IN RE: LAIR'S ESTATE. SHNELL et al. v. BRUNTON.*
This is an appeal from a judgment settling an amended and supplemental first and final account rendered by the legal representative of a deceased trustee of a testamentary trust; awarding a ‘lump sum’ fee to A. W. Brunton ‘for services as attorney and administrator of the estate’ of the deceased trustee; and distributing the trust estate to the remainder-beneficiaries. Although the notice of appeal states that the appeal is from the whole judgment, the brief of appellant states that the appeal is directed only to the following portion thereof: ‘It is further Ordered, Adjudged and Decreed, that the said A. W. Brunton be and he is hereby allowed the sum of $800.00 for his services as attorney and as Administrator of the Estate of John W. Lair, rendered in the above entitled matter, and that the said A. W. Brunton have a lien upon all of the assets of said trust estate to secure the payment of said sum of $800.00.’
Appellants contend in part that the court was without jurisdiction to award attorney's fees direct to the attorney for the trustee; that an administrator or a testamentary trustee who acts as attorney for himself cannot have compensation for his services as attorney; and that when a part of a lump sum allowance for fees has been made upon an improper basis and there is no means of segregating the improper part from the total allowance, the whole order for fees should be reversed.
The appellants are the husband, son and daughter of a deceased sister of the trustor, Nancy Ray Lair, deceased, which sister was one of four remainder-beneficiaries of the corpus of the trust. The appellants were the objectors to the account herein. The other beneficiaries have not appealed.
In 1936 John W. Lair became the trustee of the testamentary trust of his deceased wife, Nancy Ray Lair. Under the provisions of the trust he was to receive the income from the trust during his life and upon his death the corpus of the trust was to be distributed to her brother and three sisters. In 1939 he filed his first account as such trustee. The remainder-beneficiaries objected to the account upon the ground, among others, that the trustee should be charged personally with $850 which had been made a lien upon the corpus of the estate during the administration and before distribution to the trustee. That objection was sustained, but the order was reversed on appeal. Estate of Lair, 38 Cal.App.2d 737, 102 P.2d 436. Upon a rehearing of the account after the reversal, the trial court found that an item of $55.11 (which the trustee had listed as income) was a part of the corpus, and ordered that said sum should be charged against the trustee personally; and further ordered that no expenses should be charged against the corpus of the estate. Those orders were reversed on appeal. Estate of Lair, 52 Cal.App.2d 222, 126 P.2d 133. Soon after the trial court in 1939 had ordered that the trustee be charged personally with the $850, the remainder-beneficiaries filed a complaint, designated a bill in equity, to remove the trustee. That action was tried and submitted on January 20, 1941. On February 6, 1941, before the decision therein was rendered, the trustee John W. Lair died. While the first appeal, above mentioned, was pending the trustee filed a second account, and after the reversal on that appeal he filed an amended and supplemental second account which was set for hearing on February 7, 1941. Mr. Lair having died prior to the date for that hearing, the matter of said second account was placed off calendar pending the appointment of a legal representative of the deceased trustee. A. W. Brunton, an attorney at law who had been the attorney for the trustee John W. Lair, was appointed administrator with the will annexed of the estate of John W. Lair, deceased, on March 11, 1941. As such administrator, Mr. Brunton was substituted in place of Mr. Lair in the action which had been submitted on January 20, 1941. That action was decided on June 5, 1941, and it was therein adjudged that plaintiff recover $55.11 from defendant for the benefit of the corpus of the trust estate. That judgment was reversed on appeal. Shnell v. Brunton, 52 Cal.App.2d 226, 126 P.2d 135.
On November 20, 1942, Mr. Brunton, as such administrator of the deceased trustee's estate, filed the amended and supplemental first and final account, petition for fees, and petition to determine ownership of corpus, which are involved herein.
In the petition for fees the administrator asked that fees in the sum of $50 be allowed A. W. Brunton as administrator for services rendered by the deceased trustee, and that fees in the sum of $3,000 ‘be allowed A. W. Brunton as attorney for said trustee and as Administrator’ of his estate for services rendered as such administrator. The petition alleged that, in connection with the action to remove the trustee, Mr. Brunton rendered 69 hours of services as attorney for the trustee prior to the death of the trustee, and that after the death of the trustee Mr. Brunton rendered 55 hours ‘appearing in pro. per.’ as administrator of the estate of the deceased trustee; that he spent 5 hours in preparing the first account, and 10 additional hours in preparing a first account rendered by himself as administrator (not the one now before the court); that he had spent 10 hours in preparing the account now before the court and he would spend 10 additional hours in the hearing of the account and preparing the findings and decree; and that he spent more than 100 hours in connection with the first account filed by the trustee, including the appeals involved therein. Mr. Brunton submitted evidence in support of those allegations.
