*1 conceptual error: is a This, opinion, my party make a are to awards
Compensatory (SDCL sustained for a detriment
whole whereas, damages are
21-3-12); punitive setting by way of damages
an award (SDCL 21- punish/deter
example and two intermix these
3-2). We should the distinc- hybrid that blurs into a
awards 21- Legislature set §§
tion 21-3-2.
3-1 and of the ESTATE OF
In the Matter SCHULDT, deceased.
Marvin E.
No. 15909. Dakota.
Supreme Court South
Aug. code, compen- which will the amount 2. SDCL 21-3-1 provides: proximately caused the detriment for all sate thereby, arising obligation not For the breach of an anticipa- been could have contract, whether it damages, ex- the measure added.) (Emphasis or not. expressly provided ted cept where otherwise *2 taxes, expenses and Marvin made a series specific bequests. residuary of small The devised the clause bulk estate to ten nonprofit organizations. or charitable paragraph last of the will directed Alton to obtain Miller’s services as attorney estate, for executor of and Theeler, Morgan Morgan, of John L. paid that he ... be “[Directed [Miller] Padrnos, Mitchell, appellants. for Cogley & for such not to services exceed the minimum bar fee of Bucher schedule the State of Miller and Steven of Walter C. South Dakota.” Plankinton, Bucher, appellee. for Miller & inventory appraisal and filed with Judge. KEAN, Circuit court following indicated the assets: residuary legatees (appellants) Six of ten Item Value (four $108,800.00 quarters) (Mar- Real estate of Marvin E. Schuldt under the will Cash, Deposit, Certificates of deceased, appeal from circuit vin), court Certificates, Time Credits the executor’s final ac- approving оrder 413,862.00 and Dividends machinery, Farm portion of the final account livestock count. The personal 98,806.00 property other appealed from concerns claimed excessive fees, $622,468.00 attorney’s fees, Gross Estate Value excessive executor’s charged by and real broker’s fees estate probate proceeded without incident. (Mil- attorney, Miller the estate’s Walter C. August 1986, purchased $44,- In Alton ler). part, and reverse in We affirm worth of property 735.00 the estate at part. appraised granted value. Marvin’s will Marvin, County, of a resident Aurora right. him this A return this sale was 25, May petition 1986. A died letters made circuit court. The inheritance testamentary was filed circuit tax return for the State South Dakota court 1986. Marvin’s will was on June prepared A was and filed. sale of the 9, 1986, July on to admitted remaining personal property complet- was testamentary were on letters issued public ed at auction and routine return (Alton), Alton day same Schuldt Mar- duly made circuit with the court. brother, provided vin’s in the will.’ September 9, On Alton and Miller straightfor- The scheme will is agreement1 entered into a written where providing payment ward. After for the hired Miller Alton as a real estate broker to agreement hereby 1. The between appoint Alton Miller 1. That the does Executor agent part: select the sell the states in hereinafter public private described real estate at or auc- day Sep- THIS AGREEMENTmade this 9th agrees agent pay sale and tion such the fee tember, 1986, Schuldt, by Alton Executor of (5%) of Five Per Cent commission on the Schuldt, of Marvin E. the Estate Mar- a/k/a selling price plus tax as sales is authorized Schuldt, (hereinafter Deceased vin called the South under Dakota law. Miller, Executor) and Walter C. a real estate listing 2. consideration of the herein- Plankinton, broker, (herein- South Dakota after described real for sale estate with the Agent); called after agent perform agent, agrees the follow- ing services: WHEREAS, necessary it is AND considered pay expenses drawing any To 1. con- agent employed estate or a real broker closing papers necessary tracts of sale or as is purpose handling closing for the all of matters to be done for the of the sale. necessary complete private necessary, to sell and ordinary To do all 2. that is in the term, public prepare advertising promot- auction sale and all sense of the ing price necessary highest papers the best and for the herein- the sale such real described listed for closing requirements; after real estate sale. estate and WHEREAS, Agent willing AND to con- obtaining To assist the executor an auc- duct the sale such real under the tioneer arid clerk for the auction sale. conditions terms and hereinafter set out: WITNESSETH: sale, fee, attorney’s fees and the executor’s private public at a farmland sell the hearing a brief at which no to sell the land fees. After necessary stating it was offered, pay Mil- the circuit re- agreed to court Alton evidence was close the estate. tax on the percent plus jected objections approved sales appellants’ ler five *3 by accounting, the sale was confirmed price after the final sale court. the circuit arose No- problem first hint of The I. petitioned Alton for 1986 when
