IN RE: KING'S ESTATE. (1941)

Two sons of Frank J. King, deceased, have appealed from the order settling the final account and directing distribution of his estate. The appellants also seek to review a previous order settling the first annual account of the executor, from which no appeal was taken.

It is contended the court erred in allowing the executrix extra compensation for services in conducting a cattle business during administration; that the compensation was wrongfully charged against both separate and community property of the estate; that the expenses of administration were improperly apportioned; that the community interests of the deceased in certain real and personal property were illegally distributed to the widow, and that Frank A. King, was wrongfully charged as a coexecutor with the appraised value as cash on hand, of two matured notes which he owed the deceased.

Frank J. King died testate, December 12, 1936, at San Francisco, leaving surviving him, his widow, Josephine King, two sons, Frank A. and William H. King, and a brother named George W. King. He left a will dated September 26, 1936, by the terms of which he appointed his widow and his son Frank as coexecutors. The will purported to dispose of his entire separate property and of all the community property belonging to himself and wife. He willed specific real and personal property to each of his heirs. He devised to his widow the Peterich ranch, consisting of 314 acres of land, and he bequeathed to her a legacy of $10,000 and one–third of the proceeds from the sale of 565 head of cattle which he possessed. He directed the executors to care for the horses and cattle until they could be disposed of to good advantage, which he said might be within “about one year from the date of the will”.

The will was admitted to probate in Glenn county. Letters testamentary were issued to Josephine King and Frank J. King, February 16, 1937. The estate was appraised at $49,142.33. The inventory included two unpaid notes executed by Frank A. King and payable to his father, both of which were matured. One note was for $4,328.10, upon which unpaid interest was then due in the sum of $1,363.83. That note was appraised at $5,691.93. The other note was appraised at $600. The cattle and horses were appraised at $16,950. A portion of the horses and cattle were sold to Moffett Company, July 12, 1937, for $16,776.20. Upon petition therefor, under section 572 of the Probate Code, the court authorized the continuation of the cattle business until the stock could be sold to advantage. The following January the balance of the cattle were sold to Mr. Zumwalt for $12,232.25. The total receipts from the sale of horses and cattle was $29,008.45. The cattle business was conducted at a substantial profit to the estate.

The widow renounced her right to inherit property from the estate of her husband according to the terms of his will, and upon the contrary elected to take her share of the property pursuant to the rules of succession. The executor's first annual account was settled and approved October 21, 1938. In that account the widow was allowed $2,000 extra compensation, to be paid from the assets of the estate. The order making that allowance and settling the account was entered October 21, 1938. No appeal was taken from that order and it became final. Upon application therefor the court also made an award of $100 per month to the widow for a family allowance during the process of administration.

The final account was settled and distribution of the property of the estate was made and entered September 12, 1939. At that time the assets of the estate were marshaled and the expenses of administration were properly apportioned against the respective devisees, legatees and heirs in the proportions ascertained from the appraised valuations of the distributive shares received by each one. Besides the several ranches and other personal property on hand for distribution, there was $35,090.37 in cash, received from the sales of horses and cattle and from other sources. The costs of administration were $12,277.53. The portion of the costs assessed against the widow was the sum of $5,295.09.

All of the cash on hand, the two notes and the three ranches which are involved on this appeal, are community property. Those farms were called respectively the “Peterich Ranch”, the “Edgewood Ranch”, and the “Magoffey Ranch”. By the terms of the will the Peterich ranch was devised to the widow, together with a legacy of $10,000, one–third of the proceeds from the sales of horses and cattle, and whatever residue remained after the debts and expenses of administration had been paid. The will gave to Frank A. King the Edgewood ranch, the Magoffey ranch, together with some other property, and a third of the proceeds from the sales of cattle and horses.

Having elected to inherit her share of the estate according to the rules of succession, there was distributed to Josephine King the Peterich ranch, consisting of 314 acres of land, an undivided one–half interest in the Edgewood ranch, one–third interest in the Magoffey ranch, one–half interest in two small notes and cash in the sum of $12,930.37, all of which properties distributed to her were her community share thereof, except that she took the entire Peterich ranch under section 201 of the Probate Code, as community property which was not disposed of by will on account of her renunciation of that instrument.

