Lead Opinion
Opinion
Has a trustee the right to appeal an order determining that a trust beneficiary’s proposed claim would not violate the trust’s no
Background.
On August 23, 1992, Donald R. Scott Goulet (Goulet) and Esther Montello (Montello), acquaintances for many years, married in Las Vegas, Nevada. They separated the next day. At the time, Goulet was terminally ill with Acquired Immune Deficiency Syndrome.
The same day as the marriage, Goulet and Montello executed a document entitled “Premarital Agreement.” The agreement provided, among other things, that the parties had separate property interests in premarital and postmarital assets and acquisitions. In addenda to the agreement executed the same day, Goulet promised to pay Montello $2,500 per month until she reached age 75, subject to cost-of-living increases. He also promised to buy her a home worth at least $500,000, lease her a new automobile, pay her and her children’s health and life insurance premiums, and pay her living expenses until the home was purchased.
Six weeks after the marriage, Goulet filed a petition for nullity of marriage in Los Angeles Superior Court, alleging he had been of unsound mind. Montello defaulted, and the court rendered a judgment of nullity on the ground alleged.
While the nullity proceedings were pending, Goulet executed a will and declaration of trust. The will declared all of Goulet’s property was his separate property pursuant to the provisions of the premarital agreement and transferred the entire estate to the trust. The will also stated Montello was disinherited, with Goulet “having made adequate provision for her and her children” in the trust. The will included a no contest clause, which revoked the share or interest of any beneficiary or heir who “contests this will or any of its provisions . . . .”
After rendition of the judgment of nullity, Goulet executed a codicil to the will and an amendment to the declaration of trust. The codicil recited that the marriage had been annulled. The codicil nominated Goulet’s friends, Clint Burke (Burke) and John J. Ferry (Ferry), to be co-executors of the will. The trust amendment restated (with some modifications) the $75,000 disposition to Montello. It described Montello as Goulet’s “former spouse.” The trust amendment also named Burke and Ferry as successor trustees and added a $50,000 gift to Ferry.
Goulet died on March 28, 1993. According to counsel, in November 1993, Goulet’s estate had a value of $3.5 million to $4 million. When future payments to be received under a series of contracts were included, the estate had a value of $5 million to $5.5 million.
The probate of Goulet’s will is in San Francisco Superior Court. In the probate proceeding, Montello filed a petition, pursuant to Probate Code section 21320,
Ferry purported to appeal the section 21320 order. Relying on Smith v. Esslinger (1994)
Discussion
In the only published California opinion directly addressing the issue before us, the Fourth District Court of Appeal held trustees of an inter vivos trust were not, within the meaning of Code of Civil Procedure section 902, “aggrieved”
The Court of Appeal in Smith acknowledged a trustee acting in a representative capacity has standing to appeal an order affecting the existence, modification or termination of the trust. (Smith v. Esslinger, supra,
We disagree. Considerations of law and policy lead us to conclude a trustee must be permitted to appeal an order determining a trust beneficiary’s proposed claim would not violate a trust’s no contest clause.
When a probate court erroneously determines under section 21320 that a proposed claim by a beneficiary of a trust would not violate the trust’s no contest clause, there may be no other beneficiary who is both “aggrieved” within the meaning of Code of Civil Procedure section 902 and who is financially or otherwise motivated or situated to pursue an appeal. Because appealing an erroneous section 21320 determination may be risky or expensive or both, aggrieved beneficiaries may choose not to appeal, even though they have standing to do so.
Indeed, beneficiaries of the Donald R. Scott Goulet Trust who are aggrieved by the probate court’s section 21320 determination, Goulet’s friend Burke and Goulet’s first cousins Daniel A. Goulet, Raymond E. Goulet and
Where there is no beneficiary who is both “aggrieved” within the meaning of Code of Civil Procedure section 902 and who is financially or otherwise motivated or situated to appeal an erroneous section 21320 determination, if the trustee is not permitted to appeal, the trustor’s intent is left undefended. Montello argues that, even barring an appeal, Goulet’s intent is adequately protected, despite an adverse section 21320 determination, because Ferry may reject Montello’s claim when presented to the estate and oppose any subsequent action on it. This argument, although superficially persuasive, is flawed. The grounds on which a fiduciary may oppose an action on a rejected claim do not include all those he might, were he permitted, advance on appeal in the section 21320 context. Most importantly, a section 21320 determination that a proposed claim would not violate a no contest clause conclusively determines that issue. The doctrines of law of the case or collateral estoppel would, therefore, presumably bar Ferry from arguing in the same or subsequent litigation that the claim contravenes Goulet’s intent. Thus, rejecting the claim and opposing it in subsequent litigation provides Ferry with at best an illusory substitute for the right to appeal the adverse section 21320 determination.
