IN RE: STANLEY'S ESTATE. (1949)

Milledge Stanley, administrator of the above named estate, and surviving husband of the deceased, appeals from the decree of settlement of final account and of final distribution. The decree was based upon a purported “consent to distribution” signed by appellant and Juanita Clarke, decedent's daughter by a previous marriage and her only other heir. This document, the authenticity of which presents the main controversy, was designed to provide that the real property of the estate consisting of the home of the spouses and all the household furnishings, should be distributed to Mrs. Clarke with a reservation of a life estate in appellant, and that all other personal property and cash should be divided between the two parties.

Primarily it should be stated that appellant attacked the proposed decree of distribution on the ground that all the money used in the purchase of the property both real and personal had been supplied by him, a part before the marriage and all under the express agreement with deceased that it should be and remain their community property and that the “consent to distribution” was executed under false pretenses and undue pressure consisting of improper advice by counsel for Mrs. Clarke who procured its execution. The trial court found adversely to appellant on the character of the real property, apparently resting its conclusion on the fact that the deed to the realty having been issued in the name of the decedent alone the realty became her separate property under the presumption of section 164 of the Civil Code. As to the household furnishings the trial court found, with no statutory presumption applicable, that all such property was community. As to all other items of personal property the findings are silent.

A brief statement of facts will suffice. Milledge Stanley entered the United States army at the age of fifteen and served continuously until his discharge in February, 1926. He met the deceased in 1914 while stationed at an army camp in the Southwest. He testified that she told him she was unmarried, but it is conceded that respondent is a daughter of deceased and that deceased was married at some time to a man named Mariner who, however, is not the father of respondent. In 1922 deceased was living in Oakland under the name of Mattie Gibbons. Appellant met her there on his way to transfer to service in the Philippines. He testified that she then told him she was unmarried and they thereupon agreed to purchase the property in suit for a home and to marry when he was retired from the service; that he advanced the down payment and sent to Mattie Gibbons his monthly pay checks which were used in payment of the purchase price. In this he was corroborated by other witnesses.

Immediately after the death of deceased respondent came from her home in Texas and took appellant to her attorney Richard M. Lyman, Jr. in the City of Oakland. A written consent to distribution and waiver of administrator's fees had theretofore been prepared and this was given to appellant to sign after having been advised that he had no more than a separate interest in the property. This agreement is defendant's Exhibit “C” in evidence. In the body of the document the parties agree that the real property should be distributed directly to Mrs. Clarke with a life estate in appellant. Subdivision 3 recites that “* all other sums of money now in various bank accounts standing in the name of said deceased, and all other property of said deceased not referred to herein, shall be divided equally between the parties hereto.” But the document admitted in evidence discloses three material interlineations. In subdivision 1 relating to the home property there is written in ink preceding the figure (1) the word “omit” and the words “and the furniture and furnishings therein.” In subdivision 3 there is inserted in the same manner the words “and all other property of said deceased not referred to herein.” In subdivision 7 relating to the payment of a debt of deceased there is inserted in the same manner the words “to contribute $50.00 to” a savings account for payment of the debt. Opposite all three insertions in the margin of the document are the initials in ink “M.F.S.” and “J.G.C.” Appellant Stanley testified that he did not make or authorize the alterations; that they were added after he had signed the document and without his knowledge.

While appellant was a witness on the stand he was badly confused by both court and counsel in an effort to get him to admit that the initials “M.F.S.” were his initials. Finally he explained that though “M.F.S.” were his initials he did not inscribe them on the document and knew nothing about them or of the interlineations. The questioning of the witness proceeded, and we quote from the reporter's transcript:

“Q [By Mr. Lyman] Did you put your initials on this paper I am holding in my hand, ‘consent to distribution’? A. Did I put them on?

“Q. Did you or did you not put your initials on there? A. I can't say I put my initials on, who put that in there?

“Q. You are asking a question, I did, that is my handwriting. The Witness: That accounts for everything then.

“Q. Answer my question; did you put those initials on there? A. (Witness mutters inaudibly). Mr. Lyman:

“Q. Did you put those initials on there, Mr. Stanley? A. No, I guess you did.”