vember citing the reappraisal real estate of the THE FEE EXECUTOR’S the farmland because need to revalue govern Two the amount of an statutes Appellants prices. depressed farmland the first, 30-25-7, fee. The executor’s SDCL request it because was objected to this provides: the farmland value premature reduce compensation provided by When no to sell it. had made since no efforts been will or the executor renounces all claim his Alton use They best demanded thereto, he be allowed commissions must public at auction. to sell the land efforts upon personal proper- of the the amount adjourned hearing in The court circuit him, by excluding per- ty accounted for attempt had until some Dеcember assets, as property not ranked as sonal ap- at the farmland made to sell been follows: wheth- in order to determine praised value (1) On the first one thousand dollars at a market existed. er percent; rate five public at auction farmland was sold The (2) thou- On all sums in excess of one buyer January to one on exceeding and not five sand dollars appraised value. price sale exceeded rate four dollars at the thousand sale, he Alton made return of the When percent; paid brokerage requested that Miller be (3) in excess of five thou- On all sums $5,684.00 plus tax. Notice of two and sand dollars at rate they appellants, but hearing given was percent. one-half brokerage Miller’s were unaware that for Upon property real accounted all process sale part confirmation him, just shall receive a the executor with the return of sale was sent since no compensation for the services reasonable confirmed. notice. sale was (Em- by the court. performed to be fixed account, report he In Alton’s final supplied) phasis anticipated disburse- noted these actual 30-25-8, statute, pro- second estate: ments from Marvin’s vides: Par- Miller Bucher ... by an executor Attorney’s All real estate sold tial Fees based on terms Probate Will & agreement proceedings part administrator (sic) Executors person- probate, shall be considered as 9,664.91 attorneys $ property. al Bal- Miller and Bucher ... ance of sales tax as contracted fee cen- objection Alton’s Appellants’ Attorney fees & earned dur- on inclusion of income ters 9,285.09 with Walter C. Miller ... property ing personal in “... Real income earned him.” The accounted fees & Estate Broker’s sales Alton various cash funds consists of tax, pursuant to writ- in one interest deposited redeposited on total ten contract 5% they became due. bearing account when 5,923.84 selling price of Real Estate argue fee should be Schuldt ... Statu- that the Appellаnts Alton 17,341.75 tory Executor’s fee upon valuations from determined only by inventory appraisal, increased knowledge Appellants first bro- real on the sale amount realized report. in Alton’s final ker’s contract came brokerage They estate. objections filed to Miller’s
We decline read SDCL 30-25-7 in such passive fee and a increase in value should An a limited fashion. executor acts in a never be augment used to an executor’s fee fiduciary capacity and is by law to if winding up of the estate’s is manage possible the estate the best fash- longed good without reason or the executor prudence making ion and use when invest- dilatory performаnce of his duties. duty He is ments. bound see that the Otherwise, delay, promptness, would be idle prevail- assets do not remain under the encouraged. ing circumstances. SDCL ch. 55-5. With conclude, therefore, We the award executor, obligation upon the the obvi- of executor’s fees made the circuit court purpose provide ous of SDCL 30-25-7 is to was correct and that award is affirmed. *4 compensation for an fair executor’s efforts and duties when the will does not so II. simply vide. The statute allows a devised THE ATTORNEY’S FEES calculating method of the allowable com- pensation. necessarily simple It is a issue of fees has two as- possibly arbitrarily figure; yet, determined (A) peсts to consider: Was Marvin’s refer- legislature it is one which has chosen to in ence his will to by be standard which cover those situations where a testator Miller’s fees were to deter- be provide fails to otherwise. It is definite binding Miller?; upon (B) mined Were the capable easy calculation and leaves charged fees in this case excessive? dispute. little to A.