Montello also argues that, because the section 21320 determination in this case did not endanger the trust assets, question the trustee’s rights or powers or subject the trustee to potential personal liability, the trustee is not a “party aggrieved” for the purposes of Code of Civil Procedure section 902 and therefore lacks standing to appeal. (See Smith v. Esslinger, supra,
Contrary to these arguments, we conclude the trustee in this case is, in reality, a “party aggrieved” for the purposes of Code of Civil Procedure section 902. Similar to a personal representative, the trustee owes fiduciary duties which require him to defend the trust corpus against unwarranted diminution until it is distributed to the beneficiaries. (In re Heydenfeldt (1897)
Montello does not dispute that the trustee, in fulfilling his fiduciary duty to defend the trust, is entitled to oppose a beneficiary’s section 21320 application seeking a determination that a particular action would not constitute a contest within the meaning of the trust instrument’s no contest clause. We agree with Ferry that to deny the trustee the right to appeal an adverse ruling seems anomalous. If a trustee’s duties to protect the trust corpus and seek to effectuate the trustor’s intent are not implicated by court approval of a section 21320 application, it follows he should be prohibited from responding to section 21320 applications in the first instance. The inference his duties are not implicated is contrary to the statutory scheme, which requires the trustee to administer the trust in accord with the trust instrument (§ 16000) and, as discussed below (see fn. 9, post), requires the trustee (or personal representative) to be notified of section 21320 applications (§§ 1220, 21322). Accordingly, we reject the inference and conclude
It may be argued there is no anomaly in the law’s permitting the trustee to oppose objectionable section 21320 applications only until an authoritative order issues and thereafter requiring the trustee to acquiesce in the order. Such a rule—the argument would run—parallels that forbidding the personal representative, even though he “is specially entrusted with the duty and power to defend the rights of all beneficiaries until distribution” (In re Heydenfeldt, supra, 117 Cal. at pp. 553-554, italics added), to appeal from a final distribution order. (Estate of Kessler, supra,
We conclude such a comparison is flawed. The rule forbidding a personal representative to appeal a final distribution order is supported by considerations not necessarily obtaining upon the issuance of a section 21320 determination.
“After the decree [of distribution,] the administration has served its purpose, and the claims of the creditors have been protected.” (Estate of Kessler, supra,
By contrast, a section 21320 determination may issue anytime during a probate proceeding (§ 21322), or prior to the commencement of a probate proceeding (§ 21321, subd. (b)), or even while the transferor is still living (id., subds. (c) and (d)), as long as “an instrument containing a no contest clause is or has become irrevocable . . . .” (§ 21320, subd. (a).) At such times, the potential remains for a beneficiary’s proposed action to imperil the trust corpus or the distributional scheme generally. It is the fiduciary’s role to defend the fund and effect the intended distributional scheme. “It has accordingly been held that an executor or administrator may appeal from a decree of partial distribution, because the assets of the estate may not be sufficient to discharge the claims of creditors [citations] or because the status of the assets may be so highly uncertain that such an order may be embarrassing to the proper administration of the estate.” (Estate of Kessler, supra,
Further, a rule forbidding trustees to appeal section 21320 determinations, by decreasing the likelihood an erroneous determination will be corrected on appeal, would militate in some degree against the enforceability of no contest clauses. “No contest clauses are valid in California and are
Our resolution accords with the public policy favoring enforcement of no contest clauses we recently affirmed in Burch v. George, supra. As noted, the policy is important because it defends the interests in effectuating testators’ intentions "and in minimizing litigation. (
Permitting trustees to appeal adverse section 21320 determinations accords with legislative intent. The statutory requirement that notice be provided the trustee or personal representative when a section 21320 application is filed (see §§ 21322 and 1220; see also fn. 9, post), evidences the Legislature’s intent that fiduciaries be involved in litigation of such applications. The statutory scheme contains no limitation on the fiduciary’s participation at the appeal stage or at any other point. If the Legislature had meant for any such limitation to exist, it presumably could have said so. Moreover, if the Legislature disagrees with our understanding of the trustee’s proper role in section 21320 proceedings, there is no bar to its imposing a contrary rule. The Legislature remains free to close any gap it perceives in the statutory scheme by codifying the trustee’s duties with regard to section 21320 determinations.
