Opinion
5101/95.
Decided January 6, 2004.
Charles Gibbs, Esq., Holland Knight, New York, New York, for the Petitioner Gerhard Frohlich.
Theodore Wagner, Esq., Carter, Ledyard Milburn New York, New York, for the Petitioner Theodore Wagner.
Richard Mescon, Esq., Morgan, Lewis Bockius, New York, New York, for Objectant Chemical Heritage Foundation.
George Gillespie, III, Esq., Cravath, Swaine Moore, New York, New York, for Objectant Polytechnic University.
David McCabe, Esq., Wilkie, Farr Gallagher New York, New York, for Objectant The Long Island College Hospital.
Laura Werner, Esq., Charities Bureau, New York State Department of Law New York, New York, for the AG.
In this proceeding to settle the account of the executors of the will of Donald Othmer, the objections of the beneficiaries raise the question as to whether one of the accounting parties, Gerhard Frohlich, is bound by the provision in the will limiting his commissions to $400,000. The dispute is important because the difference between the commissions fixed in the will and statutory commissions claimed by Frohlich exceeds $5,000,000.
Donald Othmer died testate on November 1, 1995 at the age of 91, survived by his widow, Mildred Othmer. Dr. Othmer had been a chemical engineer and had a successful career as a professor, inventor, entrepreneur and philanthropist. During his career, he amassed a large fortune, worth over $250,000,000.
His last will and testament, dated August 5, 1994, left his widow their home in Brooklyn Heights and a $5,000,000 trust fund. After a number of bequests to family and friends, he left his sizable estate to charity. The residuary estate was divided among Polytechnic University (25%), Long Island College Hospital (25%), and Chemical Heritage Foundation (50%).
The testator named Theodore Wagner, Esq., ("Wagner") and Dr. Gerhard Frohlich ("Frohlich") as executors of his will. Wagner is an attorney who represented the decedent in his estate planning for more than fifteen years. He prepared a number of wills for him, including the propounded will. Frohlich knew Dr. Othmer for more than forty years. Frohlich managed Dr. Othmer's affairs with the help of Wagner under a power of attorney from 1994 until Dr. Othmer's death in 1995.
Article FOURTEEN of the will provided that the total commissions payable to the executors shall not exceed $800,000, which amount shall be divided between them. As a condition of qualifying, Dr. Othmer directed that the nominated executors agree in writing to this limitation of commissions. If one or both refused to serve, he provided that Fiduciary Trust Company ("Fiduciary Trust") act as successor executor, either alone or as co-executor with the remaining executor. ARTICLE FOURTEEN provides as follows:
" ARTICLE FOURTEEN: I appoint my friends Theodore R. Wagner and Gerhard Frohlich as joint executors of this will and trustees of the trust, or, if either shall fail to qualify or cease to act, I appoint Fiduciary Trust Company International of New York, to be the joint or sole executor or trustee or both, as the case may be. I appoint Theodore R. Wagner knowing and approving that he will be entitled to receive fiduciary's commissions as provided in this Article, and that in addition his law firm will be compensated for legal services rendered to my estate and trust.
The commissions payable to my executors shall be according to the New York statute then in effect, but shall in no event exceed the sum of $800,0000, which amount shall be divided between my executors, if more than one shall be serving, as they may agree, recognizing the extent of the duties and the relative difficulty of the duties assumed by each or done by each in his respective tenure in office, and the remaining duties and their extent remaining after his tenure, and I direct that each executor agree in writing to that provision as a condition of qualifying."
Wagner and Frohlich offered the will for probate on November 3, 1995. On the same day, they filed a petition for preliminary letters testamentary. In the petition, they averred that they were "entitled to letters testamentary immediately upon the probate of the said propounded instrument." Preliminary letters testamentary were issued to them on November 20, 1995. The will was admitted to probate on July 8, 1996, without objection, and the preliminary letters testamentary vacated. Neither Wagner nor Frohlich executed an agreement in writing to accept the compensation provided in the will. Nonetheless, letters testamentary were issued to them upon filing their oaths and designations.
On November 6, 1996, Frohlich filed a renunciation of the compensation provided under the will pursuant to SCPA 2307 (5) and served a copy on his co-executor, Wagner. SCPA 2307 [b] (the "Statute") provides, in pertinent part:
"Where the will provides a specific compensation to a fiduciary other than a trustee he is not entitled to any allowance for his services unless by an instrument filed with the court within 4 months from the date of his letters he renounces the specific compensation."
Wagner did not renounce the provision limiting his compensation as executor. On November 25, 1996, the executors filed an ex parte petition for advance payment of commissions pursuant to SCPA 2311. The petition requested that each executor receive $200,000 on account of their commissions. In his affidavit in support of his petition, Frohlich stated that, when the complexities of the estate became apparent to him during the first ten months of the administration, he asked counsel whether he could receive compensation greater than the amount provided under the will. Counsel informed him of the right to renounce the will's compensation provisions under the Statute. He was further advised that it was not "entirely clear" that the Statute is applicable to him and that the determination would be made in the accounting. He stated that he filed his renunciation, although he had not yet decided whether to request statutory commissions, to preserve his right to compensation under the Statute. As a result, he only asked for $200,000 on account of commissions at that time.
In July, 1999, the executors filed their account of their administration of the estate and petitioned for the settlement of their account. In the petition, Frohlich requested that he be awarded full statutory commissions of $5,323,112, of which $200,000 has been paid and Wagner requested that the court award him $400,000 in compensation as provided in the will, of which $200,000 has been paid. The charities who are residuary beneficiaries and the attorney general (hereinafter referred to as the "objectants") filed objections and counterclaims. The gravamen of their objections and counterclaims is that Frohlich had no right to serve as fiduciary in this estate without filing the necessary agreement to accept the compensation under the will. Therefore, notwithstanding the renunciation, he either expressly or implicitly agreed to the limitation under the will, or, if no express or implied agreement can be found, his right to compensation is nevertheless limited to the provisions in the will under equitable doctrines.
The parties entered into lengthy negotiations over the commission issue without success. Frohlich has now moved for partial summary judgment for receiving commissions of $2,563,803.81 as preliminary executor and the objectants have cross-moved for partial summary judgment denying Frohlich's claim for compensation as preliminary executor.
