Court Opinion

ID: 4009909
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:10:52.439828+00
Date Added: 2024-06-11T07:44:41.709159
License: Public Domain

This appeal is from an order of the circuit court for Dane county, entered August 3, 1942, disallowing all attorney fees, *Page 98 
except the sum of $500, which was allowed by the court for legal services subsequent to May 19, 1941, in the action commenced January 18, 1940, by Robert N. Nelson and another, plaintiffs, against Madison Lutheran Hospital and Sanatorium, defendant, which action came to this court on appeal from orders entered on August 5 and August 15, 1940, overruling defendant's demurrers to separate complaints.  That case is reported under the title Nelson v. Madison LutheranHospital  Sanatorium, 237 Wis. 518, 297 N.W. 424, to which reference is made for a statement of the facts and the issues considered by the court in connection with that appeal.
After return of the record to the court below, the defendant, Madison Lutheran Hospital and Sanatorium, answered, putting in issue the allegations of the Nelson complaint and the complaint of the Union Trust Company, as special administrator of the estate of Torger G. Thompson, deceased. On the 30th day of October, 1941, the Madison Lutheran Hospital and Sanatorium commenced an action in the circuit court for Dane county against the Union Trust Company, as special administrator of the estate of Torger G. Thompson, deceased, and Robert N. Nelson, individually and as representative of all of the donors to the Madison Lutheran Hospital and Sanatorium.  From the allegations of the complaint in that action it appears that plaintiff corporation proposed a plan to construct and operate a fifty-bed convalescent hospital and sanatorium at an approximate cost of $140,000, including a $40,000 bond issue.  The prayer was for judgment, (a) that the court construe the trust impressed upon its funds, and that the court find and determine that the proposed plan for the carrying out of said trust is legal and within the terms thereof; and (b) for such other relief as may be just and equitable.  The two actions then pending in the circuit court were consolidated for trial.  On the trial separate findings of fact, conclusions of law, and judgments were entered. *Page 99 
In the action of Nelson v. Madison Lutheran Hospital 
Sanatorium the court found, in part, as follows:
"(1) That on the 22d day of April, 1922, one Torger G. Thompson, now deceased, executed a subscription agreement in writing, wherein he agreed for himself, his heirs, executors, administrators and assigns to contribute the sum of $50,000 for the purpose of erecting and equipping a sanatorium for the treatment of sicknesses and ailments of all kinds, including the operation of a general hospital and surgical work.  Said contribution was to become binding only upon the following conditions and restrictions, to wit:
"(a) That there should have been subscribed and paid by other persons the additional sum of $100,000 for the purpose of erecting and equipping of said institution.
"(b) That said institution shall be a Lutheran institution.
"(c) That said institution shall be erected at Madison, Wisconsin.
"It was further a condition of the payment of said contribution that all the foregoing conditions, (a), (b), and (c), must be complied with within six years from April 22, 1922; that in case of a failure thereof, then said contribution agreement should be absolutely void.
"(2) That none of the conditions (a), (b), and (c) have been complied with except said condition (a), which condition was complied with prior to October 20, 1927.
"(3) That the defendant, the Madison Lutheran Hospital and Sanatorium, a corporation, was organized on September 14, 1922, for the purpose of receiving said $50,000 contribution and to carry out and fulfil the conditions and restrictions above stated; that said corporation has ever since its organization had and now has the full control and supervision of carrying out and fulfilling said conditions and restrictions; that it has at no time petitioned the court for guidance or instructions.
"(4) That said Torger G. Thompson died testate in Dane county on the 13th day of November, 1923, without having paid said contribution; that his estate was duly probated in the county court for Dane county; that thereafter and on October 20, 1927, and pursuant to an order of said court, the executors of said estate paid said sum of $50,000 to the *Page 100 
defendant, the Madison Lutheran Hospital and Sanatorium, in fulfilment of said condition (a) of said contribution agreement dated April 22, 1922.
