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Docket Number

Civil No. 1985.

Attorney(S)

Mr. F. Louis Zimmerman and Mr. Earl Anderson, for Appellant. Messrs. Kibbey, Bennett, Gust Smith, for Appellees.

Judges

FAIRES, Superior Judge.

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Smart Summary

Case Summary: In the Matter of the Estate of Mary C. O'Reilly, Deceased

Factual and Procedural Background

Mary C. O'Reilly died in Maricopa County, Arizona, leaving an estate of approximately $20,000. Eugene D. O'Reilly was appointed executor and employed counsel. The will directed that advances made by the testatrix to certain devisees be charged against their shares. The executor filed a final account and petition for distribution claiming credits including $3,005 paid to his attorney, $808.85 for a trip to St. Louis, and statutory commissions on $8,971.95 in advances made by the testatrix. Beneficiaries filed exceptions contending the attorney's fees were excessive, the trip expenses unauthorized, and the claimed commissions on advances improper. The superior court reduced the attorney's fee claim to $1,500, disallowed the commission on the $8,971.95 advances, and allowed the account in other respects. The executor appealed, presenting two questions: (1) the reduction of the attorney's compensation to $1,500, and (2) the disallowance of commission on the advances. The Supreme Court of Arizona affirmed.

Legal Issues Presented

Whether the superior court properly reduced the executor's claimed attorney's fee from $3,005 to $1,500 under Civil Code of 1913, paragraph 992.
Whether the executor was entitled to statutory commissions measured by $8,971.95 in advances made by the testatrix during her lifetime under Civil Code of 1913, paragraph 994.

Arguments of the Parties

Appellant's Arguments

The executor contended that the advances of $8,971.95 made by the testatrix and directed by the will to be charged against beneficiaries should be treated as part of the estate for purposes of calculating statutory commissions.
The executor challenged the reduction of the attorney's fee claimed (from $3,005 to $1,500).

Appellees / Beneficiaries' Arguments

Beneficiaries filed exceptions asserting the attorney's fee claimed was excessive.
They objected that the expense of the trip to St. Louis was unauthorized and unnecessary to administration.
They challenged the executor's claim for commissions based on advances made by the testatrix.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
In re Straus' Estate, 144 Cal. 553, 77 P. 1122	That what is a reasonable attorney's fee depends on the character of the estate and the nature of the service required and performed.	Cited to support that reasonableness of fees is case-specific and the executor bears burden to justify the fee.
Rowe v. Dyess et al. (Tex.Civ.App.), 213 S.W. 234	Authority illustrating the burden on executor to justify attorney's fees claimed as administration expense.	Used with other authorities to support the proposition that the executor must justify claimed attorney fees.
Richey v. Cleet, 46 Ind. App. 326, 92 N.E. 175	Similar authority on executor's burden to justify attorney's fees.	Included among authorities establishing executor's burden to justify fees.
In re Thiede's Estate, 102 Neb. 747, 169 N.W. 435	Authority concerning allowance and reasonableness of attorney's fees in estate administration.	Reinforced the court's statement that executor must justify attorney's fees as reasonable expenses.
State ex rel. Cohen v. District Court of Fifth Judicial District, 53 Mont. 217, 162 P. 1053	That payment of an unauthorized attorney's fee by an executor in good faith prior to court approval does not justify ratification by the court.	Applied to reject the argument that prior good-faith payment mandates court approval of the full fee claimed.
Joseph Marie Gasq's Estate, 42 Cal. 288	Probate court's fixing of compensation will not be reversed absent plain abuse of discretion; such matters are within probate judge's knowledge.	Quoted to support appellate deference to the probate court's discretion in fixing fees.
In re Cudworth's Estate, 133 Cal. 462, 65 P. 1041	Authority holding that advances by a testatrix are not part of the estate for purposes of executor's commissions.	Applied to support disallowance of commissions on advances made during the testatrix's lifetime.
In re Fernandez' Estate, 119 Cal. 579, 51 P. 851	Authority supporting that lifetime advances are not assets taken into executor's possession for administration.	Used with other authorities to show advances do not form basis for executor commissions.
In re Burden, 98 Misc. Rep. 542, 164 N.Y. Supp. 747	Authority on treatment of lifetime advances in relation to executor compensation.	Included to support the court's construction that advances are not part of estate for computing commissions.
Succession of Pierce, 119 La. 727, 44 So. 446	Authority holding that advances charged against beneficiaries do not justify executor commissions.	Relied upon as additional support for disallowing commissions on the advances.
24 C.J.	General principles on executors' and administrators' duties and allowances (multiple pages cited).	Referenced in the syllabus and opinion for general principles regarding fees, commissions and court discretion.
11 R.C.L.	Textual authority on probate and attorney fee principles (multiple pages cited).	Referenced as secondary authority supporting principles governing allowance of attorney's fees and executor powers.
Note in 93 Am. Dec. 393	Discussion of power of administrator to make estate liable for attorneys' fees.	Listed in syllabus as related authority on the subject of making estates liable for attorneys' fees.

