In re: Estate of Wakefield
| Decision Date | 10 December 2001 |
| Docket Number | 98-00921 |
| Parties | IN RE: ESTATE OF M.L. WAKEFIELD, DECEASED M1998-00921- |
| Court | Tennessee Court of Appeals |
Appeal from the Probate Court of Davidson County, No. 94P1917, Frank G. Clement, Jr., Probate Judge
This case involves a dispute over the compensation sought by two of three co-executors of a will that was drafted by one of them. The will provided that the executors should be "paid fees equal to those fees customarily charged by NationsBank of Nashville." The two co-executors each received an interim payment of $50,000 in compensation, and then sought additional payments under the fee schedule. The adult beneficiaries of the will challenged the amount of compensation sought by the co-executors. Disagreements and tensions continued between the beneficiaries and the two non-family co-executors, and, after strong suggestion by the probate court, the two non-family co-executors resigned. The probate court heard evidence on the fee request and refused to award additional fees. The court also ordered the attorney co-executor, co-trustee to disgorge over $70,000 in attorney fees paid by the testamentary trust's major asset, a corporation formerly owned solely by testator. The co-executors, co-trustees were the directors of the corporation, and the disgorged fees had been paid pursuant to a retainer agreement pre-existing the testator's death. On appeal, the two co-executors contest these rulings. In a cross-appeal, the beneficiaries argue that the probate court erred in denying their request that the co-executors disgorge additional fees. We modify the trial court's award of reasonable fees but otherwise affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Probate Court, Affirmed as Modified and Remanded
Hugh C. Howser, Nashville, Tennessee, for the appellants, Ronald H. Pursell and Robert Whisenant.
Richard Holton and Charles A. Trost, Nashville, Tennessee, for the appellees, Judith Wakefield Sandlin, Nancy Wakefield Coleman, Michael C. Wakefield, Linda Wakefield Melvin, Alden H. Smith, as guardian for Nathan Murry Green, and Susan R. Limor, as guardian for Timothy Louis Wakefield.
WILLIAM C. KOCH, JR., filed a separate opinion concurring in part and dissenting in part.
Murrey Louis Wakefield, the testator, died in an automobile accident on December 18, 1994. He was seventy-eight (78) years old. Mr. Wakefield was survived by four adult children, Judith Wakefield Sandlin, Nancy Wakefield Coleman, Michael C. Wakefield, and Linda Wakefield Melvin. One of the testator's children, Timothy M. Wakefield, had predeceased the testator, leaving two minor sons, Nathan Murray Green and Timothy Louis Wakefield. These children and grandchildren were the beneficiaries of Mr. Wakefield's estate. At the time of the testator's death, his net taxable estate was worth over $5 million while his gross estate was valued at $10.6 million, according to the estate tax return. The principal asset was Feldkircher Wire Fabricating Company, Inc. ("FWC"), of which the testator had been the sole shareholder. In addition, the testator owned the real property on which FWC's several facilities were located, and houses and other real property, including a farm on which he conducted a cattle breeding operation.
The testator's will appointed three co-executors: his daughter, Ms. Sandlin; his longtime personal and business attorney, Mr. Pursell, and his longtime personal and business accountant, Mr. Whisenant. The will also named those three individuals as co-trustees of all trusts established under the will. The will provided for compensation in return for discharging the duties attendant to these positions, stating:
No one acting as executrix, executor, or trustee shall be required to furnish any bond or security of any kind for the faithful performance of his or her duties as executrix, executor, or trustee. I direct that my co-executors and co-trustees herein shall be paid fees equal to those fees customarily charged by NationsBank in Nashville, Tennessee, or its successors for estate and trust administration services.
The will was drafted by Mr. Pursell, and the testator received advice from both Mr. Pursell and Mr. Whisenant regarding the method of compensation for the executors and trustees. The will contained several bequests of specific property to named individuals, and directed that the remainder of the estate's assets, which included the stock in FWC, should be placed in the M.L. Wakefield Family Trust. That trust was to be terminated prior to the eleventh anniversary of the testator's death.
