Opinion
21908.
SUBMITTED JANUARY 15, 1963.
DECIDED APRIL 4, 1963.
Exception to decree. Camden Superior Court. Before Judge Thomas.
Barrie L. Jones, for plaintiff in error.
Conyers, Fendig, Dickey Harris, contra.
1. The assignments of error are sufficient where they specifically designate the error complained of and point out wherein the error lies so that this court can ascertain substantially the real questions which the parties seek to have decided. Where counsel in the brief of the plaintiff in error confines the issues to certain specified points and states the court could not pass an order containing the provisions complained of "regardless of the evidence," exceptions to the sufficiency of the evidence will be treated as abandoned.
2. One is not entitled to recover of another the value of anticipated services that have not been rendered merely because it is reasonable or probable that such services will be performed in the future.
3. Where a decree awarded compensation to a trustee for past services and for services to be rendered in the future in one gross or aggregate amount so that it was impossible to ascertain what amount was allocated to each category, the invalidity of the award to the trustee for services to which it was not yet entitled infected the entire award for extra compensation.
4. Although the superior court may, in the exercise of sound discretion, permit a trustee to borrow money and decree that such debt be a lien against the trust property, this broad power should be prudently exercised and not granted except where the exigencies of the trust's administration render it necessary.
SUBMITTED JANUARY 15, 1963 — DECIDED APRIL 4, 1963.
Mrs. Lucy C. Carnegie, a resident of Pennsylvania until the time of her death, owned Cumberland Island situated in Camden County, Georgia, and personalty on the Island. In her will she created a trust in the Island property, named her five eldest children trustees of the estate and all nine of her children beneficiaries of the trust. The provisions of the will pertinent to the issues of the present case are set out in the opinion and need not be stated here.
On January 25, 1955, The National Bank of Brunswick, which later by order of the Comptroller of Currency became The First National Bank of Brunswick, was appointed trustee of the Island property by the Superior Court of Camden County. The decree appointing the bank trustee recited that: at this time there is no legally constituted trustee to hold the legal title to the real property on Cumberland Island, and the personal property necessary and appurtenant thereto, for the uses, purposes and trusts established in Mrs. Carnegie's will; jurisdiction to appoint a successor trustee is vested in the Camden Superior Court; The National Bank of Brunswick, a banking corporation having a trust department, is appointed successor trustee and directed to hold the described real property in Camden County.
On April 28, 1962, the trustee bank filed a suit for direction. The petition alleged the fact of the plaintiff's trusteeship, the jurisdiction of the trust and the death of the last surviving child of Mrs. Carnegie. It recited that: during the administration of the trust, the United States has brought condemnation proceedings against certain portions of the Island, which proceedings are now pending in the United States District Court; the petitioner in its capacity as trustee retained a firm of lawyers to represent the trustee for the purpose of obtaining the proper value of the land being taken for the benefit of the trust; as an outgrowth of damages to properties of the trust, such law firm brought suit against Western Contracting Co., which suit is pending in the Camden Superior Court; also as an outgrowth of damages, suit has been brought against the United States under the Torts Claims Act, which suit is pending in the United States District Court; as trustee, the petitioner employed persons to render the services required of the trust by the will and to protect and conserve the property of the trust; until the remaindermen, who take title to the trust property, can be determined and the property vested in them, it is necessary to continue the services of the employees, to purchase supplies, and provide equipment and facilities to enable them to continue to carry out their duties, to transact other considerable business involving the trust and its termination, and to do all other things necessary to conserve the trust property until it can be vested in the remaindermen; as trustee, the plaintiff has on hand certain personal property belonging to the trust, including boats, automotive equipment, and other equipment on the Island and including cash, bonds and accounts receivable. An exhibit attached to the petition shows the assets of the estate in personalty, money and bonds to be $70,060.51.
The petition further related that "insofar as the trustee has been able to ascertain, the persons who are the remaindermen in whom the trust property will vest when the trust becomes terminated" were certain named persons whose respective addresses were set forth. One of these parties is T. M. C. Johnston of Lexington, Kentucky. There were other averments relative to the difficulties confronting the trustee in ascertaining the remaindermen entitled to interests in the trust property and finally the allegation that: because the trust is now a resulting executory trust and the plaintiff is a stakeholder in that there are matters remaining to be done, including the ascertainment of the objects of the trust, distributions according to a specified mode, and other actions requiring the trustee to retain the legal estate, the plaintiff bank "requires the direction of the court as to its duties, responsibilities and powers during determination of the pending issues."
