Case Name: RALEIGH SAVINGS BANK AND TRUST COMPANY v. M. T. LEACH and W. H. PACE, Trustee
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1915-10-27
Citations: 169 N.C. 706
Docket Number: 
Parties: RALEIGH SAVINGS BANK AND TRUST COMPANY v. M. T. LEACH and W. H. PACE, Trustee.
Judges: Justice BrowN concurs in the dissenting opinion of Justice Walker.
Reporter: North Carolina Reports
Volume: 169
Pages: 706–716

Head Matter:
RALEIGH SAVINGS BANK AND TRUST COMPANY v. M. T. LEACH and W. H. PACE, Trustee.
(Filed 27 October, 1915.)
1. Mortgages — Trusts and Trustees — Commissions—Agreements—Courts.
Where the deed in trust specifies the compensation to be paid the trastee as a certain per cent of the “proceeds” of the sale of lands made in executing the power thereof, and there is no allegation of fraud, undue influence or usury, the agreement of the parties will control, and the courts will not interfere, or reduce the amount of the trustee’s compensation as specified in the deed; and by the word “proceeds,” upon which the percentage as commissions is calculated, is meant the amount the lands sold for. Loftis v. Duclcivorth, 146 N. C., 344, cited and distinguished.
2. Mortgages — Trusts and Trustees — Sales—Advertisement — Costs —“Thirty Days” — Statutes.
Where a mortgage of lands provides that notice of the sale under the power thereof given in the conveyance shall be published in a newspaper, etc., “for a time not less than thirty days prior to the date of sale,” and the language employed closely follows the provision of Revisal, section 641, it is Held, that by the agreement entered into by the parties the advertisement should be inserted in the newspaper once a week for four consecutive weeks, and not consecutively for thirty days, and an allowance made in the Superior Court for an advertisement for thirty consecutive days was erroneous.
3. Mortgages — Trusts and Trustees — Attorney’s Fees.
Where a trustee has fully executed his trust except the payment of the proceeds of a sale of lands made in pursuance thereof to the parties entitled, and the funds are attached in his hands by a claimant thereof, he is not interested in the result of the action except to hold the trust funds until the matter is determined and to state the amount thereof; and there being no necessity for him to employ an attorney, no attorney’s fees are allowable to him when he has employed one.
Walker and Brown, JJ., concurring in part.
Appeal by defendants from Daniels, J., at tbe May Term, 1915, of ■Wake.
Appeal from an order allowing W. H. Pace, trustee, as commissions tbe sum of $350, bis attorney, Jobn Bousball, $25, and cost of advertising, $69.30, and tbe controversy is wholly between tbe defendants Leacb and Pace.
Prior to 3 May, 1915, tbe defendant M. T. Leacb borrowed from tbe Raleigb Savings Bank and Trust Company tbe sum of $8,000, and to secure tbe payment of tbe same executed a deed of trust to tbe defendant W. H. Pace upon a storehouse and lot on tbe east side of Wilmington Street in tbe city of Raleigb. Default having been made in tbe payment of tbe said note and interest, tbe said Pace, who was tbe regular attorney of tbe Raleigb Savings Bank and Trust Company, being requested by tbe said trust company, advertised tbe said property for sale at tbe courthouse door in tbe county of Wake, and offered tbe same for sale on 3 May, 1915, wben and where Miss Dixie Leacb purchased tbe said property at and for tbe sum of $15,700.
Tbe above entitled action was then brought on 7 May, 1915, by tbe plaintiff, and tbe lot conveyed to secure tbe debt and tbe surplus in bands of trastee were attached by tbe plaintiff.
Tbe said trustee rendered bill as follows: Principal, $8,000; interest, $416; advertising, $69.30; auctioneer’s fee, $2; trustee’s commissions, $471, as of date 3 May, 1915; and tbe said Leacb having filed objection to tbe allowance of commissions, $471, advertising, $69.30, and tbe said Pace having requested tbe court to allow an attorney’s fee, bis Honor, J-uclge Daniels, fixed it at $25. It appeared before bis Honor that tbe said W. H. Pace, as trustee, prepared tbe advertisement, • bad it inserted in tbe News and Observer, bad it posted at tbe courthouse door and three other public places; spoke to two or three persons to attend tbe sale, attended tbe sale on 3 May, 1915, which sale occupied one-half or three-quarters of an hour; prepared tbe deed to Mr. Yass, assignee of Miss Dixie Leacb, and made demand upon tbe bidder, Miss Dixie Leacb, for tbe payment of tbe purchase price. These were all of tbe services rendered by Mr. Pace as trustee, and in tbe above-entitled action be filed an answer by bis attorney, Jobn Bousball.
