265 F. 972 | D.D.C. | 1920
This appeal brings before us for review a decree of the Supreme Court holding that a trustee was entitled 1o receive compensation out of the corpus of the trust estate for his services in handling and caring for the estate, in addition to 10 per cent, paid to him on all collections and allowances for disbursements made by him for counsel fees, premium on his bond, and other outlays.
William A. jones was for about 20 years a trustee of the estate of Sarah A. ITagner, deceased. He died in 1918. The estate consisted of personal and real property valued at about $121,000. He sold the real estate and invested the proceeds. When he took charge of the estate it produced yearly about $3,500, but under his management the income therefrom increased, so that at the time of his death it amounted to upwards of $6,300 a year.
Upon the death of Mr. Jones, Mrs. Anne S. Hopkins, his daughter, was appointed administratrix of his estate, and as such took possession of tlie trust estate. Mrs. Caldwell, life tenant, and mother of the potential remaindermen under the will of Sarah Hagner, and the wife of Hugh M. Caldwell, the appellant, filed a petition, asking that her husband be substituted for Mr. Jones as trustee. He was appointed in October, 1918, but did not qualify for more than a year thereafter. In the meantime 'Mrs. Hopkins continued under the order of the court to administer the trust estate. Upon his qualifying, she turned over to him all the trust property, except sufficient to cover claims made by her against the estate.
Later she filed a petition as administratrix c. .t. a. of the estate of William A. Jones, deceased, in which she claimed, after alleging that she had turned over to Caldwell the property as just stated, that a commission was due her on the income collected by her after the death of Mr. Jones, and on that portion of the corpus of the trust estate on which no commission had been allowed either to her or Mr. Jones; also that she was entitled to an allowance for counsel fees. She then recited the appointment of Mr. Jones, first as receiver of the trust estate, and then as trustee; described the property of the estate as a farm in Virginia and two houses on H street, Washington; that there was an indebtedness, chargeable upon the houses, of $8,000 and interest; that the farm yielded no income, but the houses produced a rental of $3,450 annually; that he sold the Virginia farm for $6,500, and out of the proceeds paid the balance due on the bouses; that in 1911 lie consummated a sale of the houses for $123,000, after having been authorized to do so by the court; that he was directed to hold and invest the proceeds of the sale upon the same trusts as he had held the real estate; and that he continued to administer the trust until the time of his death, when the income therefrom was 86,300 per annum. She referred for a more detailed disclosure concerning the matters just mentioned, to the proceedings and entries theretofore had and made in the case, and asked leave to produce such evidence as might be considered desirable touching the services rendered.
She further stated that a commission of 10 per cent, had been allowed to Mr. Jones in respect to the income collected by him, also
Mrs. Caldwell and the substituted trustee, Hugh M. Caldwell, filed separate answers. They denied that the estate of Jones was entitled to any commission, either on the principal of the estate or on the income, or that Mrs. Hopkins was entitled to an allowance for attorney’s 'fees; alleged that the income of the estate, after deductions of commissions and charges, was less than $6,000; referred to the record of the cause for the accuracy of their statements; -and denied that there was any necessity for an accounting by the auditor.
Mr. Jones, during his administration of the estate, filed only two reports with the auditor — one in 1905 and the other in 1911. In each he made claim for commissions and allowances for disbursements. He asked and was allowed by the auditor 10 per cent., “the maximum commission on income.” The allowance was made, the auditor said, ' “in view of the character of the trust and the services and responsibility imposed upon him.” At no time did Mr. Jones make or intimate any claim for a commission on the corpus. The entire amount received by him as commission was $8,616.53. In addition he was allowed counsel fees, the premium on his bond, and a commission of $3,690 paid to brokers for effecting the sale of the H street property.
The decree of the court, appealed from, recited that the cause came on to be heard “upon the petition of Anne Seymour Hopkins * * * and the answers thereto of Hugh M. Caldwell, substituted trustee, and Sarah S. Caldwell,” and held that the estate of William A. Jones was “entitled to an allowance of commissions upon the corpus of the trust estate administered herein by him as trustee until the time of his death, the amount of said commission upon the corpus to be determined by the auditor upon the reference hereinafter made,” and made certain other findings, immaterial here because the only matter complained of by the appellant is the holding in respect to the commission on the corpus, and the reference of the subject to the auditor.
