1 Withheld from publication in Vol. 3 Wn.2d by order of court. — REP.
2 Reported in 101 P.2d 1003; 107 P.2d 1104.
This is an appeal by Wilmon Tucker, as administrator with the will annexed of the estate of
Sarah E. Smith, deceased, from an order of the superior court of Yakima county denying appellant's motion for revision of a court commissioner's decree approving a guardian's final account and petition for distribution.
Sadie R. Brown, March 6, 1934, was appointed guardian of the person and estate of her son, Fred R. Brown, a minor eighteen years of age. The minor's estate, as inventoried, was appraised at $212,705. At the time of her appointment, the guardian's bond was fixed at $10,000 and later was increased to $110,000.
Appellant, as administrator, filed a claim with the guardian, alleging that Reese B. Brown, father of Fred R. Brown, had received large sums of money and securities in a fiduciary capacity from Sarah E. Smith, for which he had not accounted; that property and large sums of money belonging to her had been taken by Reese B. Brown in the name of his son, Fred R. Brown; and that all the money and property standing in the name of the son or his estate, whether inventoried or not, rightfully belonged to the estate of Sarah E. Smith. Appellant prayed, among other things, that an accounting be had, and that all of the property and money standing in the name of Fred R. Brown be decreed to belong to the estate of Sarah E. Smith and impressed with a trust in favor of the appellant as its administrator.
On the guardian's rejection of the appellant's claim, he instituted an action in the superior court of Yakima county against Sadie R. Brown, individually and as guardian of her son's estate, the Guaranty Trust Company, as administrator of the estate of Reese B. Brown, deceased, and Fred R. Brown, to recover, as property belonging to the Sarah E. Smith estate, all of the assets of the estates of Reese B. Brown and Fred R. Brown.
The defendants in that action pleaded that all of the property or money received by Reese B. Brown from
Sarah E. Smith had been given to him by her as an absolute gift.
March 26, 1938, the superior court of Yakima county decided the issues in that action adversely to the appellant's contention and entered an order of dismissal of the action. On appeal to this court, it was concluded that Mrs. Smith had turned over all of her property to Reese B. Brown in the course of a fiduciary relationship. The judgment was reversed, and the cause remanded for further proceedings not inconsistent with what was said in the opinion. Tucker v. Brown, 199 Wn. 320, 92 P.2d 221. That action will hereafter be referred to as the Tucker suit.
While the Tucker suit was pending in the court below, and on November 13, 1936, Fred R. Brown became of legal age; and, on December 17, 1936, the guardian filed her first and final account in his estate and petitioned for her discharge. In her account, she recited the pendency of the Tucker suit and the costs incurred in its defense and prayed for an allowance for her attorney's fees and expenses, as well as compensation for her own services as guardian.
The account and petition came on for hearing before a court commissioner. After denial of a motion made by the appellant that the hearing be postponed pending the determination of the Tucker suit, the commissioner heard the testimony of the guardian with reference to her services and of her attorneys in respect to the nature and value of their services. At the close of the hearing, the commissioner entered a decree approving the guardian's account and directing payment of the following sums: To the guardian, for her services in the administration of the trust, $15,000; to Bonsted and Nichoson, as full compensation for legal services, mainly in defending the interest of the ward's estate in the Tucker suit, $15,000; to Poe, Falknor, Falknor
and Emory, as the ward's share of the fee paid to that firm for services in the Tucker suit, $2,000; and to the Guaranty Trust Company, as administrator of the Reese Brown estate, $5,000, being the ward's proportionate share of the expense incurred in defending the Tucker suit. Finally, the guardian was directed to distribute to Fred R. Brown all of the residue of his estate,
". . . . subject, however, to the pendency of the aforesaid action . . . wherein Wilmon Tucker, as administrator with the will annexed of the estate of Sarah E. Smith, deceased, is plaintiff, and Sadie R. Brown, Fred R. Brown, et al., are defendants . . . and subject to all of the rights of plaintiff and all of the liabilities of the defendants, Sadie R. Brown, as guardian of the person and estate of Fred R. Brown, a minor, and of Fred R. Brown, individually, and his estate flowing from or arising out of said action; . . ."
The appellant, by motion, applied to the superior court for a revision of the commissioner's decree. After argument, the court made an order revising the decree in some respects not material here, but approving the allowances made to the guardian for her own fees, for attorney's fees, and the contribution to the expense incurred by the administrator of the Guaranty Trust Company, administrator of the Reese Brown estate, in defending against the Tucker suit. The order also approved the provision embodied in the commissioner's decree for immediate distribution of the residue of the guardianship estate to the ward.
