Estate of Brown v. Hoge
| Decision Date | 24 June 1924 |
| Docket Number | 35684 |
| Parties | ESTATE OF OSMOND M. BROWN, Appellee, v. O. M. HOGE, Executor, Appellant |
| Court | Iowa Supreme Court |
Appeal from Pottawattamie District Court.--O. D. WHEELER, Judge.
APPEAL from order of the district court approving final report of executrix of estate of Osmond M. Brown, deceased, and ordering distribution of the property of the estate.--Modified and affirmed.
Modified and affirmed.
James Joyce, John P. Organ, Robert T. Scott, and George S. Wright for appellant.
Tinley Mitchell, Ross & Mitchell, for appellee.
I.
The questions presented by reports of executrix and objections thereto are:
(1) What compensation should executrix be allowed?
(2) What compensation are attorneys of executrix entitled to for ordinary service and for extraordinary services to the estate?
(3) As to diversion of interest on certain certificates of deposit bequeathed to Robert E. Brown to the benefit of other legatees under the will.
(4) Whether the Federal estate tax is a charge against the estate and part of the expense of administration, or should be paid from the several legacies proportionately.
(5) Whether or not fees of attorneys for extraordinary services in certain litigation instituted by Mrs. Lazier and others should be paid from their portions of the estate in the hands of the executrix.
Osmond M. Brown died testate, October 12, 1918. His estate was of the approximate value of $ 100,000, consisting of real estate of the value of about $ 17,000, and of money, stocks, and bonds and other securities of the value of about $ 87,000. Under the will, the property was given to the beneficiaries in amounts of approximate values as follows: Elinor G. Brown, $ 25,850; Louise Brown Lazier, $ 5,000; Clara G. L. Fitch, $ 22,500; Robert E. Brown, $ 37,640; Myrtle M. Hoge, $ 3,600; Osmond M. Hoge, $ 950; Luella B. England, $ 4,048; Nellie R. Van Inwegen, $ 5,000.
II. The larger amounts in controversy are the fees allowed by the court to the executrix and her attorneys for services. The court allowed executrix, as compensation for her services, $ 2,456.43. Evidently this amount was arrived at as the statutory percentage under Chapter 391, Acts of the Thirty-eighth General Assembly. This act was amended by Chapter 22 of the Acts of the Thirty-ninth General Assembly, providing for the allowance of "such reasonable fee as may be determined by the court, for services rendered, but not in excess of" the schedule of fees provided by Chapter 391, Acts of the Thirty-eighth General Assembly. The fees must be calculated under the law as it exists at the time of distribution, which would be "such reasonable fee as may be determined by the court, for services rendered, but not in excess of" the schedule of fees provided in Chapter 391, Acts of the Thirty-eighth General Assembly. In re Dewar's Estate, 10 Mont. 426 (25 P. 1026).
Appellant complains that the allowance made to the executrix for her services is excessive. As above mentioned, the executor's fees must be allowed on the basis of a "reasonable fee." We think the allowance of fees to the executrix was unreasonable and excessive. As is usually the case, the executrix in this estate did very little. She did some little bookkeeping. She issued not a great number of checks, and but few receipts, which were prepared by her attorneys. The work involved in the estate was practically all done by her attorneys, as it should be. Only the size of the estate, which was valued at something over $ 100,000, would suggest a substantial fee for the executrix. We have carefully examined the record showing the services performed by the executrix, and conclude that $ 1,000 will be an ample fee for the services performed by the executrix.
III. Appellant claims that allowance of fees of attorneys of executrix made by the lower court is excessive. The ordinary fees allowed by the court were the same as the fees allowed to the executrix. They were evidently calculated on a percentage basis, under Chapter 391, Acts of the Thirty-eighth General Assembly. The attorney fees, like the fees of executrix, must be calculated under the law as it now exists: that is, under the provisions of Chapter 391, Acts of the Thirty-eighth General Assembly, as amended by Chapter 22, Acts of the Thirty-ninth General Assembly, which is, a "reasonable fee," not exceeding the schedule set out in Chapter 391, Acts of the Thirty-eighth General Assembly. The ordinary fees were allowed in the amount of $ 2,456.43. We will not set forth the testimony bearing on attorney fees. We have carefully examined the record with respect to this question. There were intricate and complex questions involved, which required considerable investigation and consideration, consuming much time and attention of the attorneys. Considering the size of the estate and the services performed, we find no reason to disturb the allowance of the court for ordinary services.
