Stiebel v. Roberts

Charles H. Roberts died on August 11, 1933, leaving a holographic will containing the following bequest to his wife Elizabeth Clare Roberts: “After the payment of my just and lawful debts, I give, devise and bequeath to my wife, Elizabeth Clare Roberts, Two Hundred Dollars ($200.00) per month for her natural life out of the rents and receipts of my estate. This Two Hundred Dollars ($200.00) must be paid first, then the children get theirs.” The will also gave a life interest in 5/12 of the estate to Oliver James Roberts and a life interest in 3/12 to Ethel E. Stiebel, children of a former marriage of the testator, with remainder in each case to the children of the life tenant. The remaining 4/12 of the estate was given to the children of two predeceased daughters of the testator. Elizabeth Clare Roberts, the testator’s widow, and Ethel E. Stiebel, his daughter, were appointed executrices under the will. On October 10, 1934, the probate court set aside out of community property, as a probate homestead for the widow, a lot on which were located seven bungalows, six of them rented. The validity of this order was contested in a proceeding between the parties under sections 1080-1082 of the Probate Code to determine heir-ship. The judgment in that proceeding, which became final, held that the order setting aside the homestead was valid;

The executrices filed a first account in 1934, which was settled. The amended second account and the third and final account were consolidated. In the same proceedings objections were raised to both accounts and the distribution of the estate was litigated. The probate court entered its decree of distribution and settlement of the accounts. Contestants appeal from this decree.

Appellants contend that the will reveals the testator ’s intention to dispose of all the property in which he had any interest, including the community property; that the widow was therefore put to an election to take her interest in the community property under the statute or to take under the will; and that by claiming a probate homestead in the community property, she elected to take her share in the community property under the statute and cannot take under the will. This question is not open on this appeal, however, for it was rendered res judicata by the final judgment in the proceeding between the parties to determine heirship. That judgment established the right of the widow to the probate homestead set aside for her as part of the community property and her right upon the distribution of the estate to receive her share in the community property in addition to her bequest under the will, and determined conclusively the issue now raised whether or not it was then expressly raised. (Panos v. Great Western Packing Co., 21 Cal.2d 636 , 638 [ 134 P.2d 242 ]; Bernhard v. Bank of America, 19 Cal.2d 807 , 810 [ 122

Appellants contend, however, that the question whether a surviving spouse is put to an election must be left open until the time of distribution. No such rule was pronounced in Colden v. Costello, supra; Estate of McCarthy, 127 Cal.App. 80 , 85 [ 15 P.2d 223 ]; or Estate of Dunphy, 147 Cal. 95 , 104 [ 81 P. 315 ], on which appellants rely. These cases hold simply that if a widow is put to an election, she need not decide until the estate is to be distributed whether she wishes to claim her share in the community property or the benefits provided for her in the will. If she reserves her decision, the court will make alternative provisions in the interim for the distribution of the estate. (Estate of Dunphy, supra, 104.) In the present case the court determined that the widow could claim both her share in the community property and the bequest left her under the will, and it was therefore unnecessary for the widow to make a choice,

Appellants contend that the widow has no right to the family allowance of $100 monthly granted her by an order of the probate court on the grounds that the bequest of $200 monthly from the date of the death of the testator was in lieu of a family allowance, and that in any event she was not entitled to a family allowance for a period longer than three years within which the estate would have been closed but for her allegedly improper conduct in delaying the administration of the estate. The merits of these contentions cannot be determined in the present proceeding, for the order of the probate court granting the family allowance was neither appealed from nor modified. The order was made before the inventory was filed and was therefore subject not only to appeal (Prob. Code, § 1240), but to modification by the court after the inventory was filed. (Prob. Code, § 681.) Having failed to take an appeal within the time prescribed or to petition for the modification of the order after the filing of the inventory, appellants cannot attack the order collaterally in the present proceeding. (Estate of Nelson, 167 Cal. 321 , 324-325 [ 139 P. 692 ]; Estate of Monge, 25 Cal.App.2d 235 [ 77 P.2d 290 ]; Estate of Brown, 54 Cal.App.2d 575 , 581 [ 129 P.2d 713 , 130 P.2d 188 ]; see 11A Cal.Jur. 542.)

Appellants question the right of the widow to any part of the executors’ commissions upon the ground that she acted to the disadvantage of the estate. It is settled, however, that an executor does not lose his right to the statutory compensation because he is guilty of mismanagement of the estate. He “should be charged with losses resulting from his default or neglect, and allowed his commissions.” (Estate of Carver, 123 Cal. 102 , 105 [ 55 P. 770 ]; Estate of Goodrich, 6 Cal.App. 730 , 733 [ 93 P. 121 ]; 3 Woerner, Administration (3d ed.) § 526.) The statutes in some states have established a different rule. (See 83 A.L.R. 726 ; Woerner, ibid.). As to the division of the statutory compensation between the executrices “according to the services actually rendered by each” (Prob. Code, § 901), the probate court exercised its discretion, which cannot be disturbed on appeal in the absence of a showing that the court abused its power.

