In re Anderson's Estate

• Decision Date: 05 October 1937
• Citation: 157 Or. 365,71 P.2d 1013
• Parties: In re ANDERSON'S ESTATE. v. HOLMAN, State Treasurer, et al. BANK OF CALIFORNIA NAT. ASS'N
• Court: Oregon Supreme Court

71 P.2d 1013

157 Or. 365

In re ANDERSON'S ESTATE.

BANK OF CALIFORNIA NAT. ASS'N v. HOLMAN, State Treasurer, et al.

Supreme Court of Oregon

October 5, 1937

In Banc.

Appeal from Circuit Court, Multnomah County; George Tazwell, Judge.

Proceeding in the matter of the estate of Joseph Anderson, deceased. From a decree of the circuit court of Multnomah county sitting in probate, disallowing in part a claim of the Bank of California National Association and sustaining objection of Rufus C. Holman, State Treasurer, and the State Land Board of Oregon to the final account of the bank, as administrator the administrator appeals.

Reversed with directions.

This is an appeal by the Bank of California National Association from an order of the circuit court of the state of Oregon Multnomah county, sitting in probate, disallowing in part the claim of the bank against the estate of Joseph Anderson deceased, and sustaining the objection of the state treasurer and the state land board to the final account of the bank, as administrator, filed in the matter of said estate.

The facts and circumstances pertaining to the controversy are about as follows: Joseph Anderson for many years was janitor for the Bank of California National Association, at Portland, Or. By reason of age and poor health, rendering him unable to continue the work, he voluntarily retired in October, 1924. He had accumulated a savings account in said bank amounting to about $2,000, which was, by means of a loss in an investment and some necessary expenses, reduced to a little less than $1,000. Anderson applied to the bank for a small pension to enable him to live, representing that he had no resources other than the small savings account which he desired to retain for emergencies, such as total disability, last sickness and burial, and that unless he had some assistance he would starve or become a public charge. His application was referred to the head office of the bank in San Francisco and authority was given to the Portland Branch to pay Anderson $25 per month but to keep in touch with his condition and obtain further instructions from the head office before continuing the gratuity for more than one year.

The bank had no regular pension plan or system. No employee, regardless of age or time of service, was entitled to a pension as a matter of contract or right, although it appears that pensions were paid to one or more former employees besides Anderson, but in each instance the bank reserved the right to grant or withhold its gratuity as appeared proper in individual cases.

From year to year Anderson renewed his statement of destitution and representations that he had no other means except the savings account, and from year to year, upon reporting the facts to the head office, the Portland bank received the instruction to continue Anderson's pension. Beginning October, 1924, he was paid $25 each month, as he called for it at the bank, until a total of $2,500 had thus been donated to him.

All of Anderson's said statements and representations respecting his indigent condition were untrue and known by him to be untrue and were made with intention to deceive the bank and obtain said pension. The bank had no knowledge of the falsity of the statements and had no means of ascertaining the truth until after Anderson's death, but believed his story and paid him the pension as aforesaid.

In October, 1932, he entered into a trust agreement with the bank whereby he conveyed to the latter his savings account, which amounted to $944.44, in trust to invest and pay the net income, and in case of illness, extreme need or other emergency some portion of the principal, to him, and upon his death to pay the expenses of his last illness and funeral. If any of the trust fund then remained the bank was to retain and apply the same in part reimbursement for said monthly pension advances. The bank continued to pay Anderson $25 per month without deduction from said trust fund.

Anderson died intestate in March, 1933, leaving no known heirs. Out of this trust fund, which then amounted to $954.13, the bank paid expenses of last illness and funeral, amounting to $144.61. Among his personal effects were found a passbook showing a savings account of $274.69 in the United States National Bank and a key to a safe deposit box at Commerce Mortgage Security Company, in which there was subsequently found $2,237 in currency.

