Opinion
4-6-1959
In the Matter of the ESTATE of Harry C. STAUFFER, Deceased. Anthony J. KENNEDY and Devlin Diepenbrock & Wulff, Petitioners and Respondents, v. Gladys WOLLENBERG, Residuary Legatee and Appellant. * Civ. 9505.
A. M. Mull, Jr., Clarence Pease, and Wilke & Sapunor, Sacramento, for appellant. Anthony J. Kennedy and Devlin, Diepenbrock & Wulff, Sacramento, for respondents.
In the Matter of the ESTATE of Harry C. STAUFFER, Deceased.
Anthony J. KENNEDY and Devlin Diepenbrock & Wulff, Petitioners and Respondents,
v.
Gladys WOLLENBERG, Residuary Legatee and Appellant. *
April 6, 1959.
Rehearing Denied April 30, 1959.
Hearing Granted June 3, 1959.
A. M. Mull, Jr., Clarence Pease, and Wilke & Sapunor, Sacramento, for appellant.
Anthony J. Kennedy and Devlin, Diepenbrock & Wulff, Sacramento, for respondents.
WARNE, Justice pro tem.
This is an appeal from an order fixing and directing payment of extraordinary attorney fees and costs and proportionately charging such fees to each of the heirs, legatees and beneficiaries of the will and estate of decedent.
The trial court, in conformity with the decision of this court (In re Estate of Stauffer, 142 Cal.App.2d 35, 297 P.2d 1029), entered judgment to the effect that under Item 4 of decedent's will, one Michael David Littlefield would receive a bequest of $5,000, and under Item 7 thereof appellant Gladys Wollenberg and one Jessie Snyder would take one-third of the residue of decedent's estate remaining for distribution, and as to the remainder of the residue testator died intestate.
The attorney fees allowed to respondents were for extraordinary services performed in representing the special administrator to recover property for the estate, much of which is reflected in the decision of this court in Anglo Cal. Nat. Bank of San Francisco v. Philpot, 148 Cal.App.2d 469, 306 P.2d 970. As the result of respondents' efforts, property valued at over $173,000 was recovered and became assets of said estate. The trial court found 'that without said legal services there would be no property, real or personal, in the estate of decedent; that said services created and preserved for the estate of decedent all of the real and personal property that has come into the possession of said Special Administrator'; and 'that said extraordinary legal services were performed in connection with litigation taken for the common benefit of each of the heirs, legatees and beneficiaries of the estate of decedent.' The trial court further found that $32,500 was a reasonable fee; and that the fee plus costs of $1,311.51 should be paid proportionately by the heirs, legatees and beneficiaries, and so ordered.
Appellant Wollenberg contends that any fee allowance should be preferentially a charge against the intestate portion of said estate rather than ratably charged against all the beneficiaries.
Under Item 7 of decedent's will, R. N. Philpot, Jessie Snyder and Gladys Wollenberg were the residuary legatees, share and share alike (142 Cal.App.2d 35, 40, 297 P.2d 1029), and because of fraud upon the part of Philpot, his share lapsed, the result being that a residuary legacy lapsed as to one-third thereof. Under such circumstances we feel that the rule that where a residuary legacy lapses due to the death of the legatee prior to the death of the testator, such a legacy is not residue but is estate not disposed of by the will and should be first resorted to for the payment of all demands against the estate, is likewise applicable here. As stated in Re Estate of Hall, 183 Cal. 61, 190 P. 364: 'The general rule is that property not disposed of by the will should be first resorted to for the payment of all demands against the estate. This is so for the reason that the law endeavors to carry out the intent of the testator as far as possible and, therefore, property not disposed of by the will should be so applied as to render it certain that the dispositions actually made by the testator will be effective.' See also In re Estate of Kelleher, 205 Cal. 757, 272 P. 1060; In re Estate of Traver, 145 Cal. 508, 78 P. 1058.
Appellant points out that there is no will before this court directing payment of debts, and that if there were such an express direction, section 750 of the Probate Code would apply in any event, and the intestate share would be first chargeable. We agree with appellant. The section reads: 'If the testator makes provision by his will, or designates the estate to be appropriated, for the payment of his debts, the expenses of administration, or family allowance, they must be paid according to such provision or out of the estate thus appropriated, so far as the same is sufficient. If insufficient, that portion of the estate not disposed of by the will, if any, must be appropriated for that purpose; and if that is not sufficient, the property given to residuary legatees and devisees, and thereafter all other property devised and bequeathed is liable for the same, in proportion to the value or amount of the several devises and legacies, but specific devises and legacies are exempt from such liability if it appears to the court necessary to carry into effect the intention of the testator, and there is other sufficient estate.' (Emphasis added.)
