder to Merinoeth. When Thomas delivered the deed to the trustees, there were no conditions precedent for Merinoeth to perform. Thomas had received the consideration for the grant, when the compromise settlement of Chloie's estate ws executed. The provision that the trustees should hold the deed until Thomas' death was not a condition precedent to the passage of legal title, for even in cases of gift, e. g., Bury v. Young, supra, an instruction that the depositary is to retain possession of the deed until the death of the grantor does not prevent the deed from being operative as a present conveyance. In this case, Merinoeth was not a donee; he was a purchaser for value, already vested with an equitable title to the remainder. The situation is thus analogous to that of a true escrow after the purchaser has performed all of the conditions precedent. Performance of those conditions automatically vests the legal title in him, even though the escrow holder retains possession of the deed.

Defendant contends, however, that Thomas did not make a legal delivery of the deed. Delivery is a question of intent. In some cases to ascertain the grantor's intent it is necessary to have recourse to his acts and declarations both before and after his transmission of the deed to the grantee or a third party. Williams v. Kidd, 170 Cal. 631, 649-652, 151 P. 1; Rice v. Carey, 170 Cal. 748, 753-754, 151 P. 135; Donahue v. Sweeney, 171 Cal. 388, 391-392, 153 P. 708; Northern Cal. Conference Ass'n, etc., v. Smith, 209 Cal. 26, 33, 285 P. 314. When, as here, however, the grantor's 'only instructions are in writing, the effect of the transaction depends upon the true construction of the writing. It is, in other words, a pure question of law whether there was an absolute delivery or not.' Moore v. Trott, 156 Cal. 353, 357, 104 P. 578, 580. Thomas executed the deed and delivered it to the trustees pursuant to the provisions of the trust agreement. It was a completed act and nothing remained to be done to vest the legal title to the remainder in Merinoeth. Thomas was bound by the terms of the trust...