Bianchi v. Western Title Insurance & Guaranty Co.

CHRISTIAN, J.

I dissent.

In a complaint filed one day before expiration of the statute of limitations, appellant alleged liability on the part of respondent title company and 10 Does for personal injuries allegedly suffered on April 22, 1963, by reason of defective maintenance of a staircase in a building owned by respondent. Respondent answered, alleging that it held title “as trustee for certain designated beneficiaries” and explicitly denying that it “owned, operated, maintained and controlled” the building. Appellant nevertheless made no attempt to bring into the action the beneficial owners. The pretrial conference order determined that respondent “held bare record title to the premises involved as trustee for certain designated beneficiaries” but appellant apparently still made no effort to bring in those parties; the pretrial conference order included a provision dismissing “all fictitious defendants.” There is no indication that appellant resisted that order, although the statute of limitations had by then run. Appellant’s predicament, which resulted in the granting of a nonsuit, thus must be attributed to incomplete investigation and preparation of his case. I cannot join in rescuing appellant from the effect of his *243counsel’s neglect by thrusting strict liability upon a party having no control over, or responsibility for, the allegedly defective staircase.

The pretrial conference order, in determining that respondent “held bare record title” superseded the pleadings insofar as the pleadings defines issues inconsistent with the order. (Rule 216, Rules of Court.) Indeed, the evidence established that respondent was no more than the holder of bare legal title to the premises. The beneficial ownership, management and control of the property was in an investment syndicate; a series of holding agreements between respondent and the individual shareholders in the syndicate set forth the details of this arrangement. The agreement provided that respondent was under no obligation to do anything with respect to the property other than hold title in its name. An employee of respondent testified that respondent, pursuant to the terms of these agreements, did not concern itself with the property in any way other than to receive in behalf of the beneficial owners notices directed to it as the record title holder.

Appellant attempted to show that respondent had something to do with management of the property, despite the strong showing that it was actually managed by the real estate firm which had organized the syndicate of purchasers. Most of appellant’s evidence consisted of various notices or letters which had been sent to respondent as the record title holder. Applications for elevator permits were executed in respondent’s name (apparently by the managing real estate firm), were sent to that firm, and paid for from the rents collected by that firm. The premium on the liability insurance policy was determined on the basis of the record of a number of similar trusts held by respondent, but respondent had nothing to do with procurement of the policy and the record contains no indication of activity on the part of respondent in the nature of operation and management of the property as opposed to communications and transactions consistent with the role of a trustee holding bare legal title.

The basic rule as to the liability of the holder of bare title to property is that, “Although the trustee has the legal title to the trust premises, he is not liable to a third person for a tort which results not from the mere fact of ownership of the premises but from the operation of the premises, where the trustee has no responsibility for the operation of the premises.” (3 Scott on Trusts (2d ed. 1956) § 264, pp. 2050-2055; see also Scott, supra, (1966 Supp.) at p. 65.) Scott notes that the bare title holder does have some liabilities merely because of the ownership (e.g., taxes, shareholder assessments), but distinguishes these from possible liability resulting from the operation of the premises (3 Scott on Trusts, supra, §§ 265-265.4, pp. 2056-2066; see Richman v. Green (1956) 143 Cal.App.2d 470 [299 P.2d 890]. Foreign cases similar to the Richman case include Pena v. Stewart (1955) *24478 Ariz. 272 [278 P.2d 892]; Fields v. 6125 Indiana Avenue Apartments, Inc. (Ill. 1964) 196 N.E.2d 485; Brazowski v. Chicago Title & Trust Co. (1935) 280 Ill.App. 293).

Contending that the holder of bare legal title should be liable for the injuries due to negligence of the actual managers in the operation of the premises, appellant cites Johnston v. Long (1947) 30 Cal.2d 54 [181 P.2d 645]. The Johnston case should be distinguished. The trustee in Johnston actually controlled the property of an active trust; he was directed to do so by the will of the deceased and had obtained court permission to operate the business. In Richman, supra, and in the present case, the trustee was the record owner only; the agreements under which respondent held title expressly excluded respondent from operation or management of the property; there was no evidence that respondent went beyond the functions anticipated. The holding agreements and the testimony of respondent’s employee indicate that respondent took no part in the management of the premises; the evidence offered by appellant for the purpose of showing that respondent did take part in management decisions goes no further than to show that respondent performed functions consistent with the status of a trustee holding bare legal title. Appellant’s contention that the holder of bare record title to certain property is liable for torts occurring in the operation of that property should be rejected. There was no substantial evidence that in fact respondent undertook duties to the public by reason of performing functions beyond the holding of bare legal title. The court did not err in granting a nonsuit. (See O'Keefe v. South End Rowing Club (1966) 64 Cal.2d 729 [51 Cal.Rptr. 534, 414 P.2d 830, 16 A.L.R.3d 1]; Minniear v. Tors (1968) 266 Cal.App.2d 495, 505 [72 Cal.Rptr. 287].)

I would affirm the judgment.

A petition for a rehearing was denied on January 20, 1971, and the following opinion then rendered: