McCreary v. Falconer

PRESTON, J. Plaintiffs appeal from judgment rendered against them in an action in interpleader.

On November 26, 1919, defendant May Bland Falconer executed to City Savings Bank of Santa Cruz, her $6,000 promissory note, secured by trust deed, wherein these plaintiffs were named as trustees. Plaintiffs were at said time officials of the bank, being respectively treasurer and president thereof. It appears that their service in the capacity of trustees was purely nominal. All matters of every kind connected with the transaction were handled by the bank’s then attorney, Ralph H. Smith. In the name of the trustees he instituted and carried on the proceedings next hereinafter described:

On demand of the bank, after default of the debtor, upon notice and all legal steps duly taken, and on April 27, 1922, he caused the property covered by the trust deed to be sold to satisfy said indebtedness. This property was purchased by one Jansen for $12,250, which sum was turned over to Smith on behalf of said trustees. After applying it to satisfy the indebtedness, costs of sale and other expenses, there remained in the hands of Smith $3,328.62, in the distribution of which amount various persons claimed a right to participate. Therefore, on March 16, 1923, this action in interpleader was instituted. A complaint was prepared and filed by Smith wherein the trustees were named as plaintiffs and said debtor and other persons < claiming an interest in said residue were named as defendants. After setting forth the facts relative to foreclosure of the trust [337]deed and plaintiffs’ inability to determine the respective interests of the defendants, if any, to said residue, said pleading alleged: “Plaintiffs herewith pay into court . . . $3328.62 which . . . shall be subject to payment to the parties entitled thereto according to the order of court herein to be made,” and it was prayed that defendants be required to litigate among themselves their several respective claims to the fund and that it then be distributed pursuant to order and judgment of the court.

According to testimony later given by the county clerk at the time Mr. Smith filed said complaint, he handed the clerk his personal check for $3,328.62 but failed to explain its connection with the filing of the action. The clerk placed the check in the money drawer, where it remained until the death of Smith, hereafter referred to, awaiting Smith’s explanation of its purpose.

On July 3, 1923, defendant Frey filed an answer, asserting his claim to said sum. On January 7, 1925, defendant Bias filed an answer and cross-complaint, asserting his claim thereto. On March 28, 1928, Smith died. In November or December of that year the attention of the county clerk was again called to the check, which had then become valueless by reason of Smith’s death. Finally, on October 20, 1930, this cause was called for trial. On November 17, 1930, the court permitted plaintiffs to file an amendment to their complaint, alleging that neither of them had ever received said sum of money and that it had never been deposited in court. On said date, also, plaintiffs moved to be dismissed from the action on the ground that the court had lost jurisdiction because of the lapse of more than five years after filing of the last answer. (See. 583, Code Civ. Proc.) This motion was never decided and the trial was never completed by reason of resignation of the trial judge.