Appellants urge that the matter should provided Marvin’s will governed by (Revised be SDCL ch. 55-13 Alton should hire Miller or Miller’s Principal Act) represent Uniform law firm to and Income which the estate and that Miller expenses paid deals with the allocation of should be be- legal in fees an principal tween amount nоt to and income and exceed the related minimum problems bar fee schedule during which arise for South Dako- the adminis- ta. The will was tration of executed in Appellants’ trusts and estate. 1972. At that time, the upon Association, South Dakota reliance SDCL ch. Bar misplaced. 55-13 is integrated bar, primary following had the purpose fee SDCL ch. 55-13 is sched- adopted ule in provide to effect: trustees in the allo- receipts principal income, cation of or percent (3%) A three charge on the first defining income, principal $100,000.00, or and in the but not less than $350.00 on expenses allocation of principal costs to regular probate; two per- and onе-half or income as it (2.5%) relates to income benefi- cent $400,000.00; on the next two Thus, ciaries and by (2%) remaindermen. percent $500,000.00. its on all over purpose apply it does not to the upon facts at fees gross based values. issue. Adopted Fee Schedule at 39th Annual Meeting, Aberdeen, 19, South Dakota June We hold then that income earned 1971.2 during period of the administration of by Miller, estate and accounted for the execu prepared will, who urges Marvin’s may tor personal be included proper that minimum fee schedules are an unlaw- ty upon which the executor’s fees are de ful prohibited restraint of trade by and are earned, however, termined. Inсome the case of Virginia v. State Goldfarb Bar, distinguished be passive 773, from the increase 421 U.S. 95 S.Ct. 44 L.Ed.2d personal the value of property (1975). Thus, between any reference to stan- appraisal the date report. and final legal dards fees which are related to the passive Such a increase in value should not old minimum fee are outlawed. In this by be used itself to enhance the regard, executor’s Miller partially correct. The 2. The repudi- gust Bar Commissioners cancelled and meeting ated this Fee Schedule at their of Au- mandatory kept that he no office records of the time mini- decision forbids Goldfarb actually performing legal spent services lаwyers
mum fee schedules
states,
appeal
Alton.
on
The brief
how-
charge at
least
attorneys are
ever,
upon
no
his fee was
“be based
fee
their bar associa-
predetermined
set
(3%)
percent
gross
more than three
But,
is not covered
issue
tion.
arrangement
value of
estate.”
This
Marvin’s will
decision since
the .Goldfarb
oral,
Alton
and memorandum
no
By the will Miller
fee.
sets a maximum
or letter
Miller
at
followed.
also conceded
charge
legal
could render
services
argument
percentage
oral
that this
fee re-
will, if
limit
in the
he so
up
noted
quired
perform
him to
all the
services
accept employment.
desired
required to close thе affairs of the estate.
issue,
germane to
how
More
previously
court has
noted in the
in a will
ever,
such a clause
is whether
Lingscheit
that:
decision
only
mandatory
binding,
and.
directive.
awarded, however,
sup-
The fee
must be
fees are a matter of contract
“[Attorney
record,
ported by evidence
personal representative and
between
solely
cannot
based on the amount
Estate,
In re
attorney.”
Johnson’s
*5
tax
estimated and listed
an inheritance
603,
38,
(1942).
698,
41
5 N.W.2d
In
S.D.
Hansen,
report.
Estate
366
Matter of
of
Lingscheit, 387
the Matter
Estate
of
of
852,
(S.D.1985).
N.W.2d
855
(S.D.1986).