On entry of the foregoing order, the appellant, in open court, gave notice of appeal. An appeal bond was timely filed, and a proposed statement of facts was served and filed May 13, 1937. Within the time allowed, the respondents served and filed their proposed amendments to the statement. Nothing further was done to settle the statement until after final disposition of the
Tucker suit on appeal. The opinion in that case was filed June 22, 1939, and, on July 6th thereafter, the appellant gave notice to the respondents of his application for settlement of the statement. The statement was settled and certified July 12th, and appellant's opening brief served July 26, 1939. Before certifying the statement, the court denied a motion interposed by the respondents to dismiss the application, for the reason that it had not been made within a reasonable time and that the appellant should be held to have abandoned his appeal.
[1] The respondents now move in this court for dismissal of the appeal and affirmance of the judgment on the grounds urged below and the further ground that the appellant's brief was not timely filed.
By giving his notice of appeal, filing his bond, and serving and filing his proposed statement of facts, the appellant complied with the essential jurisdictional requirements. When the matter of the certification of the statement was before the trial court, appellant presented the affidavit of one of his counsel to the effect that there had been an "arrangement" between counsel for the parties for holding further steps on the appeal in abeyance until after the determination of the issues in the Tucker suit. That such an arrangement was made, was denied in an affidavit filed by respondents; and, in any event, it was not in writing as required by rule of court. It appears from written stipulations in the record that, after service of appellant's brief, respondents sought, and were given, two extensions of time for serving their answering brief.
Under the circumstances, the respondents were in no way prejudiced by the delay of the appellant in applying for settlement of the statement of facts. The trial court did not abuse its discretion in certifying the
statement. The motion in this court to strike and dismiss is without merit and should be denied.
The appellant's assigned errors are: (1) The allowance of attorneys' fees and expenses in contesting the Tucker claim and directing that they be paid out of property claimed by him; (2) the ordering that the property in the guardian's possession be delivered to the ward; and (3) the allowing of $15,000, or any portion thereof, as fees to the guardian.
Appellant takes the position throughout his brief that the effect of the decision in the suit of Tucker v. Brown, supra, was to declare all of the property in the guardianship estate of Fred R. Brown to be held in trust for appellant, and he thus states the question involved:
"We therefore have for consideration a rather simple question of whether or not a guardian, holding trust property as a successor trustee, can use the property in her possession, belonging to such trust estate, to pay her own fees and the fees and expenses of her attorneys incurred in an unsuccessful defense of a suit by the true owner to recover such property."
Actually, the status of the property in the guardianship estate, with respect to the appellant's claim, has not yet been determined. It may be trust property in whole or in part, or it may not be. The question, with respect to payment of expenses and fees, is, we think, whether the guardian is entitled (1) to payment of the reasonable expenses incurred by her in defending the ward's title against an adverse claim; and (2) to payment for her own services, even though it may ultimately be judicially determined that the property, in whole or in part, belongs to the Sarah E. Smith estate.
[2] We will first consider the guardian's right to an allowance for the expenses and attorneys' fees incurred in defending the Tucker suit.
It is provided in Rem. Rev. Stat., § 1575 [P.C. § 9907]:
"It shall be the duty of the guardian of any estate: . . .
"(5) To pay all just debts due from such ward out of the estate in his hands, and to collect all debts and demands due such ward, and in case of doubtful debts, to compound the same, and toappear for and defend, or cause to be defended, all suits againstsuch ward." (Italics ours.)
By her appointment, the guardian became the conservator for her ward of a considerable estate, to which he had at least primafacie title, and for the faithful performance of her duties, she was required to give a bond in a large sum. Now, when an adverse claim to the whole of this estate was asserted, what was her duty in the premises? If we are to accept the appellant's contention, she was faced with the alternative of following one of two courses: Either standing idly by and surrendering her ward's estate without a contest, or waging a contest involving great expense with the certainty that, if the appellant prevailed ultimately, she would have to bear these heavy charges herself.
