In re Krueger's Estate

• Court: Washington Supreme Court
• Writing for the Court: SIMPSON, Justice.
• Citation: In re Krueger's Estate, 119 P.2d 312, 11 Wn.2d 329 (Wash. 1941)
• Decision Date: 22 November 1941
• Docket Number: 28488.
• Parties: In re KRUEGER'S ESTATE. v. GOSTINA et al. JENNER, Supervisor of Inheritance Tax and Escheat Division,

119 P.2d 312

11 Wn.2d 329

In re KRUEGER'S ESTATE.

JENNER, Supervisor of Inheritance Tax and Escheat Division, v. GOSTINA et al.

No. 28488.

Supreme Court of Washington

November 22, 1941

Department 2.

Proceedings in the matter of the estate of John L. Krueger, deceased wherein T. M. Jenner, Supervisor of Inheritance Tax and Escheat Division of the State of Washington, filed a claim for inheritance taxes, and Carrie Gostina and husband and William Neff filed objections to the final report filed by John W. Whitham, as executor. From a judgment disallowing the claim for taxes, T. M. Jenner, Supervisor, appeals, and from a judgment approving the executor's final report, Carrie Gostina and husband and William Neff cross-appeal. From an unsatisfactory order fixing the executor's fee at $887.50 and fixing the fees of his attorneys at $300, John W Whitham, as executor, cross-appeals.

Judgment affirmed upon the appeal of T. M. Jenner, Supervisor, and the cross-appeals of John W. Whitham, as executor, and Carrie Gostina and husband. Reversed upon the appeal of William Neff, with instructions.

BLAKE J., dissenting in part.

Appeal from Superior Court, King County; J. T. Ronald, Judge.

Smith Troy, Stanbery Foster, R. P. Guimont, and Max Kaminoff, all of Olympia, for appellant.

Teresa I. Masters, E. P. Whiting and John W. Whitham, all of Seattle, for respondent and cross-appellants.

SIMPSON Justice.

This appeal involves the final report in the estate of John L. Krueger, deceased, who died January 9, 1926, leaving a nonintervention will in which John W. Whitham was appointed executor. The will was admitted to probate January 11, 1926. Thereafter, the estate was appraised in the sum of $10,186.44.

The total amount realized by the executor, as shown by his report dated December 17, 1931, was $8,652.13, which included the following items:

Sale of house and lot ........ $2650.00

Sale of small sawmill ......... 1200.00

Cash in the bank .............. 3521.12

Amount collected from other

sources ...................... 1281.01

During the year 1928 the executor deposited $5,000 of the estate funds in the Home Savings & Loan Association, which was later liquidated by the state banking department. Claims filed against the estate amounted to $11,253.44, of which amount $824.70 were preferred claims. Of the preferred claims $312.50 were not verified. The executor paid all of the preferred claims and some of the general claims in full notwithstanding the fact that the estate was insolvent. Among the assets of the estate was a sawmill in operation at the time of Mr. Krueger's death and which the executor operated for two weeks after his appointment.

The executor filed four reports. The first report showed receipts in the amount of $8,652.13 and disbursements in the sum of $3,193.20, including executor and attorney fees in the sum of $750. The second report disclosed dividends from the liquidator of the Home Savings & Loan Association of $558.80 and disbursements in the sum of $524.38, including $325 paid a firm of attorneys employed to defend the executor in an action brought against him. The third report showed dividends and interest from the liquidator in the sum of $2,066.17 and the expenditure of $50 as a contribution to a committee which was engaged in litigation against the liquidator of the Home Savings & Loan Association. The fourth report is the one under consideration, and shows that the executor paid expenses since December 17, 1931, of $524.38, leaving a balance on hand of $2803.93.

There was additional income due the estate prior to the filing of the final report from the sale of a pass book in the sum of $184.41 and the sale of the personal effects of the deceased in the sum of $110.

The estate has had considerable difficulty concerning the various claims against it and the actions of the executor. This appeal makes the sixth time it has appeared in this court necessitating the expenditure of much of the money belonging to the estate.

