IN RE: the ESTATE of Sue B. KERR

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District Court of Appeal, Fourth District, California.

IN RE: the ESTATE of Sue B. KERR, Deceased. Almario M. AVILES, Executor and Appellant, v. LUCE, FORWARD, HAMILTON & SCRIPPS, Respondents.

Civ. 7960.

Decided: July 26, 1965

David W. Hardin, San Diego, for executor of the Estate of Sue B. Kerr, appellant. Luce, Forward, Hamilton & Scripps, Michael Ibs Gonzalez and Bruce A. Berry, San Diego, for respondents.

The probate judge made on order awarding to Messrs. Luce, Forward, Hamilton & Scripps, and Anderson, McMillan & Connolly, by reason of an attorneys' contingent agreement, one-half of the net recovery of Almario M. Aviles, sole beneficiary of the Kerr estate, after all court costs, creditors' claims, and costs of administration shall be deducted. The order further recites that as the estate will not be in a condition to close until the claims of creditors and costs of administration have been ascertained and paid, the exact amount of the fees cannot now be fixed; accordingly, the attorneys are given a lien on the assets of the estate to secure the payment of such fees. This order specifically embraces funds which may be deposited in escrow by reason of the sale of land in the estate, and it is said, ‘* * * that the aforesaid lien in favor of said attorneys shall be a charge against said funds so held by said escrow company.’

While the appellant demanded a reporter's transcript on appeal, no reporter's transcript was ever prepared or filed for the simple reason that no reporter was present when the hearing was held.

It appears by concession of the parties that Sue Kerr made a will on the 21st day of August, 1961, apparently in duplicate, in which she said:

‘* * * I do hereby designate ALMARIO M. AVILES as my sole heir and beneficiary’;

that he should be her legal guardian ‘if and when necessary’; that in the event of her death her ‘body shall be cremated and the remains be kept in the crypt of my late husband’; and that:

‘* * * I appoint ALMARIO M. AVILES 8072 Beaver Lake Drive, San Diego 19, California * * *’ as executor.

One copy of the will, which had been torn across several times by someone and later pasted together with trading stamps, was found by the public administrator after her death; the other copy, apparently, was in the hands of Mr. Aviles, who, before her death, had moved from his former home in San Diego to the San Mateo area.

After the death of Mrs. Kerr, the public administrator filed for letters of administration. Mr. Aviles consulted with attorneys in San Mateo, Messrs. Anderson, McMillan & Connolly, who in turn enlisted the interest of Bruce A. Berry, associated with Luce, Forward, Hamilton & Scripps of San Diego and Michael Ibs Gonzalez, a partner in that firm.

In the month of November, 1962, Mr. Aviles, therein called ‘client,’ and Anderson, McMillan & Connolly and Michael Ibs Gonzalez of the firm of Luce, Forward, Hamilton & Scripps, named as ‘attorneys,’ executed what was termed ‘Attorneys' Rctainer Agreement,’ which provided in part:

‘Client hereby ratains Attorneys to represent him as his Attorneys at law in the matter of proving in Will of SUE B. KERR in the County of her residence; to-wit: San Diego County, California, * * * and empowers them to effect a compromise of said matter or contest the actions of the public administrator or other claimants to the property of said deceased SUE B. KERR in said probate proceedings or other actions, as may be necessary in their judgment and agrees to pay them for their services as a guaranteed fee of Two Hundred Dollars ($200.00) to defray their costs in connection with the prosecution of the probate of said Will and other actions, if any, and to pay said Attorneys one-half (1/2) of the recovery in said estate proceedings by reason of any compromise or proof of the said Will and the admission thereof and the procurement of the distribution of the assets of said decedent, SUE B. KERR.’

It was also stipulated in the contract that the attorneys should have a lien on the client's property in said estate, and that they might retain 50 per cent ‘as their share out of the amount finally collected by suit or settlement, or judgment in full, of their services.’ Notwithstanding the contemporaneous attempt of the public administrator to be appointed administrator, the respondent attorneys were successful at the court hearing in having the will of Mrs. Kerr admitted to probate and in having Mr. Aviles appointed executor; it was decided that Mr. Aviles, by virtue of being named ‘as my sole heir and beneficiary’ would be entitled to recover all of the property of the estate, even though the will did not explicitly say so. The ‘attorneys' named in the contingent contract thereafter performed in sequence most of the legal work of the estate; it is said on pages 2 and 3 of Appellant's Opening Brief that the firm of Luce, Forward, Hamilton & Scripps performed extensive duties as the attorneys for the executor, having prepared ‘* * * Letters Testamentary, Order Admitting Will to Probate, Notice to Creditors, Petition for Probate of Will, Declaration of Michael I. Gonzalez and Bruce A. Berry, Publication of Notice to Creditors, Appointment of Inheritance Tax Appraiser, * * * Notice of Sale of Real Property, and petition to borrow money to encumber real property of the estate.’

