Opinion
Page __
__ Cal.App.2d __266 P.2d 548BURCHELLv.STRUBE et al.Civ. 15721.California Court of Appeals, First District, First DivisionFeb. 10, 1954Rehearing Denied March 12, 1954.
Hearing Granted April 7, 1954.
Robert E. Hatch, San Francisco, for appellant.
Thomas C. Vassar, San Francisco, for respondent.
BRAY, Justice.
Defendant Wiley on a settled statement appeals from a judgment against him in an interpleader action.
Questions Presented.
1. Is a determination under section 1020.1 of the Probate Code limited to distribution in the estate or does it affect the ultimate rights of the parties to the contract?
2. If not so limited, is the section constitutional?
Facts.
Defendant Wiley's assignor, Walter C. Cox, is in the business of searching for heirs. Lucy Falkiner (now deceased), Charles J. C. Strube, and Reinhold R. Strube (now deceased) were the heirs of Charles G. Moore, deceased. Cox obtained assignments to 40 per cent of the [266 P.2d 550] interest of said heirs in the Moore estate for his services in investigating and procuring proof of their relationship to Moore. In the Probate Court of Napa County a hearing was held under section 1020.1, Probate Code. The court there adjudged that the heirs were not 'lost or missing heirs,' the assignments were obtained 'at least by high pressure methods,' were grossly unreasonable and against public policy, and that distribution pursuant to said assignments should be denied in an amount in excess of 10 per cent. This judgment became final. Later a decree of final distribution was entered distributing to Cox 10 per cent of the distributive shares of said heirs. Thereafter plaintiff filed this action in the San Francisco Superior Court, setting forth the foregoing matters, alleging that as administrator of the Moore estate he held $7,686.73 and that Wiley as assignee of Cox claimed to be entitled to 30 per cent more of the interests of said heirs, asked that the heirs Wiley and Cox be required to interplead and their claims determined. After a trial at which the decree under section 1020.1, Probate Code, and the decree of distribution were admitted, the court entered the judgment appealed from, declaring that the Napa County Probate Court decree fully determined and adjudicated all of the rights and liabilities of the parties and that defendant Wiley was entitled to recover nothing.
Effect of Decree under Section 1020.1, Probate Code.
Defendant contends that the section only relates to distribution and that in spite of the probate court's finding under the section, the heir hunter can collect by suit or otherwise the full percentage provided in the contract. Section 1020.1 provides that upon motion of any interested party, the probate court, before making distribution to the assignee of an heir, may inquire into the consideration for any contract or assignment between the heir and the assignee 'and into the amount of any fees, charges, or consideration paid or agreed to be paid * * * and into the circumstances surrounding the execution of such assignment, transfer, agreement * * * and if it finds that the fees, charges or consideration paid by any such heir * * * is grossly unreasonable or that any such assignment * * * was obtained by duress, fraud or undue influence it may refuse to make distribution pursuant thereto except upon such terms as it deems just and equitable.'
While this section has been considered in several cases the exact point raised here has not been passed upon. In Lund's Estate, 65 Cal.App.2d 151, 150 P.2d 211, the appellant invoked the provisions of section 1020.1 and the probate court found that although the contract assigned to the respondent a one-third interest in the appellant's interest in the estate, the probate court refused to distribute to the respondent that interest but did distribute $1,000 to him, a sum equalling much less than that interest. On appeal it was contended that the court had 'set aside' the assignment and granted a recovery on a quantum meruit and that such a recovery was not within the issues of the pleadings under the section. The reviewing court held that the assignment had not been set aside but was given effect, not according to its precise terms, but to the extent of awarding reasonable compensation for the respondent's services for which appellant had agreed to a larger amount. While the opinion contains some language which might appear to support defendant's contention (for example, it states that the section gives the probate court jurisdiction to determine the validity of the assignment 'at least for the purpose of distribution'), the opinion in no wise attempted to discuss the effect of the section other than as to distribution. It expressly stated, 'We are not called upon here, however, to determine the numerous questions which may arise with respect to said section.' 65 Cal.App.2d at page 153, 150 P.2d at page 213.
Ettlinger's Estate, 87 Cal.App.2d 494, 197 P.2d 163, although the facts are not analogous to those in our case, is persuasive that the determination under section 1020.1 is a final one. There, pursuant to that section, a proceeding was brought to have the probate court approve an assignment made by an heir of her interest in the estate then pending. After a hearing the court approved the assignment. No appeal was made from this order. Nearly a year [266 P.2d 551] later the heir filed a motion to set aside the order approving the assignment. After a hearing the probate court refused to set the order aside. In sustaining that action the reviewing court held that in the absence of evidence of fraud, a party who had had a fair opportunity to present her case at the first hearing could not be permitted to seek relief from the judgment against her, nor to relitigate the matter.
