Conservatorship of Hart

• Decision Date: 22 March 1991
• Docket Number: Nos. H006185,H006532,s. H006185
• Citation: 279 Cal.Rptr. 249,228 Cal.App.3d 1244
• Court: California Court of Appeals Court of Appeals
• Parties: In re CONSERVATORSHIP OF the ESTATE OF Marcia Farrell HART. WELLS FARGO BANK, as Conservator, etc., Petitioner and Respondent, v. John McPike KERESEY, Objector and Appellant.

Page 249

279 Cal.Rptr. 249

228 Cal.App.3d 1244

In re CONSERVATORSHIP OF the ESTATE OF Marcia Farrell HART WELLS FARGO BANK, as Conservator, etc., Petitioner and Respondent, v. John McPike KERESEY, Objector and Appellant.

Nos. H006185, H006532.

Court of Appeal, Sixth District, California.

March 22, 1991.

William R. Gaffaney, Catherine Lawson and Gaffaney, Teal, Cudney & Gray, for objector and appellant.

John M. Rubens, Mark G. Bonino, Heather A. McKee, Linda Dvorak and Ropers, Majeski, Kohn, Bentley, Wagner & Kane, for petitioner and respondent.

BAMATTRE-MANOUKIAN, Associate Justice.

Under Probate Code sections 2580 through 2586 a superior court may, upon the petition of any interested person and after consideration of all relevant circumstances, authorize or require a conservator to take actions of various kinds with respect to the conservatorship estate. In essence the statute permits the court to substitute its judgment for that of a conservatee.

Wells Fargo Bank (the Bank) is the conservator of the estate of Marcia Farrell Hart, an elderly person afflicted with Alzheimer's disease. In June 1989, when Hart's conservatorship estate was valued at approximately $13.2 million, the Bank petitioned under the substituted-judgment statute for authority to make, from the conservatorship estate, gifts totalling $670,000 in the first year and $70,000 in each of five succeeding years to Hart's living children and to certain of her grandchildren. One of the children, John McPike Keresey, objected. The superior court granted the requested authority and Keresey appealed (H006152); the appeal automatically stayed the superior court's order. (Prob.Code, § 2751, subd. (a).) The Bank then petitioned for an order that it make certain of the gifts notwithstanding the stay. (Id. subd. (b).) Keresey again objected. Again the superior court made the requested order and again Keresey appealed (H006532). We have ordered the appeals consolidated.

Keresey asks that this court modify the superior court's orders in specified respects and affirm the orders as so modified; the Bank asks that the orders simply be affirmed. We shall adopt neither party's proposal. Instead we shall reverse the superior court's orders and remand the cause for further proceedings. The superior court was significantly misinformed as to relevant circumstances. We can neither reshape the substituted-judgment orders (as Keresey proposes) to fit the true circumstances nor assume (as the Bank suggests) that the superior court would have reached the same decision if fully informed. The substituted-judgment statute vests broad discretionary power in the superior court; we must return the cause to that court for its fully-informed consideration. ¹

1. The Substituted-Judgment Statute

The doctrine underlying the substituted-judgment statute was first recognized in California in Estate of Christiansen (1967) 248 Cal.App.2d 398, 56 Cal.Rptr. 505. (Cf. also Conservatorship of Wemyss (1971) 20 Cal.App.3d 877, 880, 98 Cal.Rptr. 85.) Christiansen declared "that the courts of this state, in probate proceedings for the administration of the estates of insane or incompetent persons, have power and authority to determine whether to authorize transfers of the property of the incompetent for the purpose of avoiding unnecessary estate or inheritance taxes or expenses of administration, and to authorize such action where it appears from all the circumstances that the ward, if sane, as a reasonably prudent man, would so plan his estate, there being no substantial evidence of a contrary intent." (248 Cal.App.2d at p. 424, 56 Cal.Rptr. 505.) Significantly, Christiansen did not require that a court find the ward would have acted as proposed; instead it adopted an essentially objective prudent-person standard. Thus Christiansen contemplated substitution of the court's judgment for that of the incompetent person.

The substituted-judgment doctrine was codified in 1979, operative January 1, 1981 (Stats.1979, ch. 726, § 3, pp. 2403-2405), upon the recommendation of the California Law Revision Commission which intended to "make[ ] clear that the court may authorize a conservator on behalf of the conservatee to perform a variety of acts that are necessary or desirable in modern estate planning or management." (Recommendation Relating to Guardian-Conservatorship Law (Nov.1978) 14 Cal. Law Revision Com.Rep. (1978) p. 513.) Noting that Christiansen had empowered a guardian "to carry out the presumed donative intent of the ward," the Commission suggested that "[t]he proposed law gives statutory recognition to the doctrine of substituted judgment and lists by way of illustration matters that are to be considered in applying the doctrine. At the same time, the proposed law gives the court discretion and flexibility in applying the doctrine under the circumstances of each case." (Id. at p. 556.)