The lower court allowed attorneys for executrix, for extraordinary service, a further sum of $ 543.57. Appellant complains of this allowance as excessive. In this connection, appellant complains of the allowance of any fee to the attorneys of executrix on account of litigation instituted in the district court by Mrs. Lazier, Clara Gattrell, Mrs. Fitch, and Charles Brown. As we understand the record, the plaintiffs in that case claimed to own certain property given by the will to appellant here, Robert E. Brown. This case was subsequently removed to the district court of the United States. Plaintiffs and defendants were represented by counsel, and the trial work in connection with the case was done by said attorneys. The property in question was in the hands of executrix,--she held the legal title to the property. The executrix was made a party defendant, and her counsel appeared for her and filed pleadings and were present during the trial of the case, though taking no active part. It was proper, and the duty of counsel, to appear for executrix and see that her legal rights were protected. In the allowance of extraordinary fees, this service was taken into consideration. Not a large fee was claimed for such services. We think it should be included in the allowance for extraordinary services. We conclude that the fee for extraordinary services was not excessive, and was properly allowed.
IV. The executrix paid a Federal estate tax in the amount of $ 1,431.57, and treated said tax as an expense of administration of the estate, and not a charge against the several legacies. The tax in question is imposed under "Title II--Estate Tax," 39 Statutes at Large 777. Section 201 reads:
"That a tax (hereinafter in this title referred to as the tax), equal to the following percentages of the value of the net estate, to be determined as provided in Section two hundred and three, is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this act, whether a resident or nonresident of the United States."
Then follow percentages.
Section 202 provides for determining the value of the gross estate of a decedent.
Section 203 reads:
"That for the purpose of the tax the value of the net estate shall be determined,"--then follow provisions for determining the net estate.
Ordinarily, the tax imposed by the above quoted statute would be paid out of the residue of an estate, if there was a residue sufficient out of which to make such payment; and if there was no residue, or an insufficient residue, it would be paid out of other property belonging to the estate, whereby there would be contribution to the fund used in payment of the tax from the several legacies proportionately.
In the instant case, testator, in Item 13 of his will, provided:
"I direct that all my indebtedness, including the expenses of my last sickness and burial and also including the expense of administration of my estate, including the payment of all collateral inheritance tax assessed against all bequests and devises made in this will shall be paid out of the cash belonging to me, on deposit in open account in the First National Bank of Council Bluffs, Iowa, and in the event there shall be insufficient money in said account to discharge such indebtedness and expense, it is my will that the same shall be paid from moneys hereinbefore bequeathed to my brother, Robert E. Brown, and that such bequest to him shall be burdened with any deficiency."
The will bequeathed to Robert E. Brown, among other properties:
"Also all moneys carried by me on deposit in the First National Bank of Council Bluffs, Iowa, evidenced by certificates of deposit, but not in open account; and all moneys belonging to me in the First National Bank of Zanesville, Ohio, and evidenced by certificates of deposit."
Only $ 3,295.47 was on deposit in the First National Bank of Council Bluffs in "open account." It is conceded that the fund in open account was insufficient to satisfy but a small part of the demands under said Item 13 of the will, and that most of the payments provided for in said Item 13 would have to be paid, as provided in said Item 13, from money bequeathed to Robert E. Brown. The question presented requires interpretation or construction of the phrase, "the expense of administration of my estate," contained in the above quoted Item 13 of the will; and perhaps the construction of the above quoted Section 201 of the Act of Congress of September 8, 1916.
It is conceded by all parties that the tax in question is a tax imposed upon the transfer of the...
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