738,
Implicit in
741
N.W.2d
attorney’s
the
Whether
evidence of
understanding that it is
phrase
that
is the
some
fees consists of
itemized state-
for
representative
the
who contracts
estate
per-
ment
or of
of time
the standard
services,
the
The
the
testator.
John
charged by attorneys
pro-
centage
case,
also added
supra,
Estate
that
son’s
actions, some
must exist
bate
evidence
to reimbursement
the executor is “entitled
attorney’s]
the basis for
show
[the
attorney
only
fees
for services in the
for
support a
that
fees and to
conclusion
trust_”
68 S.D.
administration of
at
the
for whatever
fees were reasonable
603,
at
conclude
5 N.W.2d
41. We
portion
for
spent
time
or whatever
was
which
language in the testator’s will
at-
per-
attorney]
of the
[the
attorney’s
the
of
tempts to limit
amоunt
formed.
be
at
directive and should
con-
fees is
best
387 N.W.2d at
only as a
to the executor
sidered
charged
contracting
Thus,
for the fees to be
cir-
although the record from the
attorney for his
To hold
the
services.
oth-
for
of evi-
cuit
is notable
the lack
court
preventing
dence,
adequate
have
of
erwise would
the effect
Miller’s concessions are
representative
securing
an
the
appellate
estate
review since “this Court
attorney
may
experts
of
at
needed assistance
an
a rea-
the trial court
be considered
legal
arbitrarily
upon
if the will
low
services.”
sonable fee
set
the value of
Stanton
584,
Saks,
(S.D.1981).
figure for such
Thе few cases
311 N.W.2d
585
services.
v.
however,
court,
prefers
the
agree
issue
to review
have considered this
serve
See,
of
trial court and not to
Olney’s
In re
records
the
with this conclusion.
re-
89,
judicial body where
Estate,
as a
evidence
appeal
A.D.
N.Y.S.2d
ceived.
281 N.Y.
(1939). arrange- of Generally, the terms the fee attorney are ment an executor and between
B. parties. of The agreement these left upon a may percentage or based only at the circuit court fee be The evidence per diem or some other method. attorney amount Miller’s fee rate level on the clearly basis attorney explain the charge set in the ac- was the forth final fact, to be hearing and the work needed objec- on the count. well as performed for the as exchange no more than an tions was complete In all matters. position. time needed to comments on each counsel’s Dur- guided attorney shall ing argument, respects appeal Miller conceded (2) likelihood, apparent if Model Rules of Professional 1.5 of the Rule fees, client, acceptance par- concerning keeping in mind that the Conduct3 employment preclude ticular will other found in the Comment that suggestion employment by lawyer. concerning the fee statement “A written possibility (3) of misunderstand- customarily charged reduces The fee in the ing.” locality for similar services. (4) The amount involved and the re- fees agreement as to While sults obtained. weight by the given considered should be (5) imposed by The time limitations fairly negotiated fee be court, if it was client or the circumstances. charged parties, the actual tween (6) length The nature and scrutiny of court for subject to the still relationship fessional with the client. participants all un unless reasonableness (7) experience, .reputation, pay the fee and ac will desire der the ability lawyers per- in some fashion. In knowledge this desiré forming the services. IAngscheit, supra; the Matter Estate (8) Whether the fee is fixed or сontin- Hansen, 366 Estate In the Matter gent. (S.D.1985). When a fee is chal N.W.2d 852 following. noteWe Miller is an fee, however, the lenged an excessive forty-six years experience. claiming the fee is very perform He is able to the services competent evidence to demonstrate produce very tidy involved. The estate in a Simply put, the of his services. value posture Nearly sixty- when Marvin died. providing attorney has the burden *6 eight percent liquid of in the estate was justified is and reasonable. In the his fee merely assets. The executor had to collect Lingscheit, supra. Estate Matter of deposit'and place the certificates various case, governed by In this the fee issue is person them into one account. One sale of 16-18, Appx. DR 2-106 Fees for property appraised al was to Alton at val provision of the Legal This Services.4 ues which no auction. The sale of Responsibility was in Code of Professional remaining personal property the was at throughout of this effect the course requiring only auction a normal return of attorney’s governs conduct bate and an The real sale. estate sale was also through