Estate of Hanson

These are appeals taken from the order of court making certain allowances to William H. Jordan and S.G. Murphy, trustees under the will of Charles Hanson, deceased. The appellants are W.H. Hanson, the sole beneficiary of the trust, and the third trustee, H.C. Chesebrough. By his will, duly admitted to probate, Charles Hanson nominated H.C. Chesebrough and S.G. Murphy executors. They qualified and acted. Their attorney was William H. Jordan. By the will the following trust was declared: — "Ninth: I hereby give and bequeath to H.C. Chesebrough of Oakland, Samuel G. Murphy and William H. Jordan of San Francisco, all the interest which I may possess at the date of my death in and to the capital stock of the said Tacoma Mill Company, after the payment of all my just debts, funeral expenses and the foregoing legacies, the same to be held by them in trust for the period of five (5) years from and after the date of the entry of this decree of distribution of my estate, or until the death of my son, William H. Hanson, should he die prior to that time." Of the beneficiaries and purposes of the trust no more need be said than that it is conceded that the trust has been executed, and that appellant William H. Hanson is the sole beneficiary thereof, and is now entitled to the full ownership of the trust property, relieved from the trust. By codicil, the compensation of the trustees was provided for in the following language: "To H.C. Chesebrough, Samuel G. Murphy, *Page 403 and to William H. Jordan, the sum of six thousand ($6,000) dollars per annum during the full term of their trusteeship, and that said sum of money shall be so paid to each of said trustees in equal monthly installments." It is to be noted that two of the trustees were the executors of the estate, and that the third trustee is the attorney for the executors. On the fifth day of February, 1903, a decree of distribution was made and given in the superior court, by which the executors were ordered to distribute to the trustees the property of the trust, which consisted wholly and solely of 3749 shares, of the par value of one hundred dollars each, of the capital stock of the Tacoma Mill Company. Neither the executors nor Mr. Jordan, their attorney, nor the same persons as trustees, caused this decree to be entered until June 23, 1903, notwithstanding which the executors, upon the advice of their attorney, made over the trust property to themselves as trustees upon the fifth day of February, 1903, and proceeded to administer the trust. The decree was actually entered upon June 23, 1903. Upon the eighth day of February, 1904, the trustees filed their first annual account, and on the twenty-third day of February, 1904, the account was settled and allowed and has become final. In this account of February, 1904, the trustees credited themselves, as compensation for their services, with the sum of five hundred dollars each, monthly, beginning with February 5, 1903. Following this, the trustees made no report or account to the court of their dealings with the trust until after the fifth day of February, 1908, when they presented their report and account for the preceding four years, including their claims for fees at the rate of five hundred dollars a month up to February 5, 1908. This account was allowed and settled and has become final. On the twenty-fifth day of June, 1908, William H. Hanson, the sole beneficiary of the trust, filed his petition for an order citing the trustees to render their final account and show cause why the trust should not be terminated and the property distributed to him. The trustees responded, the trustee Chesebrough disclaiming all compensation from February 5, 1908, the other two trustees claiming compensation at the rate fixed by the will from February 5, 1908, till June 23, 1908, the latter date being five years after the decree of distribution was actually entered. The court found the trust to have been terminated on the twenty-third day of June, *Page 404 1908, and allowed this compensation. The correctness of its ruling in this regard presents the main contention upon this appeal. Under the trust, Chesebrough had a contingent interest in its property, depending upon the death of William H. Hanson before the termination of the trust. He released and relinquished all this interest to William H. Hanson immediately after the fifth day of February, 1908, and petitioned the court to have the trust terminated. This was opposed by the other trustees, Jordan and Murphy, and an allowance of five hundred dollars is made to Jordan as necessary attorney's fees expended in so resisting Chesebrough's application. Of the trustees, Mr. Murphy was a banker, who spent no small part of the time of the life of this trust in Europe; Mr. Jordan was an attorney at law, and Mr. Chesebrough was the manager of the Tacoma mill, the stock of which constituted the trust property. This property was delivered to and remained entirely in the custody and control of the trustee Chesebrough. He collected the dividends and made the disbursements. At the time of the settlement of the trust, the corpus of the trust consisted of this stock and certain moneys by way of accumulated dividends. One of the purposes of the trust was by the testator declared to be his desire that the stock should be preserved in its integrity, and the interests of the Tacoma Mill Company advanced, as a monument to his memory. What was practically done to this end it would seem was done by Mr. Chesebrough. These considerations are adverted to solely for the purpose of showing that the trust was not of such character as to impose any considerable labor upon the trustees, or to call for much or any care by way of its management. Shares of stock of a milling company were delivered to one of the trustees who was the manager of this company, who alone kept it, received the dividends, made the disbursements to the trustees of their monthly compensation, and placed the rest