Case Name: ESTATE OF Ethel K. SCHWENK, Deceased. Appeal of Frank L. FISHER and Elizabeth S. Wiest
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1985-04-04
Citations: 507 Pa. 409
Docket Number: No. 114 E.D. Appeal Docket, 1984
Parties: ESTATE OF Ethel K. SCHWENK, Deceased. Appeal of Frank L. FISHER and Elizabeth S. Wiest.
Judges: Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, HUTCHINSON, ZAPPALA and PAPADAKOS, JJ.
Reporter: Pennsylvania State Reports
Volume: 507
Pages: 409–426

Head Matter:
490 A.2d 428
ESTATE OF Ethel K. SCHWENK, Deceased. Appeal of Frank L. FISHER and Elizabeth S. Wiest.
Supreme Court of Pennsylvania.
Argued Dec. 3, 1984.
Decided April 4, 1985.
Reargument Denied June 4, 1985.
Fred J. Wiest, Chester C. Corse, Jr., Pottsville, for appellant.
Morris R. Brooke, Karen A. Fahrner, Philadelphia, for Girard Bank.
Stephen M. Cushmore, Norristown, for appellee.
Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, HUTCHINSON, ZAPPALA and PAPADAKOS, JJ.

Opinion:
OPINION OF THE COURT
FLAHERTY, Justice.
This is an appeal from an order of the Superior Court which affirmed an order of the Orphans' Court Division of the Court of Common Pleas of Philadelphia County confirming a trustee's final account and dismissing remaindermen's objections to a credit claimed by the trustee. Schwenk Estate, 326 Pa.Super. 253, 473 A.2d 1078 (1984). The trustee, Girard Bank (formerly Girard Trust Company, now Mellon Bank (East), N.A.), had claimed the credit, in the amount of $45,692.86, against trust principal to reflect the total of compensation which it had paid to itself quarterly as compensation for its services as trustee during the twenty-nine years of the trust's existence. The sole issue on appeal is whether the trustee's compensation was properly to be treated as a charge against principal, or whether the trustee should have taken its compensation from the income of the trust.
The trust in question was created when a testatrix, Ethel K. Schwenk, died on June 6, 1949, leaving a will dated August 28, 1947. The will appointed Girard Bank as executor and created a testamentary trust, of which Girard Bank was to serve as trustee. Girard Bank received full compensation for its role as executor, as distinguished from trustee, when, in 1951, the executor's account was approved and duties as a trustee commenced. Under the terms of the trust, testatrix's sister, Gertrude T. Kauffman, was given a life estate in the income of the trust, and, upon Kauffman's death, Girard Bank was to distribute the principal, in equal shares, to remaindermen consisting of the surviving children of the sisters of testatrix's deceased husband. Following the death of Gertrude T. Kauffman on December 18, 1979, the appellants, as the remaindermen of the trust, objected to the trustee's final account on grounds that compensation for services as a trustee should have been taken from income of the trust, rather than from trust principal.
The relevant provision of testatrix's will, addressing compensation for the trustee, provided that Girard Bank should hold the residuary estate in trust, "to hold, invest and reinvest the principal thereof and to collect the interest, income, dividends and rentals therefrom and after the pay ment of taxes, trustee's compensation and other proper charges against income, to pay the whole of the net income to my sister Gertrude T. Kauffman, for and during the term of her natural life." (Emphasis added.) We believe this language is clear and unambiguous, and that the terms of the testamentary trust could not have been more explicit in their directive to pay trustee's fees out of the income of the trust. In view of this express language in the will, the contention of Girard Bank that the will permits payment of such fees out of the principal of the trust is patently without merit.
The courts below, in holding that the trustee's compensation was a valid charge against principal, erroneously considered evidence aliunde to reach a conclusion that is plainly contrary to the intent expressed in the will. This evidence consisted of a letter, dated August 8, 1947, sent by Girard Bank to testatrix approximately three weeks before the will in question was executed. The letter recorded an understanding between the parties that Girard Bank would handle the administration of testatrix's estate, stated that the amount of the trustee's compensation would be that set forth in Girard Bank's Standard Fee Schedule, and provided as follows with regard to the manner in which the trustee's compensation would be collected:
All trustee's fees payable from time to time shall be charged against the principal of the trust unless you specifically direct otherwise under the heading "Special Provisions" on the following page . We will appreciate your signing and returning this letter as evidence of your acceptance of this proposal.
