Coffin's Estate, In re

• Citation: 499 P.2d 223,7 Wn.App. 256
• Decision Date: 10 July 1972
• Docket Number: No. 1078--I,1078--I
• Parties: In the Matter of the ESTATE of Miriam COFFIN, Deceased.
• Court: Court of Appeals of Washington

Page 256

7 Wn.App. 256

499 P.2d 223

In the Matter of the ESTATE of Miriam COFFIN, Deceased.

No. 1078--I.

Court of Appeals of Washington, Division 1, Panel One.

July 10, 1972.

Petition for Rehearing Denied Sept. 26, 1972.

Lundin, Estep, Sindell & Haley, Inc., P.S., Landon R. Estep, James T. Marston, Seattle, for appellant.

Wettrick, Toulouse, Lirhus & Hove, George J. Toulouse, Jr., Seattle, for respondent.

HOROWITZ, Chief Judge.

The sole question here is whether substantial evidence supports an attorney's fee allowance made for a nonintervention will executor's attorneys at a hearing on the executor's final report and account. The Aquarian Foundation, Inc., the residuary estate beneficiary, appeals contending the amount allowed is excessive.

Miriam Coffin died July 28, 1968. By her nonintervention will, she named Peoples National Bank of Washington as executor and the Foundation as residuary beneficiary. The executor employed Messrs. Newman and McCann of Seattle, Washington, as estate attorneys. Mr. McCann had primary responsibility for legal services rendered.

After the will was admitted to probate, Mr. McCann discovered the decedent had a power of appointment in each of two trusts then administered by a Boston, Massachusets trustee, Old Colony Trust Company of Boston. Decedent's will did not specifically exercise either of the powers of appointment. However, upon discovery of their existence and after legal research, Mr. McCann informed the executor that under the minority rule as applied by the governing law of Massachusetts, the residuary clause in the decedent's will constituted an effective exercise of those powers.

Mr. McCann's opinion was independently confirmed by the executor bank's general counsel and by the attorneys for the trustee. Subsequent to Mr. McCann's opinion and at Mr. McCann's suggestion and with his help, the executor pursued the matter of obtaining possession of the assets resulting from the exercise of the powers of appointment. Considerable correspondence followed. Among other things, it was necessary to come to an agreement with the eastern trustee, who was advised by its own counsel, concerning what Mr. McCann considered were excessive demands for legal protection. With the advice and assistance of Mr. McCann, the disagreements were resolved. As a result, about 18 months after the first effort to obtain the estate assets, the trustee delivered to the executor bank assets totaling $221,793.18 in securities and cash. The probate estate was thereby augmented to $261,348.99, largely in liquid assets.

Early in the probate proceedings, the Aquarian Foundation, pursuant to RCW 11.28.240, filed a statutory demand for notice of the proceedings in probate. After the estate had been augmented and during a recess in the hearing on the Foundation's inheritance tax exempt status, Mr. Fred Schoen, assistant trust officer of the executor bank, and Mr. McCann met briefly with Mr. Landon R. Estep, attorney for the Aquarian Foundation. They informed Mr. Estep that the bank would be seeking an executor's fee of $10,000 'because they had done a lot of work,' and Mr. McCann stated 'our firm would probably be asking for $30,000 due to the tremendous amount of time we put in to get this estate for them.' Both Mr. Schoen and Mr. McCann testified they were under the impression that Mr. Estep believed the amount satisfactory. No contrary evidence was received concerning the conversation.

Shortly thereafter, the executor filed a verified petition in the probate proceedings seeking an executor's and attorney's fee allowance. The petition detailed the services of the executor and the estate attorneys and claimed the amounts previously described to Mr. Estep. The Aquarian Foundation was not served with a copy of the petition, received no notice of the hearing thereon, and did not appear at the hearing.

The petition was heard ex parte by the late King County Superior Court Judge Donald L. Gaines. Mr. McCann and the bank's senior trust officer, Mr. Bagnall, each testified in support of the petition. Upon conclusion of the hearing, at Judge Gaines' suggestion, the hearing was continued for additional testimony concerning the time spent in the probate proceedings. At the continued hearing, additional testimony was received. Upon the conclusion of that hearing, Judge Gaines entered an order dated October 30, 1969, reciting:

(A)nd the Court having heard the testimony of Richard G. McCann on behalf of said petition and having heard the testimony of Walter Bagnall, Trust Officer of the Peoples National Bank of Washington in support of said Petition and having read said Petition and finding all things therein stated to be true and correct . . .

