Eggert v. Pacific States Savings & Loan Co.

McCOMB, J. From an order directing appellant Building and Loan Commissioner to pay respondent’s attorney’s fees in the sum of $36,270, together with costs and expenses advanced by said counsel, in an action wherein respondent resisted an attempt to place a trust upon assets which had been transferred to respondent Fidelity Savings and Loan Company, appellant* appeals.

So far as material here, the undisputed facts are:

May 23, 1931, Fidelity Savings and Loan Company (hereinafter referred to as Fidelity) transferred all of its assets to the respondent, Pacific States Savings and Loan Company (hereinafter referred to as Pacific States), pursuant to a written agreement, which provided among other things that Pacific States should issue to Fidelity or its investors approximately $23,000,000 of so-called Fidelity Definite Term Certificates and approximately $7,500,000 nominal value of Fidelity Participating Certificates. The definite term certificates were to be paid five years after the date of the agreement and to bear interest at 6 per cent. The participating certificates were to be paid out of any net proceeds which were to be realized from the subsequent operation and disposition or other “valuation” as defined in the agreement, by Pacific States of the acquired assets.

The term of the original agreement was for five years or to May 23, 1936. By supplemental agreement the maturity date of the certificates was extended to May 23, 1938.

June 17, 1931, appellant as Building and Loan Commissioner of the State of California took possession of the assets of Fidelity which consisted solely of the Master Fidelity Definite Term Investment Certificate and the Master Fidelity Participating Investment Certificate issued under the agree[556]ment of May 23, 1931, between Fidelity and Pacific States, and of any rights of Fidelity under said agreement.

After execution of the agreement, holders of Fidelity investment certificates exchanged them for definite term and participating certificates to such an extent that the face amount of the master certificates held by appellant is approximately $750,000. Pacific States did not pay the definite term certificates in full on May 23, 1936, or at any time thereafter. October 28, 1938, holders of Fidelity definite term certificates and Fidelity participating certificates brought the present action against Pacific States to obtain a declaration that the agreement of May 23, 1931, between Fidelity and Pacific States did not constitute an outright sale but in fact constituted a transfer in trust for the benefit of plaintiffs. March 4, 1939, appellant as Building and Loan Commissioner for the State of California took possession of the assets of Pacific States. March 6, 1939, pursuant to section 13.12 of the Building and Loan Association Act, Pacific States commenced an action in the Superior Court in and for the City and County of San Francisco, contesting the action of appellant in taking possession of its assets. October 30, 1939, pursuant to the same section appellant filed in said superior court a written notice of his determination to liquidate Pacific States. March 16, 1939, appellant filed a complaint in intervention in the present action. The main question presented remained the same as before the intervention, to wit: Did the transfer of assets from Fidelity to Pacific States by the agreement of May 23, 1931, constitute an outright sale of the assets of Fidelity to Pacific States or a transfer in trust for the benefit of Fidelity, its creditors, and certificate holders?