Opinion
12-22-1958
Matter of the ESTATE of Irene I. HART, Deceased. Lillian A. WORTHINGTON, as Administratrix with the Will Annexed of the Estate of Irene I. Hart, Deceased, Petitioner and Respondent. Fred B. Hart, as Administrator of the Estate of Augustus Loring Hart, Objector and Appellant. * Civ. 9418. . Nov, 25, 1958. Rehearing Denied
Fred B. Hart, Oakland, and Busick & Busick, Sacramento, for appellant. Frantz & Dopkins, Sacramento, for respondent.
Matter of the ESTATE of Irene I. HART, Deceased.
Lillian A. WORTHINGTON, as Administratrix with the Will Annexed of the Estate of Irene I. Hart, Deceased, Petitioner and Respondent.
Fred B. Hart, as Administrator of the Estate of Augustus Loring Hart, Objector and Appellant. *
Nov, 25, 1958.
Rehearing Denied Dec. 22, 1958.
Hearing Granted Jan. 21, 1959.
Fred B. Hart, Oakland, and Busick & Busick, Sacramento, for appellant.
Frantz & Dopkins, Sacramento, for respondent.
VAN DYKE, Presiding Justice.
Augustus Loring Hart and Irene L. Hart were husband and wife. Both died intestate as to the property involved in this proceeding without parents or issue of either of them surviving. Irene died January 25, 1952. Augustus died February 2, 1952. Lillian A. Worthington, hereinafter called respondent, was appointed administratrix with the will annexed of the estate of Irene. Fred B. Hart was appointed administrator of the estate of Augustus. As was later determined by a judgment, all of the property inventoried by respondent in the estate of Irene, except government bonds of the value of about $200, had been either the separate property of Augustus or community property of the spouses vesting in Augustus as community survivor without administration in Irene's estate. The property consisting in the main of securities and bank credits had been held in the name of Irene and was in her possession at the time of her death. Having taken possession and inventoried the property in the estate of Irene, respondent proceeded to administer upon that estate upon the assumption that the property belonged to that estate. However, appellant, as administrator of the estate of Augustus, made claim to the property. He demanded that all the property inventoried in Irene's estate, save the government bonds, be turned over to him for administration in the estate of Augustus. This demand was refused. On July 8, 1953, appellant began a civil action in the superior court seeking adjudication as to the rights of the respective parties in the property. In that action a judgment was rendered May 4, 1956, decreeing that the property had been either the separate property of Augustus or that it came to him as survivor of the community and that appellant was entitled to possession. In the meantime and on November 6, 1953, respondent filed her first account in the estate of Irene, therein charging herself with all the property inventoried and with the interest and dividends accruing thereon and received by her. On December 29, 1953, the court sitting in probate made its order settling the account. In that order the court charged the respondent with the appraised value of all the inventoried property, and, basing its order upon the assumption that all the property inventoried belonged in the estate of Irene, the court ordered the allowance of an attorney's fee of $250, an administratrix' commission of $250, and credited some other items of expense in probate. Respondent, as administratrix, had been contesting the claims of appellant herein as asserted in the civil action. Appellant herein did not appear and object to the account or take part in the proceedings leading up to its settlement. No appeal was taken from the order allowing the account and it became final.
When the judgment came down in the civil action, it included an order that respondent herein as defendant in that action, deliver the property to appellant as administrator of the estate of Augustus. Respondent, so far as she was able, obeyed that order. She turned over to appellant all of the securities and the money left in her hands, but the amount she was able to turn over fell short of the total amount due by $1,479.11, which sum included $402.27 costs of court assessed against her in the judgment. Having on December 31, 1956, thus far complied with the judgment, respondent, on January 3d following, filed her second account in the estate of Irene. She sought to credit herself with the commissions and attorney's fees allowed in her first account and with costs and expenses incurred by her in contesting appellant's claims as plaintiff in the civil action. At this point, appellant appeared in the proceedings in the estate of Irene as an objector to respondent's account. He asked the court in probate to surcharge respondent's account with the above items and also with the costs assessed against her in the judgment. The trial court approved the account as rendered. It declared that in all things in respect of her defense against the claims of appellant she had acted properly and in good faith and in the performance of her duties as administratrix of the estate of Irene. She was ordered to liquidate the government bonds she still held as property of the estate of Irene and, having done so, to pay the proceeds over to appellant as a credit upon the balance owing from the estate of Irene to the estate of Augustus. The court found that there were insufficient funds in her hands to fully discharge this indebtedness and that when she had liquidated the bonds and paid over the proceeds there would be no other money or property in her hands. The court refused any further relief to appellant and from the settlement of the second account this appeal was taken.
