Patterson v. Old Dominion Trust Co.

Campbell, J.,

delivered the opinion of the court.

The facts of this case have been fully set forth in the former opinions of this court reported in (Patterson v. Old Dominion Trust Co.), 139 Va. 246, 257, 123 S. E. 549, and (Patterson v. Old Dominion Trust Co.), 149 Va. 597, 140 S. E. 810, 141 S. E. 759, and will not be repeated in detail in this opinion.

On April 12, 1912, Dr. R. A. Patterson died testate, seized and possessed of valuable real estate and personal property valued at approximately $852,000.00, which was devised and bequeathed to his widow and six children. To the widow was devised an undivided one-third interest in the estate for life, and an undivided one-sixth interest in the remainder of the estate was devised to each of the six children. The undivided one-sixth share of Elizabeth Patterson Crutchfield was, however, to be held in trust during her lifetime, and at her death to pass’to her issue, and in the event she left no issue surviving, then to pass to the testator’s other children or the issue of his children then surviving.

The clause of the will relating Mrs. Crutchfield reads as follows:

“I give and devise one other one-sixth of my property, real, personal and mixed, to R. Fuller Patterson as trustee for my daughter, Elizabeth G. Patterson, to be held by him for the sole use and benefit of my said daughter during her life, free from the control and liabilities of any husband she may take and, at her death, this one-sixth of my property, or so much thereof as *766shall then remain in the hands of the trustee,- shall pass in fee simple to her children, if she leave any, and to the descendants of any child that may have died leaving issue; if my said daughter shall leave no children at her death, nor the issue of any, then this one-sixth of my property, or so much as shall then remain, shall pass to- my children then living and the descendants of any who may have died leaving issue, said descendants taking per stirpes, except that any portion of this one-sixth of my estate which would pass to my son, James T. Patterson, under this item of my will shall pass as is provided by item 4 in regard to the one-sixth thereby devised to A. W. Patterson, trustee, and shall be governed by the provisions of said item 4 in regard to the one-sixth therein devised.

“The said R. Fuller Patterson as trustee for my daughter, and any trustee who may be substituted in his place, is authorized and empowered to sell any portion of the trust property for the purpose of changing the investment and producing a better income, when, in his judgment and that of my said daughter, it shall be judicious to do so. And if the income from the trust property shall be insufficient to provide for her proper maintenance and support, of which the trustee shall be the judge, he is authorized and empowered to sell for that purpose any portion of the trust property and use so much of the proceeds (principal and interest) as he may deem necessary; and, if in the judgment of the trustee it shall at any time be more to the interest of the trust property and all concerned therein to borrow mone}/- for the support of my said daughter than to sell for that purpose, as above authorized, he is empowered to do so, and to pledge, hypothecate or convey in trust any part of the trust property, to secure the money so borrowed. On all-cases of sales or encumbrances of the trust property, as hereinbefore authorized, the trustee shall act at the request of my said daughter and with her consent, to be evidenced by her uniting with him in the deed or writing making the said sale or encumbrance; and the purchaser in such *767case is not to be responsible for the proper application of the proceeds.” ^

That clause of Dr. Patterson’s will might well be termed the “stormy petrel” of Virginia litigation, for it has been the subject of controversy for years.

By mutual agreement, the devisees partitioned the real estate among themselves. The portion received by Mrs. Crutchfield in trust was unproductive, and in 1922, having received an offer of purchase from H. S. Wallerstein, she and the trustee instituted the original suit seeking a confirmation of sale to Wallerstein. In the first decision construing the will (Patterson v. Old Dominion Trust Co.), 139 Va. 246, 257, 123 S. E. 549, 552, it was held that she had the right to make the property productive. There it is said: “It is evident from the language employed that the intention of the testator was to provide liberally for the support and maintenance of his daughter.”

An answer was proposed to be filed by the remaindermen, alleging that the offer of $75,000.00 of Wallerstein was an inadequate price for the property (as it was subject to a real estate agent’s commission of five per cent), and requesting the court to accept their offer of $75,000.00 net. Thereupon, with the assent of the court and over the objection of the remainder-men, the trustee dismissed the suit. The dismissal of the bill and refusal to permit the answer to be filed was the question involved in the first appeal. This court held the action of the trial court to be reversible error and remanded the case, with direction that the case be reinstated and the answer proposed by the remaindermen filed.

