Farmers & Merchants National Bank v. Peterson

55 P.2d 867, 5 Cal. 2d 601, 1936 Cal. LEXIS 433
CourtCalifornia Supreme Court
DecidedMarch 11, 1936
DocketL. A. 14444
StatusPublished
Cited by43 cases

This text of 55 P.2d 867 (Farmers & Merchants National Bank v. Peterson) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farmers & Merchants National Bank v. Peterson, 55 P.2d 867, 5 Cal. 2d 601, 1936 Cal. LEXIS 433 (Cal. 1936).

Opinion

SHENK, J.

The plaintiff Farmers and Merchants National Bank of Los Angeles, a creditor of the Bartlett Music Company, sued on its own behalf and on behalf of all the other creditors of that company to obtain an accounting and other relief from the trustees under an assignment for the benefit of the creditors of the music company. The Farmers and Merchants National Bank of Los Angeles will be referred to as the plaintiff, and the trustees under the assignment will be referred to as the defendants. From a judgment decreeing the removal of the defendants as trustees, appointing their successor, ordering the transfer of cash, hooks and records to the new trustee, and for the recovery from them of certain sums, the defendants have appealed.

*603 The facts are not in dispute. In September, 1925, by an agreement in writing, the music company transferred all of its assets to Fred E. Peterson, A. Getty, C. H. Mayer, H. Jackson and W. H. Munson for the benefit of its creditors. In August, 1926, Mayer and Munson resigned as trustees and the defendants W. C. Lannin and C. W. Jacks succeeded them. In July, 1929, Jacks resigned and C. B. Boothe took his place. The value of the assets of the company taken into the possession of the trustees shortly after the execution of the agreement was $67,646.94. Liquidation of those assets was completed about July, 1927, and realized the gross sum of $53,764.82. The court found that $22,384.97 of said sum was properly paid out for expenses.

Commencing in November, 1926, the plaintiff, who was a creditor of the company to the extent of some $60,000, made repeated demands on the defendants for an accounting or for some information concerning the receipts, expenditures and balances of the trust property. The trustees declined to make any accounting or divulge any information except as to the approximate balance on hand and that the expenses, other than occasional advances for costs where suits were necessary, were restricted to office rental of $25 a month and bookkeeping and collection charges of $15 per week. In May, and again in July, 1928, the plaintiff requested distribution of approximately $30,000 then admitted to be in the trustees’ hands for that purpose. No action in respect to such demands was taken except that in meeting the trustees decided to pay $7,500 to the defendant Peterson on account of attorney fees for services rendered. In February, 1929, the demand of twenty-two of the creditors for a distribution was received by the trustees. Twice in March, 1929, the plaintiff made demands for an accounting which were declined by the trustees in writing.

The present action was commenced on May 4, 1929. On May 10th following the trustees met and paid a retainer fee of $2,500 to the defendant Peterson to resist the action for an accounting. In June, 1929, the trustees procured an. audit of their accounts for their own benefit. On July 1, 1929, the trustees voted the payment of $2,000 to each of Getty, Jackson and Lannin for services to date, and an additional $4,000 to Peterson on account of attorney fees. In March, 1930, they voted the payment of $250 to each member of the committee *604 for services rendered. In December, 1930, they voted $1600 more to Peterson for attorney fees and $400 to each of the other trustees.

On February 23, 1931, the trustees met and resolved that a first and final dividend of 2% per cent be paid to the creditors. Pursuant to this resolution they distributed to some of the creditors prior to the trial the sum of $1357.11, and the sum of $3,572.74 remained in their possession for distribution.

In November, 1931, on the plaintiff's further demand the trustees by letter refused to permit the plaintiff to audit the accounts except at its own expense, and on condition that it accept the final dividend of 2% per cent and dismiss the action for an. accounting. On December 4, 1931, in meeting, the trustees considered the plaintiff’s offer to audit the accounts at its own expense and, although the trustees then had an available audit, decided not to grant the bank’s request, and again voted sums to Peterson for attorney fees and to each of the other members for services rendered.

The action was tried in October, 1932. The court found that Peterson had received a total of $16,450, Getty, Lannin and Jackson each $3,000, and Boothe $1,000 of the trust funds for their personal use; a total of $10,000 to the trustees except Peterson, and a grand total of $26,500 to all the trustees for purported services rendered, out of a fund of $31,379.85 remaining for distribution after all expenses found to have been proper were discharged. The court found further that the sum of $1367.65 was the reasonable value of Peterson’s services, and that the difference, or the sum of $15,082.35, constituted an overpayment to him. Also, that of the $10,000 paid to the other trustees, $8,632.35 constituted an overpayment. There was thus found the sum of $27,285.34 which should have remained in the trustees ’ hands for distribution to the creditors. The court found specific acts of concealment and bad faith and that the defendants were unfit to continue as trustees. It ordered the removal of the trustees, and appointed George H. Naegele to succeed them and to receive from them the sum in their hands amounting to $3,572.74 and the books and records pertaining to the administration of the trust. The court further provided for the recovery from the defendants jointly and severally of certain sums aggregating $23,714.70. It ordered the disbursement *605 by the newly appointed trustee of said sum of $3,572.74 to those creditors who had not yet received a 2% per cent dividend ; it ordered the payment to the plaintiff of five per cent of the sums received and recovered from the trustees as and for fees for services rendered by its attorney in the conduct of the action for and on behalf of all the creditors; and ordered the balance of the sums recovered from the defendants disbursed in accordance with the terms of the trust agreement.

On this appeal no serious contention is or can be made that the findings are not supported by the evidence or that there is any error prejudicial to .the defendants in the accounting as found by the court. The appellants, in a voluminous brief, without any statement of the facts or the evidence, content themselves for the most part with attacks on the sufficiency of the pleadings, and contentions respecting claimed defects of parties. They also contend that the findings made and relief granted were outside the issues, and that the judgment is void because not filed within thirty days as required by section 632 (1) of the Code of Civil Procedure. Some of the specific grounds of the appeal will be noted.

It is the contention of the defendants that all the necessary parties were not before the court because each of the sixty-nine creditors on whose behalf the plaintiff brought the action was not made a party plaintiff or defendant and served with process. The plaintiff alleged facts which conformed to the requirements of section 382 of the Code of Civil Procedure and which, if true, entitled it to pursue the action on behalf of itself and all the other creditors of the music company. These facts were all admitted by the failure of the defendants to deny them. The trial thereupon properly proceeded, the plaintiff acting on behalf of all the creditors. (Code Civ. Proc., sec. 382.)

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Bluebook (online)
55 P.2d 867, 5 Cal. 2d 601, 1936 Cal. LEXIS 433, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farmers-merchants-national-bank-v-peterson-cal-1936.