IN RE: WEAR'S ESTATE. (1941)

This is the second appeal by Edward Rolkin, executor of the last will and testament of Katie Richards Wear, from an order and decree settling his first account. Because of the death of Edward Rolkin during the pendency of this appeal his executrix, Arline M. Rolkin, and his executor, Bohdan Gillewitz, have been substituted as appellants in his place and stead.

In 1920 Mrs. Wear, the decedent, owned certain real property situated in Agua Caliente, Sonoma County, against which there was a deed of trust securing a promissory note for $27,800, and a mortgage securing a note for $3,525. Mrs. Wear was without funds to meet the demands for payment made by the holders of these securities who were threatening to foreclose. On January 31, 1920, Edward Rolkin entered into a written agreement with her whereby he agreed to advance the money to purchase the two notes and the instruments securing them and she agreed to pay these notes to him; Mrs. Wear further agreed to sell her lands in Sonoma County and to apply the money received from such sales to the payment of the notes. Continuing, the agreement provided that after the notes had been paid all money received from the sale of the lands was to be divided in proportions of seventy–five per cent to Mrs. Wear and twenty–five per cent to Rolkin; if the lands were not sold within six years Mrs. Wear agreed to convey a one–fourth undivided interest in the lands remaining unsold to Rolkin. Rolkin put up the cash to purchase the notes and the instruments securing them, and they were assigned to him. On September 29, 1922, Mrs. Wear sold certain of her properties to Thomas H. Corcoran and wife for $49,000; the purchasers paid $9,000 down and in payment of the balance of the purchase price gave their promissory note for $40,000 secured by a mortgage and deed of trust. The note, mortgage and deed of trust were made out to Rolkin and were delivered to him; Rolkin executed and delivered to Mrs. Wear a declaration that he held the same only as security for the money advanced by him, which declaration of trust was recorded.

Mrs. Wear died on April 7, 1930, at which time the unpaid balance on the Corcoran note was $26,000. Her last will nominated Rolkin as executor and devised certain portions of the residue of her estate to the contestants in the present litigation. Rolkin offered the will for probate and was appointed special administrator pending the determination of a contest which had been filed; he continued in this capacity until April 7, 1932, when the will was admitted to probate and he was appointed executor. On August 23, 1932, Rolkin filed his final account as special administrator; this account stated that the cash on hand belonging to the estate amounted to $2,443.43 and that the share of the decedent in the unpaid balance of the note was $11,954.39 at the time of her death; the schedule in the account showed that certain payments of principal and interest had been received on the note since Mrs. Wear's death. A supplemental account was filed which increased the cash on hand to $2,829.43 and stated that the estate had an interest in the note. The contestants filed exceptions to this account and were represented by counsel. On September 22, 1932, the court found that these accounts were true and correct, and the accounts were approved and settled as rendered; the court ordered that fees in the amount of $1,300 be paid to certain persons and that the balance of the cash on hand in the sum of $1,529.43 as well as the interest in the promissory note be distributed to Rolkin as executor. No appeal was taken from this decree.

On January 3, 1934, Rolkin filed his first account as executor, which account is now under consideration. He reported that the cash on hand belonging to the estate totaled $1,677.32, and that the interest of the estate in the Corcoran note was $8,740. The contestants filed exceptions and the court ordered a reference for the purpose of taking an account. As a result of the referee's report the court charged the executor with $5,395.75 cash on hand and with $19,000 as the interest of the estate in the Corcoran note. The executor appealed from the decree and it was reversed in Estate of Wear, 17 Cal.App.2d 703, 62 P.2d 779.

On retrial, the record on the former appeal, reports of the referee, and a stipulation that Rolkin had never filed a claim against the estate were before the trial court. Rolkin objected to an examination of any matters prior to the period of this account on the ground that these matters had been concluded by the settlement of the special administrator's account which had become final, and they were thus res judicata. The court entered a minute order and a decree settling the first account of the executor in which it was found that the plea of res judicata was not available to the executor and that the court must proceed to interpret the agreement of January 31, 1920; the court charged the executor with $7,450.66 cash on hand which was $5,773.34 over and above the sum reported by him in his account and with an unpaid balance of $19,000 belonging to the estate on the promissory note instead of $8,740 reported in the account. The decree further stated that “with the foregoing amendments and surcharges, the first account of said executor will be settled and allowed”. The executor appeals from this order and decree settling his first account.

