Source: https://scocal.stanford.edu/opinion/board-regents-v-davis-27870
Timestamp: 2020-08-08 05:38:39
Document Index: 262737454

Matched Legal Cases: ['§ 1', '§ 5000', '§ 1', '§ 1858', '§ 1751', '§ 1751', '§ 5352']

Board of Regents v. Davis - 14 Cal.3d 33 - Fri, 04/18/1975 | California Supreme Court Resources
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Citation 14 Cal.3d 33
Board of Regents v. Davis , 14 Cal.3d 33
In Bank. (Opinion by Tobriner, J., expressing the unanimous view of the court.) [14 Cal.3d 34]
Beardsley, Hufstedler & Kemble, Jerome H. Craig, Irwin & Gluecksman, J. D. Gluecksman and Joseph L. Wyatt, Jr., as Amici Curiae on behalf of Defendant and Respondent. [14 Cal.3d 36]
On September 10, 1968, the conservators filed in the probate court a petition for an order to show cause why the conservators should not be instructed to rescind the pledge, but, on September 21, 1968, before the petition could be heard, Davis, Sr., died. The court appointed defendant as executor of the estate. Representing the Wisconsin State University-Platteville, [14 Cal.3d 37] plaintiff filed a claim in probate for $150,000, and upon defendant's rejection of the claim, commenced the present action.
Defendant filed a demurrer to plaintiff's complaint, contending in part that the mere existence of a conservatorship deprived the deceased conservatee of the capacity to enter into a pledge agreement. [2] The trial court overruled the demurrer; defendant then moved for judgment on the pleadings on the ground that the complaint failed to state a cause of action for the reasons set forth in the demurrer. fn. 2 The trial court denied that motion. Defendant then renewed his motion for judgment on the pleadings, alleging that the Court of Appeal's decision in Place v. Trent fn. 3 (1972) 27 Cal.App.3d 526 [103 Cal.Rptr. 841], filed August 29, 1972, after denial of the original motion, required the court to grant the motion. [3] The trial court granted the renewed motion, entering judgment on the pleadings in favor of defendant. fn. 4
Believing that the stigma of the label "incompetent" discouraged persons unable to conduct their affairs from seeking appointment of a guardian, the State Bar of California recommended, and the Legislature [14 Cal.3d 38] established, the new protective relationship of conservatorship. These efforts resulted in 1957 in the addition to the Probate Code of a fifth division, consisting of sections 1701 through 2207 (Stats. 1957, ch. 1902, § 1) establishing probate conservatorships.
The second objective of the new statute was to extend its embrace to those who would otherwise find themselves without legal protection. fn. 7 [14 Cal.3d 39] The Legislature achieved this objective by providing that the court could appoint a conservator for a person who was neither insane nor incompetent, but who, for a variety of other reasons, needed direction in the management of his affairs. fn. 8 Thus, clearly, the Legislature designed the conservatorship statute to cover a much more extensive category of eligible persons than the more limited guardianship law.
In view of the fact that the Legislature sought to accomplish by its conservatorship structure both the avoidance of the stigma of incompetency and the inclusion of a wider class, we must decide whether the Legislature intended that the conservatee who had not been adjudicated incompetent should nevertheless lose his capacity to enter into a contract. Although Place v. Trent, supra, 27 Cal.App.3d 526, held that in this respect the conservatee could not be distinguished from the ward in his inability to contract, we do not believe that the legislative history confirms this identity. As we shall show, this court has recognized a distinction between conservatee and ward; furthermore, we shall point out that section 1858 expressly upholds the conservatee's limited power [14 Cal.3d 40] to contract and, finally, that the Lanterman-Petris-Short Act (Welf. & Inst. Code, § 5000 et seq.) likewise recognizes such restricted power of the conservatee.
