Wish anyone who says "there is a law" would cite the law they are talking about. I am not finding ANY CA law that applies to this situation. In fact, one site,
Lost Dog Laws , says: "Unlike cruelty laws or impound laws,
no state appears to directly address the issue of lost pets in its statutory code. Indeed, while many states define dogs and cats as the personal property of their owners by statute, these states exclude domestic animals from their lost property statutes. This is ironic considering the understood value we place upon companion animals in our society and the level of regulation states apply to animals." I read through pages and pages of CA dog law and nowhere was it addressed about what is required when you find a stray.
I did find an article about a poor woman who recently tried to claim her dog after a micro chip scanning revealed it was hers. The clinic, unfortunately had given it back to the finder who now refuses to give it to the original owner. This is sad as in this case, the dog was stolen from her and she had police reports, receipts, dog records etc....and she truly missed her baby! But the law was not specific. Although on one hand dogs might be considered personal property, in other places domesticated animals are not. Without them falling under the personal proerty laws, there is no law governing them.
Mother defends son for not returning found dog to original owner | abc7news.com
Bottom line, if a finder keeps a dog, it is up to the owner to actually take them to court and the police say it is a civil matter. I also found a case where the courts found in favor of the finder as they had done a good job of posting fliers and notifying authorities, then kept the dog and provided care for over 30 days. Basically the court found that they needed to encourage people to provide care for stray animals in need and penalize owners who did not meet basic safety and monitoring of their pets.
Here is a site that lists dogs lost by state. You might make a check of those Yorkies reported to make sure this little one is not on there:
Fido FinderŪ - Where Lost Dogs Are Found
Here is some excellent advice to follow when finding a stray dog:
Rescuers.com - Adoption Options for Stray Dogs It does include filing a "found dog" report with local animal control but taking to the pound is definately not on the list.
Another reason not to take him to the pound is that in CA it is law that all dogs must be spayed or neutered before they can be adopted out, unless the person signs that they will do so within 30 days and put down a deposit. Since your vet has said his prostrate and age preclude neutering him, I think that might create a problem. But then it did not sound like you were going to take the poor old guy to a pound anyway!

Good heart!
I find it comical that someone can follow around and post after me, use my name over and over and over again in their posts, and then cry "foul" when I question a couple of their posts over the past few days. Sorry -- I just don't agree with the advice you gave here either.