In re Krueger's Estate, 145 Wash. 379, 260 P. 248, arose out of a citation to compel the executor to act upon a claim presented to him. Neff v. Whitham, 147 Wash. 101, 265 P. 462, involved an action to recover a commission of $250 from the estate. Gostina v. Whitham, 148 Wash. 72, 268 P. 132, was an action to recover upon evidence of indebtedness. In Re Krueger's Estate, 173 Wash. 114, 21 P.2d 1030, the executor brought action against the supervisor of banking seeking to establish a trust fund of the moneys he had deposited in the Home Savings & Loan Association. In Re Krueger's Estate, 180 Wash. 165, 39 P.2d 381, Gostina, the plaintiff in Gostina v. Whitham, supra, sought to hold the executor personally responsible for the loss of funds of the estate he had deposited in the Home Savings & Loan Association. The estate lost all of the cases except the last one mentioned.

During the progress of the administration of the estate, the state of Washington filed a claim for inheritance taxes. The claim for the tax was based upon an amount due Carrie Gostina in the sum of $10,000.

After the executor had filed his final report, Carrie Gostina and William Neff, two creditors of the estate, filed separate objections to the report. The objections were alike and recited first, that the executor had failed to itemize his receipts of the first report, particularly the item referred to as 'amount collected from all other sources, $1281.01.' Second, that the executor should be required to furnish an itemized statement concerning the operations of the sawmill. In the third, fourth and fifth objections they challenged the right of the executor to pay certain claims. Another objection challenged the payment of attorney's fees. The two creditors also filed objections to the claim of the state for inheritance tax.

At the hearing upon the final account the court entered an order confirming the report of the executor, allowing certain fees, and disallowing the claim of the state to an inheritance tax. The state appealed from the order disallowing the tax. The creditors Gostina and Neff cross-appealed from the order approving the report, and the executor cross-appealed from the order fixing the executor's fee in an amount less than requested.

We will consider the appeal of the state first in which error is predicated on the part of the trial court in decreeing that no inheritance tax was due the state of Washington.

The facts relating to the Gostina claim, upon which the state claimed a tax, are stated in Gostina v. Whitham, supra, as follows:

'For many years prior to his death, John Krueger made his home with the respondents. The condition of his health was such as to require a great deal of care and nursing. All of this was supplied by respondents, and no payment was ever made therefor. In June, 1924, he delivered to respondents an order in writing as follows:

"The National Bank of Commerce of Seattle: Pay to the order of Carrie Gostina $_____ after death 10,000.00 dollars. John Krueger.'

'Krueger spent most of his time at respondents' home until a few months prior to his death, when, for some reason he spent part of his time with another neighbor. In 1925 he made a will bequeathing his estate to brothers and sisters. The respondents presented their claim based on the writing just set out, which was refused, and this action instituted to enforce the payment, with a favorable result.'

The state claims that the order which formed the basis of the Gostina claim constitutes a transfer which comes within the literal language of Rem.Rev.Stat. (Sup.) § 11201, and that the tax is payable regardless of the fact that the written agreement was founded upon a consideration. The pertinent portions of that statute read: 'All property within the jurisdiction of this state, and any interest therein, * * * whether tangible or intangible, which shall pass by will or by the statutes of inheritance * * * or by deed, grant or sale or gift made or intended to take effect in possession or in enjoyment after death of the grantor or donor, * * * shall, for the use of the state, be subject to a tax as provided for in section 2 * * *.'

To support its contention, the state cites In re Gaudette's Estate, 165 Wash. 412, 5 P.2d 503. The facts in that case, an inheritance tax claim which we allowed, are more fully stated in McCullough v. McCullough, 153 Wash. 625, 280 P. 70, 73.

With this contention, however, we cannot agree. In the first place, a comparison of the cited cases with the instant case reveals a marked difference not only in facts, but also in legal theory. In the former, action was brought on a contract to make provision by will. As no claim against the estate was filed, plaintiff was never an estate creditor. Recovery was obtained, however, by a suit in the nature of specific performance. Therefore, since the effect of the action was to make a transfer pursuant to will and thus testamentary in character, the property transferred, although for a consideration, was held taxable. In the McCullough case we said: 'If a claim had been filed in probate and rejected and an action brought thereon, it would have been necessary to measure the damages in money. To state it otherwise, it would have been necessary to measure the love, affection, and companionship of the father when he gave up the custody and control and all association with his daughter and the love and affection and companionship which the respondent rendered to Mrs. Gaudette during her lifetime. For services of this character, the law furnishes no measure of damages.'

The instant case, on the other hand, is one of a contract creditor seeking recovery against the estate for services rendered. Hence, the position of Gostina is no...