In re Holden

• Citation: 126 N.Y. 589,27 N.E. 1063
• Parties: In re HOLDEN.
• Decision Date: 02 June 1891
• Court: New York Court of Appeals

126 N.Y. 589

27 N.E. 1063

In re HOLDEN.

Court of Appeals of New York.

June 2, 1891.

Appeal from supreme court, general term, first department.

RESIGNATION OF TRUST-COUNSEL FEES.

In a proceeding instituted by a trustee for leave to resign and to procure the appointment of a new trustee, the beneficiaries who are made parties are not entitled to allowances out of the fund for counsel fees, as such allowances can only be made to trustees or those occupying trust relations towards the fund, not to beneficiaries. Reversing 12 N. Y. Supp. 842.

Sutherland Tenney, for appellant.

H. W. Vander Poel, for guardian respondent.

Platt & Bowers, for respondent Martha Weber.

Chas. C. Protheroe and William Man, for respondents Protheroe and Martha Weber, Jr.

RUGER, C. J.

The question in this case involves the authority of the court to make allowances to parties who appear in a proceeding instituted by the trustee of a trust fund for leave to resign, and to procure the appointment of a new trustee, which necessarily involve the examination and settlement of the accounts of the retiring trustee. In these proceedings the several beneficiaries were made parties and generally appeared by separate counsel, who took an active part in the conduct of the proceedings. The interests of the several beneficiaries were substantially the same, and the services of each attorney inured to the benefit of the others. The special term in its final order made allowances for counsel fees to several of the beneficiaries concerned in the fund, but denied them to others and to the retiring trustee, and its order was affirmed by the general term. The new trustee, who secured by the order an allowance of $500, appeals to this court from to much of it as makes allowances to the several beneficiaries for counsel fees. This proceeding, obviously, was not an action, and must therefore be classified as a special proceeding, so far as the power of the court to make allowances to the parties in the litigation is concerned. That power is regulated by section 3240 of the Code of Civil Procedure, which provides that costs in a special proceeding in a court of record, and on appeal therefrom, may be awarded to any party, in the discretion of the court, at the rates allowed for similar services in an action brought in the same court. This section was substantially a re-enactment of the provisions of chapter 270 of the Laws of 1854, and the decisions under that act are generally applicable to cases arising under the Code of Civil Procedure. The cases in which allowances can be made in actions are definded in sections 3252 and 3253 of that Code, and are confined to actions of partition; for the foreclosure of mortgages on real estate; to procure an adjudication upon a will or other instrument in writing; to compel the determination of claims to real property, or when an attachment against property has been issued; and in difficult and extraordinary cases. It is provided by section 3254 that such allowances, when authorized, shall not exceed, in the aggregage, to all parties, the sum of $2,000. It is quite obvious that the allowances in question cannot be supported upon the theory that they are authorized by the provisions of the Code of Civil Procedure, as they are not made in any of the causes of action mentioned therein. The respondents have not, therefore, attempted to sustain the order of the court by a reference to such provisions, and the court below did not assume to grant the allowances upon any such theory. It was contended, however, that an equity court has inherent power in the due administration of a trust-estate, or the distribution of a common fund in which many parties are interested, to make allowance upon such fund to parties engaged in a litigation respect thereto for costs and counsel fees incurred by them in such proceedings, if beneficial to the fund, independent of the provisions of the Code. We are referred to several cases which, it is claimed, support this contention, and among others to those of Wetmore v. Parker, 52 N. Y. 466;Savage v. Sherman, 87 N. Y. 277, and Downing v. Marshall, 37 N. Y. 380. The case of Downing v. Marshall was an action to obtain the construction of a will. The only principle established by that case, as indicated by its head-note, is that, in an equitable action for the construction of a will, an extra allowance of costs cannot be made under the Code; but a trustee may be allowed a reasonable disbursement for counsel fees. It was said by Judge MARVIN in that case that ‘the allowances as costs, beyond the taxable costs, cannot be sustained upon any statute, or any notion of power in the court to allow extra costs, or costs of any kind independent of statutory authority. Is there any other general principle of law upon which they, or any part of them, can be sustained, in whole or in part? I think there is. The principle to which I refer is that persons acting autre droit, as executors, administrators, trustees, guardians, receivers, etc., are, upon a faithful execution of their trusts, to be indemnified out of the trust property for all expenses necessarily incurred in the faithful performance of their duties.’ The case of Wetmore v. Parker was also an action to obtain the construction of a will, and involved the power of the court of make an allowance to the executors of the will. It was there held that the special term of the supreme court has power to make allowances to trustees and others acting in a fiduciary capacity for all expenses necessarily incurred in the faithful performance of their duties, including counsel fees, and that the power to do this was independent of the statutory provisions relating to costs; and the cases of Downing v. Marshall and De Courval v. Ray, 37 N. Y. 380, were cited to sustain this proposition. We are also referred to the case of Trustees v. Greenough, 105 U. S. 527, where it was held that it...