Beard's Estate, In re

• Decision Date: 14 June 1962
• Docket Number: No. 35719,35719
• Citation: 372 P.2d 530,60 Wn.2d 127
• Court: Washington Supreme Court
• Parties: In the Matter of the ESTATE of John Craswell BEARD, Deceased. OCOMA FOODS COMPANY, Seattle Ice and Cold Storage Company, American National Processors, Inc., and Umatilla Canning Company, Respondents, v. Lee L. NEWMAN and Vernitta Phyllis Beard, Executor and Executrix, Appellants.

Page 127

60 Wn.2d 127

372 P.2d 530

In the Matter of the ESTATE of John Craswell BEARD, Deceased.

OCOMA FOODS COMPANY, Seattle Ice and Cold Storage Company,

American National Processors, Inc., and Umatilla

Canning Company, Respondents, v. Lee L. NEWMAN and Vernitta Phyllis Beard, Executor and Executrix, Appellants.

No. 35719.

Supreme Court of Washington, En Banc.

June 14, 1962.

Newman & Newman, Russell W. Newman, Franco & Bensussen, Albert M. Franco, Seattle, for appellants.

Elliott, Lee, Carney & Thomas, Elvin P. Carney, Seattle, Comfort, Dolack & Hansler, Tacoma, Cameron Sherwood and William M. Tugman, Walla Walla, for respondents.

DONWORTH, Judge.

This is an appeal from an order removing appellants as the executor and executrix of the estate of John Craswell Beard.

On August 19, 1958, John Craswell Beard died testate leaving community property consisting of a family home subject to a mortgage, an automobile, a $6,540 bank account, other personal property worth $500, and a sole proprietorship business known as 'Beard's Frosted Foods.' Under the will, the decedent's surviving spouse, Vernitta Phyllis Beard, was the sole beneficiary. The testator nominated his wife and Lee. L. Newman, his attorney (who will hereafter be designated as the executors when referred to together), to administer the estate and empowered them to:

'* * * take possession of and assume control of all my property and estate, of whatsoever kind or nature, and wheresoever situate, and proceed to pass upon, allow or reject any claim and/or claims presented against my said estate, to collect all monies due my said estate and to institute all suits or proceedings necessary therefor, and in any manner that they may deem fit or proper; to sell either real or personal property, regardless of whether such sale is necessary to pay the expenses of administration or claims against my said estate, to administer upon, settle and distribute my said estate without the intervention of any court or courts whatsoever further than to admit this my Last Will and Testament to probate, direct notice to be given to creditors, ascertain who are heirs, enter a decree of solvency or take such other preliminary steps as may be necessary under the laws of the State of Washington to admit to probate my said estate, after which the same shall be administered upon and settled by my said executors, without the intervention or supervision of any court or tribunal whatsoever, and no bond shall be required of my said executors, either to enable them to qualify as such under this, my last Will and Testament, or to sell real or personal property.'

The will was admitted to probate, the executors were appointed and qualified, and an inventory and appraisal were filed. Thereafter, the executrix operated the frozen food business as she had done with her husband prior to his death. Neither an adjudication by the court that the estate was solvent nor an order permitting the continuance of the business was obtained. After the notice to creditors was published, creditors of the business were paid for claims arising prior to the death of the testator, although, adhering to a prior arrangement made with the executors, they had not filed and presented their claims. After paying these claims in the amount of $53,741.38, the executrix filed and presented a claim against the estate for reimbursement of this amount more than six months after the publication of notice to creditors. It was asserted, and the petitioners did not deny, that the purpose for filing this claim was to gain a tax exemption, and the claim was withdrawn subsequently. Thereafter, petitions for an award in lieu of homestead and for a family allowance were filed and granted.