"(5) That by the terms of the will of said Torger G. Thompson, the residue of his estate after the payment of certain bequests and legacies therein provided for, was devised and bequeathed to the University of Wisconsin for certain designated purposes.
"(6) That the defendant, the Madison Lutheran Hospital and Sanatorium, promptly after its incorporation entered upon the soliciting of sufficient funds for the erecting and equipping of said institution; that solicitors were hired and extensive advertising campaigns were entered upon from time to time, all for the purpose of obtaining the necessary funds to erect and equip said institution; that between 1922 and 1929 said soliciting and advertising campaigns were made on varying bases and estimates as to the size of the institution and its cost of erection and equipment; that estimates varied from a 100 to a 160-bed institution, and at a cost ranging from $200,000 to $450,000; that practically no soliciting for subscriptions or campaigns for that purpose have been carried on since 1930; that the reason for such cessation was the inability to obtain sufficient funds to carry out the program as theretofore contemplated, represented, and advertised.
"(7) That said Torger G. Thompson and his wife contributed $12,000 to said project in addition to said $50,000 contribution agreement; that the total subscriptions collected from other persons were somewhat less than $84,000; that the total amount received, including the Thompson family contributions, aggregate somewhat less than $146,000; that there are about $34,000 in subscriptions obtained prior to 1930 on which no payments have been made; that on all subscriptions obtained there has been less than $50 paid since 1932.
"(8) That in 1924 the defendant, the Madison Lutheran Hospital and Sanatorium, purchased a proposed site for said institution and paid therefor about $54,000.  Said site consisted of a plot of ground located in the city of Madison, together with some dwelling houses situated thereon; that some repairs or improvements have been made on said houses; that no steps have been taken at any time looking toward the *Page 101 
actual erecting or equipping of a hospital or sanatorium of any kind or nature; that said defendant has expended the further sums for defraying said campaign expenses of approximately $22,000, and for architects' fees somewhat over $5,000; that the total property now held in trust by said defendant, the Madison Lutheran Hospital and Sanatorium, consists of said proposed building site, about $65,000 in cash and securities, and about $34,000 in subscription agreements which are all over ten years old, and which may or may not be collectable or may be outlawed.
"(9) That for some years last past said defendant has through its governing body advocated the abandonment of obtaining sufficient funds to erect and equip a sanatorium for the treatment of sicknesses and ailments of all kinds, including the operation of a general hospital and surgical work; that for some years last past said defendant through its governing body has advocated and now advocates the establishment of a convalescent institution, either independently or in connection with some hospital.
"(10) That the subscriptions as made by the plaintiff Robert N. Nelson and other persons than said Torger G. Thompson were made in reliance upon the carrying out and fulfilment of the terms, conditions, restrictions, and purposes as set forth in the offer and contribution agreement of said Torger G. Thompson."
As conclusions of law the court found that the contribution agreements of Thompson and Nelson both provided for donations to be used for a specific purpose and were not general charitable gifts; that the cy pres doctrine has no application and cannot be invoked in this action; that the erection and equipment of a convalescent institution as now contemplated, would not be a compliance with the conditions and restrictions of the Thompson subscription agreement; that the subscription agreements of Thompson and Nelson became null and void by reason of the failure to comply with the conditions and restrictions therein contained; that the plaintiff Nelson and the plaintiff Union Trust Company, as special administrator of the estate of Torger G. Thompson, deceased, are entitled *Page 102 
to judgment, (a) adjudging that the defendant, the Madison Lutheran Hospital and Sanatorium, holds all of said property as trustee for the benefit of the plaintiffs and other persons having an interest therein; (b) for the appointment of a receiver of the property so held in trust by said defendant; (c) for an order restraining said defendant from using or making any change or disposition of any of said trust property; (d) for a full and detailed accounting by said defendant to such receiver of all property received and all proceedings done and had as such trustee; and (e) that plaintiffs recover costs as provided by law.
