Edgar v. Bank of America National Trust & Savings Ass'n

228 P.2d 21, 102 Cal. App. 2d 700, 1951 Cal. App. LEXIS 1371
CourtCalifornia Court of Appeal
DecidedMarch 7, 1951
DocketCiv. No. 4060
StatusPublished
Cited by2 cases

This text of 228 P.2d 21 (Edgar v. Bank of America National Trust & Savings Ass'n) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Edgar v. Bank of America National Trust & Savings Ass'n, 228 P.2d 21, 102 Cal. App. 2d 700, 1951 Cal. App. LEXIS 1371 (Cal. Ct. App. 1951).

Opinion

MUSSELL, J.

In 1921 the plaintiffs purchased 80 acres of land situated in Kings County, California, for the sum of $8,000. Because there were some 30 or more purchasers, the title was conveyed to Security Trust Company to hold under a trust agreement. The agreement provided that the trustee could not sell or lease without the consent of 51 per cent of [701]*701the beneficial interests. Defendant Bank of America thereafter succeeded to all of the rights, duties and liabilities of the Security Trust Company as trustee. From February, 1921, until December, 1936, the property was rented by plaintiffs, whenever it could be, for grazing purposes and the rentals received by them did not exceed the amount of the taxes. The taxes for the years 1932 to 1935, inclusive, were allowed by plaintiffs to become delinquent. These taxes were paid by the bank on January 5,1937, and during the years 1933, 1934 and 1935 no rental money was received by the beneficiaries from grazing.

In the fall of 1936, D. C. Scott and E. G. Stahl, believing that they could develop water on this 80 acres, sought to buy the property and also leased about 900 acres of adjoining and surrounding land at a rental of from 50 cents to $1.00 per acre. In December, 1936, the defendant bank, in violation of its trust, but in the belief that it owned the 80 acres, sold the same to Scott and Stahl for $800, payable in installments, reserving the oil rights. Early in 1937, Scott and Stahl drilled two water wells on the trust land, complete with casing, at a cost of approximately $4,305. These wells produced about 1,200 gallons of water per minute each, which proved sufficient to irrigate about 1,000 acres of land. When water was developed on the 80 acres on March 1, 1937, Scott and Stahl leased the trust land and subleased the adjoining 900 acres to Sample Bros, for a period of five years and five months, expiring on August 1, 1942, with the right to use water produced on the 80 acres, both on that land and on the adjoining 900 acres. The Samples agreed to and did pay Scott and Stahl a rental of $5.00 per acre per year for both the 80 acres and the 900 acres. They agreed to pay the cost of drilling the wells, with the casing, these amounts to be deducted from the rentals due. They also agreed to operate the pumps and deliver the water to various portions of the land at their own expense. The Samples used the water so produced until August 1,1942, and raised valuable crops on the property. After the leases had expired in 1942, Scott and Stahl acquired two 10-acre tracts adjoining the trust land on the north and on the south and drilled thereon two wells from which the 900 acres were then irrigated.

In October, 1937, one of the beneficiaries discovered that extensive farming operations were being conducted on the 80 acres. This was reported to the bank and an investigation was made. Immediately upon discovery of the bank’s error [702]*702in selling the trust property, the oil, gas and mineral rights were restored to the trust. Negotiations were then conducted by the bank, which, on March 10, 1938, resulted in a repurchase of the 80 acres by the hank, subject to a reservation in the deed from Scott and Stahl, reserving unto them the use and occupation of the 80 acres until August 1, 1942, on the payment by them of $200 cash and $400 annually, beginning with the 1st day of August, 1938 to and including August 1, 1941. The water wells and casings were to be maintained in good condition, reasonable wear and tear excepted, and delivered to the bank at the end of the term. The repurchase price paid by the bank for the property, subject to the reserved use, was the cancellation of the balance of $500 owing on account of the original purchase price from Scott and Stahl and the further sum of $5,000 cash. This valuation of $5,500 was predicated on the amount that Scott and Stahl had paid for the property and the cost of drilling and equipping the wells with casings.

The instant action was originally brought by the beneficiaries of the trust against the trustee for damages for the use, occupancy, rents, issues and profits of the trust property which the trustee had sold without obtaining the written consent of the beneficiaries as provided in the trust agreement. On a former appeal (Edgar v. Bank of America, 50 Cal.App.2d 827 [123 P.2d 885]) a judgment against the bank for $25,000 was reversed on the ground that it was based upon several measures of recovery without any election to rely upon any one of them in particular. It was there pointed out that under section 2237 of the Civil Code, where trust property has been wrongfully disposed of by the trustee, the beneficiaries of the trust may, at their option, either compel the trustee to replace the property “with its fruits” or compel the trustee to account for its profits with interest. Thereafter, the plaintiffs, having elected to seek the restoration of the property with its fruits, filed an amended complaint in which they asked to have the 80 acres fully restored to the trust and to have the bank account to the trust for the value of the water and other fruits and products produced between December 28, 1936, and August 1, 1942. On the second trial of the ease, the trial court, sitting without a jury, held that the trustee had restored the trust property to the trust and that the fruits thereof were the rents paid by Scott and Stahl to the trustee bank in the total amount of $1,800 and rendered judgment accordingly. Plaintiffs appealed and that [703]*703judgment was reversed by this court. (Edgar v. Bank of America, 73 Cal.App.2d 871 [167 P.2d 509].)

Upon the second appeal, this court held that the water taken from the trust land and used to irrigate the 900 acres of adjoining lands was part of the actual fruits of the trust property and that the trustee must account for the ‘ ‘ net value ’ ’ of what Scott and Stahl received therefor. In commenting upon the situation, this court said in Edgar v. Bank of America, 73 Cal.App.2d 871, 874 [167 P.2d 509]:

“The land being returned and it being thus admitted that the appellants should be charged for the enhanced value of the land, the essential question here is as to what may be said to constitute the fruits of this land during the period from the date of the wrongful conveyance up to August 1, 1942, when possession was finally restored to the trustee. The main controversy is over the question as to whether the water removed from the 80 acres and used on the 900 acres should be considered and accounted for as a part of the fruits of the 80 acres.
“Restoration of the land, with its ‘fruits,’ requires, in addition to restoring the title, an accounting, on some basis, for what the land produced over the period in which the appellants were deprived of its possession. As was said in Work v. County Nat. Bank & Tr. Co., 4 Cal.2d 532 [51 P.2d 90], ‘The alternative remedies . . . are all aimed to make the beneficiary whole. . . .

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Bluebook (online)
228 P.2d 21, 102 Cal. App. 2d 700, 1951 Cal. App. LEXIS 1371, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edgar-v-bank-of-america-national-trust-savings-assn-calctapp-1951.