Both Lyman and Mrs. Clarke, however, testified that the interlineations were made at the time the document was signed and in the presence of all three parties and that Stanley added the initials “M.F.S.” in the margin in their presence. The appellant however testified that he objected to the terms of the agreement and signed only on the promise that a new contract would be drawn covering the subject matter satisfactorily to him. Such a contract was drawn with the typewritten date of February _, 1944, but it was not signed by either party. It appears as Exhibit No. 1 in the evidence. It is significant that it omits all of subdivision one of the October document relating to the real property and that in the October contract there is written in ink opposite subdivision one the word “omit”, with the parties' initials in the margin. Instead of subdivision one there is a provision for the division of the household furniture specifying the separate items to go to each of the parties. The remaining subdivisions are identical with those of the contract signed in October, 1943. The preparation of this form of contract, and the substance of it are potent corroboration of appellant's testimony that he protested signing of the October contract and was told by Mrs. Clarke's counsel that it would not be binding and that another contract expressing his intentions would be prepared for signature.

Notwithstanding this clear and undisputed evidence the trial court found that a typewritten copy of this instrument, with the pen and ink interlineations typed in the body of it without indicating that they were interlineations and without including any of the initials on the margins was a true copy of the original agreement executed by the parties. The evidence does not support this finding.

Returning to the circumstances of the execution of the agreement, and though we regret the necessity of doing so, we must further elaborate these pertinent facts: Mrs. Stanley deceased on September 27, 1943. On October 4 Mrs. Clarke took Stanley to her attorney's office where the consent to distribution was executed. On October 15 the same attorney filed petition for letters of administration on behalf of Stanley. Letters were duly issued and the same attorney continued to act for the administrator until substitution was made May 8, 1945. On February 25, 1946, he filed a petition for removal of the administrator as attorney for Mrs. Clarke. On April 26, 1947, still acting for Mrs. Clarke, he filed exceptions to the administrator's account which covered the period of administration from January 30, 1944, to March 31, 1947. These exceptions included an objection to the payment of any fee to the administrator. In the contest over the validity of the consent to distribution, counsel for respondent had available all the confidential information he had obtained from the appellant while he was his client.

These circumstances direct an inquiry into the character of the legal advice given to appellant as an inducement to procure his signature to the contract. At the outset it is conceded that if appellant's story of the manner in which the realty was purchased is true he was improperly advised that he had no legal claim to the property—that is to say he was not advised that he had a possible cause of action to establish a trust, nor that if he had paid the purchase price the property might be community. He was advised that he had no interest whatever except as an heir of Mrs. Stanley to one-half.

In reference to the community personal property consisting of the household furnishings and money in bank (assuming that the interlineations hereinbefore referred to were made at the time of the execution of the “consent”) he was not advised of his right to have all the furnishings transferred to him under section 660 of the Probate Code, that he had the right to take all the furnishings as community property, nor was he advised of his right to assert the claim that the money in the bank came from his earnings and that it was community property which he would also take. It must be manifest that if appellant had known that he was entitled to all the household furnishings he would not have consented to give respondent title to all reserving to himself merely a “life estate.” It is equally clear that if he had been advised that he had a valid claim to all the money in bank he would not have voluntarily agreed to take only one-half of it.

The trial court found, for what reason does not appear, that the household furniture was community property and awarded it to Mrs. Clarke because of the “consent to distribution.” Upon the same evidence, and for the same reason, it should have found that the money in bank and the government savings bonds were community. If such finding had been made, and appellant had been properly advised as to his legal rights, it is inconceivable that he would have consented to an even division of the funds without getting something in consideration. It is undisputed that such advice was not given. Appellant testified that the subject of the household furniture, bonds and bank deposits was not discussed, and this testimony was not denied.

Two questions arise upon these facts: (1) On a petition in probate for distribution based upon a written contract has the probate court jurisdiction to determine the validity of the contract? (2) Does the evidence support the conclusion of the trial court that the consent to distribution was binding on appellant?

(1) The question is in how far the trial court had jurisdiction to decide the validity of an agreement and consent to distribution signed by the husband and the daughter of decedent after her death, considering that the husband was appointed administrator of the estate after the signing of the agreement and in how far the court had jurisdiction to order distribution of certain assets in accordance with said agreement.

