Estate of HARRY C. STAUFFER, Deceased. ANTHONY J. KENNEDY et al., Respondents, v. GLADYS WOLLENBERG, Appellant.
Sac. No. 6921
In Bank
Nov. 30, 1959.
124 Cal. 2d 124
Anthony J. Kennedy, Devlin, Diepenbrock & Wulff and Arthur C. Devlin, in pro. per., for Respondents.
SCHAUER, J. — Gladys Wollenberg (one of the beneficiaries named in the will of Harry C. Stauffer) appeals from an order which directs that fees for extraordinary legal services and costs and expenses advanced by respondents (attorneys for the special administrator of Stauffer’s estate) be “shared proportionately by each of the heirs, legatees and
Appellant-objector contends that the ratable apportionment ordered by the trial court improperly contravenes the California probate rule that, in the absence of a contrary expression of testamentary intent, property not disposed of by the will should be first resorted to for payment of debts and expenses of administration. Respondents urge that such apportionment is proper because, under equitable principles, each of those who benefit by the recovery of the estate property should bear his share of the expenses of recovering it. We have concluded that under the statutory and decisional law of this state the trial court should have applied the probate rule rather than ordering ratable apportionment.
Appellant’s argument for application of the probate rule is based largely upon asserted intent of the testator, and respondents’ argument for ratable apportionment is based largely upon asserted considerations of fairness. In order that the factual bases of these arguments can be appraised it appears necessary to state the history of Stauffer’s disposition of his property and the litigation which followed his death.
Stauffer’s will is not in the record on this appeal. The facts concerning the will appear in the opinion in Estate of Stauffer (1956), 142 Cal.App.2d 35 [297 P.2d 1029]. The will, executed in 1944, stated that Stauffer made the following devises and bequests: Certain residential realty to Jessie Snyder; improved business realty to R. N. Philpot and Hilda Kirtlan; $5,000 to Michael David Littlefield; $5.00 each to named relatives; $50 a month to a sister, Myra Henry, if there was “sufficient revenue from the estate to warrant” such payments; and the residue “share and share alike” to Philpot, Jessie Snyder, and Gladys Wollenberg (the present appellant). The will named Philpot executor without bond. When he executed the will Stauffer owned no property which could have passed under the residuary clause if the other dispositions of the will were given effect.
In December, 1949, Stauffer signed a deed of gift of the above mentioned business property (then valued at about $120,000 with income of nearly $2,000 a month) to Philpot and Kirtlan.
When Stauffer died in January, 1952, his heirs at law were
Philpot, Kirtlan, and Wollenberg appealed. (Estate of Stauffer (1956), supra, 142 Cal.App.2d 35; rehearing and hearing denied.) The District Court of Appeal (pp. 39-40 [1] of 142 Cal.App.2d) upheld the finding that Philpot and Kirtlan were guilty of undue influence. But it determined (pp. 41-42 [2] of 142 Cal.App.2d) that the residuary gifts to Snyder and Wollenberg were not affected by the undue influence. The appellate court pointed out (p. 36 of 142 Cal.App.2d) that the testator’s surviving heirs had no communication with him for more than 15 years prior to his death and (p. 42 of 142 Cal.App.2d) that “the record is devoid of any evidence of love or affection between the testator and his relatives. In fact it was all to the contrary.” Therefore, the appellate court said (p. 42 of 142 Cal.App.2d), the effect of the superior court’s order “was to defeat any possibility of carrying out, except as to minor bequests, the testator’s intention . . . since the judgment of the trial court excluded both Snyder and Wollenberg, the only two beneficiaries for whom he was shown to have expressed any affection, except Littlefield, and thereby gave substantially all of his estate [by intestate succession] to the very persons whose participation he emphatically did not want.” The District Court of Appeal concluded (pp. 43-44 of 142 Cal.App.2d) that the business realty ineffectually devised to Philpot and Kirtlan passed under the residuary clause, one third to Snyder, one third to Wollenberg, and one third by intestate succession.
Pursuant to the remand of the District Court of Appeal, the superior court on September 24, 1956, rendered judgment that the will is denied probate except as to the $5,000 legacy to Littlefield and the residuary gifts to Wollenberg and Snyder; that as to the remainder of the residue Stauffer died intestate.