We do not conceive that she was faced with this dilemma. In the circumstances, Rem. Rev. Stat., § 1575, made it her duty to defend the ward's estate against the adverse claim, and, by the provisions of Rem. Rev. Stat., § 1586 [P.C. § 9918], she was assured that, in making this defense, she would be allowed her reasonable expenses and attorneys' fees. As was said in Ashleyv. Holman, 44 S.C. 145, 166, 21 S.E. 624, a case involving a similar issue, the cases are quite different when a trustee, of his own notion, commences an action concerning the estate of hiscestui que trust without first obtaining an order of court sanctioning such action, and the case of a trustee who is sued by a third party. In the latter instance,
". . . the principle of self-defence, of necessity, drives the trustee to court and to the expenditure of the funds of thecestui que trust. It is not a case of may, but must."
In the recent case of In re Jolly's Estate, 3 Wn.2d 615,101 P.2d 995, in sustaining the right of the executor named in a will, which had been probated, to expenses incurred by him in unsuccessfully resisting the probate of a later will, we say:
"If the rule contended for by appellant be now adopted, then, in the future, an executor in the position in which McCarthy was when he was cited into court, must either default or show cause at his peril, or, having gone to the point to which McCarthy went and prevented the revocation of the will under which he was acting by securing a jury verdict and a judgment sustaining it, in case an appeal should be taken from that judgment, would be compelled to let the appeal go by default or run the chance of never being reimbursed for his own outlays and expenses, to say nothing of having his adversary's costs charged against him if the appellate court should reverse the trial court. Since duty and the law require an executor to defend in such a situation, he should not be required to defend at his peril."
The general rule deducible from the authorities is stated in 3 Woerner's American Law of Administration (3d ed.), 1783, § 517, as follows:
"It may be stated, as a general rule of law, and one always applied in equity, unless restrained by some statutory provision, that an administrator or executor, having acted in good faith and with ordinary prudence, is entitled to be credited in his administration account for all costs he may have been compelled to pay in litigation affecting the estate in his charge. And his right to credit therefor does not depend upon the favorable issue of the litigation, but only upon good faith in prosecuting or defending. A favorable issue in the first instance, however, isdecisive that the proceeding was not groundless." (Italics ours.)
Ordinarily, the question whether a personal representative or guardian may pay expenses incurred in litigation affecting an estate, arises where there are assets in the estate, other than the property involved in the litigation, available for payment of the charges. But in resolving the issue before us here, we must consider the possibility that the whole of the Fred Brown estate may be determined to belong to the estate of Sarah E. Smith. If, on a final determination of the issues in the Tucker suit, property enough remains in the estate of Fred Brown to satisfy any claim found to be due the Sarah E. Smith estate, after payment of the fees and expenses of the guardianship estate, then, of course, the question involved here would be moot. It would seem, however, that the rule authorizing the making of an allowance to a personal representative or guardian for expenses incurred in resisting adverse claims against the estate should apply with equal force whether the claim be against a part or the whole of the estate, assuming, of course, as the rule requires, that the claim was resisted in good faith and upon reasonable grounds. Here, the good faith of the guardian, as well as her duty in the premises, is evidenced prima facie by the outcome of the Tucker litigation in the superior court.
In In re Carlin's Estate, 226 Mo. App. 622, 47 S.W.2d 213, after the administration of an estate had so far progressed that it was ready for final settlement and distribution, an action was instituted against the administratrix by one DeArmond, claiming to be the adopted son and sole heir at law of the deceased and entitled to all of the property of the estate. The administratrix contested the claim. The lower court found that DeArmond was, in fact, the adopted son of the deceased and was entitled to the whole of the estate remaining for distribution after final settlement
and payment of lawful claims and costs of administration. The judgment was affirmed on appeal.
The probate court refused to allow the administratrix payment of the expenses incurred in the employment of counsel in the litigation and for other services rendered to the estate. The appellate court, in reversing the decision of the trial court, said:
"But the learned trial court erred in its judgment in denying credit to the administratrix for attorney fees and expenses incident to the litigation instituted by DeArmond. The claim involved in the suit was that of sole owner of the entire estate, both real and personal. The administratrix as such was made a party, summons was served upon her, and she was in duty bound to defend, and it appears that she was in fact the only party who did defend. She was possessed of a personal estate which had descended to her as administratrix and which she held as trustee for the legal owner; she was a necessary party to the suit. [Eisiminger v. Stanton, 129 Mo. App. 1, c. 412.] She had no personal interest in the estate and claimed none as an individual. It was to the benefit and to the interest of the estate that the true ownership thereof be determined. Under the circumstances revealed by the record the administratrix clearly would have been derelict in her duty if she had not defended against the claim of an apparent stranger, so far as she knew, who based his claim to the entire estate upon an oral agreement made by the deceased. . . . She should not be required to defend at her own personal expense. There is no evidence, nor a suggestion of evidence, of bad faith upon her part or of her attorneys, and when an administrator in good faith and in the exercise of ordinary prudence employs legal counsel to defend such an action, and the attorneys in good faith and with reasonable care, skill, and judgment perform such duty, then in law the whole matter is for the benefit of the estate. Good faith and reasonable care and not the result of the litigation is the test."