During the operation of the frozen food business after the death of the testator, debts were incurred in the ordinary course of business, some of which had not been paid at the time the order of removal was entered. Of these obligations, some were owed to the petitioners herein. Regarding the success of the operation of the business during this period, suffice it to say that the business experienced some losses. In the early spring in 1959, Arden Farms Company, competitor, resumed some advances made prior to the testator's death concerning acquisition of the business. The negotiations continued, and, on December 7, 1959, a contract was entered into for the sale of Beard's Frosted Foods between Vernitta Phyllis Beard and T. B. Amundson of Arden Farms Company, although no order of the court authorizing the sale was obtained. In the contract, the buyer promised to pay $13,539 for the trucks and equipment, together with the value of the inventory on hand and the accounts receivable which could be collected. The buyer agreed to apply these payments to the claims of the business creditors arising prior to the sale and after the death of the testator and pay the excess, if any, to the seller. In case of a deficit, the buyer promised to attempt to arrange a compromise agreement with the creditors whereby they would discharge the seller in full. However, upon learning of the agitation which underlies this action, Arden Farms refused to make these payments and expressed a desire that it be allowed to pay the proceeds into court or some other body which could make the proper payments after the issues in this action are resolved. As a result, the executors brought an action for damages against Arden Farms Company for breach of the contract, which was pending at the time of the hearing of this action on appeal.

On February 18, 1960, Ocoma Foods Company and Seattle Ice and Cold Storage Company petitioned the superior court for removal of Vernitta Phyllis Beard and Lee L. Newman as executors of the estate of John Craswell Beard. An initial proceeding occurred March 3, 1960, in which the executors were directed to render a report on the condition of the estate and their activities regarding the administration of it. American National Processors, Inc., and Umatilla Canning Company were allowed to intervene upon filing a petition seeking the removal of the executors. A final hearing on the issues commenced on March 24, 1960, wherein the sole issue became whether or not the executros had mismanaged the administration of the estate. An order removing Vernitta Beard and Lee L. Newman as executors and appointing an administrator with the will annexed was entered on the basis of information derived from the petitions of the original petitioners and the intervenors, the response to the petitions, the report, affidavits and accountings of the executors, and arguments of counsel. The grounds for the removal, stated in the order, were '* * * said Executor and Executrix have continued the business of the deceased known as Beard's Frosted Foods, it constituting one of the assets of subject estate, without order of Court or a decree of solvency, and in spite of the fact that said business was insolvent at the date of the death of John Craswell Beard, to the extent that it was unable to pay its creditors in the ordinary course of business, and it further appearing that said Executor and Executrix operated said business at a loss and the estate is now insolvent, and it appearing that an attempted sale of the business to Arden Farms has not been completed by reason of litigation and claims developing in connection with said sale and the administration of the estate, and that the Executrix Vernitta Phyllis Beard caused a claim on her behalf in the sum of $53,741.38 to be filed and approved more than six months after the date of the first notice to creditors, and did also secure an order setting aside a portion of the real property in lieu of homestead and also providing for a widow's allowance retroactive to the date of death, both of which orders were secured without advising the Court of the insolvency of said estate, and that the acts of said Executor and Executrix are adverse to the best interests of creditors, who have come into existence as a result of the operation of said business, and said Executor and Executrix having failed to faithfully perform their duties and trust, as required by law * * *.'

From this order, the executors appeal.

Appellants, raising the question of jurisdiction, contend that respondents were not proper parties to bring this proceeding, and, therefore, the trial court erred in entering the order of removal on the basis of respondents' petition. The standing of these parties is not material to the trial court's jurisdiction to remove the executors from the estate.

Under Art. IV, § 6, of our constitution, and RCW chapter 11.02, the superior courts have broad powers in administering estates brought within their jurisdiction. In re Kelley, 193 Wash. 109, 74 P.2d 904 (1938); In re Campbell's Estate, 46 Wash.2d 292, 280 P.2d 686 (1955). One of these powers, the power to remove executors or administrators, has been specifically set forth by the legislature. RCW 11.28.160 provides:

'The court appointing any executor or administrator shall have authority for any cause deemed sufficient, to cancel and annul such letters and appoint other executors or administrators in the place of those removed.'

RCW 11.28.250 provides:

'Whenever the court has reason to believe that any executor or administrator has wasted, embezzled, or mismanaged, or is about to waste, or embezzle the property of the estate committed to his charge, or has committed, or is about to commit a fraud upon the estate, or is incompetent to act, or is permanently removed from the state, or has wrongfully neglected the estate, or has neglected to perform any acts as such executor or administrator, or for any other cause or reason which to the court appears necessary, it shall have power and authority, after citation and hearing to revoke such letters. * * *'

It it clear from these constitutional and statutory provisions that a superior court which has jurisdiction over an...