234 P. 851 | Cal. Ct. App. | 1925
The facts of this controversy are: That Abraham Everstine Clary died testate in the county of Yolo, state of California, on the third day of November, 1920. Surviving him were his wife Johanna and six children. Two of his sons, Edward F. Clary and Charles M. Clary, were nominated in his last will as executors thereof, qualifying as such on the sixth day of December, 1920, and jointly acting as such until the fourth day of April, 1921, when Charles M. Clary died intestate in the county of Monterey, state of California. From the last-mentioned date E.F. Clary continued as sole executor of said will.
The will of Abraham E. Clary provided that all the property of the estate was to go to the children of the deceased in equal shares, subject, however, to the right of the widow, Johanna, to the income from all the property during her life and "in case the income was insufficient for her care then the property was to be applied for her support, the estate not to be distributed until the death of the widow."
On the twenty-third day of June, 1922, approximately two months after the death of Charles M. Clary, the widow of Abraham passed away.
Charles M. Clary left surviving him his widow, two sons, and a daughter. Cecil M. Clary, son of Charles M., deceased, after due proceedings in the superior court of Monterey County, was appointed and later qualified as the administrator of the estate of Charles M. It having been determined, after the usual proceedings in such cases had been taken, that the estate of Charles M. was less than the sum of $2,500 in value, the whole of the same, on her application, was by the court set apart and assigned to his widow. (Code Civ. Proc., sec. 1469.)
Subsequent to the making of the decree by the superior court of Monterey County in the estate of Charles M. Clary, setting apart the whole of his estate to his widow, the real and other property belonging to the estate of Abraham E. Clary was sold and converted into cash, and at the time *24 said estate was distributed by the decree of the superior court of Yolo County to the beneficiaries named in the will to succeed thereto upon the death of the widow, the executor, E.F. Clary, had in his hands in cash the sum of $7,544.58.
Immediately following the death of Abraham E. Clary, and prior to the death of Charles M. Clary, a promissory note for the sum of $3,000, dated August 1, 1918, in favor of said Abraham, and signed by said Charles M. Clary, was found by E.F. Clary, the other executor, among the effects of Abraham, said note at all times subsequent to the time it was so found remaining in the hands of said E.F. Clary. Said note was made payable "one day after date to the order of A.E. Clary." Neither the note, nor the indebtedness it represents, was ever at any time included in any inventory of the estate of Abraham E. Clary, nor in any account of an executor as an asset of his estate, except in the final account. Nor was there any appraiser appointed to appraise the property of the estate of A.E. Clary until the third day of October, 1921, when one J.D. Musgrove was appointed sole appraiser of said estate, and qualified as such on the twenty-eighth day of October, 1921. No inventory was filed in the estate of A.E. Clary prior to January 9, 1922, nine months, approximately, after the death of Charles M. Clary.
As to said promissory note, the petition for settlement of the final account and distribution of the estate of Abraham E. Clary states: "That he (E.F. Clary, sole executor) filed inventories of all property which has come to his hands, except that at the time of the death of said Charles M. Clary, he was indebted to the estate of A.E. Clary on a promissory note for $3,000, on which had been paid $700 on account of principal, and $125 interest, leaving then due and owing from said Charles M. Clary to the estate of said Abraham Everstine Clary, . . ., the sum in excess of $2,000; that your petitioner is informed and believes, and therefore, avers, that it was the duty of the said Charles M. Clary to inventory his said indebtedness to said estate as cash in his hands, but through inadvertence or ignorance of the law, the said Charles M. Clary did not so inventory said note, and the same does not appear in the inventory of said estate." Payments on principal and interest on the *25 note were indorsed on the back thereof, the last payment on principal having been made on November 21, 1921, and on account of interest on January 2, 1920.
It is admitted that no demand was ever made upon C.M. Clary by his coexecutor to settle or pay said note or indebtedness to the estate of A.E. Clary, and that no claim based upon said note was ever filed or presented to the estate of said C.M. Clary, deceased; nor was there any attempt ever "made to collect the indebtedness alleged to have arisen from the note prior to the filing of the petition for final distribution four years and three months after the note became due"; that "no other steps were taken at that time with the exception of petitioning the court that the executor be allowed to retain the interest of C.M. Clary (in the estate of A.E. Clary) on account of said indebtedness"; that "no discharge of record has been entered discharging the said Cecil M. Clary as administrator of the estate of C.M. Clary."
Written objections and exceptions were interposed by the heirs of Charles M. Clary, deceased, to the final account, report, and petition for distribution of the estate of A.E. Clary, deceased. Among the grounds of objection to said account, etc., was and is that A.E. Clary, prior to his and C.M. Clary's death, released the latter from all obligation to pay said note. It was also objected that the note and indebtedness thereby evidenced was barred by subdivision
Evidence, both oral and documentary, was taken, and the court found as to said note and indebtedness against all the claims made by the heirs of C.M. Clary in their exceptions to the settlement of the final account, and found in particular that said A.E. Clary was the owner and holder of said note, upon which there was due the sum of $2,965.91 at the time said C.M. Clary qualified as executor, and upon which nothing had been paid. The court further found that the sum total of all the commissions earned by the executors of the will of A.E. Clary for their services as such was $498.28, of which amount one-fourth, to wit, the sum of $124.57, was earned by C.M. Clary while acting as a joint executor of said will. *26
As to the promissory note and the indebtedness remaining unpaid thereon, the court decreed: "That it was the duty of the said Charles M. Clary, upon accepting the appointment of joint executor of the said last will and testament of Abraham Everstine Clary, deceased, to have inventoried, as `cash then in his hands,' the amount of his indebtedness to the said Abraham Everstine Clary, or his estate, which he did not do." The court further decreed:
"That but for such indebtedness, aggregating $2,965.91, the said Charles M. Clary, or his heirs at law, or successors in interest (the contestants herein), would have been entitled to receive upon the distribution of said estate the sum of $1,257.50 as his distributive share, together with the further sum of $124.51 hereinabove allowed as his share of the commissions earned by the executors of said estate, aggregating $1,382.07, which sum should be retained by said Edward Ferguson Clary, executor, and be and is hereby, set off against his (said Charles M. Clary's) said indebtedness of $2,965.91, to the estate of Abraham Everstine Clary, deceased."