Appellant's first contention is that, although he had filed his civil action claiming almost all of the property inventoried in the estate of Irene before respondent filed her first account, he had no right to appear in that estate proceeding and contest the account. He claims he was not then a person 'interested in the estate' within the meaning of that phrase as used in Probate Code, § 927. That section provides as follows: 'Any person interested in the estate may appear and file written exceptions to the account, and contest the same. * * *' In this first contention we disagree with appellant and think that, having filed his civil action claiming all the property inventoried in the estate of Irene, with minor exceptions, he was a person interested in the estate with full right to except to the account and contest the same. At that time he knew that if the claims he was asserting in his civil action were made good, practically all of the property being administered in the estate of Irene belonged in the estate of Augustus. He knew respondent, even if acting in good faith, had in fact and without right taken possession of assets belonging in the estate of Augustus, inventoried them as assets of the estate of Irene, charged herself therewith and that by her account she was claiming a right to use funds so held by her in paying fees and commissions based upon the total inventory value, and in payment of costs and expenses being incurred by her in resisting appellant's claims in the civil action. He knew that if she were allowed to do this the amounts so allowed and used would exceed the value of all assets properly inventoried in the estate of Irene, that, in short, assets of the estate of Augustus were thus being consumed in the administration of the estate of Irene and that that estate from its own resources could not repay or restore those funds. Under these circumstances we hold that he as administrator was a person interested in the estate of Irene and fully entitled to contest respondent's accounts therein.
In saying this we are aware that it may appear, although we think superficially, that we are in conflict with other decisions of our appellate courts. We think, however, that a consideration of such cases in the light of the facts presented by the records therein demonstrate that none of them would compel us to a conclusion other than we have stated in view of the peculiar facts presented in this case. It has become established law that our superior courts, sitting in the exercise of probate jurisdiction, may not determine adverse claims to the properties of an estate in course of administration when asserted by a 'stranger to said estate'; that they may not 'try the question of title to property as between a representative of the estate and strangers to the estate.' As a corollary, our courts say that one who is claiming adversely to an estate is not bound by the orders of a superior court sitting in the exercise of probate jurisdiction. In re Estate of Dabney, 37 Cal.2d 672, 676-677, 234 P.2d 962, 965. This concept of a segregation of powers, depending upon whether or not a superior court is sitting in the exercise of its general jurisdiction or sitting in the exercise of its probate jurisdiction, received further treatment by our Supreme Court in Schlyen v. Schlyen, 43 Cal.2d 361, 273 P.2d 897, 900. Therein the court, having remarked that considerable confusion had arisen because of the reference in many cases to the 'probate court' as if it were 'apart from the superior court' and that such references were incorrect, proceeded to examine the past and present constitutional provisions on the subject. The court concluded that a superior court in exercising its jurisdiction in probate matters did so as a superior court with general jurisdiction and as such had the right to exercise inherent equitable functions. The court adhered to the rule that a superior court, acting in the exercise of its probate jurisdiction, is without power to try title to property asserted by strangers to the estate as against the estate with certain exceptions as when a personal representative claimed property in an individual capacity. However, that exceptional jurisdiction, said the court, is not exclusive, and in the absence of timely objection to the trial of such a controversy in the superior court sitting in the exercise of its general jurisdiction that court can properly adjudicate the issues.
In this case the issues concerning title could only be tried in the superior court sitting in the exercise of its general jurisdiction, that is, in the civil action brought by appellant against respondent. But under the peculiar circumstances here obtaining, appellant was sufficiently 'interested in the estate' of Irene to justify, and to require, him, in the performance of his duties as administrator of the estate of Augustus, to appear in the matter of the account rendered by respondent and object to the allowances being asked and to the authorization of the expenditures being made. The almost inevitable result of his failure to do so would be the dissipation of the property of the estate of Augustus in the affairs of the estate of Irene.
The situation appearing here did not exist in the In re Estate of Dabney, supra, 37 Cal.2d at page 681, 234 P.2d at page 968, and the Supreme Court noted this, saying: 'In the present case it is not the entire assets or (as in Ricaud) 'all of the real estate' which is involved in appellants' suit * * * but only a portion thereof. Although the record is not specific on the point, it appears that appellants' claims extend only to some twenty-five to fifty per cent of the assets of the estate; moreover, all creditors' claims have been paid and there is no suggestion that the distributions here ordered would endanger the ability of the estate to pay the expenses of administration.'
