Walton v. City of Red Bluff

• Citation: 3 Cal.Rptr.2d 275,2 Cal.App.4th 117
• Court: California Court of Appeals Court of Appeals
• Decision Date: 30 December 1991
• Parties: Herbert Kraft WALTON, Jr., Plaintiff and Appellant, v. CITY OF RED BLUFF, Defendant and Appellant. Civ. C007759.

Page 275

3 Cal.Rptr.2d 275

2 Cal.App.4th 117

Herbert Kraft WALTON, Jr., Plaintiff and Appellant, v. CITY OF RED BLUFF, Defendant and Appellant.

Civ. C007759.

Court of Appeal, Third District, California.

Dec. 30, 1991.

Review Denied March 19, 1992.

[2 Cal.App.4th 120] Clyde Small, Redding, for plaintiff and appellant.

Harold J. Lucas, Red Bluff, for defendant and appellant.

CARR, Associate Justice.

In 1908 and 1916 respectively, Mrs. Elizabeth Kraft and her son, Edward Kraft, granted to the City of Red Bluff certain properties to be used as a library. In 1986, the books were removed from the library building. Herbert Kraft Walton, a descendant and heir of the donors, filed suit seeking reconveyance of the property to him pursuant to the original grants which provided for reversion to the grantors or their heirs if the property ceased to be used for library purposes.

Red Bluff cross-complained, contending it owned the land free of any use restrictions. The trial court ruled the transfer was not in trust but on condition, that the condition was not triggered by temporary abandonment by Red Bluff and the condition was still valid. The trial court found the land could be used for a library or certain related purposes.

On appeal Walton urges the land was transferred by a trust instrument and, as the trust terms were violated, the land reverts to him as the successor of the settlor. On cross-appeal Red Bluff urges the land was transferred in fee simple on condition subsequent, but the passage of time has nullified the purpose of the condition and it should be declared the owner in fee simple.

The transfer was by fee simple determinable, leaving the heirs of the grantors with a possibility of reverter, also called a right of entry or reentry. By statute such interests are now powers of termination. We requested supplemental briefing on the effect of the Marketable Record Title statutes (Civ.Code, § 880.020 et seq.) on this case. ¹ We conclude the issue of Walton's failure to record his claimed power of termination pursuant to the Marketable Record Title statutes cannot be raised for the first time on appeal. On the undisputed facts below Red Bluff violated the condition of the grants. We shall reverse the judgment with directions to the trial court to quiet title in favor of Walton.

FACTUAL AND PROCEDURAL BACKGROUND

The parties stipulated that trial by the court would be conducted on the pleadings, trial briefs and certain declarations submitted by Red Bluff to which Walton preserved objections.

Elizabeth and Edward Kraft, the wife and son of Herbert Kraft, wished to provide for a public library in Red Bluff. The library was to be free, open to all races, and dedicated to the memory of Herbert Kraft. ² Each gave land for the library by inter vivos transfer and each left money for library purposes by bequests in their wills. ³ The Krafts transferred the land by On February 18, 1988, Walton filed a complaint for declaratory relief, to terminate a trust, and to quiet title as against Red Bluff. The complaint alleged Walton was the sole surviving heir of Elizabeth and Edward (called by Walton "trustors"), who died in 1916 and 1920, respectively. Attached as exhibits to the complaint were the indentures.

separate but similar documents, denominated indentures, the pertinent provisions of which are recited in the appendix. It is not disputed that in September 1986, the books were removed from the library.

Red Bluff answered, admitting the allegations of the complaint except for denying it held the property in violation of Walton's rights and denying Walton was entitled to possession or title. Red Bluff cross-complained for declaratory relief and to quiet title. Red Bluff alleged the books were moved to a new building because of a lack of space, the lack of access for handicapped and elderly persons and the lack of parking. ⁴

The trial court issued a statement of decision in which the court stated the "indentures" were "not an attempt to create a trust in the classic sense." Citing two cases, discussed below, the court treated the conveyance as a grant in fee, subject to a condition, and found the condition of abandonment had not yet occurred. ⁵

Judgment was entered that Red Bluff had not breached the "condition of conveyances," but its request to quiet title was denied and it was ordered that Red Bluff "does not have the right or the power to dispose of the property, or to use it otherwise than in accordance with this judgment. [p] 4. It is further adjudged that [Red Bluff] must use the Kraft Building for library purposes, but is not restricted to that use alone, and may use said building consistent with the terms of the grant...."

Both parties appeal. We shall reverse.

