Strauss v. Superior Court In and For Los Angeles County

• Citation: 224 P.2d 726,36 Cal.2d 396
• Parties: . L.A. 21542. Supreme Court of California, in Bank
• Decision Date: 06 December 1950
• Court: United States State Supreme Court (California)

Page 726

224 P.2d 726

36 Cal.2d 396

STRAUSS v. SUPERIOR COURT IN AND for los angeles county.

L.A. 21542.

Supreme Court of California, in Bank.

Dec. 6, 1950.

Rehearing Denied Jan. 4, 1951.

George I. Devor, Los Angeles, for petitioner.

Harold W. Kennedy, County Counsel, Douglas DeCoster and Wm. E. Lamoreaux, Deputy County Counsel, Los Angeles, for respondent.

Loeb & Loeb and H. F. Birnbaum, Los Angeles, for real party in interest.

SPENCE, Justice.

This is a petition for a writ of mandate to compel respondent court to vacate its order quashing a subpoena duces tecum theretofore issued in a proceeding to perpetuate testimony under section 2084 of the Code of Civil Procedure. The points in controversy are these: (1) the sufficiency of petitioner's pleading of the foundational premise for his demand for the production of the desired documentary evidence; and (2) the definiteness in scope of the subpoena duces tecum itself in relation to the constitutional protection against unreasonable search and seizure. Const. art. I. § 19. A review of the record sustains petitioner's position as to the impropriety of respondent court's ruling in denial of his right to proceed with the perpetuation of the designated testimony and the examination of the specified documents. Accordingly, he is entitled to the writ here sought. Demaree v. Superior Court, 10 Cal.2d 99, 73 P.2d 605; McClatchy Newspapers v. Superior Court, 26 Cal.2d 386, 159 P.2d 944; Brown v. Superior Court, 34 Cal.2d 559, 212 P.2d 878.

From the record herein, it appears that Union Bank and Trust Company of Los Angeles is co-trustee under a trust indenture dated December 1, 1934, securing an issue of sinking fund bonds. The bank accumulated $102,806.76 in the trust estate to retire the bonds. By the terms of the trust, the bank could so proceed through purchase of outstanding bonds on the open market or on tender from bondholders. In response to request petitioner, among others, tendered bonds for payment. The bank refused all tenders because it determined that sufficient bonds could be bought on the open market for less than the tendered prices.

Petitioner than sought to take the testimony of the bank and one of its officers, A. L. Lathrop, allegedly 'in immediate charge of the administration of the trust indenture.' In his petition he alleges that he expects to be a party, the plaintiff, to an action to be filed in respondent court and to name the bank 'as the or a party-defendant.' Then follows a general outline of the facts expected to be proved in relation to the administration of the trust indenture: (1) its execution as of the date aforesaid, with Consolidated Office Buildings Co. indentified as the debtor company, one Leigh M. Battson designated as trustee, and the bank as co-trustee; (2) the provisions of the trust authorizing the co-trustee's use of available funds for the retirement of the bonds of the company and specifying that 'the co-trustee shall not accept any tenders at any price or prices which in the opinion of the co-trustee shall be higher than the price at which bonds may be purchased at that time in the open market'; (3) the bank's call for tenders on June 30, 1949, including petitioner as one of the addressees, and setting July 18, 1949, as the date when 'all tenders will be opened' and acceptance determined by the bank; (4) petitioner's tender of his bonds within the time allowed therefor by the bank; (5) the bank's rejection of all tenders as of July 27, 1949, after it had opened all tenders as scheduled on July 18, 1949, and disclosed the contents thereof 'to a third person,' which disclosure allegedly constituted 'a breach of (its) fiduciary duties'; and (6) the claim that the 'rejection * * * aforesaid was wrongful and without right.'