Summary Judgment
It is well settled that summary judgment may be granted only where it is clear that no triable issue of fact exists (see e.g. Alvarez v. Prospect Hosp., 68 NY2d 320; Phillips v. Joseph Kantor Co., 31 NY2d 307). Frohlich argues that he is entitled to summary judgment because he is entitled to statutory commissions as preliminary executor under SCPA 1412 (7) whether or not he is entitled to statutory commissions as executor, citing Matter of Hillman ( 280 App Div 310, affd 305 NY 577, lv denied 305 NY 797), Matter of Lowenstein ( 72 Misc 2d 193) and Matter of Koch (NYLJ, Mar. 29, 1995, at 31, col 3). Statutory compensation of a preliminary executor is limited to a receiving commission that an executor is entitled to receive ( Matter of Birch, 50 AD2d 951, appeal dismissed 38 NY2d 902). Frohlich claims that the statutory receiving commissions to which he is entitled are $2,563,803.81.
Objectants disagree that Frohlich is entitled to greater commissions as preliminary co-executor than as co-executor. Furthermore, they argue that even if he would normally be entitled to statutory commissions as preliminary executor, Frohlich is not entitled to them because he was not entitled to serve as preliminary executor.
Right to Serve as Preliminary Executor
Where an applicant is fully qualified, the court must issue letters to the nominated executor (SCPA 1412; Matter of Patton, 43 Misc 2d 807; Matter of Molnar, NYLJ, Mar. 4, 1974, at 18, col 7). The rationale for this rule is to avoid contests over the appointment of the preliminary fiduciary before the will is admitted to probate (see Turano, Practice Commentaries, McKinney's Cons Laws of NY, Book 58A, SCPA 1412, at 344; 2d Report of Temp St Commn on Estates ["Bennett Commission Report"]; 1963 NY Legis Doc No. 19, Appendix B, at 94-95). However, an applicant has no right to preliminary letters unless he or she is entitled to letters testamentary under the will ( Matter of Bayley, 72 Misc 2d 312, affd 40 AD2d 843, appeal denied 31 NY2d 1025).
Right to Letters Testamentary
Objectants argue that Frohlich was not entitled to letters testamentary without first agreeing in writing to the reduced compensation of ARTICLE FOURTEEN. Since he did not agree in writing to accept compensation under the will, he was not entitled to serve as co-executor (and Fiduciary Trust was). They argue that since he was not entitled to serve as executor, he could not be appointed preliminary executor and is not entitled to statutory commissions as preliminary executor (compare Matter of Jones, 136 Misc 122).
The general rule is that a testator may condition the right to serve as fiduciary ( Matter of Healey, 255 App Div 361). Acceptance of an appointment as executor cannot be given effect unless the condition is satisfied ( Matter of Grant, 155 Misc 2d 819). On the other hand, an appointment of an executor upon a condition precedent which violates public policy is invalid in its entirety ( Oliver v. Wells, 254 NY 451; Hogan v. Curtin, 88 NY 162).
Frohlich argues that requiring him to agree to the will's compensation provision as a condition precedent to serving as executor is invalid as against public policy, citing In re Folsom's Will (142 NYS2d 144). In that case, the will provided that if any beneficiary attempted to set aside, interfere with, or invalidate any of the provisions of the will, the beneficiary forfeited his or her right to receive any portion of the estate. The nominated executor was also a beneficiary under the will. He brought a construction proceeding to determine whether he forfeited his bequest if he renounced his right to compensation under the will to obtain statutory commissions. The court held that, if the in terrorem clause was intended to apply to the executor's renunciation of compensation, it was invalid as contrary to public policy ( id. at 147). Frohlich argues that, for the same reason, the requirement of the will that he waive statutory compensation to qualify as executor is invalid.
There are two competing public policies at issue when a will attempts to limit the compensation of a fiduciary. The first is the public policy in favor of paying executors statutory commissions (see Matter of Worthington, 141 NY 9; 6 Cox-Arenson-Medina, NY Civ Prac [2002] ¶ 2307.02 at 23-156). This is counterposed by the public policy embodied in the common law which seeks upholding the testator's right to limit compensation. "New York courts routinely follow the testator's directions concerning fiduciary compensation when these directions differ from the statutory provisions" ( Matter of Grant, 155 Misc 2d 819, 820).
The public policy behind SCPA 2307 is to ensure that estates are properly administered and that fiduciaries selected by the testator are fairly rewarded (6 Cox-Arenson-Medina, supra, at 23-157). The Statute supports this public policy by allowing an executor to renounce the testator's provision for specific compensation and secure commissions at the statutory rate. Accordingly, there is a presumption that executors have the right to commissions at the statutory rate ( Matter of Friberg, 199 Misc 593; Application of Knowles, 101 NYS2d 601).
Where the will makes a provision and either expressly states or strongly implies that such disposition is in lieu of commissions, the Statute applies ( Matter of Carlisle, 142 Misc 2d 657, 659, affd sub nom. Butler v. Mander, 159 AD2d 379). Furthermore, it is presumed that the testator is aware of the election afforded an executor under the Statute ( Matter of Hayden, 172 Misc 669, affd 261 App Div 900, appeal denied 261 App Div 1074, lv denied 285 NY 859).
On the other hand, "[The] SCPA was never intended to restrict testators from either fixing compensation to the exclusion of statutory allowances, or from forbidding any compensation whatsoever." (6 Cox-Arenson-Medina, NY Civ Prac [2002] ¶ 2307.12 [a] at 23-265; see Secor v. Sentis, 5 Redf 570). The result of these competing social policies have led to sometimes inconsistent results (see Annotation, Validity and Effect of Provision in Will Limiting Amount of Fees of Executor or Trustee, 34 ALR 913).
Thus, where the will provides that the executor shall receive no compensation, the Statute does not apply. In such cases, it has been held that the executor's only choice is to either to renounce his or her right to serve or to serve without compensation ( Matter of Mason, 98 NY 527; Matter of Vanderbilt, 68 App Div 27, rearg denied 71 App Div 611, mod on other grounds, 172 NY 69; Matter of Hopkins, 98 NY 636, affg 32 Hun 618; Matter of Flagg, 192 Misc 397, mod on other grounds 275 App Div 848; Matter of Engel, 106 Misc 2d 733). As a corollary, where the will leaves a bequest to a named executor and requires that he or she serve without commissions, the Statute does not apply. The nominated executor may receive his or her bequest, but receives no compensation (see Matter of Carlisle, 142 Misc 2d 657, supra).