The contention of the respondent is that, inasmuch as the indebtedness of C.M. Clary to A.E. Clary existed at the time the former qualified and so accepted his appointment as executor of the will of the latter, said indebtedness, upon acceptance by C.M. Clary of such appointment, became, under the terms of section 1447 of the Code of Civil Procedure, money and assets of the estate of A.E. Clary in the hands of C.M., as such executor; that it was within the jurisdiction of the superior court, in the exercise of its probate jurisdiction and on the hearing of the petition for the settlement of the final account and for a decree of distribution, to require an accounting of such assets; that, if the same be not thus accounted for, the court is authorized in its decree settling the final account, to adjudge that C.M. Clary was and is indebted to the estate of A.E. Clary to the extent of said indebtedness, and further adjudge and decree that the distributive share of said C.M. Clary in said estate and his commissions for his services as such executor be retained by the estate as an offset to or in recoupment of said indebtedness. As seen, the court below adopted that view of the case and upon that theory, as to said indebtedness, made and entered its decree. Section 1447 of *27 the Code of Civil Procedure provides: "The naming of a person as executor does not thereby discharge him from any just claim which the testator has against him, but the claim must be included in the inventory, and the executor is liable for the same, as for so much money in his hands, when the debt or demand becomes due."
Counsel for the respondent cite a number of cases from other jurisdictions which declare it to be the rule that "if a legatee under a pecuniary bequest or a distributee is indebted to the estate, the amount of the debt may be retained from the legacy or distributive share, and the balance, if any, paid by him to the legatee or distributee in full of his claim; and the same rule is applicable to the assignees of the legatee or distributee, or to persons otherwise succeeding to his interest. This is often spoken of as a right of set-off, but it is said that, strictly speaking, it is a right of retainer." (11 Am. Eng. Ency. of Law, p. 1170, and cases named in the footnotes.) This right, it is said in some of the cases, is founded on the principle that the administrator or executor has an equitable lien on the share of the distributee or legatee until the latter has discharged the obligation which he owes to the estate. (Holmes v.McPheeters,
In our state there are cases which hold that the superior court, sitting in probate, has jurisdiction to hear and determine the question of the title to money or other personal property which has come into the possession of an executor or administrator in his official capacity, and which, in fact, belongs to the estate, but which such executor or administrator claims to be the owner of in his individual capacity and adversely to the estate. (Stevens v. Superior Court,
It will be noted, however, that in all the last above-named cases the issue arose during the course of administration of the estate and while the executor or administrator was still alive and acting as such executor or administrator and involved the question whether the executor or administrator had accounted for all the assets of the estate coming into his possession as such officer, the question always being raised by the heirs, the devisees, or legatees by objections to the petition praying for the settlement of the account of the executor or administrator. There is, though, a much more forceful reason why the course pursued by the court below as to the alleged indebtedness of C.M. Clary to the estate of A.E. Clary cannot be approved, and that reason is to be found in the fact that the legislature of 1905 took occasion to prescribe specifically in section
In King v. Chase,
In the case of In re Smith,
In re Smith,
It will be observed from the decision that even before the enactment of section
Counsel for the respondent contend that the case of In reSmith is not in point here for the reason that in that case an attempt was made "to charge the administrator with a *32
liability which did not exist against him at the time of his appointment but which arose out of facts occurring during his administration," whereas, in the instant case the executor was indebted to the testator or his estate at the time he accepted the appointment of executor, upon the happening of which event the debt became "money in his hands" for which he was liable to the estate by virtue of the provisions of section 1447 of the Code of Civil Procedure. We can perceive no real distinction between the two situations. In both cases, the executor was indebted to the estate by reason of having failed to account for certain moneys coming into his possession and belonging to the estate as part of the assets thereof. The only difference between the two is that in this case the money was assets in the hands of the executor only in contemplation of law, while in the case ofIn re Smith the money was actually in his hands, There is nothing in the language of section 1447 which would justify the conclusion that any other course to obtain an accounting at the hands of the heirs of C.M. Clary for the money which was theoretically in said Clary's possession as executor than that prescribed by section
If it should be necessary to decide, as the above-mentioned eastern cases declare, that where an executor or administrator, who is also a distributee or legatee of the estate of the will of the deceased or an heir, has retained or not accounted for some of the assets of the estate, or is indebted to the estate, the estate may be vested with an equitable lien upon the distributive share or legacy of such executor or administrator, still, where such executor or administrator has died before the completion of the administration of the estate or prior to the distribution thereof, leaving heirs, the proper mode for the determination of the matter as against such heirs, or, it may be correct to say, for the enforcement of such lien as against such heirs, is now that prescribed by section
There are other questions raised which, in view of the conclusion at which we have arrived herein, we do not think it is necessary to discuss.
That portion of the decree of the court below appealed from is reversed.
Plummer, J., and Finch, P.J., concurred.
NOTE. — By the Court: After the filing of the above opinion on January 29th, the opinion of the supreme court in Estate ofCates,
A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on March 30, 1925.