IN RE: LANKERSHIM'S ESTATE.* LANKERSHIM et al. v. BANK OF AMERICA NAT. TRUST & SAVINGS ASS'N et al.
Appeal from the order of the trial court fixing the special administrator's and attorney's fees.
The deceased, Colonel J. B. Lankershim, died in New York on October 16, 1931. Mr. J. Wiseman Macdonald, who for a number of years had been the attorney for the deceased, had in his possession a will which he had prepared for Colonel Lankershim in 1929, by the terms of which practically the entire estate was left to Doria C. Lankershim and John I. Lankershim, children of the testator and the objectors and appellants herein. Mr. Macdonald cabled the beneficiaries, who were in France, and, in accordance with the authority cabled back, presented the will for probate in the names of the son and daughter and himself, these three being the executors named in the will. A few days later Mr. Macdonald was first informed of and received from a personal attendant of Colonel Lankershim a document purporting to be a will executed by the latter two weeks before his death, by the terms of which each of the children were to receive three-tenths of the estate, one-tenth was left to Mr. Macdonald and the remainder to other beneficiaries, and in which Mr. Macdonald and Bank of America were named as executors. Mr. Macdonald then filed a petition asking that this will be admitted to probate, also signing, as in the petition for probate of the prior will, as attorney for the petitioners. The probate of the later will, that of 1931, was abandoned after a contest had been filed, and, in this connection, it appears that Mr. Macdonald executed to the contestants, the children and beneficiaries under the first will, a transfer of any rights he might have under the 1931 will. Prior to the filing of the will of 1931 for probate, the Bank of America advised Mr. Macdonald that it desired him to represent the bank as its attorney in the probate proceedings, and this Mr. Macdonald agreed to do. In view of the contest and to preserve the estate and to do those things necessary until executors should be appointed, Mr. Macdonald and the Bank of America were appointed as special administrators. The bank employed Mr. Macdonald to act as its attorney throughout the administration of the estate, and he so acted until December, 1932, when executors were appointed. It was agreed between the bank and Mr. Macdonald that the latter would waive all right to administrator's fees, and that the bank would do practically all of the work of administration, and that Mr. Macdonald should receive only the fees of an attorney for the estate.
In February, 1932, the powers of the special administrators were made general and so continued during their administration. The agreement of Mr. Macdonald in relation to the matter of fees was declared by him in open court at the hearing of the petition for special letters of administration and in the presence of counsel for appellants and was promptly communicated to Doria Lankershim and John Lankershim, appellants herein, and to their attorneys. No objection appears to have been made by the court or any person until the proceeding which gives rise to this appeal and after the services upon which the claims for fees were made had been rendered, and the record warrants the conclusion that appellants first made objection in the matter of the fees of the special administrator and the attorney fees claimed by Mr. Macdonald at the time the matter of fixing such fees was presented to the trial court. Prior to the filing of the accounts of the special administrators, Mr. Macdonald had performed all legal services required by the estate.
Upon the filing of the final account of the special administrators and petition for allowance of fees, the trial court found and fixed the amount of the administrative fees to be allowed the Bank of America in the sum of $49,387.75 and the amount of attorney's fees to be allowed Mr. Macdonald in the sum of $56,443.15 minus the sum of $10,000 which had been paid him on account of such fees prior to the filing of the accounts. It appears that Mr. Macdonald also performed special legal services in the contesting of a claim filed against the estate by one Irene Herbert in the sum of $500,000 for which special services the trial court, basing its findings upon substantial proof in the record, fixed and allowed as reasonable compensation the further sum of $15,000.
The basic contention of appellant is that Mr. Macdonald, by reason of the fact that he was one of the special administrators, could not, as a matter of law, receive any compensation for legal services regardless of whether his employment was by both special administrators or solely the employment of his coadministrator, the Bank of America. It may be noted here that it is not contended that an administrator or executor may not perform legal services in estate matters, but merely that, if he does so, he is entitled to no compensation therefor.
