Donald v. Maxwell, 147

• Decision Date: 11 April 1927
• Docket Number: No. 147,147
• Citation: 71 L.Ed. 942,274 U.S. 91,55 A.L.R. 705,47 S.Ct. 497
• Parties: McDONALD et al. v. MAXWELL et al
• Court: U.S. Supreme Court

274 U.S. 91

47 S.Ct. 497

71 L.Ed. 942

McDONALD et al.

v MAXWELL et al.

No. 147.

Argued Jan. 20, 1927.

Decided April 11, 1927.

Mr. Charles V. Imlay, of Washington, D. C., for petitioners.

Mr. Frederic D. McKenney, of Washington, D. C., for respondents.

Mr. Justice SANFORD delivered the opinion of the Court.

In the course of a proceeding that had been pending for many years in the Supreme Court of the District of Columbia, sitting as a probate court, for the administration of the estate of James McDonald, deceased, under his last will and testament, the executors were allowed certain commissions for the one-year period covered by their ninth account. On an appeal by the beneficiaries under the will, two of whom are minors represented by a guardian ad litem, the District Court of Appeals, being of opinion that there was 'nothing on the face of the record to indicate error,' affirmed the judgment allowing these commissions (55 App. D. C. 375, 6 F.(2d) 678), and this writ of certiorari was thereupon granted (269 U. S. 542, 46 S. Ct. 20, 70 L. Ed. 402).

A motion by the executors to dismiss the writ and affirm the judgment, on the ground, in effect, that the record presents no substantial question for review, was postponed to the hearing; and the case has been heard on this motion and on the merits.

The record-aside from formal and undisputed matters-consists of the account filed by the executors, a report and exception by the guardian ad litem, an exception by the adult beneficiary, and the order of the court allowing the commissions. From these it appears that the executors, in August, 1923, filed their ninth account, covering the period. from July 11, 1922, to July 12, 1923, hereinafter referred to as the accounting period. In this account they stated, under the heading of 'Receipts Principal Account,' that, in addition to the balance of principal in their hands on July 11, 1922, shown by their eighth account, they had charged themselves with the profits received during the accounting period from the sales of certain inventoried items, aggregating $1,604.32, and with certain shares of stock which they had received during the accounting period as stock dividends, 'at the face or par value thereof,' aggregating $1,570,325, making a total of $1,571,929.32, and that they 'claim and hereby retain for their services a commission of 5 per cent. upon profits realized on proceeds of inventoried items, and the par or face value of stocks received as dividend, viz. $1,571,929.32-$78,596.47.'

They further stated, under the heading 'Income Account,' that, in addition to the balance of income shown by their eighth account, they had charged themselves with income received during the accounting period on the property owned by the estate, aggregating $247,814.39, and that they 'also claim and hereby retain for their services a commission of 5 per cent. upon the annual income and profit on income investments received $12,390.72.'

The guardian ad litem, pursuant to a former order of the court, filed a report concerning the matters involved in this account, in which, after pointing out that the executors on their previous accounts had been allowed commissions of more than $200,000 upon the principal of the estate and $50,000 upon on the income, he insisted that the sum of $12,390.72, claimed as commission on the income received, was a sufficient compensation for their services during the accounting period; and that, as to the additional commission of $78,596.47, claimed on an 'increase in principal' of $1,571,929.32, the stock dividends of $1,570,325, of which this mainly consisted, were 'not a proper basis upon which to charge a commission'; and he specifically 'except(ed) to the requested allowance of $78,596.47 for commission on principal.'

The adult beneficiary also filed an exception to the account, upon the ground that 'the commissions claimed, in large part, are based upon an alleged increase in the capital assets of said estate, * * * consisting in the issuance to said estate, as the holder of stock in a large number of corporations, of stock dividends, when, as a matter of law and of fact, the issuance of said stock dividends added nothing to the interest of said estate as a shareholder in said corporations, but merely changed the evidence of said interest, in the shape of stock certificates,' and 'the issuance of stock dividends to said estate cannot be considered as an increase of either capital or income.'

Thereafter the court, without handing down an opinion, entered an order reciting that, the ninth account of the executors 'being now presented for approval, the same is, after examination by the court, approved and passed; the executors being allowed $12,390.72 commission on income, as claimed, but being hereby allowed $50,000 commission on increase in principal, instead of $78,596.47 claimed.'

It thus is apparent that the court allowed the commission of $50,000 'upon profits realized on proceeds of inventoried items, and the par or face value of stocks received as dividend, viz. $1,571,929.32,' for which the executors had claimed a commission of $78,596.47, on the ground that these profits and the par or face value of the stock dividends constituted an 'increase in principal' upon which a commission could be allowed.

The beneficiaries do not challenge here so much of this allowance as was based on the $1,604.32 of profits realized from inventoried items, on which the executors claimed a commission of 5 per...