Opinion
For Opinion on Hearing, see 39 Cal.Rptr. 203, 393 P.2d 403.
Charles B. Snow and Daniel Dennis, Newark, for appellant.
Warren Gant and Gant & Gant, Modesto, for respondents.
STONE, Justice.
In 1912 Mrs. Josie Kidd established a dairy on 27 acres of land in Stanislaus County. Three of her sons, respondents herein, and a fourth son, appellant's deceased father, helped their mother with the dairy from the time they were little boys. In 1927 the three respondents formed a partnership and took over the operation of the business, but the fourth son, Clarence W. Kidd, left the ranch and did not participate. It is not clear just what interest the mother retained in the business after 1927, but it is clear that she retained title to the real property upon which respondents operated the dairy and that upon her death in 1952, title to the real property passed to the four sons, share and share alike.
On March 13, 1955, Clarence, appellant's father, orally agreed for $3,100 to sell his one-quarter interest in the 27 acres to his three brothers, who were in possession. The agreement was actually made with Milton Kidd, who gave Clarence two checks totaling $3,100, and Clarence signed the following receipt:
'To day I received from my brother Milton Kidd for himself and my brothers Hubert & Herman the sum of $3100.00 (three thousand one hundred dollars) as payment for property left by our mother to we four brothers.'
As it was Sunday, Milton and Clarence agreed that Clarence should go to a title company on a business day and execute a deed conveying his interest in the property to his brothers. Clarence never refused to execute the deed; to the contrary, upon several occasions he stated that he would execute the deed when convenient; but he died September 23, 1960, without having done so.
The three brothers, respondents herein, have been in possession of the property at all times, they have paid the taxes and received the income from the land.
Respondents brought this action to have the contract specifically enforced and to have appellant, Clarence's son, declared a constructive trustee of the property which had vested in him by operation of law at his father's death. (Estate of Newlove, 142 Cal. 377, 75 P. 1083.) The judgment decreed specific performance of the oral contract and also that appellant holds the property as a constructive trustee.
This case is before us upon the granting of a motion for a rehearing. Our original opinion was largely devoted to the issue of the statute of limitations. A rehearing was granted because respondents felt that this court gave insufficient consideration to the question of constructive trust, which they argue tells the running of the statute of limitations.
Respondents argue that a constructive trust arose when the agreement was entered into between Milton and Clarence Kidd, and the consideration was paid. However, the trial court did not so find. Rather, it found that by reason of the cancelled checks and the memorandum of the agreement signed by Clarence, there was a specifically enforceable agreement between respondents and Clarence Kidd which was not performed or enforced during the lifetime of Clarence. The court then held that upon Clarence's death his son, appellant herein, If we were to concede, as respondents seem to argue, that it can be implied from the findings that a constructive trust arose at the time the agreement was made, it would be of no comfort to respondents. Such an implied finding would be in direct conflict with the trial court's express finding that the agreement was specifically enforceable. Contradictory findings about matters material to the merits of a case require reversal of the judgment. (Andrews v. Cunningham, 105 Cal.App.2d 525, 529, 233 P.2d 563.) The two findings would be in conflict because a specifically enforceable agreement cannot, in the absence of pleading and proof of unconscionable circumstances forestalling its enforcement, provide the framework for a constructive trust.
In view of the finding that the contract was specifically enforceable, a further implied finding that a constructive trust should nevertheless be imposed, could serve only one purpose, to prevent appellant from raising the statute of limitations. Therefore the real issue presented by this case is whether a court of equity will impose a constructive trust for the sole purpose of preventing a successor in interest to a specifically enforceable contract from raising the statute of limitations
We have found no decisional authority or comment by textwriters that support respondents' contention. On the other hand, in Restatement of the Law of Restitution, section 160, subsection (c), we find the following:
'There are many situations in which a person holding title to property is subject to an equitable duty to convey it to another. In some of these situations, however, the relationship is not properly included in the term 'constructive trust,' since the equitable duty to convey the property is not based upon unjust enrichment. Thus, the trustee of an express trust is under such a duty when the time for the termination of the trust arrives; so also, a person who has made an enforceable contract to sell land is under such a duty to the purchaser, since such a contract is specifically enforceable; * * *.' (Emphasis added.)
It is not surprising that no authority is cited in support of respondents' contention, for to so hold would vest a court of equity with discretion to impose a constructive trust to relieve against the bar of the statute of limitations in any case involving an enforceable contract. This is so because in practically every instance in which the defense of the statute of limitations is successfully interposed in a contract case, one party is enriched at the expense of another. The courts, however, have never, on this ground alone, justified the imposition of a constructive trust.
Respondents have cited a number of cases which they contend support their theory that a constructive trust arose upon the making of the contract and that the constructive trust tolled the running of the statute of limitations. A review of these cases impels us to conclude that both the pleadings and the proof here fall short of the basic requirements for this kind of relief in equity. All that respondents pleaded or proved was that Clarence Kidd did not perform the contract prior to his death, apparently by reason of neglect, his neglect and respondents' neglect, and that upon his death his interest in the property passed to his son, the appellant, by operation of law. The complaint here, unlike the pleadings in the cited cases (Day v. Greene, 59 Cal.2d 404, 29 Cal.Rptr. 785, 380 P.2d 385; Lauricella v. Lauricella, 161 Cal. 61, 118 P. 430; Steinberger v. Steinberger, 60 Cal.App.2d 116, 140 P.2d Cf. Beazell v. Schrader,
Once the trial court made the naked finding that there was an enforceable contract as between respondents and Clarence Kidd and nothing further except that Clarence intended to perform up until the time of his death, any ground for declaring a constructive trust as between them disappeared. Therefore, as Clarence's successor in interest, appellant is not precluded from pleading the statute of limitations by way of answer. The statute of limitations may be raised as a defense in an equity case. (Grattan v. Wiggins, 23 Cal. 16, 34; Troeger v. Fink, 166 Cal.App.2d 22, 28, 332 P.2d 779.)
The contract which the court found to be specifically enforceable was entered into March 13, 1955, and performance could have been demanded the following day. Clarence died September 23, 1960; this action was commenced August 14, 1961. Appellant, as administrator of the estate of Clarence W. Kidd, deceased, and in his individual capacity, pleaded the statute of limitations. Not only did he have this right but insofar as the estate is concerned, he was required to do so under Probate Code, § 708, which forbids an executor or administrator or a judge to approve a claim barred by the statute of limitations. Since more than four years elapsed after the time the contract was performable and before the death of Clarence, the action was barred under the provisions of Code of Civil Procedure, § 337, subdivision (1). So far as the record before us is concerned, the defense is good since no excuse was pleaded or proved for delay in seeking enforcement of the contract.
The foregoing determination focuses attention upon an apparent incongruity in the law. Had there been no cancelled checks and no written memorandum of the contract, a constructive trust could have been imposed upon the original transaction as it then would have been predicated upon an unenforceable oral contract for the sale of real property. The constructive trust would have been imposed as to Clarence himself. Since the statute of limitations does not commence to run on a constructive trust until the constructive trustee repudiates the oral agreement or dies without performing it (Steinberger v. Steinberger, supra, 60 Cal.App.2d p. 124, 140 P.2d p. 35), and as Clarence did not repudiate the agreement, the statute would not have commenced to run until his death. Yet this anomaly does not justify the erosion of the law of contracts by imposing a constructive trust upon an enforceable agreement simply by reason of lack of due diligence in its enforcement, even though an unjust enrichment may result.
The judgment is reversed.
CONLEY, P.J., concurs.
RALPH M. BROWN, J., deeming himself disqualified, did not participate.