Court Opinion

ID: 9736443
Source: CourtListenerOpinion
Date Created: 2023-08-26 18:56:53.965271+00
Date Added: 2024-06-11T18:27:06.738825
License: Public Domain

Concurring Opinion by
Mr. Justice Bell,
July 3, 1951:
Mr. Justice Stearns has written a very able exposition of the existing law and has decided that the Act of April 10, 1945, is not retroactive and therefore the decree of the Orphans’ Court must be affirmed. With all of this I fully concur; but at that point we part.
This was a test case to secure increased compensation for a trustee who had also been executor, as well as to secure interim commissions on principal; incidentally involved were a number of related and important questions. These questions or problems have been vexing fiduciaries, laymen, the bench and the bar.
There has been a very great change in conditions in recent years, and it is trite but true to say that changing times and conditions sometimes require changes in our law. The adage of Sir Edward Coke is particularly appropriate: “Reason is the life of the law.” I believe that if the reason for a rule or principle of law no longer exists and changed conditions have made it unwise or unjust, to continue it unchanged only brings the law into public disrepute. If the law is judicially made, it can, and if no property or contract *354rights are involved, it should be judicially changed if justice requires.
Because the questions presented in this case are of such great importance to the community, this Court should, in my judgment, avail itself of this opportunity to (a) change or modify several rules or principles which are now, because of changed conditions, producing inequity or injustice; and (b) erect certain new modern standards for the guidance of all parties who are- or may be concerned.
Section 45 of the Fiduciaries Act of June 7, 1917, supra, provided that “In all cases where the same person shall, under a will, fulfill the duties of executor and trustee, it shall not be lawful for such person to receive or charge more than one commission . .*
The first question to be decided is: Was the Act of 1945 which repealed Section 45 of the Fiduciaries Act, retroactive or prospective; and if prospective, to what did it apply?
“ ‘It is a sound and well-settled principle of statutory construction that no law shall be construed to be retroactive unless clearly and manifestly so intended: Painter v. B. & O. R. R. Co., 339 Pa. 271; Farmers N. Bk. & Tr. Co. v. Berks Co. R. E. Co., 333 Pa. 390, 393; Taylor v. Mitchell, 57 Pa. 209. Cf. Article IV, Section 56, of the Statutory Construction Act of May 28, 1937, P. L. 1019 . . . ’: Com. ex rel. Greenawalt v. Greenawalt, 347 Pa. 510, 512, 32 A. 2d 757.”: In Re: Petition of Bowie Coal Company, 368 Pa. 102, 82 A. 2d 24.
' “When an act is changed or repealed ... or when the words or meaning of a statute are not explicit or clear, the intention of the legislature is to be gathered not only by a consideration of the new act but also by examining the occasion, reason or necessity for the law; the circumstances under which it was enacted; *355the mischief, if any, to be remedied; the object to be attained; and the old law upon the subject: Phipps v. Kirk, 333 Pa. 478, 5 A. 2d 143; Orlosky v. Haskell, 304 Pa. 57, 66, 155 A. 112”: Martin Estate, 365 Pa. 280, 283, 74 A. 2d 120. In the light of these authorities we are reluctantly forced to the conclusion that the Act of 1945, while remedial, was intended to be prospective only. However, the legislature clearly and specifically says: “This Act shall take effect immediately upon its final enactment”; and it is here that I depart from the majority opinion. I would hold that the Act, as it clearly states, takes effect immediately upon its enactment; and, therefore, a trustee who was an executor-trustee may be entitled, in the discretion of the Orphans’ Court, to compensation for services which he renders after the Act went into effect, i.e., after April 10, 1945.
The next question that arises is: What compensation is a trustee entitled to and how is it to be computed? By the Act of June 14, 1836, P. L. 628, §29, supra, “It shall be lawful for any court ... to allow such compensation to . . . trustees . . . for their services, as shall be reasonable and just”. This was merely a declaration of the standard or rule for determining compensation of fiduciaries, which rule has been by now so long and well established that it is universally recognized as the bedrock on which compensation must always be based: Montgomery’s Appeal, 86 Pa. 230, 234, 235; Harland’s Appeal, 5 Rawle 323, 330; Pusey v. Clemson, 9 S. & R. 203, 208; Taylor’s Estate, 281 Pa. 440, 443, 126 A. 809; Harrison’s Estate, 217 Pa. 207, 210, 66 A. 354; McCaskey’s Estate, 307 Pa. 172, 182, 160 A. 707; Davidson’s Estate, 324 Pa. 90, 96, 186 A. 796; Crawford Estate, 340 Pa. 187, 197, 16 A. 2d 521; Reid’s Estate, 250 Pa. 103, 95 A. 392. What is reasonable and just, or as it is sometimes expressed, fair and just compensation is a matter for the *356discretion of the court below, subject to review by an appellate court: Strickler Estate, 354 Pa. 276, 277, 47 A. 2d 134; Taylor’s Estate, 281 Pa. 440, 443, 126 A. 809.
