Court Opinion

ID: 6378726
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:58:05.73806+00
Date Added: 2024-06-11T15:50:16.779573
License: Public Domain

Henderson J.,
dissenting. — This decedent died in 1899, leaving his daughter
all his real estate “in trust” for her life, with a gift over at her death. No trustee was named in the will, and so at first she managed the real estate herself. About 1916, a parcel of this real estate was condemned, and a trustee became necessary to make title.
*569This exceptant chose the Republic Trust Company, afterwards merged with the United Security Trust Company, which company by its bankruptcy has forfeited the trusteeship and has filed this account to be relieved thereof. It has taken credit therein for $338.02, being three per cent, on the gross debits of principal, all derived from the sale of real estate. This is the usual rate of commission for converting real estate and it would have been entitled to no more were the trust terminated. The majority opinion points out that the bankrupt trustee would only be entitled to compensation, not commissions, and fixes $250 as a fair amount.
In selecting a corporate trustee, this life tenant was justified in assuming that it would serve to the termination of the trust, and meanwhile she would have the benefit of its expert supervision and the security of its capital stock. Through its mismanagement she is deprived of both of these, and although this trustee has had commissions of about $400 on income, it has requested full commissions on the corpus; while this has been denied, compensation in the sum of $250 has been allowed. The auditing judge recognizes the rule in this state as laid down in Mylin’s Estate, 32 Pa. Superior Ct. 504, and quotes at length in his adjudication what our Superior Court said therein.
Nevertheless, because this trustee had served fifteen years, he was of opinion that it did “not seem” to him “just to disallow these commissions,” and, hence, this should constitute an exception to the rule.
Can we say it is “just,” that is equitable and fair, to allow compensation and compel the fund to pay a second set of commissions to a substituted trustee?
If this “exception” to the rule, in favor of forfeited trusteeships by bankrupt banks, is permitted to stand, I venture to predict it will presently become the rule. It is highly inequitable, when these parties in interest are deprived of the management of this company and the security of its stock, to compel them to pay a second set of commissions, and this through no fault of their own, but due solely to the mismanagement of the corporate trustee.
The cases relied on in the majority opinion are Makin’s Estate, 7 Dist. R. 126, Wainwright’s Estate, 27 Dist. R. 955, and Rominger’s Estate, 28 Dist. R. 513.
Makin’s Estate is an extraordinary extension of judicial tenderness towards a trustee who had invested the trust estate’s funds in third and fourth mortgages, who was surcharged, paid the surcharge and resigned. It is not a case to be relied upon in laying down a rule granting compensation in forfeited trusteeships of bankrupt trust companies.
In Wainwright’s Estate the deceased trustee had served for twenty years and had waived all commissions on income.
And in Rominger’s Estate the question of an allowance of compensation out of corpus was not involved. Upon the resignation of the trustee the costs of the accounting were directed to be charged to the principal account.
It should, furthermore, be pointed out that such commissions go to swell the, fund for the depositors, and had the estate been awarded a surcharge, not one penny of it could have been collected.
I am of opinion that it would be unjust to allow any compensation out of corpus. It will not do to plead that this corporate trustee has administered this fund for fifteen years and should have some compensation. That can scarcely be urged as a reason why the beneficiaries should be compelled to pay twice; and it may be, at least potentially, thrice.