City Bank v. Enos

Two appeals from orders of the superior court are brought up in this record; the one from an order settling the third account of the administrator, and the other from an order refusing to revoke the letters of administration.

The account purported to give a detailed and itemized statement of all sums received and of all amounts paid out during the period covered by it. This account was contested by appellants, creditors of the estate, who filed their objections in writing to "each and every item of disbursements therein contained, except the items of taxes, upon each of the following grounds, to wit: —

"1. That in rendering said account said administrator did not produce or file vouchers therefor.

"2. That said administrator did not pay the same.

"3. That such item is not an expense of administration of said estate.

"4. That the charge thereof is excessive and more than the reasonable value thereof.

"5. That such item is not a proper or legal charge.

"6. That such item is not a necessary expense of administration.

"7. That said administrator has not accounted for all the estate of said deceased which has come to his possession."

The bill of exceptions shows that upon the hearing "each and every item set forth in said account was proven by competent testimony to be true, with the exception of those items the consideration of which has been continued until the hearing of the final account in said matter."

Appellants do not now attempt to attack any item in the account, nor do they claim that the finding as to any item is unsupported by the evidence.

The main contention is, that the administrator has neglected for an unreasonable time to have the money on hand distributed or paid to the creditors, and that he deposited the money on hand with one Hoffman, who mingled it with his own and used it to some extent in his own business. In regard to the delay, while it is true the estate has been pending several years, there is nothing in the record to show that the administrator has willfully or negligently caused the delay. There are many cases in which the settlement of estates is unavoidably delayed, without the fault of the administrator. In this case it appears that there was litigation which went to the supreme court. In all cases where the administrator is called upon to pay the penalty of his neglect by being charged with interest or by removal from his trust, it is incumbent upon the party alleging such neglect to prove it. All presumptions are in favor of the regularity of the management of the estate by the administrator. Here the administrator appears to have paid a dividend to the creditors as ordered by the court; and to have obeyed all orders of the court in the estate. The account filed is the third account, and each and every item was found to be correct. There was still on hand undisposed of at the time of the hearing in the court below property of the appraised value of $2,750.

In regard to the money having been deposited with, and to some extent used by, Hoffman, it does not appear that the administrator consented to, or was in any way privy to such use. The administrator never used any of the money himself nor received anything for its use. We are not prepared to say that an administrator may not deposit the funds of the estate with a private banker or with an individual. In many cases it would be the safer course to do so. But, aside from this, a conclusive answer to appellants' claim that the administrator should be charged with interest, is the fact that no such claim is stated in the written grounds of contest. The code provides (Code Civ. Proc., sec. 1635): "On the day appointed, or any subsequent day to which the hearing may be postponed by the court, any person interested in the estate may appear and file his exceptions in writing to the account, and contest the same." The object of the section is that an issue shall be made in the trial court as to the items contested, or with which it is sought to charge the administrator. It was intended that the administrator should know the items contested or the matters in regard to which he is claimed to have been delinquent, so that he may come into court with his evidence prepared to meet or explain any exception taken to his account. The issues are thus made by the verified account and the written exceptions filed to it. The method is simple, and designed to save the time of the court being taken up by uncontested matters.

In the Estate of More, 121 Cal. 639, [54 P. 148], the same view was taken, and it was there said the person desiring to contest the account of an executor or administrator "must file his exceptions in writing to the account, setting out specifically the grounds of his objections, and at the hearing he should be held limited to the exceptions so presented."

Appellants contend that the claim that the administrator should be charged with interest is supported by the statement "that said administrator has not accounted for all the estate of said deceased which has come to his possession."

Under the most liberal rules of pleading we could not hold that a penalty for delay in settling an estate, or interest allowed as a penalty for depositing the money with Hoffman, is "estate which has come to his possession." The administrator has received no interest, profit, or income from the estate. It has been said that in the absence of exceptions the court may inquire into any matter in the settlement of an account which may seem objectionable, and may pass judgment thereon; but such rule does not apply to any matter by which it is sought to impose a penalty upon the administrator, nor to cases where the parties have appeared and made their objections in writing, as they did in this case.

The law provides (Code Civ. Proc., sec. 1647) that "Upon the settlement of the accounts of the executor or administrator, as required in this chapter, the court must make an order for the payment of the debts, as the circumstances of the estate require."

The section evidently makes it the duty of the court, when there is money on hand, to make an order for the payment of the debts. If there are not sufficient funds on hand with which to pay the debts the court must specify in the decree the sum to be paid to each creditor. Here the account shows a balance of cash on hand of $6,757.47. The court refused to make an order for the payment of the debts of the estate, but made an order directing the administrator "to close the said estate and have the proceeds thereof distributed among the creditors at the earliest possible date." Petitioners were creditors in a large amount, and asked for an order to the administrator for the payment of the debts of the estate. They were entitled to such order, or to an order directing a dividend to the extent that the funds on hand would justify.

The order refusing to revoke the letters of administration was correct for the reasons herein stated in discussing the appeal from the order allowing the account. A further separate discussion of the latter order would serve no useful purpose.

The order, in as far as it settles the account, is affirmed. The order, as to a distribution of the unsold estate and denying a dividend to the creditors, is reversed, and the court directed to amend and modify its order so as to direct a dividend to the creditors in accordance with the views herein expressed.

The order refusing to revoke the letters of administration is affirmed.

Appellants are entitled to their costs on this appeal.

Hall, J., and Harrison, P. J., concurred.