It therefore appears that the petitioner sought an allowance for the services of the deceased trustee, and sought an allowance for the services of himself as attorney rendered before and after the death of the trustee, and for services as administrator of the estate of the deceased trustee; that the court made no allowance for the services of the deceased trustee although it found (in its general findings) that he had rendered services of the value of $50; and that the court made a lump sum allowance of $800 to A. W. Brunton individually ‘for his services as attorney and as Administrator.’
Appellants assert, as above stated, that the court was without jurisdiction to award attorney's fees direct to the attorney for the trustee. Section 1122 of the Probate Code, in a Chapter entitled ‘Administration of Trusts,’ provides in part: ‘On the settlement of each such account the court shall allow the trustee his proper expenses and such compensation for services as the court may deem just and reasonable.’ Proper expenses of the trustee, referred to in said section, include reasonable fees for necessary legal services rendered in behalf of the trustee, but there is no provision in that section or in any statute that the court is authorized to make an allowance for such expense of a trustee to the attorney directly. On the contrary that section provides, as above noted, that the proper expenses of the trustee shall be allowed to the trustee. Under the provisions of Section 911 of the Probate Code the court is given express authority to ‘make an order requiring the executor or administrator’ to pay attorney's fees ‘out of the estate’ to an ‘attorney who has rendered services to an executor or administrator’ (italics added), but that section does not give the court authority to order the payment of fees to an attorney for a trustee. The probate court has no other powers than those given by statute and such incidental powers as pertain to it and enable the court to exercise the jurisdiction conferred upon it. Section 1556 of the Probate Code which relates to payment of expenses of a guardian is similar to said Section 1122 which relates to expenses of a trustee. Said Section 1556 is in part as follows: ‘Every guardian shall be allowed the amount of his reasonable expenses incurred in the execution of his trust * * *.’ In Garra v. Superior Court, 1943, 58 Cal.App.2d 588, at pages 590, 591, 137 P.2d 31, at page 32, which was a proceeding to prohibit the the trial court from enforcing an order that attorney's fees be paid directly to the attorney for a guardian, the court said: ‘* * * the decree * * * in so far as it purports to award attorney's fees directly to W. C. Wilde, is void, as the court had no jurisdiction to award ‘judgment’ to a person not a party to the proceedings. The order in the instant proceeding was a direct judgment for money in favor of a person not a party to the proceeding and to that extent was irregular and void. [Citations.] The judgment and order for the payment of fees to the guardian's attorney being void, the respondent court was without jurisdiction to enforce such judgment.' As a rule, an attorney employed by a trustee must look to the trustee for payment, and can have no claim on the trust fund, but to this rule there is an exception, namely, when a trustee is without funds of the estate in his possession he may by agreement require those rendering services to look solely to the trust estate and when the facts creating the exception appear the creditor may proceed in equity for the satisfaction of the claim from the trust estate. Cullinan v. Mercantile Trust Co., 1926, 80 Cal.App. 377, 835, 252 P. 647. The record herein does not show any agreement that the attorney should look to the trust estate for his compensation rather than to the trustee. The order herein that the fees be paid to A. W. Brunton individually was erroneous. Mr. Brunton has suggested in his brief that if it should be determined that such order awarded $800 to him individually and that such order was erroneous that the trial court be directed to correct the clerical error by directing that said sum be paid to him as administrator with the will annexed of the estate of John W. Lair, deceased trustee. It does not appear, however, that such error was a clerical one.
