816 S.E.2d 542
S.C.2018Background
- Marion M. Kay died in 2007; her will named Edward D. Sullivan (her attorney) as personal representative (PR) and authorized "reasonable compensation." The residuary estate included a house, a lot, and a one-half interest in a 330-acre farm.
- Kay’s cousins, Martha Brown and Mary Moses, each held a one-half undivided interest in the other half of the Farm and expected a larger share; the will gave them only 1/10 each of the residuary.
- The will granted a neighbor an eight-month option to buy the real estate at fair market value and gave the PR broad authority to sell and manage estate property.
- Sullivan negotiated, appraised the property, attempted compromises with beneficiaries, then filed a partition and declaratory judgment action after Brown and Moses failed to cooperate; the property eventually sold for about 94% of a 2007 appraisal.
- Sullivan sought court approval of commissions totaling $93,775 plus additional unpaid commissions; Brown and Moses demanded a hearing challenging the compensation as excessive.
- The probate court reduced Sullivan’s commissions to $51,300 (~10% of estate), ordered reimbursement of prior self-payments, denied Brown and Moses’ claim to recover common-fund attorneys’ fees, but the courts below disagreed on whether Sullivan could recover expenses and attorneys’ fees for defending the settlement hearing; the Supreme Court affirmed in part, reversed in part, and remanded.
Issues
| Issue | Plaintiff's Argument (Sullivan) | Defendant's Argument (Brown & Moses) | Held |
|---|---|---|---|
| Standard of review when circuit court affirms probate court | Two-judge rule should apply (deferential review) | Equity appeals should be reviewed on preponderance of evidence regardless of two judges | Two-judge rule inapplicable where circuit court sat in appellate capacity; appellate courts may take their own view of preponderance of evidence |
| Applicability of 5% default compensation (§62-3-719) | Will’s "reasonable compensation" removes PR from default 5% limit | Absent an explicit contractual or will directive, the statutory 5% default applies | Will language insufficient to invoke statutory exception; court treated award as "extraordinary services" and approved $51,300 |
| Recovery of expenses and attorneys’ fees for defending settlement hearing (§62-3-720) | PR incurred necessary expenses defending proceedings in good faith and is entitled to reimbursement | Fees for defending PR’s compensation claim are self-interested and not recoverable under §62-3-720 | Sullivan acted in good faith defending the proceeding; reversed lower court’s denial and remanded to calculate recoverable expenses and attorneys’ fees |
| Award of attorneys’ fees to Brown & Moses under common fund doctrine | (Brown & Moses sought fees) Their challenge preserved beneficiaries’ interests and benefited all beneficiaries | Majority of beneficiaries supported the sale; no implied or express contract with other beneficiaries; interests were adverse | Common fund doctrine does not apply; Brown & Moses are responsible for their own fees |
Key Cases Cited
- Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976) (articulated the two-judge rule for equity proceedings involving masters/referees)
- Geddings v. Geddings, 319 S.C. 213, 460 S.E.2d 376 (1995) (applied two-judge rule to probate decisions affirmed by circuit court)
- Dean v. Kilgore, 313 S.C. 257, 437 S.E.2d 154 (Ct. App. 1993) (applied Townes framework to probate appeals)
- In re Estate of Holden, 343 S.C. 267, 539 S.E.2d 703 (2000) (discussed equity v. law distinctions for probate matters)
- Lee v. Lee, 251 S.C. 533, 164 S.E.2d 308 (1968) (accounting actions to determine improper compensation are equitable)
- Lewis v. Lewis, 392 S.C. 381, 709 S.E.2d 650 (2011) (appellate deference to trial judge credibility in equity appeals)
- Layman v. State, 376 S.C. 434, 658 S.E.2d 320 (2008) (describing common fund doctrine and fee-spreading rationale)
- Johnson v. Williams, 196 S.C. 528, 14 S.E.2d 21 (1941) (common fund recovery requires express or implied contract with beneficiaries)
- Bedford v. Citizens & S. Nat'l Bank of S.C., 203 S.C. 507, 28 S.E.2d 405 (1943) (common fund doctrine does not apply where parties’ interests are adverse)