In the decree settling the final account and directing distribution to be made, the court charged Frank A. King with the appraised value of the two matured notes as cash in his hands as a coexecutor, aggregating the sum of $6,854.46, which he owed to the estate. From that decree settling the final account and directing distribution of the estate to be made, Frank A. King and his brother William have appealed.

We are of the opinion the allowance of $2,000 as extra compensation for carrying on the cattle business was properly awarded. The will specifically authorized the executors to retain the cattle and horses for a period of “about one year from the date of the will”, and they were directed to sell them when it was most advantageous to do so. That provision necessarily infers that the business of carrying on the cattle enterprise for a period of at least one year was authorized by the testator. The fact that the widow elected to inherit her share of the estate in accordance with the rules of succession rather than under the provisions of the will, in no way abrogated the independent authorization of the testator to carry on the business until the cattle could be sold to advantage. That provision of the will is nevertheless valid and binding. The fourth clause of the will provides in that regard: “I direct that my executors sell the cattle and horses on the ranch near Fruit as soon as they are in condition to be sold, which should be about one (1) year from the date of this will.”

The will was dated September 26, 1936. On July 12, 1937, a portion of the cattle and horses were sold to the Moffett Company for $16,776.20. On October 8, 1937, before the year had expired, the court made an order under section 572 of the Probate Code, authorizing the executors to continue the stock business. The following January the balance of the cattle were sold to Mr. Zumwalt for $12,232.25. There is no evidence the stock could have been sold to advantage before they were actually disposed of. Evidently the business was conducted at a profit, for the horses and cattle were appraised at $16,950. They were sold for the total sum of $29,008.45.

It is the duty of an executor, with or without an order of court, to take charge of the property of an estate and to preserve it in as good condition as is reasonably possible pending administration. Estate of Fulmer, 203 Cal. 693, 265 P. 920, 58 A.L.R. 430; Estate of Freud, 131 Cal. 667, 63 P. 1080, 82 Am.St.Rep. 407; Estate of Smith, 118 Cal. 462, 50 P. 701; 11 B Cal.Jur. 250, sec. 842; 2 Bancroft's Probate Pr., 682, sec. 359. In the absence of evidence to the contrary it must be presumed the stock was properly cared for; that the expense of doing so was necessarily incurred, and that the horses and cattle were sold as promptly as was for the best interest of the estate. The court so found. There is evidence to support the finding that these duties were performed.

The court was authorized under section 902 of the Probate Code, as it existed prior to the amendment of that section in 1939, to allow additional compensation for the feeding and care of 565 head of horses and cattle belonging to the estate. That section then provided in part: “Such further allowances may be made as the court may deem just and reasonable for any extraordinary services, such as * * * the carrying on of the decedent's business pursuant to an order of the court, and such other * * * special services as may be necessary for the executor or administrator to prosecute, defend or perform.”

It is said in Riedy v. Bidwell, 70 Cal.App. 552 at page 555, 233 P. 995, at page 996, there is an exception to the general rule that it is not ordinarily the duty of an executor to carry on the business of the testator during the administration of his estate. That exception exists “where the will of the testator expressly creates the power so to do, or where the carrying on of a business would be cast upon the executor as a necessary means for the preservation of the estate”.

An allowance of compensation for extraordinary services performed by an administrator with the will annexed, for carrying on a farming enterprise of the deceased, was affirmed by the Supreme Court in the case of Estate of Broome, 162 Cal. 258, 122 P. 470, 472. It is there said: “It is well settled, as a general rule, that if an executor or administrator, in the course of his administration, renders to the estate services not ordinarily required or expected of him, he is not entitled to special compensation therefor, unless it is so provided by statute or by the will under which he acts.” 11 B Cal.Jur. 269, sec. 859; Estate of Ward, 127 Cal.App. 347, 15 P.2d 901.

Where a continuation of the business of a deceased person during administration results in a profit to the estate, it has frequently been said the executor is entitled to extra compensation therefor, even though he voluntarily assumes to perform that service. 11 B Cal.Jur. 270, sec. 860; 2 Bancroft's Probate Pr. 788, sec. 419. In the text last cited it is said: “Likewise, for management of farm operations, because of the chance of loss to the estate and personal liability on the part of the representative, extra compensation may be allowed.”

