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Schechtman's Estate, In re

Court of Appeals of California
Aug 9, 1954
273 P.2d 553 (Cal. Ct. App. 1954)

Opinion

8-9-1954

In re SCHECHTMAN'S ESTATE. SCHECHTMAN v. SCHECHTMAN et al. Civ. 20064.

Nathan L. Schoichet, Beverly Hills, for appellant. Harry A. Franklin, Los Angeles, for respondents.


In re SCHECHTMAN'S ESTATE.
SCHECHTMAN
v.
SCHECHTMAN et al.

Aug. 9, 1954.
As Modified on Denial of Rehearing Sept. 8, 1954.
Hearing Granted Oct. 6, 1954.

Nathan L. Schoichet, Beverly Hills, for appellant.

Harry A. Franklin, Los Angeles, for respondents.

SHINN, Presiding Justice.

Frances B. Schechtman appeals from an order of the court in probate that the executors of the estate of Max L. Schechtman, deceased, need not include in the inventory as assets of the estate certain real and personal property.

Max L. Schechtman died February 10, 1952, survived by his widow, Frances B. Schechtman, and by three sons by a prior marriage, Leo Schechtman, Dr. Abraham Schechtman, and Jack Shepley. Decedent left a will which was executed June 4, 1948, naming Leo and Abraham as executors. They were appointed, qualified and filed an inventory and appraisement showing an estate valued at $3,231.72, consisting of the following four items: (1) a bank account at Union Bank and Trust Company, $751.72; (2) furniture and furnishings in decedent's home, $450; (3) a 1947 Pontiac car, $700; and (4) an undivided one-third interest in lots 18 and 19 of tract 7849, Santa Monica, $1,330.00.

Decedent by his will recognized that petitioner had a community interest in a property hereinafter referred to as parcel 12 and one known as 3814-3816 Montclair Avenue. These properties were sold by decedent. The will stated that petitioner was to have personal effects, certain furniture, any automobile owned by the testator at the time of his death and her one-half interest in any community property, the other half to go to Abraham Schechtman and Leo Schechtman. It was not stated in the will that decedent owned any separate property.

On October 15, 1952 Frances filed a petition in the matter of the estate alleging that decedent owned interests in four described pieces of real property then in the hands of Leo and his wife, Abraham and his wife, Jack Shepley and his wife, and Benjamin Schechter, a brother of decedent, and Benjamin's wife. She further alleged that these same persons and other persons unknown to her had in their possession or control money which represented proceeds from the sale of nine other parcels of real property in which decedent allegedly had interests and which were sold to third parties at various dates during a ten year period preceding decedent's death. The petitioner also alleged that the above named persons and other persons unknown to her had in their possession or control various items of real and personal property which belonged to decedent or in which he owned interests, and that the executors had failed and refused to inventory any of the aforementioned real and personal property. The prayer of the petition was that a citation issue to Abraham and Leo Schechtman, Jack Shepley and Benjamin Schechter and to various banks, trust companies, escrow and investment companies to appear and be examined as to the properties and interests of the decedent.

Pursuant to the citation the executors and Benjamin Schechter appeared. Jack Shepley, who resides in Washington, D. C., was not served with process and did not appear. After a trial which consumed nine days the court made findings with respect to the matters in issue. It was found that a bona fide dispute existed as to two bank accounts in the Union Bank and Trust Company of Los Angeles, and they were ordered included in the inventory, but it was found that as to all the other properties and claims set forth in the petition there was insufficient evidence to show color of title or claim of title in the decedent or his estate to warrant an order that the executors include any of them in the inventory. A judgment was entered accordingly.

Appellant's petition was brought under the provision of section 613 of the Probate Code which provides, inter alia, that when '* * * any person is suspected of having embezzled, concealed, smuggled or fraudulently disposed of any property of the decedent, or has in his possession or has knowledge of any deed, conveyance, bond, contract or other writing, which contains evidence of or tends to disclose the right, title, interest or claim of the decedent to any real or personal property, or any claim or demand * * * the court or judge may cite the suspected person to appear before the court, and may examine him on oath upon the matter of such complaint.' The proceeding is one for discovery of property which should be brought into the estate, and not for adjudication of title to such property.