In this case the very converse appears. The allowance to respondent of fees and commissions based upon the entire inventory valuations rendered the estate insolvent. Any expenditures respondent made in defending against the civil action could only result, if authorized, in the further dissipation of property belonging to the estate of Augustus. Surely, it was appropriate to inform the court, sitting in probate, of the condition that existed and there could be no better opportunity afforded than to object to the allowances being asked by respondent and to place in issue before the court the propriety of spending estate funds in defending the civil action. Indeed, there was no place else to go where effective help could be given. The superior court sitting in the exercise of its general jurisdiction in the civil suit was not concerned and could not properly concern itself with the conduct of estate proceedings and there appears to be no sound reason why it should do so. When probate courts were separate counts with limited jurisdiction it may have been on occasion necessary for courts of general jurisdiction, such as equity courts, to interfere with the administration of estates where the powers of the courts of probate and their modes of procedure precluded them from doing complete justice, remitting their decrees to such courts to be carried into effect. This was noted in Re Estate of Dabney, supra, 37 Cal.2d at page 682, 234 P.2d at page 969. But we have no such probate courts and our superior courts sitting in the exercise of probate jurisdiction exercise a general, not a limited, jurisdiction. It is no answer to say the court in probate could not try title. It could refuse to allow commissions and fees in view of the hazard the allowance at that time might turn out to be unwarranted. And it could examine sufficiently into merits of the title suit to exercise its discretion as to whether or not its officer could properly defend at estate expense. It appears to us that there is nothing in the In re Estate of Dabney, nor in Section 927 of the Probate Code, which would warrant a holding under the circumstances of this case that appellant was not sufficiently interested in the estate of Irene to authorize him to appear at the first opportunity afforded and to advise the court in probate of the situation existing and impending. Had he done so, we doubt not that the court would have stayed its hands in the matter of settling the account in so far as it concerned the making of the requested allowances which might prove grossly excessive; and the court would no doubt have considered with serious concern the advisability of permitting its officer, the administratrix of the estate of Irene, to continue the defense of the civil action at the inevitable cost to the estate of Augustus if that action should turn out adversely to the estate. Even if it be deemed that it was compelled under the circumstances to authorize her to continue the defense of the civil action, no doubt it would have controlled the actions of its officer. The court ought to have been afforded the opportunity to make decisions upon such matters in advance of the disposal of funds.
Although we think that nothing we have herein said runs counter to the Supreme Court's rulings in the In re Estate of Dabney, supra, or to other cases referred to therein, we are aware that what we have said does run counter to a statement in the opinion in the In re Estate of Wilson, 114 Cal.App.2d 468, 250 P.2d 266. Therein it was said that the extent of the adverse claim was a matter of no consequence in determining the right of one asserting an adverse interest to appear in the probate proceedings as a person interested in the estate. We are unable to persuade ourselves that this broad assertion is correct. The result of all this is that the order settling the first account became res judicata, and that payment of commission and fees and the other credits allowed could not be attacked in the proceedings to settle the second account.
By his objections to the second account of respondent, the appellant asked the court in probate to surcharge the account with all items of expenditure made by her in defense of the civil action and with the costs assessed against her by the superior court in that action as an incident to the judgment. The trial court made findings, as heretofore noted, that in all that she did in defending against the civil action the respondent had acted in the performance of her duties as administratrix of the estate of Irene, had acted in good faith throughout, had been guilty of no fraudulent conduct, and as a conclusion therefrom the court in probate credited her account with the items objected to. We are not told by the record presented here what evidence touching these issues was presented to be trial court. Appellant has taken what amounts to a judgment roll appeal. We must assume that the trial court received evidence of the situation confronting the respondent and that the record before it and the evidence taken supports the court's findings. Appellant, therefore, if he is to be successful here, must show that the action taken by the court in probate was in excess of its jurisdiction. The authorities are to the contrary. It is the duty of the administrator of an estate as such to defend against a claim that part of the property found in the name of or in the hands of the decedent did not in fact belong to her unless there be circumstances from which it can be said as a matter of law that the administrator could not justify such a defense. The administrator is not bound to perform the functions of the trial court and determine matters at issue as to ownership. Whether or not an administrator who has defended has done so properly is a matter for determination by the probate court when credit for expenditures so made is asked in the administrator's accounts. Of course, property held in trust by a decedent during his lifetime is not a part of his estate. It is only property that belonged to the decedent that can be applied in satisfaction of his debts or form a portion of his estate to be distributed to his heirs. In re Estate of Sidebotham, 138 Cal.App.2d 412, 416, 291 P.2d 965. In that case the opinion quotes and approves the language found in the case of Elizalde v. Murphy, 11 Cal.App. 32, 36, 103 P. 904, wherein it was stated that notwithstanding the foregoing 'the administrator of the estate is not released from his duty to maintain the right of the estate to such property until it has been finally judicially determined that it is not the property of the estate.' As said in Elizalde v. Murphy, 11 Cal.App. at page 36, 103 P. at page 906, quoting from Elizalde v. Elizalde, 137 Cal. 634, 638, 66 P. 369, 70 P. 861: "* * * It may often happen that a personal representative takes possession of funds which may be proved to be trust funds without any knowledge that such is the fact. Not knowing the fact, it would be his duty to resist, on behalf of the heirs, legatees, and the creditors of the estate, any attempt to deprive it of a part of its assets; that is, he is bound to assume for this purpose that the trust fund constitutes a part of the assets of the estate."
