Kirk v. Kirk

BROWN, P. J. Respondent Charles R. Loveland was appointed by the superior court in August 1961 as receiver for the insolvent Kirk interests. He filed a receiver’s cash bond of $10,000. During the receivership the United States of America and State of California Department of Employment filed with that court proof of claims against the insolvent and the receiver amounting to about $53,000 for taxes and unemployment insurance contributions.

In July 1963 the receiver filed his “accounting and report and application by receiver for confirmation of accounts and discharge”; it showed that during the receivership the trust property produced receipts of approximately $153,000, and that the total disbursements exceeded this amount by approximately $25,000. At the hearing pursuant to the receiver’s accounting and application for discharge, the appellants, United States (District Collector of Internal Revenue) and the State of California (Department of Employment and State Board of Equalization), objected to this accounting and [582]report. The superior court considered the objections and, after a continuance, approved the accounting and report, discharged the receiver, exonerated the bond, and ordered the cash bond paid to the receiver. California and the United States appeal from this order.

The receiver has moved the appellate court to dismiss these appeals; we continued the motion to be decided along with our determination on the merits of the appeals.

The first issue concerns appellants’ standing to object to the accounting. The receiver contends that since appellants originally were not—and did not later become—parties to the receivership cause, they had no standing to object. Further, the receiver urges that appellants failed to comply with section 304.1 of the Code of Civil Procedure, in that they did not receive a court order permitting them to institute an action against a receiver on his bond.

It is clear, however, that appellants had standing to object as they did. Their taxation laws placed the receiver under the specific duty to collect and remit taxes with respect to the property entrusted to his management; his bond was conditioned upon a faithful and law abiding performance of these duties. Under federal law, a receiver is personally liable to the United States to the extent he pays other creditors if at such time there are debts owing to the United States (31 U.S.C. §§ 191, 192 King v. United States, 379 U.S. 329 [85 S.Ct. 427, 13 L.Ed.2d 315]). As a creditor of the receivership estate, each appellant had standing to object to the accounting. (Cf., Code Civ. Proe., § 304.1, supra; Estate of McMillin, 46 Cal.2d 121, 127 [292 P.2d 881, 56 A.L.R 2d 1175], which states the well-established rule that a creditor of the estate is “a person interested in the [decedent’s] estate” who may object to an administrator’s account.) While appellants could have sought a court order (Code Civ. Proe., § 304.1, supra) or instituted an independent action against the fiduciary on his bond, the procedure employed here in which the court entertained their objections to the accounting and discharge of the receiver, was sufficient to give standing to appellants in the matter as intervening objectors; any requirement of written objections by appellants was waived. The appellants were interested parties. (Cf., Estate of Morris, 37 Cal.App.2d 155 [99 P.2d 294], where there was no dispute that the state had standing; the only question was one of priority.)