Patterson v. Trust Co.

• Decision Date: 18 June 1931
• Citation: 156 Va. 763
• Parties: A. W. PATTERSON AND OTHERS v. OLD DOMINION TRUST COMPANY AND OTHERS.
• Court: Virginia Supreme Court

Page 763

156 Va. 763

A. W. PATTERSON AND OTHERS v. OLD DOMINION TRUST COMPANY AND OTHERS.

Supreme Court of Virginia, Wythebille.

June 18, 1931.

Present, Campbell, Holt, Epes, Hudgins and Gregory, JJ.

1. TRUSTS AND TRUSTEES — Sale of Trust Property by Trustee — Employment of Read Estate Agents by Trustee — Commissions of Agents — Case at Bar. — By decree of court, a trustee was directed to sell the corpus of the trust. The trustee employed real estate agents and the court allowed these agents commissions on the sale. The decree directed the trustee to sell the property at public auction, after advertising it, and by such other means, if any, as the trustee may deem expedient. It was the duty of the trustee to exert every reasonable effort to make the property bring the highest price possible. The employment of reputable real estate agents, conversant with such transactions, was within the terms of the decree. The amount of the compensation of the agents was for the court, and the fact that the trust estate was enriched to the extent of $51,000.00, was conclusive proof that the trustee acted wisely in putting forth the effort he did.

2. WILLS — Provision in Trust for Daughter of Testator — Allowance out of Corpus to Daughter — Case at Bar. — A testator devised one-sixth of his estate to a trustee in trust for his daughter. Upon partition of the estate the part set aside for this trust was mainly unproductive. Under the plain provisions of the will the daughter was entitled to receive from the trust estate an income befitting her station in life, and under the will it was provided that the corpus of the trust might be used if the income was insufficient. Upon the sale of the trust estate the court allowed the daughter $9,614.82 out of the corpus of the trust fund.

Held: That this allowance was not improper under the circumstances.

3. TRUSTS AND TRUSTEES — Authority of Trustee — Employment of Counsel — Amount of Counsel's Fees — Case at Bar. — The law is well settled that a trustee is vested with authority to employ counsel, if necessary, for the protection or preservation of the trust estate. The amount of counsel's compensation rests in the sound discretion of the court having jurisdiction of the subject matter. In the instant case the lower court was thoroughly acquainted with the services rendered by counsel to the trustee, and there was nothing in the record to lead the Supreme Court of Appeals to the conclusion that the fee allowed was exorbitant.

4. GUARDIAN AD LITEM — Fees of Guardian ad Litem — Whether Allowed out of Corpus of Trusts or out of Shares of Infants — Case at Bar. — In the absence of peculiar facts, such as the creation of a fund which enures to the common benefit of all concerned, the allowance of guardian ad litem fees is regulated by section 6098 of the Code of 1919, which provides that where the guardian ad litem has rendered substantial service to an infant, the court may allow him reasonable compensation therefor, to be paid out of the estate of such infant. An estate of an infant contingent remainderman was such an estate as that contemplated by section 6098 of the Code of 1919, and, therefore, it was error for the court to decree the payment of the guardian ad litem's fee out of the corpus of the trust estate, and in view of the fact that the fee was based on the theory that it should be paid out of the corpus and not fall upon the infant, the infant should be given an opportunity, if so advised, to question the reasonableness of the fee finally allowed.

5. JUDICIAL SALES AND RENTINGS — Sales Set Aside — Purchaser's Right to Recover Payments, Interest and Taxes — Case at Bar. — In the instant case a purchaser bought trust property from the trustee and the beneficiary. In further proceedings, the deed to this purchaser was set aside and his deed of trust securing future purchase money was also set aside and the land directed to be sold at public auction. From the proceeds of the sale at public auction the court allowed the purchaser the principal amount paid by him, interest on his six interest notes paid by him, and interest on taxes paid by him. The amount expended by the purchaser on account of taxes and interest on his deferred payments was for the benefit of the trust, and so he should be reimbursed therefor out of the proceeds of the trust fund.

6. TRUSTS AND TRUSTEES — Counsel's Fees — Counsel for Beneficiary — Case at Bar. — In the instant case a trustee employed counsel for the protection of the trust estate. The lower court allowed a portion of the fee of these counsel to be borne by the beneficiary in the trust. It was manifest that this firm of counsel was representing the beneficiary independently of any contract with the trustee. The beneficiary was sui juris; if she was indebted to her attorneys they had recourse against her. There was no pleading in the cause properly raising any question between the parties, and the court exceeded its authority when it entered judgment against the beneficiary.