It is a well established rule that the probate court lacks jurisdiction to try questions of title to property except as between the representative and the estate. Stevens v. Superior Court, 155 Cal. 148, 99 P. 512; Estate of Fulton, 188 Cal. 489, 205 P. 681. Where the controversy is between the estate and the representative, the jurisdiction of the probate court to try the question of title is exclusive. Bauer v. Bauer, 201 Cal. 267, 271, 256 P. 822; Teeple v. Stanley, 93 Cal.App.2d 581, 209 P.2d 628. The proper time to determine a question of title as between the representative and the estate is at the time of the final accounting. Stevens v. Superior Court, Estate of Fulton, Bauer v. Bauer, supra; Parsley v. Superior Court, 40 Cal.App.2d 446, 104 P.2d 1073; Teeple v. Stanley, supra. Jurisdiction to try such question of title is not invoked by a petition brought under section 613, Estate of Escolle, 134 Cal.App. 473, 25 P.2d 860; Koerber v. Superior Court, 57 Cal.App. 31, 206 P. 496, and an attempt to exercise such jurisdiction in the course of a discovery proceeding under this section is ineffectual.

An order in a proceeding under section 613 that the representative of the estate should or should not inventory an item of property is not a determination that the property does or does not belong to the estate. In the present case the court's order that the bank accounts be inventoried is not an adjudication that the bank accounts are estate property, and the order that the other properties and monies not be included in the inventory cannot be an adjudication that such property does not belong to the estate. These principles were accorded recognition in the conclusions of the trial court with respect to the bank accounts.

Petitioner and decedent were married April 13, 1942. Both had adult children by previous marriage. Before and after he married petitioner, the decedent earned his living by active buying, selling, improving and managing of real property. Leo estimated in his testimony that in 1942 decedent owned real property, trust deeds and cash in the aggregate value of from $70,000 to $75,000. Decedent invested his own funds when they were available to him, borrowed and repaid money, and often made investments in cooperation with members of his family and other relatives. Decedent often placed his properties or interests in the names of one or more of his sons. At or shortly before the date of his marriage to petitioner decedent owned interests in three parcels of property, his interest in each appearing of record. These three parcels were (1) an 8-unit apartment house at 412 South Cloverdale Avenue in which decedent owned a half interest, (2) a 3-story brick apartment house at 905 South Normandie Avenue, in which his interest was one-half and (3) a 16-unit apartment house at 1327 South Catalina Avenue in which decedent's interest was one-third. Shortly before marrying petitioner, the decedent conveyed his interests in the Catalina and 905 South Normandie properties to Jack and Ida Shepley without consideration. On April 13, 1942, he conveyed his interest in the Cloverdale property to Leo without consideration. There was evidence that during the ten years after his marriage decedent acquired interests, ranging in extent from one-fourth to sole ownership, in the following eleven additional properties, all but one in the city of Los Angeles:

(4) a vacant lot at 80th and Central Streets; (5) land at 7376-7384 Melrose Avenue, on which seven stores were later constructed; (6) two adjoining lots at 2863-2867 Robertson Boulevard on which three stores were later constructed; (7) two additional lots on Robertson Boulevard, acquired at about the same time; (8) an apartment house at 756 South Mariposa Street; (9) five brick stores at 7377-7383 Melrose Avenue; (10) two brick stores and four apartment units at 5020-5028 South Normandie; (11) a vacant lot at La Cienega and David Streets; (12) two adjoining vacant lots on Pico Boulevard, Santa Monica; (13) a 6-unit apartment house at 327 North Spaulding; (14) an apartment house at 3814-3816 Montclair Avenue.

