Admiral Oil Co. v. Lynch

WOOD, P. J. Admiral Oil Company, “as Trustee,” commenced this action (1) to set aside an assignment of oil leases and oil well equipment, (2) to establish that defendants are constructive trustees of said property for the benefit of plaintiff; (3) for an accounting, (4) for an injunction, and (5) for appointment of a receiver. The assignment was made by Admiral Oil Company to defendant Damar Production Company, a corporation. There were five alleged causes of action. It was alleged that defendants MacDonald Lynch and A. J. Bandy were copartners, and that Damar Production Company was the alter ego of MacDonald Lynch. Defendants MacDonald Lynch, Frances Lynch, and Damar Production Company demurred to the third amended complaint. The demurrer was sustained without leave to amend, and a judgment of dismissal with prejudice was entered. Plaintiff appeals from the decision and the judgment.

The principal question is whether the third amended complaint sufficiently alleges that plaintiff is the trustee of the trust referred to therein.

The allegations of the third amended complaint regarding a trust, and regarding the manner in which plaintiff became [271]trustee thereof, are substantially as follows: About February 3, 1958, a certain written Memorandum Trust Agreement was entered into between Pozo Grande Oil Company, a corporation, and Transline Oil Corporation, “as Trustee,” and certain persons as beneficiaries. A copy of the agreement is attached to the complaint, marked Exhibit “B,” and made a part of the third amended complaint. About August 29, 1958, plaintiff became substituted trustee on behalf of the beneficiaries concerning the properties referred to in the third amended complaint “in that all beneficiaries and defendants MacDonald Lynch and A. J. Bandy were aware that Pozo Grande Oil Company and Transline Oil Corp. were unable to act as Trustees concerning said properties; that all parties, before signing the aforesaid Memorandum Trust Agreement [Exhibit “B”] orally agreed that Admiral Oil Company [plaintiff] should act as Trustee; that subsequently thereto, Admiral Oil Company, by proper resolution, entered upon its duties as such Trustee in reliance upon the said oral agreement and representations by the beneficiaries and defendants MacDonald Lynch and A. J. Bandy ; that furthermore, defendants MacDonald Lynch and A. J. Bandy ratified the substitution of Admiral Oil Company as Trustee in that they accepted the assignment as aforesaid; that by reason of said agreement and ratification defendants MacDonald Lynch and A. J. Bandy are estopped from denying plaintiff is not the substituted Trustee, as aforesaid.”