Opinion ID: 466517
Heading Depth: 2
Heading Rank: 1

Heading: muzzy ranch

Text: 14 The Allustiartes contend that the bankruptcy court erred in quieting title to the Muzzy Ranch on the following grounds: (1) the action was barred by the statute of limitations, (2) the action should have been barred due to failure to join an indispensable party, and (3) the findings are not supported by sufficient evidence.
15 The Allustiartes assert that the trustee's action to quiet title to the Muzzy Ranch was barred by the statute of limitations. The applicable statute of limitations does not bar an action by a grantor in possession of the property. Muktarian v. Barmby, 63 Cal.2d 558, 560, 47 Cal.Rptr. 483, 407 P.2d 659 (1965). The uncontradicted evidence shows that the debtors remained in possession, and thus the trustee, standing in the shoes of the debtors, was not barred by the statute. 16
17 During the bankruptcy trial, Linda Allustiarte appeared as trustee of the family trusts. The Allustiartes argued before the district court for the first time that Linda Allustiarte did not have the capacity to appear as trustee for the family trusts because she had filed for bankruptcy. They asserted that her appearance before the bankruptcy court as trustee was ineffective to protect the interests of the family trusts. They seek to invalidate the order of the bankruptcy court quieting title to portions of the Muzzy Ranch in the debtors on the ground that the trustee in bankruptcy failed to join a person who could lawfully act as trustee of the family trusts. 18 The district court held that Linda Allustiarte could not serve as trustee at the trial because, under Cal.Civ.Code Sec. 2281 (West 1985), persons filing for bankruptcy are barred from serving as trustees. The court also concluded, however, that the Allustiartes were barred from asserting this claim due to (1) equitable estoppel, (2) the fact that Linda Allustiarte was the de facto (if not de jure ) trustee, and (3) waiver. 19 We agree with the district court's holding that because the Allustiartes remained silent on this issue before the bankruptcy court, the doctrine of equitable estoppel prevents them from now asserting that defense. The doctrine of equitable estoppel precludes a person with a duty to speak from taking advantage of another by remaining silent. Jablon v. United States, 657 F.2d 1064, 1068 (9th Cir.1981). The Allustiartes' failure to inform the court that their trustee was disqualified from representing their interests estops them from asserting that defense now. 20 The district court was also correct in holding that, even if Linda Allustiarte could not serve as trustee de jure, she was a trustee de facto. A person who voluntarily acts as if he or she is a trustee is a de facto trustee. Eisenmann v. Eisenmann, 52 Ohio Misc. 119, 370 N.E.2d 788, 793 (1976); accord In re Dakin's Will, 58 Misc.2d 736, 296 N.Y.S.2d 742, 743 (1968). The acts of a de facto trustee are valid as against third parties. Dakin, 296 N.Y.S.2d at 743. 21 It is also clear from the record that the Allustiartes waived their right to assert this defense. Under Fed.R.Civ.P. 9(a), a party must make a specific negative averment in order to assert a defect in capacity. Failure to do so in a timely manner is a waiver of that defense. Summers v. Interstate Tractor & Equipment Co., 466 F.2d 42, 49-50 (9th Cir.1972). The Allustiartes made no such averment before trial. They waived their right to this defense.
22 In the bankruptcy court, the trustee argued that the Muzzy Ranch was never legally transferred to the family trusts because (1) the Rudnicks, who were tenants in common in the Muzzy Ranch, had not signed the conveyance, and (2) debtors lacked the requisite intent to effect a transfer of title. The district court held that the debtors could convey their portion of the Ranch without the Rudnicks' concurrence, but that delivery of the deed was ineffective, rendering the conveyance void. 23 The fact that the Rudnicks did not sign the conveyance would not, standing alone, preclude the debtors from transferring title to their interest in the Muzzy Ranch. A person may freely alienate or encumber his interest in property held in co-tenancy. Schoenfeld v. Norberg, 11 Cal.App.3d 755, 765, 90 Cal.Rptr. 47 (1970). 24 In California, a transfer of land is only effective if there has been delivery of title. In order to have effective delivery, the grantor must intend to convey title to the land in question. Meyer v. Wall, 270 Cal.App.2d 24, 27, 75 Cal.Rptr. 236 (1969); accord Mecchi v. Picchi, 245 Cal.App.2d 470, 486, 54 Cal.Rptr. 1 (1966). 25 The evidence presented at trial amply supports the trustee's contention that the debtors did not have the requisite intent to convey their interest in the Muzzy Ranch. The evidence shows that they continued to exercise dominion and control over the property after the alleged conveyance. The debtors used crops growing on the land as collateral for loans, and also leased portions of the property. In addition, it was revealed at trial that the transfer to the family trusts made the Muzzy Ranch eligible to participate in a special federal irrigation project for which it would otherwise have been ineligible. This evidence supports an inference that the motive for the transfer of title was not to convey an interest in the land but to obtain federal benefits. 26 The finding of lack of intent was not clearly erroneous. The lack of intent resulted in ineffective delivery. The purported transfer was void. The order quieting title in favor of the trustee on behalf of the debtors' estate was proper.