It cannot be said that in general the function questioned in this case is a normal function of a probate court. Its powers are statutory and limited. McPike v. Superior Court, 220 Cal. 254, 258, 30 P.2d 17. Normally “ ‘Matters of Probate’ include the ascertainment and determination of the persons who succeed to the estate of a decedent, either as heir, devisee, or legatee, as well as the amount or proportion of the estate to which each is entitled, and also the construction or effect to be given to the language of a will; but do not include a determination of claims against the heir or devisee for his portion of the estate arising subsequent to the death of the ancestor, whether such claim arises by virtue of his contract or in invitum; nor is the determination of conflicting claims to the estate of an heir or devisee, or whether he has conveyed or assigned his share of the estate a ‘matter of probate.’ ” Martinovich v. Marsicano, 137 Cal. 354, 356, 70 P. 459. However under various circumstances the probate court may determine the validity and effect of contracts when ancillary to a proper judgment by it. Dobbins v. Title Guar. & Trust Co., 22 Cal.2d 64, 68, 136 P.2d 572.

Although early cases were not harmonious, Estate of Ryder, 141 Cal. 366, 369, 74 P. 993, since Estate of Howe, 161 Cal. 152, 118 P. 515, it has been regularly held both before and under the Probate Code, that the probate court had no jurisdiction to determine the issue of the validity of an assignment in the probate proceedings. Parr v. Reyman, 215 Cal. 616, 620, 12 P.2d 440; McGee v. Allen, 7 Cal.2d 468, 471, 60 P.2d 1026. The rule was applied to an agreement for distribution between widow and children of a decedent in Estate of Gregson, 96 Cal.App. 767, 274 P. 991. The rule remained in force until the enactment of section 1020.1, Probate Code and its forerunners. Estate of Lund, 65 Cal.App.2d 151, 153, 150 P.2d 211; Estate of Cazaurang, 75 Cal.App.2d 217, 223, 170 P.2d 694; Gordon v. Nichols, 86 Cal.App.2d 571, 195 P.2d 444. As section 1020.1 was added in 1941 and Mrs. Stanley died in 1943 we are here concerned with the law since the addition of that section, and can disregard its predecessors of 1939.

The section read in part: “The court before making distribution of any property of a decedent to any assignee or transferee of any heir, devisee or legatee or before making distribution to any person other than an heir, devisee, or legatee pursuant to any agreement, request or instructions of any heir, devisee or legatee or of any attorney-in-fact of any heir, devisee or legatee may on the motion of any person interested in the estate or on the motion of the public administrator or on its own motion inquire into the consideration for such assignment, transfer, agreement, request or instructions and into the amount of any fees, charges, or consideration paid or agreed to be paid by the heir, devisee or legatee and into the circumstances surrounding the execution of such assignment, transfer, agreement, request or instructions and if it finds that the fees, charges or consideration paid by any such heir, devisee or legatee is grossly unreasonable or that any such assignment, transfer, agreement, request or instructions was obtained by duress, fraud or undue influence it may refuse to make distribution pursuant thereto except upon such terms as it deems just and equitable. *” (Emphasis ours.)

It was enacted “to give the probate court some control, at least for the purpose of distribution, over agreements providing compensation for services of so-called ‘heir-hunters' ”. Estate of Lund, supra [65 Cal.App.2d 151, 150 P.2d 212]. In that case the new power given to the probate court was considered by this court to be so anomalous that the opinion of the court as to the validity of the section was expressly reserved. However in a dictum in Estate of Henshaw, 68 Cal.App.2d 627, 634, 635, 157 P.2d 390, this court stated that the section bestowed upon the probate court jurisdiction to determine conflicting claims to the present right of possession of the estate whether such claims are based upon inheritance, descent or contract and used the statement for analogical interpretation of another section. In Estate of Cazaurang, supra, 75 Cal.App.2d at page 224, 225, 170 P.2d at page 699 the court, arguing that with respect to the subject matter of the forerunner of section 1020.1 there was no right to jury trial, says, “It is a proceeding to determine the validity and effect of a claimed assignment.” In arguing that section 1020.1 was not intended to legalize contracts between heir hunters and heirs the Supreme Court said in Estate of Butler, 29 Cal.2d 644, 653, 177 P.2d 16, 21, 171 A.L.R. 343: “Section 1020.1 does not mention ‘heir-hunters' and does not purport to define or regulate any particular business. While it does give the probate court some control, at least for the purpose of distribution, over assignments and agreements obtained by ‘heir-hunters', Estate of Lund, supra, 65 Cal.App.2d 151, 153, 150 P.2d 211, this is true because it refers in general terms to ‘any assignee or transferee’ and to ‘any person other than an heir, devisee, or legatee’ who claims the right to distribution ‘pursuant to any agreement, request or instructions of any heir, devisee or legatee.’ Said section and its forerunner merely enlarged the powers of the probate court with respect to all such assignments and agreements, *.” Although most of the matter cited is dictum it seems clear from it that section 1020.1 as an exceptional provision gives the probate court jurisdiction to decide the validity of agreements for assignment or distribution of parts of an estate for the purpose of its distribution to a person other than an heir, devisee or legatee. This rule expresses both the jurisdiction and its limitation. The court has power to adjudge the validity of agreements intended to influence the distribution of an estate administered under its supervision and may order the distribution accordingly but the effect is limited to the distribution of what forms part of the estate under administration.