Permitting trustees to appeal adverse section 21320 determinations will foster judicial economy. As noted, that trustees are permitted to oppose
Finally, permitting the trustee in this case to appeal the section 21320 determination that Montello's claim would not violate the trust’s no contest clause will not, ultimately, deprive Montello of the opportunity to advance her claim. Whether or not any appeal by the trustee is successful, Montello will retain the option in appropriate proceedings to advance and attempt to prove her claim on its merits. (§ 9354.)
Conclusion
For the reasons given, the Court of Appeal’s judgment is reversed. The matter is remanded for farther proceedings consistent with this opinion.
Lucas, C. J., Arabian, J., Baxter, J., and George, J., concurred.
This factual background statement follows that provided by the Court of Appeal in its unpublished opinion and is derived largely from respondent’s “Petition For Order Determining Whether Proposed Action Constitutes Will Or Revocable Trust Contest” and attached exhibits, copies of which are included in “Appellant’s Appendix in Lieu Of Clerk’s Transcript.” The probate court in its “Order That Proposed Action Does Not Constitute Will Or Revocable Trust Contest” found that “[a]ll facts set forth in the Petition are true and correct.” We presume the court’s order to be correct and indulge all intendments and presumptions to support it on matters as to which the record is silent. (Walling v. Kimball (1941)
Prior to its amendment in 1994 (Stats. 1994, ch. 40, § 3), section 21320 provided, in full:
“(a) If an instrument containing a no contest clause is or has become irrevocable, a beneficiary may apply to the court for a determination whether a particular motion, petition or other act by the beneficiary would be a contest within the terms of the no contest clause.
“(b) A no contest clause is not enforceable against a beneficiary to the extent an application under subdivision (a) by the beneficiary is limited to the procedure and purpose described in subdivision (a) and does not require a determination of the merits of the motion, petition, or other act by the beneficiary.
“(c) A determination of whether Section 21306 [contest on the grounds of forgery or revocation] or 21307 [contest of provision benefiting witness or drafter] would apply in a particular case may not be made under this section.”
In 1994, the Legislature inserted “including, but not limited to, creditor claims under Part 4 (commencing with section 9000) of Division 7 and Part 8 (commencing with section 19000) of Division 9,” after the second occurrence of “beneficiary” in section 21320, subdivision (a). The change does not affect our analysis. Unless otherwise indicated, further statutory references are to the Probate Code.
Under Code of Civil Procedure section 902, “Any party aggrieved may appeal . . . .” “One is considered ‘aggrieved’ whose rights or interests are injuriously affected by the judgment.” (County of Alameda v. Carleson (1971)
When granting review in this matter, we directed the parties to address only the issue of a trustee’s appeal rights following a section 21320 determination that a claim would not violate the trust’s no contest clause. In dissent, Justice Kennard accurately observes that, while Ferry was named both trustee of the Goulet trust and executor of Goulet’s estate, his duties as executor and as trustee are “distinct.” (See dis. opn. of Kennard, J„ post, at p. 1097, citing Estate of Beach (1975)
Pursuant to provisions of the trust amendment, Burke receives “two-thirds of the remaining balance of the trust estate, which shall vest in and be distributable to him, free and clear of trust, subject,” among other things “to . . . bequests in favor of [Montello] and her children . ...” As a residuary beneficiary whose share is subject to Montello’s bequest, Burke is aggrieved by the probate court’s section 21320 determination, both because it eliminates any likelihood Montello would have abandoned her claim to the bequest payable to her out of Burke’s share in favor of pursuing her purported claim under the premarital agreement, and because it increases the possibility Montello will pursue a successful claim and thereby dimmish the residue. Under the trust instrument, Goulet’s first cousins receive one-third of the trust residue. As residuary beneficiaries, Goulet’s first cousins are similarly aggrieved, because the section 21320 determination increases the likelihood Montello will pursue a claim and thereby dimmish the residue.
