Goldstrass v. Security-First National Bank
Goldstrass v. Security-First National Bank
Opinion of the Court
Action for damages allegedly resulting from fraud and conspiracy in inducing the execution of a trust agreement. Plaintiff Ella J. Goldstrass was the trustor under the agreement. She appeared as plaintiff by her guardian ad litem, Frederick McCann (her brother). She died prior to the trial and Frederick McCann, the executor of her will, was substituted as plaintiff. Defendant Security-First National Bank of Los Angeles, hereinafter referred to as the bank, was trustee under the agreement. In a jury trial, motions for nonsuits were granted as to defendants Hasbrouck, Smith, Empey and Mossoni. A motion by the bank for a directed verdict was granted, and a verdict in favor of the bank was returned, and judgment was entered thereon. Plaintiff appeals from the judgments.
Appellant contends that there was sufficient evidence to require that the case be submitted to the jury.
On December 31, 1948, Mrs. Goldstrass executed a revocable trust agreement wherein the bank was named trustee. The agreement provided, in part, that the income from the trust should be paid to Mrs. Goldstrass monthly during her lifetime ; and that the trustee, subject to the discharge of its fiduciary obligations, was vested with all the rights of an owner of the trust property. A schedule, attached to the trust agreement, listed the property which was delivered to the bank, as trustee. The schedule listed two parcels of real property and a draft for $950.61 drawn on a term account in the Glendale office of the bank. One parcel of real property was the house and lot where Mrs. Goldstrass resided, and the other parcel was property which was leased to the Zinke Shoe Company on a long term lease. The trust agreement was amended on February 1, 1949, to provide that the net income of the trust should be added to the principal, forming a common fund, and that the trustee should distribute the common fund to or for the benefit of Mrs. Goldstrass at her request, excepting that if, in the opinion of the trustee, she became incapacitated the trustee might use as much of the fund for her benefit as the trustee deemed advisable. The bank accepted the trust and acted as trustee (until a successor was appointed as hereinafter stated).
The value of the two parcels of real property as determined by the bank on July 8, 1949, for the purpose of fixing its fee as trustee, was $53,775. On February 1,1950, Mrs. Goldstrass authorized the bank to sell the residence, and the bank sold it “as of” November 1, 1950, for $12,000.
On May 14, 1952, prior to filing the present action, Mrs. Goldstrass, acting through Frederick McCann as her guardian ad litem, commenced another action against the bank seeking an accounting, the removal of the bank as trustee, and the appointment of another trustee. Frederick McCann, individually, was also a plaintiff in that action. Further relief sought by him in that action was the payment to him of certain amounts which he allegedly had paid for the support of Mrs. Goldstrass. The bank answered that complaint and also filed an account and resignation as trustee. Mr. Hasbrouck appeared as one of the attorneys for the bank in that action. Mrs. Goldstrass, through her guardian ad litem, filed objections to the account of the trustee and alleged that the sale of Mrs. Goldstrass’ house and lot (residence) was in bad faith and that she was damaged thereby in the amount of $7,000. The court overruled the objections, approved the account, accepted the resignation of the trustee, and appointed another trustee (Crules R. Cheek). The decree in that action was entered February 9, 1953. The bank transferred all the assets of the trust to the successor trustee.
The present action (for damages allegedly resulting from fraud and conspiracy in inducing the execution of the trust agreement) was commenced April 13, 1953.
The allegations regarding fraud and conspiracy, in the sixth amended complaint, in the present action were in substance as follows: Defendants unlawfully conspired to make representations to induce Mrs. Goldstrass to execute the trust agreement “wherein and whereby” defendants would obtain profit and income for themselves. Defendants, in furtherance of the conspiracy, falsely represented to Mrs. Goldstrass that: Frederick McCann was not taking proper care of her and had abandoned her; he had collected the rentals from her residence and converted them to his own use; he had sold her furniture and converted the proceeds to his own use; he had not insured her residence against loss by fire; the rentals from the Zinke property were not being collected or were being collected by Mr. McCann and were being converted to his own use; a trustee was necessary in order to provide for her care and to manage her property; if she executed the trust agreement the bank would provide for her care out of the trust property and take care of her. Also, in furtherance of the conspiracy,
Said amended complaint also alleged that, subsequent to the execution of the trust agreement, the defendants committed various acts for the purpose of furthering and concealing the fraud and conspiracy. Plaintiff sought damages consisting of: trustee’s fees and charges and attorneys’ fees allowed in the previous action of plaintiff against the bank; loss of interest on money which the bank as trustee allegedly failed to invest; the difference between the alleged market value of the residence and the amount for which the trustee sold the residence; loss of services which Mr. McCann could have furnished to plaintiff without cost to her. Plaintiff also sought punitive damages.
