158 N.Y.S. 763 | N.Y. App. Div. | 1916
A. Gerald Hull of the county of Saratoga in this State died in February, 1893. He left .a will which was duly probated in the Surrogate’s Court of that county in March, 1894, succeeding a contest as to testator’s competency. He left no descendants. His wife had died in 1892. His sole heir at law and next of kin was one Sayre, a first cousin. The will after making certain bequests gave the remainder of testator’s' property to his executor, in trust, to receive the income therefrom and apply the same to the use and benefit of William R. and Leonora B. Strong, who were testator’s father-in-law and mother-in-law; and devised and bequeathed the property remaining after the death of both to their daughter, the appellant Alma B. S. Johnson, who became of age in January, 1895. All said beneficiaries resided on a farm at Golden’s Bridge, 'Westchester county, N. Y. The will named the respondent Willard Lester, Esq., executor and trustee and gave him full power and authority. to mortgage, lease and sell any or all of the real estate. The estate of the testator consisted of both real and personal property. The personal property was of the value of $Y2,262.11, which included articles specifically bequeathed inventoried at $4,41Y. 30. The real property consisted of testator’s residence property at Saratoga Lake, known as “ Arrowhead; ” a farm known as the Katonah farm; property in Brooklyn, H. Y., and a strip of land in Hew York city having a frontage on Twenty-sixth, street of about 30 feet, and on Fifth avenue of 113 feet, upon which stood a portion of the Hotel Brunswick. The real estate of the testator was free from incumbrance, except the Hotel Brunswick property upon which there was a mortgage of $151,000, and which was also subject to a lease executed by the testator in 1892 for the term of 200 years at the annual rental of $19,000. ■
The probate of the will was vigorously contested by the cousin, and pending the contest the respondent was appointed temporary administrator. The proponents were successful and the will was admitted to probate. Immediately following this, an action was brought in the Supreme Court by the cousin to determine the validity of the probate. This action came to trial in January, 1895, and after the close of the evi
Following the probate of the will, and in the year 1895, the executor in order to obtain moneys with which to pay indebt - edness of the estate and expenses of administration, mortgaged the Hotel Brunswick property for $200,000, out of the proceeds of which he paid the prior mortgage of $151,000. Within a few years after the death of the testator the company operating the Hotel Brunswick became insolvent. The property soon thereafter becoming tenantless, and the executor being unable to lease it for any purpose, and being without funds of the estate with which to make the alterations necessary to render the property productive, borrowed money, and at an expense of approximately $48,000 transformed the building into stores and bachelor apartments from which he ultimately received a gross income of upwards of $20,000 a year. Early in the year 1903 the executor conveyed the Hotel Brunswick property, pursuant to a contract of sale made by him in June, 1901, concerning the carrying out of which by the purchasers serious compli-. cations had arisen, for the sum of $450,000, the purchaser paying the executor $250,000, and taking title subject to the $200,000 mortgage.
William R. Strong, the life beneficiary, died in or about the month of January, 1901. In 1904 the executor filed an intermediate account and later a supplemental account of his proceedings as such executor and trustee. Upon the presentation to the said Surrogate’s Court of said accounts and of the petition of said executor for an accounting, the then surrogate of said county, who was one of the law firm of C. S. & C. C. Lester, made and filed a certificate of his disqualification to sit as such surrogate. Thereupon jurisdiction of such proceedings vested in the county judge of said county as acting surrogate. Objections to the account were duly filed by the surviving life beneficiary of the trust, and by the appellant, and hearings were duly had before the acting surrogate. In 1906 Leonora B. Strong died, and George F. Chamberlin, her executor, was made a party to the proceedings. In November, 1910, the acting surrogate made his decision upon the account
Thus, two appeals, one from the decree entered upon the intermediate accounting, and the other from the decree entered upon the final accounting, are before us for consideration. The bases of these appeals are chiefly allowances made by the Surrogate’s Court for payments made by the executor and trustee: First, to the real estate firm of Lester Brothers for services in connection with the leasing by the testator in 1892 of the Hotel Brunswick property; second, for payments made by the executor mainly to his father and two brothers for legal services aggregating about $42,000; and third, for the sum allowed to respondent for commissions as executor and trustee upon the intermediate accounting. While complaint is made of the failure of the respondent to accept an offer of $7,500 for “Arrowhead,” which the respondent later sold for about $6,100, and of the refusal of the acting surrogate to surcharge respondent’s account with the deficiency, the evidence is insufficient to establish breach of duty upon the part of the respondent. The offer made for the property was submitted by the respondent to the life beneficiary, William R. Strong, who advised requiring a larger cash payment. This the proposed purchaser was apparently unable to make, and it would appear that any offer made to the respondent for the property was withdrawn, and that the respondent thereafter sold the property for the largest sum obtainable. Oom