of the money in bank. Under these circumstances, it is quite apparent that the munificent compensation which the will bestowed on the trustees was in the nature of an honorarium. By the order of the court in probate there has been allowed to them compensation at the rate of five hundred dollars a month from February 5, 1903, the date of the making of the decree of distribution, to June 23, *Page 405 1908, five years after the decree of distribution was entered, that is to say, compensation has been awarded for full five years from the date of the entry of the decree, and for nearly five months additional, being the time between the date of the making of the decree and the date of its entry. We conceive the important question in this consideration to be, not the duration of the trust, but the length of time for which the trustees were to receive the compensation fixed by the will. The will provides for a trust to endure for five full years from the entry of the decree of distribution, and it provides that the trustees should receive compensation at the rate of five hundred dollars per month for the full term of the trust. Clearly this means that in the view of the testator the full term of the trust was to be five years — no more, no less. If by accidents or contingencies, as by litigation, which might necessarily prolong the life of the trust, its duration was extended, there is nothing in the will to lead to the belief that the testator contemplated a fixed remuneration at the rate of five hundred dollars a month for any prolonged or indefinite period. Considering the services rendered, the remuneration was not unlike a bequest to each of thirty thousand dollars payable in monthly installments of five hundred dollars. If this was indeed the testator's view, and it may well be said that it was his view, as compared with the other which would subject the trust estate to the enormous drain of fifteen hundred dollars a month for an undetermined and indeterminable period, that is so long as the trust might last, — then it follows that under the will the trustees were entitled to a compensation of five hundred dollars a month for sixty months, and that under the will they were entitled to no more. Any other further or additional compensation beyond this must rest not upon the provisions of the will but upon the value of the services actually rendered, to be fixed by the court. We are the more confirmed in our view that this is the true construction, by consideration of the facts actually presented. It was unquestionably the duty of the executors, who were themselves to be the trustees, and of the attorney for the executors, who was himself to be a trustee, to see that the decree of distribution was promptly entered. Their right in law to act as trustees would be founded upon this entered decree. Their right to compensation should in law have begun from their formal assumption *Page 406 of trusteeship after decree of distribution entered. They, and no one else, failed to have the decree entered, notwithstanding which they made over to themselves the trust property and proceeded with the execution of the trust. They base their claim for compensation not from the time when, under the will, it was declared the trust should begin, but from the time when they caused it to begin. Under their contention, if by their remissness the decree of distribution had not been entered for ten years after the date of its making, they would be entitled to compensation at the rate fixed by the will for fifteen years. Such a construction would be a plain temptation to the trustees to defeat, to their own advantage, the manifest intent of the testator. The fact that the court upon the filing of their first account in 1904 allowed them compensation fixed by the will for the time intervening between the actual commencement of the trust and June 23d, when by the will its commencement was contemplated, is in no way determinative of their right to future compensation. For if, as we have said, the will contemplated a compensation of five hundred dollars a month for five years, it was a matter of trifling significance when the trust was finally brought to a close, whether they had received any or all of this sum by way of advancement. We held, therefore, that as concerns the life of the trust, the controlling consideration under the will was that it should exist for five years after the entry of the decree, though of course it might, by reason of litigation, have been still further prolonged. But we hold as to the compensation of the trustees that the controlling consideration was not the time after entry, but was the fixed period of five years; that when the trustees had received compensation for the full five years, compensation for any additional term to which the trust may have been prolonged, should rest not upon the terms of the trust but upon an award of the court in quantum meruit. The five hundred dollars attorney's fees made chargeable against the trust property for the successful opposition of the trustees Murphy and Jordan to the petition for the termination of the trust are allowed. That judgment having become final, the inquiry here is not open as to its soundness, and notwithstanding that it was an effort by one of the trustees, and not by the beneficiary, to terminate the trust, still the action *Page 407 of the resisting trustees must be held to have been the successful defense of the trust. Their legitimate and necessary disbursements in this regard are therefore chargeable against the trust property. So much of the order and decree appealed from as allows the trustees compensation under the will after receiving the thirty thousand dollars for the five years as fixed by the will, is hereby reversed, with directions to the trial court to allow the trustees compensation for the extended period of the life of the trust over five years, in such sum as it shall find merited. Melvin, J., Shaw, J., and Beatty, C.J., concurred.