IN RE: COE'S ESTATE. (1948)

This is an appeal from a judgment of the probate court decreeing that respondents are entitled to share equally in the estate of H. D. Coe, deceased, and ordering distribution accordingly.

The facts pertinent to the one issue presented are not in dispute and reveal that H. D. Coe, who used various aliases during his lifetime, died intestate in Butte county on July 3, 1938. Probate of his estate was instituted in said county, and no heirs appearing to claim the estate, the probate court on May 6, 1940, entered its decree settling the final account of the administrator and ordering distribution of the entire estate to the State of California. The estate was retained by the treasurer of Butte county and was not actually delivered to the State Treasurer until January 26, 1946, or more than five years after the entry of the decree.

Within approximately three weeks from the date of the delivery of the property to the State Treasurer, respondents, whose interests and relationship are not questioned, instituted proceedings pursuant to the provisions of section 1272a of the Code of Civil Procedure claiming to be the persons entitled to succeed to said estate. The pertinent portions of said section are as follows:

‘When an estate, or any portion thereof, of any decedent has been received by or deposited with the State Treasurer pursuant to a distribution thereof to the State of California * * * the superior court of the county of Sacramento, State of California, shall have full and exclusive jurisdiction to determine the title to the property and all claims thereto.’ (Italics added.)

The respondents' petition was opposed by appellants, primarily on the grounds that it was barred by the provisions of Probate Code section 1027. Said section in part provides:

‘If the money or other personal property belonging to an estate has been deposited in the county treasury prior to the date of distribution to the State of California, upon on the rendition of the decree of distribution, any money so distributed shall forthwith be delivered to the State Treasurer by the county treasurer. * * *

‘The property so distributed shall be held by the State Treasurer for a period of five years from the date of the decree making such distribution, within which time any person may appear in the superior court for the county of Sacramento and claim the estate or any part thereof. * * *

‘Any person who does not appear and claim, as herein required, shall be forever barred, and such property, or so much thereof as is not claimed, shall vest absolutely in the State.’ (Italics added.)

At the conclusion of the hearing upon the issues so made the court concluded that petitioners had filed their petition within the time required and judgment was entered in their favor. The appeal from the judgment so entered presents but one question for determination: Where in the absence of known heirs an estate in probate is distributed to the State of California under the provisions of Probate Code section 1027, but the estate is not actually delivered to the State Treasurer until more than five years have elapsed after date of distribution, does the period of limitation as provided in said section begin to run from the date of the distribution so as to bar a claim filed more than five years after the entry of such decree but within one month of the actual delivery of the estate to the State Treasurer? In answer to the question so presented we conclude, as did the trial court, that respondents are not barred.

Appellants' first contention is that by the express language of section 1027 the right of a claimant is absolutely barred ‘five years from the date of the decree’ of distribution, or as stated otherwise at the time of oral argument the property ‘shall be held not to exceed five years' from that date. In support of such argument appellants rely upon Estate of Lindquist, 25 Cal.2d 697, 154 P.2d 879. The point, however, was not directly at issue in that case nor is there any indication that the court in referring to the distribution in its conclusion intended to establish a rule of law applicable to the situation here presented or that it intended in any way to decide or pass upon the point. We cannot then take the dictum as controlling here or even as an expression of opinion by the court.

Respondents' answer to this position is that such a contention fails to consider the provision that ‘the property so distributed shall be held by the State Treasurer’ for the period.

Appellants further assert that the actual transmission of the funds is purely an intergovernmental transaction or a bookkeeping entry, and that the holding by the county treasurer was a holding by a state officer. In oral argument the appellants further contended that the county treasurer in so holding the funds was acting as agent or trustee for the state.

In answer to respondents' contention that the construction of section 1272a contended for by appellants would result in the anomalous conclusion that respondents had lost their right before they had their remedy, appellants, in their reply brief argue that in any event the fact that the State Treasurer was not in actual possession of the estate does not affect the jurisdiction of the Superior Court of the County of Sacramento to determine title under section 1272a, and therefore respondents could have filed suit within five years following the decree and thereby preserved their rights.

It is quite obvious from a summary of the arguments of counsel that whichever of the contentions so made by them be taken as correct, either the phrase ‘shall be held by the State Treasurer for a period of five years' or the phrase ‘from the date of the decree’ must be disregarded and the section held to be ambiguous. Therefore it follows that the problem so presented is wholly one of statutory construction, and in view of the interpretation we have placed upon the wording thereof the other arguments urged in support of the trial court's decision are immaterial to such determination.

Preliminarily it may be said that inasmuch as escheat statutes are statutes of forfeiture and of limitation whereby the rights of inheritance are cut off, such statutes should be strictly construed against the one asserting the same (the state in this case) and in favor of the one whose rights or interest would be terminated (the respondents herein). Where the statute is ambiguous the court may construe it with reference to the purposes to be accomplished by it and may consider any inconvenience or necessary hardship which may result from a given construction. Carter v. Chevalier, 100 Cal.App. 567, 28 P. 706; In re La Belle, 37 Cal.App.2d 32, 98 P.2d 778; Reithardt v. Board of Education, 43 Cal.App.2d 629, 111 P.2d 440.

Section 1027 as originally enacted in 1933, although providing for ultimate holding of the property of the estate by the State Treasurer, did not direct an immediate transfer of the property by the county treasurer to the State Treasurer. However, now by virtue of the 1939 amendment thereto, if there are no known heirs to whom distribution can be made, then distribution must be made forthwith to the state and the property transmitted forthwith to the State Treasurer. Furthermore said section relieves the state of affirmatively establishing an escheat in a proceeding under section 1269 of the Code of Civil Procedure which, prior to the adoption of section 1027 was the sole means available to the state. In addition to providing a simpler means for the escheat of property to the state, section 1027 has the further purpose of giving to heirs, either known or unknown, a reasonable opportunity to appear and present their claims within the five year period or thereafter be barred. The further effect of the provisions of the section is to cast upon an heir, unknown at the time of distribution the burden of instituting proceedings, within the period therein set forth, to perfect his right to the estate under the provisions of section 1272a of the Code of Civil Procedure.

The provision for the transfer forthwith of the property to the State Treasurer and the further provision that such property ‘shall be held by the State Treasurer for a period of five years from the date of the decree’ can have but one meaning—that forthwith the property actually should be distributed to and be held by that official for the required period. And it may be added that an interested person would have the right to assume that the responsible officials would comply with the statute.

At this point it should be noted that if known heirs fail to appear prior to the decree of distribution their subsequent action, if any, to establish their rights, is governed by section 1274a of the Code of Civil Procedure. Said section provides that one year after the next county settlement, property theretofore distributed to known heirs shall be delivered to and deposited with the State Treasurer, and any property so deposited, if not claimed within ‘five years from the date of such deposit’ shall become the property of the state. If the construction of section 1027 urged by appellants be correct, then an heir who is known has a full five year period commencing not with the decree of distribution, but with the actual deposit with the State Treasurer, whereas an heir who is unknown, and therefore in need of greater consideration, would have his claim defeated even though at no time, during the five year period following the decree of distribution did the State Treasurer have actual possession of the property, and thus give the heir the additional notice which such deposit would afford.

By reason of our conclusion herein, that custody of the funds by the State Treasurer pursuant to the statute is a prerequisite to the running of the period of limitations, it is unnecessary to decide any of the remaining questions posed by the parties.

The judgment is affirmed.

PEEK, Justice.

ADAMS, P. J., and THOMPSON, J., concur.