Steiner v. Flournoy

Decision Date09 March 1972
Citation100 Cal.Rptr. 680,23 Cal.App.3d 1051
CourtCalifornia Court of Appeals Court of Appeals
PartiesFreidl STEINER, also known as Mrs. Wenz Steiner, Plaintiff and Respondent, v. Houston I. FLOURNOY, Controller of the State of California, Defendant and Appellant. Civ. 37361.

Myron Siedorf, Chief Inheritance Tax Atty., Walter H. Miller, Chief Asst. Inheritance Tax Atty., and Phyllis Kelly Fairbanks and Richard Barnet, Asst. Inheritance Tax Attys., for defendant and appellant.

Rich & Ezer, by Mitchel J. Ezer, Los Angeles, for plaintiff and respondent.

STEPHENS, Associate Justice.

Defendant Controller of the State of California appeals from a judgment of the Los Angeles Superior Court 1 setting aside an order of the San Diego Superior (Probate) Court 2 fixing plaintiff's inheritance tax in estate proceedings which had become final.

The Background Facts: The San Diego Court Proceedings

In her will, decedent Fenny Van Leer of San Diego County divided the estate residue into halves, bequeathing one-third ($213,156.86, gross) of the second half of the estate residue to both Mrs. Wenz Steiner (plaintiff here) and Mr. Steiner. 3 The will provided that should certain of the other devisees of the second half of the estate residue 'predecease me and/or both Mr. and Mrs. Wenz Steiner, then his her or their share I will devise and bequeath (to certain heirs-at-law of the first half of the estate residue).' Mr. Steiner predeceased decedent-testatrix.

On September 15, 1966, in reliance upon the report of the estate executor 4 that plaintiff here was entitled to the entire Steiner share, and also upon te report of the inheritance tax appraiser fixing plaintiff's tax accordingly, the court made its 'Order Fixing Inheritance Tax,' imposing upon plaintiff the obligation to pay inheritance taxes ($35,613.23, gross) on the entire Steiner share.

A few days thereafter, the executor raised to the court the question of whether plaintiff was entitled to the entire Steiner share under the language used in the will, and on September 27, 1966, the court suspended distribution of Mr. Steiner's portion of the Steiner share until the proper distributee(s) of said share were determined. However, the court did not suspend its prior order imposing on plaintiff the obligation to pay inheritance taxes on the entire Steiner share. On February 14, 1968, after contested hearing, the court determined that Mr. Steiner's portion of the Steiner share had lapsed and devolved to decedent's heirs-at-law. However, again, the court failed to void its order fixing plaintiff's inheritance taxes on the entire Steiner share, and her obligation remained.

In the meantime, on November 14, 1966, the order fixing inheritance tax made September 15, 1966 became final upon lapse of the 60-day appeal period, and the inheritance tax fixed was then paid by the executor.

On May 17, 1968, after noticing her appeal from the court's order of February 14, plaintiff abandoned it in return for a cash settlement of somewhat less than one-half of the net value of Mr. Steiner's portion of the Steiner share. In further settlement, as plaintiff had already paid the inheritance taxes for the entire Steiner share, the heirs to whom Mr. Steiner's portion was distributed reimbursed plaintiff the amount they would have had to pay on Mr. Steiner's portion had plaintiff not paid the tax. These settlements were approved by the court. However, because the tax which plaintiff had paid had been assessed on the entire Steiner share and on a graduated scale, it was in excess of the amount which the heirs would have had to pay on Mr. Steiner's portion, thus in excess of the amount they reimbursed her. The overpayment for which plaintiff was not reimbursed amounts to $4,703.47.

The Instant Los Angeles Court Action Brought by Plaintiff

Plaintiff brought her instant action in the Los Angeles court as a suit in equity to set aside and modify the San Diego court order fixing inheritance tax 'due to extrinsic mistake' and to recover the unrecouped portion of her inheritance tax overpayment. On June 4, 1970, after trial, the Los Angeles court 'vacated and set aside' the San Diego court order fixing inheritance tax, determining that the order was obtained by extrinsic mistake, and allowing plaintiff 30 days after the Los Angeles court judgment became final to present to the San Diego court 'appropriate objections to the Report of the Inheritance Tax Appraiser.' It is from this order of June 4, 1970 that defendant Controller appeals.

