Court Opinion

ID: 5351205
Source: CourtListenerOpinion
Date Created: 2022-01-08 06:40:42.160204+00
Date Added: 2024-06-11T08:29:43.906008
License: Public Domain

Dore, J.
(dissenting). For the reasons stated in the opinion of Surrogate Foley in Matter of Swartz (162 Misc. 46) I dissent from so much of the majority opinion as holds that the trustee’s ordinary income commissions under section 285 of the Surrogate’s Court Act are to be computed on the net income from the real estate. Under section 285, the trustee is entitled to compensation, so far as normal commissions are concerned, at the percentage rate specified upon the gross rents received and upon the amounts disbursed and paid over.
In the absence of any claim or proof of fraud or bad faith on the part of the trustee and in view of the circumstances disclosed with regard to the property in question, I consider also that the trustee was justified in the employment of the building expert, Mr. Walter T. Smith, and entitled to pay him the fair and reasonable compensation for his services as an estate disbursement. He was retained as an expert to make a survey for the trustee of the possibilities of rehabilitation, reconstruction or modernization of the hotel premises that represented, on the basis of the executors’ appraisal, a capital asset of about $3,000,000 out of an "estate of $5,894,000. Concededly the services were rendered and the survey used as a basis of information for final decision in the matter. Indeed, it would not have been prudent to attempt to reach a conclusion without producing data such as was concededly provided in the extensive survey made.
On the facts disclosed it would be an error to lay down, even by inference, a rule that a trustee, including a corporate trustee, could *87not in the exercise of good faith, reasonable care and prudence, and for the protection and preservation of so large an estate asset, procure the services of an expert builder and authority on hotel and apartment building construction before it finally determined what to do so as to render the asset most valuable to the estate. The trustee’s action is to be tested in the light of the conditions that presented themselves when the question was faced, not in the light of results that could not reasonably have been foreseen. The problems as they then presented themselves were so far out of the usual routine of ordinary real estate management as to justify obtaining the advice of an expert builder and paying for it out of estate moneys as part of the trustee’s reasonable and necessary expenses provided for under section 285 of the Surrogate’s Court Act. The trustee, in my opinion, amply sustained the burden of showing the need of such expert advice.
I consider, however, that the arrangement made to compensate the expert at the rate of $1,000 a month without any proviso respecting the length of his employment was not a prudent one, and that the trustee may not be credited with the bill as paid but only with fair and reasonable compensation for such services as were reasonably necessary.
Accordingly, I recommend that this aspect of the case be remitted to the surrogate to fix such fair and reasonable compensation on the record as made and on additional testimony if necessary.
Except as herein stated, I otherwise concur with the majority opinion.
Decree modified to the extent of allowing the expenditure of $4,751.25 made by the trustee for brokerage commissions as a charge against the estate, and in all other respects affirmed. Settle order on notice.