Included in the petition were prayers: that the court grant the bank authority to continue operating the trust property under the terms of the trust until the determination of the remaindermen under the laws of intestacy of the State of Pennsylvania; that the court grant the bank authority to do all things necessary to preserve the trust property pending the determination, including authority to continue to prosecute and defend the three suits and to pay the attorney fees accrued, to borrow money from itself or others if required for conservation and preservation of the trust, and to employ and pay for services and supplies as may be required; that the court fix reasonable compensation to the trustee for its extraordinary services rendered as such; that the court determine the persons in whom the trust property shall vest, the percentage of the trust property to which such persons are entitled and give direction as to the manner and time of the vesting; that the accounting of the trustee be approved; that the trustee be directed as to the manner in which the property of the trust shall be vested in the remaindermen, and that the trustee be dismissed.
To the petition was attached the will of Mrs. Carnegie. The petition was later amended by adding a prayer for termination fees. The amendment was allowed without objection. No demurrer or plea was filed by any of the parties to this case.
T. M. C. Johnston filed his answer to the petition. The answer admitted the location of the property, the jurisdiction of the court to entertain the bill for direction, and the other material allegations of the petition pertinent to the issues of this case, except the averments relative to the vesting of the remainder interest in the trust property and the right of the plaintiff trustee to the compensation for extraordinary services rendered in administering the trust. In reference to the termination of the estate, the answer alleged that the remainder estate in the Island had already vested in the remaindermen named in Mrs. Carnegie's will, but admitted it would be necessary to ascertain the identity and interest of the remaindermen, in this connection expressly challenging the right of some of the parties claiming to be remaindermen to share in the trust property.
The answer set forth defenses to the recovery of the compensation prayed by the trustee. One of these defenses was that the petition did not describe the nature or extent of the extraordinary services for which the trustee claimed compensation. Another was that the trustee had previously filed in the court of ordinary an intermediate report covering an interval of time and in such report claimed no right to fees for services in addition to those normally incident to the administration of the trust.
The answer specifically invites attention to the portion of Mrs. Carnegie's will reading: my executors in that capacity, as well as trustees, shall be permitted and allowed and are directed to pay all expenses incident to the administration of my estate and of the trusts herein created, as the same become due and payable, before distribution of the income of the estate to persons entitled to receive the same, "except that none of my said Executors shall be entitled whether acting as Executors or Trustees, to any commission for the performance of any duty in connection with the administration of this estate..." The answer then alleges: that by virtue of the clause in the will, taken in connection with the remainder of the will and codicils, it was not the intent of the testatrix to impress the trust fund set up in the will for any purpose other than maintaining the Island property and improvements thereon, and that she specifically excluded the payment of any commission to any trustee in connection with the administration of the trust property; that the trustee bank accepted the trust with full knowledge of the contents of the will and with knowledge that it was entitled to no greater compensation than the will allowed, and the trustee bank had the choice of refusing appointment; further, that the order appointing the trustee bank does not fix any compensation whatever and that the trustee accepted appointment under such order.
The final paragraph of the answer alleged: that the trustee's petition prayed for authority to borrow money from itself or others if required for conservation or preservation of the trust property and to employ and pay for the services, employment and supplies required for such purposes; that, pursuant thereto, the court granted an interim order authorizing the trustee to borrow money from itself or others for the purposes enumerated; that there is no provision in the will allowing the borrowing of money by executors or trustees, and that any debt made by them pursuant to the order or any subsequent order would be null and void and that the trustee ought not be allowed to borrow money.
The trustee bank, the defendant T. M. C. Johnston and other parties at interest entered into a stipulation of facts reading: 1. The First National Bank of Brunswick is the duly qualified and acting trustee for the property on Cumberland Island owned by Lucy C. Carnegie at the time of her death and placed in trust by her will and codicils, the bank having been appointed by order of the Camden Superior Court. 2. By order of the Comptroller of Currency of the United States, effective February 1, 1957, the name of the National Bank of Brunswick was changed to The First National Bank of Brunswick. 3. The administration of the trust is in the jurisdiction of the Camden Superior Court. 4. All of the lands held by The First National Bank of Brunswick, as trustee, are located in Camden County. (Here followed a complete legal description.) 5. The documents annexed to the stipulation are true and correct copies of the last will and testament of Lucy C. Carnegie, and codicils thereto, of the probate proceeding held in the Camden County Court of Ordinary, of the order of such court of ordinary admitting the will and codicils to record as duly proved in solemn form, and of the letters testamentary issued to the executors by the court of ordinary on December 21, 1916. 6. Lucy C. Carnegie died on January 16, 1916, a resident of Allegheny County, Pennsylvania. 7. The last surviving child of Lucy C. Carnegie, namely, Florence Carnegie Perkins, died on April 15, 1962. 8. While the bank was trustee, the United States brought a condemnation proceeding against certain portions of Cumberland Island, which proceeding is now pending in the United States District Court. The bank employed a law firm to represent it, as trustee, in answering the proceeding and in obtaining for the benefit of the trust the fair value of the property sought to be condemned. 9. As an outgrowth of damages to the properties of the trust, the bank, as trustee, employed the law firm to bring suit against. The Western Contracting Co., which suit is now pending in Camden Superior Court. 10. Also as an outgrowth of the damages to the trust property, the bank, as trustee, employed the law firm to bring suit against the United States under the Torts Claims Act, which suit is now pending in the United States District Court. 11. The bank, as trustee, filed an intermediate final report covering the three year period ending March 31, 1961, with the Camden County Ordinary in accordance with Code Ann. § 113-1417 (Ga. L. 1943, pp. 409, 410). The accounting for the period from April 1, 1961, through March 31, 1962, consisting of Statement of Income Assets, Accounts Receivable Detail, Income and Disbursement Statement, Principal and Principal Assets held, is true and correct.