In the meantime Wallerstein abrogated that clause of his written offer of purchase requiring a confirmation of the sale by the court, and, thereupon, the trustee and Mrs. Crutchfield conveyed the property to him for the consideration stated, payable part cash and the residue on time. At the time of conveyance Wallerstein paid $10,000.00. Subsequently, he made *768various other payments totaling $11,659.54. Interest on those payments is involved in this appeal and will be hereafter discussed.

Upon the reinstatement of the suit, in obedience to the mandate of this court, the answer of the adult remaindermen was filed, together with the answer of H. W. Oppenheimer, guardian ad litem for Fuller, James and Martha Patterson, children of James T. Patterson, who had died subsequent to the institution of the original suit, and the answer of J. T. Patterson’s executor.

The cause finally came on to be heard on the thirteenth day of May, 1926, upon the pleadings, exhibits, said offers in writing, and the depositions taken in behalf of the parties, whereupon the court set aside the deed'of July 27, 1922, conveying the property to H. S. Wallerstein, and the deed of trust given by Wallerstein on the same date to secure the unpaid purchase money; directed the trustee to cancel and deliver to Wallerstein his notes for the deferred payments; retained for future consideration the supplemental Patterson offer and several proposals made by Wallerstein, and then proceeded to' decree, in párt, as follows:

■ “And the court being of opinion that thé proper procedure in this case is to. have the land in suit, hereinafter more fully described, offered for sale at public auction upon an opening bid of a sum in excess of the respective amounts represented by the said offers for the said tracts or parcels of land made by the said A. W. Patterson and M. C. Patterson in their own right and as executors of the estate of James T. Patterson, deceased, and by said Henry S. Wallerstein, which said offers in their respective final forms each represent the net sum of seventy-five thousand dollars ($75,000.00), with interest thereon at the rate of six per centum per annum from the twenty-seventh day of July, 1922, to date, together with such sums as are properly chargeable as taxes on said land from the said twenty-seventh day of July, 1922, to date, thereby making a *769sum total of $.........” (Patterson v. Old Dominion Trust Co.), 149 Va. 597, 604, 140 S. E. 810, 812, 141 S. E. 759.

An appeal was allowed from that decree. The Special Court of Appeals, in an opinion delivered by Judge Chinn, affirmed the decree of the lower court ordering the sale of the property at public auction set aside, and annulled the deed to Waller-stein, and remanded the cause for further proceedings.

Former counsel for petitioners, Julien Gunn, Esq., having just previously been chosen judge of the Circuit Court of Henrico county, this case was then removed by order of said court, dated March 27, 1928, with the consent of all parties, to the Hustings Court, Part Two, of the city of Richmond, in accordance with the provisions of section 6176 of the Code of Virginia. That court entered a decree April 21, 1928, ordering the sale of the property at auction, “after first advertising the time, place and terms of sale at least nine times in some newspaper or newspapers published in the city of Richmond, Virginia, and by such other means, if any, as said trustee may deem expedient * * * subject to confirmation by this court.” It was further provided in the decree: “* * * the said trustee shall, however, entertain and consider no bid or bids at said auction the aggregate amount of which is less than the sum of $100,000.00.” The trustee, having duly advertised the sale of the property in both the Richmond Times-Dispatch and in the Richmond News-Leader and by other extensive advertisements, proceeded to sell the property at auction on the fifteenth day of May, 1928, for the sum of $126,000.00, this being the highest bid, to the Housing Investment Corporation, on the basis of one-fourth of the purchase price to be paid in cash and the balance in five years from the date of sale, with interest on the deferred installments at the rate of six per cent per annum, payable quarterly.

The court confirmed the sale by its decree entered on June 8, 1928. Certain parties, having given notice that they desired to present claims for various amounts against thé corpus of *770the trust estate realized from the sale of the land in question, the court ordered by decree, on October 25, 1928, that all such claimants file petitions setting forth their claims for participation in the distribution of the fund to the credit of the court. Six such petitions were filed, as follows :

“(1) Petition by C. L. and H. L. Denoon, Inc., and Pollard & Bagby, Inc., for an allowance of commission for their services as real estate agents in connection with the final sale of the property at the fate of five per cent on the sale price of $126,-000.00, to-wit, $6,300.00.