The Appeal

In their original briefs to us, the parties argued the issue of whether the mistake upon which the Los Angeles court founded its 'judgment' was 'EXTRINSIC' OR 'INTRINSIC,' AND NO ATTENTION Was given to the jurisdictional question suggested by the 'judgment' of the Los Angeles court. At our suggestion, reargument and to some extent rebriefing was had on the question of jurisdiction, and our determination as to the validity of the judgment on appeal before us is based solely on the answer to that question. We have concluded that for the reasons hereinafter set forth, the Los Angeles court did not have jurisdiction to determine the validity 5 of the San Diego court's inheritance tax order, specifically wherein it sought to not only set aside that order, but to reopen the San Diego court's probate determinations by providing a time within which plaintiff might make objection to a probate order which, presumptively, at least, had long become final. (See Rev. & Tax.Code § 14512.)

Initially we are confronted with what appears to be an attack upon a judgment for extrinsic mistake; such an attack is one commonly recognized on the equity side of the superior court, and hence maintainable in any superior court of the state which obtains jurisdiction of the parties. 6 As stated in defendant-appellant's opening brief: 'An order determining inheritance tax is in the nature of an ordinary civil judgment and has the same force and effect.' (Rev. & Tax.Code § 14672; Estate of Willis (1950) 34 Cal.2d 782, 788, 215 P.2d 453.) Plaintiff concurs in defendant's statement of that principle of law, from which she seeks to provide the Los Angeles court with equity jurisdiction over the San Diego court's taxing order. Plaintiff relies upon Deas v. Lido Lumber Co., 132 Cal.App.2d 402, 282 P.2d 90; Herd v. Tuohy, 133 Cal. 55, 65 P. 139; and Young v. Young Holdings Corp., 27 Cal.App.2d 129, 80 P.2d 723, with particular reliance upon Deas; but we feel that Deas, when correctly read, states the jurisdictional rule in its quotation from Bullard v. Zimmerman, 82 Mon. 434, 516--517 (at pp. 406--407):

"'It is competent for every court, whether superior or inferior, to treat as a nullity any judgment which can be shown to have been obtained by mainfest fraud.' State ex rel. Phelan v. Engelmann, Supra (86 Mo. 551).

"The cases cited by (Bullard defendant) are cases in which one court sought to interfere with the process of another court of equal jurisdiction, in a live case, still at issue, with the litigation in progress, which may not be done. It is entirely different when a case is at an end, merged in a judgment, and suit is brought to annul the judgment on the ground of fraud. We hold that the court in which this suit was instituted had jurisdiction, and therefore so had the court to which it was transferred."

The Los Angeles court recognized (as did the parties) that the tax determination necessarily must emanate from the San Diego court, and the Los Angeles court carried into its order (by stipulated wording) the very Life of the probate case' still at issue' in San Diego. This is the very interference which the Deas case and its cited authority (Bullard) stated 'may not be done.' 7 (See Estate of Cox, 8 Cal.App.3d 168, 87 Cal.Rptr. 55.) As the quotation from plaintiff's complaint shows, she articulates at attack upon the fixing of the inheritance tax. The unalterable fact is that her attack is rather that the inheritance tax was fixed upon the executor's petition that distribution to plaintiff be in the amount bequeathed to both plaintiff and her deceased husband, and that because of the ultimate court determination of heirship, plaintiff did not receive Mr. Steiner's portion of the Steiner share, it going to the heirs-at-law. There is no contention of error in the computation of the tax based upon the recommended distribution set forth in the original petition for distribution filed by the executor; it is the fixing of the tax upon property not received by plaintiff (except by compromise settlement, with which we are not here concerned) to which her attack is truly directed. Such attack must be made within the arena of the only court with the power to set the tax, i.e., the San Diego Probate Court.

We conclude that the relevant sections 8 of Revenue and Taxation Code under division 1, part 8, chapter 12, article 1 ('Court Jurisdiction and Procedure Generally') (particularly that portion which we see fit to underline in the footnote) confer exclusive jurisdiction to the courts in San Diego County.

We believe that our foregoing analysis confirms the reconcilability of the decisions in Security-First Nat. Bank v. Superior Court, 1 Cal.2d 749, 757, 37 P.2d 69, 73, 9 and Estate of Auslender, 53 Cal.2d 615, 626, 2 Cal.Rptr. 769, 774, 349 P.2d 537, 10 as set forth in 5 Witkin, California Procedure (2d ed.) § 177, p. 3747. There, Mr. Witkin states:

'The Charters and Auslender cases are nevertheless reconcilable with the Security Bank case. In Estate of Charters (1956) 46 Cal.2d 227, 293 P.2d 778, the issue of validity of a prior order settling a trustee's account arose on A petition by the trustee for instructions on disposition of accumulated income of the trust. In Estate of Auslender, supra, the issue of validity of two prior consent judgments against the estate arose in a...

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