In re the Judicial Settlement of the Account of Titcomb

Ketcham, S. The only theory upon which allowance can be made to an executor or trustee for counsel fees paid by him in resisting an effort to remove him from office is that the expenditure was made in the course of administration and was made for the benefit of the estate. That the office is valuable to the incumbent and that his personal interests are concerned in maintaining it is of secondary significance if it be shown by the event that the officer was justly entitled to retain his office. If it be found that he rightfully resisted removal, it must follow that his resistance was made not only in the exercise of a personal right but in the pursuit of a duty, and any outlay made in the discharge of an obligation to the estate must be regarded as an expense which the estate should bear. [375] The allowance is not to be made merely because the party seeking it has succeeded in avoiding removal. The test must be applied to the situation of the accused officer at the time of the commencement of the proceeding. If then there was no ground for the attack upon him, his disbursement made in a successful endeavor to show that no such ground existed should be allowed as an incident to his discharge of a legal duty to the estate. But if at the commencement of the proceeding he was subject to criticism such as would justify his removal, and pending the proceeding he has so dealt with the estate that the conditions upon which the criticism depended no longer exist, he should be denied indemnity for his outlays. This is illustrated by the case in which an executor whose circumstances are such that they do not afford safety to the fund in his charge escapes removal by giving the bond permitted by the statute. In such instances reimbursement foi counsel fees incurred in the removal proceeding should, doubtless, be refused. In the case at bar the trustee made an investment in the bonds of an industrial corporation, secured by the usual mortgage to a trustee. During the trial in which the facts of this investment were shown and its unlawfulness was asserted, the trustee sold the bonds without loss and reported that he had received and held the proceeds in. place of the bonds. The estate was thus shown to be secure and the application for removal was denied. If the investment was unauthorized the proceeding was authorized, and its defense could not have been originally in the interest of the estate. The only duty which rested upon the accountant, if his holding was unlawful, was to confess his error as soon as it was [376] challenged. Failing this, none of the services of counsel in the proceeding were rendered for the benefit of the estate. Hence, there can be no allowance to the trustee for fees incurred in the proceeding, if by reason of his having improperly applied the moneys of the estate or invested the same in securities unauthorized by law he was at the time of the commencement of the proceeding unfit for the due execution of his office. Not only were these bonds a form of security unauthorized by law, but in the taking of them the interests of the estate were subordinated to other interests. So much of the items of counsel fees as were incurred in the íemoval proceeding must, therefore, be disallowed. This ruling must also extend to the credits for sums paid to the real estate expert for appraisal and testimony. The expert’s services were primarily directed to the defense of the removal proceeding and it is not shown that they were required by any general need of the estate. The legal services rendered to the trustee in the general care of the estate are found to have been worth $150, and this sum is allowed. The objection to the reduction of interest on the $30,000 mortgage from five and one-lialf to five per cent, is not supported by evidence. The trustee’s account reports the reduction and unless objectants sustain the burden of showing its impropriety the account in this regard must prevail. Decreed accordingly.