IN RE: LUCAS' ESTATE. (1943)

This is an appeal from an order of the probate court settling and approving the final account of the public administrator as administrator of the estate of Nelia Lucas, deceased. The appeal is taken upon the judgment roll; and the argument of appellant here is based upon the contention that the final account of the administrator included the allowance of a claim barred by the statute of limitations at the time of its presentation. It was stipulated by the parties that respondent might file herein a supplemental clerk's transcript to include the petition of the administrator for instructions to determine whether a compromise of the claim in question should be accepted, the objections thereto filed on behalf of appellant, the order granting such petition, and certain exhibits introduced at the time of the hearing of the first and final account of respondent.

Appellant, as administrator of the estate of Eliza Jacobs, deceased, is a judgment creditor of the deceased, Nelia Lucas, with a claim based on said judgment duly filed against her estate and approved by the administrator. The claim in dispute herein is based upon a note and mortgage executed by A. J. Lucas and Nelia Lucas on February 1, 1928, and was filed against the estate of Nelia Lucas by the executor of the deceased mortgagee. Upon the filing of the claim in question it was rejected by the administrator of the estate of Nelia Lucas. Suit on said note and mortgage was then instituted, in which action the administrator of the estate of Nelia Lucas interposed a demurrer to the complaint on the ground that the action was barred by the statute of limitations. Before this demurrer was heard the administrator of the estate of Nelia Lucas petitioned the probate court for instructions regarding an offer of compromise of the claim in question; and appellant interposed objections to the allowance of this petition. The probate court granted the petition of the administrator (respondent herein) and ordered and directed him to enter into an agreement with the executor of the deceased mortgagee to secure the release of the note and mortgage and the dismissal of the action thereon, and to clear the title to the premises covered by said mortgage, upon the payment to said executor of the sum of $500 through escrow upon sale of the property or in such other manner as may be agreed upon by respondent petitioner and said executor. Appellant did not take an appeal from the order of the probate court allowing a compromise of the disputed claim; but instead has appealed herein from the order settling and approving the final account of the administrator, which account, as already stated, includes the allowance of the compromise.

Respondent makes no contention that the claim in dispute was not barred by the statute of limitations, or that such question was determined in the proceedings below; but confines his argument chiefly to the point that, no appeal having been taken from the order directing the administrator to pay $500 by way of compromise of the claim in question, the order directing such compromise has now become final, is conclusive, res judicata, and the law of the case. The defect in this argument is revealed through consideration of section 708 of the Probate Code. Section 708 reads: “No claim which is barred by the statute of limitations shall be allowed or approved by the executor or administrator, or by the judge. When a claim is presented to a judge for his allowance or approval, he may, in his discretion, examine the claimant and others on oath, and hear any legal evidence touching the validity of the claim. No claim which has been allowed is affected by the statute of limitations, pending the administration of the estate.” It follows from the quoted section of the code that the probate court was without authority or jurisdiction to direct the compromise of the claim in the manner here shown by the record.

The question of the bar of the statute of limitations was, according to the record, duly raised by appellant. This question, touching upon the validity of the claim, does not appear from the record to have ever been determined in the proceedings below. The claim was first rejected by the administrator, suit was brought thereon by the claimant, in which action the administrator himself raised by demurrer the question of the bar of the statute; but before any question was determined in that suit an offer of compromise was made, the administrator petitioned the probate court for instructions and the court directed the acceptance of the compromise, apparently without passing upon the validity of the claim in question.

It should be noted that although appellant interposed objections to the allowance of the petition to compromise the action upon the claim, the order granting such petition recites that no objection to said proposal was made. It does not appear that the objections thus interposed were ever formally withdrawn; though a subsequent letter written by counsel for appellant to counsel for the administrator and respondent, and incorporated in the supplemental transcript, might indicate a possible disposition to approve the compromise, were it not for the fact that the letter also indicates an unwillingness to waive any rights in the matter. The record here presented furnishes no ground for holding appellant estopped; and the circumstance mentioned is immaterial.

It is sufficient to note that the record reveals a proceeding upon the claim not in accord with the provisions of section 708 of the Probate Code, and hence a proceeding which the court was not authorized to follow. It appears that circumstances disclosed a possibility that the disputed claim was one barred by the statute of limitations; and the question was directly presented to the probate court. Under such circumstances, the probate court could not properly proceed to approve the claim or direct a compromise thereof without first passing upon the validity of the claim by determining the question of the application of the statute of limitations.