The answers denied the allegations of fraud, conspiracy, and damages. Some of the answers alleged various affirmative defenses, including res judicata, statute of limitations, and estoppel.
The court granted motions of defendants to strike from said amended complaint (1) the allegation as to loss of interest on money which the bank as trustee allegedly failed to invest; and (2) the allegations as to damages allegedly sustained by Mrs. Goldstrass through the sale of her residence by the trustee.
The evidence was, in substance, as follows: About 1923, Mrs. Goldstrass and her husband became residents of Glendale, California. About August, 1947, Mr. Goldstrass died, and shortly thereafter, Mr. McCann came to California from his home in New Jersey and remained here for a few weeks. While he was in California, Mrs. Goldstrass gave him about $12,000 to invest for her. She accompanied him on his return to New Jersey and remained there until December, 1947, when she returned to California. Mr. McCann invested the money, which he had received from her, in a corporation in which he was the principal investor. The corporation operated a coal mine. About June, 1948, Mrs. Goldstrass became seriously ill and was hospitalized, and Mr. McCann came to California to take
When he returned to New Jersey he was informed that the coal mine, in which he had invested Mrs. Goldstrass’ money, had been flooded. He closed the mine, and the assets of the corporation were sold. No part of the money, which he invested for Mrs. Goldstrass, was returned to her. Mr. McCann continued to write checks on Mrs. Goldstrass’ account for her care. On November 7, 1948, Mr. McCann wrote a letter to the bank,
Defendant Hasbrouck, called as a witness under section 2055 of the Code of Civil Procedure, testified as follows: He is an attorney at law and had practiced in Glendale since 1927. He had performed legal services for Mrs. Goldstrass at various times commencing in 1947. About December 23,
Mr. Bell, called as a witness under section 2055 of the Code of Civil Procedure, testified as follows: He is and had been a trust advisor for the bank for 15 years. He might have talked with Mr. Smith about the trust agreement three times before the agreement was made, but he (Bell) did not recall what the conversation was. He went to the sanitarium about December 22 or 23,1948, with Mr. Hasbrouck and talked with Mrs. Goldstrass. She told him that she had a residence, and she also had property which was leased to Zinke. She also told him that her brother had gone east and left her by herself with no one to take care of her business and
Mr. Smith, called as a witness under section 2055 of the Code of Civil Procedure, testified in part as follows: He had no recollection as to the manner in which the Zinke checks came to him. He recalled only one occasion when a Zinke check was delayed, and he wrote to Mr. McCann stating that the rent had not been paid. He did not recall talking to Mr. Bell regarding a trust agreement. His only recollection of talking with Mrs. Empey regarding Mrs. Goldstrass ’ affairs was that he talked with her when she and Mrs. Friend came to the bank with a $35 check which had been signed by Mrs. Goldstrass. They told him that Mrs. Goldstrass needed certain clothing and other things. He cashed the check.
As above stated, appellant contends tha there was sufficient evidence to require that the case be submitted to the jury. His principal argument is to the effect that the evidence showed, or that the jury could have inferred, as follows: That in November, 1948, Mr. Smith “initiated” the execution of the trust agreement. The Zinke Company paid the rent promptly for 15 years, and mailed the rental checks directly to the Glendale branch of the bank. The Zinke Company mailed the rental check for November, 1948, to the bank on November 1, promptly as usual, and that Mr. Smith “set that check aside,” and did not deposit it until November 27, in order to cause Mrs. Goldstrass to believe that the rent was not being collected and thereby induce her to execute the trust agreement. On December 17, 1948, Mr. Smith sent Mr. Bell to the sanitarium to solicit the trust agreement from Mrs. Goldstrass. In order to induce Mrs. Goldstrass to execute the trust agreement, Mr. Smith and Mr. Bell withheld from her the information that the Zinke rentals were being collected. Mr. Smith prepared the property schedule, which was attached to the trust agreement, and in order to conceal the information
Appellant argues further that the jury could have inferred that Mr. Hasbrouck and Mrs. Empey joined in the alleged fraud of Mr. Smith.