“(2) Petition of Elizabeth P. Crutchfield for allowance to her of the sum of $17,674.94, representing (a) claim on her part for the interest at the rate of six per cent per annum on Wallerstein’s unpaid purchase money note of $65,000.00 from January 27, 1926, to September 10, 1928, amounting to $12,-176.66, plus interest at the rate of six per cent on each installment of said interest, which interest, however, was never actually paid by Wallerstein or any one else; (b) a claim for refund of certain taxes which she had paid on the land in question between July 27, 1922, and December 15, 1927, amounting to $4,141.91, plus interest on each item of taxes from the respective dates of payment.

“(3) Petition of Messrs. Meredith and Meredith for an allowance of $5,000.00 as fee for legal services rendered in this case to' the trustee.

“(4) Petition of Henry W. Oppenheimer, guardian ad litem, for allowance by the court of the sum of $2,500.00, as fee to him' for his services as guardian ad litem for certain infant defendants.

“(5) Petition of Henry S. Wallerstein for an allowance to him of the sum of $31,957.16, representing the repayment to him of the cash payment of $10,000.00 which he paid to the substituted trustee in connection with the sale which was set aside by the court, plus interest on the said $10,000.00, from date of payment, plus the amount of six semi-annual interest *771notes, amounting to $11,659.54, given and paid by said Wallerstein on the $65,000.00 deferred purchase money, plus interest on said interest notes from the respective dates of payment, in addition to which said Wallerstein asked for repayment to him of certain taxes, amounting to $2,561.84, paid by him on the land in question between July 19, 1922, the date of the deed to him, and November 30, 1925, plus interest on each item of taxes so paid from date of payment, plus the cost of recording his deed of bargain and sale and abstract of title, amounting to $315.00, plus interest on these last items from dates of payment.

“(6) Petition of Joseph M. Hurt, Esq., for an allowance of $300.00 for legal services as counsel for the trustee in connection with the institution and conduct of this suit. The defendants did not object to this allowance, and so the court entered an order on January 15, 1929, allowing said counsel for the trustee this amount.”

The court, having taken evidence orally with respect to the claims respectively of the real estate agents and of counsel fees asked for by Messrs. Meredith and Meredith and Henry W. Oppenheimer, entered final decree in this cause on February 27, 1930, which is the decree now appealed from, in which the court (1) allowed out of the corpus the real estate agents as commission for their services the sum of $3,780.00, this being three per cent on the sale price of $126,000.00, but provided that the trustee should be entitled to a credit against this allowance of $3,750.00, which was unlawfully paid said agents on July 27, 1922, in connection with the attempted sale to Wallerstein; (2) allowed out of the corpus Mrs. Crutchfield’s claim to the extent of $9,614.83—thus in effect allowing her claim of $12,176.66 for interest on Wallerstein’s $65,000.00 note from January 27, 1926, to September 10, 1928, but disallowing her claim for refund of taxes and requiring that she pay into the corpus of the trust estate the principal amount of taxes paid by Wallerstein, amounting to $2,561.84, but with*772out charging her' with interest on this amount; (3) allowed Messrs. Meredith and Meredith’s claim in full for $5,000.00, but ordered that $2,000.00 should be charged against the life tenant, Mrs. Crutchfield; (4) allowed, out of the corpus, to the guardian ad litem, Henry W. Oppenheimer, Esq., $2,000.-00 as fee for his services; and (5) allowed out of the corpus Wallerstein’s claim in full, refunding to him not only the principal amount of $10,000.00 paid by him and the six interest notes on his $65,000.00 note, which had been paid by him, amounting to $11,659.54, but also- interest at six per cent on the $10,000.00, and said six interest payments and all taxes paid by him, amounting to $2,561.84, plus interest on said taxes from dates of payment.

The first error assigned is that the court erred in allowing C. L. and H. L. Denoon, Inc., and Pollard & Bagby, Inc., commissions in the sum of $3,780.00, subject to the credit stated in the decree.