In accordance with the objects sought by the repeal of Section 45 of the Fiduciaries Act, namely, to allow a trustee to receive increased or additional compensation, I would carry out the legislative intent and give recognition and effect to the vastly changed conditions which we all know have occurred in the last 15 years. To accomplish these objectives, I would allow the Orphans’ Court to fix a trustee’s compensation with only three qualifications or limitations'. (1) that it must be reasonable and just; (2) that it can be awarded only under proper circumstances and at a proper time; and (3) that it is, of course, subject to review by the appellate courts. Compensation, popularly and frequently referred to as commissions — although compensation, not commissions, is the correct and proper standard: McCaskey’s Estate, 307 Pa. 172, 182, 160 A. 707; Harrison’s Estate, 217 Pa. 207, 209, 66 A. 354; Gardner’s Estate, 323 Pa. 229, 238, 185 A. 804; Montgomery’s Appeal, 86 Pa. 230, 234, 235 — is often determined or “arrived at as a matter of convenience by way of a percentage . . .”: Montgomery’s Appeal, 86 Pa. 230, 234; Harrison’s Estate, 217 Pa. 207, 209, 66 A. 354; Bosler’s Estate, 161 Pa. 457, 462, 29 A. 57; Taylor’s Estate, 281 Pa. 440, 443, 126 A. 809. Notwithstanding these authorities, we decided in Gardner’s Estate, 323 Pa. 229, 239, supra, that the court cannot fix the compensation by way of commissions on a sliding scale or on a graduated percentage basis. Since this is merely a convenient rule-of-thumb method of determining and fixing compensation, it seems to me that there is neither reason nor necessity for continuing the prohibition which Gardner’s Estate unnecessarily and unwisely established.
*357How should compensation be determined? Compensation should be determined, fixed and awarded upon a consideration of (1) the labor and services which were performed (which, in turn, include a consideration of the nature and difficulty of any problems which were involved) ; (2) the responsibility incurred; (3) the time expended; (4) the size of the estate; and (5) the results of the fiduciary’s services.
How large can a trustee’s compensation be? Every man, woman and child in America knows that what was reasonable and just compensation in 1900 or in 1910 or in 1920 or in 1938 is — because of the tremendous increase in the cost and expenses of everything — not just or adequate today. I would, therefore, remove, as far as future cases are concerned, the 8% ceiling which apparently was fixed in estates of $500,000. or over by our decision in Gardner’s Estate, 323 Pa. 229, supra, and in Quigley’s Estate, 329 Pa. 281, 198 A. 85; and I repeat I would allow the Orphans’ Court initially to determine what was reasonable and just compensation in accordance with the standards herein established. In determining what is fair and just compensation, consideration should be given, in my judgment, not only (a) to the services rendered by the trustee (as hereinabove more particularly detailed); but also (b) to the number of trustees, if there be more than one, (not forgetting the interest and right of an individual trustee to reasonable and just compensation in accordance with his ability, services and responsibility) ; and (c) to the interests, rights and welfare of (life tenants and) remaindermen who, as compared with the fiduciaries, were undoubtedly the primary objects of testator’s interest and concern.
The trustee likewise desires a modification of our long established rule which forbids interim compensation even during a long trust: Bosler’s Estate, 161 Pa. 457, 29 A. 57; Snyder Estate, 346 Pa. 615, 622, 31 A. *3582d 132. This rule is so unnecessarily harsh, especially in the case of an individual trustee who, under the present law, (unless he is also an executor) would never (personally) receive any compensation on principal if he dies prior to the termination of the trust, that this Court has itself breached it and in exceptional cases has allowed interim compensation on principal to be paid before the trust terminated or before the particular trustee’s relation to it ended: McCaskey’s Estate, 307 Pa. 172, 182, 160 A. 707; Penn-Gashell’s Estate (No. 1), 208 Pa. 342, 344, 57 A. 714; Thouron’s Estate, 182 Pa. 126, 37 A. 861; Snyder Estate, 346 Pa. 615, 623, 31 A. 2d 132; Boster’s Estate, 161 Pa. 457, 29 A. 57. I thoroughly agree with the judges of the Orphans’ Court of Philadelphia County who are unanimously of the opinion that “the standards of commissions payable to a trustee for the management of a trust should be revised in favor of increased compensation . . . [and] the rule forbidding interim compensation should be abrogated” in a long-term trust. There is no fairness or justice in any longer applying such a principle to such a trust. On the other hand, the proposed principle or practice advocated by the corporate fiduciary of taking annual compensation by way of commissions, based on the annual market value (or even the inventory value) of the principal of the estate, is so fundamentally contrary and antagonistic to all our authorities, and to our philosophy of trusts and their preservation, and to our long established policy of awarding compensation only for services which were rendered during the entire trust; and the likelihood of the proposed practice producing diminution of or disaster to the trust is so great — that for all these reasons I believe such new pracJ tice or principle would, be approved only if authorized or required ■ by an act of the legislature.