In our case the court found that the realty was separate property of decedent. There is no doubt that the court had jurisdiction so to decide considering that the husband was at the same time administrator. Stevens v. Superior Court, 155 Cal. 148, 150, 99 P. 512; Bauer v. Bauer, 201 Cal. 267, 271 et seq., 256 P. 820; Estate of Kelpsch, 203 Cal. 613, 617, 265 P. 214; Estate of Roach, 208 Cal. 394, 281 P. 607; Estate of Helm, 6 Cal.App.2d 752, 45 P.2d 250. Whether there was evidence to support this finding will be treated later. Where the court found property to be separate property of decedent it had power to distribute it in accordance with the agreement which it found valid.

However the position is different with respect to the household furniture and furnishings which the court found to be community property. “It has always been and still is the rule that the surviving husband's interest in the community property vests in him without administration.” Estate of Kurt, 83 Cal.App.2d 681, 683, 189 P.2d 528, 530. By finding the furnishings to be community property the court put them out of the estate administered and cut off its exceptional jurisdiction to make a further disposition of it on the basis of any agreement valid or not.

With respect to the bank accounts and war bonds there is no finding of the character of the ownership. A finding with respect to the jurisdictional fact whether they are part of the estate should have been made. If the court had found on this issue the evidence was such that it could not have escaped a finding that these items were community, and hence no part of the estate subject to distribution.

It is suggested that appellant did not attack the validity of the agreement by proper pleading. However both Estate of Lund, supra, and Estate of Cazaurang, supra, uphold investigation by the court notwithstanding informality of procedure. In Estate of Cazaurang, 75 Cal.App.2d at page 226, 170 P.2d at page 699 it is said: “Section 1020.1 of the Probate Code provides that the court might make the investigation ‘on its own motion’ and does not contemplate a petition setting forth the grounds of the contest in relation to the assignments nor does it make mention of the necessity of any answer or other pleading in connection therewith.”

On this issue we conclude that since the household furniture, government bonds, and money in bank were all community property passing to the husband on death of the wife the probate court had no jurisdiction to order distribution with or without agreement.

(2) As to the home property which was held to be separate the evidence conclusively shows that the agreement was procured by duress and undue influence. Under the cases just cited two issues were properly raised—that appellant had a resulting trust in the estate by reason of having paid the full purchase price with that understanding. Second, that whatever his interest in the realty he was induced to execute the consent by duress and misrepresentation. No specific findings were made on the facts of these issues. The finding that the agreement is binding on appellant is more in the nature of a conclusion of law. The finding that the consent was duly executed is contrary to all the evidence. The appellant was entitled to unbiased legal advice in the execution of the contract. The argument may be made that, because of the statutory presumption of consideration arising from the writing itself, a finding could be made of legal consideration. But all the evidence without any conflict discloses that he gave away everything and secured nothing in return. On a retrial the court should take into consideration whether appellant executed the contract in ignorance of his legal rights and if it is found that he was misinformed he should not be bound by it.

No attack is made on the portion of the decree settling the final account and we must therefore assume that to that extent the appeal is abandoned.

Decree of distribution reversed.

NOURSE, Presiding Justice.

GOODELL and DOOLING, JJ., concur.