In the case of Shouldice v. McLoed's Estate, 145 Mich. 708,108 N.W. 1083, the facts were that one Shouldice filed a claim in a decedent's estate, which the executors contested. The trial resulted in final judgment against the executors, in the sum of six thousand dollars. The executors' account included charges incurred for attorneys' fees and other expenses in contesting the claim. The property of the estate was insufficient to pay the claim, and it was contended by Shouldice that, under such circumstances, the executors should be held to have undertaken the defense at their own peril and should be required to look to the legatees for reimbursement.
In approving the allowance to the executors for the expenses incurred, the Michigan supreme court said:
"We cannot discover that the rule that the executor is entitled to be repaid the reasonable expenses of administration . . . is subject to any such qualification. On the other hand, we understand the rule to be that an executor is entitled to defend against a claim presented against his testator, provided he acts in good faith, upon the advice of counsel, and may be reimbursed his expenditures."
The numerous cases cited by appellant in support of his contention may be divided into three groups: The cases in the first group are those involving the principle that one who, by adversary proceedings, attempts unsuccessfully to invalidate a trust cannot be reimbursed for his expenses out of the trust funds. These cases are not in point here, because they presuppose the existence of a trust fund and an attempt to defeat it. That the guardianship funds are, in fact, trust funds belonging to appellant, has not been established; the appellant is attempting to defeat the guardianship estate by establishing a trust.
The rule applying here is illustrated by the case of Hobbs v. McLean, 117 U.S. 567, 582, 29 L.Ed. 940,6 S.Ct. 870, where the court declared the principle that,
". . . where one brings adversary proceedings to take the possession of trust property from those entitled to it, in order that he may distribute it to those who claim adversely, and fails in his purpose, it has never been held, in any case brought to our notice, that such person had any right to demand reimbursement of his expenses out of the trust fund, or contribution from those whose property he sought to misappropriate."
Another illustrative case of those cited is Strout v. Strout,117 Me. 357, 104 A. 577. The plaintiff contested a will, claiming that a residuary clause naming his children as beneficiaries was void and contrary to the rule against perpetuities. In holding that the plaintiff was not entitled to his costs and counsel fees out of the trust fund, the court said:
"This litigation instituted by the plaintiff, is of a highly adversary character; it has for its object to wrest the trust estate from the possession of the trustee, to deprive the children of the plaintiff of all benefit of the fund, and to divert the fund to the personal benefit of the plaintiff. In such a case the defeated party must bear the expense which he has incurred in his own interest alone. The trust estate is chargeable only with that expense which is incurred in the interest of all the cestuis que trustent."
The next group of cases cited by appellant support the view that a personal representative is not entitled to his expenses where he unsuccessfully had defended suits brought by other parties claiming the estate and where he is himself the beneficiary. The cited case of In re Thompson's Estate,156 Wn. 486, 287 P. 21, is illustrative of this group. In that case, the executrix was the beneficiary named in the will. One Brown filed a claim, asserting a right to all of the property in
the estate by virtue of a contract with the deceased. In unsuccessfully defending his claim, the executrix incurred expenses which she included in her final account. In stating the question, this court said:
"The question is whether, in the litigation referred to, Mrs. Jones, the executrix, was representing herself, as beneficiary under the will, or the estate of the deceased. If she was representing herself as beneficiary, the order of the trial court in disallowing the items was correct. On the other hand, if she was representing the estate, the judgment cannot be sustained."
The court concluded that the executrix was representing herself and affirmed the judgment of the lower court, which had disallowed the expenses of the litigation.
The third class of cases cited are those which support the rule that a receiver holds the property of the receivership subject to the liens and priorities existing at the time of his appointment, and are not of any controlling force here.
