Opinion
7-30-1956
In the Matter of the ESTATE of Edward J. FRANKLIN, Deceased. Robert O. Pfleger, Esq., In Pro Per., Contestant and Appellant, Bank of America National Trust and Savings Association, Petitioner and Respondent * Civ. 21769.
In the Matter of the ESTATE of Edward J. FRANKLIN, Deceased.
Robert O. Pfleger, Esq., In Pro Per., Contestant and Appellant,
Bank of America National Trust and Savings Association, Petitioner and Respondent
Robert O. Pfleger, Tarzana, in pro. per.
FOURT, Justice.
This appeal is from a part of the order settling the final account and decree of distribution under the will, made and entered on January 6, 1956, and that part of the nunc pro tunc order therein entered on February 20, 1956.
The decedent in this case died on or about October 3, 1953, and letters testamentary were issued to the Bank of America National Trust and Savings Association on November 13, 1953. The first and final account of the executor was filed on December 9, 1955, and set for hearing and heard on December 28, 1955. The appellant, as the attorney for the executor, requested attorney's fees based on the rate as set forth in Probate Code, section 901, effective September 7, 1955, and filed his affidavit in support thereof. The court refused to grant the appellant fees under the new schedule, and from that part of the order this appeal is taken.
Section 901 of the Probate Code, in effect at the date of death of the decedent, provided for certain commissions for executors or administrators.
By the Statutes of 1955, Chapter 174, effective September 7, 1955, section 901 of the Probate Code was amended to provide a new schedule of commissions.
Section 910 of the Probate Code provides in substance that attorneys for executors and administrators shall be allowed out of the estate as fees for conducting the ordinary probate proceedings, the same amounts as are allowed as commissions to executors and administrators.
The executor in this particular case waived its statutory fees in excess of the old rate.
The question to be determined here is, what schedule should be used, that is, should the compensation be governed (1) by the law in effect at the time of the settlement of the account, and making the order allowing compensation, or (2) by the law in effect at the date of the death of the decedent, or (3) by the law in effect at the date of the appointment of the personal representative, or (4) by the law in effect at the date the various services were rendered.
We are of the opinion that the proper rule is that the rate of compensation for executors, administrators, and attorneys for such, should be determined by the law in effect on the date of the order allowing the commission or compensation.
In the case of In re Estate of Spires, 1932, 126 Cal.App. 174, 14 P.2d 340, the record indicates that the decedent died January 3, 1924, and her will was admitted to probate on the 23rd day of that month. The petition of the executor claiming a fee for extraordinary services was filed March 17, 1930, wherein a fee in excess of the amount allowable under the law in effect at the time of death was requested. A legatee under the will objected. As of the time of the death of Mrs. Spires the law provided that the court could allow extra compensation provided the total amount of such extra compensation did not exceed one-half the amount of the commissions regularly allowed by the section. In 1925, the section was amended by omitting the limitation and thereby left the amount of extra compensation entirely within the discretion of the court.
The lower court found that the services were morth in excess of the amount allowable under the law in effect at the time of the death. However, for the reason that the court believed its powers to be restricted to the law as it existed at the time of death, and not as it existed at the time of the allowance of the fees, it made no allowance in excess of the limited amount. The executors appealed and the appellate court reversed the order. A petition for hearing in the Supreme Court was denied.
In the course of the decision the court stated, 126 Cal.App. at page 177, 14 P.2d at page 341: 'But we think that there is no such vested right in the benefit of the limitation. 'The right of inheritance and testamentary disposition is entirely the creation of the statute, and the heirs, devisees, and legatees take the property subject to such burdens as the Legislature has seen fit to impose upon it. * * * While it is true that the descent is cast and the property of the decedent vested in the devisees and legatees, or in the heirs, at the moment of the death of the deceased, it is also true that they take the property subject to the payment of the expenses of administration. * * *' In re Estate of Bump, 152 Cal. 274, 92 P. 643, 644. On the other hand, the right of the executor to a defined rate or standard of compensation is not vested as of the date of the decedent's death, nor even as of the date when he qualified as executor, but such right first accrues at the time when by appropriate order the amount of compensation payable to him is determined and allowed. And since the right of an executor to compensation for extraordinary services is not established or vested until allowed by the court in the exercise of its discretion, it follows as a direct consequence that the law in force at the time when the order is made constitutes the only law by which the power of the court is to be governed.' (Emphasis added.)
This rule has been applied in many courts. 91 A.L.R. 1421-1422.
