Hutchinson v. Dow

4. Error in commissions and fees.

5. Alleged inadequacy of fees to appellant’s attorney.

6. The final account generally.

Second Appeal.

Did the pendency of a proceeding to determine that Mrs. Dow had forfeited her interest in the estate justify denial of partial distribution to appellant?

1. No-Gontest.

The will bequeathed to respondent wife certain personal property, and to testator’s two sons by a former marriage certain articles of personal ornament. “And I further declare that any and all securities or property that I have given or may give prior to my death to my wife or any one of my children evidenced by a transfer of such securities or property shall be conclusive evidence of their ownership, and shall not be considered a part of the Trust hereinafter created.

“Fourth: I herewith and hereby declare that all other property of every kind and character, and all the estate whereof I die possessed is separate property accumulated, owned and possessed by me prior to my present marriage, or is the increase, profits and accumulations that have been directly derived from such property, and the increase in value of securities owned by me or from the investment or reinvestment of my separate funds or property owned or possessed prior to my said marriage.”

It then states that since his marriage his only income other than that derived from his separate property has been his salary of $12,000 as president of River Farms Company of California and that the living expenses of himself and family have averaged approximately $25,000 per year. Testator devises and bequeaths to a trustee all of his estate of every description wherever situated “and however held which is or may be subject to my testamentary disposition at the time of my death” (excepting the personal property bequests above mentioned). The will sets forth the power of the trustee and the terms of the trust, primarily that the income shall be used for the joint support and benefit of appellant and respondent, with a provision that his two sons would participate if the income exceeds a certain amount annually. So far as concerns the questions here, the trust was to terminate on January 1, 1952, at which time the trust estate was to go one-third to appellant, one-third to respondent and one-sixth to each of the two sons. The no-contest clause (paragraph twenty-first)

13, 1948, on petition therefor, Mrs. Dow was granted a family-allowance of $500 per month commencing January 1, 1948, and continuing until the further order of the court. Appellant appealed ( 91 Cal.App.2d 420 [ 205 P.2d 698 ].) The order was affirmed. In 1953 appellant applied to the probate court for a termination of this allowance. She appealed from the order denying termination. ( 120 Cal.App.2d 296 [ 260 P.2d 970 ].) The reviewing court ordered the allowance terminated as of the date the motion to terminate was made. On October 5, and on November 30, 1953, Mrs. Dow applied for further family allowances. Both applications were denied. The total amount received in family allowances by Mrs. Dow is $38,500.

The probate court expressly and independently found that the legal actions above mentioned were not in any way contests or actions contemplated under paragraphs twenty-first of the will nor did they violate its terms, and that Mrs. Dow is entitled to inherit under the will. The court found that the “community property action” resulted in “three outstanding matters which clearly benefited” appellant and the estate: (a) the estate became owner of an additional 1,526% shares of River Farms having a book value of $75 per share; (b) the estate became the owner of a one-third interest in the Mayflower Mine, of the present value of $10,000; and (c) that Edgar and Gerald assigned to appellant and Mrs. Dow their right to a one-third share of the entire estate, and that neither of the sons has now any claim in the estate. The probate court found that the matter of family allowance being a statutory right, Mrs. Dow, by her various petitions for family allowance, had not violated paragraph twenty-first of the will.

While a testator is free to dispose of his property on whatever condition he wishes to impose so long as the condition is not prohibited by law or contrary to public policy, and a provision in a will providing for forfeiture of a legacy or devise in the event of -a contest of the will by a legatee or devisee is binding, and an in terrorem provision in a will is not against public policy and must be enforced as written, such a clause is to be strictly construed. (Estate of Fuller, 143 Cal.App.2d 820 , 823 [ 300 P.2d 342 ].) “Whether there has been a contest within the meaning of the language used in a will is to be determined according to the circumstances in each case.” (P. 824.) It is rather interesting that in Estate of Dow, supra, 91 Cal.App.2d 420 , appellant made the