There was no evidence that Mrs. Goldstrass made any inquiry of Mr. Smith or Mr. Bell concerning the Zinke rentals or that either of them withheld from her any information concerning such rentals. There was no evidence that Mrs. Goldstrass knew that there was a delay in the deposit of the Zinke rental check for November, 1948. Mr. Smith, in his letter of November 20 to Mr. McCann (above quoted), advised Mr. McCann that the check had not been received. There was no evidence, however, that Mr. McCann or any one communicated the information to Mrs. Goldstrass that the check had not been received. Mr. McCann testified that he did not write to Mrs. Goldstrass in 1948 after he had returned to New Jersey. He also testified that while he was in California he deposited the Zinke cheeks in Mrs. Goldstrass’ checking account. Mr. McCann left California in October, 1948, and in his letter of November 7 to Mr. Smith, he stated that before he left Glendale, he telephoned the Zinke office and requested Mr. Zinke’s secretary to mail the checks to the bank “rather than Mrs. Goldstrass.” Mrs. Empey testified, without objection, that about November, 1948, she received a letter from Mr. McCann in which he stated that he had not received the Zinke check (apparently referring to the November check), and in which he requested her to go to the Goldstrass house and see if the mail had been held up. She testified further that she went to the house several times but the tenant was not there; she finally got the check and took or forwarded it to the bank. There was no evidence that Mr. Smith prepared the property schedule and there was no evidence that Mrs. Goldstrass’ checking account was omitted from the schedule in order to conceal the information that the Zinke rentals were being collected. It does not appear how or in what manner the listing of the cheeking account in the schedule would have disclosed to Mrs. Goldstrass the information that the Zinke rentals were being collected. The balance in that account on December 31, 1948 (the date of the trust agreement), was
Appellant, in support of his argument that Mr. Smith “initiated” the execution of the agreement, refers to an alleged inconsistency as between the testimony of Mr. Bell in his deposition and the testimony of Mr. Hasbrouck at the trial with reference to the date when Mr. Bell first saw Mrs. Goldstrass. Mr. Bell testified, in his deposition of January 7, 1954, that he first met Mrs. Goldstrass “about two weeks” before December 31, 1948, and introduced himself to her. (He testified at the trial that he first met her on December 22 or 23.) Mr. Hasbrouck testified at the trial that he first went to the sanitarium to see Mrs. Goldstrass about December 27, 1948; that he and Mr. Bell went to the sanitarium a few days later and he introduced Mr. Bell to Mrs. Goldstrass. Mr. Bell’s deposition was taken about five years after December, 1948; and the trial was about seven years after December, 1948. Under such circumstances the minor differences in the testimony of the two witnesses as to those details— the date when Mr. Bell first saw Mrs. Goldstrass, and who introduced Mr. Bell to her—are of no significance and do not indicate fraud or conspiracy or that Mr. Smith “initiated” the execution of the agreement. There was no evidence of any fraud on the part of Mr. Smith.
Appellant argues to the effect that the jury could have inferred that Mr. Hasbrouck joined in the alleged “fraudulent action of Mr. Smith.” That argument seems to be based upon an assumption by appellant that it could also be inferred from the evidence that Mr. Hasbrouck did not make a proper investigation of Mrs. Goldstrass’ affairs; that such an investigation by him would have disclosed “fraudulent action” by Mr. Smith; that Mr. Hasbrouck permitted Mrs. Goldstrass to enter into the trust agreement after he had “observed” that she was incompetent. That argument also seems to be based upon the evidence that Mr. Hasbrouck was one of the attorneys for the bank in the other action, hereinabove referred to, wherein Mr. McCann, as guardian ad litem and individually, sought an accounting, removal of trustee, and recovery of money advanced by him. As above stated, there was no evidence of any fraudulent action by Mr. Smith. There was no basis for an inference that an investigation by Mr. Hasbrouck would have disclosed any such action by Mr.