All the properties which have been mentioned were listed in the petition of appellant, with the exception of the property at 327 North Spaulding. Ten of the fourteen above mentioned properties were sold to third parties between April 13, 1942 and the date of decedent's death, all at a profit which in nearly all cases was substantial. The properties which were sold were the 412 South Cloverdale and 905 South Normandie properties and those named under numbers (7) through (14) of the above list. The properties not disposed of to third parties at the date of decedent's death were the apartment house at 1327 South Catalina Avenue and the properties named under numbers (4) through (6) of the list. The record title to these four properties is at present variously in Jack Shepley, Benjamin Schechter and Abraham Schechtman and their respective wives. In the case of six of the fourteen properties the decedent's name appeared as of record as full or part owner. Three of these six properties were the properties in which decedent owned a record interest near the time of his marriage to petitioner and which interests he conveyed to one or more of his sons on or shortly before April 13, 1942. The other three properties are the Montclair property, the La Cienega and David property, and the Pico Boulevard property. Of these six properties all but the Catalina property were sold prior to decedent's death. At no time did decedent's name appear as a record owner of any of the other eight properties.

The Cloverdale and 905 South Normandie properties: The executors concede that the decedent owned half interests in these two properties. As to the properties owned by decedent at the time of his marriage the executors say they were decedent's separate property. The inventory must show decedent's separate property and the community property and so far as can be ascertained, what portion of the entire property is community property and what portion is separate property. It is not for the executors to decide that question. If decedent had an interest in property at the time of his death, it could not be ignored merely because petitioner may not have a community interest in it. However, the decedent reported in his 1943 and 1944 income tax returns his share of the profits from the sales of these properties, which was evidence that he received at least the profit part of the proceeds. Petitioner introduced no evidence tending to show that the decedent did not receive and retain his full shares of the proceeds from the sales. No facts were developed sufficient to make even a slight showing that the proceeds from the sales of the Cloverdale and Normandie properties exist as an asset of the estate.

Next to be considered is Parcel 3.

Parcel 4.

Parcel 5.

Parcel 6.

As previously stated, the court found that 'there is not sufficient title or color of title or claim of title or interest in regard to' the properties discussed above under (3), (4), (5) and (6) to warrant the court in ordering the executors to inventory them. This finding was in error.

Parcels (7) through (14) were all acquired and sold between April 13, 1942 and the date of decedent's death. As to parcels (7) through (13), it appears from the record, as was the case with parcels (1) and (2), that the petitioner has not presented or discovered any evidence that the decedent did not receive his shares of the proceeds from the sales of these properties, or that the proceeds passed from his hands in such manner as to leave any claim to them in the estate. It was reasonable to infer that some of the proceeds from the sales of these parcels were invested by decedent in parcels (4), (5) and (6), as to which, as previously developed in the discussion of these parcels, the estate appears to have some claim. Also, decedent reported his share of the profits in his income tax return in each year in which one of the properties (7 through 13) was sold. The court's determination that there was not sufficient apparent title or interest in the proceeds from the sales of parcels 7 to 13 to warrant an order that they be inventoried is supported by the evidence.

The property at 3814 Montclair Avenue, mentioned in the will as lot 3, block J, tract 4981, was sold and a trust deed taken back. Decedent owned a 37 1/2 per cent interest in this note and trust deed dated May 12, 1950 and payable at the rate of $20 per month. Petitioner succeeded to a 25 per cent interest in the note as a joint tenant. A 12 1/2 per cent interest had been acquired by decedent from one Harold Stone. If this interest was not transferred to decedent and petitioner as joint tenants it should be included in the inventory.

It also appeared during the proceedings that fifteen U. S. defense bonds of the face value of $825, not listed in the petition, had been found by petitioner in decedent's safety deposit box after his death. One bond was for $25 and was issued in 1941, and the other fourteen were issued in 1944 and 1945. The $25 bond was in the name of decedent alone, and apparently was cashed and the proceeds deposited in the estate account. The other bonds were payable to grandchildren of the decedent either on maturity or on the contingency of decedent's death. Petitioner handed the bonds to counsel for the executors, and notified them that she claimed a community interest in them. The executors' counsel then handed them to the various named beneficiaries. The executors have no duty to inventory the bonds as assets of the estate or to claim them as against the beneficiaries. Petitioner will have an opportunity to assert her rights to a community interest if they are affected by any gifts made by decedent. Fields v. Michael, 91 Cal.App.2d 443, 448, 205 P.2d 402.