By a ‘Notice of Motion for Substitution of Attorneys and Fixing Fees,’ dated August 14, 1964, Mr. Aviles requested that Mr. Hardin be substituted as attorney of record for the executor and that the fees of counsel be determind as between the old and new attorneys. An order dated September 10, 1964, was made substituting Mr. Hardin as attorney for the executor, and a little later, on October 8, 1964, the court decided relative to the attorneys' fees, reciting ‘* * * that said attorneys [named in the contract] have waived all claims for fees as counsel for said Executor.’ The order continued:

‘IT IS THEREFORE HEREBY ORDERED, ADJUDGED AND DECREED that the fees of Luce, Forward, Hamilton & Scripps and Anderson, McMillan, & Connolly on account of said Attorneys' Retainer Agreement be and they are hereby fixed as one-half of the net recovery of Almario M. Aviles from the estate of the above named deceased after deducting all the court costs, creditors claims and costs of administration; that until the said creditors claims and costs of administration have been paid and the estate is in a condition to close, the amount of said fees cannot be fixed; that said attorneys be and they are hereby given a lien on the assets of said estate to secure payment of said fees; that any funds payable to the estate on account of the sale of the aforesaid real property after payment therefrom of the creditors claims and costs of administration pursuant to the order of this court set forth on September 8, 1964, shall be held by said escrow company and paid only upon the further order of this court; and that the aforesaid lien in favor of said attorneys shall be a charge against said funds so held by said escrow company.’

It was further provided that the former attorneys for the executor should be reimbursed in the sum of $29.36 for funds advanced by them for necessary costs of administration in excess of the $200 which was deposited with them by Mr. Aviles for such purpose as provided in the contingent contract. This latter finding is responsive to a statement showing ‘ITEMIZED STATEMENT OF COSTS' dated August 24, 1964, and marked ‘Exhibit I’ attached to the ‘Declaration of Michael Ibs Gonzalez,’ which indicates the payment of costs necessary in the probate of the estate.

It is obvious that three results might follow a consideration of this appeal—reversal, affirmance, or modification accompanying a reversal.

Appellant contends that the attorneys' fee contract was nothing more or less than a contract to probate the estate of the decedent, and that by reason of the provisions of sections 910, 901, and 903 of the Probate Code, and subsequent decisions, the contract was illegal and void. Unquestionably it is the general policy established by law and enunciated in the Probate Code that the probate of an estate is not the occasion for an increase in the amount of attorneys' fees provided by law. If this situation were nothing more than the probate of an estate, appellants' point would be good. (Estate of Hite, 155 Cal. 448, 101 P. 448; Estate of Higgins, 158 Cal. 355, 111 P. 8; Henry v. Superior Court, 93 Cal. 569, 29 P. 230; Firebaugh v. Burbank, 121 Cal. 186, 53 P. 560.) But this was not the simple probate of an estate. At the time that Mr. Aviles contracted with the attorneys, his chances of recovery appeared to be extremely doubtful. The Public Administrator of San Diego County had taken the position, with a considerable showing of propriety, that Mrs. Kerr had revoked the will which she had previously made by tearing it across in several places, and that many of her neighbors and close friends were opposed to Mr. Aviles and felt that he should not be the beneficiary of any part of the estate.

Evidently, Mr. Aviles was not in a position to pay cash for services to be rendered by the attorneys. He felt that he had an honest claim to the property of the estate, but it was not certain that the wording of the will itself entitled him to succeed to the property of decedent; she had merely designated him as her sole heir and beneficiary, which, in conformity with good sense, the Superior Court of San Diego County found to be equivalent in intention to willing all of her property to him.