Respondents, on the other hand, contend that since their services and the costs advanced by them redounded to the benefit of the estate and to all persons interested therein, the entire estate by the application of equitable principles is the fund to be surcharged for the costs and expenses in creating it, and therefore the order appealed from should stand. We do not agree.
None of the cases cited by respondents in support of their position are in point, factually or otherwise, with the instant case. For instance, in Re Estate of Reade, 31 Cal.2d 669, 191 P.2d 745, the decedent died intestate, hence section 750 of the Probate Code was not even mentioned for the obvious reason that it is not applicable to a totally intestate estate.
Likewise, In re Estate of McDonald, 128 Cal.App.2d 719, 275 P.2d 917, is not in point since the entire estate passed by will. No mention of section 750 was made, nor was it in issue.
As for In re Estate of Keller, 134 Cal.App.2d 232, 286 P.2d 889, 890, that case is not in point either.
There the dispute concerned the difference in the construction placed by the parties upon the following provisions of the will: "First: I direct my Executor hereinafter named to pay my just debts as soon as it has funds of my estate and in hand sufficient for the purpose, and I also direct my said Executor to pay all taxes levied and assessed against my property and all inheritance taxes and estate taxes."
Under paragraph 'Fourth' he bequeathed and devised to his brothers and sisters residing in Switzerland, 20 per cent of the properties of his estate and under paragraph 'Fifth' he bequeathed and devised all the 'rest, residue and remainder' of his estate to a cousin and his wife, and their daughter residing in Modoc County, California. The appellant took the position that the paragraph numbered 'Fourth' should be interpreted to mean that the legatees and devisees thereunder were entitled to distribution of 20 per cent of the gross estate and that all the debts, costs of administration and taxes should be paid from that portion willed to the so-called residuary legatees under Paragraph 'Fifth.' The probate court disagreed with that interpretation and in the decree of distribution adopted respondents' view, which was that all debts, costs and taxes should be deducted from the gross estate and the net only should be distributed, 20 per cent to appellants and 80 per cent to respondents. This court said at pages 236 and 237 of 134 Cal.App.2d, at page 891 of 286 P.2d: 'In the will before us the draftsman specified the order in which the mandates thereof were to be carried out and first on the list, and so specified by use of the word 'First' at the beginning of the paragraph, is that the executor is to pay the testator's 'just debts' and 'all taxes levied and assessed against my property and all inheritance taxes and estate taxes.' It is not provided that these payments are to be made from any specific fund or the residue of the estate. In this connection appellant cites section 750 of the Probate Code, which, of course, is controlling if no contrary testamentary intent appears from the language of the will and if those mentioned in paragraph 'Fifth' of the will are to be considered 'residuary legatees and devisees."
This court then pointed out that 'the only direction in paragraph numbered 'First' is that the items therein mentioned are to be paid,' and that if the testator had any impelling desire to have these obligations paid from the residue or any fund other than the general corpus of his estate that could have been accomplished by the inclusion of not more than three words, such as 'from the residue.' The provision was interpreted to be 'that the items therein mentioned should be paid before there is a division of the assets.' Hence the case involved an interpretation of those provisions of testator's will. However, it held that section 750 was controlling if no contrary testamentary intent appears from the language of the will. Further the case holds in substance that a general direction to pay debts is not a specific direction to pay from specific property within the meaning of the first sentence of section 750. To do so would be in violation of the rule and reasoning in Re Estate of Hall, supra, holding that the law endeavors to carry out the intent of the testator by first charging the intestate portion.
Nor is there anything in Re Estate of Resler, 43 Cal.2d 726, 278 P.2d 1, that supports respondents' contention. This case cites In re Estate of King, 19 Cal.2d 354, 121 P.2d 716, which involved a will of decedent husband but where the surviving wife renounced her right to 'inherit' property from the estate of her husband according to the terms of said will, and on the contrary elected to take her share of the property pursuant to the rules of succession. One of the issues was as to whether the family allowance should be charged against the devisees and legatees in proportion that they respectively share in the properties, both community and separate, upon distribution. It was asserted that the entire community amount of family allowance granted to the widow is required to be paid from the community interests of the deceased and his widow. The Supreme Court did not agree with appellant. It held that property 'not disposed of by the will' by virtue of Probate Code, section 750, does not include community property to which the widow succeeded solely by virtue of her statutory one-half interest by operation of law. On the death of her husband such property belongs to her as the surviving wife. Probate Code, § 201. 'Such property never belonged to the husband and the failure of his testamentary disposition thereof could not operate to place it in the category of property 'not disposed of by the will.' [Citing cases.]' In re Estate of King, supra, 19 Cal.2d at page 363, 121 P.2d at page 722. Obviously the case has no bearing on the instant case.