Furthermore, where the nominated executor agrees to waive statutory commissions or accept a lesser amount before qualifying, the Statute does not apply. The entering into such an agreement does not violate public policy. "The purpose of [SCPA 2307] is to assure that fiduciaries are fairly compensated for their services. Certainly this admirable purpose is fulfilled when the parties . . . have already established the . . . remuneration." ( Lehman v. Irving Trust Co., 55 NY2d 97, 103). The agreement may be made while the testator is alive ( Matter of Schinasi, 3 NY2d 22), after the will is executed (see Matter of Haydon, 172 Misc 669, affd 261 App Div 900, lv denied 261 App Div 1074, lv denied 25 NY 859), or even after the testator has died (see Matter of Hopkins, 32 Hun 618, affd 98 NY 636; Matter of Nevins, 8 Misc 2d 1041; Meacham v. Sternes Sheldon, 9 Paige 398). The agreement may be implied. Thus, where the executor has accepted compensation under the will, the executor may not renounce and claim statutory commissions (see Matter of Rowe, 42 Misc 172).
The issue before the court is whether the requirement in the will that the nominated executor agree in writing to accept the compensation provided in the will is an improper attempt to avoid the right to renounce, or an enforceable condition to serving as executor. The legislative history of the Statute is of little help. At common law, unless otherwise provided by will, executors served without compensation (see Bennett Commission Report, supra, Report No. 7.1B, at 445). Most wealth was in the form of real property and it was considered an honor to be nominated as executor. In addition, some courts felt that if an executor were allowed commissions, he might place his interests above the interests of the beneficiary (Bennett Commission Report, supra). New York applied the common law rule and denied an executor's request for commissions in an 1815 case, Manning v. Manning (1 Johns Ch 527 [NY 1815]).
For a discussion of the history of SCPA 2307, see Bennett Commission Report, supra, at 445; 6 Cox-Arenson-Medina, supra, ¶ 2307.01 at 23-151 to 23-157).
Thereafter, the legislature enacted a provision giving surrogates the authority to allow reasonable allowances to executors in addition to their expenses (L 1817, ch 251, § 40). In October of that year, Chancellor Kent held that the committee of a lunatic was entitled to commissions under this statute and established the rate of 5% on all sums not exceeding $1,000; 2½% on sums between $1000 and $5000 and 1% on any amount in excess of $5,000 ( Matter of Roberts, 3 Johns Ch 43 [NY 1817]). These percentages were adopted by the legislature in 1827 to set statutory commissions (2 Revised Statutes of New York [Butler Spencer 1829], Civil Code part 2, ch 6, tit 3, § 58 at 93). At the same time, the legislature provided for the right to renounce provisions in wills setting compensation and to receive statutory commissions instead. The provision read as follows:
"Where any provision shall be made by any will, for specific compensation to an executor, the same shall be deemed a full satisfaction for his services, in lieu of the allowance aforesaid, or his share thereof; unless such executor shall, by a written instrument to be filed with the surrogate, renounce all claim to such specific legacy."
(2 Revised Statutes of New York [Butler Spence 1829], Civil Code part 2, ch 6, tit 3 § 59 at 93).
The section was re-enacted without comment in subsequent codifications of the civil code. The Statute was re-enacted in its current form in 1893 (L 1893, ch 686, § 2730). The provisions for commissions (and renunciation of provisions in a will) remained unchanged until adoption of the revised code in 1914 (L 1914, ch 443, § 2752). The revised code only increased the rate of commissions. The commission part of the statute was amended from time to time to increase the rate of commissions. The language dealing with renunciations, however, remained unchanged and was re-enacted with the adoption of the SCPA 2307(5).
See e.g. 2 Revised Statutes of New York [3d Ed 1846, Duer, Butler Spencer] Civil Code, part 2, ch 6, title 3 § 63 at 287; L 1914, ch 443, § 2753; L 1914, ch 443, § 2753 at 1873-74).
The issue of when the executor had to renounce was subject to conflicting decisions. Some required that the renunciation be made within in a reasonable time (see Matter of Nester, 166 App Div 224, affd 216 NY 716). Another held that the renunciation had to be made as soon as the executor could reasonably know which rate, statutory or under the will, was most advantageous ( Archer v. Nelson, 1 Dem 337. A third line of cases held that there was no intrinsic limitation and the decision could be made in the accounting ( Matter of Weeks, 5 Dem 194; Matter of Arkenburgh, 33 App Div 473). With the enactment of the Surrogate's Court Act, the executor was given four months from the time letters were issued to file his or her renunciation.
The legislature expanded the fiduciaries entitled to statutory commissions. Administrators became entitled to statutory commissions in 1893 (L 1893, ch 686, § 2730). Later, the right to renounce was expanded to guardians and testamentary trustees, and the language was modified to read as it does now. In 1943, the commissions of a testamentary trustee were stricken from SCA 285 and incorporated into a new section, SCA 285-a. The right of a testamentary trustee to renounce testamentary provisions for compensation was similarly shifted to SCA 285-a. When the SCPA was enacted in 1966, the reference to executors, administrators and guardians was changed to "fiduciaries other than testamentary trustees" (L 1966, ch 953, § 2307 [5] [b]).
The statute read, in pertinent part:
"Where the will provides specific compensation to an executor, administrator, guardian or testamentary trustee, he is not entitled to any allowance for his services, unless, by a written instrument filed with the surrogate, within four months from the date of his letters or in the case of a testamentary trustee or guardian, from the date of his filing his oath, he renounces the specific compensation."
(L 1920, ch 928, § 285).
SCA 285-a was amended in 1948 to deprive testamentary trustees of the right to renounce specific compensation (L 1948, ch 582). There was no discussion of the reasons why this class of fiduciary was not able to renounce, or why the other classes could (see discussion in Matter of Hillman, NYLJ, Feb. 28, 1996, at 29, col 1). The Committee on the Surrogates' Court of the New York County Lawyers' Association commented that the change required further serious consideration from the legislature, but it was approving the change because of its desire to enact the other provisions of the statute (Report of the Committee on the Surrogate's Court, New York County Lawyers Association, Report No. 280 [1948] at 8). The change was noted by the State Bar Association without comment (Report of the Committee on State Legislation, New York State Bar Association [1948] at 48).
Given this history, the most that can be said of the public policy concerning renunciation is that the legislature has decreed that in cases in which the Statute applies, it shall control. Or, as Surrogate Wingate put it, "[t]he adoption of statutory rates of compensation for testamentary fiduciaries implies that in legislative contemplation, which in view of the representative character of our government, means in the opinion of the people at large, the remuneration specified in the statute is that which is reasonable for the service required." ( Matter of Larney, 148 Misc 871, 873).
In the instant case, Article FOURTEEN clearly attempts to obtain an agreement on compensation as a requirement for serving as executor. If a testator may require a nominated executor to limit his compensation as consideration for appointment during his lifetime (see Matter of Hayden, supra), there can be no public policy against requiring such an agreement in a will, certainly not if the will provides for the appointment of an alternate fiduciary.
