Jose v. Pacific Tile & Porcelain Co.

TAYLOR, J.

Plaintiffs appeal from an adverse judgment in their action to quiet title to real property, arguing that the trial court erred in excluding evidence that the property was held for them under an oral trust by defendants’ judgment debtors.

[143]

The facts are not in dispute. In 1958 plaintiffs, Robert H. and Florence N. Jose, hereafter Joses, acquired a parcel of real property in Santa Clara County. The Joses entered into possession of the property and at all times managed it and made all repairs and payments in relation to the property. On April 25, 1960, Mrs. Jose and her parents, Carmine P. and Virginia Catello, hereafter Catellos, asked an attorney to prepare a deed conveying the property to the Catellos, without consideration, pending the outcome of the Joses’ marital problems. This deed was duly executed and delivered shortly thereafter and recorded on January 4, 1963. The Joses continued to manage the property, made all tax, mortgage and insurance payments, and took income tax deductions for the interest paid. The mortgagee was never informed of the deed to the Catellos. The Catellos never asserted or claimed any interest in the property.

On June 10, 1963, and January 7, 1964, respectively, the defendants, both judgment creditors of the Catellos, recorded abstracts of two judgments against the Catellos, individually and doing business as San Jose Tile Company. On June 17, 1963, the Catellos quitclaimed the property to plaintiffs, by a deed that was not recorded until January 27, 1964. On February 9, 1965, plaintiffs filed this action to quiet title, alleging that the Catellos held the property for them on an oral trust. At the trial, the court sustained defendants’ objections to the introduction of evidence relating the conversation of the parties, at the time of the conveyance to the Catellos, about the purpose of the transfer.

The sole contention on this appeal is that the trial court erroneously excluded evidence indicating that the Catellos held the property under an oral trust for plaintiffs.

[1] As a general rule, the statute of frauds (Civ. Code, § 852)

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forbids the creation of a trust in real property by simple verbal declarations of its owner, and a grantor cannot, by any subsequent declarations, defeat the effect of his deed. However, the statute, by its own terms, does not apply to a trust created by operation of law