Byrne v. Harvey

Plaintiffs appeal from a judgment of dismissal entered after the sustaining without leave to amend of a demurrer to their second amended complaint.

The genesis of the present dispute is found among certain competing claims to a portion of the remainder of a trust created under the terms of the will of one Anne McNally Liddle. According to such will which was admitted to probate, the testatrix created a trust in 1,000 shares of the capital stock of California Portland Cement Company for the benefit of her sister Florence McNally during the latter’s lifetime with the direction that upon the death of such beneficiary, the trustees, inter alia, should distribute 150 shares of the remainder to Edward I. Coffey, a San Francisco attorney. Both Mr. Coffey and his wife Kathleen Ann Coffey predeceased Florence McNally and, upon the death of the last named

We have alluded to the foregoing matters solely to place the issues of this appeal in their proper perspective. As we shall point out, much of what we have just said and other considerations to be hereafter mentioned, are properly cognizable herein as subjects of judicial notice. Preliminarily we observe that in our determination of the questions presented herein, we may judicially notice within the limits and for the purpose hereinafter explained, certain pertinent parts of the following: the probate proceedings had upon the administration of the Estate of Edward I. Coffey, Deceased (No. 94205) and of the Estate of Kathleen Ann Coffey, alias, Deceased (No. 130814) in the Superior Court of the City and County of San Francisco; the proceedings and opinion in the First District Court of Appeal in the case of Estate of Coffey (1958) 161 Cal.App.2d 259 [ 326 P.2d 511 ] ; and the proceedings and opinion in the Second District Court of Appeal in the Estate of Liddle (1958) 162 Cal.App.2d 7 [ 328 P.2d 35 ],

Before discussing the problems at hand, we set forth a short chronology: On October 11, 1942, Anne McNally Liddle died. Proceedings on the administration of her estate and testamentary trusts were had in the Pasadena Department of the Superior Court of Los Angeles County. The parties herein have referred to such forum as the “Pasadena Court”; to avoid confusion we will do the same. On June 20, 1943, Edward I. Coffey died; on July 27, 1947, his wife Kathleen died. Both died intestate and, as we have indicated above, probate proceedings pertaining to the estates of both of them were had in the Superior Court of the City and County of San Francisco. On April 4, 1953, Florence McNally, the

It is further alleged: that plaintiffs, through their attorneys, “entered into a written agreement of compromise with the defendants James W. Harvey, as administrator . . . [of both estates] whereby among other things said defendants James W. Harvey acting as administrator of both said estates agreed in consideration of the sum of $20,000 thereafter to be paid to him from the said Diddle trust fund to dismiss their petition filed by them in the Diddle Estate in which they claimed adversely to these plaintiffs to be entitled to the trust funds created by the said Anne McNally Diddle”; [t]hat said agreement was in writing and duly signed by defendants James W. Harvey, individually and as administrator” of both estates and by plaintiffs’ attorneys and “that a true copy of said agreement is attached hereto marked Exhibit A and

At the outset it is obvious that the letter of March 28, 1955, was directed to and accepted by the defendant in his representative capacity as administrator of the estates of Mr. and Mrs. Coffey and covered various acts done and to be done by the defendant in such capacity. References to “your petition against the Liddle Estate” and “your Pasadena petition” in the second and fifth paragraphs mean the petition filed by the defendant as administrator claiming the remainder of the Liddle trust for the above two estates. The entire tenor of the agreement—the dismissal of the Pasadena petition, the approval of the compromise in both Coffey estates, the provision for the payment of outstanding claims against the estate of Edward I. Coffey, the allocation of the $20,000 between the two Coffey estates, the provision restricting payment of the compensation of the defendant and Mr. McGorty as attorney for the defendant as administrator—leaves no room for any doubt that the agreement in question was an agreement of the defendant solely in his representative capacity. Indeed, as we have already set forth above, the plaintiffs themselves allege that they entered into the agreement in question with the defendant “as administrator of the estates of Edward I. Coffey, deceased, and Kathleen Ann Coffey, deceased . . .” (emphasis added) and that “said defendants James W. Har