First, as to the allowance of the claim of Lester Brothers, a firm composed of the respondent and his brother, James W. Lester, for services in connection with leasing the Hotel Brunswick property, it appears that the lease was made to one Southgate, who for several years had been a tenant of the testator, and who approaching the testator for a long lease of the Hotel Brunswick property was referred by him to his lawyer, the respondent, who in the capacity of attorney for the testator negotiated the lease, which was executed by the testator in September, 1892. It was for the term of 200 years at an annual rental of $19,000, the lessee to pay the taxes, water rents and assessments. For this service said firm presented a claim against the estate for $5,000. The claim was allowed by the acting surrogate at $3,990, upon the basis that the claimants were acting as real estate brokers and were entitled to commissions of one per cent of the aggregate rental for a period of twenty-one years. It appears that the respondent spent a large portion of his time in the office of Lester Brothers, where he did law business, including the examining of titles; that he drew two or three wills and other papers for the testator, and that it was in this office that he dictated the said lease
Second, as to the payments made by the respondent for legal services, the record shows that in addition to the payment of $3,990 to the firm of Lester Brothers, the following sums were paid by the respondent as executor and trustee to the firm of C. S. & C. C. Lester, and the survivors, for legal services, in addition to the amounts paid them by him as temporary administrator:
*515 1894 to Jan. 1895...... Contest on probate.......... $7,500
1895, June, to 1896, May. Supreme Court action to set
aside probate............. 8,000
1895 to 1898........... Services ($1,000 of which re-
lated to Brunswick property
in 1895)
1,290
*516 1895 to 1897........... Belating to Brunswick prop-
erty..................... $3,685
1899 to 1903, Jan. 22... Services in connection with
sale and clearing title of
Brunswick property....... 5,000
1898, June, to 1903, Dec. Services, Brunswick property
and general services, about. 5,950
Services on intermediate ac-
counting................ 7,500
Services on first appeal...... 2,500
$41,425
In order to obtain an understanding as to these payments, a brief review in a general way of the facts relating thereto as disclosed by the voluminous record is necessary. Immediately following the death of the testator, the executor, who with his father, O. S. Lester, and his two brothers, 0. 0. Lester and James W. Lester, constituted the law firm of 0. S. & 0. 0. Lester, retained his three copartners by written agreement to act as his attorneys and counsel in respect of all business connected with said estate, agreeing to pay them a reasonable compensation for all such services, the executor not to share in the moneys received therefor. Upon the contest before the surrogate other counsel were also retained; the books and papers of the testator were carefully gone over; frequent and numerous consultations of counsel were held; large numbers of witnesses were interviewed, and a most thorough and painstaking preparation of the case was made upon both the facts and the law. The counsel attended before the surrogate some thirty days, during twenty of which evidence was taken. On March 10,1894, the surrogate overruled the objections and admitted the will to probate. For the legal services in connection with such contest there was allowed by the surrogate to the various counsel for the proponent of the will the aggregate of $10,000, which allowances were paid by the respondent out of the funds
For the services upon the trial of the action to set aside the probate of the will and to have it declared null and void, the same counsel were employed, and also James W. Verbeck, and in addition Matthew Hale, Esq., who was retained at the request of the life beneficiaries. The trial was had in January, 1895, and continued for about twelve days. During the summing up by Mr. Hale the case was announced as settled, the settlement having been arranged by the life beneficiaries without consultation with the attorneys. For the services of counsel in connection with such Supreme Court action the surrogate made allowances aggregating $13,775, which have been paid by the respondent out of the funds of the estate, $8,000 of which was allowed and paid to the father and two brothers of the respondent. The trial of the same issues had been concluded only a few months before in Surrogate’s Court, upon which trial and through the complete and laborious preparation therefor, the counsel had necessarily become thoroughly familiar with the evidence. We think that $5,000 would have been ample compensation for such services of the members of the Lester firm. As $5,400 was paid the said firm by the respondent May 22, 1896, and the remaining $2,600, with $827.23 interest thereon June 7, 1901, the account of the executor should be surcharged with $3,827.23, with interest thereon from June 7, 1901.
Regarding the payments made by the respondent to said law firm of approximately $12,500 on account of legal services in connection with the Hotel Brunswick property, it appears that said law firm rendered a bill to the respondent for services and disbursements made between March, 1895, and March, 1898, of $1,290, $1,000 of which was for services rendered between May
In November, 1899, negotiations were commenced for the sale of the Hotel Brunswick property and the services detailed in finding 72 were rendered, and on January 22, 1903, the said property was sold for $450,000, subject to said mortgage of $200,000, for which services the Lester law firm charged the respondent, and he paid them the sum of $5,000, January 5, 1903. Thereafter, said firm presented a bill to the executor for services rendered from June, 1898, to January, 1904, for the sum of $6,302.16, which said executor paid on or before January 27, 1904. The nature of said services as well as the amounts charged therefor are stated in findings 73-77 inclusive, and 82-94 inclusive. Included in said bill of $6,302.16 was an item of $2,000 for general counsel furnished the respondent during the six years from January, 1898, to January, 1904.