So far as material, like findings and conclusions of law were made in the action of Madison Lutheran Hospital and Sanatorium v. Union Trust Company, as special administrator of the estate of Torger G. Thompson, deceased, and Robert N. Nelson, individually and as representative of all of the donors of the Madison Lutheran Hospital and Sanatorium.  Separate judgments, dismissing both actions, were accordingly entered on the 12th day of January, 1942.  No appeal has been taken from either of said judgments.
On April 21, 1942, the Madison Lutheran Hospital and Sanatorium filed a final account in which it petitioned the court for approval and payment of $3,043 attorney fees to Messrs. Sanborn, Blake  Aberg, for legal services in both the supreme court and circuit court.  The itemized statement of said attorneys showed a credit for $1,000 paid on account, October 1, 1941.  The plaintiff Robert N. Nelson filed objections, principally on the ground that the decision of the supreme court on the appeal from the orders overruling defendant's demurrers (237 Wis. 518, 297 N.W. 424) determined fully the issues of law, and that the material facts were not in dispute.  A hearing was had.  There was offered and received in evidence the record in the case of Robert N. Nelson and another v. Madison Lutheran Hospital and Sanatorium, consisting of the complaints in that action, demurrers and *Page 103 
orders of the court overruling such demurrers, and the mandate and decision of the supreme court; also, the records in the two actions which were consolidated and tried together. On August 3, 1942, the court entered an order allowing Messrs. Sanborn, Blake  Aberg the sum of $860 for services up to May 19, 1941, as proper charges to be paid out of the trust funds.  The order further provided:
"That for the services itemized in such itemized statement and rendered on and after May 19, 1941, practically all of which were rendered with reference to establishing a convalescent hospital with the trust funds, an allowance of $500 to be paid out of the trust funds is a fair and liberal allowance.
"That, considering the payment made by defendant to its said attorney October 1, 1941, in the amount of $1,000, there is properly payable to Sanborn, Blake  Aberg, a balance of $360 out of the trust funds, which sum of $360 the receiver herein is hereby directed to pay out of the funds in its hands."
The defendant, Madison Lutheran Hospital and Sanatorium, and Messrs. Sanborn, Blake  Aberg appeal.
On the former appeal this court held that the donations of Thompson and Nelson were gifts for a specific purpose, not general charitable gifts.  The court said:
"A mere glance at the subscription contract of Thompson makes this clear.  The project is accurately described and precisely limited in the opening clause.  It is again described in the promissory clause and the whole matter is virtually repeated in the conditions expressly attached to the promise of Thompson. . . .  It is expressly provided in Thompson's contract of subscription that conditions of the subscription must be complied with within six years from the date of the contract of subscription.  Certainly, it may be argued with *Page 104 
considerable force that on this score alone defendants are not in a position to successfully attack the complaints by demurrer in view of the failure for so many years to carry out the projects. . . . In the case of Nelson, the contract is not so elaborate.  Nelson simply promised to pay money for the purpose of raising funds for a building for the Madison Lutheran Hospital and Sanatorium at Madison. . . .  The gifts [Thompson's and Nelson's] were to a single definite building project, extremely limited in scope, and to nothing else.  The project has failed and has been abandoned according to the allegations of the complaint.  By no process of construction may an alternative purpose be found.  This being true, the fund must be returned to the donors even in the absence of express conditions or provisions for a `reverter.'"Nelson v. Madison Lutheran Hospital  Sanatorium, 237 Wis. 518,524, 525, 297 N.W. 424.
The facts, as found by the trial court in the trial of the case upon the merits, do not alter the situation, and the decision on the former appeal is the law of the case upon the facts found. As to the allowance of attorney fees the trial court said:
"The charges of the firm of Sanborn, Blake  Aberg, as attorneys for the Madison Lutheran Hospital and Sanatorium to May 19, 1941, aggregated $860; no question is or was at issue as to those charges.  After the decision of the appellate court, the Sanborn firm made additional charges for services aggregating $2,168.  Practically all of the services performed after the supreme court decision was with reference to an attempt to have the funds in the possession of the Madison Lutheran Hospital and Sanatorium used for the purpose of establishing a convalescent hospital.
