Case ID: abb-pr-ns_13/html/0361-01.html
Source: Caselaw Access Project
Author: {"author": "Folger, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MORGAN against HANNAS.
    
      Court of Appeals,
    
    
      April, 1872.
    Reversing in effect 39 Barb., 20.
    Compensation of Guardian for Personal Services.—Interest on Annual Balances.
    The guardian of a minor cannot be allowed any compensation beyond his statutory commissions for services rendered the estate,—not even for his personal services as a mechanic in making repairs to the buildings on the estate.
    
    
      The rule is the same although the services are performed by the guardian under the direction of the surrogate.
    Annual rests in the accounts of an executor or other trustee, cannot be taken for the purpose of allowing him commissions at full rates upon the balance then found. But where annual rests are required by the special direction of a court, for the sake of charging the trustee with interest, or by a rule of court, or by the provisions of statute,—then full commissions may be computed upon the amounts, excluding re-investments of principal.
    A guardian, being obliged by statute to render annual accounts, he may be allowed full commissions on each annual account rendered by him; and at his final accounting may be allowed interest on the balances due him on his annual accounts.
    Appeal from a judgment.
    
      Daniel Morgan, the respondent, was appointed the general guardian of Mary Jane Morgan and Sarah E. Morgan, minors, in August, 1851, and continued such guardian of Mary Jane, until her death, in 1855, and of Sarah E., until February, 1859, at which time, she having become fourteen years of age, and petitioning therefor, Thomas Buchanan, Jr., was appointed her general guardian. Mary Jane died unmarried and intestate, and her estate therefore descended to her sister.
    The estate consisted of about thirty building lots in the city of Utica, on which were seven wooden dwelling houses.
    During the guardianship of Morgan, these houses needed and received very extensive general repairs, "besides the small ordinary and annual repairs incident to that kind of property.
    All this work was done under the personal supervision of the guardian, who also personally collected the rents, and settled and paid all bills, both in reference to the property, and the support and education of the minors.
    The guardian himself performed considerable mechanical labor on the property, and paid sundry small items of expenses connected therewith; and for this labor, and these expenses, he made charges in the accounts which he rendered from year to year, which charges were examined and adjusted by the surrogate, as they were annually presented.
    These accounts so adjusted were as follows:
    
      
    
    Before adopting this practice, the guardian presented the matter to the then surrogate of the county, who, after examination of the-property and the facts of the case, directed the guardian to pursue this course, and instructed him to make such small repairs as were necessary, and as he could do himself with economy and advantage, and present, with his annual accounts, detailed statements of what he might do, and the time he might be employed in making such repairs.
    When the case came before the surrogate for final settlement, he held that the services in question had been rendered, but rejected the charges therefor as illegal, on the ground that the compensation of the guardian was confined to his commissions, which covered every kind of service which a guardian, executor or administrator could bestow upon the estate committed to his care.
    The surrogate also modified other parts of the accounts in such manner that the account against the guardian was increased to the amount of one hundred and twenty dollars and thirty-nine cents.
    The charges for interest were stricken out; the annual balances in favor of the guardian having been pretty much canceled by the changes which had been made in the account.
    A final decree was made by the surrogate on March 25, 1861, by which a balance of twenty-five dollars and thirty-five cents was found due to the guardian, and no costs were awarded to either party. From this decree the late guardian appealed to the supreme court.
    The main question on the appeal related to the rejection by the surrogate of the charges for services and expenses, amounting to the sum of four hundred and fifteen dollars and twelve cents.
    The supreme court reversed the decree of the surrogate, holding that such charges were legal, and that the commissions did not necessarily cover every kind of services which the person who was guardian might render; and they sent back the case for a new trial before the surrogate. (Reported in 39 Barb., 20.)
    The new trial took place before the surrogate, on December 26, 1863. The surrogate, in accordance with the judgment of the supreme court, decided that the charges were legal in their character; and he further held that the services in question were rendered, and in good faith, and were worth the amounts charged for them in the guardian’s account. Interest was also allowed to the guardian on the annual balances found due to him.
    A final decree was made by the surrogate, on December 31, 1863, by which a balance of seven hundred and twenty-one dollars and forty cents was found due to the late guardian, which amount, together with the amount allowed for. costs and the surrogate’s fees on the hearing, the present guardian was ordered to pay from the estate of the infant.
    From this decree, Thomas Buchanan, Jr., then the guardian of the infant, appealed to the supreme court. That court, in April, 1865, affirmed the decree of the surrogate, with costs, and from this judgment the present appeal was brought to the court of appeals.
    The infant having become of age, it was stipulated that the subsequent proceedings might be conducted in her name, without joining that of her guardian, and this appeal was so brought.
    