In accordance with the request contained in the letter, testatrix affixed her signature and returned the letter to Girard Bank. Testatrix made no entries under the heading "Special Provisions," and, thus, did not then express an intent to draft a will that provided for payment of trustee's compensation in some manner other than from the principal of the trust. This fact was the basis of Girard Bank's contention that the will in question, which was executed approximately three weeks after Girard Bank sent the foregoing letter to the testatrix, should be interpreted as allowing compensation to be paid from trust principal.
It is well settled that, where a court can with reasonable certainty ascertain the intent of a testator through examination of the will itself, resort to consideration of matters external to that document is not generally proper. Taylor Estate, 480 Pa. 488, 494, 391 A.2d 991, 994 (1978). When a will as written is clear and unambiguous, it is error for the court to consider external evidence tending to impute an intent to the testator different from that appearing on the face of the will. Kelly Estate, 473 Pa. 48, 52-55, 373 A.2d 744, 746-748 (1977). As stated in Jacobsen Estate, 460 Pa. 118, 122-123, 331 A.2d 447, 449 (1975),
The common law has consistently proclaimed that the testator's intent is the crux in interpreting every will and that intent must be ascertained from the language chosen by the testator.... Courts will not search for the testator's intent beyond "the four corners of his will" when the language of that document is sufficiently clear and unambiguous so as to lead the court to believe it can with reasonable certainty effect a distribution in accordance with the testator's desires.
(citations omitted; emphasis added). See also Soles Estate, 451 Pa. 568, 571, 304 A.2d 97, 99 (1973). In the instant case, the courts below committed error by looking beyond the "four corners" of testatrix's will to consider the letter that had been exchanged between the parties prior to the will's execution. That letter stood in plain contradiction to the testamentary trust's clear and unambiguous provision contemplating payment of trustee's fees from trust income.
One may only speculate as to the reasons that testatrix's will did not, in its provisions regarding the source of the trustee's compensation, conform to the terms expressed in the letter which she earlier signed and returned to Girard Bank. Whether testatrix neglected to remember the letter, failed to understand the meaning of the letter, knowingly changed her mind about the manner in which the trustee's fee was to be paid, or breached an agreement with Girard Bank as to the provisions that would be contained in her will are all factors that are not relevant to the process of interpretation when the will itself is devoid of ambiguity.
When Girard Bank, as the designated executor and trustee for testatrix's estate, presented the instant will for probate, it undertook thereby to faithfully administer the provisions of the will, and, therefore, Girard Bank must be charged with knowledge of the clear and unambiguous terms in that document. We need not address the question of what timely recourse, if any, would have been available to Girard Bank, upon testatrix's death in 1949, when Girard Bank was charged with having discovered that the terms of the will did not conform to its expectations.
Fee agreements, governing the amount and manner of a testamentary trustee's compensation, have long been recognized as a valid means of governing terms of a testamentary trustee's compensation that have not been set forth in the will itself. See, e.g., Sinnott's Estate, 231 Pa. 299, 302, 80 A. 363, 364 (1911). See also, Decedents, Estates and Fiduciaries Code, 20 Pa.C.S.A. § 7185(c) (1975). Thus, in the present case, where the amount of the trustee's compensation was not set forth in the will which created the trust, and only the source of the trustee's payment was so specified, there is no dispute as to the fact that Girard Bank's Standard Fee Schedule controls the amount of the fees that the trustee could properly have claimed, since that Schedule was specified in the letter which testatrix signed and returned to Girard Bank. As to the source of the trustee's compensation, however, the will was not silent, and its terms must be regarded as controlling because they clearly express the testatrix's intent as to the funds from which the trustee should be paid. Indeed, it would be an anomaly to allow a fee agreement, a document not designed to express testamentary intent, to nullify the operative provisions of a subsequent will, where the subsequent will would have supplanted the earlier document even if the earlier document had been a will in itself.