Court's Reasoning and Analysis

The court construed Civil Code of 1913, paragraph 992, as allowing necessary expenses in estate administration "including reasonable fees paid to attorneys." It held that reasonableness depends on the character of the estate and the nature of services performed and that the executor bears the burden of justifying attorney fees. The court emphasized deference to the probate court's discretion in fixing fees and that prior good-faith payment of an unauthorized fee does not compel ratification. Applying these principles to the record, the court found the reduction of claimed legal expense from $3,005 to $1,500 a proper exercise of discretion.

As to commissions, the court construed Civil Code of 1913, paragraph 994, as measuring commissions by the "whole estate accounted for by" the executor. Advances made by the testatrix during her lifetime were not assets taken into the executor's possession, did not require administration, and entailed only the ministerial duty to deduct them from distributive shares. Therefore such advances did not form a basis for commissions, and the lower court properly disallowed the claim for commissions on the $8,971.95 advances.

Holding and Implications

Affirmed.

Direct effects: the superior court's order reducing the executor's claimed attorney's fee to $1,500 is sustained, and the claim for statutory commissions on $8,971.95 of advances made by the testatrix during her lifetime is disallowed. The opinion applies statutory construction and established authorities to limit commissions to property actually coming into the executor's possession and confirms probate court discretion in fixing reasonable attorney fees. The opinion does not announce a broader novel precedent beyond these direct rulings.

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In the Matter of the Estate of MARY C. O'REILLY, Deceased.

1. EXECUTORS AND ADMINISTRATORS — BURDEN ON EXECUTOR TO JUSTIFY ATTORNEY'S FEES. — Under Civil Code of 1913, paragraph 992, the burden is on the executor to justify attorney's fees, for which he claims credit.

2. EXECUTORS AND ADMINISTRATORS — COURT WILL DISALLOW ATTORNEY'S FEE DISPROPORTIONATE TO SERVICE RENDERED ESTATE, AND WILL ALLOW REASONABLE FEE. — While court is reluctant to disturb agreement between an executor and counsel as to amount of counsel's fees, the court will in the exercise of its discretion allow only what it deems a reasonable fee, if the agreed fee appears disproportionate to the service required and performed.

3. EXECUTORS AND ADMINISTRATORS — COURT NOT JUSTIFIED IN RATIFYING EXECUTOR'S PAYMENT IN GOOD FAITH OF UNAUTHORIZED ATTORNEY'S FEES. — That an unauthorized attorney's fee has been paid by the executor in good faith prior to the court's approval of such claim does not justify the court in ratifying the same.

4. EXECUTORS AND ADMINISTRATORS — FINDINGS OF LOWER COURT WITH RESPECT TO ATTORNEY'S FEE NOT DISTURBED IN ABSENCE OF ABUSE OF DISCRETION. — What constitutes a reasonable attorney's fee within Civil Code of 1913, paragraph 992, for legal services rendered an estate, is peculiarly within the knowledge of the court before which the estate is probated, and, in the absence of abuse of sound discretion of such court, the Supreme Court will not disturb the findings of that court.