It is well established that “as a general proposition the only obligations which an executor or administrator may create against an estate are those which are authorized by the will of decedent or by statute.” (Moss v. Boyle (1941) 44 Cal. App.2d 410 , 413 [ 112 P.2d 657 ] ; First Nat. Trust & Sav. Bank v. Industrial Acc. Com. (1931) 213 Cal. 322 , 325 [ 2 P.2d 347 , 78 A.L.R. 1324 ] ; Sterrett v. Barker (1897) 119 Cal. 492 , 494 [51P. 695].) The representative cannot, by virtue of his general powers as such, make any contract which will be binding upon the estate or create any liability against the deceased or the estate, even though such contract is made for the benefit of the estate and the executor or administrator is described therein in his representative capacity. (First Nat. Trust & Sav. Bank. v. Industrial Acc. Com., supra.) It is equally well established, as a necessary corollary to the foregoing propositions, that an executor or administrator, unless so authorized by the will of the decedent or by statute, is personally liable on the contracts made by him unless he shall “avoid personal liability by special agreement with the creditor for the latter to expect payment only from the estate. ’’ (Moss v. Boyle, supra; Sterrett v. Barker, supra; First Nat. Trust & Sav. Bank v. Industrial Acc. Com., supra; Maxon v. Jones (1900) 128 Cal. 77 , 81 [ 60 P. 516 ].) However, although the executor or administrator is personally liable, he may be reimbursed out of the assets of the estate, if his expenditure is found to be a necessary one. (First Nat. Trust & Sav. Bank v. Industrial Acc. Corn., supra; Moss v. Boyle, supra.)

In support of their proposition that the defendant is individually liable, the plaintiffs rely on the Sterrett, Moss and Maxon cases, supra, as well as on Dwinelle v. Henriquez (1851) 1 Cal. 387 , Lowrey v. Rego (1944) 65 Cal.App.2d 16 [ 149 P.2d 706 ] and Henderson v. Riggles (1930) 110 Cal.App. 320 [ 294 P. 31 ]. It is not necessary to review these cases in detail. All of them affirm the nonresponsibility of the estate and the individual liability of the representative where the latter acts by virtue of his general powers and not under the authority of

The record in the instant case discloses the following additional facts: that on March 21, 1956, in the estates of Edward I. Coffey and Kathleen Ann Coffey, the San Francisco probate court made a second order entitled “Instructions to Administrator”; that such order was made upon the petition of the defendant as administrator and after a hearing at which the Byrne claimants appeared by their present counsel and the Keating claimants, the O’Connell claimants and claimant Margaret Coffey appeared by their respective counsel; that, according to the recitals of such order, present counsel for the plaintiffs herein (Byrne claimants) filed a demurrer and objections to the above petition, and also presented to the probate court reporters’ transcripts of certain proceedings before such court on the hearing of the petition to compromise claims on May 1955 and of the proceedings in the Pasadena court on June 3, 1955; that the court found that the proposed compromise authorized by it on May 31, 1955, had “not been effected or completed,” that no determination had been made by the Pasadena court or any other court as to the persons entitled to the Diddle trust remainder, that the matter had been set for hearing before the Pasadena court on March 23, 1956, that more than nine and one-half months had elapsed since the court’s last order and “because of the uncertainty of the rights” of the Byrne claimants and the O’Connell claimants, “the proposed compromise could not be completed,” and that since the court’s first order on May 31, 1955, “new and additional facts have arisen which indicate it is not now for the best interests of the two above-entitled Estates and the persons interested therein to effect the proposed compromise . . . but that it is for the best interests of the said Estates that the Administrator exercise all his rights under the law to . . . press the claims of said Estates to the Diddle Trust . . . ”; that by the order of March 21, 1956, the administrator was thereupon instructed by the court “ [t]hat the order of May 31, 1955, . . . neither enlarged nor abrogated the regular powers of the Administrator of the Estates, but merely afforded him additional protection from liability in the event he should effect the compromise,” and that in view of the above stated finding, the administrator was instructed and authorized “to do whatever he, in his discretion, may determine to be to the best interests” of the Coffey estates in connection with the claims to the Diddle trust and authorized to prosecute his

Upon appeal taken from the above order of March 21, 1956, by plaintiffs herein and others, Division Two of this court, on June 11, 1958, in the Estate of Coffey, supra, 161 Cal.App.2d 259 , held that the first order of May 31, 1955, authorizing the compromise, even though final, created no vested rights in favor of the Byrne claimants, plaintiffs herein, stating: “We think that the order of March 21, 1956, was a proper one and should be affirmed. ... The order of May 31, 1955, was based on Probate Code, sections 578 and 718.5. Under these sections, the probate court has power only to approve or authorize a compromise. The language of both of these sections is permissive. These statutes neither enlarge nor abrogate the common law power of the administrator to enter into compromise agreements but only afford additional protection from liability. (Estate of Lucas, supra, 23 Cal.2d 454 , 464 and 465.) . . . The record of the hearing on June 3, 1955, clearly indicates that both sides understood the nature of the order of May 31, 1955. Appellants now maintain that the order created vested rights in their favor. It is clear that an order merely authorizing a compromise, even though final, cannot create vested rights. Rather, it would appear that no rights are created until the compromise agreement is executed. For the various reasons set forth in the petition for instructions, the compromise was never completed.” (161 Cal.App.2d at pp. 264, 265.)