In re Estate of Parker, 1926, 200 Cal. 132, 251 P. 907, 49 A.L.R. 1025, the Supreme Court reversed the trial court which had allowed extraordinary fees in excess of the statutory limitation in effect at the date of decedent's death, and still in effect on the date the order was actually made. In other words, the order for the higher fees was made two and one-half months before the effective date of the amendment omitting the limitation. It would appear therefore, that the Parker case is not authority for holding that in all situations the law in effect at the date of death is the law by which the fees shall be determined, and particularly so when it is remembered that the Supreme Court denied a hearing in the Spires case some six years afterward.
It is the rule that the right of an executor, administrator, or attorney of either, to ordinary compensation is absolute, but does not accrue until an order for its payment is made. In re Estate of Roberts, 27 Cal.2d 70, 162 P.2d 461, in re Estate of Carver, 123 Cal. 102, 55 P. 770.
There is nothing in the cases of this state or in the statutes which we have been able to find, holding that such right vests at the time of death. Estate of Spires, supra, contains an express statement of the very point----' * * * such right first accrues at the time when by appropriate order the amount of compensation payable to him is determined and allowed.'
In re Estate of Straus, 144 Cal. 553, 77 P. 1122, it was held that an executor or administrator is entitled to his ordinary compensation only when he has taken the property of the estate into his possession and accounted for it.
Probate Code, section 901, the very section upon which the right of an executor or administrator to ordinary compensation is based, appears to indicate that such right arises only after the accounting. That section states in part: 'The executor, when no compensation is provided by the will or he renounces all claim thereto, or the administrator, shall receive commissions upon the amount of estate accounted for by him, * * *.' (Emphasis added.)
The great weight of authority is to the effect that the law in force at the time of the settlement of the account governs the amount of compensation allowed. In re Donovan's Estate, 1934, 266 Mich. 362, 253 N.W. 552, 91 A.L.R. 1418; In re Barker, 1921, 230 N.Y. 364, 130 N.E. 579; In re Barrett's Estate, 1925, 124 Misc. 699, 209 N.Y.S. 678; In re King's Will, 1923, 121 Misc. 530, 201 N.Y.S. 239; In re Hildebrand's Estate, 1953, 57 N.M. 778, 264 P.2d 674; Phraner v. Stone, 1945, 137 N.J.Eq. 284, 44 A.2d 504; In re Leigh's Estate, 1923, 196 Iowa 1102, 195 N.W. 1005; Brown's Estate v. Hoge, 1924, 198 Iowa 373, 199 N.W. 320; Gaines v. Reutch, 1886, 64 Md. 517, 2 A. 913.
In the case of In re Donovan's Estate, supra, 266 Mich. 362, the court stated 253 N.W. at page 553: "The probate court derives none of its jurisdiction or power from the common law, but must find the warrant for all of its doings in the statute. Its jurisdiction, powers, and duties are prescribed by law.' * * * 'The circuit court, on appeal, was likewise in error in apportioning the commissions according to the length of time the executor served under the old and new statutes. He should have allowed the claim of the executor at the rate of 2 per cent., and we so hold. * * * * * * 'The date of the making of the order allowing the award is determining, and the law then in effect governs the compensation to be allowed to the executor.'
In the case of In re Dewar's Estate, 10 Mont. 426, 25 P. 1026, at page 1029, the court stated: 'Under the general rule, then, it is unhesitatingly concluded that the amended law must regulate the fees of the appellant. Whatever right appellant had to fees prior to September 14, 1887, was an unascertained, inchoate one. If, by virtue of his qualifying and performing a few acts while the old law was in force, his right to fees accrued, and were to be settled upon the percentage allowed by that law, then it must also be true that, if he had resigned or died on September 13, 1887, before performing any labors, he or his estate would be entitled to all the fees provided by the old law. This absurdity is not contended for, yet it is as reasonable as the claim that, having performed the services, the fees must be reckoned by the provisions of a law in force when his administratorship commenced, but repealed before any fees were either due, payable, or to be ascertained. On the other hand, it is the law that, appellant's claim for fees being unsettled, unallowed, and inchoate, and the creature of the statute, (section 253,) it fell with the law creating it.'
In a New Mexico case, Hildebrand's Estate, 1953, supra, 264 P.2d 674, 677, the decedent died on May 3, 1937, at a time when the statute provided that real estate in decedent's estate was not to be included for the purposes of computing the executor's commission. In 1947 this statute was changed so as to allow compensation on account of real estate. In 1950 the administrator of the estate filed his final report. In deciding the case the court said, among other things, as follows: 'We find a division of authorities on the question. Some hold to the view that the compensation of a personal representative is governed by the law in effect at the time of rendition of his services; others by the law in force at the time of his appointment; and still others by the law in effect at the time of the settlement of his account and making the order allowing the award. [Citing cases.] We are in accord with the latter view. Logically, a representative is entitled to compensation only when he has finished the duties imposed upon him. It is then the court can fully evaluate his services.'