In Estate of Murphy (1904)
The dissent makes much of the age of the rule barring executors and administrators from appealing orders of final distribution. (See dis. opn., post, at pp. 1089-1092.) Of similar pedigree, however, is the recognition that “where [an order of distribution] affects the decedent’s estate as a whole, apart from the conflicting interests of . . . beneficiaries,” the executor or administrator may appeal from it to protect the estate. (Annot. (1967)
As respondent acknowledges, previous decisions have, on related policy grounds, embraced a rule permitting a fiduciary to appeal “ ‘a decree determining the relative rights of beneficiaries if some of them are unascertained or without representation . . . , or are not competent to act for themselves.’ ” (Smith v. Esslinger, supra,
Under the modem statutory scheme, when a section 21320 application respecting a trust is filed during the trustor's lifetime (or, if the trustor has died, following the conclusion of any proceeding for administration of his estate), the trustee is entitled to notice of the action. (§21322, subd. (b)(2).) When the trustor has died and a proceeding is pending for the
Dissenting Opinion
It has long been settled, not only in California but elsewhere, that a fiduciary (such as the trustee of a trust or the personal representative of a decedent’s estate) administering property on behalf of multiple beneficiaries must act impartially towards all the beneficiaries and must not favor, or expend funds litigating, the interest of one beneficiary over another. The fiduciary may not take sides when a dispute arises as to the relative rights and interests of various beneficiaries, and may not work to advance or oppose the claim of any beneficiary.
For that reason, it has also long been held that, once a court has determined the shares to which various beneficiaries are entitled, a fiduciary has
The majority in this case discards this governing principle of trust and estate law and overrules Estate of Murphy, supra,
I dissent because the majority’s holding is contrary to the settled and well-reasoned rule, which the majority does not question, that a fiduciary may not appeal from an order determining the relative rights of beneficiaries to share in the property administered by the fiduciary. A section 21320 proceeding only determines whether a beneficiary will forfeit his or her share if the beneficiary takes the proposed action; as such it only affects the relative shares of various beneficiaries. The only parties aggrieved are the other beneficiaries whose shares of the trust would increase if the beneficiary in question forfeited his or her share under the no contest clause.
By permitting trustees to appeal from section 21320 determinations, thereby to oppose the interest of one beneficiary and favor the interests of the remaining beneficiaries, the majority seriously erodes the fundamental fiduciary duty of impartiality among beneficiaries. Furthermore, the majority’s misreading of the cases and statutes it relies on will needlessly unsettle probate law. Finally, the majority’s holding will foment needless appeals by permitting the trustee to appeal at the expense of the trust even when none of the beneficiaries object to the section 21320 determination.
I
Donald R. Scott Goulet established an inter vivos trust. Among the beneficiaries of the trust is Esther Montello. The trust contains a no contest
Goulet died. Goulet’s will made his trust the devisee of his estate. John J. Ferry is successor trustee of the Goulet trust and has also been appointed executor and special administrator of Goulet’s estate. Like the Goulet trust, the will also contains a no contest clause, which provides that any beneficiary under the will or lawful heir who “in any manner, directly or indirectly, contests this will or any of its provisions” forfeits any interest he or she has in the estate.
Under section 21320, a beneficiary of a written instrument containing a no contest clause “may apply to the court for a determination whether a particular motion, petition, or other act by the beneficiary . . . would be a contest within the terms of the no contest clause.”
Montello has a contractual creditor’s claim against Goulet’s estate. Montello applied to the trial court under section 21320 for a determination as to whether filing her claim with the estate would be a contest within the meaning of either the no contest clause of the will or the no contest clause of the trust. Ferry opposed Montello’s application in his capacity as special administrator of Goulet’s estate. The trial court held that Montello’s proposed action was not a contest within the meaning of either no contest clause. Ferry filed a notice of appeal. Applying this court’s decision in Estate of Murphy, supra,
We granted review limited to the question of whether a trustee has the right to appeal a trial court’s order under section 21320 determining that a trust beneficiary’s proposed action is not a contest within the meaning of the no contest clause of the trust.