There is no merit in the first assignment of error. The final sale of the real estate was made under a decree of the court by State Planters Bank and Trust Company, substituted trustee for Elizabeth-Patterson Crutchfield, under the will of Dr. Patterson. The decree directs the trustee to sell the property at public auction, “after having first advertised the time, place and terms of sale at least nine times in some newspaper or newspapers published in the city of Richmond, Virginia, and by such other means, if any, as said trustee may deem expedient.” (Italics added.) It- was the duty of the trustee to exert every reasonable effort to make the property bring the highest price possible. The employment of reputable real estate agents conversant with such transactions- was within the terms of the decree. The amount of this compensation was a question for the court, to be determined by the exercise of a reasonable discretion. The fact that the trust estate was enriched to- the extent of $51,000.00—the difference between Wallerstein’s of*773fer and the sale price—is conclusive proof that the trustee acted wisely in putting forth the effort it did.

The second assignment of error is that the court erred in allowing Mrs. Crutchfield the sum of $9,614.82, or any part thereof, out of the corpus of the trust fund. That Mrs. Crutch-field was, under the plain provisions of Dr. Patterson’s will, entitled to receive from the trust estate an income befitting her station in life cannot be questioned. That she has not done so is self-evident. Judge Chinn aptly describes her situation: “The life tenant has just cause to make the complaint that, although about fifteen years have elapsed since her father’s death, little effect has yet been given to his intentions in providing for her.” (Patterson v. Old Dominion Trust Co.), 149 Va. 597, 616, 140 S. E. 810, 816, 141 S. E. 759.

While we are not prepared to unqualifiedly endorse the trial court’s conclusion, we are of opinion that substantial justice has been meted out, and, therefore, hold that the second assignment of error is without merit.

The third assignment of error challenges the action of the trial court in allowing Meredith and Meredith counsel fees in the sum of $3,000.00, payable out of the corpus of the estate. The record discloses that Meredith and Meredith were counsel for the trustee from the inception of this litigation; that they participated in three or four hearings in the lower court; that they three times appeared as counsel in this court. The law is well settled that a trustee is vested with authority to employ counsel, if necessary, for the protection or preservation of the trust estate. The amount of counsel’s compensation rests in the sound discretion of the court having jurisdiction of the subject matter. In the case at bar the lower court was thoroughly acquainted with the services rendered by petitioners. We do not find anything in the record to lead us to the conclusion that the fee allowed is exorbitant, and, therefore, we cannot hold there has been an abuse of the court’s discretion in allowing counsel fees.

*774The fourth assignment of error is that the court erred in allowing H. W. Oppenheimer a fee of $2,000.00, payable out of the corpus of the trust fund for legal services as guardian ad litem for the infant defendants.

The general rule in regard to the allowance of counsel fees is thus stated in McCormick v. Elsea, 107 Va. 475, 59 S. E. 411, 412:

“Except in rare instances, the power of a court to require one party to contribute to the fees of the counsel of another party, must be confined to cases where the plaintiff, suing in behalf of himself and others of the same class, discovers or creates a fund which enures to the common benefit of all; but the discretion invested in the court should never be exercised in a case where the interests of the party, whose fund is sought to be charged, are antagonistic to- the party for whose benefit the suit is prosecuted.

“The rule is thus stated in 4 Cyc. 1013, 1014: ‘While there is, strictly speaking, no lien on any fund which is within the custody or control of the court, the court may award attorney’s fees out of the fund. Thus, counsel for a representative may receive remuneration out of the estate, especially if he procures propert};- for the estate, but counsel for a beneficiary cannot claim payment out of the estate, though he may be paid out of his client’s share or from the portions of those beneficiaries who have joined in the proceedings, or have acquiesced in the attorney’s exertions.’ See also Roller v. Paul, 106 Va. 214, 219, 55 S. E. 558.”

In Stuart v. Hoffman, 108 Va. 311, 61 S. E. 757, 758, Judge Keith affirms the above pronouncement and then says:

“To that statement of the law we may add that a fee would properly be allowed where the services of counsel had ‘preserved’ a fund to be shared with those in like interest and unrepresented by counsel, but this court has not as yet required a party represented in a suit by counsel to contribute to the pay*775ment of the fees of counsel other than his own engaged in the suit. See also Roller v. Paul, 106 Va. 214, 55 S. E. 558.”