The whole situation was one of difficulty and uncertainty at the time the contingent contract was executed, and, while such agreements are relatively rare in probate practice, it is apparent that unless a contingent contract should be held to be proper in appropriate instances, there would be a failure of justice due to the inability of beneficiaries to pay for attorneys' services as rendered. In fact, there have been numerous cases which hold that in some circumstances contingent fees are entirely proper in probate proceedings. (See Estate of Raphael, 103 Cal.App.2d 792, 230 P.2d 436; Estate of Cazaurang, 1 Cal.2d 712, 36 P.2d 1069; Estate of Cazaurang, 75 Cal.App.2d 217, 170 P.2d 694; Houge v. Ford, 44 Cal.2d 706, 285 P.2d 257.)

It should also be noted that the value of the estate did not initially appear to be great and that, by reason of various factors, the proposed sale of the real property formerly owned by decedent will bring more than was originally expected. The percentage that is proper in contingent contracts for attorneys' services is legitimately influenced by the apparent size of the payment that will probably fall due upon full performance.

It is true that once the position of the public administrator was eliminated by proof, and the will admitted to probate with Mr. Aviles as executor, the main work that had to be done by the attorneys consisted of the normal services performed by counsel in connection with the probate of an estate. The contract of employment states that the attorneys were retained ‘* * * in the matter of proving the Will of Sue B. Kerr,’ and most of the actual services rendered by the attorneys were those usually incidental to the probate of an estate.

There are indications of necessary activities by the attorneys which were not inevitable parts of a probate proceeding; there were the extensive interviews with witnesses to the will and neighbors of the decedent, and the whole background of the matter was thoroughly canvassed by the attorneys with these potential witnesses under, apparently, adverse conditions. There were also numerous items of correspondence and several conferences with Mr. Aviles relative to the sale of the only substantial asset of the estate, namely, the real property.

Should the order awarding one-half of the property gained by Mr. Aviles as a result of the probate of the estate be approved? To give the attorneys this full measure of recovery after they specifically waived attorneys' fees for their work for the executor would be offensive to a sense of fairness.

However, the attorneys did do substantial work, and to deprive them of any fee for their services would be equally unfair. We believe that the solution of the question lies in a resort to section 1020.1 of the Probate Code, which provides as follows:

‘The court before making distribution of any property of a decedent to any assignee or transferee of any heir, devisee or legatee or before making distribution to any person other than an heir, devisee, or legatee pursuant to any agreement, request or instructions of any heir, devisee or legatee or of any attorney-in-fact of any heir, devisee or legatee may on the motion of any person interested in the estate or on the motion of the public administrator or on its own motion inquire into the consideration for such assignment, transfer, agreement, request or instructions and into the amount of of any fees, charges, or consideration paid or agreed to be paid by the heir, devisee or legatee and into the circumstances surrounding the execution of such assignment, transfer, agreement, request or instructions and if it finds that the fees, charges or consideration paid by any such heir, devisee or legatee is grossly unreasonable or that any such assignment, transfer, agreement, request or instructions was obtained by duress, fraud or undue influence it may refuse to make distribution pursuant thereto except upon such terms as it deems just and equitable.’ (Italics added.)

(See Estate of Lund, 65 Cal.App.2d 151, 150 P.2d 211; Estate of Cazaurang, supra, 75 Cal.App.2d 217, 170 P.2d 694.)

The trial court evidently did not take into consideration this provision of the Probate Code. After an express waiver by the attorneys of payment for all of their services rendered to the executor as such it would be wrong for the court completely to ignore the waiver and allow them everything that was contemplated in the original contingent agreement. The work done by the attorneys for the executor as such was also done pursuant to the contingent contract in their efforts to secure to the client named in the agreement his full share of the estate.

That portion of the order making the fee which is payable a charging lien on appellant's property in the estate is not improper. (Gostin v. State Farm Ins. Co., 224 Cal.App.2d 319, 36 Cal.Rptr. 596.)

The order is reversed with directions to the trial court to hear the matter again and by applying the provisions of section 1020.1 of the Probate Code to reduce the attorneys' fees provided in the contingent agreement by the reasonable value of the services rendered by respondents to Mr. Aviles as executor of the estate of Sue B. Kerr.

FOOTNOTES

FOOTNOTE.  

CONLEY, Justice.* FN* Assigned by Chairman of the Judicial Council.

GERALD BROWN, P. J., and COUGHLIN, J., concur.

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