      Montgomery H. Throop, for the appellant.
    I. By 2 Rev. Stat., 153, § 22, guardians shall be allowed for their reasonable expenses, and the same rate of compensation for their services, as is provided by law for executors. And by 2 Rev. Stat., 93, § 58, the surrogate is directed to allow to the executor, for his services, over and above his expenses, a commission after a certain rate on his receipts and disbursements. The allowance is to be made in full compensation " for his services,” without any discrimination between services which are discretionary and personal in their character, and others which are of a ministerial character, and might be performed as well by an agent or deputy (Vanderheyden v. Vanderheyden, 2 Paige, 287; Clinch v. Eckford, 8 Id., 412; Matter of Livingston, 9 Id., 440; In re Bank of Niagara, 6 Id., 213; Lansing v. Lansing, 45 Barb., 182; Nichols v. McEwen, 17 N. Y., 22; Aberdeen Railway Co. v. Blaikie, 1 Macq., 461; Collier v. Munn, 41 N. Y., 143). II. The commissions ought to have been estimated on the aggregates of income received and of disbursements made during the entire term of the guardianship, and not upon the yearly income and outlays (In re Bank of Niagara, 6 Paige, 213; Hosack v. Rogers, 9 Id., 467; Lansing v. Lansing, 45 Barb., 182).
    
      O. S. Williams, for respondent.
    I. The commissions allowed a guardian are in payment for the acts which he is required to do by statute, and are not intended to compensate him for all the services he may render the estate (In re Bank of Niagara, 6 Paige, 216; Dayt. Surr., 496; Clinch v. Eckford, 8 Paige, 412; In re Livingston, 9 Paige, 440; In re Fisher, 1 Bradf. Surr., 335; Dayt. Surr., 497). Where a guardian obtains the direction of the surrogate in advance, and follows that direction fairly and in good faith, it is a perfect protection to him. It is within the province of a surrogate to direct a guardian to render special services to the estate and promise him compensation therefor (3 Rev. Stat., 362, § 1, subd. 7; Bliss v. Sheldon, 7 Barb., 152; affirmed, in 8 N. Y. [4 Seld.], 34; Will. on Exec., 254).
    II. Interest should be allowed the guardian on the annual balances in his favor (Will. on Ex., 2, 1318, and note; Dayt. Surr., 500, 639; Jennison v. Hassgood, 10 Pick., 77). Wherever annual rests in the ac. counts of an executor, administrator, guardian, or other trustee are required by the special direction of a court, or by the rule of chancery, under the old practice, and, much more, if by statute, which imposes a penalty in case of neglect to do this, full commissions are to be computed upon the receipts and disbursements of the year (exclusive of repayments and reinvestments) (Dayt. Surr., 535-6, and 691-2; Vanderheyden v. Vanderheyden, 2 Paige, 288; In re Bank of Niagara, 6 Id., 216-7; Hosack v. Rogers, 9 Id., 467; Bennet v. Chapin, 3 Sandf., 673). A guardian is required by statute to make annual rests in his accounts, and to file each year’s account with the surrogate (3 Rev. Stat., 5 ed. 247; Dayt. Surr., 690).
    
      
       Compare the Parsee Merchant’s Case, 11 Abb. Pr. N. S., 207; S. C., 3 Daly, 529; Hopper v. Adee, 3 Duer, 235; Lansing v. Lansing, 1 Abb. Pr. N. S., 280; S. C., 45 Barb., 182; 31 How. Pr., 55.
      In Foley v. Egan (Supreme Court, First District, Special Term, September, 1872), it was held, by Leonard, J., 1. That the compensation of guardians is the same as that of executors and administrators, as modified by the act of 1883. 2. That a guardian on turning over the estate and its investments to his successor in the trust, is not entitled to commissions on such investments as were made by his predecessor, and have not been necessarily or properly changed.
      