Upon the presentation of this petition, an order was obtained for the examination of the bank and A. L. Lathrop; and at the same time, upon affidavit, a subpoena duces tecum was issued directing the bank to produce, at the scheduled deposition of its officer, all of the tenders which it had received under its call dated June 30, 1949. At the taking of the deposition of A. L. Lathrop as ordered, he as a bank officer refused to answer certain questions propounded to him and to produce the specified documents. The propriety of his action was then submitted to respondent court for determination, and the court made its order directing the witness to answer certain of the questions propounded but sustained the bank's objections to the production of the documents named in the subpoena duces tecum. Thereafter petitioner sought a second subpoena duces tecum upon the following averments by affidavit: 'Said Union Bank and Trust Company is the co-trustee under a certain trust indenture. Consolidated Office Buildings Company, a corporation, is the trustor thereunder. Petitioner is the holder of numerous bonds issued under the terms of said indenture and is, therefore, a beneficiary of said trust. As such trustee, said Union Bank and Trust Company has in its possession and maintains records showing: (1) The number of outstanding bonds; (2) Bonds acquired by purchase, or otherwise; (3) Dates of acquisition of bonds; (4) Prices Paid for bonds; (5) From whom said bonds were purchased; and (6) Disbursements for counsel and other fees and charges.'

The affidavit then makes reference to the petition to perpetuate testimony as 'Incorporated' therein and as setting forth, among other things, these matters: '(1) a certain invitation for tenders of bonds made by the co-trustee; (2) the making of said tenders by various persons, including petitioner; (3) the rejection of said tenders by the said co-trustee; and (4) that said rejection by said co-trustee was wrongful and without right.' The affidavit then continues: 'Whether the said rejection was wrongful and without right defends, among other things, upon (a) the terms of the trust indenture, and (b) the prices paid for the bonds, plus all additional costs and expenses in acquiring them. The records of the said co-trustee in its possession and above-described are, therefore, competent and admissible evidence material to the issues.'

Additional charges are also made by the affidavit wherein it is claimed that 'unknown to petitioner at the time he filed his said petition to perpetuate testimony was the fact that the said co-trustee had entered into a secret agreement * * * wherein and whereby the conduct of the said co-trustee was sought to be influenced'; that 'the existence of said secret agreement, but not its terms, was discovered upon the taking of the deposition of the said A. L. Lathrop'; that said 'secret agreement' called for the bank's refusal of all tenders from the bondholders under an arrangement with three 'guarantor's whereby bonds could be acquired by the bank in the 'open markey' for prices less than those tendered by the bondholders. It is then averred that 'petitioner desires to further interrogate the said A. L. Lathrop concerning the execution of said secret agreement * * * the acts and conduct of the (bank as) co-trustee subsequent to the date of execution of said agreement'; and particularly with regard to the 'present status, past acts of management, the intent of the (bank) as to future operation, (as well as) other incidents of the operation of the trust.'

Upon such affidavit petitioner procured the issuance of a second subpoena duces tecum calling for 'all books, documents and records relating to the creation, existence and administration' of the trust. Thereafter motion was made for the quashing of this subpoena as being improvidently issued, and as also violative of the constitutional protection against unreasonable searches and seizures. In opposition to such motion and in support of the premise for the issuance of the subpoena in question, a counter-affidavit was filed on behalf of petitioner, wherein it is averred that one of the 'guarantors' under the alleged secret agreement was 'president' of the trustor company, and that 'vitally' concerning the petitioner was the matter of whether the arrangement for the purchase of the bonds on the 'open market' involved the payment of a broker's commission and attorney fees from the sinking fund in an amount which made the total expense of acquiring the bonds on the 'open market' in fact greater than it would have been if the bank had accepted the bondholders' tenders. Respondent court sustained the bank's objections to the propriety of the subpoena and ordered it to be quashed. The court also ruled, in pursuance of certain medical affidavits filed with respect to the proposed examination of A. L. Lathrop, that it would be detrimental to his health to testify. Petitioner does not seriously challenge the premise of this latter ruling, but he does seek, by writ of mandate, to have vacated the order of respondent court quashing the second subpoena duces tecum above mentioned as it relates to the demand upon the bank for the production of the designated documentary evidence.

The petition to perpetuate testimony indisputably constitutes a literal compliance with subdivisions (1) and (3) of section 2084 of the Code of Civil Procedure, with petitioner setting forth (1) the reason for the perpetuation of the testimony, that is, that he expects to be a party to an action; (2) the names of the witnesses to be examined and their places of residence; and (3) a general outline of the facts expected to be proved. It is conceded that 'Ordinarily nothing more than the statutory requirements is necessary to be shown in the application, and the courts of this state have so stated on several occasions', Kutner-Goldstein Co. v. Superior Court, 212 Cal. 341, 345, 298 P. 1001, 1003, and cases cited; but it is argued that when the order for examination of the proposed witness extends beyond the taking of his deposition through questions and answers and directs his production of documentary evidence, there...