ESTATE OF BAXTER

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Docket Number

Docket No. L.A. 17040.

Attorney(S)

Wade Garfield and F.L. Richardson for Appellants. Gray, Cary, Ames Driscoll and Burton D. Wood for Respondent. Clarence A. Henning as Amicus Curiae on Behalf of Respondent.

Judges

John W. Shenk

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Smart Summary

Factual and Procedural Background

This appeal arises from an order of the Superior Court of San Diego County settling the first and final account and report of Charles T. Chandler, administrator of the estate of Anna Baxter, deceased. Chandler was initially appointed guardian of Anna Baxter's estate in 1919 while she was incompetent, and upon her death in 1922, he was appointed administrator of her estate. Chandler filed several accounts during his guardianship and administration, including a third and final guardianship account and a first and final administrator's account, which were initially approved and settled by the court.

Following Chandler's death in 1935, F.L. Richardson was appointed administrator de bonis non of Baxter's estate, and R.F. Smith was appointed administrator of Chandler's estate. Smith filed an amended final account alleging that Chandler had received funds as guardian that were not accounted for and that Chandler's estate owed $17,901.53 to Baxter's estate. The probate court, after hearing, found a smaller discrepancy of $623.83 with interest, and entered an order settling the accounts accordingly. Richardson, Hale (heir), and Smith appealed the order, contending the court erred in not adopting the amended final account filed by Smith.

Legal Issues Presented

Whether the probate court erred in refusing to consider certain rejected evidence and in not settling Chandler’s final account in accordance with the amended final account filed by Smith.
Whether the settlement of prior guardianship accounts is conclusive and binding in the current administration proceeding.
Whether the probate court has jurisdiction to establish a debt due from Chandler’s estate to Baxter’s estate based on alleged omissions in prior guardianship accounts.
Whether interest should be allowed on the entire amount found due from Chandler as administrator.

Arguments of the Parties

Appellants' Arguments

The appellants contended that Chandler, as guardian, received funds or securities not accounted for, which continued in his possession as administrator.
They argued that prior orders settling guardianship accounts were not final or conclusive as to omitted items not included or passed upon by the court.
They relied on the principle from Estate of Clary and similar cases that settlement of accounts is not conclusive regarding omitted items.
They urged the probate court should have admitted rejected evidence to discover omitted property or money and adjust the accounts accordingly.
They claimed that the court should have allowed interest on the entire amount found due from Chandler as administrator.

Respondent's Arguments

The respondent, Royal Indemnity Company, denied the allegations in the amended final account.
They opposed reopening or revisiting the settled and approved guardianship accounts.
No evidence was offered to show that Chandler, as administrator, possessed unaccounted funds beyond those approved by the court.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Estate of Clary, 203 Cal. 335, 264 P. 242	Settlement of accounts is not conclusive as to omitted items not included or passed upon by the court.	The court distinguished this case, holding that the rule applies only within the same proceeding and not to collateral attacks on settled accounts in a different proceeding.
Security-First Nat. Bank of Los Angeles v. Superior Court, 1 Cal.2d 749, 37 P.2d 69	Finality and conclusiveness of orders settling accounts in probate proceedings.	The court held that the prior order settling Chandler’s guardianship accounts was final and conclusive, barring collateral attack in the current proceeding.
Estate of McGue, 180 Cal. 413, 181 P. 637	Finality of probate orders settling accounts.	Reinforced the principle that settled accounts are conclusive absent an appropriate reopening proceeding.
Estate of Madsen, 31 Cal.App.2d 240, 87 P.2d 903	Finality of probate account settlements and limits on reopening.	Supported the court’s conclusion that the prior settlement was binding and could not be collaterally attacked.
24 Corpus Juris, p. 52, sec. 470	Liability for acts committed in a prior representative capacity is chargeable in that capacity, not in a subsequent one.	The court applied this principle to hold that any loss due to Chandler’s acts as guardian could not be enforced against him as administrator.