Meanwhile, in July, 1953, Crocker-Anglo National Bank had been appointed special administrator with general powers and had employed respondents as its attorneys. When Stauf-
Over objection of Wollenberg the superior court then made the order from which the present appeal is taken. The court found that without respondents’ extraordinary legal services to the special administrator there would be no property in the estate; that such services were performed “in connection with litigation taken for the common benefit of each of the heirs, legatees and beneficiaries of the estate“; that $32,500 is the reasonable value of the services and that respondents advanced $1,311.51 for necessary costs and expenses of such litigation. It ordered that the special administrator pay respondents such $32,500 and $1,311.51, and that “Said compensation and said costs and expenses are to be borne and shared proportionately by each of the heirs, legatees and beneficiaries of the estate of said decedent, herein, out of his or her respective share in said estate.”
Under the California law of wills, in the absence of testamentary provision controlling payment of claims against the estate, resort must be had first to property undisposed of by will for payment of such claims. (Estate of Kelleher (1928), 205 Cal. 757, 761 [3] [272 P. 1060]; Estate of Hall (1920), 183 Cal. 61, 62 [1] [190 P. 364]; Estate of Traver (1904), 145 Cal. 508, 510-511 [78 P. 1058].) “This is so for the reason that the law endeavors to carry out the intent of the testator as far as possible and, therefore, property not disposed of by the will should be so applied as to render it certain that the dispositions actually made by the testator will be effective.” (Estate of Hall (1920), supra, p. 62 [1] of 183 Cal.) The Kelleher, Hall, and Traver cases point out that the foregoing rule and reason had statutory expression. The present relevant
Under the italicized language (as under the substantially similar language of former
The “obvious aim” of
Where a will provides (as the will of Stauffer provides) that the residue is to be divided among beneficiaries who take as individuals, not as a class, and the disposition is ineffective as to one share of the residue, such share is property not disposed of by will. In that situation the estate property which will remain after satisfaction of general and specific gifts is divided into residuary shares and the debts and expenses of administration, including fees of the attorney for the personal representative, are first charged against the intestate share. (Estate of Hall (1920), supra, p. 64 of 183 Cal.; Estate of Kelleher (1928), supra, 205 Cal. 757, 761 [3], 763 [6].)
The fees for extraordinary services of an attorney for the personal representative which are allowable out of the estate (
In the present case resort to the intestate share of the residue for payment of respondents’ fees will achieve the testamentary intent of Stauffer as that intent has been determined in Estate of Stauffer (1956), supra, p. 42 of 142 Cal.App.2d; i.e., the testator intended that Snyder, Wollenberg, and Littlefield, for whom he had affection, should benefit by his will and he “emphatically did not want” substantial “participation” in his estate by his heirs, for whom he had no affection.
Respondents, however, urge that the order from which this appeal is taken properly applies the rule of Estate of Reade (1948), 31 Cal.2d 669, 671-672 [3] [191 P.2d 745], that “a plaintiff who has succeeded in protecting, preserving or increasing a fund for the benefit of himself and others may be awarded compensation from the fund for the services of his attorney. This is to compel those for whose benefit the action or proceeding was taken to bear their share of the expenses of the litigation; and this rule is equitable and just.”
Reade died intestate leaving seven heirs. One heir employed her own attorney, successfully objected to the administratrix’s account, and obtained for the estate a fund which the administratrix claimed individually. This court affirmed an order that the administratrix pay the fee of the objecting heir’s attorney from such fund. We recognized (p. 671 [2] of 31 Cal.2d) that “Compensation for the services of an attorney must be paid by the person employing him, in the absence of a special agreement, special statutory provision, or exceptional circumstances“; we pointed out (pp. 671-672 [3] of 31 Cal.2d) that equitable actions in which an attorney’s fee was payable from a fund which the attorney recovered or protected for the benefit of his client and others were examples of such “exceptional circumstances“; and we concluded (p. 672 [4-5] of 31 Cal.2d) that the superior court in the exercise of its probate jurisdiction had properly applied the equitable rule.
