Lightner v. . Boone

19 S.E.2d 144, 221 N.C. 78

• Court: Supreme Court of North Carolina
• Decided: March 18, 1942
• Status: Published

Opinion

BarNhill, J.

This is not an in chambers matter which could be heard by the judge anywhere in the district. It is a civil action pending on the civil issue docket of Polk County. It could be heard out of the county in which the cause was pending only by consent. Therefore the judgment entered did not become effective until it was filed in Polk County, 26 September, 1941. Likewise, the entries of appeal, including stipulation as to time within which case on appeal should be served, became operative as of that date. The case on appeal by plaintiffs was served in apt time. They followed the proper procedure in noting their exception to the order of the judge striking the same and applying for a writ of certiorari. The motion to dismiss is denied. Chozen Confections, Inc., v. Johnson, 220 N. C., 432.

We concur in the conclusion of the court below that the exceptions filed by plaintiffs raise no issue of fact to be submitted to a jury. Even so, plaintiffs have failed to preserve their right to a trial by jury. Brown v. Clement Co., 217 N. C., 47, 6 S. E. (2d), 842.

The only exceptions to the findings of fact relate to the allowance of an attorney’s fee to the defendant and are directed to the alleged error of the referee in his conclusion, sustained by the court below, that the allowance of $12,000 to the executor for legal services rendered by him was reasonable and proper and constitutes a charge upon the distributive shares of the plaintiffs in the estate of Frances M. Lightner. No exception relates to findings or conclusions in the Clarence A. Lightner estate. Hence, our further discussion relates only to the Frances M. Lightner estate.

The conclusion of the referee, as affirmed by the court below to which plaintiffs except, is based on the finding that the letter dated 6 May, 1939, constituted both a contract by plaintiffs to pay defendant for legal services rendered and an agreement to arbitrate the amount to be paid.

. The language of the letter does not support this conclusion. By its terms plaintiffs approved the allowances made or to be made in the administration of the estate. The commissions referred to constitute the compensation paid the executor for his services rendered in settlement of the estate and the items of expense mentioned are expenses incurred or to be incurred during the course of the administration thereof. Both the commissions and the expenses, to the extent such expenses are reasonable and proper, are proper charges against the estate.

There is nothing in the letter indicating that defendant was being employed by plaintiffs or which authorizes his employment by the estate. Their mere approval of charges to be allowed by the clerk to compensate the executor for his services and to reimburse him for expenses, including counsel fees incurred in the course of the administration, in no sense constitutes a promise by plaintiffs to pay. Nor does it warrant the con ■elusion that they, to any extent, assumed personal responsibility for the payment thereof or agreed to become personally liable therefor.

The circumstances surrounding the signing of the letter support this view. Defendant went to plaintiff Dr. 0. M. Lightner and explained that it was necessary to employ an attorney in connection with the settlement of the estate and that he would employ one unless he, the defendant, was acceptable to the heirs. Dr. Lightner, upon the representations made by the defendant, assented to the employment by the estate. Defendant then asserted that it was necessary for plaintiffs to approve his employment. “I drew up a rough copy (of a letter) showing what necessitated the employment of an attorney and setting forth the expense the estate would have to pay.” Dr. Lightner suggested certain changes which resulted in the drafting of the letter. Defendant then went to the plaintiff Hopf, explained the necessity of employing an attorney to assist in the settlement and procured her signature. He followed the same course as to the other two plaintiffs. Thus nothing was said to plaintiffs to indicate that defendant understood that he was being employed by plaintiffs or that they would be held accountable for his fees.

The defendant first so interpreted the writing. While the letter was in his possession he petitioned the clerk for an allowance to him out of the assets of the estate to compensate him for legal services rendered and to be rendered by him to the estate. It was only after Armstrong, J., vacated the allowance made on this petition that he filed application “for an award” under the terms of the letter, asserting that the letter constitutes a contract by plaintiffs to pay his fee and to arbitrate the amount thereof.