At this point we also take cognizance of the following subsequent developments as disclosed by the opinion of the Second District Court of Appeal filed on July 7, 1958, in the Estate of Liddle ( 162 Cal.App.2d 7 [ 328 P.2d 35 ]) : the petitions claiming the remainder of the Liddle trust which were filed by the Byrne claimants, Mr. Harvey for the Coffey estates and the Keating claimants (heirs of Mrs. Coffey) were heard together, after which the Pasadena court rendered its decree distributing the remainder to the Byrne claimants as the only heirs at law of Edward I. Coffey and therefore entitled to his share of the trust. Upon appeal, the District Court of Appeal held that this was error and that the sole heir at law of Mr. Coffey was his wife Kathleen. It was further held that Mrs. Coffey’s share must go to Mr. Harvey, her administrator, subject to administration in her estate rather than directly to her heirs, the Keating claimants. (162 Cal.App.2d at pp. 20-21.) The court

The foregoing facts and circumstances vividly expose the defective character of the pleading before us. In their light we are no longer presented with the bare allegation, itself of dubious factual value, that the defendant failed and refused to perform on his side the agreement declared upon. In passing upon the sufficiency of the second amended complaint, we now take into consideration, among others, the following salient facts appearing above: that the defendant having entered into the agreement in question, subject to approval of the court by which he was appointed (as well as subject to other conditions not presently considered), obtained such approval by an order of May 31, 1955, pursuant to sections 578 and 718.5 of the Probate Code; that the compromise, so authorized, was never effected or completed; that upon findings detailed above to the general effect that the compromise was no longer for the best interests of the Coffey estates but that it was for their best interests to press the claims to the Liddle trust, the same court on March 21, 1956, among other things, authorized the defendant to prosecute such claims without restriction by reason of the first order; that, as decided in the Estate of Coffey, supra, 161 Cal.App.2d 259 , these plaintiffs had no vested rights in the first order of May 31, 1955, and the second order of March 21, 1956, was a proper one; and that, as appears from the Estate of Liddle, supra, 162 Cal.App.2d 7 , the defendant as administrator, in performance of his duties and presumably in accordance with the above instructions, pressed the claims of the Coffey estates to the Liddle trust and was successful in securing the property.

The net effect of the foregoing is that the probate court, having jurisdiction of the Coffey estates and supervision over the acts of their representative, vacated and withdrew its authorization of the compromise and instructed the defendant as administrator that he was authorized to press the claims of the estates against the Liddle trust. It is implicit that the court’s approval of the agreement be predicated upon the “best interest of the estate” or the “advantage” thereof to

It is defendant’s position that the problem before us is governed by the above rule and that upon our taking judicial notice of certain related proceedings in this and other courts, it becomes evident that certain conditions and events prescribed by the agreement and indispensable to the accrual of defendant’s duty to perform, never did occur.

It is plaintiffs’ position, on the other hand, that the defendant was bound to perform all of the acts underlying the above conditions, thereby effectuating their occurrence and that by his failure to do so and his frustrating the occurrence of the conditions, he committed a breach. Plaintiffs argue that the problem confronting us is governed by the familiar rule that

We turn to conditions 2 and 3 of the agreement. By its terms the agreement is subject to “Pasadena Court approval of the compromise in the Liddle Estate. ’ ’ Through the operation of the concluding provision of the letter, the agreement “shall be without prejudice to either party” if the approval of the Pasadena court were not obtained. In plain language, this means that neither party is bound by the agreement if it is not so approved. Nowhere does the agreement by its terms impose on the defendant the duty of securing such approval.

On oral argument before us, counsel for the plaintiffs maintained that the agreement should nevertheless be interpreted as imposing such duty upon the defendant. As we have pointed out, the plaintiffs chose to plead the agreement in haec verba by attaching a copy and incorporating the same by proper reference, thereby adopting the recitals of the agreement as direct allegations. (See Holly Sugar Corp. v. Johnson, supra, 18 Cal.2d 218 and other authorities, supra.) If the plaintiffs’ position on the agreement was that the provision dealing with Pasadena court approval was ambiguous and should be interpreted as they now urge, then they should have put some definite construction upon it by appropriate averment. (Lambert v. Haskell, supra, 80 Cal. 611 , 613; Bates v. Daley’s, Inc. (1935) 5 Cal.App.2d 95 , 101 [ 42 P.2d 706 ].) This they did not do. In our view, the agreement does not charge the defendant with the duty of obtaining Pasadena court approval. Even assuming for the sake of argument, but without conceding, that it may be ambiguous in the above respect, nevertheless the agreement was a letter prepared by plaintiffs’ counsel and should therefore be interpreted most strongly against the plaintiffs. (Civ. Code, § 1654; Miranda v. Miranda (1947) 81 Cal.App.2d 61 , 66 [ 183 P.2d 61 ].)