Continuing, the court said: 'If Graves, as administrator, had prevailed in the action brought by the incompetent, there is no question that the fund would have remained a part of the assets of the estate, and that defendants would have been responsible for its preservation by him. If Graves had lived and continued as administrator, and the action remained pending as it does, it cannot be doubted that it would have been his duty, as administrator, on behalf of the estate, to continue to defend against the claim. Unquestionably he would have been administering the estate in respect to this fund.'
In Re Estate of Sidebotham, supra, 138 Cal.App.2d at pages 416-417, 291 P.2d at page 968, the court further said: 'This duty is part of his general duty to protect and defend the estate and to conserve its assets (20 Cal.Jur.2d 336 et seq. § 226) and if property would be lost for the estate because of his failure to defend an action his accounting may be attacked on that ground. In re Estate of McSweeney, 123 Cal.App.2d 787, 795, 268 P.2d 107. However, a representative is not required to advance his own funds for the protection of the assets of the estate, although he is entitled to reimbursement if he does so for a necessary purpose (20 Cal.Jur.2d 352 et seq. § 233). He must therefore normally use the assets of the estate for such purpose and he may assume also for said purpose that an alleged trust fund constitutes a part of the assets of the estate, until it has been finally judicially determined that it is not part of the estate, except when no defense to the existence or imposition of a trust can be made in good faith. He will be entitled to credit on his accounting in the estate for moneys properly spent in the defense of an action even if such action might finally be lost by him. Eggert v. Pacific States Savings & Loan Co., 53 Cal.App.2d 554, 127 P.2d 999. 'If the administrator has to defend in a long trial some expenses will normally be necessary and the prohibition from using any funds must mean that either there must be no active defense or the money for the defense must be advanced by the administrator or sought elsewhere. If money has been squandered that may be a ground to hold the administrator or his attorneys responsible for such action if possible, but it does not obligate them to bear the necessary costs of further proceedings.'
In Re Estate of Sidebotham the court held that where an administrator had used considerable estate funds in the defense of a civil action by which the plaintiffs sought to establish title to property inventoried in the estate, it was error upon application of the heirs and distributees for the probate court to enter an order absolutely prohibiting the further use of estate funds; that as a matter of law such an order made in that case constituted an abuse of discretion and would be set aside on that ground. Said the court, at page 418 of 138 Cal.App.2d at page 969 of 291 P.2d: '* * * The circumstances urged by respondents, that money allegedly has been squandered for unnecessarily high costs and attorneys' fees, that other defendants were defending the case anyway, that depositions and investigations had not been used in a proper manner and that further expenditure for these purposes was unnecessary might possibly justify the prohibition of the use of estate funds for certain specific purposes, or until the need of specific expenses was shown to the court, but does not justify an absolute and unrestricted prohibition as is contained in the order. '* * * In our case the court below has before authorized expenditures in advance and has now made a too stringent order forbidding such expenditures. Whether it wishes also further to decide in advance which expenditures will be proper and which not, or whether it prefers to have appellant act on his own conviction as to what is proper and review his action afterwards, is also a matter of said court's discretion.'
We think it clear in this case that the question of whether or not the court should uphold the actions of its officer in defending against the civil action brought by appellant was a matter for it to determine in the exercise of is probate jurisdiction and according as the record and the evidence before it warranted. Upon an appeal which presents nothing to us save the account, the objections thereto and the findings are conclusion of the trial court upon the issues as to the propriety of the expenditures made, the presumption must be that the court was justified in its ruling.
For the reasons given, the order appealed from is affirmed.
SCHOTTKY, J., and WARNE, J. pro tem., concur. --------------- * Opinion vacated 337 P.2d 73.