Opinion ID: 1344780
Heading Depth: 1
Heading Rank: 3

Heading: fees and expenses

Text: The standard of appellate review in determining whether the trial court erred in granting the allowance of interim administration expenses is whether the trial court's ruling is supported by substantial competent evidence. Thus, [w]here the trial court has made findings of fact and conclusions of law, the function of an appellate court is to determine whether the findings are supported by substantial competent evidence and whether the findings are sufficient to support the trial court's conclusions of law. Substantial evidence is evidence which possesses both relevance and substance and which furnishes a substantial basis of fact from which the issues can reasonably be resolved. Stated in another way, `substantial evidence' is such legal and relevant evidence as a reasonable person might accept as being sufficient to support a conclusion. Tucker v. Hugoton Energy Corp., 253 Kan. 373, 377, 855 P.2d 929 (1993). K.S.A. 59-1717 provides: Every fiduciary shall be allowed his or her necessary expenses incurred in the execution of his or her trust, and shall have such compensation for services and those of his or her attorneys as shall be just and reasonable. At any time during administration the fiduciary may apply to the court for an allowance upon his or her compensation and upon attorneys' fees. In its objections to the petition for allowance of interim administration fees, Marine claimed that if the executor had properly managed the estate, much of the expenses for which the executor requested compensation, and all of the attorneys' expenses sought for UMB's litigation of Marine's claim in New York, would not have been necessary. Thus, Marine argued it was the executor's act of discontinuing payments on the note which caused acceleration of the note and forced Marine to file a lawsuit in New York to collect the note as well as attorneys' fees and costs. Because it was the conduct of the executor that caused much of the fees to be incurred, the executor should not be paid as requested. Marine further argued in its objections to the allowance of fees that the note in question is binding on the heirs of Dr. Reynolds. Now that the executor has caused the note to be accelerated, [Marine] will be obligated to institute litigation against the heirs to collect any deficiency that is not collected in this case. But for the conduct of the executor, no such suit would ever be necessary. But for the litigation instigated by the executor's failure to continue paying the note, there would have been sufficient assets in the estate to pay the note in full. The trial court, however, did not find that the executor had failed to perform the duties imposed on him by ceasing payment on the note. Marine asserts that this finding was error because Mr. Buchmann, one of the attorneys involved in representing the estate, testified that he had discussed the provisions of the promissory note with the executor, and that they were both aware that ceasing to make payments on the note would expose the estate to the acceleration of the balance and a 2% interest penalty per month, in addition to potential litigation expenses. Marine contends that the executor's decision to terminate payment on the 19th of 24 payments on the note was an imprudent act, causing the estate to incur additional fees and expenses that would have been unnecessary had the note simply been paid. Thus, Marine concludes that because the New York litigation was engendered by the imprudent acts of the executor, it is inequitable to force Marine to bear the burden of the executor's acts, and the trial court erred in allowing expenses related to the New York litigation to be paid. UMB avers that Marine's claims are not compelling and cites Murdock v. First National Bank, 220 Kan. 459, Syl. ¶ 3, 553 P.2d 876 (1976), in which the court stated: An executor has a duty to collect and preserve the assets of a decedent's estate and in so doing he may employ counsel to assist him. The necessity for the particular legal services and the reasonableness of the amount of compensation to be paid out of the estate are essentially questions of fact for the tribunal authorized to order their allowance. (Following In re Estate of Murdock, 213 Kan. 837, 519 P.2d 108, Syl. ¶ 10.) Although the executor and his attorneys knew that they were subjecting the estate to potential litigation and significant cost by discontinuing payment on the note, the executor may have deemed it in the best interests of protecting the estate's assets to cease payment. Perhaps it was a financially calculated risk to incur the cost of defense, rather than to continue to pay on a note which no longer had any value. Given the testimony of those involved, there is no indication that UMB purposefully subjected the estate to needless costs. Marine shares some of the responsibility for the estate incurring costs to defend the suit, as it should have filed a claim in the estate as opposed to a law suit in New York. The two individuals who represented the bank's interest as executor testified that an award of fees in the amount of $6,200 had been granted for the work done relating to Reynolds' wife's estate, but that the court had not awarded any compensation for the administration of Reynolds' estate. In conclusion, there is substantial competent evidence to support the trial court's ruling to allow attorney fees and appointment of an interim executor. Substantial evidence is such legal and relevant evidence as a reasonable person might accept as being sufficient to support a conclusion, and a reasonable person could find such evidence to support the trial court's conclusion that the estate should pay the requested fees. Affirmed in part and reversed in part.