Section 910 of the Probate Code provides that “Attorneys for executors and administrators shall be allowed out of the estate, as fees for conducting the ordinary probate proceedings, the same amounts as are allowed by the previous article as commissions to executors and administrators; and such further amount as the court may deem just and reasonable for extraordinary services.” Sections 901 and 902 of the same Code provide for the commissions of executors for regular and extraordinary services, limiting the latter to what the court may deem just and reasonable and basing the regular compensation upon the amount of the estate accounted for. Section 467, by reference, makes the foregoing sections applicable to cases where the estate is handled by special administrators. There is nothing in our statutes bearing upon the question as to the right of an individual to act as both administrator or executor and as attorney, nor is there any specific provision of law in this state laying down the rule as to fees and commissions in such cases.
Appellants rely largely upon the case of In re Estate of Parker, 200 Cal. 132, 251 P. 907, 909. There, one Leon M. Abbott, a member of a firm of lawyers practicing in Massachusetts, was appointed the sole executor of the estate and employed this firm of lawyers and two members of the California bar to perform all legal services for the estate. In his final account, the executor claimed credit for all statutory commissions and extra compensation to which he possibly could be entitled as executor and also claimed credit for all of the statutory fees to which his attorneys could be entitled and an additional sum for extraordinary legal services. These items were allowed by the court. An appeal was taken by the residuary legatees from only that portion of the order allowing the sum of $40,000 as extra compensation to the executor's law firm and local counsel for extraordinary legal services. The court, in its opinion, says that if an executor or administrator “being himself a practicing lawyer, elects to act as his own attorney in the performance of the legal services incident to the administration of the estate, the general rule is that he will not be entitled to an allowance against the estate for his professional services, in the absence of some statutory provision entitling him thereto.” This statement of the general rule is said by the court to be supported by the weight of authority and “though there is considerable apparent and perhaps real conflict of authority upon the subject * * * we deem it a sound and wholesome doctrine, founded upon reasons of public policy.” The court decides the case before it upon the obvious premise that payment of legal fees to the law firm of which the executor was a member, was a payment of legal fees to the executor. The Parker Case is distinguishable from the case at bar in that there the court was considering a case in which there was but one executor who had the sole power to appoint legal counsel, who, in effect, appointed himself as legal counsel and claimed both the executor's fees and the attorney's fees for regular and extraordinary services. Only the extraordinary legal fees were considered by the Supreme Court, no appeal having been taken from the order of the trial court allowing the fees for regular legal services in addition to the executor's fees. The court states as the fundamental basis for the rule, supra, the principle that a trustee cannot place himself in a situation where his interests conflict with his duty as a fiduciary. Such a conflict, patent when a sole executor or administrator appoints himself as the attorney to handle the legal business of the estate, does not exist when the appointment, as here, is made by a coadministrator and the “clash between his own personal interest and his duty to employ the ablest counsel obtainable for the agreed compensation” and to oppose excessive charges, does not exist. It might also be mentioned that the court in the Parker Case, supra, 200 Cal. 132, page 140, 251 P. 907, finds ample support for its reversal of the order appealed from in the fact that to allow the fee for special legal services would be a double payment since, by the order of the trial court, the executor was also allowed compensation for extraordinary, executorial services in addition to his commissions for ordinary duties. The court further bases its reversal upon the ground (200 Cal. 132, page 142, 251 P. 907, 911) that many different items included in the description of services making up the amount of $40,000 “cannot be classified as extraordinary legal services,” a conclusion quite obvious from the fact that part of the extraordinary legal services consisted in a study of the stock market in connection with the prospective sale of securities of the estate. The decision in the Parker Case is a typical application of the general rule to a state of facts demanding its application which cannot, however, be binding under a state of facts in which the reasons for that decision do not exist.
Considerable space has been devoted in appellant's brief to a discussion of the question as to whether Mr. Macdonald was the attorney for the estate, for both special administrators or for the administrators and the estate, a discussion based upon a variance in the description of the relationship in various portions of the record. It appears quite clearly, however, that, at the very outset, the Bank of America employed Mr. Macdonald, and that he continued throughout as the legal counsel for that administrator in its handling of all affairs of the estate. Under this view Mr. Macdonald, as to such services, was not the legal advisor appointed by himself as administrator. Had the bank been the sole administrator, either as the result of Mr. Macdonald declining to act by or withdrawing as coadministrator, there would have been no argument of appellant that he could not receive counsel fees–and it does not seem to us that his merely qualifying as coadministrator brings the facts within the rule announced in the Parker Case. The Parker Case and the cases to the same effect in other jurisdictions are opposed, on the grounds of public policy, to an administrator employing himself as legal counsel in estate matters thus giving himself the opportunity of pecuniary profit beyond that which would come to him as the representative of the estate, but in the case at bar the employment of Mr. Macdonald came not from himself but from the Bank of America; he claimed only fees for legal services and the element of self-employment, held by the cases to be contrary to public policy, does not exist in the case at bar.
