Dahlberg v. Brown, 15308.

• Citation: 16 S.E.2d 284,198 S.C. 1
• Decision Date: 14 August 1941
• Docket Number: No. 15308.,15308.
• Court: United States State Supreme Court of South Carolina
• Parties: DAHLBERG. v. BROWN.

16 S.E.2d 284
198 S.C. 1

DAHLBERG.
v.
BROWN.

No. 15308.

Supreme Court of South Carolina.

Aug. 14, 1941.

[16 S.E.2d 284]

Appeal from Common Pleas Circuit Court of Charleston County; Wm. H. Grimball, Judge.

[16 S.E.2d 285]

Action by B. I. Dahlberg against Carolyn P. Brown, individually and as administratrix with the will annexed of the estate of John Scruggs Brown, for services performed and expenses incurred. From a judgment for plaintiff, defendant appeals.

Reversed and remanded.

Samuel Want, James S. Verner, and Sam Rogol, all of Darlington, for appellant.

Buist & Buist, of Charleston, for respondent.

BAKER, Justice.

This is an action at law brought by the respondent as plaintiff for the recovery of $97,305.08 for services alleged to have been performed, and expenses incurred in connection with tax matters relating to the estate of the late John Scruggs Brown, and for incidental relief. The action is brought against the widow of said testator in her individual capacity and also in her capacity as administratrix c. t. a., of the estate of the testator.

The claim set forth in the complaint involves four separate items, to-wit: (1) Compensation for services performed in connection with deficiency estate and inheritance tax assessments levied against the testator's estate, as the result of which services it is alleged large savings were effected for the estate; (2) reimbursement of expenses incurred by the respondent in the performance of his services; (3) compensation for services performed in preparing "Various and sundry tax returns * * * entirely separate and apart from the services of the plaintiff in contesting" the deficiency tax assessments; (4) an "accounting" by the appellant that will enable the respondent to ascertain whether he is entitled to compensation for any additional amounts saved to the estate by his services following his discharge by the appellant, and which may not have been taken into account by him in fixing the amount of his claim.

The questions before the Court arise under a demurrer to the complaint and under motions to strike certain portions of the complaint and to make the complaint more definite and certain in designated particulars. In the Circuit Court the demurrer was overruled and the motions refused.

The arguments of counsel have taken a wide range, and encompass a number of questions of substantive law that we do not deem it necessary to pass upon.

The pertinent facts disclosed by the record are as follows:

The late John Scruggs Brown died in July, 1934. At the time of his death he was a resident of Tennessee. During his lifetime he had created a trust by the delivery of assets of an estimated value of $1,500, 000 to the Farmers Loan and Trust Company of the City of New York. The trust instrument provides that the income of the trust shall be paid to the donor and to his wife, during the lifetime of both, in equal shares. Upon the death of either, the whole of the income is to be paid to the survivor during the term of his or her natural life. Further provisions relating to the disposition of the income and of the capital of the trust, after the death of Mr. and Mrs. Brown, are not material in this controversy. The donor, however, reserved a power of appointment by Will over the corpus of the trust.

The trust instrument contains a drastic "spendthrift trust" provision to safeguard the income of the trust against the claims of creditors of Mr. and Mrs. Brown, and to prevent the assignment or anticipation of the income of either of the donees.

On the subject of the payment of estate and inheritance taxes, the trust instrument contains a provision to the effect that if by reason of the creation of the trust inter vivos "a transfer, estate or inheritance tax is assessed against the estate of the donor, " the trustee shall pay such tax out of the principal of the trust fund.

The estate left by the testator at the time of his death in 1934, exclusive of the estate embraced in the trust instrument, was appraised at $142,181.82. The will devises the income of the estate to the appellant for life, subject to a "spendthrift trust" provision similar to that contained in the trust instrument. Exercising the power of appointment over the trust estate which he reserved in the trust instrument, the testator disposed of the trust fund by provisions in his will to become effective upon the death of the widow. The spendthrift trust provisions under which she obtained all of the income of the trust estate upon the death of her husband were not changed. The will disposed of the combined estates after the death of the appellant, and contains a provision for...