Case ID: ky_40/html/0348-01.html
Source: Caselaw Access Project
Author: {"author": "Chief Justice Robertson", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Phillips’ Administrator vs Bustard et al.
    
    Chancery. Case 103.
    Error to the Jefferson Circuit.
    
      May 27.
    
      Trustees and Trusts.
    
    The case stated.
    Decree of the Circuit Court.
   Chief Justice Robertson

delivered the Opinion of the Court.

Upon a bill of interpleader, filed by John Bustard and Worden Pope against several persons to whose use, as the creditors of John Gwathmey, the latter had conveyed to the complainants a large and various estate, in trust, for sale and distribution of the proceeds — the Circuit Court, after adjusting by a final decree the proportions of each of them and ascertaining the payment of the greater part thereof, decreed to the trustees “$3,275 to “ be retained by them for their expenses and trouble for “selling the trust estate and collecting and paying out “the trust fund.”

Doctrine of the British Chancery before the resolution in regard to compensation to trustees.

Trustees may,by our Courts, be indemnified and reasonably compensated for expenses, shill, and attention to trust duties, as other trustees, curators, executors, administrators, &c. without any express contract therefor.

That decree, so far as it allowed compensation for trouble and responsibility, is now sought to be reversed by the personal representative of Richard Phillips who, as a substituted and postponed creditor, might, perhaps, have been entitled to the sum thus decreed, had it not been yielded by the decree to the trustees.

It was certainly the well settled doctrine of the British Chancery, antecedently to the American revolution, that a trustee was entitled to no compensation for time, trouble, skill, or service, unless there had been some provision therefor in the trust document. And the only reasons for a rule, apparently so anomalous and unjust, were, 1st, that a trust should, prima fade, be deemed merely honorary and gratuitous on the part of the trustee; 2nd, an alleged difficulty in adjusting the proper rate of compensation; 3rd, that “by such an allowance, the trust estate “might be loaded and rendered of little value,” and 4th, an assumed public policy, supported by the maxim of the civil law, in reference to tutors and curators, ‘ ‘lucrum facere ex pupilli tutela tutor non debit."

This arbitrary rule established by Courts was, as early as the case of Palmer vs Jones, 1 Vern. 144, considered by Lord Keeper North “a great hardship.” Chancellor Kent, whose judicial motto was via antiqua via esttuta, virtually conceded, in Manning vs Manning, 1 John. Chy. Rep. 527, that this British rule, though he conformed to it, was unreasonable; and it has been evaded, even in England, by liberal constructions of trust documents, for the purpose of deducing from them a presumed intention to allow compensation, and also by making ample allowances for expenses.

We have never been able to perceive either consistency in the rule or full force in the reasons assigned for it. It should "be no less true in the municipal than in the divine code, that “the laborer is worthy 'of his hire," and there can be no doubt that heavy and responsible trusts áre rarely, if ever, undertaken as merely honorary, without expectation of indemnity at least. Moreover, there might be danger, not only of non-acceptance, but of injurious infidelity if strangers, nominated for their skill, should know that, for all their devotion, time, and responsibility, they caribe entitled to no compensation unless they make a contract, which, in many cases, cannot be made for want of opportunity or competent parties. And we doubt not that, in most cases of onerous trust devolved on strangers, there is an implied mutual understanding, that there shall be a reasonable allowance for responsible, faithful, and beneficial services.

Courts of Pennsylvania & Virginia allow compensation totrustees without any express contract therefor.

But the British rule has been extensively qualified, if not entirely exploded by the local law and usage of our own Commonwealth; where tutors, and curators, and executors, and administrators, are all entitled to reasonable compensation. Here then the civil law maxim and all the other analogies which fortified the rule in England have been abolished, and a converse principle has been recognized and established. Is there now, therefore, any sufficient reason here, for applying a rule so harsh and unreasonable to the solitary class of cases denominated express technical trusts? We think not.

For similar reasons, the Courts of Pennsylvania and of our parent state Virginia, have decided that trustees may be entitled to compensation without any express direction or contract therefor: See 3 Binney, 457; 1 Washington, 246; 4 H. & Mun. 415. And this appearing to be-intrinsically just, not forbidden by policy, and not only not inconsistent with any analogy in our local jurisprudence, but perfectly consistent with its complete harmony, we do not feel authorized to repudiate it and blindly adhere to the old English rale, the reasons for which, if ever good, are now altogether inapplicable in this age and country, whenever it may he presumed that compensation was expected and seems to he reasonable and just.

The record in this case furnishes intrinsic proof of the unreasonableness of withholding compensation from the trustees, whose labors and responsibilities appear to have been great and extensively beneficial. And we are not authorized to presume that the allowance, as made, was exhorbitant or in any respect unjust. From the character of the trust, the magnitude of the estate, the responsibility of the trustees, and the extent of their services, the allowance cannot be deemed unreasonable on its face, and especially as the expenses of the trust, and of the consequential litigation must have been considerable. Moreover, it is far from being certain that injustice was not done to Bustard in refusing him a credit for $1900 he had loaned to Gwathmey, and the lapse of time since the decree (about 13 years,) would render it difficult to adjust the account for services by extraneous proof.

Owsley for plaintiff: Crittenden for defendant.

Although, therefore, in all such cases, the Court should take care not to make such an allowance as to tempt cupidity, induce trustees to act upon mercenary motives, or, by reducing the trust fund, essentially to frustrate the ends of the trust, we perceive nothing in this case that would authorize even’ a suspicion of inappropriateness or injustice in the allowance as made by the decree.

And consequently the decree for compensation and remuneration to the trustees, must be affirmed.