Alternative Appointment
Even if the provision in ARTICLE FOURTEEN requiring the nominated executors to consent to the will's provision for compensation as a condition to serving as executor is invalid as against public policy, the provision is enforceable as long as the testator names an alternate fiduciary to serve if the original executor objects. This is consistent with decisions that the courts will enforce a condition to the appointment of a fiduciary that would otherwise be invalid, as long as the instrument provides for an alternate executor.
Thus, a provision in a will that the appointment of a fiduciary is conditioned upon his appointment of a specific attorney is invalid as against public policy. "The law of this state does not recognize any testamentary power to control executors in the choice of their attorneys or counsel who shall act for them in their representative capacity." ( Matter of Caldwell, 188 NY 118, 121; Matter of Lawless, 194 Misc 844, 861). Nonetheless, such a direction is enforced if the will provides that in the event the executor did not retain a designated attorney, another would be appointed executor ( Reinwald v. Chemical Bank Trust Co., 283 App Div 966).
Similarly, a provision in a will conditioning appointment of an executor upon accepting limitation on payment of attorneys' fees is generally unenforceable ( Matter of Olney, 255 App Div 195, 197; Annotation, Limiting Effect of Provision in Contract, Will, or Trust Instrument Fixing Trustee's or Executor's Fees, 19 ALR3d 520). However, the courts will enforce such a condition if the will provides for an alternate fiduciary ( Matter of Roth, 291 NY 1).
In Matter of Roth, the will provided that the nominated executor serve without compensation and pay no more than $1,000 for legal fees. The nominated executor was willing to serve without compensation. However, he was a judge and could not devote the time to handle the legal issues and felt that he could not obtain competent counsel to administer the estate if counsel fees were limited to those provided for in the will. He applied to the court for a determination whether the condition was binding. The surrogate found that the limitation on counsel fees was against public policy and not binding on him. The Appellate Division agreed. The Court of Appeals reversed.
While noting that the provision in the will limiting the attorneys fees is normally invalid, the Court held that the provision was binding if the will provided for an alternate executor if the original executor was unwilling to abide with the will's restriction.
"The problem would be different if, without specifying an alternative, the testator had nominated only the petitioner as his executor and trustee and had attempted by his will to dictate the choice of his executor's counsel and to fix the maximum amount of fees which could be paid for legal services. Such limitations, in cases where the wills involved prescribed no legal alternatives, have met with disapproval when challenged in our courts. ( Matter of Caldwell, 188 NY 115, 121; Matter of Olney, 255 App Div 195.)" ( id. at 4-5).
The court went on to enforce the condition upon the original executor.
"Upon the record at hand the testamentary condition precedent to the petitioner's qualification and service as executor and trustee of the decedent's will may not be ignored. To do so would permit the petitioner to serve in that capacity without regard for the conditions expressly imposed by the testator; it would give no effect to the alternative unconditional nominations made by the testator; it would disregard the plan for the administration of his estate as to which his intention was clearly and definitely expressed." ( id. at 6-7).
In fact, the courts have consistently enforced conditions in wills that would normally be unenforceable, provided an alternate taker is named. In Re Folsom's Will, supra, for example, the court held that to the extent the in terrorem clause pertained to the executor's renunciation of the compensation provided in the will, it was invalid as contrary to public policy ( id. at 147). However, the court stated that it would have reached a different result if the will provided for an alternate fiduciary.
"Although research has disclosed no case involving the application of an 'in terrorem clause to the right of a person to serve as a fiduciary despite the renunciation of specific compensation, the failure to name an alternate fiduciary is regarded as analogous to the failure to provide for a gift over in case of forfeiture. The general rule is that 'in terrorem' clauses are unenforceable unless they provide for a gift over in case of a breach." ( id.) [citations omitted].
For similar reasons, the courts will not apply the doctrine of cy pres if the will provides for a gift over to another beneficiary ( Matter of Fletcher, 28 NY 86, 91; Matter of Merrit, 258 App Div 188, affg 171 Misc 812).
Accordingly, even if the condition in the will that the executor agree in writing to the will's provision for compensation is otherwise unenforceable, it will be enforced where the will provides an alternate executor to administer the estate if the original executor refuses to accept the condition. In such cases, the Statute does not apply to the original named executor. The original executor has the choice of agreeing to the compensation provided in the will or renouncing his or her right to serve (and allowing the alternate executor to serve).
Using the same reasoning, even if the condition in the will that the nominated executors agree to the will's provision on compensation is otherwise unenforceable, it will be enforced since the will provides for an alternate executor. While there is no New York case directly on point, such a result was reached in an Indiana case ( Butler University v. Danner, 114 Ind App 236, 50 NE2d 928, reh denied 114 Ind App 250, 51 NE2d 487).
In that case, a codicil to the will provided that another executor would be appointed unless the original executor agreed to serve for a total fee of $1,000. The original executor qualified and renounced the compensation provided in the codicil pursuant to Indiana law. On his accounting, he claimed statutory commissions. The trial court held that the executor was entitled to commissions as provided by statute. On appeal, the appeals court reversed. It held that the appointment of the original executor was a conditional one, conditioned on acceptance of the compensation provided in the will. Such a provision was held valid. "That a testator should be at liberty to make such a conditional appointment is so apparent as to require no elaboration or citation of examples. In fact, a provision for alternative executors is in the nature of a conditional appointment insofar as the alternate is concerned." ( id. at 50 NE2d 932).
Frohlich next argues that the condition should not be enforced against him because Fiduciary Trust would renounce the will's specific compensation. This is a question of fact. Frohlich's speculation as to Fiduciary Trust's conduct is no basis for granting summary judgment. Moreover, even if Fiduciary Trust were to renounce pursuant to the Statute, this would not help Frohlich. The Statute gives this right to Fiduciary Trust, not Frohlich. As the Court of Appeals stated in Matter of Roth, the court "may not disregard the alternative nominations which were expressly made a part of that plan and which the testator intended should become effective in the event the petitioner 'should * * * refuse to qualify and serve as such Executor and Trustee, upon the conditions herein imposed'" ( Matter of Roth, supra at 5) (emphasis in original). Such an argument was expressly rejected by the Appellate Court in Indiana in Butler University v. Danner, supra. "That those named as alternate executors were not bound to accept the compensation mentioned as a condition of their own appointment does not change the situation." ( 50 NE2d 928, 932).