The will also directed the co-trustees to continue to operate FWC as its board of directors until the trust was terminated. The company had not previously had a board of directors, with the testator having exclusive control of its management and operation. The will specified that the directors could sell FWC if they deemed it financially advisable. The will required the co-trustees to continue the testator's farming and cattle breeding activities and to restore a specified house for one of testator's children.
The will also included an in terrorem clause which provided for the revocation of the benefits of any beneficiary who contested the will. This clause stated:
If any beneficiary hereunder shall contest the probate or validity of this will or any provision herein, or shall institute or join in (except as a party defendant) any proceeding to contest the validity of this will or to prevent any provision herein from being implemented in accordance with its terms (regardless of whether or not such proceedings are instituted in good faith and with probable cause), then all benefits provided for such beneficiary are hereby revoked, and such benefits shall pass to the issue of said beneficiary, equally, or if the beneficiary dies without issue then such benefit shall pass pursuant to the terms and conditions stated herein. Each benefit conferred herein is made on the condition precedent that the beneficiary shall accept and agree to all the provisions of this will and the provisions of this paragraph are an essential part of each and every benefit.
On December 28, 1994, Mr. Pursell filed a petition to probate the testator's last will and testament. That day the probate court issued an order admitting the testator's will into probate. The co-executors then took steps to manage the estate, including retaining counsel to pursue claims against the driver of the car which collided with the testator, 1 finding alternative financing for FWC to retain its cash flow, and taking out a $950,000 loan to cover a portion of the federal estate taxes.
Almost from the first, controversy arose between the beneficiaries, including Ms. Sandlin, and the non-family co-executors, Mr. Pursell and Mr. Whisenant ("Appellants"). Early on, Appellants made it known that they thought it was in the estate's best interest to sell FWC. One suggestion Appellants made was to effectuate an employee stock option plan ("ESOP plan"), which would have given the employees ownership of the company, and they spent considerable time researching this option. The adult beneficiaries objected to this plan because they preferred to retain the company for themselves.
Mr. Pursell, or his law firm, initially also provided legal representation to the estate. Because of developing difficulties between Appellants and the beneficiaries, Appellants retained new counsel for the estate in the spring of 1996, "for the purpose of assisting in dealings with the beneficiaries and in order to remove any apparent conflict of interest that might arise from continuing representation by Mr. Pursell's firm." Mr. Whisenant's accounting firm provided accounting services to the estate.
The number of disagreements between Appellants and the beneficiaries is evidenced by the various filings over the course of the proceedings below and is acknowledged and recounted in the briefs before this court. Most of the substantive disputes regarding management of the estate's assets have been resolved and are not on appeal. Appellants resigned as Co-Executors and Co-Trustees, as reflected in an agreed order entered in July of 1997, in which the beneficiaries agreed to indemnify Appellants from "any and all duties, responsibilities, liabilities, and/or obligations of either of them arising out of or in connection with the duties and obligations in each capacity." 2 First American National Bank was appointed as substitute Co-Executor along with Ms. Sandlin. That same order reflects that Appellants also resigned as directors of FWC.
The issues in this appeal involve compensation to Appellants. The facts relevant to those issues involve a detailed procedural history, of which the following is a summary. Beginning with the interim accounting for the period ending November 20, 1995, the beneficiaries have questioned details of accountings and questioned or opposed various actions proposed or taken by Appellants. For example, in an exception filed to this first accounting, three beneficiaries asserted that the accounting was inadequate, challenged the propriety of a $159,000 loan the estate made to FWC, and excepted to payment of over $128,000 in legal and professional fees. 3
On April 9, 1996, Appellants petitioned the court for approval of fees, seeking payment for their activities as executors, members of the FWC board of directors, and accountants and lawyers for the estate. They sought interim payments of $120,000 to be equally divided among the co-executors, and an hourly fee of $125 for their work on the board of directors. On October 18, 1996, the probate court entered a consent order approving payment of an interim co-executors' fee of $150,000 to be divided equally among the three co-executors. The order also approved payments of...
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