Steeve v. Yaeger

• Decision Date: 26 October 1956
• Citation: 302 P.2d 704,145 Cal.App.2d 455
• Court: California Court of Appeals Court of Appeals
• Parties: Emma M. STEEVE, Plaintiff and Respondent, v. Lillian E. YAEGER, Defendant and Appellant (two cases). Civ. 4775, 5279.

Page 704

302 P.2d 704

145 Cal.App.2d 455

Emma M. STEEVE, Plaintiff and Respondent, v. Lillian E. YAEGER, Defendant and Appellant (two cases).

Civ. 4775, 5279.

District Court of Appeal, Fourth District, California.

Oct. 26, 1956.

Rehearing Denied Nov. 20, 1956.

Hearing Denied Dec. 19, 1956.

A. P. G. Steffes, Los Angeles, Harvey, Rimel & Johnston, Santa Ana, for appellant.

Snyder, Fletcher & O'Neil, South Pasadena, Forgy, Reinhaus, Miller & Kogler, Santa Ana, for respondent.

BARNARD, Presiding Justice.

This is an appeal from judgments granting declaratory relief and ordering and approving an accounting.

The plaintiff was a nurse and the defendant was a real estate broker. They were friends and lived together for some years. In 1939, they entered into a written partnership agreement as equal partners. The partnership acquired two parcels of valuable income real property in Fullerton, referred to as 'Parcels One and Two,' the legal title being held for them by a third party. So far as material here, it also acquired five other parcels of real property, title to four of them being in plaintiff's name and title to one being in defendant's name. On August 10, 1944, the defendant took the plaintiff to the office of defendant's attorney where a contract and deeds terminating the partnership and conveying the property had already been prepared. The plaintiff was surprised and hurt because the defendant was dissolving the partnership without taking it up with her beforehand, but after certain arguments and representations were made she signed the papers.

This contract described the property owned by the partnership, and provided that the partnership agreement should no longer apply and that the parties desired and agreed thereby to partition and divide said properties as set forth therein. It was then agreed that:

Parcels One and Two 'shall be conveyed in fee to (the defendant) but reserving a life estate in and to one half of the rents, issues and profits to (the plaintiff) for and during the period of her natural life';

That the four parcels standing in the name of the plaintiff shall be conveyed in fee to the defendant but reserving a life estate to the plaintiff, in the same language just above quoted;

That with respect to the parcel standing in defendant's name, 'there shall be conveyed to (the plaintiff) a life estate consisting of one half of the rents, issues and profits, for and during the period of her natural life, and the fee title, subject to said life estate, shall remain in (the defendant)';

That the parties agree to dispose of all the property except Parcels One and Two, and apply the proceeds upon 'the present indebtendness on Parcels One and Two, to the end that said properties may be freed from indebtedness and improved, so as to obtain the maximum rental income for the benefit of the parties hereto';

That each party shall be entitled to $100 a month from the properties to be charged against the net income to which each party may be entitled;

That the rental of a house in the rear of Parcel Two shall be $50 per month and shall be paid by the one occupying the same from and after September 1, 1944;

That if one half of the net income from the properties should be insufficient to care for either of the parties, by reason of illness, then as much of the principal or corpus of the properties as necessary shall be used for that purpose;

That except for necessary operating expenses no indebtedness shall be contracted without the concurrence of both parties; and that each party will sign any papers necessary to renew the existing indebtedness when it became due;

That true books of account should be kept, and on December 31 of each year the books should be audited and closed and an accurate statement delivered to each party, with both parties entitled to withdraw the balance of her share of the net profits, if any.