Appellant argues further to the effect that the jury could have inferred that Mrs. Empey “joined in to conceal and further the fraud complained of.” He (appellant) states in his brief that Mrs. Empey advised him that Mrs. Gold-stress was better at the time she signed the agreement than she was when she became sick, that Mrs. Goldstrass “now hated” him, and he “was not to come back to Glendale because his sister would not give him a chance to make a fool of her again.” He also states in his brief that Mrs. Empey led Mrs. Goldstrass to believe that he had abandoned her; and we “have a situation where Mrs. Empey played the brother against the sister and the sister against the brother, and neither the brother nor the sister could understand how the other could be so ungrateful.” It seems that appellant’s argument is that Mrs. Empey concealed alleged fraud of Mr. Smith with reference to the Zinke rent not being paid; that she caused an estrangement between Mrs. Goldstrass and Mr. McCann; and she was present when the trust agreement was executed. Apparently the argument is based upon two letters written by Mrs. Empey to Mr. McCann. One letter, dated December 5, 1948, stated: “I cheeked with Mr. Smith on Dec 2nd and found the Zinki check had been received and credited. Met Mr. Johnson and asked if the Broadway tenant had paid and he said yes so ‘all is well.’ ... I told her you had to rent the house on account of the insurance. . . . She asks about her bills—is Zinki paying his rent—etc and we side step. In view of the fact that she had the ‘go home’ idea I told her the house had to be rented. I am sure she won’t sign anything harmful because as I said before she is alert about her property and money.” The other letter, dated January 2, 1949, stated: “. . . I went to see
There was no evidence to the effect that defendant Irene Mossoni (operator of the sanitarium) was involved in any way in the execution of the trust agreement. Appellant does not refer to her in his brief.
‘ ‘ [A] nonsuit may be granted only when, disregarding conflicting evidence, giving to the plaintiff’s evidence all the value to which it is legally entitled, and indulging in every legitimate inference which may be drawn from that evidence, the court properly determines that there is no substantial evidence to support a verdict in favor of the plaintiff.”
Appellant contends, in effect that the evidence showed that Mrs. Goldstrass was incompetent at the time she executed the trust agreement, and that the agreement was void. This is not an action to set aside the agreement. It is an action for damages resulting from fraud and conspiracy in inducing the execution of a trust agreement. The alleged incompetency of Mrs. Goldstrass was material only on the issue as to whether she was induced by fraud to execute the agreement. No issue is presented as to whether the agreement was void.
Appellant contends that the court erred in granting the motions of defendant to strike, from the sixth amended complaint, the allegations concerning damages sustained by Mrs. Goldstrass through the loss of interest on money, and through the sale of her residence. In view of the orders granting motions for nonsuits and for a directed verdict, it is not necessary to discuss the ruling with reference to striking out allegations as to damages.
In view of the above conclusions, it is not necessary to discuss other contentions on appeal. Some of the other contentions on appeal pertain to: the affirmative defenses; appellant’s request for special verdicts; and the denial of appellant’s motion for judgment notwithstanding the verdict.
The judgments are affirmed.
Vallée, J., concurred.
Shinn, P. J., did not participate.
A petition for a rehearing was denied May 3, 1957, and appellant’s petition for a hearing by the Supreme Court was denied May 29, 1957.
“Herewith cheek payable to Laurel Sanitarium, W. Laurel St., Glendale, Cal. in amount §267.87 where Mrs. Ella J. Goldstrass is and payments to Sanitarium is due. I enclosed addressed envelope so you can let go forward to them. I send yours to your bank for O.K. rather than direct and little delay will occur.
“Will you be good enough to advise if Zinki send you Nov. rent §175.00 for deposit to credit of Mrs. Goldstrass. Before leaving Glendale I telephoned Zinki Glendale office. Mr. Zinki was not there so I gave his secy my request to mail you hereafter each month $175.00 rent rather than Mrs. Goldstrass who you know can’t handle her affairs, by reason of your kindness I have been ask to do so. Zinki office said they would do it.
“Please send me copies of Sept. Oct. and November bank statements. Erom N ov. on mail to me. Will you change your records accordingly. ’ ’
“ Your letter dated November 7th has been received. I mailed the check to the Laurel Sanitarium as requested. Zinke’s have not paid to the Bank the rent which was due November 1.
‘ ‘ In regard to sending you Mrs. Goldstrass ’ cancelled checks and statement, there was no checks in September and only one in October, which has been mailed to your sister at her old home address.
“Two friends of your sister, Mrs. Friend and Mrs. Empey, called at the Bank yesterday with a $35.00 check signed by your sister. The signature was very normal. They advised the money was being used to buy a robe, slippers and other accessories for your sister, and which they said she needs very badly. The check was properly signed and there was nothing for me to do but to cash it.’’
Case-law data current through December 31, 2025. Source: CourtListener bulk data.