I begin with the statutory structure authorizing appeals from a trial court’s order under section 21320 determining whether a beneficiary’s proposed action amounts to “a contest within the terms of the no contest clause.” Title 13 of the Code of Civil Procedure, starting with section 901, governs appeals in general. Within title 13 of the Code of Civil Procedure, subdivision (a)(10) of section 904.1 provides that “[a]n appeal may be taken [¶] . . . [¶] From an order made appealable by the provisions of the Probate Code or the Family Code.” Turning to the Probate Code to see what orders it makes appealable, subdivision (q) of section 7240 provides that “[a]n appeal may be taken from [an order] [¶] . . . [¶] Determining whether a specific beneficiary action constitutes a contest under Chapter 2 (commencing with Section 21320) of Part 3 of Division 11.” Thus, a section 21320 order is an appealable order.
As this court noted in Estate of Kessler (1948)
The law governing when a fiduciary is not aggrieved by a court order, and is therefore precluded from bringing an appeal, has been well settled for more than a century. This court has long held that a fiduciary administering property for the benefit of several beneficiaries is not aggrieved by an order determining the share of each beneficiary in the property. (Estate of Ferrall (1948)
This understanding that a fiduciary is not aggrieved by an order determining the entitlement of various beneficiaries is as old as the statutory provision limiting appeals to aggrieved parties. Code of Civil Procedure section 902 is derived, with immaterial variations, from section 938 of the 1872 Code of Civil Procedure. The annotations of the 1872 Code Commissioners give, as an example of a party who is not aggrieved and may not appeal, an executor who objects to an order determining the shares to be distributed to various beneficiaries of an estate. (Code Comrs. note foil. 18 West’s Ann. Code Civ. Proc. (1980 ed.) § 902, pp. 10-11.)
The nearly universal weight of authority from other states also takes this position. Other states in addition to California also limit appeals to aggrieved parties, and similarly conclude that fiduciaries are not aggrieved and may not appeal from orders determining the shares of various beneficiaries in the property being administered. (See, e.g., First Nat. Bank of Dewitt v. Yancey (1991)
The rule that a fiduciary is not aggrieved by an order determining the shares of various beneficiaries is the consequence of several aspects of a fiduciary’s role in administering property on behalf of multiple beneficiaries. First, the fiduciary has a duty of impartiality towards all the beneficiaries and may not favor one over another by litigating for or against a particular beneficiary’s claim. (§ 16003 [“If a trust has two or more beneficiaries, the trustee has a duty to deal impartially with them.”]; Estate of Ferrall, supra,
Second, the fiduciary’s position is that of a stakeholder who holds property at the direction and under authority of the court and who is indifferent to the disposition decided on by the court. (Estate of Ferrall, supra,
Finally, when the beneficiaries whose interests are affected by the order, and who therefore are aggrieved, have acquiesced in the court’s order
As a necessary corollary of this rule, this court has held that a fiduciary is not aggrieved by, and therefore cannot appeal from, an order determining whether an action by a beneficiary is a contest within the meaning of a no contest clause. (Estate of Murphy, supra,
In considering the same question, New York’s highest court likewise concluded that an executor may not appeal the question of whether a beneficiary has violated the no contest clause of a will. (Bryant v. Thompson, supra, 128 N.Y. at pp. 432-435 [28 N.E. at pp. 523-525]; accord, Krause v. Tullo (Mo.App. 1992)
This court’s decision in Estate of Murphy, supra,
This result is an inevitable consequence of the general rule that a fiduciary may not appeal from an order determining the shares of various beneficiaries. A section 21320 order determines only whether the beneficiary in question will remain a beneficiary if he or she takes the proposed action or instead will lose his or her share of the property administered under the written instrument. As such, a section 21320 order only determines the relative allocation of the property among the beneficiaries—the share that each beneficiary under the instrument will receive. A section 21320 order does not increase or decrease the amount of property administered under the instrument. It cannot either authorize or prohibit the beneficiary from taking the proposed action; it only determines what the consequence of the proposed action will be to the beneficiary’s interest in the property administered under the instrument.