The bank applied for letters of administration, and on March 17, 1933, was appointed and qualified as administrator of the estate of Joseph Anderson, deceased. It filed an inventory which included the sums above mentioned and the remainder of said trust fund amounting to $809.52. September 13, 1933, the bank filed and presented to the probate court for hearing its verified petition for allowance of its claim against the estate for $2,500, which it had paid to Anderson in his lifetime, with interest. After a hearing in open court, at which testimony was taken, the court made findings of fact and entered an order allowing the bank's claim, with interest, amounting to the total sum of $3,131.25. The final account of the administrator was filed January 2, 1934. Notice thereof, as required by law, was duly published. No objections to said final account were filed at that time, and on October 8, 1934, an order was duly entered approving the disbursements of the administrator, which included payment of the aforesaid claim, and approving and confirming said final account, discharging the administrator, and closing the estate.

On July 22, 1935, about eight months later, Rufus C. Holman, the state treasurer, and the State Land Board, appearing by attorney, petitioned the court to set aside the order approving the final account and closing the estate, and to open the same, and filed objections to said final account, wherein the claim of the Bank of California, which had been approved and allowed by the court September 13, 1933, was attacked. Issue was joined thereon by answer of the administrator and was tried by the court without a jury October 6 and 8, 1936. Before signing the judgment, the administrator and claimant presented to the court, and requested, findings of fact and conclusions of law in favor of the bank, but the whole thereof was refused. Thereupon the court filed and entered the order, from portions of which and for refusal to make findings and conclusions requested by appellant, this appeal is prosecuted.

Thomas G. Greene, of Portland, for appellant.

David S. Husted, of Portland, for respondents.

BEAN, Chief Justice (after stating the facts as above).

The first assignment of error is that the court erred in overruling appellant's motion to dismiss the objections of the respondents to the final account of the administrator. The estate of Joseph Anderson consisted entirely of personal property, and the probate court had exclusive original jurisdiction to direct the payment of debts and distribution of the remainder, if any. Re Faling's Estate, 113 Or. 6, 15, 228 P. 821, 231 P. 148; State v. O'Day, 41 Or. 495, 499, 502, 69 P. 542; Esterly v. Rua (C.C.A.) 122 F. 609, 612.

A probate proceeding is in rem, and orders and decrees therein are binding upon every person, including the state and its governmental agencies as well as private persons unless the decree is attacked directly. Publication of notice to creditors and notice of final account, as required by law, are sufficient notice to the state to render the decree on final account conclusive as against a collateral attack. Winkle v. Winkle, 8 Or. 193, 196; State v. O'Day, supra; State v. Finnigan, 81 Or. 538, 542, 160 P. 370; Christianson v. King County, 239 U.S. 356, 372, 36 S.Ct. 114, 60 L.Ed. 327, 335; 34 C.J. 1172, § 1663, 1176, § 1668.

The crux of this case is stated by the respondents as follows: "The right of the bank to recoup this sum depends upon whether there was an express or implied agreement between Joseph Anderson and the Bank that he would repay to them all sums advanced to him as a pension. The question of the right of the bank to recoup on the ground of fraud or deceit is not presented here since the same cannot arise out of a proceeding in the probate court for an allowance of a claim at law, a liquidated sum."

The question is fairly presented by the petition, objection, and answer thereto.

There being no known heirs of Joseph Anderson, deceased, the state claims that the personal property involved escheated to the state of Oregon for the benefit of the school fund. Section 11-1201, Oregon Code 1930, the escheat statute in force at the time of Anderson's death and the probate of his estate, made no provision for service of petition, proof of claim, or final account upon the state or any of its officers, other than the published notice of the settlement of the estate. However, that section was amended by chapter 365 of the Laws of 1933, § 1 (page 586), and again amended by chapter 12, Laws of 1935, Special Session (page 22), which provides that, when any person shall die intestate without heirs, leaving any real, personal or mixed property, interest or estate in this state, the same shall escheat to and become the property of the state and the clear proceeds derived therefrom shall be paid into and become a part of the common school fund of this state and be loaned or invested by the State Land Board, as provided by law. The county court before whom any probate matter is pending, shall determine whether there are any legal heirs to said estate, and, if it be determined by said court that there are no legal heirs thereto, said court shall order the administrator of said estate to serve upon the said State Land Board a true copy of each order, motion, petition, or citation, and of the order...