## Facts

- James and Beverlee Walgren entered a written contract on August 28, 1986, with Dolan, Sr. to buy real property for $15,000.
- The contract required an immediate $1,000 escrow deposit and a later $14,000 balance, and stated that if the seller could not furnish marketable title, the seller would perfect title at the seller’s expense.
- Walgren deposited $1,000 into escrow and later tendered the $14,000 balance by cashier’s check.
- The escrow company refused to accept the $14,000 after learning record title was held by a trust, not by Dolan, Sr. individually.
- Dolan, Sr. died about two months after the escrow refusal.
- The trust instrument (as described at trial) made Dolan, Sr. and his wife the settlors and sole beneficiaries at creation and provided the trustee’s duties were exercisable only pursuant to their written instructions (or those of the survivor).
- Christopher Dolan served as trustee of the trust holding record title.
- Walgren sued the trustee and related defendants for specific performance of the sale contract or, alternatively, damages.
- The trial court granted defendants’ motion for nonsuit at the close of Walgren’s case.

## Issues

1. Whether a real property sale contract signed by a settlor/beneficiary who retained power to direct the trustee’s disposition of trust property can be enforced (by specific performance or damages) against the trustee and trust despite record title being in the trust.
2. Whether, viewing the evidence and reasonable inferences in plaintiffs’ favor, plaintiffs presented a legally sufficient theory to defeat nonsuit.

## Decision

- The Court of Appeal reversed the judgment of nonsuit and remanded for further proceedings.
- The court held plaintiffs presented a viable legal theory that the contract could be enforceable against the trustee and the trust.
- The court concluded the trust provisions, as proved for nonsuit purposes, supported an inference that Dolan, Sr. had sufficient equitable interest and control to obligate conveyance through the trustee or support damages.
- The title-perfection clause supported enforceability because it contemplated the seller’s obligation to cause marketable title to be delivered, not merely to transfer whatever interest he personally held.
- Dolan, Sr.’s death and trust allocation provisions did not, as a matter of law, defeat enforcement at the nonsuit stage.

## Legal Principles

- Nonsuit is improper if, taking plaintiff’s evidence as true and drawing all reasonable inferences in plaintiff’s favor, a trier of fact could find for plaintiff under a legally cognizable theory.
- A person who holds an equitable interest and enforceable power to compel the record title holder to convey may be subject to specific performance of a contract to sell, even if not the nominal title holder at contracting.
- Where a trust instrument gives a settlor/beneficiary authority to direct the trustee’s actions regarding trust property, that retained power can support enforcement of the settlor/beneficiary’s lifetime sale contract against the trustee and trust.
- A contractual obligation to “perfect” or provide marketable title may be satisfied by causing the trustee to convey legal title when the contracting party has authority to direct such conveyance.

## Conclusion

The appellate court held that plaintiffs’ evidence supported a legally sufficient theory that a settlor/beneficiary with power to direct a trustee could bind trust-titled property through a sale contract, and it reversed the nonsuit so the claims for specific performance or damages could proceed on the merits.


Walgren v. Dolan, 226 Cal. App. 3d 572 (Cal. Ct. App. 1990)