Zuber's Estate, In re
| Decision Date | 04 December 1956 |
| Citation | 304 P.2d 247,146 Cal.App.2d 584 |
| Court | California Court of Appeals Court of Appeals |
| Parties | In the Matter of the ESTATE of Berta ZUBER, also known as Katherine Auguste Berta Zuber, Deceased. Herbert BROWNELL, Jr., Attorney General of the United States, Contestant and Appellant, v. H. A. GEBHARDT, Esquire, Petitioner and Respondent, Emilie Exner and other German Beneficiaries, Respondents. Civ. 21741. |
Dallas S. Townsend, Asst. Atty. Gen. of the United States, Laughlin E. Waters, U. S. Atty., Airline Martin, Asst. U. S. Atty., Los Angeles, Mary Eschweiler, Office of Alien Property, San Francisco, James D. Hill, George B. Searls and Irwin A. Seibel, Dept. of Justice, Washington, D. C., for appellant.
Don L. Gilman and Alvin B. Baranov, Beverly Hills, for respondent Emilie Exner.
The Attorney General of the United States, acting in his capacity of successor to the Alien Property Custodian, 1 appeals from decree of distribution in the estate of Berta Zuber, deceased, because it denies him any participation therein by virtue of the custodian's vesting order of November 1, 1945. The challenged ruling was made upon the theory that respondents had a mere expectancy and did not take under decedent's will any interest which the custodian could seize.
Decedent, a citizen of this country and a resident of Los Angeles county, died on February 7, 1944, leaving a last will which was executed on October 31, 1940. The principal asset of her estate was a parcel of realty.
Paragraph Third of the will made certain specific legacies, three of which named German nationals and residents as recipients. They embraced a watch, silver teapot and porcelain lamp. The will provided that 'each such bequest * * * be effective only in the event the beneficiary shall survive distribution of the article bequeathed.' Also that, as Germany was then at war, the executor was authorized to defer transmittal to legatees residing in Germany until after termination of the war or such earlier time as he might be satisfied that same could be delivered in good order in Germany. In the event that Germany should be at war when the estate became otherwise ready for distribution, said articles were given to H. A. Gebhardt as trustee for the said named beneficiaries, to be held in trust until in the judgment of the trustee they could be delivered in good order.
Paragraph Fourth disposes of the residue in the following manner. The executor, Mr. Gebhardt, is given discretionary power to sell the same during the ordinary course of the probate proceeding, and in that event testatrix gives all the proceeds to a nephew, Heinrich Schlette, and a niece, Emilie Exner, both of whom were German nationals and residents, 'share and share alike, if they both survive distribution;' but in the event of either of them failing to survive that event his or her share to go to the surviving children of that decedent by right of representation. It is also provided that, in the event the executor does not sell the property during pendency of the probate proceeding, said residual estate is given to Mr. Gebhardt as trustee for the benefit of the said Heinrich Schlette and Emilie Exner, and to the surviving children of either of them who might decease, by right of representation; testatrix further directs that the property then constituting the trust estate be sold within three years after its receipt by the trustee and the proceeds of the sale distributed, share and share alike, to said nephew and niece and the children of either of them who may have died prior to such distribution. The concluding paragraph of Fourth confers upon the trustee, notwithstanding 'anything which is apparently to the contrary in the foregoing paragraphs,' uncontrolled discretion 'during the life of said trust' to make remittances from time to time to or for the benefit of either of the German beneficiaries 'for their maintenance or education in such amounts and at such time as he in his sole discretion may consider for their best interests.'
During the progress of the administration the executor, under court order and for the purpose of avoiding condemnation, sold the realty to the City of Los Angeles, and the court in confirming the sale ordered '[t]hat the proceeds of said sale shall at all times be deemed to be real property and retain the original character of real property.' This was but the application of a familiar equity principle (18 Cal.Jur.2d § 14, p. 127), and the parties present this appeal upon that basis, doubtless being persuaded thereto by Clark v. Allen, 331 U.S. 503, 517, 67 S.Ct. 1431, 91 L.Ed. 1633, which holds that the California reciprocal inheritance statute, Prob.Code § 259, yields to the Treaty of Friendship, Commerce and Consular Rights with Germany, signed December 8, 1923, 44 Stat. 2132, and therefore operates only upon personal property. However, no problem of reciprocal rights of inheritance is present in the instant case.
