guaranty was written on the back of the note, and was signed by the five defendants contemporaneously with the execution of the note. After the maturity of the note the California Rochdale Company transferred all of its assets to a trustee for the benefit of its creditors. Subsequently a settlement was effected with some of the creditors, leaving the corporation indebted to the plaintiff and to certain other creditors. Thereafter, with the consent of the corporation and of such remaining creditors, and with the consent of the defendant Heisinger, said trustee transferred the assets then remaining in his hands to a committee of three, consisting of the plaintiff, the defendant Heisinger, and the defendant Bennett, which transfer was found to have been made in trust for the benefit of such remaining creditors. The trial court rendered judgment in favor of plaintiff and against defendants, all of the defendants having defaulted except Heisinger and Bice, from which judgment the nondefaulting defendants prosecute this appeal. The defenses of each of the defendants were: First, that he had signed the contract of guaranty in reliance upon a prior agreement of plaintiff to the effect that if the five defendants would sign the same, plaintiff would stand his pro rata share of any loss that might be occasioned to them by reason thereof; second, that, without the consent of the guarantors, plaintiff had released the maker of the note from all liability thereon; and, third, that, after the execution of the contract of guaranty, the California Rochdale Company, with the consent of the plaintiff, but without the consent of the guarantors, transferred all of its assets to one Smith as trustee for the benefit of its creditors, and that thereafter the plaintiff, without the consent or knowledge of the guarantors, executed a waiver in writing of all his rights as holder of the note to participate in the assets of said corporation. [1] At the close of the trial the court granted plaintiff's motion to strike out the testimony of certain witnesses by which defendants attempted to prove an oral agreement between plaintiff and defendants that plaintiff would stand his pro rata share of any loss that might be suffered by them by reason of said guaranty, hereinabove referred to in the first defense; and in accordance with the remaining evidence found that no such agreement had been made.

We cannot agree with appellants' contention that this ruling was erroneous. If there was any conversation regarding such an agreement, it was inadmissible, as the contract sued upon was in writing, was complete in itself, and superseded all negotiations or conversations which preceded or accompanied its execution. [2] Appellants do not attempt to dispute the well-established rule that parol evidence is inadmissible to vary the terms of a written instrument. They argue, however, that plaintiff is estopped from enforcing his contract of guaranty because of the oral agreement which they claim he entered into; that if he made such oral agreement without intention of fulfilling it, it constituted fraud in the procurement of the contract of guaranty, which would preclude its enforcement. There is no merit in this contention. Fraud as a defense must be pleaded and proved. This defendants have not done.

[3] Appellants further claim that the introduction of parol testimony to establish this oral agreement was not an attempt to vary the terms of a written contract, but that it evidenced another collateral agreement, which constituted a part of the consideration for the execution of the contract of guaranty. If such an agreement were made, it would have amounted to nothing more than a contract of guaranty of the debt of another, which would not have been enforceable unless in writing. The cases cited by appellants do not bear out their contention in this regard. [4] Nor would such an agreement constitute a counterclaim against plaintiff's cause of action, as claimed by appellants, for the reason that the agreement pleaded and attempted to be proved was to "stand his pro rata share of any loss that might be occasioned said defendant by reason of his becoming the guarantor of said note." The record contains no allegation nor proof that appellants have as yet suffered any loss by reason of their guaranty. They had, therefore, no "existing" cause of action against plaintiff under such alleged agreement, as is required by section 438 of the Code of Civil Procedure. A cause of action upon contract is not "existing" within the meaning of the above section until a liability upon such contract has matured. (Provident Mutual Building-Loan Assn. v. Davis, 143 Cal. 253, 255, [76 Pac. 1034].) No loss would be occasioned to defendants within the meaning of the alleged agreement until

actual payment was made by them. Even recovery of judgment against them would not have given rise to a matured right of action in their favor against the plaintiff. (Oaks v. Scheifferly, 74 Cal. 478, [16 Pac. 252].)

[5] The trial court found that "the plaintiff did not at any time. . . release the California Rochdale Company from liability on the note referred to in said complaint or from any part of its liability on said note." Appellants' contention that plaintiff released the corporation "or its representative Smith" from its obligation upon the note is unwarranted. Smith was the trustee for the creditors. The California Rochdale Company passed a resolution authorizing and directing defendant Heisinger, president of the corporation, upon acceptance of a certain compromise settlement by a majority in number and amount of its merchandise creditors, to deliver to said Smith a copy of said resolution, "which is hereby constituted an authority and instruction to H. L. Smith to retransfer to F. A. Bennett, S. L. Heisinger, and W. J. McClendon, or their nominees, all of the assets heretofore transferred to him by the California Rochdale Company." Plaintiff and Heisinger, as creditors of said corporation, each executed a release to Smith for all claims and demands which he "has or may have against said H. L. Smith on account of the aforesaid transfer of assets, and does hereby consent that said H. L. Smith may transfer said assets and property" to said parties. This release does not purport to be a release of the corporation, or anyone else, from any obligation under the note in suit, nor a waiver by plaintiff of any rights thereunder. This is the only release in evidence. Reliance is placed upon section 2819 of the Civil Code, which provides that "a guarantor is exonerated, except so far as he may be indemnified by the principal, if by any act of the creditor, without the consent of the guarantor, the original obligation of the principal is altered in any respect, or the remedies or rights of the creditor against the principal, in respect thereto, in any way impaired or suspended." It is not contended that the original obligation was altered in any respect. The consent of plaintiff, as a director of the corporation, to the transfer of the assets of said corporation for the benefit of creditors, did not constitute an act impairing or suspending the remedies or rights of plain