The statute ² permits a conservator to petition for an order authorizing a proposed action for any one or more of several purposes: To benefit the conservatee or the estate; to minimize current or prospective taxes or expenses of conservatorship or probate administration; or to provide gifts for such purposes and to such donees as would be likely beneficiaries of gifts from the conservatee. (Prob.Code, § 2580, subd. (a).) The proposed action may include, among other things, "[m]aking gifts of principal or income, or both, of the estate, outright or in trust." (Id. subd. (b)(1).)

The statute empowers the superior court, "in its discretion" and after a hearing, to "approve, modify and approve, or disapprove the proposed action" and to authorize or direct other action. (Prob.Code, § 2584.) But before it makes its decision the superior court must (1) provide for notice to various classes of persons (id. § 2581, subd. (c)), (2) determine (a) that the conservatee is not opposed to the action, or if opposed lacks legal capacity for the action, and (b) that the action either will have no adverse effect on the estate or will leave the estate adequate to provide for the conservatee and for the support of those the conservatee is legally obliged to support, taking all circumstances into account (id. § 2582), and (3) "[T]ake into consideration all the relevant circumstances, including but not limited to" specific circumstances enumerated in 11 categories (id. § 2583) recapitulated in a requirement that the court consider "[t]he likelihood from all the circumstances that the conservatee as a reasonably prudent person would take the proposed action if the conservatee had the capacity to do so." (Id. subd. (k).) The Law Revision Commission commented that "[t]he listing in Section 2583 is not exclusive, and the weight to be given to any particular matter listed will depend upon the circumstances of the particular case.... A matter not listed may be significant in a particular case." (Com. on Prob.Code, § 2583, 14 Cal.Law Revision Com.Rep., supra, p. 795.)

Our disposition of these appeals is primarily influenced by three broad generalizations compelled, in our view, by the statute viewed as a whole.

a. The Conservatee's Interests

It is apparent that the substituted-judgment statute is designed, consistent with the Probate Code's conservatorship provisions as a whole, to protect the conservatorship estate for the benefit not only of the persons who will ultimately receive it from the conservatee or his or her personal representative but also (and perhaps primarily) of the conservatee himself or herself. It is, after all, the conservatee whose property is to be managed, applied, or (as in this case) given away. Common sense tells us that in many cases (as in this one) the conservatee will be incapable of protecting his or her own interests. It will thus be incumbent upon the conservator, upon any other petitioner, and upon the superior court itself to assure throughout substituted-judgment proceedings that the conservatee's interests are, indeed, protected. Where amounts are large or the stakes otherwise especially high, it may be prudent for the superior court to appoint a guardian ad litem, empowered to retain independent counsel, to protect the conservatee's personal interest.

b. Breadth of Superior Court Discretion

The substituted-judgment statute conceptualizes the superior court's function as an exercise of judicial "discretion." "The scope of discretion always resides in the particular law being applied.... Action that transgresses the confines of the applicable principles of law is outside the scope of discretion and we call such action an 'abuse' of discretion." (City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1297, 255 Cal.Rptr. 704.) As a practical matter it will be the task of a reviewing court to identify any abuse of discretion, and thus the scope of a superior court's discretion will be commensurate with the reviewing court's willingness to defer to the superior court's judgment. (Cf. Hurtado v. Statewide Home Loan Co. (1985) 167 Cal.App.3d 1019, 1022, 213 Cal.Rptr. 712, disapproved on another point in Shamblin v. Brattain (1988) 44 Cal.3d 474, 479, fn. 4, 243 Cal.Rptr. 902, 749 P.2d 339.) It has been suggested that, in general, greater appellate deference "is warranted whenever the trial judge's 'nether position' in the judicial pyramid makes him a presumptively more capable decisionmaker...." (Id. at p. 1024, 213 Cal.Rptr. 712.)

The superior court's primary function under the substituted-judgment statute will be to make a decision (as the conservatee would if able) on the basis of information furnished to it. The information the superior court receives may or may not be consistent: If there are issues of fact the court of course must determine whether the issues are material to the decision to be made and then resolve any issues it deems material.

This is not to say that if the facts are undisputed, or are settled by judicial fact-finding, the decision to be made will follow...