Court's Reasoning and Analysis

The court analyzed the nature of the amended final account filed by Smith on behalf of Chandler’s estate, which alleged a debt owed to Baxter’s estate due to unaccounted funds during Chandler’s guardianship. It found no evidence that Chandler’s estate currently possessed such funds, and concluded the amended account sought to establish a debt by judicial decree rather than report actual property in possession.

The court emphasized that prior guardianship accounts had been settled and approved by the probate court, and those orders had become final. It held that the appellants’ attempt to reopen or attack these settled accounts collaterally in the current proceeding was improper. The court distinguished the appellants’ reliance on Estate of Clary, noting that the rule there applies only within the same proceeding and not to collateral attacks.

Furthermore, the court reasoned that any loss or defalcation occurring during Chandler’s guardianship was chargeable against him in that capacity, not as administrator, and thus could not be recovered in the present administration proceeding.

The court also found no merit in the appellants’ contention regarding interest on the entire amount due.

Holding and Implications

The order of the probate court settling the final account of the administrator was affirmed.

The decision directly resolves the dispute between the parties by upholding the finality of prior settled guardianship accounts and rejecting a collateral attack through the amended final account in the administration proceeding. No new precedent was established beyond reaffirming established principles regarding the conclusiveness of probate account settlements and the proper scope of probate court jurisdiction in such matters.

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In the Matter of the Estate of ANNA BAXTER, Deceased. F.L. RICHARDSON.Administrator, etc., et al., Appellants, v. ROYAL INDEMNITY COMPANY,Respondent.

SHENK, J.

This appeal is from an order settling the first and final account and report of the administrator of the decedent's estate. It is presented on a bill of exceptions.

On April 18, 1919, Charles T. Chandler was duly appointed the guardian of the estate of Anna Baxter, an incompetent person. On March 2, 1922, Anna Baxter died. Chandler was then, on May 8, 1922, duly appointed the administrator of her estate. In June, 1922, he filed his third and final account in the guardianship proceeding, showing a balance in his possession as guardian of $31,295.25. That account was approved and settled by the court in the same month, and Chandler was ordered to deliver all property in his hands as guardian of the incompetent to himself as administrator. As such administrator he filed an inventory in the decedent's estate showing the sum of $31,700.25 as the total appraised value of all property which had come into his possession. On May 11, 1925, Chandler as administrator filed his first and final account and report, and a petition for distribution. That account showed receipts of $32,279.81, and disbursements of $31,001.78, which included partial distribution to three surviving brothers of the decedent, Joseph W. Hale, Charles N. Hale and Thomas H. Hale, leaving a balance on hand of $1278.03. At the hearing, pursuant to stipulation dated May 29, 1925, between the attorney for Chandler as administrator, and Clarence A. Henning, as administrator of the estate of the deceased Thomas H. Hale, said first and final account and petition for distribution was stricken from the calendar and it was agreed that an amended final account would be filed in the ordinary course. Thereupon the court ordered a reduction in the bond of the administrator from $30,000 to $2,000 upon the showing that less than the latter amount remained in the possession of the administrator and that no additional funds or estate were expected to come into his possession.

No further proceedings were taken in said estate until the filing of the amended final account hereinafter mentioned. On May 24, 1935, Charles T. Chandler died, and on June 12, 1937, F.L. Richardson was appointed administrator de bonis non of the estate of Anna Baxter, deceased. On September 10, 1937, R.F. Smith was appointed administrator of Chandler's estate. On March 5, 1938, Smith, assuming to act on behalf of the estate of Charles T. Chandler, filed in the matter of the estate of Anna Baxter, deceased, an account designated "Amended Final Account" of Chandler's administration of the Baxter estate. In that amended final account Smith alleged that Chandler as guardian of the estate of Anna Baxter, an incompetent person, had received funds or property in excess of the amount reported by Chandler as such guardian to the extent of $17,901.53, and that Chandler at the time of his death was therefore indebted to the estate of Anna Baxter, deceased, in said amount. Royal Indemnity Company, respondent herein, filed objections to said amended final account in the form of a denial of the allegations thereof. On the hearing of said account and the first and final account previously filed by Chandler which had been put off calendar, and the objections thereto, the court found receipts totaling $32,279.81, and disbursements pursuant to appropriate orders in the sum of $31,655.98. It concluded that Chandler, as administrator, was chargeable with the difference between those sums, or $623.83, with interest on a portion thereof compounded annually.