5. EXECUTORS AND ADMINISTRATORS — STATUTE ALLOWING COMMISSIONS CONTEMPLATES PERFORMANCE OF SOME SERVICE FOR WHICH FEE IS TO BE PAID. — Civil Code of 1913, paragraph 992, providing for commissions of executors and administrators, contemplates the performance of some service on the part of such officers for which the fee is to be paid.

6. EXECUTORS AND ADMINISTRATORS — EXECUTOR HELD NOT ENTITLED TO COMMISSION ON ADVANCES MADE BY TESTATRIX WHICH WERE TO BE CHARGED AGAINST BENEFICIARIES. — Under Civil Code of 1913, paragraph 994, executor held not entitled to commission on advances made by testatrix which by will were to be charged against beneficiaries, as executor is chargeable only with the estate which comes into his possession, and it is the basis for determining his commission.

7. EXECUTORS AND ADMINISTRATORS — DUTY OF COURT TO SAFEGUARD PROPERTY OF ESTATE, AND NOT TO COUNTENANCE CLAIMS IN ABSENCE OF REASONABLE JUSTIFICATION. — While fair compensation should be allowed officers in the administration of an estate for services actually performed, it is the duty of the court to safeguard the property of the estate, and not countenance claims in the absence of reasonable justification.

See (1) 24 C.J., pp. 104, 1019. (2, 3) 24 C.J., p. 104. (4) 24 C.J., pp. 104, 1050. (5, 7) 24 C.J., p. 978 (1926 Anno.). (6) 24 C.J., p. 984 (1926 Anno.).

See 11 R.C.L. 233.

Power of administrator to make estate liable for attorneys' fees, see note in 93 Am. Dec. 393. See, also, 11 R.C.L. 234.

See 11 R.C.L. 227.

FAIRES, Superior Judge.

This is an appeal by the executor of the estate of Mary C. O'Reilly, deceased, from an order of the lower court sustaining objections and exceptions to certain items in the final account of the executor.

The testatrix died in Maricopa county, Arizona, leaving an estate of the approximate value of $20,000. Upon the will being admitted to probate, Eugene D. O'Reilly was appointed executor, and as such employed counsel to assist in the administration of the estate. The will, among other things, provided that the testatrix had made advances to some of the devisees therein mentioned, and directed that such advances should be charged in each instance against the shares of the beneficiaries to whom such advances were made.

In due time the executor filed his final account and petition for distribution. Among the credits claimed was an item of $3,005 paid to the executor's attorney for legal services, an item of $808.85 covering expenses of a trip of the executor and his attorney to St. Louis and return, and the statutory commission claimed by the executor on $8,971.95 advances made by the testatrix during her lifetime to some of the beneficiaries named in the will.

Exceptions were duly filed to the final account by some of the beneficiaries named in the will, on the ground that the claim for attorney's fees was excessive; that the expense of the trip to St. Louis was unauthorized, and an unnecessary expense in administering the estate; and that the commission claimed by the executor on advances made to the heirs during the lifetime of the testatrix was not a proper charge under the statutes.

The court entered its order reducing the claim for attorney's fees to $1,500, and disallowed the claim of the executor for commissions based on the $8,971.95 advances made by the testatrix, but allowed the account in all other respects. From the order of the court the executor appeals, setting up four assignments of error which raise but two questions: (1) The reduction of the attorney's compensation to $1,500; and (2) the disallowance of the commission claimed by the executor on $8,971.95 advances made by the testatrix.

The determination of the questions raised by this appeal rests upon the construction of our statutes. Civil Code of 1913, paragraph 992, provides that:

"He [the executor] shall be allowed all necessary expenses in the care, management and settlement of the estate, including reasonable fees paid to attorneys for conducting the necessary proceedings or suits in the superior or other courts."