We are of the opinion that the approval of the agreement by the Pasadena court was therefore “an event which must

The plaintiffs argued before us that the Pasadena court deferred its approval and was prepared to give a conditional approval but that the defendant, although accepting this situation, subsequently frustrated and “sabotaged” the agreement. The defendant on the other hand argues that these same proceedings show that no approval of the Pasadena court was ever obtained and that he was not responsible for such lack of it.

From the facts and matters pertaining to the Liddle estate which we have already noted, we are persuaded that the Pasadena court never approved the agreement of compromise and that even if the general tenor of its remarks on June 3, 1955, indicated a conditional approval, the condition which the court mentioned, namely that either the Byrne or O’Connel claimants first establish their right to the Liddle trust remainder before court approval never occured, since the Second District Court of Appeal in the Estate of Liddle, supra, held that none of these claimants had established their right to the property.

This leads us to a brief consideration of the third condition of the agreement, set forth at length above, and dealing with the signing of the agreement by other heirs. After reciting that the agreement shall be effectual as to the Byrne claimants, this provision states that the “agreement shall be of no force and effect should other qualifying heirs refuse to enter into this agreement or proposed compromise prior to court approval thereof.” It is not indicated what is meant by “qualifying” heirs and the pleader has placed no construction whatsoever on such word or for that matter on any part of such clause, by appropriate averment. From the existence of endorsements for the O’Connell and McCrohan heirs and for Margaret Coffey, we think that the provision can be reasonably construed to mean other claimants similar to the above and having some colorable claim based on relationship to Mr. or Mrs. Coffey. It is clear to us that the Keating claimants, relatives of Mrs. Coffey, fall within this group and, as the opinion in the Estate of Liddle, supra, indicates, by prosecuting their claims to the Liddle trust independently and not signing, joining in or consenting to the agreement of compromise, these heirs declined and there

Apart from our first conclusion as to the insufficiency of the second amended complaint and assuming arguendo that the defendant may be individually liable under the instant agreement, it nevertheless appears that the agreement imposes such liability only if the following conditions are met: first, that the agreement is approved by the Pasadena court; and, secondly, that no other qualifying heirs have refused to enter into it. It was incumbent upon the plaintiff to allege, in the first instance, that such approval was obtained, or allege a valid excuse for the lack of such approval; and in the second instance to allege that no such refusal took place, or allege a valid excuse for such refusal. (Mitchell v. Green, supra, 110 Cal.App. 259 , 264; 2 Witkin, Cal. Procedure, p. 1237.) Such excuse might rest upon an appropriate averment that the approval in the one case was prevented, and the refusal, in the other, was caused, by the defendant. However, as we have pointed out, there is no allegation that such approval was obtained or so prevented from being obtained, and no allegation that no heirs refused to enter into the agreement or that such heirs were caused by the defendant to so refuse. Therefore, the second amended complaint failed to allege facts sufficient to state a cause of action for the above reasons also.

The above defects appear irreparable and fatal to the plaintiffs’ cause when considered in the light of the facts and matters of which we have taken judicial notice above. These establish that there was eventually no approval of the San Francisco probate court, prior approval having been vacated by said court; that there was no Pasadena court approval or at the best a conditional approval which was dissolved by the decision, in the Estate of Liddle, supra, 162 Cal.App.2d 7 ; and finally that other heirs, namely the Keating claimants, did not enter into the agreement here in question and asserted their claims independently under circumstances which at least on this record cannot be remotely charged to the defendant herein.

In view of the foregoing, there is no reasonable possibility that the second amended complaint can be amended to state a cause of action on the contract on which it is based. (See Lemoge Electric v. County of San Mateo (1956) 46 Cal.2d 659 , 662, 664 [ 297 P.2d 638 ]; 2 Witkin, Cal. Procedure, Pleading, § 505, pp. 1496-1497.) Nor have the plaintiffs shown how their second amended complaint can be amended to state a cause of action on the agreement declared upon.

In view of our conclusion herein, we need not consider defendant’s claim first made on oral argument that the agreement in question was void because against public policy.

The judgment is affirmed.

Bray, P. J., and Molinari, J., concurred.

Appellants’ petition for a hearing by the Supreme Court was denied February 13, 1963.