Recurrent payments were made to meet interest and

While the lower court rightly refused to uphold the foregoing contentions, the judgment must be reversed because it erred in also refusing to uphold certain other contentions advanced by appellants.

It was held in the proceeding to determine heirship that the widow’s bequest was one of income. Appellants contend that the probate court should have computed the income available to meet the widow’s bequest on the basis of an annual accounting period, deducting the expenses of such a period from the gross income thereof. If on such a basis the resulting net income was less than the $2,400 required to meet the monthly payments, the deficiency could not be made up out of the net income of another accounting period. The probate court computed the net income as a whole for a period of 113 months, the period covered by the amended second account, and determined that the amount arrived at after certain deductions was the “balance of the net income available for payment of said bequest.” The widow’s bequest, as one of income, was to be met by the net income of the estate. Unlike the recipient of an annuity (Prob. Code, § 161(3)) she was entitled to the periodic payments specified in the will only insofar as there was income to meet them. (Estate of Brown, 143 Cal. 450 , 455 [ 77 P. 160 ]; Estate of Bourn, 25 Cal.App.2d 590 , 599 [ 78 P.2d 193 ]; Estate of Oliver, 21 Cal.App.2d 106 , 108 [ 68 P.2d 735 ]; see 2 Cal.Jur. 78; 2 Am.Jur. 824; 20 Words and Phrases, 465; 109 A.L.R. 717 .) The amount of net income available depends on what period serves as the basis for computing the gross income and expenses. The testator may himself provide for the basis of computation. It is settled in this state that in absence of such a provision in a testamentary trust the income

Appellants also attack the finding of the probate court: “That in order to pay expenses of administration, debts and other principal payments, it has been necessary for said executrices to use and apply the income receipts from said estate for such purposes. That the total amount of principal expenditures made have exceeded the total amount of principal receipts or sums available therefor as of November 17, 1943, by the sum of $11,528.70 which sum has been paid out of the net income receipts of said estate which would otherwise have been distributable to Elizabeth Clare Roberts. . . .” Under these circumstances, however, the income that was applied to expenses chargeable to corpus would not necessarily be distributable to the widow, for if upon computation of the annual net income, the income for any period exceeded the $2,400 required for the widow’s bequest, the excess would be distributable to the other beneficiaries interested in the income.

Appellants contend that an amount withdrawn by the widow on her bequest during the period covered by the first amended account was not met by the income of that period. Respondents contend that this question is not open in the present proceeding, on the ground that the payment on the bequest was ascertainable from the account and the propriety thereof was conclusively determined by the final order settling the account. An order settling an account binds those interested in the estate to the propriety as well as to the occurrence of the receipts and disbursements listed. (Estate of

Appellants question 'the probate court’s determination that certain extraordinary expenses for the apartment house are chargeable to corpus. The probate court found: “That there has been expended ... in addition to the ordinary replacements and repairs, the following sums, to wit: 1. For a new roof . . . $220.00. 2. For new coils on water heaters . . . $150.00. 3. For painting and renovating Robert Arms Apts. $950.00. 4. For new refrigerators $466.07. That each and all of said expenditures were of an unusual and extraordinary nature beyond the scope of ordinary operation and maintenance and which tended to increase the value of said apartment house. That said expenditures are properly

In the present case, the evidence as to these expenses did not relate to the question whether the repairs and replacements in question were urgent when the estate was established. If they were, the expenditure for these extraordinary repairs and replacements are chargeable to corpus. If the property was in tenantable condition when the executrices took office, the expenses should be charged to income. The question then arises, however, how such extraordinary expenses, ultimately chargeable to income, should be charged when the benefits of the repairs and replacements are to extend over several accounting periods. “It is a generally accepted principle of accounting that, where practicable, expenses and costs which are a charge against earnings of more than one period should be apportioned equitably to the specific periods which derive the benefit. . . . From the standpoint of good accounting practice, there is no option as to how items should be charged when the benefits therefrom clearly aid or are reasonably expected to aid subsequent periods.” (Montgomery, Auditing (6th ed.), p. 246.) This principle is given specific application in the Restatement of Trusts, section 233, comment l: “If the . . . probable life of the improvements is limited in duration, although the cost of the improvements is payable out of principal, the trustee is under a duty to the beneficiary entitled in remainder to amortize the cost of such improvements out of income, in accordance with such reasonable plan as he may adopt. . . . The result is that if the trust does not terminate before the end of the probable life of ¡the

The judgment is reversed.

Gibson, C. J., Shenk, J., Edmonds, J., Carter, J., Schauer, J., and Spence, J., concurred.