Richardson, as administrator of the estate of Anna Baxter, deceased, Joseph W. Hale, as heir at law, and R.F. Smith, as administrator of Chandler's estate, appealed from the order.

The ground of the appeal is that the court erred in not settling the final account of Chandler in accordance with the amended final account as filed by Smith.

The bill of exceptions shows that on the hearing herein the court declined to receive in evidence the original and supplemental inventories and the first and second annual accounts and reports of Chandler as guardian, and the ninth annual account of James R. Baxter who preceded Chandler as guardian of the incompetent; and that the court based its findings and order upon the third annual account of Chandler as guardian, the order settling the same, the first and final account of Chandler as administrator, and the testimony of F.L. Richardson that all vouchers showing the disbursement of the funds had been lost or destroyed.

It is the theory of the appellants that the offered evidence showed that certain moneys or securities came into the possession of Chandler as guardian which were not accounted for by him in the guardianship proceeding, but which subsequently continued in his possession as administrator; and that the orders settling the accounts of the guardian as to such items as were claimed to have been unaccounted for or omitted were not final or conclusive herein. Reliance is placed upon Estate of Clary, 203 Cal. 335 [ 264 P. 242], and similar decisions and authorities to the effect that the settlement of accounts and reports is not conclusive as to any items which were not included in and actually passed upon by the court. It is contended that the items alleged in the amended final account filed by Smith were of that character, and that the probate court in this proceeding should have received the rejected evidence for the purpose of discovering such omitted items of property or money which had come into Chandler's possession as guardian and remained unaccounted for by him.

[1] We conclude that the court's ruling was proper. If the amended final account, filed pursuant to section 932 of the Probate Code, and the evidence introduced or offered in support thereof, had indicated that certain moneys or property belonging to the Baxter estate were actually in the possession of the representative of Chandler's estate, the probate court would undoubtedly have had jurisdiction, notwithstanding the settlement of any prior account, to receive the report of the administrator to that effect, and to make any appropriate order of settlement and distribution. But such is not the import of the application in the present proceeding. The record does not show, nor do the appellants purport to claim, that Smith, as administrator of Chandler's estate and on behalf of that estate, is reporting as a fact that there is money or property in his possession in the amount alleged which belongs to the Baxter estate. [2] On the contrary, the plain inference is that the representative of the estate of Chandler has no such property, but that the object in filing the amended final account is to establish by judicial decree in the administration proceeding a debt due from the estate of Chandler to the estate of Baxter resulting from a claimed omission or defalcation in the accounts of Chandler in the prior guardianship proceeding. That this is so appears from the following facts:

All of the appellants herein are represented by F.L. Richardson as attorney or in propria persona. F.L. Richardson also represented Chandler during his administrations as guardian and as administrator of the Baxter estate. He testified that he had a contingent fee contract of employment whereby Joseph W. Hale agreed to pay him a fee equal to fifty per cent of any money or property recovered for Hale from the Baxter estate. It therefore appears that parties whose interests normally would be opposed are shown united in a joint effort to establish such defalcation on the part of Chandler; and that the only opposing party and respondent herein is the surety on Chandler's bond. No evidence was produced or offered to indicate that Chandler at any time as administrator received any funds or property in addition to that accounted for by him as such administrator and as found by the court on the hearing herein. In that connection the appellants are content to rely upon inferences to be drawn from the accounts offered in evidence and filed by Chandler in the guardianship proceeding, and their contention that any unaccounted for funds or property received by him as guardian are presumed to continue in his possession in his new capacity as administrator. They point to the following apparent discrepancies appearing in the accounts offered in evidence and rejected by the probate court: The last account of James R. Baxter, filed in February, 1919, and approved by order of court on March 7, 1919, showed a balance of cash in banks belonging to the estate on the 15th day of November, 1918, in the sum of $47,265.33. The original inventory and first account of Chandler as guardian showed the receipt by him of $30,309.98, and no more, as "cash from the University Avenue Bank". In so far as the record shows, there is no explanation for the discrepancy in these two amounts. A supplemental inventory filed by Chandler in the guardianship proceeding showed the receipt of certain certificates of deposit issued by Baxter Bros. Bank in Iowa totaling in value the sum of $23,122.55, which by order of court were accepted in settlement of a claim against that bank. The first three certificates totaling $8,000 became due on or before March 1, 1922, and the balance between September 1, 1922, and September 1, 1924. The third annual account of Chandler as guardian filed on June 5, 1922, reported the amount of cash on hand as of June, 1921, taken from his second annual account, and in addition $11,512.11 subsequently received from all sources. The latter amount, it is admitted, includes $8,000 proceeds from the certificates of deposit falling due prior to the filing of that account. The proceeds of the additional $15,000 plus of such certificates are reported by Chandler in his first and final administrator's account as constituting one of the items of property in the estate which had come to his possession, thus showing receipt by him as administrator of $14,672, cash in bank, $15,500.25 proceeds of certificates of deposit, and two further items which were the proceeds of notes and receipts from interest, making a total of $32,279.81. It is apparently the theory of the appellants that since Chandler reported at the outset the receipt of approximately $30,000 in "cash", and later received some $15,000 as proceeds from the certificates of deposit, he must have received a total of more than $45,000 instead of the reported sum in excess of $30,000. But, in so far as the present record is concerned, there is nothing to show that the $15,000 worth of certificates of deposit were not "cash", or a substitute for credits designated as "cash", and included in the $30,000 originally reported by Chandler as guardian. Therefore, had the court received all of the rejected evidence, and based its present findings thereon, we would not be able to say that its findings were not supported by the record including such rejected evidence.

However, the rule relied on by the appellants did not authorize the court in the present proceeding to investigate the accounts filed by Chandler in the prior guardianship proceeding, approved and settled by an order of the court which has since became final. [3] The appellants may not invoke the jurisdiction of the probate court herein for the purpose of establishing a debt due to the Baxter estate from the estate of Chandler, in effect a money judgment, by virtue of some alleged act committed by Chandler in a different capacity. In so far as the present proceeding is concerned the purported attack upon the accounts of Chandler as guardian must be deemed to be collateral, and under familiar principles the order approving and settling such accounts in the prior guardianship proceeding are final and conclusive herein. ( Security-First Nat. Bank of Los Angeles v. Superior Court, 1 Cal.2d 749 [ 37 P.2d 69]; Estate of McGue, 180 Cal. 413 [ 181 P. 637]; Estate of Madsen, 31 Cal.App.2d 240 [ 87 P.2d 903]; 11A Cal. Jur., p. 180, and cases cited.) The rule relied on and stated in the Clary case was applied there in the same and not in a subsequent proceeding. What application it may have in an appropriate proceeding to reopen the guardianship matter or in a court of equity is not a question with which we are here concerned. [4] Furthermore, if a recoverable loss was sustained by reason of any act of Chandler as guardian, it was chargeable against him "in what was then his true character", and not in his capacity as administrator. (24 Cor. Jur., p. 52, sec. 470.)

There is no merit in the contention that the court should have allowed interest on the whole of the amount found to be due from Chandler as administrator.

The order is affirmed.

Curtis, J., Carter, J., Waste, C.J., Gibson, J., and Edmonds, J., concurred.

Rehearing denied.