Opinion
Page __
__ Cal.App.2d __ 301 P.2d 73 In re ESTATE of Jack R. RADOVICH, etc., Deceased. Robert C. KIRKWOOD, State Controller, Appellant, v. CITIZENS NATIONAL TRUST AND SAVINGS BANK OF LOS ANGELES, and George Radovich, Respondents. Civ. 21604. California Court of Appeals, Second District, Third Division Sept. 13, 1956Rehearing Denied Oct. 4, 1956.
Hearing Granted Nov. 8, 1956.
James W. Hickey, Chief Inheritance Tax Atty., Sacramento, Walter H. Miller, Chief Asst. Inheritance Tax Atty., Los Angeles, William R. Elam, Los Angeles, and Milton A Huot, Asst. Inheritance Tax Attys., Sacramento, for appellant.
Louis Thomas Hiller, Nat Wilk, Los Angeles, Scudder & Forde, and George A. Forde, Pacific Palisades, for respondents.
VALLEÉ, Justice.
Appeal by the state controller from a judgment sustaining respondents' objections to the report of the inheritance tax appraiser, and fixing the inheritance tax.
On July 6, 1954 Judge Clark, in a proceeding to determine interests in the estate, rendered a decree that George Radovich has the equitable status of an adopted son of the decedent. On June 29, 1955 Judge Hansen, after hearing objections to the inheritance tax appraiser's report, rendered judgment fixing the inheritance tax, computing it by allowing George Radovich the status of a 'Class A' transferee. It is from the latter judgment that the appeal was taken.
The deceased Jack R. Radovich died intestate on October 3, 1953, a resident of Los Angeles County. He had never married, had no issue of his body, and left no father or mother. Coadministrators of the estate were appointed.
In June 1954 George Radovich filed a petition to determine his interest in the estate. The petition was heard by Judge Clark. The facts as found by Judge Clark, which are not in dispute, are as follows:
In 1934 in Los Angeles when George Vukoye, now known as George Radovich, was about 17 years old, his natural parents and Jack Radovich entered into an oral agreement whereby Jack promised and agreed that if George would live with him and consider himself his son, Jack would treat George as if he were his natural son and would adopt him. The natural parents of George and George relied on Jack's promises and consented to the oral agreement. George went to Jack and lived with him until Jack's death. From the time George went to live with Jack he worked in Jack's liquor store until the latter's death.
Under the oral agreement Jack promised and agreed that if George would go to live with him and be his son, Jack would give George all of the rights of a natural son, would regard him as his own son, and would adopt him. The natural parents of George relied on the promises and agreed to and did relinquish to Jack all of their rights in George. From the time of the agreement until Jack's death, George performed all the duties of a child toward a parent and Jack publicly acknowledged George as his own son and heir to his estate. Since the agreement George has at all times been known as and has used the name of George Radovich and the same is presently his legal name. George, pursant to the oral agreement and his performance thereof and by reason of the failure of Jack to fully perform the obligations [301 P.2d 76] assumed by him, occupies in equity the equitable status of an adopted son and by reason thereof is entitled to distribution of all of Jack's estate.
Jack never instituted any statutory proceedings in California or elsewhere for adoption of George.
In July 1954 Judge Clark rendered a decree that George, by reason of the oral agreement of adoption made with Jack and the performance of George thereunder, has the equitable status of an adopted son of Jack and is entitled to distribution of all of Jack's estate, save and except a part thereof which George had assigned in writing to blood relatives of Jack. This decree became final.
Thereafter the inheritance tax appraiser filed his report, found that George was a stranger to the blood of Jack, allowed a specific exemption of $50 as a 'Class D' transferee, and computed the inheritance tax due at the rate of a stranger under sections 13310 and 13407 of the Revenue and Taxation Code. George and the administrators filed objections to the report under section 14510 of the Revenue and Taxation Code. The objections were heard before Judge Hansen, who found: the decree of Judge Clark had never been appealed from and was final; the same facts as found by Judge Clark; by reason of the decree of Judge Clark, George was able to succeed to the estate and be distributed the property thereof only by virtue of the establishment of his status as an adopted son and that George inherited the property 'from the said estate' as a result of having the status of an adopted son; the determination made by Judge Clark was the determination that George was adopted when under the age of 21 years by the deceased in conformity with the laws of this state; George was able to succeed to the estate only by virtue of his having the status of an adopted son and not as a stranger; pursuant to section 13307 of the Revenue and Taxation Code, George as an adopted son was a 'Class A' transferee. Judgment was rendered accordingly. The controller appeals.