Respondents also rely upon Estate of Lundell (1951), 107 Cal.App.2d 463, 464 [1] [237 P.2d 62], and Estate of McDonald (1954), 128 Cal.App.2d 719, 722 [4] [275 P.2d 917]. In each of those cases the entire estate passed by will; one of the beneficiaries of the will appeared in the probate proceedings by his own attorney and, by successful opposition to
The Reade, Lundell, and McDonald cases, upon their facts, are not controlling here. The bases of the equitable rule which permits surcharging a common fund with the expenses of its protection or recovery, including counsel fees, appear to be these: fairness to the successful litigant, who might otherwise receive no benefit because his recovery might be consumed by the expenses; correlative prevention of an unfair advantage to the others who are entitled to share in the fund and who should bear their share of the burden of its recovery; encouragement of the attorney for the successful litigant, who will be more willing to undertake and diligently prosecute proper litigation for the protection or recovery of the fund if he is assured that he will be promptly and directly compensated should his efforts be successful. (See Estate of Reade (1948), supra, pp. 671-672 [3] of 31 Cal.2d; Winslow v. Harold G. Ferguson Corp. (1944), 25 Cal.2d 274, 283-286 [8a-13] [153 P.2d 714]; Hornstein, Counsel Fee Awards (1956), 69 Harv. L. Rev. 658, 662.) All these considerations justify invoking equitable principles in situations such as those of the Reade, Lundell, and McDonald estates, where one beneficiary successfully undertook to protect the estate by opposing the position of the personal representative or the representative’s attorneys. But where, as here, the attorneys who recover estate property are employed by the personal representative, there is no occasion to invoke these equitable considerations in order to make the attorneys’ fee payable from the estate; by probate law the fee is so payable as an expense of administration. And no question of effecting testamentary intent or applying
The Reade case holds (p. 672 [4] of 31 Cal.2d) that the superior court has “power to apply equitable principles in aid of its functions as a probate court.” (Italics added.) It
Respondents, however, urge that the following circumstances make it fair (and therefore, on respondents’ view, lawful) to refuse application of
The heirs were not “responsible” for the benefit to appellant Wollenberg (and to Littlefield and Snyder) which resulted from the judgment disposing of the will contest in the same sense that one who recovers or protects a common fund is “responsible” for the benefit which results to others equally entitled to share in such fund. The successful beneficiaries of the will did not stand idly by in the contest, awaiting the benefits of property which might come to them if the heirs’ efforts prevailed. Rather, if the heirs had been able to maintain their position in the will contest the beneficiaries would have recovered nothing. But Littlefield and Wollenberg (whose efforts also benefited Snyder) each employed attorneys and successfully resisted in part the heirs’ attack on the will. The benefit of the will contest to Wollenberg, Snyder, and Littlefield was only an incidental and unintended result of the heirs’ partially successful contest. If any surcharge of the shares of the successful beneficiaries of the will had been sought for the services of respondents as attorneys for the heirs, the situation would appear to come within the following “view adopted by other jurisdictions” and by Estate of Bullock (1955), 133 Cal.App.2d 542, 547 [3] [284 P.2d 960]:
Elsewhere in their briefs, moreover, respondents correctly recognize that the attorney fees with which this appeal is concerned “have nothing to do with the will contest.” Rather, as we have stated, the fees and expenses here apportioned are for the litigation conducted by respondents for the special administrator against Philpot and Kirtlan. Respondents appear mistaken in their assertion that the heirs “were entirely responsible . . . for the suit which recaptured Mr. Stauffer’s property.” The heirs, by instituting the pre-probate will contest, did create a situation in which it was necessary to appoint a special administrator with the powers and duties of a general administrator (
There was, of course, no impropriety in respondents’ acting as attorneys for both the heirs and the special admin-
Respondents further contend that the ordered ratable apportionment of their fees can be supported by application of the provision of
The Keller case is not applicable, for there the entire estate passed by will. Furthermore, no Item 1 of the will appears in the record before us; rather, such record shows that Item 1 was denied probate.1
Respondents urge, without citation of authority, that “Expenses connected with clearing title to a parcel of property may be paid out of probate income from that property. The administrator here should discharge all of the special expenses by way of attorneys fees in capturing the real property and its income out of the probate income from that real property.” In the circumstances of the present case, this method of charging the expenses of recovering the business realty would have the same ultimate effect as charging such expenses against the general assets of the estate before the residuary shares are computed, rather than against the intestate share of the residue computed in accord with the rule of Estate of Kelleher (1928), supra, 205 Cal. 757, 761 [3], 763 [6], and Estate of Hall (1920), supra, 183 Cal. 61, 64. Thus a greater share of the estate would go to the heirs, “the very persons whose participation [the testator] emphatically did not want” (Estate of Stauffer (1956), supra, p. 42 of 142 Cal.App.2d).
For the reasons above stated, the order appealed from is reversed with directions to charge the fees for extraordinary services rendered by respondents, and the costs and expenses advanced by them, first against the intestate portion of the estate and to resort to other assets of the estate only if the intestate portion should be insufficient to satisfy such fees, costs and expenses.
Gibson, C. J., Traynor, J., Spence, J., McComb, J., and White, J., concurred.
