Riddleberger v. Goeller

Smith, J., delivered the opinion of the Court. In this case appellants, three of the beneficiaries of the estate of Mary A. Phillips, deceased, challenged the amount of commissions allowed to Frederick S. Goeller (Goeller) as executor and the amount of the fee allowed to the attorney for the executor, Ronald J. Kearns (Kearns). We shall sustain the order relative to executor’s commissions and modify the order relative to attorney’s fees. The will of Mrs. Phillips was simple.

After bequests of two rings, she directed that her estate be divided equally among her children. Her two sons were named as executors. The other son so named did not survive her. The will contained a conventional paragraph authorizing, but not requiring, sale of real estate.

The amended first and final administration account ⁴⁶ reflects a total estate to be accounted for of $71,247.22. Items passing outside the probate estate brought the total gross estate for federal estate tax purposes to $133,837.69. The principal assets indicated in the administration account were proceeds of sale of real estate, $46,750.00; “chattels and personalty”, $15,358.49; and rent receipts, $6,958.60. Mrs. Phillips died on May 28, 1968.

Therefore, under Code (1969 Repl. Vol.) Art. 93, § 12-102 (a) the questions here involved are determined under the law as it existed prior to January 1, 1970. Accordingly, the fact that in our reasoning in this case we make reference to Article 93 as revised by Chapter 3 of the Acts of 1969 should in no wise be regarded as an interpretation of that revised article. A meeting was held early in June of 1968 at the home of one of the daughters of Mrs. Phillips.

The other two daughters were present together with their brother, Goeller, and Kearns, a member of the Baltimore County Bar. As the appellee put it: “The purpose of the meeting was to discuss the estate and to ascertain how much it might cost in attorney’s fees, taxes, etc. There was no discussion as to executor’s commissions at this meeting since the Will itself was not present and the identity of the Executor (s) was not known. Mr. Kearns stated that he would accept for his services a fee of an amount equal to two and one-half percent. The details of this fee were cleared up by counsel himself, but were understood by the Appellants to be based on the entire estate or at least that portion in which Mr. Kearns would be directly involved.” Each of the appellants testified that at this meeting their brother, Goeller, said he would waive his commissions.

This is denied by Goeller and his attorney, both of whom state that at that time nobody knew the contents of the will. On March 20, 1969, Kearns wrote a letter to Goeller ⁴⁷ with copies to other interested parties. He discussed the authority of the executor to sell real estate, stating: “Last week I visited the Orphans’ Court for Baltimore County to discuss the possible closing of this file. In the course of the discussion it was determined that your Mother’s Will makes it mandatory that all of her property be sold before the Estate can be closed.

The Court has interpreted your Mother’s Will as making this an order or a directive making it mandatory that the Executor sell the properties. During the time that this file has been open I have been operating under the assumption that it was not necessary to sell these properties. However, this was not the Court’s ruling after a hearing on the case.” After suggesting a meeting of “all members of the family who [were] involved”, he said: “Because of the more complex problems involved in accounting for the proceeds from the properties, rents, expenditures, etc., both with the State of Maryland and the Federal return, it is my suggestion that we contact an accountant to set up and verify the figures for the returns. As you know, I had quoted you a figure for the Attorney’s fee of 25 °/o of the Executor’s allowed fee or half of that which is usually charged.

This did not take into account the federal tax return since I had no idea at that time that one would be necessary. If the necessity for an accountant arises it will still be more economical because of the lesser fee I have agreed to take. At any rate, these are matters we can discuss at the proposed meeting.” No accountant was hired. The real estate was sold at private sale to one of the appellants without the assistance of a broker.

On July 28, 1969, Goeller filed a first and final administration account which made no mention of an attor ⁴⁸ ney’s fee. Apparently distribution was not made after the filing of that account, although it purported to show distribution. It reflected an estate of $70,743.46. An attempt was made in it to claim executor’s commissions of 10% of that amount.

Commissions allowed were $4,029.73. An amended first and final administration account was filed on May 11, 1970, setting forth an estate of $71,247.22. There the commissions were set at $4,049.88. 1 This works out to 10% on the first $20,000.00 and 4% on the remaining $51,247.22. No claim was made for an attorney’s fee, although there was shown an item to Kearns in the amount of $3,272.50 labeled “Brokers Commission on real property sale.” 2 This brought exceptions' by appellants to the allowance for commissions.

The exceptions were based on their contention that “the said accountant had previously agreed with [the appellants] to waive his commissions except as to the extent necessary to pay the tax on commissions and an attorney’s fee”. They further excepted to the allowance of a broker’s commission. An informal hearing was held before the Orphans’ Court of Baltimore County. Subsequently, Goeller on October 13, 1970, asked leave to file a petition to pay a counsel fee to Kearns in lieu of broker’s commissions.

