Opinion
Hearing Granted Nov. 23, 1962.
Opinion vacated 29 Cal.Rptr. 273, 379 P.2d 761.
J. Richard Thomas, Bakersfield, for appellant.
Bennett Siemon, Bakersfield, for respondent.
STONE, Justice.
Elmer Enoch Daigh and his wife executed a joint last will and tastament. Elmer died, and his widow was appointed executrix pursuant to the terms of the joint will, but she died before probate proceedings were completed.
Upon the death of the widow, it was disclosed that she had revoked the joint will and in a new will named as executor her brother, Marion H. Johnston, appellant herein. The new will of the widow, Vera Thelma Daigh, was admitted to probate and letters testamentary were issued to appellant.
Thereafter appellant filed a petition for letters of administration with the will annexed in the Estate of Elmer E. Daigh, basing his right to letters upon his position as executor of the Estate of Vera Thelma Daigh. Respondent D. F. Reid petitioned for letters testamentary in the Estate of Elmer E. Daigh. He predicated his right to letters upon the following paragraph of the joint wills:
'It is our desire that the survivor of us be appointed to act as Executor of the estate of the other. In the event of simultaneous death, as set forth in Paragraph 3, above, or in the event of the death of the survivor of us, it is our desire that D. F. REID, 315 Tejon Street, Oildale, California, be appointed to act as Executor of this our Last Will and Testament. All parties heretofore mentioned in this paragraph are to act without bond.'
Notice of hearing was given as to each petition, and subsequent thereto appellant Johnston filed objections to the petition of respondent Reid. When the matter was called for hearing, counsel for appellant asked for a continuance of one week. He advised the court that he wished to file objections to the appointment of respondent upon the ground respondent was employed by Daigh & Stewart Truck Company against whom the Estate of Daigh had filed an action in the Superior Court of Kern County. Counsel for respondent replied by stipulating that respondent is employed by Daigh & Stewart Truck Company as foreman in one of their branch yards. He also acknowledged that the lawsuit by the Estate of Daigh against Daigh & Stewart Truck Company is pending and is a matter of record. The hearing proceeded, but appellant was permitted to file formal written objections to respondent's petition for letters.
The court took the two petitions and the objections to the appointment of Reid, under submission. Thereafter written orders were filed, one appointing Reid executor, the other denying the petition of Marion H. Johnston for letters of administration with the will annexed, as successor to Vera Thelma Daigh. In the order denying the petition of Johnston, the court found that:
'* * * there is now pending in the Superior Court of Kern County, under file No. 81818 an action entitled Estate of Elmer Enoch Daigh by Vera Thelma Daigh VS. Daigh & Stewart Truck Company, a California corporation, et al, in which the Plaintiff is seeking damages against Daigh & Stewart Truck Company in the amount of $132,057.00 pursuant to a mandatory stock redemption Agreement;
'The Court further finds that at the time that D. F. Reid filed his Petition for letters testamentary and at the present time was and is an employee of Daigh & Stewart Truck Company, and in fact is a foreman of one of their yards outside the Bakersfield area; * * *
'The Court further finds that D. F. Reid does not have an adverse interest to the Estate * * *.'
The action brought by the Estate against Daigh & Stewart Truck Company arose out of a written agreement entered into between Elmer E. Daigh and William H. Stewart, as individuals, and the Daigh & Stewart Truck Company, a corporation, the agreement providing that in case of the death of Elmer E. Daigh his stock in Daigh & Stewart Truck Company shall be redeemed by the company. Among other Counsel for respondent first argues that the question of adverse interest is not before the court because appellant's objections and his petition for letters of administration with the will annexed were not filed at the same time. Respondent contends this violates Probate Code, section 407, which provides that objections in writing may be filed to a petition for letters and that: 'A petition may, at the same time, be filed for letters of administration with the will annexed.' The quoted language of section 407 does not appear to us to be mandatory; certainly it is not jurisdictional. Since the record reflects neither an objection to the filing of objections in the trial court, nor a motion to strike, this procedural defect may not be assigned as reversible error on appeal. Further, counsel for respondent stipulated to his client's employment by Daigh & Stewart Truck Company and conceded that the lawsuit by the Estate of Daigh against Daigh & Stewart Truck Company is a matter of record. The issues were submitted to the trial court on the merits, so that appellant's failure to file simultaneously his petition for letters of administration with the will annexed and his objection to respondent's appointment cannot be determinative of this appeal.