Estate of Murphy recognized that such an order presents only the conflicting claims of beneficiaries. (Estate of Murphy, supra,
To permit a fiduciary to appeal from an order under section 21320 would be to allow the fiduciary to represent the interests of one group of beneficiaries against those of another beneficiary, precisely what a fiduciary is not permitted to do. A fiduciary’s duty of impartiality among beneficiaries is fundamental. (§ 16003; Estate of Lynn (1952)
Because the conclusion this court reached in Estate of Murphy is sound and is dictated by our other rulings on when a fiduciary is aggrieved and may bring an appeal, I would, unlike the majority, continue to adhere to it and would apply it to this case. Accordingly, I would hold that the trustee here, in his capacity as trustee, is not aggrieved by the trial court’s determination under section 21320 that Montello’s proposed action will not be a contest within the terms of the trust’s no contest clause. The other beneficiaries of the Goulet trust whose shares would increase if Montello forfeited under the no contest clause were, of course, aggrieved parties who could have appealed the section 21320 order. None of them, however, chose to do so.
III
The majority, however, overrules Estate of Murphy and thereby disrupts without justification our well-developed body of law delineating when a fiduciary is aggrieved by an order for purposes of appeal. The majority claims it is justified in doing so by the passage of time since Estate of Murphy was decided and because in its view the statutory scheme has changed. (Maj. opn., ante, at p. 1082, fn. 6.) Neither point is well taken.
The majority also errs in concluding that the statutory scheme governing appeals by fiduciaries has changed. The requirement that the trustee must be aggrieved in order to appeal has not changed. (Code Civ. Proc., § 902.) And the requirement that the trustee act impartially towards all beneficiaries has not changed. (Prob. Code, § 16003; Estate of Ferrall, supra,
The majority points to two statutes, section 16000 and section 21322, that it contends form a new “statutory scheme” authorizing appeals by fiduciaries from section 21320 orders. (Maj. opn., ante, at pp. 1082, 1085 & fns. 6, 9.) Section 16000 sets forth the trustee’s duty to administer the trust in accordance with the trust instrument. The majority asserts that the trustee’s duty under section 16000 is a new duty that undermines Estate of Murphy's holding that fiduciaries may not appeal from orders determining whether a beneficiary’s action is a contest within the terms of a no contest clause. Not so. It has long been the rule that trustees are bound by the trust instrument. (Civ. Code, former § 2258, subd. (a), enacted in 1872 and repealed by Stats. 1986, ch. 820, § 7, p. 2730 [“A trustee must fulfill the purpose of the trust, as declared at its creation, and must follow all the directions of the trustor given at that time . . . .” (Italics added.)]; Bryson v. Bryson (1923)
Nor does section 21322 support the majority’s position. Section 21322, in conjunction with section 1220, sets forth the parties entitled to notice of a
The majority argues that the notice requirements of sections 21322 and 1220 evidence a legislative intent that “fiduciaries be involved in litigation of [section 21320] applications” through the appeal stage. (Maj. opn., ante, at p. 1085.) The majority’s assertion is contrary to this court’s previous holding that the mere fact that a fiduciary receives notice of a proceeding does not give the fiduciary standing to litigate the matter at issue. (Estate of Friedman (1917)
More fundamentally, the majority is mistaken when it asserts: “The statutory scheme contains no limitation on the fiduciary’s participation at the appeal stage or at any other point. If the Legislature had meant for any such limitation to exist, it presumably could have said so.” (Maj. opn., ante, at p. 1085.) In Code of Civil Procedure section 902, the Legislature has in clear and unmistakable terms imposed limitations on a party’s right to appeal. Under section 902, a party must be aggrieved to appeal. The fact of providing notice to a party can neither determine nor alter whether a party possesses an interest in the proceeding that makes it aggrieved by the court’s order. For the reasons I have set forth above, the trustee has no interest in the competing claims of various beneficiaries to share in the trust and therefore cannot be aggrieved by the trial court’s ruling as to whether a beneficiary’s action is a contest; whether the trustee receives notice of the proceeding
Finally, even if the majority were correct that a fiduciary who has been given notice of the pendency of a trial court proceeding is aggrieved for purposes of standing to appeal, the provision for notice is simply irrelevant here. The trustee never made an appearance in the trial court or filed a request for special notice and thus had no right to notice of the section 21320 proceeding. The trustee did not oppose Montello’s section 21320 application; only the special administrator of the estate opposed Montello’s section 21320 application.