The controller asserts the findings and decree of Judge Clark did not have the effect of an order of adoption as provided in section 221 to 229 of the Civil Code; did not purport to determine that George was adopted by the decedent in conformity with the laws of this state; did not purport to fix and could not fix the status of George for the purpose of computing the inheritance tax so as to be binding on the controller; for the purpose of the tax laws, George is a stranger to the deceased and is a 'Class A' transferee and within the class covered by section 13310 of the Revenue and Taxation Code.
George and the administrators contend the decree of Judge Clark is a judgmentin rem, binding on the controller, and that that decree was tantamount to the finding of an adoption in conformity with the laws of this state.
A "Class A transferee" means one who is the lineal issue of the decedent and one 'whose relationship to the decedent is that of a child adopted by the decedent in conformity with the laws of this State, provided such child was under the age of 21 years at the time of such adoption.' Rev. & Tax.Code, § 13307. Generally a stranger to the blood of the decedent is a "Class D transferee". Rev. & Tax.Code, § 13310.
There can be no question but that the agreement was valid and that Judge Clark correctly decided George is entitled to distribution of all of the estate of the decedent. In re Estate of Grace, 88 Cal.App.2d 956, 962-967, 200 P.2d 189, and cases there discussed. In any event, that decree is a final judgment. We will not reach the problem whether the decree rendered by Judge Clark is to be given the effect of res judicata in the proceeding to fix the inheritance tax since it merely adjudicated that George has the equitable status of an adopted son of Jack and is entitled to distribution of all of Jack's estate. We assume, solely for the purpose of this decision, that in the proceeding before Judge Hansen it was an adjudicated [301 P.2d 77] fact that George has the equitable status of an adopted son of Jack and is entitled to distribution of all of Jack's estate.
See Probate Code, § 1080; In re Estate of Bloom, 213 Cal. 575, 580, 2 P.2d 753; In re Estate of Holt, 61 Cal.App. 464, 466, 215 P. 124; In re Estate of Ampusait, 131 Cal.App. 533, 537-539, 21 P.2d 691. Cf. Rediker v. Rediker, 35 Cal.2d 796, 800-804, 221 P.2d 1, 20 A.L.R.2d 1152.
The findings in the inheritance tax proceeding that, by reason of the decree of Judge Clark, George was able to 'succeed' to decedent's estate and be distributed the property of the estate only by virtue of his status as an adopted son; that he 'inherited' the property of the decedent as a result of having the status of an adopted son; that the determination of Judge Clark was a determination that George 'was adopted by the decedent in conformity with the laws of this state'; that he was able to succeed 'only by virtue of his having the status of an adopted son and not as a stranger'; and that he was a Class A transferee, cannot be sustained.
The procedure for the adoption of children was unknown to the common law. Adoption of McDonald, 43 Cal.2d 447, 452, 274 P.2d 860; In re Adoption of Parker, 31 Cal.2d 608, 612, 191 P.2d 420. The Legislature from the earliest years of statehood has provided a staturory scheme under which adoptions might be carried out. In re Barents, 99 Cal.App.2d 748, 750, 222 P.2d 488. Adoption exists only by virtue of the statutory law. Matter of Cozza, 163 Cal. 514, 522, 126 P. 161. The rights and obligations springing therefrom are entirely matters of statutory regulation. In re Estate of Calhoun, 44 Cal.2d 378, 380, 282 P.2d 880; In re Estate of Jobson, 164 Cal. 312, 315, 128 P. 938, 43 L.R.A.,N.S., 1062; In re Estate of Moore, 7 Cal.App.2d 722, 724, 47 P.2d 533, 48 P.2d 28. The mode prescribed by statute for adoption of a child is the measure of the power, and one claiming that an adoption has been accomplished must show that the statute has been complied with. In re Estate of McCombs, 174 Cal. 211, 214, 162 P. 897. And an adoption is effective only when it is done in the manner laid down by the code. Adoption of McDonald, 43 Cal.2d 447, 452, 274 P.2d 860; In re Adoption of Parker, 31 Cal.2d 608, 617, 191 P.2d 420.