In the instant case, the provisions of the will are clear. The testator wanted to specify the compensation his two friends would receive. If either was unwilling to agree to this provision, he wished his estate to be administered by an institutional fiduciary. Under the clear terms of the will, Frohlich's only choice was either to agree to serve under the conditions imposed by the testator or to relinquish his right to serve.
Having established that the testator's condition that the nominated executors agree in writing to accept the compensation specified in the will is binding, the court must determine if Frohlich was entitled to act as executor. To be entitled to act as executor, the nominated executors must agree in writing to the will's provision for compensation.
Since the will is silent on the issue, the agreement may be made at any time prior to appointment. The record is silent on whether or not the named executors executed an agreement, either before Dr. Othmer's death or afterwards. Frohlich managed Dr. Othmer's affairs during the last year of Dr. Othmer's life. It is not inconceivable that there was such an understanding with the testator. If there was such a written agreement, it would be binding on the executors (see Matter of Schinasi, supra; Matter of Hayden, supra).
Assuming that there was no such written agreement, the actions of the executors have placed the court in a difficult position. They knew of the will's requirement that they agree in writing to the will's provision for compensation as a requirement to serving as executors. They knew that, if they did not so agree, the right to serve passed to Fiduciary Trust. They elected to serve and gave no notice to the court, the beneficiaries or Fiduciary Trust that Fiduciary Trust might be entitled to letters testamentary. The estate has now been administered and it is not in the estate's best interest that the executors be removed.
Given these facts, it is fair to treat the executors' petition for letters of administration and qualification for service as executors as written agreements to accept the compensation provided under the will. Such a result was reached in Butler University v. Danner, supra. Faced with a fact pattern similar to ours, where the executor qualified and discharged his duties as executor, with full knowledge of the terms of the will and codicil, he was deemed to agree to the will's provisions. "Under these circumstances, may he later renounce the condition, continue in office, and receive greater compensation? We think not. We believe that when he qualified as executor, with full knowledge of the terms and conditions of the will and codicil, he impliedly agreed to the condition and that he could later no more renounce that condition than could he renounce any other condition, the compliance with which was necessary to secure the issuance of letters testamentary to him." ( id. at 50 NE2d 928, 932).
As for the requirement that the agreement be in writing, the will does not specify the form that the written agreement is to take. Frohlich signed the probate petition, requesting that the court issue letters testamentary to him, knowing that he might be limited to compensation under the will. He further requested that the court issue preliminary letters testamentary to him on the ground that he was entitled to letters once the will was admitted to probate. This is sufficient writing to satisfy the testator's requirement that the agreement be in writing.
For the same reason, the other co-executor is deemed to have agreed to the will's compensation provision in writing. Moreover, as the draftsman of the will, he may be deemed to have accepted the compensation provisions of the will (see Matter of Carlisle, supra; Matter of Klein, NYLJ, Dec. 28, 1972 at 19).
Finally, even if the executors did not agree, either expressly or implicitly, to the condition imposed by the testator, they are estopped from denying their agreement to the will's provision. "Equitable estoppel is imposed by law in the interest of fairness where enforcement of one party's rights would work a fraud or injustice upon the person against whom enforcement is sought, and where the party against whom enforcement is sought has, in justifiable reliance on the opposing party's words and conduct, been misled into acting, or refraining from acting, upon the belief that the opposing party would not seek to enforce the right." (57 NYJur 2d, Estoppel, § 3 at 10).
Under either theory, the executors are bound by the provision of ARTICLE FOURTEEN on their compensation as executors. Holding that the executors are bound by the provision for compensation in ARTICLE FOURTEEN of the will is fair to both the executors and the beneficiaries. Frohlich petitioned for letters testamentary knowing that the will required his agreement to the provision for compensation as a condition to serving. His understanding of the condition is made clear in his affidavit filed in support of his application for advance payment of commissions on account. Under these circumstances, it is fair to hold him to the will's provision on compensation. There is no prejudice to the beneficiaries in recognizing his right to serve, as long as he is limited to the compensation provided under the will.
Commissions as Preliminary Executor
Having determined that Frohlich either agreed to the compensation provision of Article FOURTEEN of the will or is bound by it as a matter of law, Frohlich is entitled to appointment as preliminary executor. Therefore, the court must consider Frohlich's claim that he is entitled to statutory receiving commissions in the amount of $2,563,803.81 as preliminary executor even though he is limited to compensation of $400,000 as executor by the will.
SCPA 1412 provides that a "preliminary executor shall not be entitled to the commissions provided for a fiduciary in this act unless the will be admitted to probate and letters testamentary are issued to him, in which event he shall be entitled to commissions as provided in this act for a case where successive letters are issued to the same person on the estate of the same decedent." (SCPA 1412). Where successive letters are issued to the same person, SCPA 2307 provides, in pertinent part:
"he is entitled to a total compensation equal to the compensation allowed for a full administration of the estate by a fiduciary acting in a single capacity only. Such compensation shall be payable in such proportions and upon such accounting as shall be fixed by the court settling the account of the person holding successive or different letters but no paying out commissions shall be allowed except upon such sums as shall actually have been paid out at the time of the respective decrees for debts, expenses of administration or to beneficiaries." (SCPA 2307 [5] [b]).
Frohlich argues that under these statutes, he is entitled as preliminary executor to receiving commissions and to paying commissions (for amounts actually paid out) determined at statutory rates, even if his commissions as executor are limited under the will, citing Matter of Hillman ( 305 NY 577), Matter of Lowenstein, ( 72 Misc 2d 193) and Matter of Koch (NYLJ, Mar. 29, 1995, at 31, col 3).
The issue was first raised in Matter of Viggiani ( 171 Misc 74). In Viggiani, the will provided that the executors would serve without commissions. Because of the delay in obtaining jurisdiction over certain foreign beneficiaries, the nominated executors were appointed temporary administrators until the will was probated. In their accounting, they took no commissions as executors. However, they claimed the right to statutory commissions as temporary administrators. The beneficiaries filed objections, on the ground that the provision denying commissions for serving as executor applied. Surrogate Foley disagreed, and held that the executors were entitled to full statutory commissions as temporary administrators.
The court based its conclusion on the unique status of a temporary administrator. "The status of a temporary administrator and his powers and his authority have been frequently defined by the courts. He is, in effect, a receiver acting under the direction of the court with special functions limited by the provisions of the Surrogate's Court Act. . . . the status and functions of a temporary administrator are distinguishable from those of an executor. The powers of the former are purely statutory, while those of the latter are testamentary and statutory. The immunities granted by the will to an executor are not available to the temporary administrator whether or not he be named as an executor. The temporary administrator possesses no specific grant of authority given by the will to the executor." ( id. at 75 [citations omitted]).