As to the four properties (3 to 6) the executors contend that contrary findings would have been unjustified. Having concluded that the court was in error in holding that the several interests of decedent in the four parcels of real property, owned by decedent be not inventoried, these being parcel 3, standing in the names of Jack and Ida Shepley, parcel 4, standing in the names of Jack and Ida Shepley, parcel 5, standing in the names of Benjamin and Rose Schechter as to an undivided one-half interest, and Jack Shepley and Ida Shepley as to an undivided one-half interest, and parcel 6, standing in the names of Abraham and Rose Schechman, the order as to these parcels must be reversed. There was ample evidence that decedent made a practice of allowing his interests in real properties to stand in the names of relatives who acted in that behalf as his trustees. It is the duty of the executors to vigorously prosecute all bona fide claims on behalf of the estate to such interests. They are the only ones who would have standing in court to assert the claims of the estate. Best v. Coloneus, 56 Cal.App.2d 285, 132 P.2d 260. To excuse them from their duty would foreclose the rights of the estate to a trial before a court having jurisdiction to decide the issue. That could properly be done only in case of claims or demands against third persons that were found on fair investigation to be baseless. The claims here in question are manifestly not of that class. The court has only the duty to see that the representatives of the estate fully protect its interests. Any doubts as to the rights of the estate as respects third persons should be resolved in favor of the estate in the giving of directions to the executors regarding the prosecution of claims.

With respect to parcel 6 the court may determine on the settlement of Abraham Schechtman's accounts as executor whether he is indebted to the estate or holds in his name any interest in property which belongs to the estate. This is not true, however, with respect to the rights of Rose Schechtman.

It will be the duty of Leo Schechtman to prosecute in good faith all claims of the estate to parcel 6 standing in the names of Abraham Schechtman and his wife Rose.

All claims of the estate to an accounting by Leo and Abraham Schechtman of monies of decedent received by them will be determined upon the settlement of their accounts. It will be the duty of the executors to apply to the court for instructions whether they should prosecute a claim for an accounting of monies received from decedent or on his behalf by Jack Shepley and Ida Shepley and by Benjamin Schechter and Rose Schechter in connection with the above described real properties which stand in their respective names.

Any failure of executors to prosecute vigorously and in good faith the claims of the estate, as directed by the court, would be a sufficient cause for their removal as executors and their replacement by an administrator with will annexed.

The point has been raised that the order in question is nonappealable. We have heretofore held, tentatively, that the position is not well taken, and we now refrain from making a final decision on the point. A failure upon our part to state our views as to the merits would but add to the confusion. In indicating that certain additional property should be inventoried we merely point the way toward further proceedings which we deem would be appropriate. The questions of ownership and the merits of conflict-claims will remain open and unaffected by the trial court's order, or our opinion until they are determined in proper proceedings.

The order is reversed for further proceedings in accordance with the views herein expressed.