        The Revised Statutes (2 Rev. Stat., 153, § 22) direct that “ guardians shall be allowed . . . the same rate of compensation for their services as is.provided by law for executors.”
      The provision of the Revised Statutes (2 Rev. Stat., 93, § 58) fixing the compensation of executors and administrators, was amended in 1863 (Laws of 1863, p. 608, ch. 362, § 8), changing the rate, without, however, making any reference to the case of guardians.
      The parts of the opinion in Foley v. Egan, relating to these points, are as follows:
      Leonard, J.—It is not clear that the legislature had any intent in respect to the fees of guardians, when the act of 1863 (Laws of 1863, p. 606, &c.) was adopted. Having regard to the prior statute upon the subject, I must consider the two acts, to a certain degree, in pa/i'i materia. In my judgment, the same reasons for altering the rate of compensation to executors, &c., also apply to guardians, and it should be held, accordingly, that their compensation is at the same rate, and I therefore so decide. Sedgw. on Stat. Const., 259.
      This compensation applies only to money actually received and paid out by the guardian. It will not apply to investments which have not been necessarily or properly changed.
      The statute provides very distinctly that executors, &c., are to be allowed commissions on money received and paid out. I am referred to two cases in which the chancellor allowed commissions (7 Paige, 265; In re Kellogg). The guardian of an infant in that case received in money the full amount of a legacy, and invested it. The chancellor said it was error to allow full commissions, in that case, as upon receiving and paying out; but conceded it would be right, if it was on final accounting, with a view to turn over the whole fund to the ward.
      Full commissions were not to he allowed on every receipt and reinvestment of the trust fund. He allowed half commissions in that case for receiving.
      In the case reported in 9 Paige, 460 (Cairns v. Chaubert), the chancellor allowed full commissions on bonds and mortgages turned over by the executrix for the benefit of the remainder-men.
      In these cases the money had been received and invested. The investment was turned over as upon the close of the trust. The present case is not precisely of the description mentioned in the cases cited. The trust is not closed. The guardian turns the fund over to another. The present guardian is but the successor of other guardians, as trustees, who may have made the investments, or some part of them, now held by the defendant. Prior guardians may have received the one-half commissions for receiving the funds now remaining on investment.
      Surely, it is not a full commission that is to be paid on passing the estate to successive guardians or executors, &c.
      I still retain the opinion, before expressed, that- the defendant is to be paid a commission only on money which he has actually received and paid out, and not upon portions of the fund which have come to his hands in the form of an investment previously made, which he now turns over to a successor.
    
   By the Court.

Folger, J.

In Collier v. Munn (41 N. Y., 143; S. C., 7 Abb. Pr. N. S., 193), this court held that an executor who was also an attorney and counsellor at law, could not receive from the estate for his own services, though professional, rendered in the affairs of the estate, a compensation beyond the commissions allowed by the statute. The decision was not put upon the ground that the services rendered were not necessary, were not meritorious, were not of value to the estate. It was put upon the wise policy of the rule, which required that there should be a fixed standard by which the compensation for the whole services of the executor should be measured, and he be not led into temptation to do anything in the administration for the mere sake of the compensation to accrue thereby.

The policy of the rule commends it to my judgment, and I deem sound the decision cited. The rule is applicable to a guardian as well as to an executor.

It is sought to vary the case in hand from that cited, and to establish an exception to the rule it recognizes and reaffirms. It is said that in this case, the extra services rendered by the guardian were approved of by the surrogate before they were rendered. To this, it might be answered that the approval was not official. There was no order of the surrogate sitting as a court. Again, it was an approval in general, and prior to the occurrence of a need for the particular services sought to be charged for. But I will not put my disapproval of the exception sought to be created to the rule, on so narrow a basis. It makes no difference whether the guardian applies to the surrogate for a formal order directing the performance of an extra service, and fixing the compensation for it, before the service is done, or whether, after it is done, the surrogate ratifies and allows it, and then fixes and allows a charge against the estate as an extra compensation. In each case, the surrogate must act upon the representation and proof of the guardian as to the necessity, the extent and value of the service to be rendered, or which has been rendered. The evil to be guarded against may be present in one case as in the other. In either case, if the guardian may by possibility be allowed an extra compensation for services not strictly within the line of his official duty, there may arise the incentive to create or magnify the need, and to overrate the value of the performance.

The policy of the rule is in both cases avoided.

2nd. It may be stated, as a general rule, that annual rests in the accounts of an executor or other trustee, cannot be taken for the purpose of allowing him commissions at full rates upon the balance then found. But where annual rests are required by the special direction of a court, for the sake of charging the trustee with interest, or by a rule of court, or by the provisions of statute ; then full commissions maybe computed upon the amounts, excluding reinvestments of principal (In re Bank of Niagara, 6 Paige, 213).

A guardian is required by statute to file accounts with the surrogate each year, and his accounts will then show necessarily annual rests (Laws of 1837, p. 534, ch. 460, § 57).

And if he has made these accounts annually, or at intervals, he may be allowed commissions in full upon each account.

But, for the reason first suggested, the judgment of the general term and the decree of the surrogate should be reversed.

A majority of the judges present concurred.

Judgment of supreme court and decree of surrogate reversed, and proceedings remitted.