Farmers & Merchants National Bank v. Anderson

MOORE, P. J. Contestant appeals from the order authorizing the compromise of a debt by the executor. She grounds her appeal upon the proposition that the evidence does not show that the compromise is to the best interest of the estate.

Contestant is the widow of decedent Alfred Newmark who created a testamentary trust with respondent, The Farmers and Merchants National Bank of Los Angeles, as trustee. He nominated the same bank as executor of his estate. Among the assets of the estate is a promissory note which at the time of its execution on February 18, 1932, was for the principal sum of $70,000. Payments upon it had been made until the time of the hearing when the balance due was $43,923.24. The note was executed by the Kaspare Cohn Company, Ltd., herein referred to as Cohn Company.

The petition, for authority to compromise alleges that the note was secured by a trust established by the Cohn Company on May 1, 1935. The maturity date of the note had been extended to May 1, 1940, and had been guaranteed by the joint and several indorsements of the following persons: Ben R. Meyer, Ray C. Meyer, Milton E. Getz, Estelle C. Getz. " The amount which had been agreed upon by the executor and the Cohn Company in discharge of the latter’s liability was the sum of $1,164.23. The reasons which it assigned’for its.decision to compromise were (1) that in the event of liquidation [371]of the assets held in the trust, executor would receive substantially less than the compromised sum; (2) that the possibility of collecting from the guarantors was remote and doubtful; (3) in the event of litigation to enforce payment the cost of such litigation weighed against the possibility of recovery would be prohibitive.

The only objection to the compromise was made by the widow of decedent, who is now Euby W. Anderson. She alleged that she is the beneficiary of the testamentary trust to the extent of two-thirds of its income. " The guardian of the minor son of decedent consented to the approval of the compromise.

The settlement of a claim due the estate of a deceased person is within the discretionary powers of the executors and of the superior court sitting in probate. Upon appeal the judgment will not be disturbed in the absence of a clear showing of an abuse of discretion by the executors or the approving court. (Estate of McAllister, 134 Cal.App. 349, 353 [25 P.2d 507]; Prob. Code, § 578.) A compromise may be authorized by the court when it appears to be just and for “the best interest of the estate.’’ (Prob. Code, § 578.)