An examination of the evidence and findings above referred to, and the bills presented for legal services on account of the Hotel Brunswick property of approximately $12,500, show that a considerable portion of such services was rendered in the discharge of duties which the respondent himself was fully competent to discharge and which he was under legal obligation to perform. The respondent had been admitted to practice in the courts of the State of New York prior to 1880, and had been actively engaged in general law practice, and was a member of the real estate firm of Lester Brothers, and was undoubtedly well qualified to pass upon many of the matters requiring simply the exercise of good business judgment in connection with handling the Hotel Brunswick property. As to many of
We think "that in view of the nature of the duties performed by counsel in connection with the Hotel Brunswick property the respondent should not have been allowed the full amount claimed to have been paid by him as legal services therefor, but that said amount should have been reduced $2,500, and that the account of the respondent should be surcharged with that sum, with interest thereon from January 27, 1904, the date of making the last payment thereon.
We also think that the said allowance of $2,000 for general counsel included in the said bill of $6,302.16 should not have been approved in view of the allowances made for general and specific services covering substantially the same period, and that the account of the respondent should be surcharged • therewith, with interest thereon from the time of the payment thereof.-
It appears that the respondent paid to his two counsel for legal services on the contest over the intermediate accounting in which practically only questions of fact were involved, $15,000. We think that $10,000 would have been liberal payment for such service and all that the respondent was justified in paying from the funds of the estate, and hence that the
Upon the appeal from the decree entered upon the intermediate accounting the respondent employed two counsel to whom he paid in the aggregate $3,500, $2,500 to his brother Charles C. Lester, Esq. We think that $1,500 was as large a sum as the respondent was justified in paying to his brother for counsel upon such appeal • and that the account of the respondent should be surcharged with $1,000, with interest thereon from February 1, 1913, the time of the payment thereof.
We realize that it is often difficult for a reviewing court to appreciate fully the work done and the time expended by counsel in litigation of this character. However, we believe that the sums paid to the law firm of C. S. & C. C. Lester with which we have surcharged the account of the respondent, are demanded by the evidence, and that the sum of principal $29,597.97, which is approved of the total payments to that firm of $41,425, is sufficient to compensate them fully and liberally for the services performed and disbursements made by them. In passing upon the payments made by the respondent for legal services we have gone carefully through the briefs and the voluminous record, and have taken into account the time occupied; the difficulty of the questions involved; the nature of the services rendered; the amount involved in the litigation; the professional standing of the respective counsel, and the result reached. The burden of proving the claim created by an executor for counsel fees or other expenses of administration rests upon him. He must show the justice of the claim, that it was necessary, and that it was of the value charged. The relationship existing between the respondent and the counsel should increase rather than lessen the rigidity of the rule. (Matter of Hosford, 27 App. Div. 427; Matter of Peck, 79 id. 296; 10 N. Y. Annot. Cas. 184, note.)
We also believe that disallowing the remaining sums aggregating $6,490, consisting of the sum of $3,990, retained by the real estate firm of Lester Brothers for drawing the lease of the Hotel Brunswick property, and $2,500, one-half of the $5,000
Third. As to the commissions to which the respondent was entitled the acting surrogate assumed a wrong basis of computation in granting an allowance of $7,200. While the decree made by the acting surrogate charges the executor with having received the sum of slightly upwards of $700,000, it shows that upwards of $313,000 represented moneys borrowed which did not increase the corpus of the estate except by the said sum of approximately $48,000 expended for so transforming the Hotel Brunswick property. To make up said allowances of commissions to the respondent, the surrogate allowed commissions for the moneys received from the sale of real estate; commissions upon the said sum of upwards of $313,000, borrowed by the respondent for the purpose of paying the debts, expenses of the estate and improving the Hotel Brunswick property as herein-before stated; commissions upon specific legacies and upon property unsold, lost or destroyed, and commissions upon the income from the property.
The acting surrogate erred in allowing commissions upon specific legacies and upon property lost or destroyed. (Schenck v. Dart, 22 N. Y. 420; Matter of Whipple, 81 App. Div. 589; Matter of Fisher, 93 id. 186.)
Regarding the allowance of commissions to executors, it is said in Beard v. Beard (140 N. Y. 260, 265): “We think the true rule for allowance of statutory commissions is this: Trustees are entitled to commissions for receiving all moneys which constitute the corpus of the estate, and any additions thereto from increase of any kind, and thus the moneys upon which commissions are to be computed can never exceed the gross amount of the estate and its net income; and the moneys paid out upon which commissions may be computed are the moneys paid out of the estate for debts, expenses of administration and
The commissions to which the respondent' was entitled were upon the moneys in his hands from the decree settling temporary administration; the net amount received from the personal property; the income received from the sale of real estate; the amount received from the estate; and on the sum of $49,000, the difference between the amount of the mortgage at the time of the death of the testator and the amount to which it was increased.
The respective decrees, findings and allowances of the Surrogate’s Court should, therefore, be modified in accordance with this opinion, and as so modified affirmed.
While material reductions have been made in allowances to the respondent, material reductions demanded by the appellant have been refused. Each party having succeeded in part, no costs should be awarded.
All concurred, except Kellogg, P. J., and Howard, J., dissenting.
Eespective decrees and findings and allowances of the Surrogate’s Court modified in accordance with the opinion of Lyon, J., and as so modified affirmed, without costs to either party.
