Powers v. Ashton

• Decision Date: 06 March 1975
• Citation: 45 Cal.App.3d 783,119 Cal.Rptr. 729
• Court: California Court of Appeals Court of Appeals
• Parties: Juanita POWERS, Administrator for and on behalf of Southern California Retall Clerk Unions and Food Employers Supplementary Unemployment, et al., Plaintiff and Appellant, v. Charles R. ASHTON, Jr., et al., Defendants and Respondents. Civ. 44296.

Page 729

119 Cal.Rptr. 729

45 Cal.App.3d 783

Juanita POWERS, Administrator for and on behalf of Southern California Retall Clerk Unions and Food Employers Supplementary Unemployment, et al., Plaintiff and Appellant, v. Charles R. ASHTON, Jr., et al., Defendants and Respondents.

Civ. 44296.

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

March 6, 1975.

Robert W. Gilbert & Associates, and Ronald J. Cooke, Beverly Hills, for plaintiff and appellant.

Twombly & Teal, and Clifford W. Twombly, Los Angeles, for defendants and respondents.

THOMPSON, Associate Justice.

In this appeal from a judgment of dismissal after a demurrer was sustained to appellant's complaint without leave to amend, we consider: (1) the standing of 'an administrator' of various trusts created pursuant to a collective bargaining agreement to sue as a real party in interest to enforce an obligation due the trusts; and (2) the propriety of trial court action in denying leave to amend after it had determined that the 'administrator' lacked standing to sue. We conclude from the record that appellant is not a real party in interest so that a demurrer to appellant's complaint on that ground was properly sustained. We conclude, also, that the trial court erred in not permitting an amendment of the complaint to substitute the trustees of the trusts as plaintiffs.

The complaint which commenced the case at bench is filed in the name of four trusts created by collective bargaining agreements between Retail Clerks Union Local 770 and 'Food Employers,' one of whom is respondent. It is brought 'by and through Juanita Powers as Administrator of the . . . Funds (trusts), who is the duly authorized representative of the . . . Funds. . . .' The pleading asserts seven causes of action against respondents, alleged to be an employer of personnel represented by Local 770 obligated to the trusts by reason of a collective bargaining argeement with the union. The first cause of action seeks specific performance of an alleged obligation to respondents to allow the trustees of the trust or their representative to examine and copy books and records of respondent-employer. The second cause of action claims that respondents have not contributed sums to the trusts that they are obligated to pay. The third cause of action alleges on information and belief that respondents fraudulently represented 'to plaintiff' that they had paid all contributions due from them to the trusts and reported all employees and hours worked by employees. It seeks damages in the amount of $25,000. The fourth cause of action alleges negligent misrepresentation of the same facts alleged in the third cause of action and also seeks $25,000 in damages. The fifth cause of action sounds in fraudulent concealment of the same facts alleged in the third and fourth. It seeks an identical amount. The sixth and seventh causes of action are framed in common counts.

Copies of the instruments creating the four trusts and the collective bargaining agreement are attached to the complaint and incorporated in it by reference. The collective bargaining agreement provides for the creation of the trusts with a 'Board of Trustees' composed of an equal number of representatives of the union and of an 'employers council.' It specifies that voting by the trustees may be by proxy and that alternate and successor trustees may be appointed by the respective groups. The agreement directs that the trustees shall establish 'a central administration office for the administration of the Trust, including but not limited to bookkeeping, tabulating, collection of contributions, record keeping and payment of claims and shall acquire appropriate office equipment and hire necessary personnel.' The trusts concerned in this litigation are created by four separate instruments designated 'Supplementary Unemployment, Supplementary Disability and Retired Employees Benefit Fund,' 'Joint Pension Trust Fund,' 'Joint Death Benefit Trust Fund,' and 'Vacation Trust Fund.' Each declaration of trust, in essence, authorizes the trustees to employ 'professional, executive, administrative, clerical, secretarial, and such other employees, persons or entities as may be deemed by (trustees) to be necessary . . ..' The declaration creating the Joint Pension Trust Fund provides for a corporate trustee in addition to the trustees named by the union and employers. Title to all trust assets is vested in the corporate trustee. The trustees are specifically empowered '. . . to take such legal action in the name of the Corporate Co-Trustee, in their own names or otherwise, as in their discretion may be necessary to effectuate any collection (of employer contributions).' The three other trusts provides that '(t)he Trustees shall have the power to demand, collect, receive and hold an employer's contributions, and to take all actions (including . . . the filing and prosecution of suit . . .) deemed necessary by them . . . to collect . . . any moneys cue and payable to the Trust Fund.'

