United States v. Fidelity & Deposit Co.

McCABE, P. J. Appellant as surety on the qualifying bond of Mrs. Dwyer, appeals from an order of the trial court surcharging Mrs. Dwyer, as former administratrix, for an amount of money.

The facts are set forth in the former appeal (Estate of Dwyer, 168 Cal.App.2d 264 [335 P.2d 718]). “Martin Dwyer, a painting contractor, died June 5, 1955. His wife, Berta L. Dwyer, was duly appointed administratrix of his estate on June 24, 1955, and was then authorized and directed by the court to continue the operation of his painting business and to complete the performance of existing contracts. Respondent Fidelity and Deposit Company of Maryland became her surety under the usual bond (Prob. Code, § 541). She continued to operate the business and employed a considerable number of employees in this work. In June, 1956, the administratrix filed United States Treasury Form Number 941 (Employees’ Quarterly Federal Tax Return) without payment of the amount indicated. She listed the particular quarter included, covering the number of employees, wages paid, am mint, withheld, and the F.I.C.A. taxes withheld. Early in 1956 the administratrix became ill and was in a sanitarium. About April 16, 1957, she was removed as administratrix of the estate, she never having filed an inventory and appraisement. She was ordered to file her account. The United States of America filed a statement of claim for taxes due and entered written objections to her first account and petition for dis[139]charge which she filed on June 4, 1957. In summary, the account showed total debits of $133,730.19, and total credits of $134,669.72, resulting in a loss of $939.53 to the estate. There were no other assets indicated. It is conceded that the administratrix commingled all the funds she received, including the withholding and F.I.C.A. taxes she withheld from wages of her employees, and that such funds were 'put back’ to help pay the wages, creditors, and for the general operation of the business which resulted in the loss indicated.

C “The relationship of the United States in this probate proceeding, in respect to the monies withheld and required by law to be withheld by the employer, the administratrix, is not the same as that of a general creditor in respect to after-death claims. Berta L. Dwyer, in her capacity as administratrix of the estate, as distinguished from her personal capacity, was the employer, was obligated by law as such to withhold such funds and taxes from the pay of the employees, and while holding such funds she, as administratrix, and not in her personal capacity, was acting as trustee, and was required, under the law, to account to and pay over such funds to the United States. The undisputed evidence shows, as such administratrix and trustee, she failed to do so. Regardless of the finding of the trial court of lack of fraud or gross neglect, there was a violation of her duty as such administratrix to follow the law in this respect. Accordingly, she should be held accountable as such administratrix and should be surcharged as administratrix with respect to these trust funds, where no assets remain in the estate out of which indemnification can be had. ”. . . .