Thompson Estate
- Reporters:
- , ,
- Before:
- Jones
Opinion by
Mr. Justice Jones,The present appeal is from a decree of the Orphans’ Court of Erie County which (a) reduced the claim of appellant-trustee (Lewis S. Mosher), compensation from $25,000 to $20,000 and (b) directed appellant-trustee to recover $40,489.33 of the fee he had paid to the attorneys who had represented him in his fiduciary capacity. Narrowly stated, the issue is whether the auditing judge abused his discretion in reducing the compensation claimed (a) by the fiduciary and (b) by his attorneys.
This is the second appeal involving the will of Robert M. Thompson (testator) to reach this Court. A detailed recital of the facts involving the will and codicil and the extensive litigation ensuing therefrom may be found in our opinion Thompson Will, 416 Pa. 249, 206 A. 2d 21 (1965). To avoid unnecessary repetition, we will simply highlight the more important and presently pertinent facts.
Testator died on March 21, 1963, leaving an estate of approximately $700,000 which estate he disposed of by will — concededly valid — dated September 16, 1959. The will appointed the present appellant-trustee execu
Both the 1959 will and the 1963 codicil were probated. Appellant-trustee — describing his capacity “not as executor but as beneficiary under the nineteenth paragraph [of the will] and as the party having the duty and authority to distribute the bulk of [testator’s] estate among Erie charities” 1 — appealed from the probate of the codicil to the Orphans’ Court of Erie County. The grounds of this appeal were: (a) at the time the codicil was executed, testator was not of sound mind; (b) the codicil was procured by undue influence. Preliminary objections to the petition challenging Mosher’s standing to appeal from probate were sustained. In Thompson Will, supra, we upheld Mosher’s standing to appeal and remanded the matter to the Orphans’ Court of Erie County for further proceedings to determine the validity of the codicil.
After lengthy discussions, negotiations, and further hearings, the probate appeal was settled by stipulation
While appellant-trustee’s history of the case omits mention of it, the record reveals that, on August 20, 1965, appellant-trustee presented a petition to the orphans’ court seeking approval of his own fees and that of his counsel. The lower court granted a rule to show cause returnable to the audit of the trustee’s account. 4 Appellant-trustee filed his first and final account on January 7, 1966, which disclosed distribution of all sums due the charities (except a reserve of $8,773.72), payment of counsel fees of $131,796 to Dunn and Wolford, attorneys for the trustee, and of a trustee’s commission of $25,000. The lower court, after noting the personal and professional difficulties faced by appellant-trustee and his counsel with respect to the will contest which had become a cause celebre in Erie County, reduced appellant-trustee’s commission as trustee to $20,000 for the reason that Mosher was not entitled to full compensation since “this trustee [appellant] did not have all the normal duties of a trustee in administering this fund, since most of it was disbursed to the selected charities shortly after it was received by him.” 5 Similarly, the lower court reduced the fees paid the trustee’s counsel, determining that “the sum of ninety thousand dollars ($90,000) [was] a just, reasonable and equitable fee . . . .” 6
Moreover, the Orphans’ Court of Erie County had both the power and the duty
on its own motion
to pass upon the reasonableness of the compensation claimed. An executor or a trustee is an officer of the orphans’ court and accountable to such court for all his actions of commission and omission in the performance of his fiduciary duties; such duty to account embraces all payments made from estate or trust funds by way of compensation to himself or his counsel. See: Orphans’ Court Act of 1951, Act of August 10, 1951, P. L. 1168,
Appellant-trustee relies upon
Stitzel‘s Estate,
221 Pa. 227, 230, 70 A. 749 (1908), for the proposition that a surcharge against an executor cannot be made for overpayment of compensation to the executor and/or his counsel absent an exception by some interested party before the court.
Stitzel-,
for two reasons, is not apposite: (a)
Stitzel
was decided under statutory law
8
no longer applicable to counties having a separate orphans’ court, such as Erie County. See: Fiduciaries Act of 1949, P. L. 512, §711,
Having concluded that the lower court’s inquiry into the reasonableness of the fees in dispute was eminently proper, we turn to an examination of the action of the court in reducing the trustee’s commission and the counsel fees.
Our case law sets forth the criteria for determining the reasonableness of compensation to be awarded counsel for services to an estate or trust. “In fixing a fee for counsel for an estate certain factors must be considered: the services rendered, including consideration of the nature and difficulty of any problems involved, the responsibility incurred, the time expended, the size of the estate, the general experience of counsel, etc. [citing an authority]”:
Fraiman Estate,
408 Pa. 442, 448, 184 A. 2d 494 (1962). As to compensation for a fiduciary, both our statutory and case law spell out the criteria for passing upon the propriety of such compensation. “The court shall allow such compensation to the trustee as shall in the circumstances be reasonable and just, and may take into account the market value of the trust at the time of the allowance, and calculate such compensation on a graduated percentage.” (Fiduciaries Act of 1949, §985, as added to by Act of 1963, P. L. 305, §1,
Primarily, the responsibility for passing upon the reasonableness of compensation to be awarded a fiduciary and/or counsel must be placed upon the orphans’ court. Common sense demands the placement of such responsibility upon the court of first instance for it is
With this guideline in mind, we examine the instant record to determine whether the court below abused its discretion in reducing the compensation claimed by appellant-trustee and his counsel.