In the absence of peculiar facts, such as the creation of a fund which enures to- the common benefit of all concerned, the allowance of guardian ad litem fees is with us regulated by statute. Section 6098 provides: “When, in any case, the court or judge is satisfied that the guardian ad litem has rendered substantial service to the estate of an infant or insane defendant, it may allow him reasonable compensation therefor, and his actual expenses, if any, to be paid out of the estate of such defendant.”

The guardian ad litem relies on the case of Pettus v. Hendricks, 113 Va. 326, 74 S. E. 191, to sustain the court’s decree. That case involved the question as to which of three sets of claimants was entitled to the proceeds of a certificate of insurance in a mutual benefit association. The heirs of the decedent were impleaded by the association and, as some of them were infants, a guardian ad litem was assigned to defend their interests. The court’s decision was adverse to the heirs, and the question arose as to the payment of counsel fees, including that of the guardian ad litem. On this phase of the case Judge Keith, in delivering the opinion of the court (Pettus v. Hendricks, 113 Va. 326, at p. 331, 74 S. E. 191, 193), said:

“This suit was brought in unquestioned good faith. There were, as we have seen, three sets of claimants to the fund for which the firemen’s association confessed its liability. In order to have the controversy so determined that it might safely pay over the fund, this suit was brought, and the guardian ad litem of the infants made a party defendant. The litigation was not rendered necessary by any default on the part of the firemen’s association, but by the conflicting claims of the parties defendant. If the infant defendants had had any estate which could have been made responsible for the costs, the fee to the guardian ad litem would have been properly charged upon it, but the presence of the wards in court, by guardian ad litem, being *776necessary, and they having no estate which the court could reach, the fee became a proper charge in the first instance upon the fund to be administered.”

That case is clearly distinguishable from the case at bar on several grounds: First, the allowance was only $25.00 and was taxed as a part of the court costs; second, the allowance was made without taking into consideration the provisions of section 3255 of the Code of 1887 (now 6098 of the Code); third, it appeared that the infants had no estate “which the court could reach.” The record in the present suit discloses that the infants have a one-sixth interest in remainder, which is worth approximately $40,000.00. That they will ultimately receive their interest in the trust estate is, we think, conclusively shown by certain facts appearing in the record. The statute provides (section 5147 of the Code) that such an estate is capable of alienation or devise. Our conclusion is that the estate to which the infants are ultimately entitled is such an estate as is contemplated by section 6098, and it was error for the court to decree the payment of the guardian ad litem1s fee out of the corpus of the trust estate. In view of the fact that the fee was based on the theory that the same should be paid out of the corpus and not fall upon the infants, we are of opinion that the infants should be given an opportunity, if so advised, to question the reasonableness of the fee finally allowed the guardian ad litem.

The fifth assignment of error is: “It was error for the court to have allowed that portion of Wallerstein’s claim consisting of interest on the principal amount of $10,000.00 paid by him, interest on his six interest notes paid by him, and interest on taxes paid by him.”

It is necessary, in discussing this assignment of error, to advert to the original transaction between the trustee, under the will of Dr. Patterson, Mrs. Crutchfield, the beneficiary, and Wallerstein. In that clause of the will (heretofore quoted) creating the trust, the original trustee or any substituted trus*777tee was authorized to sell the trust property for the purpose of changing the investment and producing a better income, “when, in his judgment and that of my said daughter, it shall be judicious to do so.” The trustee was further authorized to use so much of the proceeds of sale as in his judgment was necessary for the proper maintenance and support of Mrs. Crutchfield. Notwithstanding the broad powers conferred by the will upon the trustee, in the contract of sale, this provision was inserted in the contract: “This offer is made subject to acceptance or rej ection of the court.” In view of that stipulation, suit was instituted.

After the appearance in court of the remaindermen and their offer of purchase in the sum of $75,000.00, as set forth in their proposed answer, the trustee, on the advice of C. V. Meredith, its counsel, sought and obtained a dismissal of the cause. Then it was that the contract was changed and the property was conveyed to Wailerstein, who made the payments he is now seeking to recover, with interest thereon.'

Unless it can be demonstrated that Wailerstein has been guilty of moral turpitude—as charged by appellants—we are unable to perceive why he should not be permitted to recover his money with interest thereon. Though the dismissal of the original suit was held by this court to be reversible error, an examination of the evidence in support of the claim of Meredith and Meredith demonstrates that the trustee, Mrs. Crutch-field, and Wailerstein were guided in all of their actions by Mr. C. V. Meredith, an eminent lawyer, above reproach.

