State Bar Ass'n of Conn. v. Connecticut Bank & Trust Co., s. 107312

• Decision Date: 15 April 1957
• Docket Number: 107313,Nos. 107312,s. 107312
• Citation: 131 A.2d 646,20 Conn.Supp. 248
• Parties: STATE BAR ASSOCIATION OF CONNECTICUT et al. v. The CONNECTICUT BANK AND TRUST COMPANY. STATE BAR ASSOCIATION OF CONNECTICUT et al. v. HARTFORD NATIONAL BANK AND TRUST COMPANY.
• Court: Connecticut Superior Court

Page 646

131 A.2d 646

20 Conn.Supp. 248

STATE BAR ASSOCIATION OF CONNECTICUT et al. v. The CONNECTICUT BANK AND TRUST COMPANY.

STATE BAR ASSOCIATION OF CONNECTICUT et al. v. HARTFORD NATIONAL BANK AND TRUST COMPANY.

Nos. 107312, 107313.

Superior Court of Connecticut, Hartford County.

April 15, 1957.

Hadleigh H. Howd, Winsted, Wallace R. Burke, Hartford, Wesley A. Sturges and Fleming James, Jr., New Haven, for plaintiffs.

Gross, Hyde & Williams and Day, Berry & Howard, Hartford, for defendants.

PHILLIPS, Judge.

In these two suits the plaintiffs seek to restrain the defendants, hereinafter referred to as the banks, from engaging in certain acts and practices which they claim constitute the illegal practice of law. The plaintiffs also seek a declaratory judgment as to whether or not these acts and practices constitute the unlawful practice of law and violations of §§ 7638 and 7641 of the General Statutes. The two suits will be treated together in this memorandum.

It should be borne in mind throughout this discussion that the choice of a criterion as to what constitutes the practice of law must be made from the standpoint of public protection, not from that of private advantage for either banks or lawyers. Merrick v. American Security & Trust Co., 71 App.D.C. 72, 107 F.2d 271, 282, dis. The practice of law is restricted to natural persons who have been licensed upon the basis of established character and competence as a protection to the public against lack of knowledge, skill, integrity and fidelity. Groninger v. Fletcher Trust Co., 220 Ind. 202, 207, 41 N.E.2d 140.

Paragraphs 6 to 21 of the complaints allege certain acts and practices of the banks as the basis for the plaintiffs' claim that they are illegally practicing law. These allegations of fact are virtually admitted by exhibit A and the answers to the amended motions for disclosure, exhibits B-1 and B-2, with certain qualifications not important to this decision.

From the evidence, including these exhibits, I find the following facts:

1. The defendants, by advertising and by distribution of literature, disseminate and give out, without charge, to their customers and prospective customers and the public, general information concerning (a) the application, scope and effect of various laws that are involved in estate planning, including federal income and gift tax laws, federal and state estate and succession tax laws, laws relating to trusts, and laws relating to the administration and disposition of decedents' estates; (b) the complexities of federal and state taxes and various means of minimizing liability for them; (c) the advantages and disadvantages of various means provided by law for the distribution of property, including the use of inter-vivos and testamentary trusts. The foregoing information is given out for the purpose of inducing people to name the banks as executors or trustees in wills or trust agreements. In some of the advertising and literature, an individual is told to consult his attorney on his specific situation and is informed that all wills and trust agreements must be drawn by such attorney.

2. The banks, through conferences with and occasional correspondence by officers of their trust departments, who sometimes are and sometimes are not attorneys, discuss with customers and prospective customers the matters enumerated in 1(a)- (c), supra, for the purpose of inducing them to name the banks as executors or trustees in wills or trust agreements. The banks in so doing do not seek to give final advice as to what any individual should do, and urge the customers and prospective customers to consult their own attorneys on their specific situations. The banks do not take any compensation for such conferences and correspondence.

3. The banks, through their trust officers, who sometimes are and sometimes are not attorneys, review, at the request of testators or trustors, the provisions of their wills and trust agreements, which have been drawn by outside counsel, in instances where the banks are named executors or trustees, or the testator or trustor has indicated that he is considering naming the banks to such a position, and advise them or their attorneys of necessary, proper or desirable changes. In all such cases, the trust officers urge the testators and trustors to consult their own attorneys, and any further instruments which may result from such review are drawn by such attorneys, not employees of the banks. The banks do not take any compensation for such reviews.