There is little force to the majority’s remaining arguments. The majority attempts to analogize a trustee’s appeal from a section 21320 order to the exception recognized in In re Heydenfeldt (1897)
The orders that this court held to be appealable in In re Heydenfeldt and Estate of Kessler were orders that required the fiduciary to make interim payment out of property being administered by the fiduciary before a final accounting and final distribution of the property occurred. The order appealed in In re Heydenfeldt, supra,
By contrast, a section 21320 order is not an order that compels any payment, interim or final, by the trustee or any other fiduciary. The section 21320 order does not determine the merits of the beneficiary’s proposed action, such as Montello’s proposed creditor’s claim; it only determines what effect the proposed action would have on the beneficiary’s interest. Because a section 21320 order presents none of the dangers of the interim payment orders at issue in In re Heydenfeldt, supra,
Nor does the particular nature of the beneficiary’s proposed action in this case—a creditor’s claim against an estate of which the trust is a devisee— cause the trustee to be aggrieved by the section 21320 determination. The section 21320 order does not create the creditor’s claim against the estate, does not determine the merits of the claim, and is not a precondition to the beneficiary’s bringing the claim against the estate. Here, for example, Montello possessed her creditor’s claim against Goulet’s estate before she brought the section 21320 proceeding and she could have filed her claim against the estate whether or not she brought the section 21320 proceeding. Nor does the section 21320 order modify the terms of the trust in any way. The section 21320 order only determines whether the beneficiary will share in the trust or will instead be barred from doing so by the no contest clause. Moreover, even if Montello brings her claim against the estate and prevails on it, she will have no right to insist on an interim payment of her claim. (Prob. Code, § 11422.)
The majority also asserts, without supporting authority, that the trustee has a duty at the trial court level to litigate adversarily a section 21320 application by a beneficiary, and that therefore it would be anomalous for the
In any event, even if a trustee could properly litigate in the trial court the question of whether a beneficiary’s proposed action amounts to a contest, it still would not follow that the trustee could be aggrieved by the court’s answer. One hundred years ago, New York’s highest court explained in Bryant v. Thompson, supra, 128 N.Y. at pages 432-435 [28 N.E. at pages 523-525], a case this court has previously relied upon for guidance in this area of the law (see Estate of Ferrall, supra,
“There were two parties who had a pecuniary interest in the decision of the question involved in the case,—the daughter, who is satisfied with the result, as it is in her favor, and the widow, who does not appeal. The judgment rendered in the court to which the [executors] resorted in the first instance is a perfect protection to them in the disposition of the fund in accordance therewith, and in the performance of every duty growing out of the legacy to the daughter under the provisions of the will. This being true, what interest have the [executors] in the further prosecution of the action? They had an interest, and it was their duty, to procure a judicial determination of the questions presented by the facts alleged, but no interest or duty in obtaining a decision according to some view of the law that they may have themselves entertained, or have been advised by counsel. . . .
“The [executors] are not seeking any benefit for themselves in the action. They have simply asked the judgment and advice of the court in regard to*1100 the disposition of property belonging to others, which is in their care and keeping. The court has given the judgment and advice prayed for, and the real beneficiaries do not complain. . . . [T]he right [of appeal] is limited to a party aggrieved. In this case the executors and trustees under a will, having asked the court for directions in regard to their duty, and for a judgment as to which of two parties is entitled to a certain bequest, which directions and judgment are given and acquiesced in by both of the alleged claimants of the fund, the [executors] are not aggrieved, within the meaning of the statute, by the judgment rendered.” (Bryant v. Thompson, supra, 128 N.Y. at pp. 433-435 [28 N.E. at pp. 524-525].)