“The power to nullify acts of the Legislature prescribing a limitation upon the time within [which] actions may be commenced is not a judicial prerogative. Statutes of limitation have become rules of property. They are vital to the welfare of society and are favored by the law. Nichols v. Randall, 136 Cal. 426, 69 P. 26; Shain v. Sresovich, 104 Cal. 402, 38 P. 51. They are to be viewed as statutes of repose, and as such constitute meritorious defenses. Lilly–Brackett Co. v. Sonnemann, 157 Cal. 192, 106 P. 715, 21 Ann.Cas. 1279. * * * It is the duty of probate courts to guard the interests of heirs and creditors. So zealous is the law of their interests that it specially enjoins upon administrators and courts the duty to reject and disallow outlawed claims.” Fontana Land Co. v. Laughlin, 199 Cal. 625, at page 636, 250 P. 669, at page 664, 48 A.L.R. 1308. “With all the safeguards given by the law, and with due care upon the part of executors, administrators, and the court, experience has proven that estates are often plundered by unjust claims. The safest course is to follow the substantial requirements of the statute.” Etchas v. Orena, 127 Cal. 588, at page 594, 60 P. 45, at page 47. An executor is not permitted to waive either the general statute of limitations or the failure to present a claim against the estate, nor can he or the judge of the court having jurisdiction of the estate allow a barred or unpresented claim. Estate of Cates, 195 Cal. 319, 232 P. 972 (language taken from the syllabus). “The claim of plaintiff was barred by the statute of limitations. The administrator is prohibited from allowing or paying any claim which is barred. To waive the objection here would be to allow such a claim to be collected. In other words, the administrator would be voluntarily paying a claim which is barred. No such consent could be given so as to bind the estate.” Vrooman v. Li Po Tai, 113 Cal. 302, at page 306, 45 P. 470, at page 472. See also Reay v. Heazelton, 128 Cal. 335, 60 P. 977. “Although the respondent admitted that the claims were barred and offered no proof in support of them, they were allowed by the court. This is clearly error. Such claims should not be allowed.” Estate of Aldersley, 174 Cal. 366, at page 375, 163 P. 206, at page 209. See also Jacobson v. Mead, 12 Cal.App.2d 75, at page 79, 55 P.2d 285, 1267, in the concurring opinion of Mr. Presiding Justice Crail.

Fontana Land Co. v. Laughlin, supra, was a case wherein an administratrix of an estate had commenced an action on behalf of said estate against the holder of a past due mortgage on property of the estate, praying for a decree quieting title to the real property in the administratrix. The debt secured by the mortgage had become outlawed, but the trial court had entered an interlocutory decree holding that the administratrix was not entitled to have title to the property quieted in her favor except upon the payment of the amount which the court found due upon said mortgage. Of this situation the Supreme Court said, at page 638 of 199 Cal., at page 674 of 250 P., 48 A.L.R. 1308: “The refusal to allow barred claims is more than a general policy of the law; it is the positive command of the statute. The mortgage indebtedness showed upon its face and it was apparent upon the public records of the county * * * that it was barred long prior to the first assignment * * *. If the statute was effective for any purpose it would seem to furnish an answer to the resistance made by the defendants in the first action brought by the administrator to quiet title. The first purported interlocutory decree shows upon its face that it was void. The court was without authority or jurisdiction to make it, inasmuch as it compelled the recognition of a claim proscribed by statute. If respondent's contention be accepted as the true rule, barred claims not presented for allowance or rejection could be used to defeat the closing of estates, and real property belonging thereto would become inalienable. This would be indulging mere subterfuges to defeat the plain letter of the statute. It would also place the creditors of an estate who had been vigilant on no better terms than those who had been guilty of gross laches, and, if barred claims are to be paid prior to or as a condition to the right of the administrator to sell real property, persons chargeable with negligence would be in a position to defeat the just claims of the vigilant.” (Italics added.)

The fact that the claim in the Fontana Land Co. case had never been presented for approval or rejection furnishes no basis for distinction between that case and the one at bar. The rule applies in either case. Though an administrator or executor may not waive the statute of limitations on a barred claim, may he, after suit instituted thereon, compromise the claim? To answer in the affirmative is to arrive at an absurdity. If a barred claim may not be paid, how can it be compromised? And, by the same token, if it is made apparent to the court that the claim in dispute may be one barred by the statute of limitations the court would not be justified in approving any compromise of such a claim until the question of the limitation of time had been first determined. In the case at bar the question of the statute of limitations had been raised by demurrer to a complaint in an action upon the rejected claim, yet the probate court approved a compromise of the claim before the demurrer had been heard and the question of the bar of the statute had been determined. To compromise such a claim without determining its status constituted an abuse of the court's discretion in the matter, even if it be assumed that the court had any jurisdiction so to act.

The provisions of section 718.5 of the Probate Code, giving the executor or administrator power to compromise claims with the approval of the court, are necessarily limited by the provisions of section 708, supra. Obviously, if the court cannot allow or approve a claim barred by the statute of limitations, there can be no power in the court to approve the compromise of a claim so barred. To hold otherwise would be to provide a convenient subterfuge for the payment of barred claims, thus evading the effect of section 708, supra.

Under the circumstances here presented, it was mandatory upon the probate court to determine the question of whether the disputed claim was barred, before allowing a compromise thereof; and until that question was determined the court was without jurisdiction to direct a compromise of the claim. Any other rule would open the door to fraud and collusion in the settlement of disputed claims against estates and prejudice the rights of heirs and creditors. In view of the record upon which it was granted, the order directing the compromise of the claim was void upon its face; and appellant was not thereby precluded from raising an objection to the allowance of a credit for the compromised claim in the final account of the administrator.

The order settling and approving the final account of the administrator herein is reversed, appellant to have costs on appeal.

DORAN, Justice.

YORK, P. J., and WHITE, J., concur.