contention that by the compromise agreement in the “community property” action Mrs. Dow had waived all rights except the right to receive under the will and contended that therefore she was not entitled to a family allowance. Appellant now claims that Mrs. Dow has no right to receive under the will. The court there held to the contrary of the contention. (P. 426.) It should be remembered that while Mrs. Dow contended that all the property of the decedent was community property she did not pursue the contention far enough to get a court determination but waived the contention and as a result of her action obtained considerable assets for the estate as well as for appellant. The “community property” action, while differing somewhat in form, was, in effect (particularly in view of the compromise effected) an action for declaratory relief similar to Colden v. Costello, 50 Cal.App.2d 363 [ 122 P.2d 959 ], where the widow brought an action in declaratory relief to determine whether her husband’s estate was separate or community property. As said in the decree of distribution in our case, “an examination of all of the pleadings, the agreement entered into by the plaintiff, defendants, and interveners, and the Findings and Judgment as entered in that case, fails to indicate that said action was anything other than an effort by said Maxine B. Dow, widow of the deceased, to enhance the assets of said Estate, by moneys and property, which she claimed actually belonged to the deceased but which was in the hands of Edgar L. Dow, Jr., et al., without consideration; ...” While the Colden case held in effect that such an action should be brought in the probate court, it definitely held (p. 373) that “applications to the court in such connection, and the offering of proof to show that all, any or no part of the estate is community propT erty, will not violate” an in terrorem provision of a will which the court characterized as (p. 365) “a comprehensive ' disinheriting’ provision” in case of contest or opposition to the plan of the will. Mrs. Dow’s action brought back into the estate property which Edgar was claiming as his own.

In the “Sutro” case the court found that testator had converted to his own use certain stock which was Mrs. Dow’s separate property. It then gave judgment against the estate for the value of that stock, $12,822.32 with interest “payable in due course of administration,” a situation similar to that in Estate of Madansky, 29 Cal.App.2d 685 [ 85 P.2d 576 ], where there was an in terrorem clause much' more compre

the particular clause or the circumstances of the particular case. In In re Kitchen, 192 Cal. 384 [ 220 P. 301 , 30 A.L.R. 1008 ], a niece legatee presented a claim against the estate upon a claimed oral contract with the testator to perform the duties of a daughter to the decedent. The in terrorem, clause was very comprehensive, inhibiting the commencement of suit in any court or to sue or “disturb” the executor by any ways or means. In Estate of Howard, 68 Cal.App.2d 9 [ 155 P.2d 841 ], the husband resisted an action against him by the executors of the wife’s estate to quiet title to property as her separate estate. The in terrorem, clause in the will was even broader than that in the Kitchen case. Among other matters it inhibited a legatee from being a party to any pleading or proceeding which would draw in question the operation of any of the provisions of the will or in any way question testatrix’ acts in making the will or any of its provisions. In Estate of Mathie, 64 Cal.App.2d 767 [ 149 P.2d 485 ], it was held that the husband’s acts in destroying his wife’s will and petitioning for letters of administration, then petitioning for probate of a will prior to the one he destroyed, and petitioning for a probate homestead alleging in bad faith that the property was community property, constituted a contest of the destroyed will, thereby invoking an in terrorem clause therein. In our case, the court expressly held that Mrs. Dow’s claims that the estate was community property were made in good faith. Significant in this connection is the statement of the then administrator with the will annexed of the Dow estate in the petition asking authority to compromise the “community property” action—“That your petitioner is well acquainted with the facts and circumstances in connection with the property concerned in the litigation; that your petitioner feels that it would be difficult to prove that the said property was the separate property of the said decedent.”