The statutes governing adoption must be read into the statutes of succession. In re Estate of Winchester, 140 Cal. 468, 470, 74 P. 10; In re Estate of Hampton, 55 Cal.App.2d 543, 551, 131 P.2d 565; In re Estate of Jones, 3 Cal.App.2d 395, 396, 39 P.2d 847. To establish a person's right to inherit from the person claimed as an adopting parent, there must be proof of an act of adoption done in accordance with the statute. In re Estate of McCombs, 174 Cal. 211, 214, 162 P. 897. It is only after adoption in conformity with the laws of this state that the person adopting and the person adopted sustain the legal relation of parent and child and have all the rights and are subject to all the duties of that relation. Civ.Code, § 228; In re Estate of Taggart, 190 Cal. 493, 498, 213 P. 504, 27 A.L.R. 1360. It is only an adopted child who is deemed a descendent of one who has adopted him, the same as a natural child, for purposes of succession. See Prob.Code, § 257, as amended in 1955.
In Wooster v. Iowa State Tax Commission, 230 Iowa 797, 298 N.W. 922, 925, 141 A.L.R. 1298, the court held that one who stood in the relation of an adopted daughter by estoppel--i. e., had been taken into the adoptive parents' home and treated as a daughter by the parents but had not been legally adopted--was not, by reason of the fact that the foster parents and those in privity with them were estopped to question her status as an adopted child, entitled to the right of inheritance as an heir by reason of a legal adoption as though the statutory proceedings for adoption had been fully complied with; that 'taking a child into a family and treating is as natural offspring is not adoption.' Wooster says a decree such as that made by [301 P.2d 78] Judge Clark does not change the status of either party but merely enforces a contract which has been fully performed by one side; that the principle involved is property recompense measured in the amount fixed in the statutes of descent and distribution.
Will George be treated as a Class A transferee by reason of the fact that the transfer to him is made in pursuance of a contract entered into by the decedent? A cardinal purpose of the inheritance tax law is to coordinate the assessment of the tax as closely as possible with the substantive probate law regulating the distribution of the decedent's estate. In re Miller, 31 Cal.2d 191, 199, 187 P.2d 722. Generally speaking the state assesses the privilege of succeeding, gives preferences, and computes the tax on the interests of heirs, legatees, and devisees, and the degree of relationship, if any, to the decedent. Cohn v. Cohn, 20 Cal.2d 65, 67, 123 P.2d 833; 85 C.J.S., Taxation, § 1163, p. 981. There can be no estoppel as against the state in the fixing of inheritance taxes. 'Resort to estoppel where the statutory requirements are not met would not only defeat the safeguards prescribed by the Legislature but would amount to the creation of a method of adoption--by private agreement of the parties--not recognized at common law or by statute.' In re Adoption of Parker, 31 Cal.2d 608, 617, 191 P.2d 420, 425.
An Iowa statute gave a specified exemption to 'legally adopted sons and/or daughters' in fixing the inheritance tax. Code of Iowa 1939, § 7312.1, I.C.A. § 450.9. Another statute specified the rate of tax when property passed to any child, 'including a legally adopted child * * * entitled to inherit under the laws of this state'. Code of Iowa, 1939, § 7313, I.C.A. § 450.10. In Wooster v. Iowa State Tax Commission, supra, 230 Iowa 797, 298 N.W. 922, 141 A.L.R. 1298, it was held that the state in making a classification for inheritance tax purposes is not in such privity with a foster parent as to be bound by an estoppel of such parent to question the status as an adopted child of one not formally adopted, and that a decree establishing the rights of a child under an agreement to adopt it, not performed on the part of the foster parents, is not a judgment in rem determining status so as to be binding upon the taxing authorities as respects exemption and rate of tax upon property received by an adopted child.
