Byrne v. B. McGrath , 130 Cal. 316 ( 1900 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] Appeal from judgment for defendant, and from order denying plaintiffs' motion for a new trial. The appeal from the judgment was taken more than six months after the entry of judgment, and must be dismissed. The cause was before this court on a former appeal (Byrne v. Byrne, 113 Cal. 294), and is thus stated in the report of the case:

"Plaintiffs, who are the children of Michael Byrne, Jr., deceased, commenced this action against the administratrix of his estate and the creditors thereof, seeking a decree that certain property which had come into the possession of the administratrix as the property of the estate was in fact held by their father as trustee in trust for them. . . . . The estate of Michael Byrne, Jr., is admittedly insolvent, and the defendants in interest are creditors of his estate with allowed claims. Plaintiffs, having failed to present their claims against the estate within the time contemplated by law, are here seeking to follow, and claim to have followed, and the court finds they did follow, the specific property of the trust through its mutations in form."

On the former appeal — which resulted adversely to the defendant — there were several errors of law that do not occur in the present record. There is, also, now additional evidence which, it is claimed by appellant, establishes the trust and the identity of the trust fund. There is also another important difference between the case as then and as now presented. On the present appeal many of the facts relied upon by the appellant are specifically found by the court, and on this appeal must be accepted as true.

The case as found by the court is in effect as follows: Plaintiffs and defendant Mary F. Byrne are the children of the deceased, Michael F. Byrne, Jr., and of Mary E. Byrne. The mother died January, 1878, leaving a will, which was duly probated, wherein she appointed her husband executor and devised and bequeathed him in trust, for the support, maintenance, and education of the children, all her property, real and personal. Byrne accepted the trust, and as trustee came into possession of two thousand five hundred dollars as part of the trust fund; and on the thirty-first day of December, 1883, invested this sum, with five hundred dollars of his own, in the purchase of "the personal property particularly described in subdivision 4 of said amended complaint," taking the title in his own name, the property so purchased and described consisting of a drug store, stock, fixtures, etc., in the town of Grass Valley.

But the court found, in effect, that neither the personal property so purchased nor the proceeds thereof were traced and identified by the evidence.

The sole question in the case is as to the sufficiency of the evidence to support the finding last cited. The same question is therefore presented as in the former case, viz.: "Whether or not plaintiffs [have] followed the trust fund in its mutations, and have sufficiently identified it to avoid the rule laid down inLathrop v. Bampton, 31 Cal. 17,¹ which places the beneficiary who is unable so to follow the trust funds in the position of a general creditor of the estate." But as it is now found that the original trust fund was invested in the property described in the complaint, the question will relate only to the proceeds of the trust property.

In addition to the facts found, the following facts appear from the evidence: The business was carried on in the same location by Byrne at a profit of from one hundred and seventy-five to two hundred dollars a month, until his death, December 7, 1887, at which time, as appears from the petition of the administratrix, it was worth five thousand dollars. It was afterward carried on at a loss by the administratrix until it was sold for seventeen hundred dollars. The trust was always acknowledged by Byrne. The court does not find whether the five hundred dollars used in the purchase by Byrne was intended by him as an advance to the children, or as an investment on his account. But the circumstances of the purchase of the drug store as detailed by Mrs. Meeks, and his own declarations to his children, and to Mr. Kitts, his attorney, indicate that the former was the case; and, on the evidence, we think the court should have so found. Nor, were it otherwise, would the case be materially affected. The investment of the five hundred dollars on his own account would simply have given to Byrne a corresponding undivided interest in the concern; or if this should be considered as a mingling of the trust property with that of Byrne, the whole, on the principle of accession, would have belonged to the trust fund. (Civ. Code, sec. 1025 et seq.) It does not appear that any money of his own was subsequently put into the business by Byrne; but from the fact that the store was always a paying concern, and from his narrow circumstances as detailed by Kitts, the contrary is most probable. Were it otherwise — upon the principle already cited — the property thus mingled with the trust fund would have become part of it. Civ. Code, sec. 1025 et seq.) It is also clear from the evidence that the advance of five hundred dollars originally made by him, and other advances, if any, have been in fact repaid, and that on an accounting at the death of Byrne the balance would have been largely against him.

The question of identity does not relate to the specific items of stock, fixtures, etc., constituting the drug store at the time of the purchase, but to the drug store itself, which is to be regarded collectively as a thing or entity; or, as it would be called in the civil law, a universitas rerum. (Mackeldy's Roman Law, secs. 159, 132.) The material things belonging to the concern did not constitute the collective thing or universitas spoken of as the drug store or business, but were only mutable and transitory parts of it. It was this that constituted the trust fund in question, which was something different from the material things momentarily constituting it and remained the same, though these, like the particles of water in a river, were continually changing. At the time of the sale, therefore, "it was [still] the identical property originally covered by the trust."(Orcutt v. Gould, 117 Cal. 316.) "The identity of a trust fund consisting of money (it is said in the case cited), may be preserved, so long as it may be followed and distinguished from all other funds, not by identifying the individual pieces or coins, but by showing a separate and independent fund or value readily distinguishable from all other funds." And a fortiori is this true when the fund consists not of money, but of tangible and distinguishable items of property. The case is, therefore, not a case of the conversion of the trust fund into another species of property, but of a clearly identified fund that has retained its original form and essence. Indeed, it is in effect so found. For the finding is that the trust money was invested in the property described in subdivision 5 of the complaint, which refers unequivocally to the property as it existed at the time of the sale, and thus identifies it as it then stood with the property as originally purchased. The subsequent finding of the court to the contrary must be regarded as the result of an erroneous theory as to what the property to be identified was; that is to say, to the error that the trust property consisted of the chattels momentarily constituting the fund at the time of the purchase, and not of the fund itself.

As between the deceased and the plaintiffs the right of the latter are manifest; nor is there any question here as to the rights of creditors of the concern. The respondent is merely a general creditor of the estate, who loaned money to the deceased in his lifetime. Possibly his (Byrne's) apparent ownership of the property in question gave him a fictitious credit; but if the property in question was originally the property of the plaintiffs, and if — as it now is — it has been identified, he has no equities superior to theirs. The sole question, therefore, is as to the sufficiency of the identification of the trust fund; and as in our opinion this has been satisfactorily made out, the order denying the plaintiffs' motion for a new trial must be reversed.

Some directions will, however, be necessary with reference to the further proceedings. The suit was brought upon the theory that upon the death of Byrne, the trustee, the trust ceased and the trust fund became equitably vested in the children. But by reference to the will it will be seen that the property was not devised in trust for the children generally, but merely in trust for their "maintenance, support, and education." The trust, therefore, cannot extend beyond their lives; and it follows that the remainder was undisposed of by the will, and passed by intestate succession one-third to the father and two-thirds to the children. (Civ. Code, sec. 1386, subd. 1.) It will be proper, therefore, for the court to appoint a trustee to take charge of the trust fund as successor to the deceased.

The order appealed from is reversed and the cause remanded for new trial and further proceedings in accordance with the above opinion.

¹ 89 Am. Dec. 141.