Tbe deed of trust contains tbe following stipulations: If tbe said Leacb shall fail or neglect to pay tbe interest on said note as tbe same shall hereafter become due, or both principal and interest at tbe maturity of said note, or any part of either tbe interest or principal wben due and payable, or shall fail for six hours to keep tbe buildings on said property insured as below required, or shall fail for thirty days to pay any taxes or assessments on said property as below required, then, and in either of such events, tbe whole of said note shall be considered due and payable, regardless of tbe date of maturity expressed on tbe face of said note, and it shall be lawful for tbe said Pace, trustee, bis executors, administrators or assigns, to advertise tbe said hereby granted property for sale by notice published in some newspaper published in Raleigh, N. C., and by notice posted at the county courthouse door and three other public places in Wake County, N. C., for a time not less than thirty days prior to the date of sale, therein appointing a time and place of sale, and at such time and place to expose said land at public sale to the highest bidder for cash, and upon such sale to convey the same to the purchasers, and first retaining out of the proceeds of sale the costs of sale, including a commission of 3 per cent on, the proceeds of sale, to pay to the holder of said note so much of the residue as'may be necessary to pay off and discharge the same, and all interest then accrued and due thereon, together with such sums, with interest, as they may have paid out for taxes, assessment or insurance, as below allowed, and to pay the surplus, if any remain, to the said M. T. Leach, his executors, administrators or assigns.
It further appeared that the advertisement of the sale of the property appeared daily in the News and Observer, a newspaper published in the city of Raleigh, for thirty days.
Upon the foregoing evidence his Honor allowed W. H. Pace, as trustee, for his commissions, $350, allowed the News and Observer for advertisement, $69.30, and allowed John Boushall, as attorney of W. H. Pace, trustee, the sum of $25.
1. The defendant M. T. Leach excepted to the allowance of the sum of $350 to the trustee, upon the ground that the same was unreasonable for the service rendered by the trustee.
2. The defendant M. T. Leach excepted to his Honor’s allowance of the advertisement in the News and Observer, as it was unnecessary to put said advertisement in said paper daily for thirty days prior to the day of sale, and that the amount of $3 was all that the court could allow for the advertisement.
3. The defendant M. T. Leach excepted to the allowance to the attorney of the trustee, $25 — not upon the ground that the same was unreasonable, but that the fee of the attorney of the trustee could not be charged and retained by the trustee out of the proceeds of sale of the lot.
The defendant W. H. Pace, trustee, through his attorney, excepted to the allowance of only $350 to the trustee.
Both parties appealed.
No counsel for plaintiff.
Manning & Eitchin and W. L. Watson for defendant Leach.
John II. Boushall for defendant Pace.

Opinion:
AlleN, J.
1. Did tbe court bave tbe power to fix tbe compensation of tbe trustee for executing tbe power of sale, or is tbe compensation determined by tbe stipulation in tbe deed of trust ?
It is clearly recognized in Howell v. Pool, 92 N. C., 453, tbat tbe court can determine wbat is' a reasonable allowance for services rendered by a trustee,' although tbe amount is specifically provided for in tbe deed of trust, wben the court has taken jurisdiction of tbe cause and tbe parties, and tbe sale is made under its decree; but while there are expressions in Clark v. Hoyt, 43 N. C., 222, and Duffy v. Smith, 132 N. C., 38, indicating tbat this power does not exist, in tbe absence of evidence of fraud or undue influence, or tbat it is a cover for usury, wben tbe sale is made under tbe power in tbe trust deed, we bave not been able to find a case in our Reports directly deciding tbe question.
In Boyd v. Hawkins, 17 N. C., 329, which is relied on by tbe defendant Leach, it appeared tbat tbe relation of trustee and cestui que trust already existed under former conveyances, wben tbe agreement for compensation to tbe trustee was inserted in a subsequent deed of trust, and tbe decision rests upon the ground tbat tbe trustor was in tbe power of tbe trustee.
Tbe authorities elsewhere generally support the position tbat tbe parties bave tbe right to stipulate in tbe deed of trust bow much shall be paid for tbe services of tbe trustee, and tbat wben there is no fraud nor undue influence, and tbe contract is not a cover for usury, and is not so large as to be oppressive, tbat tbe contract of tbe parties will be enforced and cannot be disturbed by tbe courts. "Tbe mortgage or trust deed may provide for compensation to tbe mortgagee or trustee, and then tbe agreement of'the parties will, of course, govern." Jones on Mortgages (6 Ed.), sec. 1923.
"If tbe instrument creating tbe trust fixes tbe compensation, or declares tbat none is to be received, or where tbe trustee, previous to bis acceptance of tbe trust, makes a valid and binding agreement with tbe cestui que trust as to tbe compensation which be is to- receive, tbe compensation fixed by tbe instrument, or by such agreement, will be tbe rule of allowance to tbe trustee, and cannot be reduced by tbe court." 39 Cyc., 494.
"Tbe compensation of tbe trustee may be provided for in tbe trust instrument or by contract between tbe seller and tbe trustee. In tbat case, by tbe acceptance of tbe trust, tbe trustee will become bound to be satisfied by tbe amount there specified." 7 Mod. Am. Law, 332.