In the text of 11 B Cal.Jur., supra, it is said in that regard: “When the representative does assume the management of the estate beyond his duty, his services are extraordinary entitling him to compensation according to their worth as a balance to the accountability which he assumes, and he is entitled to reimbursement for proper and beneficial expenditures.”

When extra compensation is allowable for such service, the amount which is proper to fix is within the sound discretion of the probate judge. Estate of Broome, supra. The amount of extra compensation which has been awarded will not be disturbed on appeal unless it is improperly allowed or clearly appears to be excessive. In the Broome case it is said in that regard: “Where serious question arises, either over the character of the service or the value of the service to the estate, this court under familiar principles, will be reluctant to disturb the determination of the judge in probate. So, also, will it be reluctant to disturb an order fixing the amount of compensation where extraordinary services are found to have been rendered.”

Moreover the appellants waived their right of appeal from the order allowing extra compensation, by their failure to give notice of appeal therefrom within sixty days from the time of the settlement of the account as provided by section 939 of the Code of Civil Procedure. Sec. 1240, Probate Code; sec. 939 Code. Civ.Proc.; 11 A Cal.Jur. 218, sec. 142; 3 Bancroft's Probate Pr., p. 1188, sec. 999. October 21, 1938, the probate court made and entered its order settling the executor's first and final account. That order specifically found that Josephine King performed valuable services feeding and caring for the cattle; that her special services were worth $2,000, and thereupon allowed extraordinary compensation in that amount. The decree settling that account, which included the order awarding the widow extraordinary compensation, became a final judgment from which an appeal must be taken within sixty days therefrom. Sec. 939, Code Civ.Proc.; sec. 1240, Probate Code. No appeal was taken from that decree of October 21, 1938, and we may therefore not review its validity on this appeal. The notice of appeal in this case is from the order settling the final account and making distribution of the estate only, which was made and entered September 12, 1939.

We find no merit in the appellants' contention that the business of operating the stock ranch was conducted at a loss. In settling the account the court specifically found that it was conducted at a profit. The decree recites in that regard: “A rough analysis of the account will indicate that the inventory value of the cattle, plus all the expenses of feeding and keeping them, is several thousand dollars less than the assets derived from the sale of the same.”

That finding appears to be amply supported by the record. We are directed to no evidence to the contrary.

The appellants contend that the court erroneously directed payment of the family allowance, which was previously granted to the widow under section 680 of the Probate Code, to be charged against the “devisees and legatees in the proportions that they respectively share in the properties, both community and separate”, upon final distribution. It is asserted the entire amount of family allowance granted to the widow is required to be paid from the community interests of the deceased and his widow. We think not.

The right of a widow to receive a family allowance, pending the administration of the estate, is purely statutory. Hills v. Superior Court, 207 Cal. 666, 279 P. 805, 65 A.L.R. 266; 11 A. Cal.Jur. 505, sec. 367; 21 Am.Jur. 560, sec. 314; 24 Cal.Jur. 230, sec. 758. The will may direct that a specified sum of money for family allowance shall be paid from particularly designated property. Sec. 750, Probate Code. The section last mentioned provides that if the designated property “is insufficient” in value from which to pay the family allowance, the obligation shall be made a charge against “that portion of the estate not disposed of by the will”. It is further provided that if such designated property is not sufficient for that purpose “the property given to residuary legatees and devisees [shall be resorted to], and thereafter all other property devised and bequeathed is liable for the same, in proportion to the value or amount of the several devises and legacies, but specific devises and legacies are exempt from such liability if it appears to the court necessary to carry into effect the intention of the testator, and there is other sufficient estate”.

The preceding section has no application to the present case for the reason that the testator made no provision in his will for family allowance, and designated no property from which it was to be paid.