provides DR 2-106 June 1988. straightforward person pur since one pertinent part: in Upon chased all four a sections. full re (A) lawyer A not enter into an shall file, appear view there to be fоr, agreement charge, or collect an il- problems, litigation, ques no unusual title legal clearly fee. excessive tions, issues, legal intricate tax or other (B) when, clearly A fee is excessive after concerns. volume of the record does facts, a a of ordi- review of the great a of time not indicate deal and labor nary prudence be left with a defi- would expended prepare to the documents for the that the fee nite and firm conviction Miller did he executor. not claim that was excess of a fee. Factors to reasonable precluded accepting legal other work guides determining be considered as рerform legal required. to the services the of a include the reasonableness There was no need to handle the work in an following: fashion. Miller has a accelerated While (1)The required, right paid upon time and labor the to be for services based his novelty difficulty questions years experience, only this is factor one involved, requisite per- skills to to consider. It would have been beneficial and the properly. form to this court had Miller maintained some service requires to 3. The Model Rules Professional Conduct have 4. Model Rule 1.5 all fees be reason- adopted by concept clearly Supreme been the South Dakota able and the excessive is July Court and are effective eliminated. percent, letting records, upon none. Based five Miller’s fee and but there are his brief and at oral auctioneer’s fee stand would concessions in cost estate Miller’s Thus, $1,700.00. his not to exceed an added there is no fee was sav- argument ings gross to estate. percent of the value three case, estate, facts of this limited to the Second, hired, when an auctioneer is it is $18,674.00 to Miller’s fee calculate we advertise, job promote complete be added. sales taxes ’should state job promotion the sale. The better Am.Jur.2d, Attorneys generally, See usually Why more the auctioneer rеceives. 65.5, Excessive Fees.5 § paid percent then should Miller be five
do the
work of
auctioneer?
an-
Ill
no
simply
swer is
that there is
reason. The
being performed
services
Miller and the
BROKER’S FEES
THE
it
duplicate
auctioneer
each
other
attorney
third issue is whether
improper
pay
a double fee.
impose
charge
may also
for the executor
Hanrahan,
Miller claims that Dinis v.
against
broker’s fees
real estate
Mass.App. 884,
(1981) pro-
259 concept charging freight “whatever the v. Bar State See Giovanazzi of Califor approving nia, Cal.Rptr. 619 will bear” rather than reason- 169 28 Cal.3d (1980). charges able for needed services. P.2d holding may based Those this decision decline limit our who read believe We counsel, upon securing applying of outside however. this that court is the ethical rules attorney’s role thought need to limit the a There is a too To such we would broadly. proceed- attorney respond by requiring broadly of an bar to be an ings. apply An should the Rules of Professional Conduct to foremost, or executor not broker first and relationships their with their clients. Sim- he find to wear. stated, hat can whatever ply members of the bar should look to the Rules are as these argues executor had that the Miller They the “rules of reason. should be inter- enter into a right 30-22-21 to by SDCL preted purposes with reference to the property. brokerage contract for sale legal presentation the law it- But, argues. it far he correct—as He is self_” (Scope, Modern Rules of Profes- that Miller’s conduct remembered must be Conduct.) lawyer sional A follow broker, subject to not as a lawyer, as a rules, loopholes applicable, if seek scrutiny of this court under SDCL 16- to avoid their use. Miller’s do nоt hold that conduct 18. We intentionally purposefully deceptive or fee, As As the executor’s we affirm. existing in view of the lack unethical fee, attorney’s we affirm as mod- court, how- authority topic. on the fee, ified. As we reverse. to the broker’s ever, obligation to consider and still has attorney’s upon requests if an conduct rule MILLER, J., and HERTZ and professional is in issue vis-a-vis the rules of TALBOTT, Judges, Circuit concur. conduct. HENDERSON, C.J., Acting concurs considerations involved in The ethical writing. with are found Canons this conclusion requires lawyer WUEST, to exercise KEAN, Judge, Canon Circuit professional judgment on independent C.J., be- disqualified. client.
