Palmer v. Hartford Nat. Bank & Trust Co.

• Decision Date: 23 February 1971
• Citation: 160 Conn. 415,279 A.2d 726
• Court: Connecticut Supreme Court
• Parties: Stephen B. PALMER, 111 v. HARTFORD NATIONAL BANK AND TRUST COMPANY et al., Trustees (ESTATE OF William N. PALMER). Carol R. PALMER et al. v. HARTFORD NATIONAL BANK AND TRUST COMPANY et al., Trustees (ESTATE OF William N. PALMER).

Page 726

279 A.2d 726

160 Conn. 415

Stephen B. PALMER, 111 v. HARTFORD NATIONAL BANK AND TRUST COMPANY et al., Trustees

(ESTATE OF William N. PALMER).

Carol R. PALMER et al. v. HARTFORD NATIONAL BANK AND TRUST COMPANY et al., Trustees

(ESTATE OF William N. PALMER).

Supreme Court of Connecticut.

Feb. 23, 1971.

John C. Dennis, New London, for appellants (defendants) in each case.

James O. Shea, New Haven, for appellees (plaintiffs) in each case.

Before ALCORN, C.J., and HOUSE, THIM, RYAN and SHAPIRO, JJ.

THIM, Associate Justice.

This is an appeal from a judgment in favor of the plaintiffs, granting equitable relief in the nature of damages for expenses incurred in benefiting a trust fund. The trust fund here involved is a testamentary trust created by the will of the late William N. Palmer. The instant case is, in actuality, two cases. The first was brought by Stephen B. Palmer III against the named defendants. The second was filed by Carol R. Palmer and Ann Palmer Johnson, also against the named defendants. Both complaints are identical in substance, and the defendants filed identical answers and special defenses to each complaint. The cases were joined for hearing before the Court of Common Pleas, all parties stipulating that 'any judgment rendered by the Court in one of the above actions shall be binding in both.' We will, therefore, on this appeal, treat the cases as though only a single case was involved. The plaintiffs, Stephen B. Palmer III, hereinafter referred to as Stephen Palmer, Carol R. Palmer, and Ann Palmer Johnson, are beneficiaries under the truse. The plaintiff Carol Palmer is the guardian of a minor beneficiary. The defendants, the Hartford National Bank and Trust Company and Jesse Stinson, are the trustees of the trust, and are parties in that capacity alone.

In the present action the plaintiffs claim that they have benefited the trust fund, and they invoke the powers of equity to declare the expenses thereby incurred to be just, and to order that they be paid out of the trust fund. The defendants, in their answer, denied the plaintiffs' claims and submitted, by way of two special defenses, that the Court of Common Pleas lacked jurisdiction, both to order counsel fees from the trust fund and to hear the case. All the facts were stipulated. The court ruled in favor of the plaintiffs on the issue of liability but awarded no damages. The defendants filed an appeal and an assignment of errors in this court from that judgment. We dismissed that appeal, noting that, no damages having been assessed, the judgment was 'neither a complete nor a final judgment.' Palmer v. Hartford National Bank & Trust Co., 157 Conn. 597, 253 A.2d 28. On return to the Court of Common Pleas, another judgment was rendered awarding damages. The plaintiff Stephen Palmer was awarded $4934.35 plus interest and the plaintiffs Carol R. Palmer and Ann Palmer Johnson were jointly awarded $3055.50 plus interest, a total award of $7989.85 plus interest from December 3, 1963. The defendants appealed from that judgment, assigning as error: (1) the court's conclusion that the plaintiffs' attorneys had performed services payable from the trust estate; (2) the court's conclusion that it had authority to assess attorneys' fees, on an appeal from a probate order, against the trust res; and (3) the assumption of jurisdiction over a trust res and ordering payment therefrom. All assignments of error have been briefed.