PETERS, J. — I dissent.
The majority opinion reaches a shocking result. It holds that heirs who were solely responsible for bringing a fund into the decedent’s estate receive nothing as a result of their
The probate court specifically found: “[T]hat without said legal services there would be no property, real or personal, in the estate of decedent; that said services created and preserved for the estate of decedent all of the real and personal property that has come into the possession of said Special Administrator. . . .
“That said extraordinary legal services were performed in connection with litigation taken for the common benefit of each of the heirs, legatees and beneficiaries of the estate of decedent.” (Emphasis added.)
These findings cannot be challenged. The majority concedes that it was the first will contest by the heirs which made possible the appointment of the special administrator, that the heirs instigated the appointment of said administrator, and that the successful litigation was undertaken as a result of information unearthed and supplied by the heirs. Yet the majority finds that the heirs were not responsible for the recovery of the property because they caused a special administrator to be appointed instead of personally prosecuting the action which returned to the estate property originally conveyed inter vivos by the testator (see Anglo Calif. Nat. Bank v. Philpot, 148 Cal.App.2d 469 [306 P.2d 970]). This is a completely unrealistic distinction.
The rules announced in Estate of Reade, 31 Cal.2d 669 [191 P.2d 745], and Estate of Lundell, 107 Cal.App.2d 463 [237 P.2d 62], are clearly applicable. These cases simply announce a rule of fairness and justice: “[One] who has succeeded in protecting, preserving or increasing a fund for the benefit of himself and others may be awarded compensation from the fund for the services of his attorney. This is to compel those for whose benefit the action or proceeding was taken to bear their share of the expenses of the litigation; and this rule is equitable and just. . . . The application of equitable principles would seem to require that the other heirs bear their proportionate share of the expense of the litigation.” (Emphasis added; 31 Cal.2d at pp. 671-672.)
It is true that Estate of Reade, supra, is distinguishable on its facts from the instant case, because in the Reade case there
that his legatees take two-thirds of the now sizable residue even though his heirs would also benefit. In this particular case the legatees take the entire estate and the heirs are effectively disinherited. In future cases those who would take only from an intestate portion of an estate will be loath to put forth any effort to bring property into an estate if there is any likelihood that the costs will approximate the intestate share.
In this very case, where the majority finds that the presumed intent of the testator has been effectuated, it is evident that had the heirs known that they would take nothing from their efforts they would have done nothing. Thus the original will contest would not have taken place, the special administrator would never have been appointed and Philpot and Kirtlan, who were found to have acquired Stauffer’s property, inter vivos and under the will, through undue influence (Estate of Stauffer, 142 Cal.App.2d 35 [297 P.2d 1029]; Anglo Calif. Nat. Bank v. Philpot, supra) would have retained the property so acquired to the exclusion of the named legatees. If, as the majority finds, Stauffer intended these legatees to take under his will this intent would have been totally frustrated if the heirs had failed to act. Had this decision been announced prior to Stauffer’s death this would have been the result in this case. It will undoubtedly be the result in future cases.
The majority opinion sets forth three reasons that would permit surcharging of a common fund with the costs of recovering that fund: “fairness to the successful litigant, who might otherwise receive no benefit because his recovery might be consumed by the expenses; correlative prevention of an unfair advantage to the others who are entitled to share in the fund and who should bear their share of the burden of its recovery; encouragement of the attorney for the successful litigant, who will be more willing to undertake and diligently prosecute proper litigation for the protection or recovery of the fund if he is assured that he will be promptly and directly compensated should his efforts be successful.” (Ante, p. 132.) (Emphasis added.) The majority then concludes that these reasons are not important to this case because the attor-
It cannot be said, reasonably, that in this case the testator would have preferred that the residuary legatees take to the exclusion of his heirs. At the date of Stauffer’s death the residuary legatees were not entitled to anything, there being no property in the residuary fund. Furthermore, a specific devise to Snyder, who was also a residuary legatee, was adeemed by sale prior to the testator’s death. These facts suggest that at the date of his death the testator’s desire to benefit these legatees was not particularly strong and that both the legatees and the heirs had been excluded by him, requiring that both groups be treated equally once a fund was made available.
The probate court properly apportioned the costs against the heirs and the residuary legatees. This method complied with the equitable principles laid down by the Reade decision and allocated the cost among all who benefited from the recovery of the property. The order of the probate court should, in my opinion, be affirmed.
Respondents’ petition for a rehearing was denied December 30, 1959. Peters, J., was of the opinion that the petition should be granted.