The argument that a conservatee lacks capacity to contract would necessarily, if it has any statutory source at all, stem from Civil Code section 40. Yet, inasmuch as Hellman holds that it is the finding of incompetency that serves notice of a person's incapacity under Civil Code section 40, conservatees who have not been adjudged incompetent should not be bound by that section's proscriptions. fn. 10 [14 Cal.3d 41]
The fact that a conservatee has at least a limited power to contract is further evidenced by the 1963 amendment to section 1858 fn. 11 (Stats. 1963, ch. 1549, § 1, p. 3132), which provides in part that "The conservator shall pay debts incurred by the conservatee during the conservatorship for the necessaries of life. ... The conservator shall pay any other debts incurred by the conservatee during the conservatorship only if they appear to be such as a reasonably prudent person might incur." This section quite clearly indicates that a conservatee retains power to contract, subject to the conservator's right to disaffirm unreasonable contracts other than those involving the purchase of necessaries which cannot be disaffirmed. fn. 12 [7] This section also provides that if the conservator entertains any doubt as to the propriety of the debt he may petition the court for instructions. fn. 13 If all contracts of a conservatee, like those of a ward, were void, the protections of amended section 1858 would be totally unnecessary. [14 Cal.3d 42]
If all conservatees were already presumed incapable of contracting, clearly this provision would be inappropriate. [9] The provision cannot properly be read to mean, as defendant suggests, that a conservatee only retains a right to contract under sections 1861 (allowances) and 1910 (wages), which the court under the Lanterman-Petris-Short Act can then limit and restrict. This interpretation cannot stand because the court, under sections 1861 and 1910, already retains the discretion to limit and restrict the conservatee's right to dispose of those funds, if any. (See fn. 12, supra.) Thus the only natural interpretation of Welfare and Institutions Code section 5357 is that the conservatee does, indeed, have some right to contract, which is defined pursuant to the Probate Code, and that under the Lanterman-Petris-Short Act this right may not be totally obliterated but only restricted by explicit judicial declaration. [14 Cal.3d 43]
Nor will our affirmation of the power of the conservatee to contract or convey property, subject to supervision and review by the probate court, defeat the primary purpose of the conservatorship, i.e., a means to enable a competent person legally to assist the conservatee in the management of his property. (Conservatorship of Stewart (1969) 276 Cal.App.2d 211, 214 [80 Cal.Rptr. 738].) Since the transfer of property and the incurrence of contracts undertaken by the conservatee remain subject to supervision and review by the probate court (§§ 1858, 1862), the conservatee retains the protection of the conservatorship.
In sum the scheme provides for a flexible and adequate protective relationship that enables the competent conservatee, who for some reason is unable properly to care for his property, to enter into a valid contract, upon the condition that it "appear to be such as a reasonably prudent person might incur." fn. 15 If a proposed conservator harbors reservations about the proposed conservatee's competency he may simply ask the court to render a specific finding that the conservatee is a person "for whom a guardian could be appointed" in order that this conservatee, like a ward, be incapable of contracting. (§ 1751.) On the other hand, if a proposed conservatee is competent, no reason compels a total abolition of his right to contract. [1b] We therefore disapprove language in Place v. Trent, supra, to the effect that a conservatee is necessarily incapable of making a valid contract. [14 Cal.3d 44]
­FN 1. "January 6, 1968
­FN 2. A defendant whose general demurrer has been overruled properly may renew the objection by way of a motion for judgment on the pleadings. (Shabrick v. Moore (1961) 195 Cal.App.2d 56, 58 [15 Cal.Rptr. 310]; 4 Witkin, Cal. Procedure (2d ed. 1971) pp. 2822-2823.)
­FN 3. In Place v. Trent, supra, the court held void a conveyance of property from a conservatee to her nephew by deed of gift. The court rejected the argument that lack of a finding of incompetency on the part of the conservatee left her with full capacity to contract; the court reasoned that because guardianships and conservatorships were designed to serve the same purposes, the conservatee, like the ward, lacked capacity to contract even if the conservatee had not been adjudicated incompetent.
­FN 4. The instant appeal is from a judgment on the pleadings. The motion for such a judgment performs the function of a general demurrer and is to be treated in the same fashion on appeal (Colberg, Inc. v. State of California ex rel. Dept. Pub. Wks. (1967) 67 Cal.2d 408, 411-412 [62 Cal.Rptr. 401, 432 P.2d 3]); it therefore "admits the material facts alleged in the pleadings of the adverse party" (Hospital Council of Northern Cal. v. Superior Court (1973) 30 Cal.App.3d 331, 338 [106 Cal.Rptr. 247]).
­FN 5. While the conservatorship bill was pending in the Legislature an analysis in the State Bar Journal commented: "This bill would add a new division to the Probate Code, creating and defining the office of conservator and the concept of conservatorship. Conservatorships would be an alternative to guardianships in some instances and would provide the benefits of a conservator in certain others wherein guardianships are not now permissible. Many elderly or ill persons are reluctant to ask that a guardian be appointed to conduct their affairs because of the label of 'incompetent' which attaches to them under the present law. The proposed legislation, by eliminating all reference to 'incompetency,' seeks to overcome this reluctance. Various changes from guardianship proceedings are also made in procedure. ..." (Mull & Farley, 1957 Legislative Progress (1957) 32 State Bar J. 13, 23.)
­FN 6. It is possible specifically to adjudicate a conservatee incompetent and hence without capacity to contract by providing in the order appointing a conservator that the conservatee is a person "for whom a guardian could be appointed" under the Probate Code. (Prob. Code, § 1751; Johnstone & Zilligitt, Cal. Conservatorships (Cont.Ed.Bar 1968) p. 3.)