The reasonableness of the allowance for attorneys' fees and the other expenses involved in defending against the Tucker suit and in the guardianship is not questioned, the sole contention of the appellant being that no part of these expenses should be paid out of the guardianship estate. Our conclusion is that the trial court did not err in allowing these expenses.
[3] We now come to a consideration of the propriety of the court's allowance of fees to the guardian for services rendered in the administration of her trust.
The ward's estate included valuable securities, farm lands, and other improved real estate, requiring detailed and careful management. So far as the record discloses, the estate was well managed. The guardian would be, manifestly, entitled to reasonable compensation for her services independently of the ultimate disposition
of the property. If she had not performed the services, the appointment by the court of some other person would have been necessary. Indeed, the appellant himself moved the court for appointment of a coguardian.
But, while we think the guardian should be compensated for her services, we are of the opinion that the sum awarded by the court commissioner and approved by the court was too large under the circumstances.
It appears from the record that the ward, after coming of age, entered into a written agreement with his mother for payment of a fee of fifteen thousand dollars. This agreement seems to have been given weight by the court in fixing the amount of the fee. While the ward might have been bound by the agreement, although such agreements are closely scrutinized by the courts, it could not have any controlling influence as against the interest of the appellant.
Considering all of the circumstances of the case as disclosed by the record, we are of the opinion that an allowance of five thousand dollars to the guardian would be reasonable and adequate compensation for the services rendered by her.
We have not overlooked the appellant's contention that, since the guardian's report was made some eight months after the two-year period prescribed by Rem. Rev. Stat., § 1575 [P.C. § 9907], subd. (3), fees should not have been allowed to her. The allowance of fees under this section is a matter largely in the discretion of the court. In re Deming, 192 Wn. 190,73 P.2d 764; In re Kelley, 193 Wn. 109, 74 P.2d 904.
[4] The appellant objects to the provision in the decree distributing the residue of the estate to the minor, and contends that the Tucker suit operated under the theory of equitable levy to vest jurisdiction in the superior court of Yakima county, in respect to
the properties upon which Tucker was seeking to impress a trust. The court distributed the estate to Fred R. Brown, subject to all of the rights of the plaintiff in the Tucker suit and all of the liabilities of Sadie R. Brown, as his guardian, and Fred R. Brown, both of whom are parties defendant therein.
In Meeker v. Mettler, 50 Wn. 473, 97 P. 507, in disposing of the contention that an order discharging a guardian showed lack of jurisdiction, because of a failure to recite that the guardian had been served with notice of the hearing, or of the appointment of a guardian ad litem, the court said:
"The fact that a guardian was regularly appointed over the person and estate of the minor in the year 1895, which is admitted, necessarily gave the court general jurisdiction over the person of the minor and of his estate. This jurisdiction continued until the minor attained his majority, at which time the right to manage the estate and the person of the said minor by the court or the guardian ceased. Bal. Code, § 6401 (P.C. § 2735). If the ward had arrived at the age of majority when the final account of the guardian was filed, no guardian ad litem
was necessary or proper. His personal appearance was sufficient to give the court jurisdiction, if personal jurisdiction were necessary."
With respect to the termination of the guardian's authority, the following rule is stated in 28 C.J. 1096, § 110:
"Where a guardian is appointed because of the infancy of the ward, the guardianship terminates when the ward attains his majority. But the guardian remains subject to the duty, if it has not been already performed, of making a final accounting and settlement with his ward, and also remains liable on any personal obligations which he has assumed in connection with the guardianship."
The following authorities support the above rule and may be cited:
12 R.C.L. 1117; 4 Bancroft's Probate Practice (1928 ed.), 2241, § 1388; State ex rel. Scott v. Greer, 101 Mo. App. 669,74 S.W. 881; Rullman v. Rullman, 81 Kan. 521, 106 P. 52; Miller v.Tidal Oil Co., 130 Okla. 133, 265 P. 648; Pure Oil Co. v.Clark, 37 S.W.2d (Tex.Civ.App.) 1088; Georgia RailroadBank Trust Co. v. Liberty Nat. Bank Trust Co., 180 Ga. 4,177 S.E. 803.
The cause is remanded to the superior court with direction to modify the decree in accordance with the views expressed in this opinion. As so modified, the decree shall be deemed affirmed.
BLAKE, C.J., BEALS, STEINERT, and JEFFERS, JJ., concur.
ON MOTION TO DISMISS APPEAL AND WITHDRAW DEPARTMENTAL OPINION. [En Banc. November 19, 1940.]