Trustee’s Commission
In passing upon the compensation claimed by appellant-trustee the court below readily acknowledged that appellant-trustee had expended considerable time and effort to maintain the integrity of the will of testator, that, in so doing, he had subjected himself to severe criticism from certain quarters, and that, had it not been for appellant-trustee’s persistence and total commitment to his task, the charities would have received nothing. Beyond question, the record demonstrates that appellant-trustee, with great courage and
However, when it comes to the question of the appropriate compensation to be paid to appellant-trustee, we must not lose sight of the fact that he is to be paid only in an amount commensurate with the services which he performed in connection with the administration of the trust. In the Matter of Reisfeld, 227 N.Y. 137, 140 (1919), Judge (later Mr. Justice) Cakdozo well expressed the duty of the court below: “the bargain must exhibit a measurable degree of providence in the adjustment of reward to service.” The appellant-trustee did not perform to any great extent the duties of a “normal” trustee, such as administering the trust, investing and reinvesting of assets, collecting and disbursing income, etc. On the contrary, the efforts of appellant-trustee for the most part were directed to the protection of what he deemed the testator intended in the disposition of his estate and of the charitable objects of testator’s bounty. Other than that —even though such efforts were considerable and praiseworthy — appellant-trustee, upon receipt of a share of testator’s estate by way of the amicable settlement of the codicil contest, simply and immediately distributed that which he received to the charities. Insofar as his fiduciary services were concerned, the appellant-trustee acted as a conduit through whom the funds passed to the charities and he did not have to perform the usual administrative duties and assume the usual obligations of a “normal” trustee.
While we, had we been in the court below, might have been of the opinion that $20,000 was inadequate
Counsel Fees
In December of 1963, appellant-trustee and his counsel agreed that the attorneys would be paid a contingent fee to be determined in accordance with the “ethics and rules” of the Erie County Bar Association. 9 The Erie County Minimum Fee Bill provides for a contingent-fee of “40% of the amount recovered in event of appeal to Appellate Court.” After the will contest had been settled, appellant-trustee paid his counsel 40% of the recovery under the settlement ($131,796).
Appellant-trustee contends that the lower court was bound to accept the payment of fees made pursuant to» the contingent-fee agreement. With this contention we do not agree. While contingent-fee agreements between counsel and fiduciaries may be entered into, any such agreement is always subject to approval by the Court. Canon 13 of the American Bar Association’s Canons of Ethics provides: “A contract for a contingent fee, where sanctiond by law, should be reasonable under all the circumstances of the case, including the risk and uncertainty of the compensation, but should always be subject to the supervision of a court, as to its reasonableness.” (Emphasis added).
Court approval and review of contingent-fee agreements is even more appropriate where a fiduciary is
Parenthetically, it should be noted that the Erie County Minimum Fee provides for a contingent-fee of u4Á)°/o of the amount recovered in event of appeal to Appellate Court.” (Emphasis added). The amount received in the case at bar was obtained through settlement. There was never an appeal to an Appellate Court on the merits of the codicil contest. Granted that appellant-trustee was before our Court previously, it must be noted that that appeal presented a very narrow — though extremely important — issue, i.e., the question of standing to appeal. The codicil contest was never presented on its merits. Thus, there would seem to be a serious question as to whether or not the contingent-fee would be payable under the facts presented herein.
Since the auditing judge was not bound by the agreement between appellant-trustee and his attorneys, did the court abuse its discretion in reducing the attorneys’ fee? If is a “well entrenched rule of law in this State that the responsibility for determining the amount of counsel fees rests primarily with the auditing judge.”:
Mosicant Estate,
16 Pa. D. & C. 2d 66 (1959),
Bic
Our examination of the instant record leads us to conclude that the auditing judge did not abuse his discretion in reducing the attorneys’ fees from $131,796 to $90,000. In so concluding, we are fully cognizant of the yeoman job done by counsel and that for the better part of two years they were engaged almost continually with the present litigation and were subjected to a great deal of criticism for the role they played in maintaining the integrity of testator’s will. Cognizant of all these facts, however, we are not convinced that the lower court’s determination was incorrect. We conclude that $90,000 was a just and reasonable compensation for the efforts of appellant-trustee’s counsel and that the action of the court below in fixing such fee was proper.
Decree affirmed. Costs on appellant.
Notes
Record p. 81a.
Certain other benefits were made payable to specific Erie charities.
Record p. 135a.
Record pp. 142a-144a.
Record p. 212a.
Record p. 217a.
It is interesting to note that when called to testify concerning the propriety of the counsel fee, one of the attorneys stated that he did not “appreciate” having to justify an hourly charge rate of $56.25. This prompted the following colloquy: “By the Court: Q. I’ll tell you why, because you filed a petition ashing the Court to accept these fees. A. That’s all right . . . .” (K. 48a).
Act of April 14, 1835, P. L. 275.
It may be noted that this agreement was not presented to the court for approval.