Other courts too have recognized that the fact that a fiduciary may seek guidance from the court as to the rights of various beneficiaries under a written instrument does not give the fiduciary standing to bring an appeal after the court has provided the requested guidance. (Dockray v. O’Leary, supra, 286 Mass, at pp. 591-592 [190 N.E. at pp. 798-799] [“The executor having, in his official capacity, brought all interested parties before the probate court fulfilled his whole duty and had no further interest in the outcome of the suit except to abide by and carry out the instructions of the court in the distribution of the estate. [Citations.] ... As executor he properly sought the instructions of the court. . . . [A]ll other parties in interest, since they filed no appeal, must be taken to be satisfied with the instructions given . . . .”]; In re Reeves’ Estate, supra,
The majority also asserts that allowing trustees to appeal from section 21320 determinations concerning trust no contest clauses, despite creating an additional burden on our appellate courts, will minimize litigation overall
Finally, the Legislature has directed, both with respect to trusts generally and with respect to section 21320 proceedings specifically, that the common law governs except as it has been modified by statute. (Prob. Code, §§ 15002, 21301.) No statute has modified the common law on the question of whether a fiduciary is aggrieved by and may appeal from an order determining whether a beneficiary’s action is a contest within the meaning of a no contest clause. Estate of Murphy, supra,
The Court of Appeal correctly applied the rule of Estate of Murphy, supra,
Mosk, J., concurred.
All undesignated statutory references hereafter are to the Probate Code unless otherwise noted.
Section 21300 defines the term “no contest clause” as follows: “ ‘No contest’ clause means a provision in an otherwise valid instrument that, if enforced, would penalize a beneficiary if the beneficiary brings a contest.” (§ 21300, subd. (b).) In turn, “ ‘Contest’ means an attack in a proceeding on an instrument or on a provision in an instrument.” (§ 21300, subd. (a).)
The majority seems to assume that trustees would necessarily appeal only from trial court orders granting section 21320 applications. Nothing in the majority’s holding, however, would preclude the trustee from appealing from a ruling denying a section 21320 application, either alone or in concert with the beneficiary who made the application, or tells the trustee how to choose which side in the dispute to take and on which to spend the trust’s resources.
Because in this case the trust is a devisee under the will, the trust is presumably aggrieved to the same extent as any other devisee under the will by the trial court’s determination that Montello’s proposed action (her claim against the estate) is not a contest of the will within the meaning of the will’s no contest clause. The trustee, as representative of the trust, could therefore appeal that order to the same extent that any other devisee could; there would seem little point in doing so, however, because the will’s no contest clause only revokes the contestant’s interest in the estate, and Montello, while a beneficiary of the trust, is not a devisee of the will and has no interest in the estate (see Prob. Code, § 34, subd. (b) [beneficiary of trust that receives devise under a will is not a devisee of the will]).
The majority also dwells on the fact that Estate of Murphy was decided by three justices sitting in department. At the time, this court decided cases both in bank (with all seven justices participating) and in departments of three justices. If the majority means to suggest that Estate of Murphy should be accorded lesser precedential value because it was decided in department, the majority is wrong. As this court said in Niles v. Edwards (1892)
The majority, in a related argument, asserts that a trustee must be permitted to appeal even when no beneficiary objects to the trial court’s section 21320 order. As I have discussed in the text above, however, this court and others have observed that when the beneficiaries have acquiesced, a fiduciary has no legitimate interest in appealing from a court order fixing the relative shares of the beneficiaries. (See, e.g., Bates v. Ryberg, supra, 40 Cal. at pp. 465-466 [“if [the beneficiaries] are satisfied with the distribution [the fiduciary] cannot complain because some have received less than they are entitled to”].) A trustee who seeks to appeal when the beneficiaries choose not to, in addition to breaching the duty of impartiality by favoring some beneficiaries over others, becomes nothing more than an officious intermeddler stirring up a matter that all of the interested parties were content to let lie.
Nor is it significant in this regard that the same person, Ferry, was both trustee of the Goulet trust and special administrator of Goulet’s estate. This court has been quite careful to consistently observe the “basic distinctions” between a trustee of a trust and a personal representative of an estate. (Estate of Beach (1975)