The following pertinent facts were stipulated and found. The plaintiffs were three of the seven beneficiaries under the testamentary trust of William N. Palmer. Among the assets of the trust was a large tract (approximately 195 acres) of undeveloped real estate in Stonington. That land produced less income than the amount of the annual town real property tax. An offer of $100,000 for the entire tract was received by the trustees and Stephen Palmer was advised of that offer by Jesse Stinson on December 30, 1959. Immediately thereafter, Stephen Palmer conferred with the defendants and advised them that he did not consider the offer acceptable as it was below the fair market value of the property. Stephen Palmer retained legal counsel to oppose the proposed sale of the land. In January, 1960, the above-mentioned offer was reduced to writing. On February 5, 1960, Jesse Stinson notified Stephen Palmer's mother, by mail, that the trustess had accepted a deposit on the property with regard to the offer of $100,000. The defendants, on March 4, 1960, notified Stephen Palmer, in effect, that they intended to accept the offer and to request a hearing before the Stonington Probate Court on the matter. In March, 1960, the entire tract of 195 acres was appraised, by a Stonington appraiser, at $150,760. The assessor of the town, shortly thereafter, appraised the land at $155,830. The plaintiff Stephen Palmer, through his attorneys, had the property appraised, and that appraiser set the value of the land at $224,000. During the next six months numerous conferences were held between representatives of Stephen Palmer, the defendants, and the prospective purchaser. These conferences were initated by the plaintiff Stephen Palmer. In April, 1960, the prospective purchaser increased his offer to $115,000 for a portion of the tract. Stephen Palmer continued to oppose the sale as he considered the new offer also to be too low. On June 2, 1960, the defendants filed an application in the Probate Court for authorization to sell the entire tract at private sale. The application recited no sale price. At about that time the plaintiffs Carol Palmer and Ann Palmer Johnson retained counsel. A Probate Court hearing was held on June 21, 1960. At that point the defendants had received offers totaling $144,000 for the entire tract. The attorneys representing all three plaintiffs opposed the sale at that price. The Probate Court then entered an order authorizing the trustees to sell the entire tract of land in accordance with the application. The plaintiffs filed a timely appeal from the probate order to the Superior Court. While the appeal was pending, further conferences were held between the plaintiffs, the defendants, and the prospective purchaser. On June 19, 1961, the offer was increased to $165,000 for the entire tract, but on September 14, 1961, that offer was withdrawn. In February, 1962, after further conferences between the same parties, the same prospective purchaser again offered $165,000, this time for a large portion of the whole tract. The appeal to the Superior Court was then withdrawn. The sale of that portion was thereafter completed pursuant to the final offer. The remaining portion of the tract which was not sold is valued at $20,000. All three plaintiffs rendered accounts of their expenses in behalf of the trust to the defendants, and demanded payment. Those demands have not been met. The court concluded that the efforts of the plaintiffs resulted in substantial benefits to the estate in that approximately $85,000 of increased value was realized for the estate.

The situation here can best be determined if we first comprehend that situation exactly. Put simply, the plaiantiffs allege that because of their actions the trust fund benefited by the amount of $85,000, or the difference between the original offer which the trustees were wont to accept and the final sale price plus the value of the portion of the land not sold. They claim that equitable principles apply; that those principles permit the recovery of their expenses; that the recovery can be from the trust fund benefited; and that, therefore, a court of equity has jurisdiction to grant them relief.

As to the applicable principles, 'the general rule that a court of equity will, in its discretion order an allowance of counsel fees * * * as between solictor and client to a complainant * * * who at his own expense has maintained a successful suit for the preservation, protection or increase of a common fund * * * has been applied * * * in litigation respecting an express trust, brought by a beneficiary thereof'. 54 Am.Jur. (1970 Cum.Sup. 82), Trusts, § 636.11; note, 9 A.L.R.2d 1132, 1150 § 5; 54 Am.Jur. 122, Trusts, § 146. A slightly different statement of the rule adds that, in addition to bringing a successful suit, the beneficiary may recover if he 'in good faith, and at his own expense * * * takes prope proceedings, to save it (a common trust fund)'. Note, 49 A.L.R. 1149, 1161, III(b); see note, 107 A.L.R. 750; 54 AmJur., Trusts, § 146.

A leading case on this principle is Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157. Francis Vose was a bondholder under a public trust for the sale of land. He brought suit against the trustees, alleging, among other things, that they were selling the land at price which were too low. His suit was successful, and as a result the fund derived great monetary benefit. Thereafter Vose brought a petition in equity, stating that he had borne all the expenses of litigation, and praying for (105 U.S. p. 529) 'an allowance out of the fund for his expenses'. His request was allowed. On appeal, the United States Supreme Court stated, in part (p. 532): Where there is benefit to all through the expense and trouble of one, 'if the complainant is not a trustee (which he was not), he has at least acted the part of a trustee in relation to the common interest. * * * It would be very hard on him to turn him away without any allowance * * *. 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.' The court further stated (pp. 532, 533): '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 * * *, he is entitled to reimbursement'. See also United States v. Equitable Trust Co., 283 U.S. 738, 744, 51 S.Ct. 639, 75 L.Ed. 1379; Hobbs v. McLean, 117 U.S. 567, 582, 6 S.Ct....