Boldemann Chocolate Co. v. Price

CONREY, J.

Appeal by defendants from judgment for plaintiff in an action described as an action to quiet title to a life insurance policy. The complaint, however, in addition to the usual allegations of a complaint to quiet title, set forth the facts upon which plaintiff rested his claim, and asked for a determination of its rights in the premises.

The facts are not in dispute. Plaintiff, Boldemann Chocolate Company, a California corporation, has for many years been the channel through which its president, Oscar Boldemann, and members of the Boldemann family have conducted the business of manufacture and sale of chocolate confections. On February 12, 1922, the board of directors of the corporation, representing a majority of the issued shares of stock thereof, duly passed a resolution shown by its minutes, as follows: “Upon motion duly made, seconded and carried, it was decided that the life of Oscar Boldemann be insured for $50,000 and that this corporation be the beneficiary and pay all premiums. The above resolution was unanimously adopted. Oscar Boldemann was to attend to the details. ...”

Thereafter, in accordance with said resolution, Oscar Boldemann purchased a $50,000 life insurance policy of the Prudential Insurance Company of America, dated May 20, 1922. In his original application he requested that the corporation be made beneficiary but, on suggestion of the insurance agent that he name his estate and thereafter assign the policy to the corporation, the policy was issued naming as beneficiary “the

[202]

executors, administrators or assigns of the insured”, with right reserved to change the beneficiary. On June 28, 1922, Boldemann executed a declaration of trust, transferring the policy to defendant bank, as trustee, with instructions to collect, upon his death, all sums due under it and “to distribute such sums to the stockholders” of the company in proportion as their holding might appear at said time on the company’s books. Prom date of issuance of the policy each and every premium due thereon, about $2,000 annually, was paid by the corporation and the value of the policy was carried as an asset on its books.

In 1932, in the course of refinancing, the corporation attempted to borrow on the policy, and then discovered that by reason of the trust assignment to defendant bank for the benefit of the stockholders directly instead of for the corporation, a cloud existed upon its ownership of the policy. Under section 2280 of the Civil Code (prior to 1931 amendment), a trust such as this one purported to be could not be revoked “except by the consent of all the beneficiaries”. The corporation, therefore, immediately sought the consent of the stockholders to cancellation of the trust and .obtained such consent from all stockholders save Eva Price, defendant herein, who owned less than 10 per cent of the outstanding stock. This refusal of Eva Price to file her consent led to the bringing of this action.