Girard Bank contends that if, as we have here decided, the will is held to override the provision of the fee agreement governing the source of the trustee's compensation, then the trustee should be awarded a trust termination commission. This commission, which Girard Bank asserts to be due only if the sums heretofore discussed which it already paid to itself are disallowed as a credit against principal, would also be assessed against principal, and would be claimed in the same amount as the disallowed payments, to wit $45,692.86. We believe, however, that payment of any separately identified termination commission was foreclosed by the portion of the fee agreement that was not overridden by the will.
Trustees are normally entitled to receive commissions based upon the principals, as well as the incomes, of the trusts they administer. Breyer Estate, 475 Pa. 108, 379 A.2d 1305 (1977); Reed Account, 467 Pa. 371, 357 A.2d 138 (1976). Where the governing trust documents or fee agreements are silent as to providing for such commissions, the courts are empowered, pursuant 20 Pa.C.S.A. § 7185, to award such compensation. Id. Where, however, the operative provisions of a trust document, or fee agreement, fix the amounts and timing of the income and principal commissions, those provisions are to be given effect. Cahen Estate, 483 Pa. 157, 394 A.2d 958 (1978), appeal dismissed, 491 Pa. 422, 421 A.2d 209 (1980); Breyer Estate, supra.; Reed Account, supra.; 20 Pa.C.S.A. § 7185(c) ("Where the compensation of a fiduciary is expressly prescribed either by provisions of a will or deed of trust or other instrument under which he is acting or by provisions of an agreement between him and the creator of the trust, nothing in this section shall change in any way the rights of any party in interest or of the fiduciary.")
At no time in the course of this controversy have the parties disputed that the amounts of the trustee's fees, as opposed to the source of their payment, are governed by the Standard Fee Schedule which was adopted by reference in the fee agreement letter. Girard Bank presented testimony that the Standard Fee Schedules in effect since the inception of this trust have not provided for the assessment of separately identified income and principal commissions. Specifically, the Schedules have not charged a commission on the income of a trust and then assessed a separate fee against principal as a termination commission upon the closing of a trust account. Rather, the Schedules have in effect combined the two types of commissions by providing for periodic payments of trustee's compensation throughout the life of the trust, the magnitude of such payments being determined ás a percentage of trust principal. A witness for Girard Bank testified that this compensation arrangement was adopted for the Bank's benefit, so that the Bank would not have to await the termination of trust accounts to receive significant portions of its compensation.
Testatrix's will provided that the "trustee's compensation", thus the amounts specified in the Standard Fee Agreements, should be paid from the income of the trust. Since the periodic fees payable included what were in effect installments upon the termination commission that would otherwise have been collectible in one lump sum at the end of the trust's existence, Girard Bank has, by its failure to collect those fees while there was income from which they could be paid, disabled itself from collecting them.
In short, this is a case where a professional trustee failed to take adequate notice of provisions governing its own compensation. Whether the trustee can obtain reimbursement from the estate of the life income beneficiary, Gertrude T. Kauffman, for sums paid to her which properly should have been reserved by the trustee as its own compensation is not at issue in the present case. In any event, the remaindermen of the trust shall not be required to bear the loss accruing from the trustee's error. The credit against principal claimed by the trustee is, therefore, disallowed.
Order of the Superior Court reversed.
HUTCHINSON, J., did not participate in the decision of this case.
NIX, C.J., files a dissenting opinion.
ZAPPALA, J., joins in the Majority and files a concurring and dissenting Opinion.
. We find no merit in Girard Bank's assertion that the remaindermen culpably acquiesced in the trustee's actions and that they should, therefore, be estopped from objecting to the credit claimed by the trustee at the final accounting. Girard Bank never filed an interim account for the trust, and the account which it filed as executor of testatrix's estate, showing that, pursuant to an agreement, it took compensation from estate principal for its role as executor, cannot be regarded as having given notice to the remaindermen that compensation as trustee would be paid in some manner other than as the trust document provided.