Merkel v. Long, 72

• Decision Date: 27 December 1963
• Docket Number: No. 72,72
• Citation: 125 N.W.2d 284,372 Mich. 144
• Parties: Frances Gary MERKEL et al., Plaintiffs, and Dickinson, Wright, McKean & Cudli, Lewis & Watkins, Samuel M. Lane, U. George Krapfel, Ernest C. Wunsch, Frederic B. Besimer, and Robert O. Brown, Petitioners and Appellees, v. Irvin LONG and Mack Ryan, Successor Trustees Under the Will of Paul R. Gray, Deceased, Defendants and Appellants, and George O. Sackett, II, et al., Defendants.
• Court: Michigan Supreme Court

Page 284

125 N.W.2d 284

372 Mich. 144

Frances Gary MERKEL et al., Plaintiffs,

and

Dickinson, Wright, McKean & Cudli, Lewis & Watkins, Samuel

M. Lane, U. George Krapfel, Ernest C. Wunsch,

Frederic B. Besimer, and Robert O.

Brown, Petitioners and Appellees, v. Irvin LONG and Mack Ryan, Successor Trustees Under the Will

of Paul R. Gray, Deceased, Defendants and Appellants,

and

George O. Sackett, II, et al., Defendants.

No. 72.

Supreme Court of Michigan.

Dec. 27, 1963.

Dickinson, Wright, McKean & Cudlip, Robert E. McKean, Lewis & Watkins, Clarence J. Boldt, Jr., Detroit, Samuel M. Lane, New York City, for petitioners and appellees.

Long, Ryan, Franseth & Spicer, Detroit, for defendants and appellants.

Before the Entire Bench.

CARR, Chief Justice.

Some question having arisen as to the proper interpretation of provisions of the last will and testament of Paul R. Gray, who passed away in 1929, the parties concerned entered into an agreement under the so-called Dodge Act* to settle the controversy. Petition was filed in the circuit court of Wayne county requesting the approval of said agreement and a direction to the trustees under the will to execute it. An order was entered in accordance with the petition whereupon the trustees appealed to this Court. The decision reached is reported as Merkel v. Long, 368 Mich. 1, 117 N.W.2d 130, the facts involved in the situation being stated at some length in the opinion rendered. No repetition of what was there said is required. A decree was entered approving the order of the circuit court, subject to the addition of a provision therein declaring that defendant trustees should incur no personal liability by virtue of their executing the agreement which they were required to sign.

The order of the circuit court involved in the above decision provided for the reservation of the question of attorney fees, the manner of payment thereof, and the source of such payment. It does not appear that any question with reference to such reservation was presented to this Court on the prior appeal, and it was included in the order as finally entered in circuit court.

The present proceeding involves petitions for fees to be paid from the estate trust funds, the testamentary provisions relating to which presented the questions settled by the parties concerned in their agreement under the Dodge Act, petitioners being counsel representing certain of the beneficiaries under the will who were directly concerned in its proper interpretation, and guardians ad litem appointed by the court to represent unknown heirs, minors, and an incompetent beneficiary. The trustees opposed the granting of said petitions, filing motions to dismiss and also motions for summary judgments. It was and is the position of the defendants that the circuit court was without jurisdiction, that petitioners, not being parties to the suit, were not entitled to the relief sought, and that as a legal proposition the payments requested could not properly be made from the estate funds. The trial judge hearing the motions considered the various grounds submitted in support thereof, concluded that they did not require the granting of the motions, and entered an order accordingly. From such order defendant trustees have appealed. The trial judge did not pass on the separate petitions filed with reference to the allowances, if any, that should be made thereunder, indicating in his opinion that such phase of the controversy would be subsequently considered on proofs to be offered by the parties.