When, pursuant to the mandate of this court, the original suit was reinstated, the trial court retaihed the purchase price and made Wallerstein’s offer of purchase the basis of the opening bid at the public sale.

In discussing a similar contention made by appellants on the second appeal, Judge Chinn said:

“Appellants assert in their petition for appeal that if the property is sold at auction ‘either Wailerstein must lose the *778amount in interest and taxes paid by him, * * * or the life tenant made to refund to Wallerstein the amount so paid by him, or the trustee forfeit the amount of his wrongdoing.’

“With this proposition we cannot agree. It is self-evident that the amount expended by Wallerstein on account of taxes and interest on his deferred payments was for the benefit of the trust, and so, upon every principle of equity and justice, he should be reimbursed therefor out of the proceeds of the trust property when sold under the supervision of the court.”

With that conclusion we are in thorough accord. However, it is contended by counsel for appellant that to “reimburse” Wallerstein does not mean that he should be paid interest on the money withheld from him by the trial court or that he should receive interest on the sums expended by him in the payment of taxes.

The decision of this court in Parker v. Stephenson, 127 Va. 431, 104 S. E. 39, we think, fully answers the contention of counsel. In that case a suit was brought to- provide income for an infant. It further appeared that the property was owned one-third 'by the mother and two-thirds by the infant. The court ordered in the proceedings that a deed of trust be put on the property and ordered a special commissioner to convey the infant’s interest, the mother uniting in the deed. There was default in the deed of trust and it was sold to the defendant at a trustee’s sale. Subsequently, the infant attacked the whole proceeding and demanded the return by the defendant of the property. This court held that the original proceedings conveying in trust the infant’s interest were void, and ordered a rescission, but before the rescission could be consummated the court stated the purchaser was entitled not only to his purchase money, but to the interest from the time that the various payments were made, using the following language, page 445 of 127 Va., 104 S. E. 39, 43:

“Where the situation is such that equity can be done between parties, the infancy of a complainant does not exclude him *779from the operation of the maxim that he who asks equity must do equity. It appears from the record that the property in controversy has greatly increased in market value, so that the court has under its control the means of adjusting the equities of the parties. The deed of trust and the sale thereunder, so far as they affect the interest of the infant complainant, should be set aside and annulled, and his interest in the property should be charged in favor of the appellee with two-thirds of the purchase money paid by the appellee therefor, with legal interest thereon from the date of its payment by the appellee. The appellee should also have credit for two-thirds of the enhanced market value of the property by reason of any permanent improvements placed thereon by him since he became the purchaser thereof, and two-thirds of all sums paid by him for insurance premiums and taxes on the property since he became such purchaser, with legal interest on the sums paid for such premiums and taxes from the dates of their respective payments, and he should be charged with two-thirds of the rents and profits of said property since he became the purchaser thereof, with legal interest on such sums from the respective dates on which they were received.”

The fifth assignment of error is without merit.

Mrs. Elizabeth Patterson Crutchfield makes the following assignments of cross-error:

“ (1) The lower court erred in refusing to allow the whole of the claim, relating fi> both interest and taxes, which was asserted by her;

“(2) The lower court erred in requiring any portion of the fee of Meredith & Meredith to be borne by this appellee, and in failing to require the whole of said fee to' be paid out of the corpus of the trust estate.”

The first cross-assignment of error has been disposed of in the discussion of the second assignment of error of appellants, and is without merit.

As to- the second cross-assignment of error: From the *780testimony of Mr. Bernard Meredith it is manifest that his firm was representing Mrs. Crutchfield independently of any contract with the trustee. Mrs. Crtuchfield is sui juris; if she is indebted to her attorneys they have their recourse against her in the proper forum. There is no pleading in this cause properly raising any question between the parties, and therefore, the court exceeded its authority when it entered judgment against Mrs. Crutchfield. Appellees having substantially prevailed in this court, they will be awarded their costs.

The decree of the lower court will be affirmed in part and reversed in part, as indicated in this opinion, and the cause will be remanded for further proceedings not in conflict with the views expressed in this opinion.

Affirmed in part; reversed in part.