WOOD and VALLEE, JJ., concur. --------------- 1 As to the 8-unit apartment house located at 412 South Cloverdale Avenue, Los Angeles, the facts are that the property was acquired March 8, 1941, in decedent's name, that Leo Schechtman owned a one-half interest; that on April 13, 1942, the date of decedent's marriage to petitioner, decedent conveyed the property to Leo; that the property was sold on September 28, 1943 at a profit of $6,036.76, and that half of this gain was reported in decedent's income tax return for 1943. 2 The facts concerning the 3-story brick apartment house at 905 South Normandie Avenue, Los Angeles, known as the Riviera Apartments, are that the property was acquired on October 8, 1941, in the names of decedent and Benjamin Schechter; that shortly before his marriage to petitioner decedent conveyed his half interest to Jack and Ida Shepley; that the property was sold on April 1, 1944, at a profit of $13,992.81; and that decedent reported half of this gain in his income tax return for 1944. 3 The property at 1327 South Catalina Street: This was a 16-unit apartment house variously called the Catalina Apartments and the Arliss Apartments, was acquired prior to decedent's marriage to petitioner, and title was taken one-third in decedent's name, one-third in Leo's name and one-third in the name of Celia Feldman, a niece of decedent. At the present time record title is in Jack and Ida Shepley and the property is subject to a $25,000 encumbrance. As has been stated, shortly before his marriage to plaintiff decedent conveyed his one-third interest without consideration to Jack and Ida Shepley. On February 26, 1950 Leo conveyed his interest without consideration to Jack Shepley, (Not Ida.) In October, 1951 decedent and Leo borrowed $25,000 on the property in the name of Jack Shepley. With $13,300 of the borrowed funds decedent and Leo purchased the interest of Celia Feldman, who conveyed her one-third interest to Jack and Ida Shepley. Decedent's 1951 income tax return reported a 50 per cent interest in this property. In decedent's other tax returns during the period of his marriage to petitioner he took deductions for a proportionate share of tax and other expenses attributable to this property. Decedent paid the Los Angeles City apartment house license fee for the property in 1952. It also appeared that on several occasions he collected the apartment rentals, depositing checks to cover them in the Catalina Apartments bank account, which was one of two bank accounts ordered by the court to be inventoried in the estate. 4 A vacant lot at 80th and Central Avenue, on which there is a rented sign, was acquired on June 5, 1946 for $4,750. Title was taken in the names of Leo and his wife, who conveyed the property without consideration to Jack and Ida Shepley on April 15, 1952. The original deed to Leo was mailed to Decedent's residence and was found among his papers and effects after his death. Leo's deed to Jack Shepley bore a notation that it was to be mailed to Leo's counsel after being recorded. Decedent reported in his tax returns for 1946 through 1951, most of which were prepared by Leo, that he owned a one-half interest in this property. 5 Land on the Southeast corner of Melrose Avenue and Martel Street on which seven stores at 7376-7384 Melrose Avenue were built was acquired in September 1946 in the names of Benjamin and Rose Schechter. In 1948 Benjamin Shechter conveyed a one-half interest to Jack and Ida Shepley, apparently for no consideration. Petitioner testified that the cost of construction was $33,000. She also testified to the effect that decedent and Schechter bought the land and built the stores as partners. In his 1948 income tax return decedent reported a one-half interest in this property. The business records for the property show that decedent and Schechter participated equally in income and payment of expenses. After decedent's death Schechter commenced to pay to Jack Shepley the share which decedent had been receiving. After decedent died Schechter closed the original Melrose account and opened another in his own name. The court ordered that the original Melrose account be included in the inventory. The testimony of Leo concerning the Melrose property amounted to an acknowledgment that his father owned a one-half interest in it. He indicated that in refusing to inventory the property he was carrying out his father's wish that his sons should have his property. 6 The two lots on which three stores at 2863-2867 Robertson Boulevard were built were acquired in 1945, along with two nearby lots, in the names of Abraham Schechtman and his wife Rose. In 1950 a building accommodating three stores was constructed on the two unsold lots, at a cost of approximately $11,500. Decedent reported ownership of this building on his 1950 and 1951 income tax returns. In May, 1950, decedent had written to a nephew in Chicago, Morris Bernstein, advising him that he was 'building now on my business lot, I am on a 50 foot lot, three stores, it will cost $11,000, about $4 a square foot, * * *' that he had $4,000, that Jack and Ida Shepley would let him have $3,000 and that he would need $4,500 from the nephew. Abraham testified that $3,000 was lent to decedent by the Shepleys, that $4,500 came from the nephew as a loan 'to the family', that the latter sum had not been repaid, and that he and his wife were making sporadic interest payments to the nephew. Rose Schechtman testified that she and Abraham supplied approximately $2,670 and that decedent contributed about $900. All of the income from the Robertson stores was received by decedent until his death, whereafter the income was received and retained by Abraham.


Summaries of

Schechtman's Estate, In re

Court of Appeals of California
Aug 9, 1954
273 P.2d 553 (Cal. Ct. App. 1954)
Case details for

Schechtman's Estate, In re

Case Details

Full title:In re SCHECHTMAN'S ESTATE. SCHECHTMAN v. SCHECHTMAN et al. Civ. 20064.

Court:Court of Appeals of California

Date published: Aug 9, 1954

Citations

273 P.2d 553 (Cal. Ct. App. 1954)