The order fixed the executor's fees at $10,000 and the attorney's fees at $22,470. The fees were then paid.

After Mr. Estep learned of the entry of the order, he corresponded with Mr. McCann for an explanation of the allowance made. The Aquarian Foundation remained dissatisfied. On February 24, 1970, it filed a petition, verified by the Foundation's president, to set aside the fee allowances made claiming they were excessive and that they were invalid because made without notice and in violation of Rule 98.12W of the Special Proceedings Rules for the Superior Court and certain provisions of the probate policy manual of the King County Superior Court dealing with the allowances.

On March 26, 1970, the petition came on for hearing. No testimony was offered. Judge Gaines dismissed the petition, but made a minute entry reading 'Petition dismissed without prejudice to rehearing at final report.' The order of dismissal contains no such provision. Nevertheless, the parties agree that the Aquarian Foundation at the hearing below was not precluded from a de novo hearing on the fee allowances attacked.

The executor, on December 17, 1970, filed its verified final report and petition for distribution. The petition detailed the history of the estate, the circumstances that led to the estate being augmented to $261,348.99, and the fee allowances made by Judge Gaines. It described other services rendered, including those connected with a court hearing on the inheritance tax exempt status of the Aquarian Foundation. The executor claimed additional fees for services rendered since Judge Gaines' order.

At the hearing below on the executor's final report and petition, the controverted issues were particularly centered on the nature of the services rendered and the fees previously allowed by Judge Gaines. Because on appeal no objections are made to the fee allowances for the executor's services, we consider the fee allowances for services of the estate attorneys.

At the hearing, the executor presented testimony to support its claim that the services of the estate attorneys were a substantial factor in augmenting the estate. Time slips of the attorneys showing the amount of time actually spent had been lost and were therefore not introduced in evidence. However, the petition for executor's and attorney's fees contained in the probate file and heard by Judge Gaines had attached to it an exhibit containing a detailed statement of substantial time spent by the attorneys. The executor offered expert testimony to support the ex parte allowance of $22,470 previously made by Judge Gaines in the manner stated. Testimony offered on behalf of the Aquarian Foundation consisted solely of expert testimony concerning reasonable attorney's fees to be allowed. The expert testimony offered by each party came from Seattle lawyers long experienced in probate practice. Neither party attacks the good faith of the testifying attorneys. The opinions expressed ranged from a little over $7,735 to $22,470. No attorney testified that a reasonable fee to be allowed in the instant case should be confined to the minimum fee of $7,735 suggested in the Seattle-King County Bar Association schedule for probating an estate based upon its size.

The attorney testifying in the executor's case to the reasonableness of the fee of $22,470 assumed, without expressing his opinion on the validity of the assumption, 'that the work of Mr. McCann materially contributed to the . . . increasing of this estate from an initial $39,000 odd to an eventual $261,000 estate . . .' He emphasized the beneficial result to the client rather than the time taken to obtain that result. He testified that he had considered the factors required to be considered in arriving at a reasonable fee as set forth in In re Estate of Peterson, 12 Wash.2d 686, 123 P.2d 733 (1942). He also pointed out that had Mr. McCann's services not been successful in obtaining the assets sought from the eastern trustee, the executor would have had to incur substantial litigation costs in Massachusetts to accomplish by litigation what had been successfully accomplished without it.

The attorney testifying to the lowest fee on behalf of the Foundation did so on the basis that Mr. McCann's services were but minimally responsible for augmenting the estate. He considered those services to be 'part of the normal probate administration.' He therefore used the Seattle-King County Bar Association's minimum fee schedule to arrive at a fee of $7,735. However, he added two additional items, namely, $250 to $300 for preparing gift tax returns the decedent should have prepared, and an additional minimum fee based on the Bar schedule for two days' trial in connection with the court hearing on the inheritance tax exempt status of the Aquarian Foundation.

The other attorney called by the Foundation testified to a minimum fee of $7,735 and a maximum fee of $11,696.50, the latter being arrived at independently of the Bar schedule. He arrived at the maximum fee by first using what he considered a reconstructed liberal time estimate of the time spent multiplied by a liberal $50 per hour charge, thereby arriving at the sum of $10,196.50. To this sum he added $1,000 'for the...