IN RE: ESTATE of Elsie Wells GERMOND, Deceased. SALVATION ARMY, Petitioner and Appellant, v. Alta EVERETT et al., Claimants and Respondents; Los Angeles County Heart Association et al., Claimants and Appellants.
Eight charitable institutions have appealed from a determination of the probate court adverse to their respective claims of interest as alternative beneficiaries in proportionate shares of the residuary estate of Elsie Wells Germond. For the reasons set forth below, we conclude that the trial court was in error and that the appellant charities are entitled to succeed to Mrs. Germond's estate.
The administration of the Germond estate was intimately interwoven with the concurrent administration by the same executor of the estates of two other family members: that of Mrs. Germond's sister (Mrs. Nulsen), and that of Mrs. Germond's aunt (Mrs. Thomas). The three ladies passed away within a period of three years—Mrs. Thomas dying on April 18, 1961, Mrs. Germond on June 2, 1962, and Mrs. Nulsen on April 24, 1964. Mr. Everett, an attorney who had acted as counsel to Mrs. Thomas and to her nieces from time to time before Mrs. Thomas' death, had drafted wills for each of the three ladies and in each will he was named as executor. He served in that capacity in each estate from the time each will was probated until his own death on or about May 21, 1967. At the time of Mr. Everett's death—approximately six years after the death of Mrs. Thomas and five years after the death of Mrs. Germond—none of the three estates had been distributed and Mr. Everett was administering them concurrently.
For a number of years prior to her death, Mrs. Thomas occupied with her nieces a single dwelling situated at the rear of a parcel of realty at the corner of Sunset Boulevard and Fairfax in Los Angeles. The property consisted of a commercial corner with frontage on Sunset Boulevard which was improved by a gasoline service station and the adjacent property to the rear upon which the residence was located. Mrs. Thomas and Mrs. Germond owned the entire property as tenants in common and, pursuant to a lease with Atlantic Richfield which was originally executed in 1938 and which had been renewed periodically thereafter, they received a rental of $500 per month plus a gallonage fee.
Mrs. Thomas and Mrs. Germond also owned as tenants in common three improved parcels of real property situated in Cedar Rapids, Iowa, which were leased to commercial tenants.
Pursuant to Mrs. Thomas' will, the entire residue of her estate, including her undivided one-half interest in the California and Iowa properties, passed to her niece and tenant in common, Mrs. Germond. On June 2, 1962, a little more than a year following her aunt's death and before the Thomas estate was distributed, Mrs. Germond died. Her will was duly admitted to probate on July 16, 1962. Provision was therein made for distribution of her estate in the following manner:
‘FOURTH: I give, devise and bequeath all my property, both real and personal of every kind and description whatsoever, and wheresoever situate, of which I may die seised or possessed, or to which I may be entitled at the time of my decease, to my sister, JESSIE E. NULSEN. In the event of the demise of my sister, JESSIE E. NULSEN, prior to distribution to her of my estate as hereinbefore provided, * * * then and in that event, my Executor * * * shall convert my estate, and the whole thereof into cash, and from the proceeds thereof, pay to and distribute the same as follows: * * *.’
Thereafter the Church of Religious Science is designated as beneficiary of one-third and nine other charitable institutions (including The Salvation Army, Braille Institute of America, American Cancer Society, Multiple Sclerosis Society, The Service Guild, Inc., Orthopaedic Hospital, Children's Hospital, John Tracy Clinic, and Heart Association of Los Angeles County) are specified to take two-twenty-sevenths each of the residuary estate as alternative beneficiaries.
Nearly two years after her sister's death Mrs. Nulsen, who was then 79 years of age, became seriously ill and was removed from her residence to a hospital for care early in 1964. On February 4, 1964, twenty months after her sister's death, Mrs. Nulsen directed Mr. Everett to prepare for her a will naming himself as executor and residuary beneficiary of her estate. Several months later, on April 22, 1964, Mrs. Nulsen died without having had distributed to her any part of the property in the Germond estate. On May 16, 1967, almost five years after Mrs. Germond's death and only a few days before his own demise, Mr. Everett filed a claim to the Germond property.
After Mr. Everett's death in 1967, administration of the Germond estate was assumed by Security Pacific National Bank, and the assets of that estate were then, and continued to be as of the date of the trial in this matter, undistributed.
The Salvation Army, one of the alternative beneficiaries under Mrs. Germond's will, petitioned the probate court for a determination of heirship (Prob.Code, § 1080); statements of interest were filed by the Los Angeles County Heart Association, Braille Institute of America, Inc., American Cancer Society, California Division, Inc., Los Angeles County Branch, Southern California Chapter of the National Multiple Sclerosis Society, Orthopaedic Hospital, United Church of Religious Science, John Tracy Clinic, Children's Hospital of Los Angeles, being eight of the other alternative beneficiaries; the Service Guild, Inc., did not appear. In addition, appearance and claims were made on behalf of the Everett heirs, the administrator of Mrs. Nulsen's estate and the successor executor of Mrs. Germond's estate.
The Bank of America, which succeeded to the administration of the Nulsen estate, is one of the respondents in this action. The other respondents are Mr. Everett's surviving heirs, including his widow Alta Everett, his sister Cordie Averitt, and Ellamae O'Neill as guardian of his son. Respondents assert their right to distribution of the Germond residuary estate pursuant to the claim of interest initially filed by Mr. Everett. Eight of the charities were represented at the trial on the issue of distribution rights and from the trial court's decision that the heirs of the Everett estate are entitled to receive the Germond property, these institutions have appealed.