The court refused to construe the provision of the will denying compensation to the executor as applying to the nominated executor acting as temporary administrator. "The terms of the will apply exclusively to the compensation or the denial of it for services rendered as an executor. The terms of the will here indicate no limitation on the right of a person named as executor to compensation if he were appointed as temporary administrator. The testator made no provision for that contingency. The statute fixes the compensation awarded to the temporary administrator as a receiver appointed by the court. Where the person named as executor, as here, has accepted the appointment under the will without compensation pursuant to its terms, he may not be awarded commissions in his capacity as executor." ( id. at 77).
Finally, the court did not find such a result in conflict with SCA 285, the predecessor of SCPA 2307(5) (b). The court found that prior to enactment of SCA 285, the law provided that a temporary administrator who later served as executor had a choice. He could receive full receiving and paying commissions either as temporary receiver or as executor. As a result, fiduciaries elected to take commissions as temporary receiver, giving them little incentive to complete the administration of the estate. The court found that the amendment to SCA 285 limited the commissions of the temporary administrator to commissions on sums actually received and paid out. No commissions were available on sums paid to himself as executor. "The new statute presents in effect a continuing administration of the estate divided into two periods, the first of which is terminated by the decree judicially settling the account of the temporary administrator, and the second by the decree in the executor's accounting." ( id. at 76).
The next case to consider the issue reached the same result ( Matter of Melgood, 174 Misc 754). In that case, the will provided for a bequest to the executors and no compensation for serving as executors. The estate was insufficient to fund all the bequests and the will provided that all would abate except for the devise to one of the executors. The other two executors argued that their bequests should not abate. Surrogate Wingate refused to give their bequest priority. However, the executors had been appointed temporary receivers prior to receiving letters testamentary, and Surrogate Wingate held that they could receive full statutory commissions for their services as temporary administrators. Citing Viggiani, the court based its holding on the nature of the office of temporary administrator. "The offices are distinct. One does not include the other and there is no reason in law or logic which may prevent them from receiving the compensation which the statute accords for their service in the latter capacity." ( id. at 758).
Surrogate Frankenthaler reached a different conclusion in the next case in which the issue arose, ( Matter of Hillman ( 200 Misc 646, revd 280 App Div 310 affd 305 NY 577, leave denied 305 NY 797). In Hillman, the testator appointed Guaranty Trust Company and his nephew as executors of his will. The will provided that each would receive only 1% of the gross value of the estate as compensation for their services as executors and that qualification as executors would be deemed conclusive evidence of acceptance of this compensation. The nephew predeceased the testator and Guaranty Trust Company was appointed executor of the will. Guaranty Trust Company had agreed to the compensation prior to the testator's death. Objections were filed to the probate of the will and Guaranty Trust Company was appointed temporary administrator. The objections were soon withdrawn and full letters issued.
Nonetheless, Guaranty Trust Company requested a full receiving commission on the gross principal assets as temporary administrator. Although no party objected, Surrogate Frankenthaler relied on the total compensation provisions of SCPA 285 to hold that the executor was limited by the testamentary provision for all capacities.
"The compensation allowed for the administration of this estate by the Guaranty Trust Company as executor is that specified in the will. Hence, it is not under the statute entitled to a "total compensation" in excess of that sum. The statutory provision was intended to prevent a person who performed the same functions in two capacities from collecting double commissions therefor. There is no indication that a different result was intended should the executor's commissions be less than the statutory rate. On the contrary, the broad and inclusive language of subdivision 8 of section 285 would seem to admit of no exception." ( id. at 648).
On appeal, the Appellate Division reversed. Although the court agreed that Guaranty Trust Company was bound by the will's provision for compensation, the court adopted the reasoning of Surrogates Foley and Wingate to hold that it would receive full statutory commissions as temporary receiver ( 280 App Div 310, 313-314). On appeal, the Court of Appeals, in a four to three decision, affirmed ( Matter of Hillman, 305 NY 577) and denied a motion to reargue ( Matter of Hillman, 305 NY 797). Surrogate Frankenthaler subsequently followed Hillman when the issue reached him again ( Matter of McVoy, 203 Misc 33).
Because of dissatisfaction with the expense and delay resulting from the appointment of temporary receivers, the SCA was amended in 1963 to create a new section, 153-a, to provide for the appointment of preliminary executors, where probate is delayed (L 1963, ch 405). The Bennett Commission on estates recognized that the use of temporary administrators was expensive and time consuming. A temporary administrator was merely a conservator and had to apply to the courts at almost every step in the administration of the estate (Bennett Commission Report, Report 3.3A, at 94). The Bennett Commission noted that, in many instances, disappointed distributees had filed unfounded objections to the probate of the will, knowing that the executors would try to settle the objections to avoid the time and expense of a temporary administration ( id. at 90).
The Bennett Commission proposed creation of a new office, preliminary executor, with powers greater than a temporary administrator and less than an executor. When the SCPA was enacted, SCA 153-a was re-enacted as SCPA 1412 (7) (L 1966, ch 953). Although SCPA 1412 has been amended from time to time, the wording of this part of the section was not changed. Under SCPA 1412, the preliminary executor has both powers specifically given him by the surrogate and powers inherit in the office of executor. "The intent of the legislature in 1963 was to create a fiduciary position with rather broad powers that could allow the nominated executor to proceed with administering the estate as close to normally as possible while the probate contest (or search for distributees, or whatever other obstacle to probate existed) was resolved (Turano, Practice Commentaries, McKinney's Cons Laws of NY, Book 58A, SCPA 1412, at 344).
Thus, the application for preliminary letters is ex parte. Notice of the application for preliminary letters is necessary only to persons with an equal right to serve. Unless the nominated executor fails to qualify, preliminary letters must be issued to him or her as a matter of law (SCPA 1412; see Matter of Vermilye, 101 AD2d 865). A preliminary executor has the authority of an executor except as to distribution of an estate. In general, a preliminary executor may petition for determination of a claim ( Matter of Thoens, 88 Misc 2d 1006, affd 51 AD2d 691, affd 41 NY2d 823), to sell real property not specifically devised ( Matter of Barrometi, 238 AD2d 416; Matter of Way, 56 Misc 2d 552), and to pay claims ( Matter of Cooper, 55 Misc 2d 159, affd 30 AD2d 642). Consistent with this treatment of a preliminary executor, SCPA 1412 provides that a preliminary executor receives commissions as executor if the will is admitted to probate and commissions as preliminary executor if it is not. The clear language of SCPA 1412 provides that, when the will is admitted to probate, the right of the preliminary executor to commissions is merged with his right to commissions under SCPA 2307. The statutory scheme adopted by the legislature in enacting SCPA 1412 seems clear. The preliminary executor may only receive commissions as a fiduciary if the will is admitted to probate. "SCPA 1412(7) governs the commissions of a preliminary executor. If he eventually becomes permanent executor, he gets statutory commissions under SCPA 2307" (Turano, Practice Commentaries, McKinney's Cons Laws of NY, Book 58A, SCPA 1412 at 344).
