In Re Johnson , 7 Cal. App. 436 ( 1908 )

It is disclosed by the record, the completeness of which is not questioned and from which alone the jurisdictional question involved must be determined, that one Marie H. Vance, as executrix of the last will of S. A. Vance, deceased, entered into an agreement for the sale of certain shares of corporate stock belonging to the estate of said Vance; that under the provisions of said will authority to sell without order of court was given, but, as required by section 1561 of the Code of Civil Procedure, she reported to the court that she had entered into an agreement to sell said property for $143,216.66 cash, and had received a thousand dollars of such purchase price; that the balance of the cash was to be paid upon delivery of the certificates duly assigned and upon confirmation of such sale by the court. She further reported that she had agreed that the purchase money should be left on deposit with the American National Bank at Los Angeles for a period of sixty days after confirmation, and that she had agreed to assign as a part of the transaction a certain agreement of guaranty theretofore made with reference to dividends upon said stock. She prayed the court for an order of confirmation and authority to deliver such certificates upon deposit to her credit by the purchaser of $143,216.66 in said bank. Thereafter, on March 18, 1907, the court upon examination made its order confirming said sale and authorizing the executrix, upon the receipt of said money to her credit in said bank, to assign and deliver said certificates and said agreement of guaranty; that the day following the entry of such order the executrix assigned said certificates and agreement of guaranty and deposited the same with the American National Bank in escrow, at the same time delivering to said bank certain instructions and receipts, which, being read together, amounted to a statement that the certificates were held by the bank subject to petitioner's examination as to the title of the executrix and her right to sell, and upon the agreement that should the title or transfer of such securities be shown defective in any way the securities were to be returned to the executrix and the certificate of deposit issued by the bank on petitioner's account should be returned to the bank. It further appears from the record that a minor child of tender years was by the terms of the will of said Vance entitled to one-half of the estate of such testator; that on May 14, 1907, the duly appointed guardian of such minor made an application to the superior court, praying that the estate of Vance, deceased, be relieved from such order of confirmation, for the reason that said Johnson and said executrix both knew, when said agreement was made and said order of confirmation applied for, that the stipulated price for which said property was to be sold was disproportionate to its value and that the sale thereof at such price was a fraud upon said estate and said minor child; that although said executrix had ample opportunity so to do she had neglected and refused to inform herself as to the true value of said shares of stock before entering into said contract, and alleging that in truth the market value of said shares, at the date of the execution of said agreement to sell and of said application for order of confirmation, was ten dollars per share, or twenty-two thousand dollars and more, in excess of said contract price. Upon the hearing of such application for relief the executrix filed her answer alleging, among other things, that the petitioner had repudiated said sale and had refused to comply with its terms, or to pay to said executrix any part of the purchase money, and that said executrix had elected to rescind the same and had tendered back the thousand dollars received upon the execution of said agreement for sale and the certificate of deposit theretofore issued to her.

It further appears from a verified complaint signed by petitioner and before the court on said hearing, that petitioner refused to accept the title to said certificates so deposited in escrow and had sought to maintain an action for damages against the executrix on account of her default under her agreement, and in said action had caused an attachment to be issued and served upon the bank issuing such certificate of deposit, which action was still pending and undetermined at the date of the hearing of said application of the guardian.

The court upon the hearing of said application granted relief under section 473 of the Code of Civil Procedure and vacated the order of confirmation theretofore by it made. That said price stipulated in the agreement was grossly disproportionate to the true value is clearly established, the effect of which was to defraud the minor child out of more than eleven thousand dollars.

The only question presented upon this application for a writ of review relates to the jurisdiction of the superior court to grant this relief. We are of the opinion that it was properly granted and the court exercised a proper discretion therein. That such relief can be granted in proceedings of this character is clearly shown in Estate of Ross, 140 Cal. 286, [73 P. 976], and that in an application under section 473 such section is to be liberally construed as a remedial statute. (Melde v. Reynolds, 129 Cal. 311, [61 P. 932].) That such relief may be granted upon the application of defrauded heirs is manifest from the reasoning employed in the case of Campbell v. Campbell, 152 Cal. 201, [92 P. 184], where it is held that equity will grant relief after the limitation imposed by section 473 upon the application of those beneficially interested where the fraud is extrinsic. In applications for relief under section 473 of the Code of Civil Procedure, made within a reasonable time, no distinction is to be made between extrinsic or other fraud. Fraud or its equivalent, whether upon the court or a party or one so situated as to be held in law an adversary, is sufficient to warrant relief. In addition to all of this, the contract which was confirmed originally was never executed. The only attempt so to do was by entering into a new agreement in the nature of a conditional sale. The court was warranted in finding from the affidavits used on the hearing that the executrix, for good cause, had rescinded the original agreement to sell, and that no title to such certificates ever vested in petitioner, but remained in the estate. The petitioner, having refused to comply with his agreement, the executrix possessed the right to resell the property, even without an order vacating the former confirmation, and that such order was so made is of little consequence in determining the rights of the petitioner under this application. Petitioner is shown to have no interest in the property or estate, and is in no position to invoke a review of the order or proceedings connected therewith.

Writ dismissed.

Shaw, J., and Taggart, J., concurred.

A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on March 19, 1908.