“Those collections and their disbursement form but a part of the service imposed upon these trustees, and a much smaller part of tlieir responsibility. I have taken into consideration the magnitude of the principal, personal estate, and its shifting character, as illustrated by the conversion of pore than one-lialf of the promissory notes into money during the period of this account, and the reinvestment of the funds in other safe, interest-bearing securities, as well as the discharge of nearly $30,000 of liens upon tlio real estate. _ The compensation allowed in this report is less than the value of the service, but no more is claimed by the trustees.”
Commenting upon this the Chief Justice said:
“We think it sufficient to say that, while the allowance was a liberal one, it is not obviously excessive.”
When the case reached the Supreme Court, reference was made there also to the unusual character of the work done by the trustees as disclosed in the report of the auditor. The opinion says:
“As to this allowance, the auditor made a lengthy finding of fact, setting forth in detail the services rendered by the trustees over a period of ten years, finding, as to the character of the estate, that the great bulk thereof was second trust notes of small amounts, as to which the auditor says that the transactions were almost innumerable, the total number of notes approximating 3,000, and ho sets forth in detail other services involving care of the real estate, looking after the repairs of the property, acquiring parcels of real estate, and the sale thereof, and saying in conclusion that he had no hesitancy in finding that the trustees were well entitled to the commissions allowed.”
A study of these cases satisfies us that it was not the intention of either court to rule that a trustee may have a commission on the corpus in every case, but that the amount of compensation to which he is entitled should be determined upon a review^ of all the facts surrounding the administration of the estate. If the sum which he has received as commission on the income satisfies the requirements of justice, then he should have no more. A trustee is to be given no commission, “except for services actually rendered, and as a measure of reasonable compensation for the service.” Parker v. Hill, 185 Mass. 14, 17, 69 N. E. 336, 337. Equity is reluctant to diminish the corpus of a trust estate, and will not do so, except upon a clear showing that justice to the trustee demands it. In re Jones, 4 Sandf. Ch. (N. Y.) 658; Tliouron’s Estate, 182 Pa. 126, 37 Atl. 861; In re Hosier’s Estate, 161 Pa. 462, 29 Atl. 57; 39 Cyc. 487. In the latter it is said:
“As a general rule, commissions on the principal sum coming into the hands of a trustee will not be allowed.”
Usually'the fund belongs to_ one person and the income to another. Manifestly it would be unfair to deplete the former for the purpose
In the case at bar the trustee was allowed 10 per cent, on all collections made by him from the beginning of his trust. In granting him this amount the auditor said he had in mind that he was compensating him, not only for the collection of the income, but for other things as well, for he says the allowance was made “in view of the character of the trust and the services and responsibility imposed. * * * » jn a(j¿ition to his commission on the collections, tire trustee was reimbursed, as we have seen, for expenditures made on certain accounts. When important work was to be done, he enlisted, the service of others, and they were paid out of the estate. He at no time claimed a commission on the corpus. Does this, when taken in connection with what the auditor said when making him the allowance of 10 per cent., indicate that the 10 .per cent, was to be in full for all services and was accepted as such by the trustee? If so, he is not entitled to anything additional.
„ “So far as we have been able to discover, by a somewhat exhaustive examination of cases, the commission on the corpus is never allowed until the trust has ended, or at least the particular trustee has ceased to he such.” (Italics ours.)
¡5 ] Finally, it is argued by the appellant that the court erred in referring the matter to the auditor. Easter v. Ralston, 32 App. D. C. 12, is cited by him as an authority for his contention. That case decided, inter alia, that the court, before referring a cause without consent of the parties, should pass upon the issues made by the pleadings, and should also declare the principles upon which the account is to be taken. This course was pursued in the case before us, and hence there is no error.
The decree must be reversed, with costs, and the case remanded for further proceedings in accordance with this opinion.
Reversed and remanded.