Since section 680 of the Probate Code authorizes the granting of family allowance for the maintenance of the widow and minor children and neither the will nor a statute designates the class of property from which it must be paid, it reasonably follows that the family allowance under such circumstances becomes a charge against any available assets of the estate. That construction is supported by uniform authorities. A family allowance is ordinarily treated as a “part of the cost of administration”. 24 C.J. 231, sec. 758. In 21 Am.Jur. 563, sec. 320, it is said: “The allowance to a decedent's widow is normally payable out of the assets of his estate.” In Estate of Finch, 173 Cal. 462, at page 464, 160 P. 556, at page 557, it is said: “Her right to an allowance as such is, as we have stated, founded on the statute (sections of the Code of Civil Procedure, supra) and does not accrue to the widow until the death of her husband. Under these sections the surviving wife is then given the right to have a reasonable allowance made by the court for her support from the estate of her deceased husband whether the estate was community property or his separate estate and irrespective of whether the widow has estate of her own out of which she might support herself.”

Section 300 of the Probate Code specifically provides that: “All of his property shall be subject to the possession of the executor or administrator and to the control of the superior court for the purposes of administration * * * and shall be chargeable with the expenses of administrating his estate, and the payment of his debts and the allowance to the family, except as otherwise provided in this code.”

That construction of the statute was so declared in the case of Estate of Haselbud, 26 Cal.App.2d 375, 79 P.2d 443, in which a hearing by the supreme court was denied. In accordance therewith the syllabus of that case says in that regard: “Debts which constituted part of the obligations of the estate * * * as well as family allowance and expenses of administration were to be borne ratably by the community and separate property of the decedent.”

A contrary construction of the statute might result in charging the obligation of an estate to pay family allowance to a widow against her own community interest in the property. That construction is opposed to the policy of the law with respect to family allowances. In the headnote to an exhaustive brief on that subject, found in 98 A.L.R., at page 1326, it is said: “It appears, however, that with some exceptions, it has been generally held that where there is provision for but one form of allowance for the widow, this will not be deducted from her distributive share of her husband's estate.”

We conclude that, under the circumstances of this case, the court properly held that the family allowance was chargeable to the assets of the estate without regard to whether it consists of community or separate property of the decedent.

The appellants contend that the court wrongfully distributed to Josephine King, the widow of the deceased, the entire Peterich Ranch and one–half interest in two small notes, together with cash in the sum of $12,930.37. It is asserted that her renunciation of the will entitled her to inherit only her community interest in the real and personal property. We do not agree with that construction of the law. Section 201 of the Probate Code provides that: “Upon the death of either husband or wife, one–half of the community property belongs to the surviving spouse; the other half is subject to the testamentary disposition of the decedent, and in the absence thereof goes to the surviving spouse, subject to the provisions of sections 202 and 203 of this code.”

Sections 202 and 203, referred to in the preceding section, have no application to the circumstances of this case. We construe section 201, supra, to mean that upon the death of one spouse, the surviving one is the absolute owner of one–half of the community property, both real and personal, and that if the one–half interest belonging to the deceased is not disposed of by will, the entire property goes to the survivor subject to the provisions of sections 202 and 203 of the Probate Code. All of the property involved on this appeal is community property. That fact is not disputed. When the widow renounced the will, the Peterich Ranch and the other community property which were devised and bequeathed to her were deemed to be undisposed of by that instrument. There was no residuary clause of the will in favor of any other heir. By virtue of the widow's renunciation of the will, her husband's effort to devise or bequeath to other heirs her community interest in the property became ineffectual and void to the extent of her community interest therein. She was absolutely entitled to her community share of the property, plus the entire interest of her husband in any such property which was undisposed of by the will. The Peterich Ranch belonged to the character of the property last mentioned. It was undisposed of by the will, after the widow's renunciation, and she was therefore entitled to the entire ranch. She received only her one–half community share of other property of the estate. The result of the marshaling of the assets of the estate discloses that fact.

It has been definitely determined that when a widow repudiates the will of her deceased husband, she is entitled to the benefits of the statutes of succession as fully and completely as though there was no will. Estate of Bump, 152 Cal. 274, 92 P. 643; 11 A Cal.Jur. 513, sec. 373; 1 Bancroft's Probate Pr., 1324, sec. 740. Section 201, supra, declares that the widow, under such circumstances, is entitled to her deceased husband's entire share of the community property. Estate of Arms, 186 Cal. 554, 199 P. 1053.

There is nothing in the case of Williams v. Williams, 170 Cal. 625, 151 P. 10, upon which the appellants rely, in conflict with what we have previously said regarding the widow's right to the community property which is undisposed of by will.

