Estate of Fridenberg v. Commonwealth

33 A.3d 581, 613 Pa. 281, 2011 Pa. LEXIS 2820
CourtSupreme Court of Pennsylvania
DecidedNovember 23, 2011
Docket32 EAP 2010
StatusPublished
Cited by13 cases

This text of 33 A.3d 581 (Estate of Fridenberg v. Commonwealth) is published on Counsel Stack Legal Research, covering Supreme Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Estate of Fridenberg v. Commonwealth, 33 A.3d 581, 613 Pa. 281, 2011 Pa. LEXIS 2820 (Pa. 2011).

Opinions

OPINION

Justice EAKIN.

The Commonwealth of Pennsylvania, Office of the Attorney General1 appeals from the Superior Court’s order reversing the Philadelphia County Court of Common Pleas Orphans’ Court division’s order, which held Wachovia Bank was not entitled to receive commissions from principal for its trust administration services. For the following reasons, we affirm.

Anna Fridenberg executed her last Will and Testament February 14, 1938; she passed away March 26, 1940. Relevant to this appeal, paragraph 20 of her will provided the residue of her estate and other property, over which she held powers of appointment through her father and brother’s wills, was to be held in trust for five named individuals, no longer living. The remainder of the net income was to be given to the Jewish Hospital Association of Philadelphia “for the per[286]*286petual upkeep, maintenance and support of the Fridenberg Memorial Surgical Building.”2

Ms. Fridenberg appointed Philip N. Goldsmith and Fidelity — Philadelphia Trust Company as executors of her estate and trustees under her will. Wachovia is the corporate successor to Fidelity; Mr. Goldsmith died in 1952 and was eventually replaced by Bruce Taylor as the individual trustee. As a result of Mr. Taylor’s death, Wachovia filed the third account of the Fridenberg trust January 12, 2006, detailing the trust activities from the close of the second accounting in 1978 to March 16, 2005, the day of Mr. Taylor’s death. The accounting also included requests for commissions to be paid out of principal for Wachovia and Mr. Taylor. The Attorney General objected to this request, arguing the law in effect at the time the trust was created prevented parties who served as both executors and trustees under a will from receiving more than one commission from principal. The Attorney General noted Wachovia’s corporate predecessor already received a commission from principal for its services; therefore, Wachovia was not entitled to another commission from principal.

The orphans’ court sustained the objection, holding the law at the time the trust was created barred more than one commission from principal, despite subsequent changes in the law that now allow more than one commission. Wachovia appealed, and the Superior Court reversed, holding, inter alia, the numerous legislative enactments over the past half-century permitting more than one commission for previously established trusts were constitutionally valid. The Attorney General petitioned for allowance of appeal, which we granted, limited to the following issue: “Whether testamentary trustees who were paid a commission on principal for executor [287]*287services prior to 1945 may receive an additional commission on principal for their ordinary services as trustees.” Estate of Fridenberg, 606 Pa. 72, 994 A.2d 1096 (2010). As this issue presents a pure question of law, our scope of review is plenary, and our standard of review is de novo. See American and Foreign Insurance Company v. Jerry’s Sport Center, Inc., 606 Pa. 584, 2 A.3d 526, 533 (2010).

As the Superior Court noted, the changes to the law regarding payment to executors and trustees have been numerous. Section 45 of the Fiduciaries Act of June 7, 1917, No. 193, § 45, 1917 P.L. 447, 511 (repealed 1945), was the law at the time the trust was created, and provided:

In all cases where the same person shall, under a will, fulfill the duties of executor and trustee, it shall not be lawful for such person to receive or charge more than one commission upon any sum of money coming into or passing through his hands, or held by him for the benefit of other parties; and such single commission shall be deemed a full compensation for his services in the double capacity of executor and trustee: Provided, that any such trustee shall be allowed to retain a reasonable commission on the income he may receive from any estate held by him in trust as aforesaid.

Id. However, the Act of April 10, 1945, No. 90, § 1, 1945 P.L. 189, 189-90, repealed the ban on receiving more than one commission. This Court addressed the impact of this change in trusts created prior to 1945 in In re Williamson’s Estate, 368 Pa. 343, 82 A.2d 49 (1951). In Williamson’s Estate, the testatrix appointed a corporate fiduciary as both a trustee and co-executor in her will. She died February 15, 1930; later that year, the corporate fiduciary received a commission from principal for its services as an executor. After the death of a trust beneficiary, the corporate fiduciary also requested a commission from principal for its services as a trustee. At that time, we stated the corporate fiduciary was “seeking to induce this Court to overrule a long line of cases extending for over a century and a half which established principles of fiduciary compensation.” Id., at 50. We recognized “fiduciaries have always been held to be entitled to fair and just [288]*288compensation for services rendered,” but we tempered the suggestion of increasing compensation to trustees by also acknowledging the effects of the Great Depression and two world wars on trust beneficiaries. Id., at 52-58.

Regarding the issue of whether the Act of April 10, 1945 operated retroactively so as to allow more than one commission from principal, this Court held such a retroactive application would be unconstitutional under the 14th Amendment, as the parties’ “rights were vested under what necessarily is an implied contract” when the corporate fiduciary “accepted this trust in 1930 under the law as it then existed.” Id., at 54. Curiously, we reached this holding despite specifically stating on the same page that “[i]t may well be that present conditions demand that the system requires general revisions. If this be true, such radical change should be made by the Legislature and not by the Court.” Id. (emphasis in original). It is hard to imagine how repealing the prior statute was not clear proof of the Legislature’s recognition of the need for a change in the system.

Apparently in response to Williamson’s Estate, the Legislature again amended the law and reiterated multiple commissions are acceptable. Section 2 of the Act of May 1, 1953, No. 10, 1953 P.L. 190, 191 (repealed 1972), provided:

Whenever it shall appear either during the continuance of a trust or at its end, that a fiduciary has rendered services for which he has not been fully compensated, the court having jurisdiction over his accounts shall allow him such original or additional compensation out of the trust income or the trust principal or both, as may be necessary to compensate him for the services theretofore rendered by him.

Id. Regarding retroactivity, Section 5 of the Act of May 1, 1953, stated:

This act shall apply: (1) To all services heretofore rendered by any fiduciary; (2) To all services hereafter rendered by any fiduciary heretofore appointed; (3) To all services hereafter rendered by any fiduciary hereafter appointed in a [289]*289trust heretofore created; and (4) To all services hereafter rendered by any fiduciary of a trust hereafter created.

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Bluebook (online)
33 A.3d 581, 613 Pa. 281, 2011 Pa. LEXIS 2820, Counsel Stack Legal Research, https://law.counselstack.com/opinion/estate-of-fridenberg-v-commonwealth-pa-2011.