Appellants contend that “the final account and supplemental account of appellant as special administrator having been approved and settled by an order which had become final, all persons, including the respondents, were concluded in his subsequent account as executor by the court's finding, which determined the items and amount of the estate”. It is true that the former settlement of the special administrator's final account by the probate court is conclusive and res judicata as to all matters included in such settlement or necessarily involved therein. 24 Corpus Juris 1029; 11b Cal.Jur. 614, 615. However, the accounts of Rolkin as special administrator and the settlement thereof did not involve a consideration of the agreement of January 31, 1920, or the rights of the parties to that agreement, nor did they involve a consideration of the accounts of Rolkin as trustee; further, in these previously settled accounts Rolkin made no claim to an interest in the Corcoran note nor did he state that he had received from Corcoran larger sums than those turned over to the estate. These items were introduced into the controversy for the first time in the executor's account and were not passed upon or adjudicated by the court in its decree settling the special administrator's account. The law is well established that the settlement of an account is not conclusive as to matters not included in it and not actually passed upon by the probate court. Estate of Adams, 131 Cal. 415, 416, 63 P. 838; Estate of Ross, 179 Cal. 358, 362, 182 P. 303; Sontag v. Superior Court, 1 Cal.App.2d 138, 141, 36 P.2d 140; 24 Cor.Jur. 1029. Such matters not having been included or passed upon by the court in its settlement of the special administrator's final account that decree is not conclusive as to these items, and the trial court properly found in its order and decree that the plea of res judicata was not available to the executor.

Appellants argue further that “assuming that the court did have power to reconsider these matters already adjudged, it erred in determining the amount of estate with which appellant should be charged”. We find no error in the amounts charged to the executor by the trial court. A perusal of the contestants' exhibits shows that between the date of the agreement and the date of Mrs. Wear's death, Rolkin received $89,483.95 for her account which sum was greatly in excess of the amount required to liquidate her indebtedness to him. Appellants contend that Rolkin paid out $86,386 to or for Mrs. Wear from the amount received, but this argument fails to substantiate the claim that he did not receive enough money to liquidate Mrs. Wear's debt to him.

The unpaid balance due on the Corcoran note at the time of Mrs. Wear's death was $26,000. Between the date of Rolkin's appointment as special administrator and the date of the account in question, he received $7,000 principal on the note leaving an unpaid balance of $19,000 due. During the same period he collected $5,451.15 interest which brought the total amount received on the note to $12,451.15. He turned over $5,727.52 to the estate and retained $6,723.62. The question is whether Rolkin had a right to retain any of this money which he received on the note subsequent to the date of his appointment as a special administrator.

Section 703 of the Probate Code reads in part: “If the executor or administrator is a creditor of the decedent, he shall file his claim with the clerk, who must present it for allowance or rejection to the judge. Its allowance by the judge is sufficient evidence of its correctness, and it must be paid as other claims in due course of administration. * * *” It is stipulated that Rolkin never filed a claim against the estate. He acquired no title to the money under the agreement and he further disclaimed any title in the declaration of trust. Hence as his claim was not filed with a clerk and presented to the judge as required by the aforementioned section of the Probate Code he cannot retain any part of the money received by him as special administrator or as executor. Estate of Hildebrandt, 92 Cal. 433, 436, 28 P. 486. The fact that Rolkin was a secured creditor did not relieve him from the mandatory requirement of the Code section which contains no exceptions express or implied. “Debts secured by mortgage are generally subject to the rules of law applicable to those which are not secured, the only advantage which a mortgage creditor has over others being in respect to his remedy for obtaining payment of the amount due him.” 11a Cal.Jur. 697, 698. The conclusion follows, therefore, that Rolkin was not entitled to retain any part of the moneys received by him in his capacity as special administrator or executor, and that the court properly charged him with $5,773.34 as cash on hand over and above the sum reported by him and with an unpaid balance of $19,000 as the interest of the estate in the note instead of $8,740 reported in his account.

Appellants' final contention is that the court erred in failing to make findings of fact and to rule upon the claims presented against the estate. We cannot agree with this argument. Findings of fact and conclusions of law are not required in the order settling an account, but are implied in support of the order as made. Estate of Machado, 186 Cal. 246, 250, 199 P. 505; Estate of McPhee, 156 Cal. 335, 337, 104 P. 455, Ann.Cas.1913E, 899; Estate of Adams, 131 Cal. 415, 420, 63 P. 838; 11b Cal.Jur. 603. Further, the court did not fail to rule upon the claims presented against the estate. Such claims were approved by the decree which stated: “With the foregoing amendments and surcharges, the first account of said executor will be settled and allowed.” No additional ruling upon the claims was necessary.

The order and decree appealed from are affirmed, respondents to have their costs on appeal, payable out of the assets of the estate.

NOURSE, Presiding Justice.

We concur: STURTEVANT, J.; SPENCE, J.