"It seems very clear to this court that such attempt was ill-advised and contrary to the plain, and clearly expressed, holding of the supreme court decision.  If this conclusion is correct, then there could have been no justification for the proceedings had thereafter.  If there was no justification for such proceedings, then it would not only be improper but illegal to allow counsel fees to the Madison Lutheran Hospital and Sanatorium to be paid out of the funds which the supreme court has held is the property of the donors thereof." *Page 105 
The defendant was allowed credit for attorney fees in the sum of $860, which included all legal services up to May 19, 1941.  The order of August 3, 1942, allowed defendant further credit for legal expenses in the sum of $500 in connection with such services as might be necessary in the transferring of the funds and property to the Madison Trust Company as receiver.  In other words, the court allowed defendant, on its final accounting, legal expenses in the sum of $1,360.  The attorneys having been paid $1,000 on October 1, 1941, there is due them, under the order of August 3, 1942, the further sum of $360.
This appeal presents the narrow question whether the trial court abused its discretion in refusing defendant credit in its final account for legal services in excess of the amounts specified in the order of August 3d.  In passing on the allowance for attorney fees the trial court said:
"It is the opinion of the court that the decision of the supreme court clearly left nothing to be done by said defendant [appellant] except to turn all the property and assets over to the Madison Trust Company as receiver.  Said defendant was entitled to have the advice of counsel to protect it in the effecting of this transfer.  The $500 allowed would have been a very liberal allowance for that purpose.
"All other steps taken and proceedings had by the defendant after the supreme court decision are considered ill-advised and without justification and as having been taken in direct contravention of the supreme court decision.  It is concluded that it would be unjust, unreasonable, and without warrant in law to further deplete the trust fund by allowing to said defendant any additional attorney fees."
The trial court had in mind that the decision of this court upon the former appeal definitely determined that the trust funds in the hands of the defendant could not be diverted to other than the original project; that the cy pres doctrine could not be applied since the donations were to a single definite building project.  Reasonable attorney fees for services which *Page 106 
are reasonably necessary in conserving a trust estate are allowable to the trustee as expenses, and may be allowed directly to the attorney, chargeable to the trust fund.  Theyare always within the discretion of the court.  See Will ofRice, 150 Wis. 401, 488, 136 N.W. 956, 137 N.W. 778.
In reaching its conclusion, the trial court had a right to take into consideration the fact that more than eighteen years had elapsed from the time the Madison Lutheran Hospital and Sanatorium was organized to carry out the purposes of the Thompson subscription and the commencement of this action. Also, that as of the time of the trial in November, 1941, the total subscriptions collected from other persons than Mr. Thompson were somewhat less than $84,000.  The Thompson subscription, made April 22, 1922, was conditioned that all conditions of his subscription be complied with within six years from the date of his subscription.  There may have been many reasons why the defendant failed to carry out the hospital and sanatorium project as originally contemplated; but whatever the reasons, it had no right to disburse any of the assets received from the donors to establish a convalescent hospital.
Appellants argue that a trustee of a charitable trust is entitled to indemnity out of the trust estate for legal expenses incurred in defending in good faith an action brought by the settlors to terminate such trust.  Such expenses were allowed for all legal services up to and including services in this court on the former appeal.  The allegations of the complaints, then taken as admitted, disclosed the same state of facts as found by the court in the trial of the action on the merits.  The trial court said that the subsequent legal proceedings were ill-advised; that such proceedings were futile is established by the findings in the trial of the action on the merits.  Appellant Madison Lutheran Hospital and Sanatorium was organized to carry out the plan and project definitely stated in the Thompson subscription agreement.  When that plan and *Page 107 
project were departed from, as the court found to be the fact, and when it failed to consummate such plan and project within the six-year period, the subscribers were entitled to a return of their subscription agreements and all payments made thereon.  We fail to find any abuse of discretion on the part of' the trial court in making the order appealed from.
By the Court. — Order affirmed.