Richmond v. Wohlberg

• Decision Date: 17 February 1982
• Citation: 385 Mass. 290,431 N.E.2d 902
• Parties: Stephen M. RICHMOND, special administrator, v. Janet W. WOHLBERG, administratrix.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 902

431 N.E.2d 902

385 Mass. 290

Stephen M. RICHMOND, special administrator, v. Janet W. WOHLBERG, administratrix.

Supreme Judicial Court of Massachusetts, Norfolk.

Argued Nov. 2, 1981.

Decided Feb. 17, 1982.

Edward R. Lev, Boston, for defendant.

Robert W. Meserve, Boston (Eric F. Menoyo, Boston, with him), for plaintiff.

Before HENNESSEY, C. J., and LIACOS, ABRAMS, NOLAN and LYNCH, JJ.

HENNESSEY, Chief Justice.

This appeal concerns the extent to which an agreement reached in connection with a will compromise is binding upon an administratrix with the will annexed who was appointed after the agreement of compromise was completed. We conclude that, in the circumstances of this case, the agreement is binding on the administratrix with the will annexed, and bars her objections to an account filed by a special administrator.

Ronnie W. Brooker died in December, 1973, leaving an estate valued at $122,321.02. In her will, she left $25,000 in trust to a nephew and two nieces, the minor children of a deceased brother. If none of the children survived to the time set for distribution of the principal, the trustee was to pay the principal to Allie Scruggs, a friend, and in the event of his prior decease to the testatrix's heirs at law. The only other bequests were a gift of jewelry (valued at $1,000) to the two nieces mentioned in the trust, and a gift of the remainder of the estate to Scruggs. Stephen Richmond, an attorney and a partner in the law firm of Kaye & Fialkow, was named executor and trustee. Richmond petitioned for probate of the will, and was appointed special administrator.

Arthur and Lee Wasserman, two brothers of the testatrix who had not been mentioned in the will, objected to its allowance on the ground that their sister had lacked testamentary capacity. Richmond retained his law firm, Kaye & Fialkow, to represent him and defend the will in the ensuing contest. Scruggs, also represented by counsel, joined in the defense of the will. The minor trust beneficiaries were not represented, and no guardian ad litem was appointed to protect their interests.

After several days of trial, the parties to the will contest agreed to settle their claims to the estate by compromise agreement. Negotiations followed, some taking place in the chambers of Judge Robert Ford, the judge presiding over the will contest. At length the parties agreed, subject to the approval of the court, that (1) the Wasserman brothers, rather than Scruggs, would take the trust principal if none of the minor beneficiaries survived to the time set for distribution; (2) Scruggs would receive certain real estate and a sum of money; (3) the Wasserman brothers would take the remainder of the estate; and (4) Janet Wohlberg, daughter of one of the Wassermans, would replace Richmond as trustee and representative of the estate.

During the settlement negotiations, Richmond took the position that he would not accept the compromise unless it included an agreement concerning his counsel's fees. He proposed a figure of $35,000 and after some discussion the parties agreed that the estate would pay without contest $28,000 in fees, plus disbursements. This oral agreement was later memorialized in a letter written by Richmond's counsel.

The parties submitted their compromise to Judge Ford for approval. The fee agreement was not incorporated in the written compromise agreement, but was reported to the judge. Judge Ford approved the compromise agreement, and appointed Wohlberg administratrix with the will annexed to administer the estate in accordance with the compromise.

Subsequently, Richmond filed his fourth and final account as special administrator, which reflected a payment of $28,726.80 to Kaye & Fialkow for fees and disbursements. Wohlberg and Arthur Wasserman filed timely objections, and a hearing was held before a second Probate Court judge. The judge limited the issues to the validity and effect of the fee agreement, reserving all questions of the reasonableness and propriety of the fees for a second hearing, to be held if he found that the agreement was not controlling. To protect the interests of the minor trust beneficiaries, the judge appointed a guardian ad litem. The guardian ad litem filed a report, in which he stated that he would ordinarily assent to the account, but felt compelled to "qualify" his assent in light of the outstanding objections. He added that he did not "take any position relative to these objections, particularly as the rights of the beneficiaries of the trust have not been adversely affected."