Even if it be conceded, however, that the defendant’s construction of the letter is correct, the court will not countenance the payment by a third party of additional compensation to an executor or administrator or other officer of the court in addition to that allowed by statute for services he is under obligation to render by virtue of his office or trust relationship. It is against public policy and would create an evil that has not and must not become a part of our accepted practice.

Since the allowance to the defendant cannot be sustained upon the theory that it was due by contract with the devisees, may it be sustained under the statute and under the rule which entitles an executor or administrator to credit as an expense of administration for sums expended in the payment of counsel fees reasonably and necessarily expended in the administration of the estate? This is answered by the order of Armstrong, J., which is supported by the authorities.

That reasonable fees paid counsel for advice and assistance in the management of the trust estate are allowable as a necessary expense is well established in this jurisdiction. Hester v. Hester, 38 N. C., 9; Whitford v. Foy, 65 N. C., 265; Young v. Kennedy, 95 N. C., 265; In re Will of Howell, 204 N. C., 437, 168 S. E., 671, and cases cited.

“If an administrator employs counsel to assist bim in his administration, the contract is personal, and is not a debt against the intestate’s estate. The administrator must pay it, and if the disbursement is proper, it will be allowed him in the settlement of his account with his estate” as a necessary expense of administration. Lindsay v. Darden, 124 N. C., 307; Kelly v. Odum, 139 N. C., 278; Devane v. Royal, 52 N. C., 426. Such disbursements are granted upon the settlement of his account only if found to be (1) for services to the estate; (2) reasonably necessary and (3) not excessive.

"When a lawyer voluntarily becomes executor he takes the office cum onere, and although he exercises his professional skill in conducting the estate he does not thereby entitle himself to compensation beyond the amount ordinarily allowed to an executor or an administrator. In re Evans, 62 Pac., 913, 53 L. R. A., 952.

“In the absence of statute, the general rule is that where a lawyer becomes executor or administrator, his compensation as such is in full for his services, although he exercises his professional skill therein; and even if he performs duties which he might properly have hired an attorney to perform, he is not entitled to attorneys’ fees.” 21 Am. Jur., 679; Re Parker, 49 A. L. R., 1025; Anno. 49 A. L. R., 1033, and 36 A. L. R., 748; Jones v. Peabody, 100 A. L. R., 64. The rule is one of public policy, grounded upon the principle that a trustee shall not place himself in a situation where his interests conflict with his duties as fiduciary. 21 Am. Jur., 679. It has been said that if an executor chooses to exercise his professional skill as a lawyer in the business of the estate, it must be considered a gratuity, and that to allow him to become his own client and charge for professional services would be holding out inducements for professional men to seek such representative places to increase their professional business which would lead to most pernicious results. Willard v. Bassett, 27 Ill., 37; 11 R. C. L., 231.

This is in accord with the statute and decision law of this State.

When the defendant qualified as executor he obligated himself to give the necessary time and attention to, and to use his best skill and ability in, the administration of the estate. He became an officer of the court subject to the supervision of the probate court to which he must account. “Neither the law nor the reason and justice of the thing lends any Countenance to the idea that such offices shall be considered as sources of profit to the incumbent, or desirable on that account . . . every consideration of policy and right strongly impels the court to avoid any construction of the law which may lead to such a consequence.” Potter v. Stone, 9 N. C., 30.

Tbe statute, C. S., 157, vests the probate judge with authority to fix, withiu the maximum prescribed, the compensation of such officers for services rendered. Green v. Barbee, 84 N. C., 70; Ellington v. Durfey, 156 N. C., 253, 72 S. E., 194. The compensation thus fixed is for “the trouble and time expended in the management” of the estate. C. S., 157.