One other important question remains to be considered. ' The majority opinion interprets the effect- of *359the repeal of Section 45 of the Fiduciaries Act to apply only to executorships and trusts created after April 10, 1945, for the reason that prior thereto the rights of the testator or of the remaindermen had become vested. I agree that if property or contract rights had become vested at the audit in 1930 or before, they could not thereafter be changed by the legislature: Crawford Estate, 362 Pa. 458, 467, 67 A. 2d 124; McKean Estate, 366 Pa. 192, 77 A. 2d 447. What were these property or contract rights and how did they become vested? The majority say these rights arose out of a contract and the fiduciary has been paid his compensation in full; and consequently, the imposition of additional compensation would impair vested rights and make the Act of April 10, 1945 retroactive and unconstitutional. Concededly there never was any written or oral or specific contract; and the contract which the majority implies and which it refrains from defining is nothing but a creation or invention of the Court. The contract which the Court implied was, I deduce, that the testator or the remainder-men would pay (at the audit of the executor’s account) one commission on principal and the executor-trustee would accept this one commission as payment in full for all services which he had rendered as executor and which he would thereafter render as trustee. To avoid injustice which would occasionally result from construing the Fiduciaries Act literally, this Coux*t has allowed and the various Orphans’ Courts throughout the Commonwealth have often allowed an executor-trustee “to charge and receive more than one commission”, (apparently contrary to the clear language of Section 45 of the Fiduciaries Act), namely, an additional commission for unusual or extraordinary services: Thouron’s Estate, 182 Pa. 126, supra; PennGaskell’s Estate (No. 1), 208 Pa. 342, supra; McCaskey’s Estate, 307 Pa. 172, supra; Powers’ Estate, 58 D. & C. 379.
*360The Court has justified this additional commission on the theory that the commission theretofore paid was to cover only the usual ordinary services of the trustee; and if unusual services were rendered, this was outside the scope of the original (implied but never defined) contract and hence could be compensated by the payment of an additional commission. One trouble with this • theory is that it is unwarranted by and is directly violative of Section 45 which prohibits the payment of more than one commission in all cases. All of the decided cases can be harmonized with Section 45 and can be justified by reference and adherence to the (hereinabove mentioned and) well established rule that a trustee is not entitled to any fixed or established rate of percentage or to any fixed or specific amount of compensation but he is entitled to fair or reasonable and just compensation for his services “and this is necessarily to be determined by the facts and circumstances of each case: McCaskey’s Estate, 307 Pa. 172, 178, 160 A. 707”: Davidson’s Estate, 324 Pa. 90, 96, 186 A. 796. If the initial compensation was (because of unforeseeable circumstances) not reasonable and just, why is not the trustee entitled to additional compensation in order to make his total compensation reasonable and justf This would not run afoul of Section 45 — it would be merely a payment of fair and just compensation in two or more installments. If there ever was any implied contract between the testator or the remaindermen in his will and the fiduciary, it was necessarily an agreement that the executor-trustee would be paid and would accept for his services — past, present and future — "fair or reasonable and just compensation”. If it be a fact that the trustee was not paid in 1930 a fair and just compensation for his past, present and future services, is it not obvious that no vested right would be infringed by now or hereafter paying the fiduciary an additional sum sufficient *361to give Mm the reasonable and just compensation to which he was under the law entitled, but which the court, lacking prophetic foresight, could not at that time accurately and justly determine?
While the question of whether any rights had vested in this case may be a close one (Cf. Nirdlinger’s Estate (No. 2), 327 Pa. 171, 193 A. 30; Nirdlinger’s Estate, 331 Pa. 135, 200 A. 656; Farmers N. Bk. & Tr. Co. v. Berks County R. E. Co., 333 Pa. 390, 5 A. 2d 94; Levy’s Estate, 333 Pa. 440, 5 A. 2d 98; Demorest v. City Bank Farmers Trust Co., Trustee, 321 U.S. 36, 64 S. Ct. 384; Crawford Estate, 362 Pa. 458, supra) I would hold that if any rights had vested by an implied contract or by the payment of a commission to an executor-trustee for his services in that dual capacity, they would not be violated by awarding to such a trustee additional compensation if the compensation he had theretofore received was not reasonable and just.

 Italics throughout, ours.