The primary question involved on this appeal obviously relates to the jurisdiction of the circuit court to hear and determine the petitions filed by attorneys and by guardians ad litem and to direct the payment of the amount allowed under each petition from the trust funds of the estate. All of said petitions were based on the theory that the services rendered and monies expended by petitioners in reaching the settlement approved by beneficiaries under the will of Mr. Gray operated to the benefit of all parties found to have an interest in the trusts created by the will, that the questions involved in the controversy leading up to the agreement under the Dodge Act required settlement either by the procedure followed or by litigation, and that it was to the advantage of all concerned to reach an accord among themselves as to the actual intention of the testator, such agreement to be executed by all parties, including the trustees, with requisite approval by a court of competent jurisdiction. Such was the course followed, and it is now insisted that all of the beneficiaries may properly be held liable to share in the necessary expense of the proceeding undertaken and carried through to a successful completion, and that, in consequence, payment from the trust funds prior to the distribution thereof should be required. It is insisted also that the court, the jurisdiction of which was invoked to approve the agreement reached by the parties, was invested with requisite jurisdiction to determine the issue and to pass on the claims of those asserting an equitable right to receive compensation for services rendered and reimbursement for expenses incurred in accomplishing a result in which the beneficiaries had a common interest. Defendants assert in substance that there is no provision of statute authorizing the payments here sought from funds of the estate, and that the trial court should have dismissed the petitions. It is the theory of the appellees that the jurisdiction of the court of equity having been invoked in the first instance it has inherent authority to hear and determine the petitions in question.

The proposition is generally recognized that under appropriate circumstances parties realizing a common benefit out of proceedings taken to establish their rights may be required by equity to contribute to the payment of compensation for services so rendered and for expenses incurred. The decision of the United States supreme court in Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157, has frequently been referred to by courts throughout the country as recognizing the equitable principle involved. In that case a holder of bonds issued by the Florida Railroad Company brought suit on behalf of himself and others similarly situated against the trustees of the Internal Improvement Fund of Florida, and other parties, to have certain conveyances, which were alleged to involve assets of a fund pledged for the payment of interest on said obligations and installments of principal falling due, set aside. The litigation was carried through to a successful conclusion, resulting in benefits to the bondholders as a class. The individual who assumed the burden of the litigation filed a petition requesting an allowance to him for expenses and services out of the fund. It was contended in answer to the petition that the moving party was only a creditor and not a trustee and, hence, entitled only to taxed costs. Commenting on such claim, it was said:

'In ordinary cases the position of the appellants may be correct. But in a case like the present, where the bill was filed not only in behalf of the complainant himself, but in behalf of the other bondholders having an equal interest in the fund; and where the bill sought to rescue that fund from waste and destruction arising from the neglect and misconduct of the trustees, and to bring it into court for administration according to the purposes of the trust: and where all this has been done; and done at great expense and trouble on the part of the complainant; and the other bondholders have come in and participated in the benefits resulting from his proceedings,--if the complainant is not a trustee, he has at least acted the part of a trustee in relation to the common interest. He may be said to have saved the fund for the cestuis que trust, and to have secured its proper application to their use. There is no doubt, from the evidence, that, besides the bestowment of his time for years almost exclusively to the pursuit of this object, he has expended a large amount of money for which no allowance has been made, nor can properly be made. It would be very hard on him to turn him away without any allowance except the paltry sum which could be taxed under the fee-bill. It would not only be unjust to him, but it would give to the other parties entitled to participate in the benefits of the fund an unfair advantage. He has worked for them as well as for himself; and if he cannot be reimbursed out of the fund itself, they ought to contribute their due proportion of the expenses which he has fairly incurred. To make them a charge upon the fund is the most equitable way of securing such contribution. And such charge cannot be justly complained of by the trustees of the internal improvement fund, because, however fair may have been the conduct of the present trustees, who were elected to their positions since the acts complained of were committed by their predecessors, those acts, as the event of the cause shows, furnished abundant ground for instituting the proceedings.

'It is a general principle that a trust estate must bear the expenses of its administration. It is also established by sufficient authority, that where one of many parties having a common interest in a trust fund, at his own expense takes proper proceedings to save it from destruction and to restore it to the purposes of the trust, he is entitled to reimbursement, either out of the fund itself, or by proportional contribution from those who accept the benefit of his efforts. This has long been the rule in relation to proceedings for restoring property to the uses of a charity, which has been unjustly diverted therefrom. (Citing cases) * * *

'It is unnecessary, however, to pursue the subject further. The conclusion to which we have come is that, under the circumstances of this case, the Circuit Court had the power, in its discretion, to...