Kendall v. San Pedro Lumber Co.

PLUMMER, J.

The appellants instituted this action to obtain a declaratory judgment relative to the validity of a claim in the sum of $45,129.35, owned and possessed by the defendant against the Terminal Ways and Machinery Company, the assignor of the plaintiffs. The defendant had judgment, and from this judgment the plaintiffs appeal.

The record shows that the Terminal Ways and Machinery Company, a corporation organized and existing under the laws of the state of California, had become heavily involved financially and unable to meet its obligations, and on or about the tenth day of July, 1924, executed an assignment and declaration of trust in favor of the plaintiffs, wherein and whereby the plaintiffs were authorized to take charge of all the assets and property then and theretofore belonging to the Terminal Ways and Machinery Company,

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collect all moneys due the company, reduce the assets to cash, and discharge all the expenses of executing the trust, pay all preferred claims, and then distribute the residue,

pro rata,

among the unpreferred creditors of said company. The declaration of trust and assignment sets out in schedule “D,” as a part of said assignment, a list of the creditors of the said Terminal Ways and Machinery Company, and the amount due each creditor, the language of the instruments to which we have referred being as follows: “And it is further agreed by and between the trustor and each of said beneficiaries, respectively, that the sum specified in said Schedule ‘D’ as due any beneficiary from the trustor represents the total indebtedness of the trustor to such beneficiary, as of the date of this instrument.” In schedule “D,” to which we have referred, it is set forth that the amount due one A. M. Goodhue is the sum of $45,129.35. This is the amount claimed by the respondent in this action as the assignee of A. M. Goodhue. The declaration of trust in relation to this item, among other things, contains the following language: “Provided, further, that the San Pedro Lumber Company, a corporation, hereby waives and releases all claims or obligations which it may have or hereafter acquire against the stockholders of said Terminal Ways and Machinery Company, by reason of an assignment of a certain purported claim of one A. M. Goodhue, or otherwise, and it is hereby expressly agreed that it will not seek to recover or hold said stockholders on a stockholder's liability, or otherwise, by reason of said claim of A. M. Goodhue, or any other claims which it may now have against said corporation.” The declaration of trust further provides “that the trustee may pass upon all claims of all beneficiaries subscribing hereto, and may disallow any claim, in whole or in part. Such disallowance shall be without prejudice to the right of claimant to a judicial determination of the validity of such claim,” etc. The answer to the appellants’ complaint sets out at length the declaration of trust and the assignment made by the Terminal Ways and Machinery Company, containing the statement which we have quoted as to the amount due the respective creditors listed in schedule “D,” and the amount due each creditor, and also the assignment to which we have just made reference. Upon the trial of the action the plaintiffs introduced no testimony