Appellants' further contention, that a testamentary trustee who acts as attorney for himself cannot be given compensation for his services as such attorney, is sustained. In Estate of Parker, 1926, 200 Cal. 132, at page 135, 251 P. 907, at page 909, 49 A.L.R. 1025, it was said: ‘An executor, administrator, or testamentary trustee who is himself an attorney at law may properly employ another attorney to render the necessary legal services for the estate. * * * But if the executor, administrator, or testamentary trustee, being himself a practicing lawyer, elects to act as his own attorney * * * 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.’ That rule is one of public policy forbidding one who acts in a fiduciary capacity to become his own employer. Estate of Parker, supra, page 136 of 200 Cal., page 909 of 251 P., 49 A.L.R. 1025. Mr. Brunton was entitled to compensation as attorney for the trustee for legal services rendered while Mr. Lair was trustee, and it would have been proper to make an award for such services to A. W. Brunton as legal representative of Mr. Lair, the deceased trustee. He was also entitled to compensation for his services as such legal representative of the deceased trustee, and it would have been proper to make an award for such services to A. W. Brunton as such legal representative. The petition for fees and that evidence in behalf of the petitioner are to the effect that part of the services for which fees were sought was legal services rendered by Mr. Brunton in propria persona as administrator of the deceased trustee's estate. The court found that ‘the services alleged in the petition for fees were rendered as alleged therein,’ and the court then enumerated in its findings various specific items of legal services rendered by Mr. Brunton after the death of Mr. Lair. It does not appear from the findings or the judgment that the amount awarded for fees did not include an award for such legal services rendered after the death of Mr. Lair, but it does appear from the judgment that the award was for Mr. Brunton's ‘services as attorney and as administrator,’ and under these circumstances it is to be assumed that the judgment included an award for legal services of Mr. Brunton after the death of Mr. Lair. Insofar as the judgment included an award for legal services of mr. Brunton as attorney for himself as legal representative of the deceased trustee's estate, it was also erroneous.
Another contention of appellants is that since the allowance for fees is based partly upon services for which the court had no power to order payment, and since the fees were awarded in a lump sum and the condition of the record is such that the improperly allowed fees cannot be segregated from the total allowance, that the whole order for fees should be reversed. This contention is sustained. As above mentioned, it cannot be determined from the record what portion of the total award, if any, was awarded for legal services rendered during the life of Mr. Lair, and it cannot be determined therefrom what portion, if any, was awarded for legal services rendered after the death of Mr. Lair while Mr. Brunton was acting in propria persona. The fees awarded for legal services, and for services rendered as administrator, and for services of Mr. Lair as trustee, if any, should have been stated separately in the judgment in order that the interested parties might consider whether the amounts awarded for specific items were reasonable, whether the amounts were for services rendered by a person acting in a double capacity as attorney and administrator, and whether they were awarded upon any illegal basis.
Another contention of appellants is that the trustee and the administrator of the deceased trustee's estate sought to destroy the trust and therefore attorney's fees should not be allowed. The assertion that they sought to destroy the trust is based upon an allegation, in the petition herein to determine ownership of the corpus of the estate, to the effect that all of the remainder-beneficiaries had forfeited their interests in the trust because they had attacked the will of Nancy Ray Lair in violation of a contest provision in the will. The alleged violation was based upon their effort to charge the trustee personally with the $850 lien against the estate, and their efforts to remove him as trustee. The court had stated in the Estate of Lair, 1942, 52 Cal.App.2d 222, at page 225, 126 P.2d 133, at page 134, that the action, designated a bill in equity, to cancel the $850 lien and to remove the trustee was ‘an unfounded action’ and ‘clearly there was no occasion for the filing of the suit,’ and that the $850 was charged properly against the corpus. It was necessary that the trial court herein determine the ownership of the corpus, and it was not improper to call the court's attention to the efforts of the remainder-beneficiaries to impair the provisions of the trust. Said contention of appellants is not sustained.
The portion of the judgment wherein A. W. Brunton was allowed ‘$800.00 for his services as attorney and as Administrator,’ which portion is the third paragraph of the judgment appealed from, is reversed; and the superior court is directed to fix and separately state and to secure by a lien on the assets of the trust estate, the fees, if any, properly payable to A. W. Brunton, administrator with the will annexed of the estate of John W. Lair, deceased: (1) For services rendered by John W. Lair as trustee; (2) for legal services rendered by A. W. Brunton as attorney for John W. Lair while Mr. Lair was trustee; and (3) for services rendered in connection with the trust matters by A. W. Brunton as administrator with the will annexed of the estate of John W. Lair, deceased. The judgment as to all portions other than the third paragraph is affirmed.
PARKER WOOD, Justice.
DESMOND, P. J., and SHINN, J., concur.