In Estate of Seipel, 130 Cal.App. 273 [ 19 P.2d 808 ], a daughter brought two actions against the executrices of a will containing a strong in terrorem clause. The first was for an accounting by them of certain shares of stock and bank deposits, and transferred to them by testatrix in her lifetime. (This action was dismissed.) The second alleged fraud of the executrices by which they possessed themselves of the stock money. It demanded that such be inventoried as assets of the estate. The executrices won out. It was held that bringing these actions did not constitute a contest of the will,

[ 113 P.2d 759 ], it was held that the probate court had power under section 685, Code of Civil Procedure, to grant leave to enforce against the estate of a judgment debtor a money judgment obtained against him more than five years prior to death, by the presentation of a claim against his estate and by bringing an action thereon if the claim is rejected. It would be an idle and unnecessary act to require a creditor holding a judgment against an estate, which judgment can only be paid in course of administration, to petition the probate court before the expiration of a five year period to reallow his claim which section 730, Probate Code, says his judgment has conclusively established. The action of the probate court in approving the Johnson fourth account, the recognition of the judgment against the estate in Estate of Dow, supra, 91 Cal.App.2d 420 , the order in Estate of Dow, supra, 120 Cal.App.2d 296 , 300, and the order in the decree of distribution requiring payment of the judgment, would, if such action were necessary, constitute the recognition of the claim discussed in the Katz case, supra.

4. Commissions and Fees.

The decree allows Mrs. Dow’s statutory commissions in the sum of $2,058.14. She had received $1,500 in 1946, making her total commissions $3,558.14. Appellant contends that included in the base of estate assets upon which these commissions and the attorney’s commissions in equal amount were figured was a sum of $186,324.99 gross value of a hypothecated partnership interest, which after liquidation by the surviving partner netted the estate only $10,000. All parties concede that only the latter sum could be considered. An examination of the record demonstrates that appellant is in error. The commissions were based only upon moneys accounted for and the valuation of the River Farms stock and the Mayflower Mine.

Appellant’s contention that the commissions allowed Mrs. Dow fail by $294.90 to credit prorated commissions theretofore paid her predecessors is correct, and the amount payable to her should be reduced accordingly.

The valuation of the River Farms stock upon which the commissions were based is $45 per share. Appellant’s contention that the evidence does not support that valuation is not well founded. The mere fact that the offer to purchase at that price was for only 1,000 shares, does not determine that the balance of the stock in view of all the other evidence upon the subject is not worth an equal amount per share.

See Dow v. Superior Court, supra, 140 Cal.App.2d 399 , 406, stating that the trial court found that the River Farms stock was “readily salable” at not less than $45 per share.

The court allowed Mrs. Dow $5,000 finding that during her administration of the estate she had “performed further extraordinary services, consisting of many vital problems in connection with said Estate, covering a period of over seventeen (17) years ...” “ ‘The allowance of extraordinary fees is a matter of discretion with the trial court and is not to be interfered with on appeal except for abuse. Such discretion not only invests the trial court with the power to determine whether the character of the services is such as to warrant extra compensation, but to determine the amount. ’ (Estate of Scherer, 58 Cal.App.2d 133 , 142 [ 136 P.2d 103 ].) ” (Estate of Raphael, 128 Cal.App.2d 92 , 98-99 [ 274 P.2d 880 ].)

One item of Mrs. Dow’s services we pointed out in Estate of Dow, supra, 91 Cal.App.2d 420 , 425: “In 1946, Mrs. Dow succeeded in settling claims against the estate amounting to around $18,000 for a sum of around $4,000.” The probate court knew, too, the entire history of the estate and the contentions of appellant. (See Estate of Raphael, supra, 128 Cal.App.2d at p. 99 for effect of such knowledge.) Without detailing the services rendered (Mrs. Dow’s testimony covered many pages of transcript, most of which detailed her services) we think the record fails to disclose that the court abused its discretion in making this allowance.

The court allowed the administratrix’ present attorneys $2,500 for extraordinary services since their appointment in December, 1953. This raises a very serious question. In the listing of these services made by the late J. Oscar Gold-stein it appears that most of the services rendered were for Mrs. Dow personally and not for the estate. His services as detailed seem to fall into three categories: (1) Services rendered for Mrs. Dow personally. In this category are the following which he conceded at the hearing did not entitle him to fees from the estate: his appearance in the family allowance matters and his appearance on a petition of appellant for instructions to the administrator. His conferences with appellant’s attorneys were, as he stated, for the purpose of trying to effect a compromise or settlement in the bitter warfare between mother and daughter. (2) Services which were primarily for Mrs. Dow’s interests with possibly a pro forma appearance on behalf of the estate. These were appearances in opposition to appellant’s petition for partial distribution

moneys on hand sufficient to pay the claims and charges allowed in the decree, taxes, closing expenses, etc., sufficient stock will have to be sold to do so. The administratrix should immediately determine this question and withhold only such stock, if any, as may be necessary for that purpose and distribute the balance as provided in the decree, half to herself and half to appellant. There is no reason for any delay in this respect.