The court properly charged against the distributive share of the estate received by the executor, Frank A. King, two unpaid matured promissory notes executed by him to the deceased in his lifetime. The notes were included in the inventory as assets of the estate. The appellants contend that these notes were barred by the statute of limitations, and that they were therefore erroneously charged to the distributive share of the maker of the notes.

September 5, 1930, for value received, Frank A. King and Grace V. King, executed and delivered to the deceased, Frank J. King, their note for $1,200, payable five years after the date thereof. It was never paid. It became a part of the assets of the estate in the hands of Frank A. King, one of the makers thereof, as a co–executor of the will of the deceased. It was due and was appraised at $600. It did not outlaw until February 6, 1939. Frank A. King qualified as executor February 16, 1937. The note was in his hands as an executor of the estate for two years before it outlawed.

On November 25, 1932, for a valuable consideration, Frank A. King executed and delivered to his father another note for $4,328.10, due one year after the date of execution. It was secured by a mortgage on real property. The note was never paid. That note did not outlaw until November 26, 1937. It was also in the hands of the maker, as executor, for about three months before it would outlaw.

Section 602 of the Probate Code charges an executor with obligations which he owes to the testator “as for so much money in his hands”. It provides that such debts shall be included in the inventory, and that the executor is liable therefor. That section reads: “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.”

The notes executed by the executor which were due and payable, and in his hands as assets of the estate before they were outlawed, become chargeable to him as cash on hand, and they were therefore properly charged, together with the accumulated interest thereon, against his distributive share of the estate. Estate of Clary, 203 Cal. 335, 264 P. 242; Estate of Miner, 46 Cal. 564; Estate of Jones, 115 Cal.App. 664, 2 P.2d 483; Treweek v. Howard, 105 Cal. 434, 39 P. 20; 11 B Cal.Jur. 554, sec. 1100. In the opinion which was rendered in the Estate of Clary, supra [203 Cal. 335, 264 P. 244], it is said: “When Charles M. Clary on the 6th day of December, qualified as an executor of the last will and testament of Abraham E. Clary, deceased, he became a voluntary trustee of the property and assets of the estate of Abraham E. Clary, deceased, holding the same for the benefit of the devisees and legatees, under the terms of the last will and testament of Abraham E. Clary, deceased. Thus, as pointed out in 16 California Jurisprudence, p. 420 et seq., sections 30 to 37, the rule is that the statute of limitations does not run where the parties occupy a fiduciary relationship toward each other, so long as such relationship is not repudiated.”

Quoting with approval from the case of Minifie v. Rowley, 187 Cal. 481, 202 P. 673, the Clary opinion further says: “As a necessary consequence [[[[of a fiduciary relationship], if defendant Forrest S. Rowley owed the ten thousand dollars here in controversy on June 3, 1915, when he became executor, he became chargeable with that sum as for so much money in his hands and continued liable therefor, irrespective of the running of the period of the statute of limitations against the debt itself by reason of the change in the character of his obligation due to his intervening fiduciary capacity.”

Commenting on the preceding language the court said in the Clary opinion: “It means that, irrespective of the lapse of time which would ordinarily bar an action upon the note, the executor, by reason of his fiduciary capacity, becoming chargeable with the note in his hands as so much money, is in that capacity, precluded from pleading the bar of the statute, and therefore, so long as the trust relation continues, the statute does not run.”

It has been held that an executor, by virtue of his fiduciary relationship, is not only chargeable with the principal sum of a note which he owes to the deceased, if it is not outlawed before he accepts that trust, but he is also chargeable with the interest due thereon, as cash in his hands. Estate of Miner, 46 Cal. 564; 11 B Cal.Jur. 556, sec. 1100. In Estate of Miner, supra, the court says with respect to the obligation of the executor to pay both principal and interest of a note which he owes to the deceased: “We think there was no error in charging the administrator with the amount of his own note and the stipulated interest. It is a debt due to the estate and has never been paid. The money has remained in his hands, not separated or set apart from his private funds or been devoted to the uses of the estate. Under what circumstances an administrator will become liable to pay interest is discussed in the Matter of the Estate of Mary McQueen, 44 Cal. 584, and upon the principles settled in that case we think the administrator cannot escape the payment of interest.”

The decree settling the final account and making distribution of the estate is affirmed.

PER CURIAM.