Appeal from a decree of the Hustings Court, Part Two, of the city of Richmond, from a decree allowing claims against the corpus of a trust estate.

The opinion states the case.

T. Justin Moore, for the appellants.

Leake & Buford, Henry W. Oppenheimer, Wallerstein, Goode & Evans, Willis D. Miller, McGuire, Riely & Eggleston, and Parrish & Butcher, for the appellees.

CAMPBELL, J., delivered the opinion of the court.

The facts of this case have been fully set forth in the former opinions of this court reported in (Patterson Old Dominion Trust Co.), 139 Va. 246, 257, 123 S.E. 549, and (Patterson Old Dominion Trust Co.), 149 Va. 597, 140 S.E. 810, 141 S.E. 759, and will not be repeated in detail in this opinion.

On April 12, 1912, Dr. R. A. Patterson died testate, seized and possessed of valuable real estate and personal property valued at approximately $852,000.00, which was devised and bequeathed to his widow and six children. To the widow was devised an undivided one-third interest in the estate for life, and an undivided one-sixth interest in the remainder of the estate was devised to each of the six children. The undivided one-sixth share of Elizabeth Patterson Crutchfield was, however, to be held in trust during her lifetime, and at her death to pass to her issue, and in the event she left no issue surviving, then to pass to the testator's other children or the issue of his children then surviving.

The clause of the will relating to Mrs. Crutchfield reads as follows:

"I give and devise one other one-sixth of my property, real, personal and mixed, to R. Fuller Patterson as trustee for my daughter, Elizabeth G. Patterson, to be held by him for the sole use and benefit of my said daughter during her life, free from the control and liabilities of any husband she may take and, at her death, this one-sixth of my property, or so much thereof as shall then remain in the hands of the trustee, shall pass in fee simple to her children, if she leave any, and to the descendants of any child that may have died leaving issue; if my said daughter shall leave no children at her death, nor the issue of any, then this one-sixth of my property, or so much as shall then remain, shall pass to my children then living and the descendants of any who may have died leaving issue, said descendants taking per stirpes, except that any portion of this one-sixth of my estate which would pass to my son, James T. Patterson, under this item of my will shall pass as is provided by item 4 in regard to the one-sixth thereby devised to A. W. Patterson, trustee, and shall be governed by the provisions of said item 4 in regard to the one-sixth therein devised.

"The said R. Fuller Patterson as trustee for my daughter, and any trustee who may be substituted in his place, is authorized and empowered to sell any portion of the trust property for the purpose of changing the investment and producing a better income, when, in his judgment and that of my said daughter, it shall be judicious to do so. And if the income from the trust property shall be insufficient to provide for her proper maintenance and support, of which the trustee shall be the judge, he is authorized and empowered to sell for that purpose any portion of the trust property and use so much of the proceeds (principal and interest) as he may deem necessary; and, if in the judgment of the trustee it shall at any time be more to the interest of the trust property and all concerned therein to borrow money for the support of my said daughter than to sell for that purpose, as above authorized, he is empowered to do so, and to pledge, hypothecate or convey in trust any part of the trust property, to secure the money so borrowed. On all cases of sales or encumbrances of the trust property, as hereinbefore authorized, the trustee shall act at the request of my said daughter and with her consent, to be evidenced by her uniting with him in the deed or writing making the said sale or encumbrance; and the purchaser in such case is not to be responsible for the proper application of the proceeds."

That clause of Dr. Patterson's will might well be termed the "stormy petrel" of Virginia litigation, for it has been the subject of controversy for years.

By mutual agreement, the devisees partitioned the real estate among themselves. The portion received by Mrs. Crutchfield in trust was unproductive, and in 1922, having received an offer of purchase from H. S. Wallerstein, she and the trustee instituted the original suit seeking a confirmation of sale to Wallerstein. In the first decision construing the will (Patterson Old Dominion Trust Co.), 139 Va. 246, 257, 123 S.E. 549, 552, it was held that she had the right to make the property productive. There it is said: "It is evident from the language employed that the intention of the testator was to provide liberally for the support and maintenance of his daughter."

An answer was proposed to be filed by...