In 1993, the statute was changed to give temporary administrators the same powers as preliminary executors (Turano, Practice Commentaries, McKinney's Cons Laws of NY, Book 58A, SCPA 903, at 681).
That a preliminary executor was to be compensated as an executor was recognized by Surrogate Gelfand in Matter of Kochovos ( 132 Misc 2d 577). In that case, the surrogate reasoned that under SCPA 1412 (7), "if a will is ultimately admitted to probate, and the preliminary executor becomes the executor, the services rendered as a preliminary executor are consolidated with those rendered as executor, and the fiduciary is entitled to compensation based upon the statutory commission to which he would be entitled if he were the executor from the inception of the administration." ( id. at 579). The clear implication is that if the executor's compensation was limited by the will, the compensation of the preliminary executor was so limited.
Frohlich appeared to accept this construction of SCPA 1412 in his application for advance payment of commissions on account. As part of the application, he stated that he was not sure if the will's provision applied to him, but, if it did, he was entitled to a receiving commission of $200,000 and it was on this basis that he received an advancement of his commissions in the amount of $200,000.
Now he would have this court hold that he is entitled to receiving commissions of over $2,500,000. This could not be the intended result of SCPA 1412. Adoption of Frohlich's argument that he can be paid as preliminary executor, notwithstanding the will's provision for compensation as executor, would have a number of untoward consequences.
It would allow an executor to void any prior agreement on compensation by the simple expedient of applying for commissions as preliminary executor. It would subject any attorney for an executor who fails to advise the executor to make such an application to a possible action for legal malpractice. It would result in arbitrary awards of commissions that confound the expectations of testators, beneficiaries and fiduciaries. Indeed, the right to serve as preliminary executor might become more valuable than the right to serve as executor.
Finally, such a construction would complicate the orderly administration of estates. If a preliminary executor received a statutory receiving commission, while receiving only the compensation provided in the will for paying out as executor, he or she would then have little incentive to complete the administration of the estate. This was the very evil the legislature attempted to cure by requiring that a preliminary executor who was appointed executor had to wait until an accounting was filed to receive commissions (SCPA 2307 [b]).
That these results are not far-fetched can be seen in the instant application. The two co-executors received preliminary letters and letters testamentary. Yet, one has agreed to abide by the provisions of the testator's will and has asked for only $400,000 for his services as executor (including his services as preliminary executor.) The other has asked for compensation for $200,000 for serving as executor under the will, but commissions of almost six times that for serving as preliminary executor.
In holding that the compensation of a preliminary executor is governed by his or her compensation as executor, the court declines to follow the holding of Matter of Lowenstein ( 72 Misc 2d 193) and Estate of Koch (NYLJ, Mar. 29, 1995).
In Matter of Lowenstein, supra, the testator left all his personal property to the executrix as compensation in lieu of statutory commissions. The executrix failed to renounce her bequest within four months of the issuance of letters testamentary. The property turned out to be valueless and the court denied her any commissions as executrix. Nonetheless, the court allowed her statutory receiving commissions on assets actually received and paying commissions on sums paid out while acting as preliminary executrix, citing Matter of Hillman. No reference was made to the effect of the new statute.
In Estate of Koch, supra, the will provided that the executrix serve without compensation. In her accounting, the executrix sought compensation for her services as preliminary executrix. Quoting Hillman, Surrogate Roth held that the limitation on commissions provided in the will did not limit "or indicate an intent to limit the right of a person named as temporary administrator to receive compensation." (id.) [quoting from Matter of Hillman, 280 App Div 310, 313]. "The same rationale is applicable to the compensation of a preliminary executor." (id.)
In both these cases, the courts ignored the effect of enactment of SCPA 1412.
Enactment of SCPA 1412 eliminated the grounds on which the decisions in Matter of Hillman and its predecessors were based.
The first basis for the decisions in Hillman, Viggiani and Melgood, was the court's determination that the office of temporary administrator was profoundly different from the office of executor. This ground was first enunciated in Matter of Viggiani, supra, where the position of temporary administrator was likened to that of a temporary receiver. "He is, in effect, a temporary receiver acting under the direction of the court with special function is limited by the provisions of the Surrogate's Court Act" ( 171 Misc 74, 75). This was cited with approval by the court in Hillman. "The powers of a temporary administrator are statutory, and those of an executor testamentary as well as statutory. A temporary administrator possesses none of the authority given by a will to an executor" ( Matter of Hillman, 280 App Div 310, 313, affd 305 NY 577, lv denied 305 NY 797).
A temporary receiver is a temporary custodian of the property and an agent of the court ( Cohen v. Sherman, 279 App Div 939). The function of the temporary receiver is limited to preserving the property during litigation, and his or her authority is limited to the authority granted in the order appointing the temporary receiver (CPLR 6401 [b]); Daro Industries, Inc. v. RAS Enterprises, Inc., 44 NY2d 969).
Enactment of SCPA 1412, on the other hand, was intended to create a new office, that of preliminary executor, that was intended to be as similar to that of an executor, with as much authority as possible, given that the will has not been admitted to probate. The legislative scheme was to create a seamless transition from preliminary executor to executor and to allow the nominated executor to act while awaiting probate of the will and issuance of full letters.
In the instant case, preliminary letters were issued pursuant to SCPA 1412 as preliminary executor and not as temporary administrator. Therefore, commissions are limited to those of preliminary executors, not temporary administrators ( Matter of Birch, 50 AD2d 951, appeal dismissed 38 NY2d 902).
The second ground for the decisions in Hillman, Viggiani and Melgood, was based upon the courts' narrow interpretation of the provisions in the wills for compensation. "The terms of the will apply exclusively to the compensation or the denial of it for services rendered as executor. The terms of the will here indicate no limitations on the right of the person named as executor to compensation if he were appointed as temporary administrator." ( Matter of Viggiani, supra, at 77; see also Matter of Hillman, 189 AD2d 310, 313).