In the case of In re King's Will, supra, 201 N.Y.S. 239, at page 240, the court stated: 'The time of the making of the decree is therefore the determining date, and the law then in existence governs the amount to be allowed to the representative. * * *
'In his learned opinion in Matter of Potter, supra [106 Misc. 113, 175 N.Y.S. 598] Surrogate Ketcham reviews the history of commissions and the development of the ruling applied here. He points out that statutory regulation of commissions is procedural and remedial in its nature, and that changes from time to time by the Legislature are retroactive in their effect without offending against constitutional restrictions. When the Legislature enacted the recent amendment it had knowledge of this established rule of law, and it made no exception as to pending proceedings or estates of decedents who died before the measure took effect.'
In the case of In re Daly's Estate, 99 Misc. 203, 165 N.Y.S. 792, at page 796, the court stated: 'The well-settled rule, that the statute existing at the time of the passage of the accounts is the one which governs the allowance of compensation to an executor, is based upon the ground that an executor is not entitled to any compensation until the final execution of the duties imposed upon him. [Citing case.] The executor acquires no accrued right to compensation until his accounts are being settled and his acts and conduct passed upon by the court, as it is only at that time that his services can be examined and his compensation fixed. It would seem, therefore, that in applying the law in force at the time the right to compensation accrues, whether the compensation be for services purely executorial or of the nature of extra services, such as legal services, or, in other words, whether the compensation sought be for services that either may or may not be remunerated under the law in force when the services were performed, the rule of applying the statute in force at the time of the judicial accounting does not give said statute so much a retroactive effect, as it applies a new statute to an existing condition of things. In such a case the statute applied is the statute in force when the right to compensation has accrued.' (Cited with approval and as authority in In re Donovan's Estate [Mich.], supra.)
In our opinion the imposition of the new probate fees on the estates of decedents who died before September 7, 1955, does not involve the imposition of a new or additional burden on such estates. In Estate of Benvenuto, 183 Cal. 382, 191 P. 678, decided in 1920, twelve years before the Spires case, and in Wood v. Roach, 125 Cal.App. 631, 14 P.2d 170, it is stated that the legislature cannot, by amending the law after the death of the decedent, impose upon the estate any new or additional burdens. However, in Schwan v. Superior Court, 204 Cal. 51, 266 P. 532, decided in 1928, it was held that the legislature was not prohibited from making changes in procedural matters applicable to estates of decedents who died prior to the effective date of such changes. These cases simply mean that the new substantive rights or burdens may not be imposed upon an estate, but in matters of procedure the heirs and devisees have no vested rights.
In the case of In re Potter, 106 Misc. 113, 175 N.Y.S. 598, the trustees claimed one-half commissions on the value of real estate embraced in their account on the ground that it had been 'received' by them. To this, objection was made that the statute passed May 19, 1916, which if applicable, would justify the claim, did not apply and that the rule which controls the accounting was to be found in the statute as it was when the trust came into operation. Prior to May, 1916, the statute provided as to trustees' commissions as follows: 'The value of any real or personal property, * * * distributed or delivered, shall be considered as money in making computation of commissions.'
In May, 1916, the section was changed to provide as follows: 'The value of any real or personal property, and the increment thereof, received, distributed or delivered, shall be considered as money in making computation of commissions.'