Under our statutes the question of expense in estates for attorney's fees becomes a matter to be determined in each case; the limitation being that the fee be reasonable. What is a reasonable fee will necessarily depend upon the character of the estate and the nature of the service required and performed by the attorney in the administration of such estate. In re Straus' Estate, 144 Cal. 553, 77 P. 1122. Such expense is one of administration, and, accordingly, the burden is placed upon the executor to justify the same to the court. In re Straus Estate, supra; Rowe v. Dyess et al. (Tex.Civ.App.), 213 S.W. 234; Richey v. Cleet, 46 Ind. App. 326, 92 N.E. 175; In re Thiede's Estate, 102 Neb. 747, 169 N.W. 435.

Naturally, the court is very reluctant to disturb any agreement entered into between the executor and counsel as to the amount of counsel's fee. However, if such fee so charged, considering the estate, is disproportionate to the service actually required and performed, it becomes the duty of the court, in the exercise of its discretion, to allow what it deems a reasonable fee. Ross' Probate Law and Practice, § 492. That an unauthorized fee has been paid by the executor in good faith prior to the court's approval of such claim does not justify the court in ratifying the same. State ex rel. Cohen v. District Court of Fifth Judicial District, 53 Mont. 217, 162 P. 1053.

What would constitute a reasonable fee in a given case is a matter which is peculiarly within the knowledge of the court before which the estate was probated, and, in the absence of the abuse of sound discretion of the court sitting in probate, this court, as it has many times held, will not disturb the findings of the lower court.

As was stated in the case of Joseph Marie Gasq's Estate, 42 Cal. 288:

"This court will not reverse the ruling of the probate court in fixing the amount of compensation, which it would be proper to allow the administrator in payment of counsel in the settlement of the estate, unless there is a plain abuse of discretion. Such matters are peculiarly within the knowledge of the probate judge."

We are of the opinion, from a careful examination of the record, that the order reducing the claim for legal expense from $3,005 to $1,500 was a proper exercise of the court's discretion.

In the absence of a provision in the will, compensation allowed an executor for services in administering an estate has been fixed by statute. Paragraph 994 provides that:

"When no compensation is provided by the will, or the executor renounces all claim thereto, he must be allowed commissions upon the amount of the whole estate accounted for by him as follows. . . . In all cases such further allowance may be made as the court may deem just and reasonable for any extraordinary service. . . ."

Appellant urges that the advances of $8,971.95 made by the testatrix during her lifetime to be charged against the beneficiaries receiving the same should be considered part of the estate for the purpose of fixing his commissions, as allowed by statute. We cannot concur in this view. The executor is chargeable only with the estate which comes into his possession, and that is the basis for determining the executor's commission which is allowed by statute. Advances made by the testatrix during her lifetime were not property and assets which were taken into possession by the executor for administering and distribution. Such advances did not require any care, management or administration on the part of the executor, and therefore no labor or service devolved upon him for which he is entitled to compensation. In re Cudworth's Estate, 133 Cal. 462, 65 P. 1041; In re Fernandez' Estate, 119 Cal. 579, 51 P. 851; In re Burden, 98 Misc. Rep. 542, 164 N.Y. Supp. 747; Succession of Pierce, 119 La. 727, 44 So. 446.

We are of the opinion that the statute providing commissions for executors and administrators contemplated the performance of some service on the part of such officers for which the fee is to be paid. In this case the only duty or obligation which devolved upon the executor with reference to the advances made by the testatrix during her lifetime was to see that the same were deducted from the distributive shares of the beneficiaries to whom such advances had been made. This entailed no appreciable service of administration on the part of the executor for which compensation should be allowed, and, under our construction of the statute, the lower court properly rejected the claim.

Fair compensation should be allowed officers in the administration of an estate for services actually performed, but it is also the duty of the court to safeguard the property of the estate, and not countenance claims in the absence of reasonable justification.

The order of the lower court is affirmed.

McALISTER, C.J., and ROSS, J., concur.

NOTE. — Judge LYMAN being disqualified by reason of having passed on questions as Judge of the Superior Court, Honorable C.C. FAIRES, Superior Court Judge of Gila County, was called in his place.

ESTATE OF O'REILLY