In Stanley's Estate, 34 Cal.2d 311, 209 P.2d 941, the court was considering an appeal from a decree of distribution, distributing the estate in accordance with an agreement between the heirs. It pointed out that prior to the adoption of section 1020.1 the probate court had no jurisdiction to pass upon the validity and effectiveness of an assignment by an heir on an interest in an estate, and then held, 34 Cal.2d at page 319, 209 P.2d at page 945: 'The clear implication from the foregoing is that a probate court may determine the validity of an agreement that property shall be distributed in a certain manner. [Citations.]' The appellant contended that even if the probate court had the power to determine the validity of such an agreement, its power was limited to determining the agreement's validity as to that part of the property which is a part of the estate. As to this contention the court said, 34 Cal.2d at page 319, 209 P.2d at page 946: 'Where an agreement embraces both property that is a part of the estate and property which is not a part of the estate, especially community property, the probate court has jurisdiction to decide the validity of the entire agreement. It must be remembered that a probate court has jurisdiction to determine rights under contracts ancillary to the exercise of its probate jurisdiction.'
The absurdity of defendant's contention is shown by the following illustration. An heir hunter receives, as here, a 40 per cent assignment of an heir's interest in the estate. The probate court determines that such percentage is inequitable and allows 10 per cent or even determines that the contract is wholly inequitable. The heir hunter immediately filed suit on the contract, and attaches the heir's interest in the estate. In the case where the probate court allowed him 10 per cent he receives that portion of the heir's estate by distribution and the other 30 per cent through the attachment. It the case where the probate court holds the entire contract inequitable, the heir hunter, in spite of a judgment to that effect which is appealable, McPherson's Estate, 90 Cal.App.2d 17, 202 P.2d 565, and has become final, nevertheless collects the entire 40 per cent. '* * * confusion, delay and uncertainty' would result, as the court in the Stanley case said, 34 Cal.2d at page 319, 209 P.2d at page 946, from a denial of jurisdiction in a probate court to hear and determine all questions of law and fact, the determination of which is ancillary to a proper judgment of a case which it has power to hear and determine. "The superior court, while sitting in matters of probate, is the same as it is while sitting in equity, in cases at law, or in a special proceeding * * *." 34 Cal.2d at page 319, 209 P.2d at page 946. It was there pointed out that to limit the probate court in determining the validity of the heir's agreement to the property in the estate might result in the ridiculous situation of the probate court determining 'the part of the agreement addressed to it as valid, and a superior court might reach a contrary result on the remainder of the contract, or vice versa.' 34 Cal.2d at pages 319-320, 209 P.2d at page 946. Likewise a similar situation would result if it could be held that a contract was inequitable in the probate court and equitable in the superior court or vice versa. As said in Raphael's Estate, 103 Cal.App.2d 792, 795, 230 P.2d 436, 438: 'Probate Code sec. 1020.1 lays the duty of determining whether 'the fees, charges or consideration paid by any * * * heir * * * is grossly unreasonable' and whether 'any such assignment, transfer (or), agreement * * * was obtained by duress, fraud or undue influence' upon the probate judge * * *.'
In Cazaurang's Estate, 75 Cal.App.2d 217, 170 P.2d 694, where the court reduced the percentage provided in the assignment, the court discussed the limited jurisdiction of the probate court prior to the enactment of section 1020.1 and then held that the Legislature [266 P.2d 552] had specifically conferred upon the probate court the power to determine the validity of the heir's agreement and to fix and determine the reasonableness of the compensation to be charged by the person acting thereunder.
In Butler's Estate, 29 Cal.2d 644, 177 P.2d 16, 18, 171 A.L.R. 343, the court pointed out that section 1020.1 is not limited to 'heir-hunters' agreements. While it quotes from Lund's Estate, supra, 65 Cal.App.2d 151, 150 P.2d 211, to the effect that the section gives the probate court "some control, at least for the purpose of distribution, over" heir hunters' agreements, it nowhere limits that control to purposes of distribution. It stated that the section enlarged the power of the probate court with respect to all assignments and agreements by heirs and that the section pressed a public policy to limit rather than enlarge the rights of the holders of such instruments.
On the general subject of the doctrine of res judicata the following from Easter's Estate, 24 Cal.2d 191, 148 P.2d 601, is applicable. Speaking of the effect of a decree of distribution the court said, 24 Cal.2d at page 194, 148 P.2d at page 603: "It was equally within the jurisdiction of the court, and its duty, to determine * * * what other persons had legal or equitable rights to the distributable property of the estate, and the extent and nature of their interests. Having jurisdiction to determine these matters on distribution, when the decree does so determine them, although the determination may be incorrect, it is conclusive as to the rights of heirs, legatees, and devisees unless corrected on appeal. * * *"
Constitutionality.
Defendant contends that if section 1020.1 is construed so as to make the probate court's action a final adjudication of the rights of the parties to the contract or assignment, then the section would violate both the federal and state Constitutions as impairing contracts and denying trial by jury. Defendant cites no cases that support this contention. We know of no cases holding that the right of a court of equity to inquire into the consideration for a contract, constitutes an impairment of such contract in the constitutional sense. The second contention has been flatly decided against defendant's contention in Cazaurang's Estate, supra, 75 Cal.App.2d 217, 225, 170 P.2d 694, 699: 'The constitutional guaranty of a right to trial by jury has no application to cases coming within the equity jurisdiction, and a jury may not be demanded in such cases as a matter of right.'
The judgment is affirmed.
PETERS, P. J., and FRED B. WOOD, J., concur.