"Tbe acts of Assembly which settle tbe allowance to be made to persons sustaining fiduciary relations, for their care and trouble in tbe administration of their trusts, do not supersede tbe right of parties who are thereto legally competent to make their own contracts in this particular. If they agree upon a different form or rate of compensation, their agreement will constitute the law of the particular case, and as such be enforced." College of Charleston v. Willingham, 30 S. C. Eq., 195.
"Where the instrument creating the trust provides that the trustee shall have a compensation for his services in executing the trust, such provision will be enforced. If the instrument declares the rate of compensation it must be followed." In re Schell, 53 N. Y., 263, 265.
"Where the instrument creating the trust, however, fixes a different compensation, or declares that none is to be allowed, or where the trustee, previous to the acceptance of the trust, makes a valid and binding agreement with the cestui que trust as to the rate of compensation to be allowed for his services in the execution of the trust, that, of course, must prevail." Meacham v. Sternes, 9 Paige's Chancery Reports (N. Y.), 398, 404.
"We are of opinion . . . that the court had no more right to increase his compensation beyond that provided for by the trust, without the consent of the other parties in interest, than it would have had to decrease it without his consent." Southern Ry. Co. v. Glenn, 98 Va., 299, 313.
"It is next contended by appellants that the trustee was entitled to charge only reasonable compensation for the services performed by him as such trustee. Ordinarily, that is true, but that rule of law is inapplicable where the amount of the compensation to be paid had .been fixed by contract." Ladd v. Pigott, 114 S. W. (Mo.), 985.
"Where the instrument creating the trust fixed the compensation of the trustee, it must prevail." Biscoe v. State, 23 Ark., 592, 598.
We therefore conclude, as there is no allegation of fraud, undue influence, oppression or usury, that his Honor was in error in reducing the amount provided for in the deed of trust as compensation for the trustee, and that he is entitled to 3 per cent upon the proceeds of the sale, according to the agreement of the parties, and proceeds of sale means what the land sold for.
In Loftis v. Duckworth, 146 N. C., 344, the commissions of the trustee were confined to the debts secured in the deed of trust, and not allowed on the amount for which the property sold, because this was the express provision of the deed of trust.
2. Is the defendant trustee entitled to charge, as a part of the expense of sale, $69.30 for advertising in the News and Observer for thirty consecutive days? We think not.
The parties to a trust deed have the right to make a special agreement as to how the property shall be advertised for sale, in addition to statutory requirements, and may provide for additional expenditures for that purpose, but the deed of trust in this case follows very closely the language of section 641 of the Eevisal, which provides: "No real property stall be sold under execution, deed in trust, mortgage, or other contract hereafter executed, until notice of said sale shall be posted at the courthouse door and three other public places in the county for thirty days immediately preceding such sale, and also published for four weeks in some newspaper published in the county, if a paper is published in the county: Provided, the cost of such newspaper publication shall not exceed $3, to be taxed as cost in the action, special proceeding or proceeding to sell."
The advertisement contemplated by this section in the newspaper is once a week for four weeks, and in the absence of an agreement to the contrary, only $3 can be allowed for this item of expense. The small amount allowed by the statute gives clear indication that it was not intended that the notice in the newspaper should be published for thirty consecutive days.
3. Is the trustee entitled to the allowance of $25 for an attorney's fee?
A trustee has the right to employ counsel to aid him in the execution of his trust, and a court of equity may make reasonable allowance for the services rendered, but he cannot employ counsel at the expense of the trust estate when it is not necessary. Day v. Davis, 107 N. C., 270; Knights of Honor v. Selby, 153 N. C., 208.
In the first of these cases, Merrimon, G. J., speaking for the Court, says: "There is no statutory provision in this State, that has been brought to our attention, or within our knowledge, that prescribes or authorizes an allowance of compensation directly to the counsel of commissioners charged with a particular duty by an order of court, or otherwise, or to counsel of trustees, whatever may be the nature of the trusts wherewith they may be charged. Nor is there any general rule of practice prevailing in courts that permits such allowances to be made. In the absence of statutory provision, the courts, in the exercise of chancery powers, make allowances to commissioners and trustees in appropriate cases, and such allowances are sometimes enlarged so as to embrace reasonable compensation to counsel of such' commissioners or trustees in cases where counsel is necessary to a proper discharge of their duties, but in such eases the courts are careful to see that the services were necessary, that the charges are reasonable and are charged against the proper parties."
Applying this principle, we do not think the attorney's fee ought to be charged against the defendant Leach. The trustee had already executed his trust, except he had not paid the surplus in his hands to the trustor, and he was made a party to this action only for the purpose of attaching the fund in his hands. He had nothing to do with the action except to state the amount in his hands, and is not interested in the result except to obtain his commissions.
Tbis will be certified to tbe Superior Court with, directions to enter judgment in accordance with this opinion. The costs of the appeal will be divided between the defendants.
Reversed.