The court said, in deciding the case, the following, 175 N.Y.S. at pages 599-600: '* * * the only question is whether the commissions are to be computed according to the law as it now is. 'The objectants insisting that the statute as it now is does not apply, invoke the statement of the law, found in some cases, to the effect that 'it takes a clear expression of the legislative purpose to justify a retroactive application.' This general canon of construction is subject to an exception as broad and distinct as the rule itself. This exception is that the Legislature has the right to pass laws changing the form and method of procedure, and that such changes affect cases and conditions arising before the change in the absence of words of exclusion. 'The rule, then, is that it takes a clear expression of the legislative purpose to justify a retroactive reading of a law only when the enactment tends to destroy or impair a vested right, or to give a right when none existed, or to impose a liability not previously known; but that legislation which affects only the remedy or the procedure embraces a pending action or a condition which came into being before the passage of such legislation, unless words of exclusion are found in the statute. Acts relating to procedure are therefore not retroactive in the sense that they relate back to and modify a pre-existing state of right. Rather are they prospective since they apply only to a ruling to be made in the future, albeit with respect to transactions in the past which come up for adjudication in the future. 'In the case at bar, no right to commissions accrued at the time of the receipt of the real estate. That trustees may properly take their commissions at the time of disbursing income affords no basis for the thought that they can of their own motion pay to themselves one-half commissions upon principal received. 'Hence it appears that as to the principal of this trust, whether real or personal, the only right to commissions for its receipt comes into sight for the first time when the decree is made awarding such commissions. Until that time they were but an expectancy, which was wholly subject to procedure for a judicial award. * * * * * * 'The settlement of the account can only by had in a proceeding, and the definition of 'judicial settlement,' which for the present purpose is the same thing as 'settlement,' signifies a decree of the surrogate's court' * * *. Only in a proceeding can the surrogate allow the commissions which, according to the statute, he must show. Again, the value of any real or personal property, etc., shall be 'considered' in making computation of commissions. * * *'
With reference to a contention that the fees are a matter of contract, the court in Gaines v. Reutch, 64 Md. 517, 2 A. 913, at page 914, stated: 'The right to commissions for administering upon an estate does not in any sense arise from contract, but is founded only in statutory enactment. At common law the office of executor was regarded as honorary, to be performed without remuneration or commissions, like costs or salaries of all public officials, and liable, in the wisdom of the ligislature, to be varied in amount; and executors and administrators have therefore no vested right to maintain the standard of compensation, throughout their entire period of acting as such, established at the time of taking out letters. They are so entitled, however, when their commissions are fixed according to the law as it then stands. A subsequent change in the law cannot retroactively deprive them of the compensation awarded under a former statute. Every enactment becomes the rule of compensation when it goes into operation. Up to the enactment of the act of 1884, the statute repealed by it was the rule for fixing commissions of adminstrators. The act of 1884 provides that it shall take effect from the date of its passage. That date was April, 8, 1884. The first and second administration accounts of appellee were passed before that time, and he was entitled to the compensation the law then allowed. So far as his right to compensation had accrued, and been affixed in his administration accounts passed prior to the act of 1884, it cannot be disturbed. But the portion of the estate unadministered and covered by the third account falls within the operation of the act of 1884. All previous statutes relating to commissions were repealed by it, and no other standard existed. As the portion of the estate previously settled had been administered under the laws then in force, in cannot be computed with the portion unadministered when the act of 1884 took effect.'
For the reasons heretofore set forth it is our opinion that the fees in this case should be computed under section 901 of the Probate Code, as amended September 7, 1955.
It is ordered that that part of the order of the court settling the final account and decree of distribution, made and entered January 6, 1956, providing for attorney's fees based on section 901 of the Probate Code in effect at the date of death of the decedent, be reversed, and the cause remanded with directions to the court below to enter an order in accordance with the views herein expressed.
WHITE, P. J., and DORAN, J., concur. --------------- * Opinion vacated 303 P.2d 339. 1 ' § 901. Commissions: [Rates: Two or more representatives]. The executor, when no compensation is provided by the will or he renounces all claim thereto, or the administrator, shall receive commissions upon the amount of estate accounted for by him, as follows: For the first thousand dollars, at the rate of seven per cent; for the next nine thousand dollars, at the rate of four per cent; for the next ten thousand dollars, at the rate of three per cent; for the next thirty thousand dollars, at the rate of two per cent; and for all above fifty thousand dollars, at the rate of one per cent. If there are two or more executors or administrators, the compensation shall be apportioned among them by the court according to the services actually rendered by each.' 2 ' § 901. [Commissions: Rates: Two or more representatives.] The executor, when no compensation is provided by the will or 'he renounces all claim thereto, or the administrator, shall receive commissions upon the amount of estate accounted for by him, as follows: For the first thousand dollars ($1,000), at the rate of 7 percent; for the next nine thousand dollars ($9,000), at the rate of 4 percent; for the next forty thousand dollars ($40,000), at the rate of 3 percent; for the next hundred thousand dollars ($100,000), at the rate of 2 percent; for the next three hundred fifty thousand dollars ($350,000), at the rate of 1 1/2 percent; and for all above five hundred thousand dollars ($500,000), at the rate of 1 percent. If there are two or more executors or administrators, the compensation shall be apportioned among them by the court acording to the services actually rendered by each.' 3 ' § 910. Fees for ordinary proceedings: [Attorneys: Extraordinary services]. Attorneys for executors and administrators shall be allowed out of the estate, as fees for conducting the ordinary probate proceedings, the same amounts as are allowed by the previous article as commissions to executors and administrators; and such further amount as the court may deem just and reasonable for extraordinary services.'