4. Probate of wills: The banks followed the practice in 1956 of preparing and filing application for the probate of wills where they were named as executors and of being represented at probate hearings by employees who sometimes were and sometimes were not attorneys, unless the banks considered that an uncertain or unclear legal issue was involved or that a controversy might arise. In this event they were represented by independent outside counsel employed by them as fiduciaries.

5. Hearings in Probate Court: During 1956 the banks followed the same practice in being represented at such hearings and proceedings in furtherance of their fiduciary administrations as is indicated in the preceding paragraph concerning the probate of wills, paragraph 4, supra.

6. Application for widow's allowances: The same practice was followed as is indicated in paragraph 4, supra.

7. Applications for the compromise of claims for or against the banks as fiduciary of estates of decedents or wards or trust estates: The same practice was followed as is indicated in paragraph 4, supra.

8. Claims of the banks themselves against the banks as fiduciaries: These were prepared and filed by employees of the banks with the banks as fiduciaries, and applications for approval of these claims were prepared and filed in the Probate Court in the manner indicated in paragraph 4, supra.

9. Accounts and returns of distribution: These were prepared and filed in the Probate Court, and the banks were represented at hearings for their approval in the same manner as indicated in paragraph 4, supra, regardless of whether any other party in interest was represented by outside counsel.

10. Preparing and filing federal tax returns and dealing with examiners of the internal revenue service, and preparing and filing state tax returns and dealing with agents of the state tax department in connection with admitting, denying or compromising liability for taxes claimed to be due the banks as fiduciaries: The same practice was followed as indicated in paragraph 4, supra. Here an additional requirement was made for employing independent outside counsel--that the amount in question warrants such employment.

11. Compromising claims of federal and state tax authorities against the banks as fiduciaries of decedents' and wards' or trust estates: The banks did this in the manner indicated in paragraph 4, supra, with the additional requirement stated in paragraph 10, supra.

The defendant Connecticut Bank and Trust Company in case No. 107312 served as fiduciary in 1956 in 1841 fiduciary administrations. In 16 of these, the bank retained independent outside counsel to compose or approve all the papers filed in the Probate Court and to appear and represent it at probate hearings and proceedings. In 450 (excluding the 16 mentioned above), it retained independent outside counsel to render some legal services, but this number seems to have included services rendered long prior to 1956 in estates which were active in 1956. In case No. 107313, Hartford National Bank and Trust Company, defendant, the corresponding figures are 1517, 28 and 511. Out of these 1517 accounts, 284 were estates of decedents. In 71.8 per cent of these accounts (estates of decedents), independent outside counsel were used, most of whom were employed in real estate matters. Of the balance of the accounts, 1233, which were for trusts, guardianships, conservatorships, etc., the percentage where the bank employed lawyers was 27.2, but as above noted, this figure included lawyers employed prior to 1956 in trusts still active.

There were some further refinements in the testimony on this subect which need not be detailed here.

There are a great many legal problems, some of them of a complex nature, which arise in fiduciary administrations of estates of decedents. The following are illustrative: In the application of a will for probate, the questions of domicil and who are the heirs at law; in the inventory and appraisal of the estate, the problems of valuation of interests such as leasehold estates and remainder interests, what dividends and accrued interest are included, to whom the household furniture belongs; return of claims--which ones are properly presented and entitled to priority; the report to the state on transfers other than by will or laws of intestacy (Form E3, exhibit D) requires important legal determinations including concessions and nonconcessions of taxability of the items involved; determination of what are allowable deductions in the succession tax, and computation of tax; federal estate tax returns contain nineteen schedules, each of which has its legal problems, such as schedules of jointly owned property, of marital deductions, transfers prior to death; preliminary and final accounts present legal problems; the distributions of estates present problems such as interest, payments in kind or in cash.

There is a considerable body of case law built up around the succession and transfer tax statutes of this state. Trust officers have frequent meetings with tax attorneys representing the state to compromise claims arising out of these laws. The questions which arise are more difficult to solve than title searching problems. At these conferences, it is seldom that independent outside counsel are present. Where the claim is contested in the Probate Court, however, during 1956 the banks have consistently been represented by...