A Montana statute, R.C.M.1947, § 91-4409, prescribed a lower rate of inheritance tax when property passed to 'any child adopted as such in conformity with law' than when the property passed to a stranger to the blood of the decedent. In re Clark's Estate, 105 Mont. 401, 74 P.2d 401, 114 A.L.R. 496, is on all fours with the case at bar. The facts were substantially the same. The trial court fixed the tax of George John Pale, a person in the shoes of George Radovich, on the basis that he was a stranger to the blood of the decedent. On review the court held, 74 P.2d 413:
'The courts have uniformly assumed the validity of executory contracts to adopt. 1 Am.Juris., § 16, p. 630. Contracts to adopt, not performed by effectual adoption proceedings during the life of the adoptive parent, will, upon the latter's death, be enforced to the extent of decreeing that the child is entitled to such right of inheritance from the estate of the adoptive parent as a natural child would enjoy, where the child in question has fully performed the duties to the adoptive parent, when circumstances require the relief as a matter of justice and equity. [Citations.]
'Since the courts will specifically enforce contracts to adopt where they have been performed by the child, at least to the extent of securing to the child the share of the estate which it would have inherited if the adoption were completed, it is argued that George John Pale was adopted in conformity with law. In 2 C.J. § 27, page 401, it is said: 'In upholding such a [301 P.2d 79] remedy, the courts do not hold that the child is entitled to the right of inheritance as an heir. They do not undertake to change the status of either party, but merely to enforce a contract which has been fully performed on one side.' * * *
"The distinction was pointed out in Burns v. Smith, 21 Mont. 251, 53 P. 742, 69 Am.St.Rep. 653. 'The question that confronts us here is: Does the plaintiff claim to be an heir of the deceased? Or is not her claim adverse to the law? She is not an heir at law, nor does she claim under or through an heir of the estate. Whatever claim she has, we think, results and comes to her under the contract alleged to have been made with the deceased in his lifetime as set out in the complaint.'' [Citations.]
'The trial court correctly held that George John Pale was not a child adopted as such in conformity with law, and therefore its determination of the amount of tax due was correct in this respect.'
See 2 C.J.S., Adoption of Children, § 27, p. 401.
Lamb's Estate v. Morrow, 140 Iowa 89, 117 N.W. 1118, 18 L.R.A.,N.S., 226, held that articles of adoption, not acknowledged, recorded, nor complying with the statutes, being insufficient to make the adoption valid, are insufficient to establish heirship in the adopting parents' property; and that a proceeding to assess an inheritance tax not being in equity, one claiming as an heir, under irregular adoption proceedings, cannot rely upon equitable circumstances.
The inheritance tax law allows the status of an adopted child to be fixed by one method only--by statutory adoption. When such status has been thus fixed the adopted child becomes entitled to the classification and preference provided by the statute for property passing to a statutory adopted child. Manifestly when a party fails to take the steps prescribed by the state to effectuate a statutory adoption, the fact the agreement is enforced by permitting the child to take the same share of the estate as he would have taken had he been legally adopted does not bar the state from standing on the facts as they actually exist in classifying for inheritance tax purposes.
The inheritance tax law excludes all grafting of children upon another family stock otherwise than by adoption proceedings conforming to the law of this state governing the subject. George has no statutory right to inherit or to succeed to the estate. His right comes solely from the agreement. The conclusion necessarily follows that he is not a child adopted by the decedent in conformity with the laws of this state. He does not have the status of an adopted child or any right of inheritance as such. Neither the decree of Judge Clark nor the facts found by Judge Hansen changed his previous status to that of an adopted child.
We hold George Radovich is not entitled to the preference or exemption and rate of inheritance tax of a child adopted by the decedent in conformity with the laws of this state, and is not a Class A transferee, but is a Class D transferee.
The judgment appealed from is reversed with directions to render a judgment in conformity with this opinion.
SHINN, P. J., and PARKER WOOD, J., concur.