The trial court ruled that the specific legacies to German beneficiaries and the residue of the estate should be distributed to Mr. Gebhardt as trustee; '[t]hat the trust is valid and free from any claim of the United States arising by virtue of Vesting Order No. 5329 for the reason that at the time of the Vesting Order, to wit on November 1, 1945 and at the time of the death of the testatrix, to-wit: on February 7, 1944, there was no right, title and interest of the residuary legatees, their interests arising only upon distribution and contingent upon the survival of Heinrich Schlette and Emilie Exner, residuary beneficiaries, and the fact that distribution can be made personally to the beneficiaries, this being a condition precedent, the interests of the foreign heirs arising only upon the distribution of the estate.' Distribution was made accordingly. It is that order from which the appeal is taken.
Essentially the ruling is that the German legatees had no estate or interest which the custodian could seize because their rights were subject to a condition precedent which prevented their having any cognizable interest until the contingency ripened into a vested estate and that could happen only upon distribution by the court. Counsel for respondent take substantially the same position in their brief. 2 The appellant argues that respondents took under the will a contingent future estate which is an interest subject to seizure under the Trading with the Enemy Act. 3
Section 5(b) thereof authorizes the vesting of 'any property or interest' and § 7(c) permits seizure of 'any money or other property including (but not thereby limiting the generality of the above) * * * choses in action, and rights and claims of every character and description' belonging to or held for the benefit of any enemy alien, 50 U.S.C.A.Appendix, §§ 5(b) and 7(c). Executive Order No. 9095, § 2(c) authorized the vesting of 'any other property or interest within the United States of any nature whatsoever owned or controlled by, payable or deliverable to, held on behalf of or on account of, or owing to or which is evidence of ownership or control by, a designated enemy country or national thereof * * *', and subdivision (f), 'any property of any nature whatsoever which is in the process of administration by any person acting under judicial supervision or which is in partition, libel, condemnation or other similar proceedings and which is payable or deliverable to, or claimed by, a designated enemy country or national thereof.' 50 U.S.C.A.Appendix, following § 6.
The language of the vesting order is: 'All right, title, interest and claim of any kind or character whatsoever of Heinrich Schlette, children, names unknown, of Heinrich Schlette, Emilie Exner Children, names unknown, of Emilie Exner, Richard Exner, and Kaethe Semmerau, and each of them, in and to the Estate of Berta Zuber, also known as Katherine Auguste Berta Zuber, deceased.'
Discussion of the problem thus raised will be directed to the status of the residue, except as otherwise indicated.
Reference to the will discloses that, fairly construed with a view to immediate vesting, Prob.Code § 28; In re Estate of Prior, 111 Cal.App.2d 464, 469, 244 P.2d 697, the legal estate was bequeathed to Mr. Gebhardt, as trustee, 4 subject to a right of sale by him as executor in his discretion, and in the event of that occurrence the proceeds to be held in trust. Immediate vesting of the legal title in the trustee is evidenced, among others, by the provision of the last paragraph of Fourth which gives him discretionary control of the income during administration with a view to maintenance of the beneficiaries. It is settled law that a trust for maintenance becomes effective immediately. In re Estate of Dare, 196 Cal. 29, 37-38, 235 P. 725; In re Estate of Marre, 18 Cal.2d 184, 188, 114 P.2d 586. The right of the legatees to receive the proceeds of an executor's sale is subject to the condition that they 'survive distribution' by the court. If no sale is made 'while the probate proceeding is still pending' the trustee is to hold the residue for the benefit of the two German nationals (or their surviving children) until a sale is made by him in that capacity, and he is directed to do that within three years after distribution to him as trustee, whereupon the proceeds shall be turned over to said Heinrich Schlette and Emilie Exner, or their surviving children, without being subject to any further delay or condition. In the absence of a sale during administration their rights to ultimate distribution are fixed and not subject to divestment. It is only in the event of such sale that their rights (to the proceeds) are conditioned upon 'surviving distribution.' Thus the condition which respondent's counsel assert to be precedent proves to be a condition subsequent. The quality of the interest of the nephew and niece...
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