Houghton v. Pacific Southwest Trust & Savings Bank

Plaintiff brought this action against defendant bank to enforce an express trust and to obtain a judgment declaring the respective rights of plaintiff and the several defendants. The trial court sustained the demurrer of the defendant bank and defendant Gay Engineering Company to plaintiff’s amended complaint without

Plaintiff is the assignee of one Raymond, the original sole beneficiary of the trust in question, while the defendant bank is the trustee. Defendant Gay Engineering Company is the purchaser at a sheriff’s sale on execution in an action brought against Raymond in which sale the sheriff sold to said defendant corporation all right, title and beneficial interest of Raymond in said trust. The facts as alleged in the amended complaint so far as material on this appeal will be chronologically,set forth. In March, 1922, Raymond, who was the owner of certain real property, conveyed said property to the defendant bank by deed absolute in form, but said conveyance was intended to be and was received in trust for the sole use and benefit of Raymond. On the same day the defendant bank executed a declaration of trust covering said property, which declaration was accepted and approved by Raymond. The declaration of trust provided for the subdivision and sale of said property by the defendant bank as trustee and the payment to Raymond of the net proceeds of such sales. In September, 1922, and before any of said property had been sold, an action.was commenced by one Browne against Raymond and an attachment was levied upon all moneys, goods, credits, effects, debts due or owing or any other personal property belonging to Raymond in the possession or under the control of the defendant bank. In March, 1923, Raymond assigned to plaintiff for a valuable consideration all of his right, title and interest in and to said trust. In the case of Browne v. Raymond, above referred to, judgment was obtained against Raymond in March, 1924, for approximately $16,000 and a writ of execution was thereafter issued and levied upon all moneys, goods, credits, effects, debts due or owing or any other personal property belonging to Raymond in the possession of or under the control of the defendant bank. Subsequently the sheriff, after notice given, conducted a sale in which he offered to sell to the highest bidder all of the right, title and beneficial interest of Raymond in and to said trust. Defendant Gay Engineering Corporation bid $11,000, which was the highest bid received. This amount was paid and the sheriff executed and delivered to said defendant a certificate of sale. In April,

From the above statement it appears that the attachment of Raymond’s interest as beneficiary of the trust preceded Raymond’s assignment of his interest to plaintiff. If his interest as such beneficiary was subject to attachment and subsequent sale on execution, it is conceded that the demurrer was properly sustained. Appellant contends, however, that Raymond’s interest as beneficiary of the trust was neither subject to attachment nor sale upon execution. We are of the opinion that appellant’s contention may not be sustained.

Under the law of this state the interest of Raymond as beneficiary of the trust in question was not an interest in the real property, but was personal property. The creation of the trust vested in the trustee the whole estate in the real property subject only to the execution of the trust (Civ. Code, sec. 863), and Raymond as beneficiary retained no interest in the land which was subject to attachment by levy upon the real property. (Ward v. Waterman, 85 Cal. 488 , 508 [ 24 Pac. 930 ].) It has been said that the interest of the beneficiary consists of “merely a chose in action, an interest in a fund of money to be realized in the future by the sale of real property; by the making of the trust agreement he had converted any . . . interest in the real property which he possessed into a right only to receive money in lieu thereof, and this right was undoubtedly personal property”. (Marble Co. v. Merchants’ Nat. Bank, 15 Cal. App. 347 , 351 [ 115 Pac. 59 , 61], See, also, Craven v. Dominguez Estate Co., 72 Cal. App. 713 [ 237 Pac. 821 ]; Ward v. Waterman, supra; Civ. Code, sec. 663; Code Civ. Proc., sec. 17, subd. 3.)

In our opinion the interest of Raymond as beneficiary of the trust must be treated as personal property not capable of manual delivery and the code sections are sufficiently broad and general in their terms to bring such interest within the category of property subject to attachment and sale on execution. Section 541 of the Code of Civil Procedure provides that “The rights or shares which the defendant may have in the stock of any corporation or company, together with the interest and profit thereon, and

It is true that in the early stages of the law relating to attachment and execution many forms of valuable property rights by reason of their intangible nature could not be reached in this manner. The early conception of attach

That the interest of the beneficiary might be reached by the garnishment process was indicated in Ward v. Waterman, supra. Under a similar trust, it was there held that the beneficiary’s interest could not be reached -by levy upon the real property, but the court said on page 508 of 85 Cal.: “According to the allegations of his complaint, the writ was levied, not by garnishment, but by direct levy, as upon real estate, upon all the interest of Waterman in the land. As we have already seen, Waterman had no interest in the land, legal, equitable, present or prospective.” It further appears that a pledgor’s interest can be reached by garnishment of the pledgee, but not by levy upon the property pledged. (Dubois v. Spinks, 114 Cal. 289 [ 46 Pac. 95 ]; Treadwell v. Davis, 34 Cal. 601 [ 94 Am. Dec. 770 ]; Edwards v. Beugnot, 7 Cal. 162 ; Jones on Pledges, sec. 376; Warner v. Fourth Nat. Bank, 115 N. Y. 251 [ 22 N.

Appellant relies upon Hassie v. God Is With Us Congregation, 35 Cal. 378 , and Redondo Beach Co. v. Brewer, 101 Cal. 322 [ 35 Pac. 896 ]. These cases are not in point and the language used in the opinions cannot be considered authoritative in the light of the numerous decisions above referred to. See, also, Brainard v. Rogers, 74 Cal. App. 247 [ 239 Pac. 1095 ]; Philbrook v. Mercantile Trust Co., 84 Cal. App. 187 [ 257 Pac. 882 ]; Youtz v. Farmers & Merchants’ Nat. Bank, 31 Cal. App. 370 [ 160 Pac. 855 ]; opinion of Supreme Court on denying hearing in Aigeltinger v. Healy-Tibbitts Co., 23 Cal. App. 608 , 611 [ 139 Pac. 436 , 438].

As the interest of Raymond as beneficiary of the trust passed to defendant Gay Engineering Company by virtue of the attachment and sale on execution, it follows that the complaint of plaintiff as the subsequent assignee of Raymond failed to state a cause of action and the demurrer thereto was properly sustained. It therefore becomes unnecessary to consider the further points urged by respondents in support of the judgment.

Judgment is affirmed.

Nourse, P. J., and Sturtevant, J., concurred.

'A petition for a rehearing of this cause was denied by the District Court of Appeal on March 5, 1931, and a petition by appellant to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on April 2, 1931.

Richards, J., and Shenk, J., dissented.