half of his Ethical Consideration HERTZ, Judge, for Circuit lawyer within 5-1 demands J., MORGAN, disqualified. judgment his of the law exercise bounds his client solely for the benefit of free of TALBOTT, Judge, for Circuit loyalties. influences and compromising SABERS, J., disqualified. presented, it is the circumstances Under HENDERSON, Acting Justice Chief lawyer maintain improper for a such (concurring). relationship employment with the ex- dual opinion, I wish to concurring attorney and real estate ecutor as both truly the trial court state that I believe maintaining employ- dual By such broker. respect. That being in all but one puts affirmed ment, his economic inter- pertains to the broker’s promised loyalty to his matter reversal ests ahead *9 case, reading I permit- my fee. first of this arrangement is not Since client. Such the auc- it was rules have been convinced of ethics. ted under not the property, and tioneer who sold already has referred Ethi- This court lawyer, the broker was entitled and thus lawyer 9-2 a cal wherein Consideration Certainly, the lawyer. the fee not the pro- act which encouraged to in a manner pay have to a double estate not legal sys- in the public confidence motes fee, nor- brokerage one that exceeds a or present circum- do not believe the tem. We brokerage fee. mal promotes such confidence. Rather stances on good have erudition It is that we allowing the auction- Miller’s fee and We in this scenario. condoning ethics an exces- involved we would be eer’s fees law, venturing into a contract, is, endorsing are students sive fee very settled law. Un- The South Dakota Rules of Professional little has field which Conduct, 16-18, Appx., ch. effective opinion, the SDCL writing majority der 1, 1988, replaced the former July which blueprint a state have lawyers Responsibility, of Professional Code lawyer practiced This future. in the follow lawyer represent a shall not a vides that a and has been well-re- years for some representation may materi- client if that ma- attorney. By the spected, well-known lawyer’s ally limited own interests has overextended opinion, he jority lawyer reasonably believes the unless brokerage fee. charge for a adversely representation will not be affect- muddy the ethical wa- intending to Not the client consents after consulta- ed and ters, and Bench’s attention I the Bar call to this, (Rule 1.7(b)). In cases like tion. 36-21, pertaining to real estate ch. lawyer capaci- functions in several where a particular This and salesmen. brokers from, ties, diverge and inher- his interests nor cited the briefs chapter with, ently those of his client. conflict argument. in oral attention brought to our provides: SDCL 36-21-19 exempt Exception.
Attorneys — construed to include not be chapter shall law, practice attorney at admitted Dakota, he holds himself unless
in South estate in the real business
out to be business, estate real
solicits license a real estate Dakota, he shall obtain event Plaintiff STATE South he shall be sub- examination but Appellee, without chapter. of this provisions ject to v. of South Dakota and lifelong resident As a JAQUES, David Defendant years, for 37 I State Bar member Appellant. lawyers, particularly in many noted have 15823. communities, prac- No. have a law who smaller together. estate business and real tice Supreme of South Dakota. Court very prominent have been them Some of I lawyers in this state. As influential Argued April 1988. situation, lawyer entire conceptualize this Aug. Decided broker, make isolated as a can act When a real estate license. sales without
lawyer begins being to hold himself out as to business, he must obtain estate
in the real I further visualize that license.
a real estate get into trap can
the ethical occupy dual estate is to selling real
when relationships with his client. triple words, get him- lawyer should not
other he is the executor position where
self into a estate, probates the estate then
for the attorney, and being the estate’s
virtue of for the as a land
also then sells that, acting apparent It becomes
broker. *10 professional skills be- capacities,
in several gain. with commercial interwoven
come totally antag- muddled or
Loyalties become should not be a Surely,
onistic.
“middleman.”