DISCUSSION

The first determination is the nature of the grants made by the Krafts. We conclude the trial court correctly ruled no trust was created. Though Walton originally had a possibility of reverter, his interest was converted by statute into a power of termination. Next we consider the effect of Walton's failure to record his power of termination in compliance with the Marketable Record Title statute and Red Bluff's failure to raise this issue below; we conclude Red Bluff's failure to raise this issue below operates as a waiver. As the agreed facts establish a breach of the condition of conveyance we shall remand with

directions to the trial court to quiet title to the library in Walton.

I. THE NATURE OF THE GRANTS

A. No trust was created by the indentures at issue.

Walton has based his claim entirely on the existence of a trust. ⁶ The trial court found no trust was created by the indentures, a finding with which we agree.

Elizabeth Kraft's indenture provides the grantor "does hereby give, grant and convey" the property "To have and to hold the said premises in trust for the uses and purposes of a public library. No portion of said property shall be used for any other purpose[.]" "If the property herein conveyed shall at any time, be abandoned by the said Town of Red Bluff, or if the said property shall cease to be used, for library purposes, by said Town, or shall be put to [any] use other [than] the uses and purposes, herein specifically referred to ... then the grant and conveyance herein made shall cease and terminate, and the title to the said property and all the improvements thereon shall at once revert to the party of the first part or to her heirs or assigns."

Edward Kraft's indenture refers to "further carrying out the ideas of his Mother in making the gift above mentioned ... the said party of the first part does hereby give, grant and convey" additional property "TO HAVE AND TO HOLD the said premises in trust for the uses and purposes of the [Herbert Kraft Free Public Library] on the same terms and conditions and for the same purposes and uses that the rest of said Library property is held, the same being ... [incorporating the restrictions contained in his mother's indenture]."

As the court took no extrinsic evidence on the meaning of the documents, we exercise our independent judgment in this review. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866, 44 Cal.Rptr. 767, 402 P.2d 839.) ⁷ In general, a grant of real property is interpreted in like manner as a contract: The grant is interpreted in favor of the grantee; any reservations are interpreted in favor of the grantor. (§§ 1066, 1069; Machado v. Southern Pacific Transportation Co. (1991) 233 Cal.App.3d 347, 352-353, 284 Cal.Rptr. 560; Concord & Bay Point Land Co. v. City of Concord (1991) 229 Cal.App.3d 289, 294, 280 Cal.Rptr. 623.) "If the operative words of a grant are doubtful, recourse may be had to its recitals to assist the construction." (§ 1068.)

A reverter is a type of forfeiture, abhorrent to the law. (§ 1442; Simes, Restricting Land Use in Cal. by Rights of Entry and Possibilities of Reverter (1962) 13 Hastings L.J. 293, 298-301 [noting techniques used to avoid permitting reverter].) Because "the law views reversion as an anomalous doctrine, an exception to the general aversion to forfeiture" "the law requires clear expression of the grantor's intent." (Springmeyer v. City of South Lake Tahoe (1982) 132 Cal.App.3d 375, 379-380, 183 Cal.Rptr. 43. See Fitzgerald v. County of Modoc (1913) 164 Cal. 493, 495, 129 P. 794.) Language like that in the Walton deeds, including use of the word "revert," evidences such intent. (Fitzgerald v. County of Modoc, supra, 164 Cal. at pp. 495-496, 129 P. 794.)

The use of the word "trust" in a grant does not without more make a trust. ⁸

                To constitute a trust there must be trust intent, trust property, trust purpose and a beneficiary.  (Prob.Code, §§ 15201-15205 [applicable to all trusts as of July 1, 1987 and trust proceedings begun on or after that date];  11 Witkin, Summary of Cal.Law (9th ed. 1990) Trusts, § 27, p. 912.)   The intention to create a trust must be shown by more than an expression of intent to establish a moral obligation:  "The problem is one of construction, but ordinarily words of desire, hope or recommendation that a devisee or legatee use the property given him from the benefit of another do not create a trust.  The direction must be imperative.  [Citations.]"  (Id. at § 34, p. 919.)
                

"An interest subject to a condition subsequent is not, because of the condition, held in trust." (Rest.2d Trusts, § 11, p. 32.) "The owner of property may transfer it, inter vivos or by will, to another person and provide that if the latter should fail to perform a specified act his interest should be forfeited. In such a case the interest of the transferee is subject to a condition subsequent and is not held in trust." (Id. at § 11, com. a, p. 32.) Further, "Where the owner of property transfers it inter vivos or by will 'upon condition' that it be dealt with in a manner beneficial to a third person, a trust is created if the transferor manifested an intention that the transferee should be...