The deeds were recorded, in accordance with the contract, and the defendant continued to collect the rents and pay the bills as she had done during the previous years. The plaintiff went to Los Angeles to work and the defendant continued to live in the house referred to in the agreement. The defendant paid the plaintiff $100 a month for a time. During a period when the plaintiff was in a hospital with a nervous breakdown, the defendant also paid bills for her amounting to about $1100, there being then no net income available for that purpose. The plaintiff married in 1947, and the defendant stopped paying $100 a month to the plaintiff on January 1, 1948. It was stipulated that since that date defendant has taken out $200 a month, or $2400 a year, charging it as a manager's salary. The defendant had an opportunity to sell one of the parcels other than Parcels One and Two for $20,000, which was $5000 more than it cost, but refused to do so. This was a citrus orchard which was operated at a loss through these years. In July, 1949, the defendant asked the plaintiff to execute a note and trust deed for $35,000, which she declined to do. She consulted attorneys, and this suit was filed on August 4, 1949.

The complaint, as amended, set up seperate causes of action for rescission of the agreement, for reformation, for declaratory relief, and for quiet title. The answer of the defendant also asked for declaratory relief and, as special defenses, pleaded the statute of limitation and laches. At the trial, it was stipulated that certain issues be tried first and practically all of the evidence, except that of the actual accounting, was then received. After oral argument a minute order was entered reciting that the court finds certain things. Some time later the court's findings of fact and conclusions of law were filed.

The court found, among other things, that when the agreement and deeds were executed on August 10, 1944, the plaintiff was not represented by counsel, legal or otherwise; that they were read to her by defendant's counsel; that at that time the plaintiff was ill, nervous, upset and confused, and did not understand the meaning and effect of the legal language used; that she signed the contract believing the representations then made to her; that both parties then believed that her interest in the property was thus converted into that of a life tenant as to an undivided one half interest in the property; that the defendant has at all times managed and controlled the property, collecting the rents and paying the taxes and expense; that in January, 1949, the plaintiff for the first time sought legal counsel pertaining to her rights under said agreement, and for the first time questioned the representation made to her by the defendant that she had been overpaid; that in July, 1949, the plaintiff notified defendant that she was rescinding said agreement; that the plaintiff executed the agreement of August 10, 1944, relying on the representation then made to her that the defendant would sell said property, except Parcels One and Two, and would apply the proceeds to discharge the encumbrances on Parcels One and Two, so that each of them would have an unemcumbered one half of the income from Parcels One and Two for the remainder of her life; that numerous controversies exist between the parties as to their respective rights under the agreement and deeds; that the defendant had only partially accounted to the plaintiff as to the income from these properties and the expenses in connection therewith; that it is not true that the defendant provided plaintiff with annual accounts involving these properties; that on March 3, 1949, the plaintiff demanded of defendant a detailed accounting; that the plaintiff is vested with a life estate in and to an undivided one half interest in said property for and during her life; that the defendant owns all of the remainder subject to said life estate; that a confidential relationship existed between these parties from 1928 to and including January, 1949; that none of plaintiff's causes of action are barred by the statute of limitations, and plaintiff has not been guilty of laches; that the defendant has not paid to plaintiff her full share of the income from said property; that defendant has not sold all of the property agreed to be sold for the purpose of paying off the enumbrances on Parcels One and Two; that the defendant has performed services and devoted time in the management of these properties; that plaintiff did not discover that the orange orchard was not sold until in July, 1949, when the defendant requested her to sign a note and trust deed for $35,000; that plaintiff then demanded that the defendant sell the orange orchard, pursuant to the agreement, and use the proceeds toward the discharge of encumbrances on the properties; that defendant refused and still refuses to sell that property for that purpose; and that defendant has failed and refused to pay the plaintiff any sum whatever from the income of said property since April, 1948, although demand has been made therefor.

As conclusions of law the court found, among other things, that a declaratory judgment was necessary, and that an accounting was necessary. An interlocutory judgment was entered granting the plaintiff declaratory relief and construing the terms of the 1944 agreement; ordering an accounting and appointing a certified public accountant as referee to make an accounting and report; ordering that a final judgment be entered upon the approval of the report of the referee; and reserving jurisdiction over the issues tendered for final determination in the final decree. The defendant made a motion for a new trial which was denied and she then appealed from the interlocutory judgment.

The referee...