After hearing the testimony of Richmond, his counsel, the Wassermans' counsel and Judge Ford, the second judge found that the fee agreement was "an integral part of the settlement" of the will contest, that the parties had reported it to Judge Ford "in conjunction with the presentation of the compromise," and that it "did not affect the ability of the estate to fund (the) trust." He concluded that the fee agreement was enforceable and was binding on Wohlberg as administratrix with the will annexed, and entered judgment allowing Richmond's account. On Richmond's motion, the judge also allowed Richmond counsel fees and expenses incurred in the defense of his account, to be paid by Wohlberg as administratrix.

Wohlberg appealed both the allowance of Richmond's account, and the award of fees and expenses in defense of the account. ¹ Richmond cross-appealed, claiming that the fee award should have been larger. We transferred the case to this court on our own motion.

Wohlberg's central complaint is that the arrangement for legal services between Richmond, as special administrator, and his own law firm, was improper and resulted in an excessive charge against the estate for counsel fees. She contends that the agreement among the parties to the will contest, authorizing Richmond to pay the fees, is unenforceable as a matter of policy. In addition, Wohlberg objects to the agreement on the ground that the minor trust beneficiaries were necessary parties to the compromise, and were not represented in the compromise negotiations.

We begin with a statement of general principles. The challenged item in Richmond's account-$28,000 plus disbursements, paid to Richmond's law firm as fees for representing the estate-was authorized by an agreement, which, according to the unchallenged findings of the judge below, was an integral part of a will compromise. Parties to a dispute over the distribution of an estate may settle their differences in two ways. First, the executor may petition the court for leave to compromise the dispute (Richmond did this is the present case). The procedure is statutory. G. L. c. 204, §§ 15-18. The compromise agreement must be signed by the executors or petitioners for administration, all persons "claiming as devisees or legatees whose interests will in the opinion of the court be affected," and all persons who have appeared to claim intestate shares. G. L. c. 204, § 15. Mulligan v. McDonagh, 307 Mass. 464, 466-467, 30 N.E.2d 385 (1940). Any minor who is a necessary signator must be represented by a guardian or guardian ad litem, G. L. c. 204, § 18, and the court must appoint a guardian ad litem to protect contingent future interests affected by the compromise, G. L. c. 204, § 16. If the court approves the compromise as fair and reasonable, it is binding on all parties interested in the estate. G. L. c. 204, § 17. Strict compliance with the statutory requirements is necessary to support the "jurisdiction" of the supervising court. Ellis v. Hunt, 228 Mass. 39, 43, 116 N.E. 956 (1917). See Colantuono v. Colantuono, 356 Mass. 721, 249 N.E.2d 746 (1969). Alternatively, parties who are competent and of age may settle their claims without the aid of the statute, simply by mutual agreement. Mulligan v. McDonagh, supra 307 Mass. at 467-468, 30 N.E.2d 385; Ellis v. Hunt, supra 228 Mass. at 44, 116 N.E. 956. Baxter v. Treasurer & Receiver Gen., 209 Mass. 459, 463, 95 N.E. 854 (1911).

A valid compromise is binding upon the executor or administrator of the estate. 1 G. Newhall, Settlement of Estates § 45, at 160 (4th ed. 1958). This principle necessarily applies to a subsequently appointed executor or administrator; otherwise, the succession of a new fiduciary would automatically negate agreements fairly reached among affected parties. Further, the principle is reinforced in the present case by the fact that Wohlberg was nominated as administratrix by the agreement itself, and was appointed by Judge Ford with directions to administer the estate in accordance with the compromise agreement.

Thus, the question we must decide is whether the compromise and accompanying fee agreement are valid; if they are, Wohlberg is obligated to pay the fees without further contest. The reasonableness and propriety of the fee arrangement between Richmond and his law firm are not before us, except in so far as they may affect the validity of the agreement.

Richmond contends that Wohlberg lacks standing to challenge even the validity of the agreement. ² We disagree; Wohlberg as the person who must carry out the agreement, should be able to raise the possibility that it is illegal or contrary to public policy. Cf. Budin v. Levy, 343 Mass. 644, 648, 180 N.E.2d 74 (1962). On the other hand, she should not be able to challenge the compromise and fee agreement on the ground that the minor trust beneficiaries did not participate in the settlement. As we stated earlier, an agreement reached by parties who are competent and of age does not depend upon the statute for its validity; therefore, we need not consider whether a subsequently appointed executor or administrator might raise third party rights as defects in a statutory compromise. A nonstatutory compromise does not, of course, bind minors and unascertained persons who were not represented in settlement negotiations and whose interests are affected. See Abbott v. Gaskins, 181...