217 Pa. 207 | Pa. | 1907
Opinion by
In Harland’s Accounts, 5 Rawle, 323, Chief Justice Gibson delivering the opinion of the court says (p. 330): “ Though usually awarded in the form of commission, the rate (of compensation of trustees) is not determinable by any established practice or rule, being graduated to the responsibility incurred, the amount of the estate, and the sum of the labor expended. It may be awarded even in a gross sum, according to a common practice in the country, which I take to be the prefer
It will be observed, therefore, that the rule as to commissions in all cases is compensation for the responsibility incurred and the service and labor performed. In arriving at the compensation to which a trustee in any capacity is entitled, it is necessary to consider the amount of the estate, the labor performed and the responsibility imposed. These ars the elements which enter into and determine not only the amount of the compensation, but the right to compensation at all. It also necessarily follows that if there has been no service performed or liability incurred by a trustee he is not entitled to and should not receive any compensation wdiatever. The mere fact that he is a trustee will not support a demand on his part for compensation. The onus is upon him, before
There is no rate of percentage fixed by law as compensation for a trustee. Frequently compensation is determined by allowing a percentage of the fund under the control or in the possession of the trustee, but this rule is not universally adopted in ascertaining a trustee’s commission. As suggested by Chief Justice Gibson, in many cases a gross sum is awarded, and that, as he says, is in some respects preferable, as it leads to an inquiry disclosing the extent of the services rendered by the trustee which greatly assists the court in fixing the true compensation due him. A very small percentage which might seem reasonable compensation might result in a very large' sum in gross which would suggest a compensation entirely beyond what was adequate and fair to the trustee; while on the other hand a large percentage which apparently would be excessive compensation might result in a small sum in gross which would at once disclose inadequacy and unfairness of compensation for the trustee. The safer rule, therefore, to be adopted and followed in remunerating a trustee for his services is the simple one that he be compensated for the services performed and the liability incurred. It should be understood by trust companies as well as individuals that the position of a trustee is not to be sought nor granted for the purpose of profit. Fair compensation, to be ascertained under the rule suggested, is all that a trustee has a right to demand, and all that any court should award.
Turning now to the case in hand, we are of opinion that the learned court below was in error in awarding commissions upon the ground rent capitalized at $900,000. The question involved here arises on the audit of the thirty-second account of the executors of the estate of Joseph Harrison, Jr., deceased. The will of the deceased provided, inter alia, as follows : “ I give and devise all my real estate .... unto my executors .... in trust, that the same shall be by them sold, disposed of, and converted into money or personalty, and to that end I give to and confer upon them .... the fullest and amplest power, authority, and direction to sell, convey, and dispose of all my said real estate, and all real estate which
Under the provisions of the will, the executors had ample power to sell and convert this real estate into money. If they had done so and had claimed a commission on the proceeds of sale, there would have been no objection to compensation for their services. It will be observed, however, that while the testator authorized the executors to sell his realty and convert it into money, he at the same time empowered them to sell and convey with the reservation of ground rents which thereafter they were authorized in their discretion to assign or extinguish in fee. They did not sell this entire property and convert it into money but, exercising the power conferred by the will, they sold and conveyed it for a certain sum and reserved a ground rent capitalized at another sum, the. two
Under these circumstances, what right have these executors to demand commissions upon the capitalization of the ground rent ? It is real estate and, as conceded by the court below, is not the subject of an executor’s account. The executors, therefore, have not converted it into money, but it still remains as the testator left it, real estate. The trustees must deal with it and account for it as real estate and not as personalty. In this view, therefore, they have no right to commissions upon it.
The court below, in support of its position awarding commissions, held that the will worked a conversion. But that of itself would not justify the executors in claiming commissions until an actual conversion had been effected by the trustees. While the will authorized a conversion, it, at the same time, authorized the executors at their discretion to permit the realty to remain such, by empowering the executors to reserve a ground rent. What the executors did in this instance in reserving a ground rent was within the express powers conferred by the will itself. Hence the general powers conferred upon the executors to convert was modified to the extent of permitting the executors to retain the whole or part of the real estate as such. To the extent of the ground rent reserved in this instance, the estate of the testator retains its original character. Therefore, all that these executors could demand would be adequate compensation which could be arrived at by allowing a commission upon the income.. The decree of the court below shows that they have been adequately compensated by the commission allowed upon the rents which they have received and which they will receive from this property.
We have distinctly ruled that an executor or trustee is not
There is ample reason for holding that these executors are not entitled to commissions on the ground rents. As we have seen, ground rents in Pennsylvania are regarded as real estate. The owner of the rent, like the owner of the land, has a fee simple estate; the former, in the rents, the latter, in the land out of which the rent issues. The capitalization of the ground rents, $900,000, is the value of the rents as real estate. During the ten years, the executors will receive $36,000 annually as rentals of this real estate on which they will receive an annual commission of $1,030. If, during the ten years or at any other time while they are the owners of the rent they convey it to the trustees, as provided in the will, they will have no right to commissions. Their right to commissions on the principal of the rent would arise only on the happening of the contingency that the rents were sold and thereby converted into money. Until that time arrives, the property is real estate and they are not entitled to commissions.
There is no proof in this case that the accountants performed any service or assumed any responsibility which entitles them
The fifth assignment of error is sustained, the accountants are surcharged with the sum of $27,000, for which credit was taken in their account as commissions on the principal of the ground rent, and the decree as thus modified is affirmed.