In conclusion we do not feel that equitable principles can be applied here in the face of a statute which provides that the intestate portion of a decedent's estate, in the absence of testamentary intent to the contrary, is first chargeable with the payment of debts, expenses of administration, or family allowance, before the testate portion, for the same reason as stated in Lass v. Eliassen, 94 Cal.App. 175, 179, 270 P. 745, 747: 'Rules of equity cannot be intruded in matters that are plain and fully covered by positive statute. * * * Nor will a court of equity ever lend its aid to accomplish by indirection what the law or its clearly defined policy forbids to be done directly.'
The order appealed from is reversed and the cause is remanded to the probate court to enter judgment that the special administrator pay the extraordinary attorney fees, together with the costs and all other expenses, first from the intestate portion of the estate in accordance with section 750 of the Probate Code, and only if said intestate portion is insufficient shall the balance of expenses of this estate be charged proportionally to the portions of the estate to be received by the residuary beneficiaries, Snyder and appellant Wollenberg.
SCHOTTKY, J., concurs.
PEEK, Acting Presiding Justice.
I dissent. It appears to me that the sole question in this appeal comes squarely within the rule enunciated in Re Estate of Reade, 31 Cal.2d 669, 191 P.2d 745, and In re Estate of Lundell, 107 Cal.App.2d 463, 237 P.2d 62. See also In re Estate of Hendrix, 77 Cal.App.2d 647, 176 P.2d 398.
In Re Estate of Reade one of the heirs successfully contested the first and final account of the administratrix, thereby making an additional fund available for distribution. The probate court awarded to the contestant her attorney fees and costs and ordered the payment thereof from the estate. On appeal the Supreme Court, in affirming the award, said, 31 Cal.2d at pages 671 and 672, 191 P.2d at page 746: '* * * [A] plaintiff who has succeeded in protecting, preserving or increasing a fund for the benefit of himself and others may be awarded compensation from the fund for the services of his attorney. This is to compel those for whose benefit the action or proceeding was taken to bear their share of the expenses of the litigation; and this rule is equitable and just. [Citations.] 'While the probate court has no general equity jurisdiction and its jurisdiction generally is confined to the settlement of the estates of deceased persons, it does have the power to apply equitable principles in aid of its functions as a probate court. [Citation.] Here the successful contest by Mrs. Queirolo resulted in charging the administratrix in her first and final account with the additional sum of $2,654 which then became available for distribution. A fund was thus created or preserved for the benefit of all the heirs. Mrs. Queirolo has only a one-seventh interest in the estate. The application of equitable principles would seem to require that the other heirs bear their proportionate share of the expense of the litigation. We therefore conclude that the allowance of a fee for the legal services which thus redounded to the benefit of the estate and all persons interested therein was within the lawful exercise of power by the trial court (see 79 A.L.R. 523, 533), and that the order appealed from should stand * * *.'
In Re Estate of Lundell the guardian of a minor, who was a beneficiary under the will of the decedent, was successful in her objection to the award of extraordinary legal fees. Thereafter she sought to recover her costs and the fees of her attorneys in contesting the award, to which the executors objected. The probate court disallowed the objection of the executors and the fees were awarded as requested. The District Court, in sustaining the award, based its conclusion solely upon the Reade case, holding that '* * * fees for legal services rendered in preserving a common fund for the benefit of all heirs or persons interested in an estate are proper charge against such fund. Each beneficiary should bear his proportionate share of expenses of litigation as a result of which he derives a benefit.' [107 Cal.App.2d 463, 237 P.2d 63.] Thereafter a petition for hearing in the Supreme Court was denied unanimously.
In each of the cited cases the action taken, for which the extraordinary fees were awarded and charged to the estate, was for the benefit of all the heirs and persons interested in the estate. A like condition prevails in the instant case; that is, but for the efforts of respondents, real property valued at more than $170,000 would have been lost to the estate. Hence it must follow that the fees for legal services rendered in recovering such a substantial amount of property for the benefit of all heirs and persons interested in the estate, should, as in the cited cases, be paid proportionately by those who derived the benefits therefrom.
If further should be noted that section 750 of the Probate Code, which the majority says is controlling in the instant case, is not mentioned in either the Reade or Lundell cases. Each of those cases, like the one before us, involved the question of extraordinary legal services. The majority says the reason for the omission of any reference to said section, at least insofar as In re Estate of Reade is concerned, is that there the decedent died intestate. However such was not the case in Re Estate of Lundell (which is not cited in the majority opinion), since there the decedent did leave a will. Necessarily, therefore, I repeat--the question raised in this appeal is controlled by the rule expressed in the Reade and Lundell cases.
I would affirm the order of the trial court.
Rehearing denied; PEEK, Acting P. J., dissenting. --------------- * Opinion vacated 346 P.2d 748.