Yet there is no reason to deviate from the general rules of construction and to adopt such a strict standard of will construction because the provision in question deals with compensation. The general rule of construction is that the paramount consideration is the ascertainment of the testator's intent ( Matter of Thall, 18 NY2d 186; Matter of Fabbri, 2 NY2d 236). In determining the testator's intent, "the court must assume that he contemplated the reasonable and natural construction of the language used rather than that which would produce an absurd or illogical result." (11 Warren's Heaton, Surrogates' Courts § 187.01 [4] [c], at 187-30). Ultimately, even where technical words are used, it is the testator's intent that governs (see Lawton v. Collier, 127 NY 100; Matter of Mann, 86 Misc 2d 1028).
Thus, where the intention of the testator is clear, the court may add, excise, modify or transpose language in the instrument to effectuate the testator's intent. Accordingly, in effectuating the testator's intent, the word "executor" was construed to describe estate fiduciaries in general (see Matter of Brown, 197 Misc 938; see also Matter of Barker, 82 Misc 2d 974 [the term "executor" construed to include trustee]). There is nothing in SCPA 2307 requiring the court to deviate from this general rule of construction. Thus, the courts have construed the compensation provisions in wills to hold that the direction that executors serve without commission applied to prohibit payment of commissions to successor executors ( Matter of Cornell, 63 Misc 2d 234), barred the payment of additional annual commissions after SCPA 2308 was amended to allow such commissions ( Matter of Lehman v. Irving Trust Co., 55 NY2d 97), barred the payment of salary for running the decedent's business ( Matter of Frohlich, 122 App Div 440, affd 192 NY 56) and barred the payment of commissions for managing real property (see Matter of Schinasi, supra; Matter of Peterkin, 32 Misc 2d 981).
Rather than adopt a hard and fast rule that will only act as a snare to the unwary, it is better to use the general rule of construction that the intention of the testator is paramount. "The intention of the will-maker is to be found in the words used in the will, and when these are clear and definite there is no power to change them" ( Matter of Watson, 262 NY 284, 293, cited with approval in Matter of Roth, supra at 5-6).
In the instant case, the testator's testamentary scheme is clear. He wished to leave the bulk of his estate to charity and wished to limit the compensation of his individual executors. Under such circumstances, he could not have intended that Frohlich receive over $2,500,000 for receiving commissions and $200,000 as paying commissions. In fact, the court cannot conceive of a situation in which a testator would intend to limit the compensation of a fiduciary acting as executor but not the compensation of the same person acting as preliminary executor.
It can be argued that a preliminary executor should receive statutory compensation, notwithstanding the will's provisions, because of the additional work involved. Frohlich alludes to this in his affidavit accompanying his renunciation, in which he claims that he is renouncing because of the unforeseen services as executor. Upon careful analysis, however, this argument is unfounded.
First, the compensation of a fiduciary does not depend on the amount of work the fiduciary is required to perform. This is true whether the compensation is fixed by the instrument (see Matter of Schinasi, supra; ( Matter of Frohlich, supra; Matter of Peterkin, supra) or by the statute ( Matter of Hillman, supra, 280 App Div 310, 315; see 6 Cox-Arenson-Medina, supra, ¶ 2307.05 at 23-175).
Second, there is no evidence that additional executorial services were needed or performed. In the instant case, the delay in probate was caused by the widow's incompetency. There was also litigation as to whether the guardian ad litem appointed to protect the widow's interests in the estate could elect against the will. This litigation required additional legal services. However, it is not clear what additional executorial services were performed.
Finally, even if there were additional executorial services required, this would not justify awarding a preliminary executor full statutory receiving commissions. Although it could be argued that the testator intended such a result, there is no evidence of this. To the contrary, the provision in the will providing for Fiduciary Trust Company to serve if the persons selected by the testator to serve as executor declined, shows an intention to appoint an institutional fiduciary if the service became too onerous.
For the above reasons, the court finds that Frohlich is limited by the will's provision limiting his compensation to $400,000 for all services as executor, whether performed while acting as preliminary executor or as executor.
As a result, the court need not pass on objectants' claim in their cross-motion for partial summary judgment that Frohlich's actions in not revealing to the court and the beneficiaries under the will that there was an impediment to his qualifying for letters that breached his fiduciary duty to the court, the beneficiaries and the testator.
In their petition for preliminary letters, the nominated fiduciaries stated that they were "named in the aforesaid propounded instrument as executors thereunder and will be entitled to letters testamentary immediately upon the probate of the said propounded instrument". No mention is made of the requirement that they agree in writing to Article FOURTEEN of the will or that, if they do not, that Fiduciary Trust is to serve as successor. No notice was ever given to the court that there was an issue of fact as to whether the nominated executors were entitled to letters testamentary or that Fiduciary Trust might be entitled to successor letters. Instead, Frohlich's affidavit makes it appear that the only issue was whether the condition precedent that he agree to the will's provision on compensation could be enforced against a nominated executor, whereas the real threshold issue was whether Fiduciary Trust was entitled to letters once the executors failed to execute the required agreement.
Frohlich knew that Article FOURTEEN of the will required him to agree in writing to the will's provision for compensation as a condition precedent to his receiving letters testamentary, and he knew that Fiduciary Trust would be entitled to letters if he failed to so agree in writing. In Butler University v. Danner, supra, involving a similar provision in a will limiting compensation and providing for an alternative executor if the original failed to agree to the limitation, the court of appeals found that a nominated executor had a duty to inform the probate court that he was unwilling to serve under the conditions required by the will so that the court could appoint the alternate executor. The court found that the conduct of the nominated executor in remaining silent while the probate court inquired about the will's requirement and agreeing to serve breached this duty.
Frohlich attempts to justify his conduct on the ground that in Butler, the executor stood silent while the court inquired about the provision and that here he was never asked about the provision. He claims that he was not obligated to bring the condition precedent to the court's attention and therefore breached no duty to the court, the alternate executor or the beneficiaries.
Executors are expected to rise above the "morals of the marketplace" and to candidly advise the court of the issues. As was said by Surrogate Feely in another context, "the preferable [option] is not to ignore the doubted writing and incur the imputation of suppression or concealment, but rather to bring all the data, good and bad, into common light, and . . . place the burden of sustaining the invalid portion upon the one whom it purports to benefit" ( Matter of Chapin, 167 Misc 388, 390). However, since Frohlich is deemed to have accepted the compensation provided by the will for his services, and to be limited to this agreement for all his services as fiduciary, no matter what technical label is used, objectants have failed to show damages from the alleged breach.
Accordingly, Frohlich's motion for partial summary judgment is denied and objectants' cross-motion for partial summary judgment is granted to the extent that the executors are limited to compensation of $400,000 each for their services as co-executors of the estate.
Settle order.