The petition was filed on the same day. It listed 31 separate items which it said Kearns had performed on behalf of the estate, including preparation and filing of answers to exceptions to the amended first and final administration account, appearance on behalf of Goeller at hearing relative to those exceptions, and engaging “in dialogue and correspondence with counsel for the Exceptors to the Amended First and Fi ⁴⁹ nal Administration Account in an attempt to resolve the conflict between the beneficiaries of [the] Estate.” A fair summary, however, of what is set forth in the petition is that Kearns prepared all papers on behalf of the executor in the Orphans’ Court; prepared and filed the estate tax return; prepared a 1968 income tax return; prepared and filed 1968 and 1969 fiduciary income tax returns; dunned certain tenants for rent payments; instituted suit against tenants on two occasions in the People’s Court of Baltimore County; and performed the routine duties which might otherwise have been performed by the executor, such as corresponding with creditors of the decedent, opening of estate bank account, corresponding with various persons in search for additional estate assets, collecting rent, keeping records on sums collected, and corresponding with potential purchasers of the real estate. The petition of Kearns for a fee bore the certificate of two members of the bar that they had read and considered the petition and were of the opinion that a fee of $3,250 was fair and reasonable for the services set forth. One of those individuals testified that Kearns told him he had worked “in excess of two hundred hours, between two hundred and three hundred hours” in connection with the estate.

He also stated that he was not told by Kearns that the executor was claiming full commissions, nor was he told that the real estate was sold to a member of the family. The Orphans’ Court sustained a part of the exceptions to the administration account by disallowing the claim for broker’s commissions and directing that in making distribution of the residue of the estate allowance be made for the specific bequests provided in the will. The order on the exceptions fixed Goeller’s commissions at 10 % on the first $20,000 and 2 % on the balance of the estate. It then directed that from the commissions he pay the sum of $628.86 to Mary Riddleberger, one of the appellants, for her services to the estate in managing the real property from the time of the decedent’s death to ⁵⁰ the time of the sale.

The sum allowed was 10% of the rentals collected during that period. The court overruled the exceptions to the counsel fee and confirmed a fee of $3,250 to Kearns for his services as counsel for the executor. It came out in the course of the testimony before the Orphans' Court that Goeller hypothecated estate funds in the amount of $7,179.34 for the purpose of a personal loan. The sum ultimately distributable to him in the estate (aside from any compensation to him as executor) was substantially in excess of this sum.

(i) Appellants argue that Goeller waived his right to commissions. In Mott v. Fowler, 85 Md. 676, 678 , 37 A. 717 (1897), it was held that where there was sufficient consideration an agreement to perform the duties of administrator without compensation was valid and binding. In Ohlendorf v. Kanne, 66 Md. 495, 499 , 8 A. 351 (1887), an agreement in which one joint executor renounced his right to letters testamentary in favor of his co-executor in consideration of being paid one-half the commissions was likewise held valid and binding, there being sufficient consideration to support the contract. In this instance we are concerned not with an individual who might or might not be appointed as administrator, but with an individual already named as executor in the will.

We are not concerned with a contract between co-executors, but are concerned with the compensation of the named executor. No mention of any monetary consideration for the alleged agreement of Goeller has been made. The only possible consideration for any waiver of commissions on the part of Goeller would seem to have been love and affection. Love and affection is not sufficient consideration for an executory contract.

Williams v. Robinson, 183 Md. 117, 121 , 36 A. 2d 547 (1944), and Dugan v. Gittings, 3 Gill. 138, 156, 43 Am. Dec. 306 (1845). The appellants urge that another reason for denying ⁵¹ commissions to Goeller is his hypothecation of estate funds. We are not to be understood as approving in any way the conduct of Goeller in this regard.

There was no petition presented for his removal, however, and the sum hypothecated was less than Goeller’s individual share of the estate ultimately to be distributed to him. Therefore, we are unable to accept this hypothecation as a sufficient basis for denial of commissions to him. Cf. State, Use of Gable v. Cheston, 51 Md. 352, 382 (1879).

In Newton v. Johnson, 173 Md. 166 , 195 A. 312 (1937), Judge Mitchell said for the Court: “[I]t has been uniformly held that it is not within our province to control, or review on appeal, commissions that have been fixed by orphans’ courts within the limitations prescribed by law.” (citing authorities) Id. at 169 . In Wilson v. Wilson, 3 G. & J. 20 (1830), Chief Judge Buchanan put the proposition slightly differently for our predecessors when he said: “The various circumstances determining the amount of the commission proper to be allowed, cannot appear to this Court, and every case must be governed by its own peculiar circumstances, subject only to the restrictions already mentioned.” Id. at 23 . The “restrictions” to which reference was made were the limitations imposed by law. Maximum commissions allowable on the personal estate under Code (1964 Repl.

Vol.) Art. 93, § 6 were 10% on the first $20,000 and 4% on the excess. Under § 316 the executor would be entitled to a maximum commission of 10% on the sale price of the real estate. See the comment in Sykes, Probate Law and Practice (1956) § 481 to the effect that this latter figure is “without limitation as to the amount of the proceeds.” In this instance the commissions allowed were within ⁵² the limitations imposed by law. Accordingly, we will not disturb the order of the orphans’ court.

(ii) Judge Sykes in § 481 of his work comments: “At common law a fiduciary office was regarded as honorary and gratuitous, and executors and administrators were supposed to serve without compensation. As an inducement to private persons, without sacrifice of their private interests to accept the office, statutes allowing commissions have been enacted since colonial times.” Some of the same considerations undoubtedly have led to the changing pattern relative to compensation for counsel. The statutory provisions concerning counsel fees as applied to the Phillips