­FN 7. Selected 1957 Code Legislation (1957) 32 State Bar J. 501, 585.
­FN 8. Unless otherwise designated, all statutory citations hereafter are to the Probate Code.
Thus, while a person who is insane or incompetent would readily fall within the definition of a conservatee in section 1751, many of the other classes of persons for whom a conservatorship might be established are not at all to be regarded as either insane or incompetent. In Hillman v. Stults (1968) 263 Cal.App.2d 848, 873 [70 Cal.Rptr. 295], the conservatee was mentally competent. There the court held that the imprisonment or parole of a felon "with a consequent limitation of civil rights is a cause or disability within the meaning of the conservatorship law of 1957." In Conservatorship of Stewart (1969) 276 Cal.App.2d 211 [80 Cal.Rptr. 738], the court appointed a conservator for a conservatee with his consent because he had suffered a heart attack and, by reason of anticipated surgery, contemplated that he would be unable to continue his business during his recuperation.
­FN 9. Probate Code section 1561 provides that the wages of an employed adult ward subject to a guardianship shall not be subject to the guardianship estate. Section 1910 contains a similar provision with respect to the wages of an employed adult conservatee. Welfare and Institutions Code section 5000 et seq. is the Lanterman-Petris-Short Act, which provides for the involuntary detention of mentally disordered persons for evaluation and treatment.
­FN 10. The 1963 amendment to Code of Civil Procedure section 372, providing that reference to an incompetent person includes the conservatee, rests upon the legislative objective of procedural clarity and does not touch the conservatee's powers. Code of Civil Procedure section 372, relating to actions by persons under guardianship, was amended to provide that for the purposes of that section, "reference to 'incompetent person' shall be deemed to include 'a person for whom a conservator may be appointed.'" That amendment was a part of a package of code amendments sponsored by the State Bar to revise and reconcile Probate Code sections 1431 and 1510 dealing with the compromise or other collection of litigated claims on behalf of minors and incompetent persons. (See 37 State Bar J. 585, 597 (1962); 38 State Bar J. 485, 500 (1963); id. 780.) Since any money or property recovered by or on behalf of a conservatee should be collected and held by the conservator, it was convenient and proper to classify conservators with guardians in those code sections. This 1963 amendment dealt only with the procedural problem there involved and did not affect the status of the conservatee in any other aspect.
­FN 11. Section 1858 reads in pertinent part as follows: "The conservator shall pay ... any debts incurred by the conservatee before creation of the conservatorship; and he shall pay any debts incurred by the conservatee after the creation of the conservatorship, except that ability to continue to provide the conservatee with the necessaries of life, out of the estate, shall not be impaired. The conservator shall pay debts incurred by the conservatee during the conservatorship for the necessaries of life ... and shall pay any other debts incurred by the conservatee during the conservatorship only if they appear to be such as a reasonably prudent person might incur. The conservator may petition the court for instructions when there is doubt whether a debt should be paid under the foregoing rules."
­FN 12. Under sections 1561 and 1910 both a ward and a conservatee, if employed, retain complete control of his wages or salary unless the court directs otherwise. Hence to the extent of wages or salary, a ward or conservatee ordinarily may validly enter into contracts.
­FN 13. The conservator, of course, retains the power to void or rescind performance of contracts of the conservatee on the basis of any of the traditional defenses available to any other individual. (E.g., incapacity or fraud.)
­FN 14. Before the court can authorize a conservatorship under this act, an officer must conduct a conservatorship investigation and issue a report pursuant thereto. (Welf. & Inst. Code, §§ 5352, 5356.)
­FN 15. Plaintiff has always been willing to demonstrate that Davis, Sr.'s, pledge of $150,000 was not so substantial as to place his estate of $1.8 million in jeopardy, and to prove that because of Davis, Sr.'s, long and friendly association with the university, the pledge was a reasonable one.
Fri, 04/18/1975 14 Cal.3d 33 Review - Civil Appeal Opinion issued
1 BOARD OF REGENTS STATE UNIVERSITIES, STATE OF WISCONSIN, Plaintiff and Appellant, v. RALPH E. DAVIS, JR., as Executor, etc. (Defendant and Respondent)
2 RALPH E. DAVIS, JR., as Executor, etc. (Defendant and Respondent)
Apr 18 1975 Opinion: Reversed
SCOCAL, Board of Regents v. Davis , 14 Cal.3d 33 available at: (https://scocal.stanford.edu/opinion/board-regents-v-davis-27870) (last visited Friday August 7, 2020).