The maximum which may be allowed is five per cent. C. S., 157; Potter v. Stone, supra; Overman v. Lanier, 157 N. C., 544, 73 S. E., 192; Thigpen v. Trust Co., 203 N. C., 291, 165 S. E., 720. The court may allow less but it cannot allow more. Bond v. Turner, 6 N. C., 331; Green v. Barbee, supra. Such commissions are in full for all services rendered and he cannot be allowed any additional sum for loss of time and personal services. Schaw v. Schaw, 1 N. C., 168; Morris v. Morris, 54 N. C., 326; Parker v. Grant, 91 N. C., 338; In re Battle, 158 N. C., 388, 74 S. E., 23. Such commissions are allowed as compensation for services rendered both because such services are rendered by the executor or administrator as appointee of the court and there are statutes expressly authorizing it.

Passing the well founded contention that the order of Armstrong, J., is res judicata, there is still a further impelling reason why the ruling of the court below cannot be sustained. The defendant qualified as executor under a will which expressly stipulates the compensation to be received by him. The testatrix stipulated what should be paid to the executor and he, knowing the terms, accepted probate and thereby acceded to what was offered as his compensation. Whether the bargain was good or bad the defendant, by qualifying, made it and must abide by it. Having qualified he must accept the provision made for him in the will and if he is now not content with it the law can afford him no remedy.

The great weight of authority is to the effect that if a will provides that a sum less than the statutory compensation shall be paid to the executor or trustee named therein, the fiduciary so designated has his choice of refusing the appointment or accepting it on the terms fixed by the testator, and if he accepts it, he is entitled to no other or greater compensation than the will allows. Washington Loan & Tea Co. v. Convention of P. E. Church, 293 Fed., 833, 34 A. L. R., 913; McIntire v. McIntire, 192 U. S., 116, 48 L. Ed., 369; Anno. 34 A. L. R., 918, 21 Am. Jur., 677.

The exceptions of the plaintiffs to the findings of fact and conclusion of law made by the referee must be sustained and the defendant must account for the $6,000 he has already paid to himself as counsel fees.

At the hearing below an order was entered allowing counsel for the defendant the sum of $4,000 as counsel fees for services rendered the defendant in the defense of these actions. Plaintiff excepted. This exception must be sustained.

The decisions generally sustain the right of an executor or administrator to an allowance of attorneys’ fees in a controversy over surcharging his account where the account is upheld, Anno., 101 A. L. R., 806, and deny it where the account is not upheld, Anno., 101 A. L. R., 807; 21 Am. Jur., 694.

A finding that the services rendered resulted in benefit to the estate is generally necessary to charge the estate with an expenditure for counsel fees. Kelly v. Odum, supra. The credit will not be allowed if the litigation was the result of his negligence or improper conduct and it is never allowed to one who has incurred the expense in defense of his own breach of duty. Kelly v. Odum, supra; Overman v. Lanier, supra; Stonestreet v. Frost, 123 N. C., 640.

Here, the defendant had notice that exceptions had been filed to his second annual account and that the clerk had not audited or approved it. He was cited but failed to appear at the hearing. After an attorney’s fee was allowed him by the clerk the exception thereto by the plaintiffs was sustained by the judge, and yet he paid to himself out of the funds of the estate $6,000 which had thus been disallowed. When he was called to book by the institution of these actions he employed counsel to aid him in his attempt to retain the funds of the estate thus pocketed by him and to sustain an additional allowance of $6,000. His own contention that the fee is due by contract with the distributees refutes any suggestion that his defense in these actions is for the benefit of the estate. Hence, the services of his attorneys were purely personal to him. He must pay the bill.

The order entered by the court below allowing counsel fees to the attorneys for the defendant in this cause must be vacated. The judgment of the court sustaining the findings and conclusion of the referee and approving the allowance of $12,000 to the defendant for services rendered by him as attorney, of which $6,000 has been paid, is held for error. The judgment must be modified in accord with this opinion and the defendant must be required to account for the sum thus received by him.

The costs in this Court, as well as in the court below, will be taxed against the defendant individually and not against the estate.

Modified and affirmed.