Respondents filed a general demurrer to the complaint on the ground that appellant is not a real party in interest and therefore lacks standing to sue. Their demurrer also contends that the complaint otherwise fails to state a cause of action. Respondents also filed special demurrers for uncertainty and an extensive motion to strike. The trial court sustained the demurrer for lack of standing without leave to amend. It placed the other related demurrers and motions off calendar and dismissed the complaint. In this appeal from the judgment of dismissal, appellant contends: (1) she has standing to sue; and (2) if she does not, the trial court abused its discretion in not permitting an amendment of the complaint to substitute the trustees of the four trusts as parties plaintiff.

The complaint shows on its face that appellant lacks standing. Code of Civil Procedure section 367 states: 'every action must be prosecuted in the name of the real party in interest . . ..' Code of Civil Procedure section 369 codifies the only exceptions to that rule, the one pertinent to this appeal being: '. . . (a) trustee of an express trust . . . may sue without joining with him the persons for whose benefit the action is prosecuted . . ..' If an action is brought by other than a real party in interest, it is subject to general demurrer. (3 Witkin, Cal.Procedure (2d ed.), Pleading, § 93.)

In general, the person possessing the right sued upon by reason of the substantive law is the real party in interest. (3 Witkin, Cal.Procedure (2d ed.), Pleading, § 93.) Thus where a cause of action is prosecuted on behalf of an express trust, the trustee is the real party in interest because he is the one in whom title to the cause is vested. To that extent, Code of Civil Procedure section 369 is declaratory of the common law. (3 Witkin, Cal.Procedure (2d ed.), Pleading, § 106.) Conversely, because an ordinary express trust is not an entity separate from its trustees, action may not be maintained in the name of the trust. (See Lazar v. Estate of Lazar, 208 Cal.App.2d 554, 557, 25 Cal.Rptr. 354.) Thus, absent special circumstances, an action prosecuted for the benefit of a trust estate by a person other than the trustee is not brought in the name of a real party in interest and is demurrable. At the time the action at bench was dismissed, the rule applied to employee benefit trusts created pursuant to a collective bargaining agreement. (See International Bros. of Teamsters, etc. v. Kebert Const. Co. (W.D.Pa.1964) 225 F.Supp. 58; Lewis v. Quality Coal Corporation (7th Cir.1957) 243 F.2d 769, 772--773.) ¹

Appellant seeks to avoid application of the general rule arguing: (1) the reason for the rule is not here present because respondents' rights will be fully protected by any judgment rendered in the action as filed; and (2) the complaint shows that the administrator of the trust has standing to sue as an assignee of the claim, that status being established by a course of dealing. Neither argument is supported by the record.

Appellant bottoms her first argument upon language in Giselman v. Starr, 106 Cal. 651, 657--658, 40 P. 8, 10. There our Supreme Court in affirming a judgment in favor of executors of a deceased's estate on a note and mortgage executed by the defendant, entered over the defendant's contention that all of the deceased's interest in the note and mortgage had been given to his daughter, stated: 'The defendant has a statutory right to have a cause of action against him prosecuted by the real person in interest . . .. But the purpose of the statute is readily discernible, and the right is limited to its purpose. It is to prevent a defendant, against whom a judgment may be obtained, from further harassment or vexation at the hands of other claimants to the same demand. . . . But where the plaintiff shows such a title as that a judgment upon it satisfied by defendant will protect him from future annoyance or loss, and where, as against the party suing, defendant can urge any defenses he could make against the real owner, then there is an end of the defendant's concern, and with it of his right to object . . ..' Our Supreme Court held that plaintiff had established a prima facie showing that he was the owner of the cause and that...