Second Appeal

Appellant petitioned the probate court for a partial distribution to her of 2,000 of the 4,958% shares of River Farms Company stock belonging to the estate, as well as for other relief. Mrs. Dow answered, asking for partial distribution to her and appellant of 1,000 shares each. She then filed a supplemental answer denying appellant’s right to any share in the estate because of alleged violation by appellant of the no-contest clause of decedent’s will. After a hearing, the court found against Mrs. Dow’s charges that appellant had violated the provisions of the will but refused partial distribution to either party. Appellant appeals from those portions of the order which denied her distribution of 2,000 shares “and, in the alternative, one thousand (1,000) shares” of Biver Farms stock. At the time of the hearing there was then pending a petition by appellant to determine the persons entitled to distribution of the estate, the main purpose of which petition was to have determined appellant’s contention that Mrs. Dow had violated the no-contest clause of the will. The sole question here is whether the pendency of that proceeding required the denial of appellant’s petition for partial distribution.

Findings.

The court found “That the condition of said estate is such that partial distribution of two thousand (2,000) shares of the capital stock of River Farms Company of California . . . may be had without injury to any person interested in said estate, provided, however, that said shares were distributed equally and between petitioner and said administratrix,” but denied partial distribution for the reason “That the proceedings upon . . . petition for an order determining the persons entitled to distribution of the above-entitled estate . . . cannot be immediately heard, concluded and determined, and the pendence of said proceedings prevents any partial distribution to Maxine B. Dow as a legatee under said

will, or otherwise, at this time and until the determination of the issues presented . . . for this reason, and not otherwise, the Court deems it improper to order partial distribution of any asset of said estate to petitioner herein at this date. ’ ’

Partial Distribution.

Inasmuch as the court found that distribution of 2,000 shares could have been had without injury to the estate, and that “the assets of said estate remaining in the custody of said administratrix after distribution of said two thousand (2,000) shares of said stock, if had equally between petitioner and said administratrix, are sufficient to satisfy all claims, demands, family allowances and costs of administration heretofore incurred or necessarily to be incurred in the future pending the closing of said administration and, after satisfaction of the same, to satisfy any and all legacies, if any, to which said Maxine B. Dow shall be entitled under said will,” the court should have distributed 1,000 shares to appellant. (See Estate of Stephenson, 65 Cal.App.2d 120 , 123, 124 [ 150 P.2d 222 ].) Under the will and the assignments, the entire estate is to be divided between appellant and Mrs. Dow. If Mrs. Dow had forfeited her right to share in the estate that share would have gone to appellant. Under any situation appellant was entitled to such portion of her half of the estate as could safely be distributed regardless of what happened to Mrs. Dow’s half. Appellant was entitled to a partial distribution of such portion of her interest as could be distributed without injury to the estate itself or persons interested in it. (See Estate of Ross, 180 Cal. 643 , 648 [ 182 P. 755 ], and Estate of Stephenson, supra, 65 Cal.App.2d 120 , 124.) The court found that distribution to her of 1,000 shares would not have caused such injury. Therefore it should have been made. The court felt and the record shows that a distribution to her of 2,000 shares might have left the estate in such situation that, if Mrs. Dow had not forfeited her interest, that interest might be required to bear more than its fair share of the debts and charges of the estate. However, such fact would not justify the refusal of 1,000 shares to appellant, as the condition of the estate as well as the court’s findings show the distribution of that number of shares could safely be made.

As we are herein affirming the decree of distribution, and therefore both appellant and Mrs. Dow are immediately