tiff against the corporation. In this connection appellants rely on the well-established rule that "a payee who voluntarily releases the lien on property which he holds as security for the payment of his note exonerates the guarantor thereon." The note in suit, however, was unsecured. By his consent to the transfer of the corporate assets to a trustee plaintiff neither released any security for his note nor extended the time of payment.

The judgment is affirmed.

Langdon, P. J., and Brittain, J. concurred.

[Civ. No. 2923. First Appellate District, Division One.-August 22, 1919.]

NELLIE S. HUGHES, as Executrix, etc., Respondent, v. CHARLES F. SILVA, Appellant.

[1] TRUSTS-ACTION TO IMPRESS ON LANDS-CONFLICTING EVIDENCEFINDING AND JUDGMENT.-In this action, wherein plaintiff's prede cessor in interest sought to impress a trust in his favor as to several tracts of land and for an accounting as to each of such properties, the findings and judgment of the trial court sustaining the plaintiff's contention as to the existence of a trust relation as to one of said tracts, and as a result of an accounting taken as to said tract, decreeing that plaintiff recover from defendant one-half of the net amount it found defendant realized as to such holding (the findings and judgment being in favor of the defendant as to the other tracts), based as they were upon the substantially conflicting testimony of the two original parties as to the facts pertaining to their relation and dealings in respect to the tract in question during a long series of years, cannot be said not to be supported by the evidence.

[2] ID. ORAL UNDERSTANDING

-

CREATION OF TRUST - EFFECT OF DECLARATIONS BY TRUSTEE-An oral understanding between two parties whereby certain property is to be acquired in the name of

2. Creation of trust in land by parol, note, 115 Am. St. Rep. 774.

Parol agreement to take title to real property, sell the same and account for the proceeds, as affected by statute of frauds, note, 20 L. R. A. (N. S.) 298.

42 Cal. App.-50

one of them, a one-half interest therein to be held in trust for the other, may give rise to an enforceable trust in favor of the latter. Such a trust can at the same time be an express and a resulting trust, and the fact that the trustee of such trust makes a written declaration of trust does not change the character of the trust itself, but merely furnishes additional proof of its existence.

[3] ID.-LOAN OF MONEY TO BENEFICIARY BY THIRD PERSON-USE IN PURCHASE OF PROPERTY-PAYMENT BY TRUSTEE-EFFECT OF.-The fact that the declarations of trust in this case, which were executed by the defendant in connection with the making and renewal of the beneficiary's note to a third person who had loaned such beneficiary money which was used in making the initial payment on the property sought to be impressed with the trust, were made with express reference to the transaction with said third person and expressly declared the existence of a trust entitling said beneficiary to an equitable interest in the property, and in its proceeds in the event of sale of such interest, in order to pay said note, and the further fact that the defendant, and not said beneficiary, paid the same in no wise changed the status of the property or the relationship of the parties, since according to the original understanding of the parties the entire purchase price of the property was to be paid out of itself, and this was what was actually done.

[4] ID. DEMAND FOR AN ACCOUNTING-DELAY-LACHES.-Where, during the term of years that elapsed between the time of the creation of the trust and the sale of the property, the relation between plaintiff and defendant was intimate and cordial, and down to a short time before the sale of the property its character and value remained about the same as when it was purchased by them, there was no reason for balancing the accounts between them; therefore, plaintiff was not guilty of laches in not demanding an accounting earlier, where he did so a short while after an unexpected rise in the value of the property made its advantageous sale a possibility, and it was thus sold.

APPEAL from a judgment of the Superior Court of Sacramento County. Wm. M. Finch, Judge. Affirmed.

The facts are stated in the opinion of the court.

Devlin & Devlin and Sullivan & Sullivan and Theo. J. Roche for Appellant.

3. Validity of pledge of stock of corporation when not made in the books of the company as against attachments, executions, or subsequent transfers, notes, 67 L. R. A. 656; 20 L. R. A. (N. S.) 996.