Mr. Macdonald was designated by and acted as attorney for the administrator bank, in which capacity he was entitled to compensation for his services. There is no suggestion that Mr. Macdonald rendered any legal services as attorney for himself in the capacity of administrator beyond the services rendered as attorney for the bank. Any theory that Mr. Macdonald was the attorney for the estate would seem to be eliminated by the case of In re Estate of Ogier, 101 Cal. 381, 35 P. 900, 40 Am. St. Rep. 61, and In re Estate of Kruger, 143 Cal. 141, 145, 76 P. 891, which point out that an attorney chosen by a personal representative to handle like legal affairs of the estate of a decedent has as his client the representative who employed him and not the estate.
Inasmuch as Mr. Macdonald performed services of a special nature in connection with the Herbert litigation upon the agreement of appellants, and they having waived objections to his receipt for legal fees therefor, the objection to the claim for extraordinary legal services simmers down to a question of the amount to be allowed. We cannot say that the order of the court in this question of fact is not supported by the proof.
The matter of the regular special administrator's and attorney's fees is, however, governed by other and special provisions of law. Probate Code, §§ 467, 910, 901. Such fees are limited and determined by the “amount of estate accounted for” by the administrator. Section 901. While an allowance on account upon commissions or attorney fees may be made at any time after six months from the issuance of letters testamentary (sections 904, 911) no allowance in full of such commissions or fees can be made until the final settlement of the estate because, since the total amount of allowable fees is limited to a percentage of “the amount of estate accounted for” (section 901), which phrase obviously means the amount of the estate as disclosed by the final accounting, the total fees cannot be computed until the amount of the estate is so disclosed. Had a partial allowance of commissions and fees been desired, application could have been made and the court could have made such allowance by the exercise of the discretion in it vested by sections 904 and 911 of the Probate Code, but the court was premature and therefore erred in allowing the full amount of fees and commissions prior to a final accounting showing the actual amount of the estate. In re Estate of Piercy, 168 Cal. 750, 754, 145 P. 88; In re Estate of Aldersley, 174 Cal. 366, 375, 163 P. 206.
The order appealed from is reversed except as to that portion thereof allowing attorney's fees for extraordinary services in connection with the Herbert claim, and, as to the allowance for such special services, the order is affirmed.
I concur. But I wish to make additional comments. The sole trouble with the order of the trial court is that it provides for the payment in full of the attorney's fees for the respondent prior to the final settlement of the estate. An allowance on fees would have been proper, but not a payment in full. Section 911 of the Probate Code provides merely for “an allowance upon his fees.” Section 910 of said Code provides that attorneys shall be allowed the same amounts as are allowed by the previous article to administrators. This takes us to sections 901 and 904 of the Probate Code. Section 904 provides for an allowance of commissions and fees prior to the final settlement of the estate, but this section provides for an allowance only, and directs that “the court shall make an order allowing him such portion of his commissions, for services rendered up to that time, as the court shall deem proper.” But a careful reading of the section makes it clear that it provides merely for a portion and not for payment in full. We must go to section 901 for the proper rule where an order is sought for payment in full. That section provides “if there are two or more executors or administrators, the compensation shall be apportioned among them by the court according to the services actually rendered by each.” The services of the last attorney in a succession of attorneys are never “actually rendered” until the final accounting, and it is clear that there can be no apportionment according to the services actually rendered by each until that time. Neither is it fair to an estate to make an order for fees in full prior to the settlement of the final account.
It should be made clear also that the decision of this court in no way bars the rights of respondent Macdonald to petition forthwith for a partial allowance of fees on account and further at the final accounting to receive such fees as the court may apportion to him according to the services actually rendered by each of the attorneys, less such fees as he has already received on account thereof.
FRICKE, Justice pro tem.
In concur in the judgment: WOOD, J.