Respondent asserts that since his right to letters stems from the will, in which he is named as an alternate executor, the only grounds upon which he can be disqualified are those specifically relating to executors and listed in section 401, Probate Code. The section reads as follows:
'No person is competent to serve as an executor or executrix who is under the age of majority, convicted of an infamous crime, or adjudged by the court imcompetent to execute the duties of the trust by reason of drunkenness, improvidence, or want of understanding or integrity. * * *'
Respondent points out that section 401 does not list adverse or conflicting interests as a ground for disqualification. Respondent also cites several cases appearing to hold that a named executor may be disqualified for only those specific grounds set forth in section 401. The cited cases, however, must each be construed in the light of the facts concerning the particular disqualification peculiar to that case. We do not find authority for the proposition that section 401, Probate Code, deprives the court of its power, indeed its duty, to inquire into the circumstances surrounding the appointment of an executor and to exercise its discretion according to the outcome of the inquiry. Section 401, as we construe it, is concerned with the grounds for mandatory disqualification, rather than discretionary cause for disqualification.
The Supreme Court said in the case of County of Los Angeles v. Morrison, 15 Cal.2d 368, at page 371, 101 P.2d 470, at page 472, 129 A.L.R. 443:
'The probate court or judge is the guardian of estates of deceased persons and all proceedings are under the direction of the judge. An executor or administrator derives his power to act from the order of the court.'
(See also Estate of Setrakian, 140 Cal.App.2d 926, 932, 295 P.2d 924, and cases cited therein.) We do not believe the Legislature Viewed in the light of the court's duty to protect the estate of a deceased, the incongruity of respondent's contention becomes apparent. The court administers an estate through an executor or an administrator who acts for the court in a representative capacity. To hold that the court is without discretion in the appointment of the fiduciary who is to administer an estate, regardless of the nature or degree of adverse circumstances, would be incompatible with the duty and the ultimate responsibility which rests upon the court.
Respondent concedes that during the course of the administration of an estate the court has the power to remove an executor for misfeasance, malfeasance, nonfeasance, or even because of an adverse interest. It is his contention, as we understand his argument, that such grounds for disqualification must develop during the course of the probate of the estate, that they do not disqualify an executor in the first instance unless mentioned in Probate Code, section 401. We find it difficult to believe that the Legislature intended this anomalous result. There is dictum which supports the proposition that a court has authority to refuse to appoint an applicant for letters where a serious conflict of interest exists. This dictum appears in Estate of Guzzetta, 97 Cal.App.2d 169, at page 172, 217 P.2d 460, at page 462, where the court had this to say:
'Had the adverse claim of appellant been known to the court at the time she applied for letters, it would have furnished a sufficient ground for denial of her petition. Estate of St. John, 8 Cal.2d 175, 64 P.2d 725.'
In accord is dictum in Estate of Deutsch, 156 Cal.App.2d 57, 318 P.2d 847. Although undue delay in filing a petition was the specific ground for affirming in that case, nevertheless the Appellate Court noted that the probate court found that petitioner had developed an interest adverse to the estate.
Respondent next argues that to deny his petition for appointment as executor before he has had an opportunity to act, is to convict him by presupposition. On the contrary, to disregard the conflict of interest is to ignore the realities presented by the circumstances of the case. Respondent asks the court to shut its eyes to the fact that he, as a representative of the Estate, must press a pending action in the superior court to collect some $80,000 from his employer. The disqualifying conflict before us differs from the conventional conflict of interest since respondent here does not have a claim of his own against the Estate, rather he must assert a claim on behalf of the Estate but against his employer. As an employee, respondent is in the untenable position of telling his employer that the employer does not know the value of his company's stock, and that he misconceives the value of the business which he operates. An examination of the complaint filed by the Estate of Daigh reflects that respondent's employer has been charged with improper accounting practices. It is also charged that the value of insurance policies held by the company upon the life of the deceased Daigh are being measured improperly. As executor, it will be respondent's duty to pass vigorously these contentions against his employer.
The ramifications arising from respondent's petition of employee-executor readily suggests themselves. It must be recognized that an employer is in a position to utilize many subtle means of suggesting to his employee the value of company stock. The meetings between the employee-executor and the employer-defendant will not be occasional and conducted at arm's length. Respondent works for Mr. Stewart of Daigh & Stewart Truck Company and is subject to his direction every working day. The opportunity for suggestion, both overt and covert, is unusual. It is unnecessary to assume that the respondent-employee is dishonest or that he would intentionally misrepresent or fail to represent the estate or, as respondent puts it in his brief, to prejudge We should think that respondent, after considering the personal conflict which he must encounter as an employee representing a litigant in controversy with his employer, would elect to remove himself from such an untenable and discordant position.
We conclude that appellant's objections to the appointment of respondent as executor are well founded; that said adverse interest conflicts with respondent's duty to represent the Estate objectively and vigorously to the best interests of the Estate and the beneficiaries under the will.
The orders appealed from are reversed.
CONLEY, P.J., and BROWN, J., concur.