It is the position of the Everett heirs that Mr. Everett's delay in effecting the distribution of the Germond estate was unreasonable; that the effect of such unreasonable delay was to vest title to the residuary assets of that estate in Mrs. Nulsen, who was alive at the time they contend the Germond estate could and should have been distributed. Their position is founded upon the legal principle announced in Estate of Taylor (1967) 66 Cal.2d 855, 59 Cal.Rptr. 437, 428 P.2d 301. The California Supreme Court therein affirmed a probate court decision which ‘applied the rule that vesting cannot be postponed by unreasonable delay in preparing an estate for distribution and that when there is such delay contingent interests vest at the time distribution should have been made.’ (Estate of Taylor, supra, p. 858, 59 Cal.Rptr. p. 438, 428 P.2d p. 302.)
It is appellants' principal contention that the delay of the executor, if any, in the administration and distribution of the Germond estate was not so unreasonable as to cause the property to vest in Mrs. Nulsen at a date prior to her death. Appellants further contend that the heirs of Mr. Everett are estopped to assert that the executor unreasonably delayed estate distribution or that the doctrine of laches bars them from receiving the assets of the Germond estate. The trial court attributed the deferred distribution of the Germond residuary estate to the executor's unreasonable delay, especially in preparing and filing state and federal tax returns, and found that distribution should have taken place no later than September 19, 1963. Since Mrs. Nulsen was still living on the date when distribution could reasonably have been expected to take place, the probate court found that the heirs of Mr. Everett, principal beneficiary under her will, were entitled to take the property.
As indicated above, the charities have appealed from that determination, contending also that the trial court erred in failing to grant appellants' motions for a new trial or to set aside the judgment.1
It is to be noted that Taylor uses the term ‘unreasonable delay,’ and not ‘negligence.’ The two terms often, but not necessarily, have the same meaning. Whether or not, for some purposes, Mr. Everett might have been found ‘negligent,’ in the performance of his duties, we conclude that, under the circumstances of this case, the delay was not the kind of ‘unreasonable’ delay contemplated by Taylor.
The administration of the Germond estate was complicated in part by the necessity of administering and closing the Thomas estate, since the chief assets of both estates were undivided interests in common in four pieces of real property. Administration was further complicated by the fact that neither estate had liquid assets in amounts even approaching the immediate requirements for state and federal death taxes and the costs of administration. Three of the parcels of real property were located in the State of Iowa, necessitating ancillary administration in that state. The executor's decision was to sell the Iowa properties in order to raise the cash necessary for taxes and expenses. Those sales ultimately were accomplished, but only after a considerable delay. The result of all the complications, and the time that Mr. Everett took to resolve them, was that neither the Thomas estate nor the Germond estate was ready for distribution when Mrs. Nulsen died—in fact they were still not in condition to be closed when Mr. Everett died.
The trial court found that, with due diligence, the two estates could have been ready for distribution by September 19, 1963—fifteen months and two weeks after Mrs. Germond's death, and seven months prior to Mrs. Nulsen's death. Appellants here attack that finding as unsupported by the record, arguing, among other matters, that Mr. Everett wisely elected to exercise the right to wait until one year after Mrs. Germond's death before filing the federal estate tax return and that, even had that return been filed on June 3, 1963 (one year and one day after death), it could not have been audited, the tax paid and distribution made within the period prior to Mrs. Nulsen's death.
Admittedly, if the finding of negligent delay falls, there is no basis for resort to the doctrine of Taylor, the charities and not the Everett heirs take,2 and the judgment and orders must be reversed. However, we need not decide whether or not the evidence supports the trial court's findings since, for reasons hereinafter set forth, we conclude that the Everett heirs cannot take even if Mr. Everett was negligent.
Prior to the decision in Estate of Taylor, supra (1967) 66 Cal.2d 855, 59 Cal.Rptr. 437, 428 P.2d 301, the rule in cases where a will contained provisions similar to that above quoted from Mrs. Germond's will, was to apply the provisions literally and to make distribution to the beneficiary primarily named only if that person was alive at the date set in the will. As the Attorney General, appearing here as amicus curiae, argues, that result will usually accord with the intention of the testator—namely to provide for the personal enjoyment of the estate by the primary beneficiary but not to enrich that beneficiary's heirs at the expense of the alternative beneficiaries.
In Taylor, the court had before it a situation where the executor was the alternative beneficiary who, if the general rule were applied, would profit from his own delay—a situation fraught with the possibility that administration might covertly be delayed in order to prevent distribution during the lifetime of the primary beneficiary. In the case at bench, the situation is exactly the opposite and application of Taylor would reward, rather than punish, negligent and careless administration.
We read Taylor as establishing the doctrine that delay in administration, beyond the normal time required for that process, is ‘unreasonable’ if it results in shifting the beneficial interest in favor of the personal representative, who had it within his power to prevent such a result. But delay which has the opposite result is not, as a matter of law, ‘unreasonable’ within the meaning of Taylor. In other words, the Taylor doctrine, designed to effect an equitable result between beneficiaries, is not applicable where it would accomplish an inequitable result—such as would be the result in the case at bench.
The judgment and orders are reversed.
1. The notices of appeal also purport to appeal from an order denying them relief under section 473 of the Code of Civil Procedure. The issues in that connection need not be separately considered.
2. Technically, the order appealed from is in favor of respondent Bank of America, as administrator of the Nulsen estate. However, the primary beneficiaries of that estate are the Everett heirs and the equitable considerations which we deem controlling apply as though the order ran directly in their favor.
KINGSLEY, Associate Justice.
FILES, P. J., and JEFFERSON, J., concur.