The case proceeded to trial before the Judge of Camden Superior Court. After hearing evidence he entered a decree, termed by the bill of exceptions a judgment, which designation for the sake of convenience we will employ. The judgment decreed in part: that upon the sworn testimony of three witnesses, trust officers of three banks, the court finds and holds that a fair fee for the extraordinary services, including services incidental to the termination of the trust, which have been rendered and will be rendered within reason, by the trustees, not previously compensated for, is the sum of $100,000; that, if the funds which the trustee has on hand are not sufficient to discharge such obligations, the trustee shall be empowered to borrow money from itself or others to pay the same and such indebtedness arising out of the trust or its termination shall be a lien against the trust property.
T. M. C. Johnston, in due season, filed his bill of exceptions in which exception was taken only to the portion of the judgment set out in the preceding paragraph. The bill of exceptions recited: that competent evidence was introduced establishing that the value of the trust property was in excess of $4,000,000 and that the trustee had rendered extraordinary services during its seven years of administration of the trust commencing January 5, 1955, beyond normal services required of trustees. By testimony of two trust officers the fair value of such services was established as 2 1/2% of the trust estate, or $100,000; by testimony of the trust officer of the bank, it was shown that the Cumberland Island trust property contained in excess of 16,000 acres, that there are valuable improvements and properties on the Island to which serious damage could result without the continuing care of the trustee and its employees and that there might be insufficient funds in the trust to defray costs. "No evidence was introduced by any of the parties refuting such testimony."
The assignments of error were: to the order allowing fees for extraordinary services or termination fees to the trustee and allowing the trustee to borrow money from itself or others to pay indebtedness or expenses of the trust or indebtedness arising out of the trust or the termination thereof, the "Respondent T. M. C. Johnston then and there excepted and now excepts and assigns the same as error, as being contrary to law, contrary to the evidence, and contrary to the principles of equity and justice, and as misconstruing and misinterpreting the last will and testament (and codicils thereto) of Lucy C. Carnegie and says that the court erred in holding, finding and decreeing termination fees and/or fees for extraordinary services to the trustee and in entering up an order allowing the trustee to borrow money from itself or others to discharge the obligations of the trust including indebtedness arising out of said trust or the termination thereof thereby creating a lien against the property of the trust." It is further urged that the court erred and the final order is fatally defective; in that its is not therein specified what fee is allowed for extraordinary services and what fee is allowed as termination fees; in that it is vague and indefinite in holding "that a fair fee for the extraordinary services incidental to termination of the trust which have been rendered and will be rendered within reason by the trustee but not previously compensated for, is the sum of $100,000.00" for the reason that the court cannot by a final order project or anticipate what services will be rendered, and it is not therein stated what portion of the $100,000 represents services rendered and what portion represents services to be rendered or what is reasonable with reference to services to be rendered.
1. Our rules of practice provide that the bill of exceptions shall specify plainly the decision complained of and the alleged error, Code Ann. § 6-901 (Ga. L. 1880-1, p. 123; Ga. L. 1887, p. 41; Ga. L. 1957, pp. 224, 232), and that the Supreme Court shall not decide any question unless it is made by a specific assignment of error in the bill of exceptions. Code § 6-1607. However, under Code § 6-1307 the Supreme Court shall not dismiss any case for any want of technical conformity to statutes or rules of practice "where there is enough in the bill of exceptions or transcript of the record presented, or both together, to enable the court to ascertain substantially the real questions in the case which the parties seek to have decided."
"An assignment of error that the verdict is contrary to law and the principles of justice and equity is too general and indefinite to present to a reviewing court any question of law except that the verdict, for want of any evidence to support it, is contrary to law." Jackson v. Sapp, 210 Ga. 134 (1) ( 78 S.E.2d 23), citing Pace v. Pace, 154 Ga. 712 ( 115 S.E. 65), and Calhoun v. Ozburn, 186 Ga. 569, 570 ( 198 S.E. 706).
Code Ann. § 6-806 (Ga. L. 1889, p. 114; Ga. L. 1946, pp. 726, 732) provides that the plaintiff in error shall plainly and specifically set forth the errors alleged to have been committed, and shall incorporate in the bill of exceptions a brief of such of the written and oral evidence as is material to a clear understanding of the errors complained of. Where the trial judge certifies that the bill of exceptions is true and "contains" all the evidence and in fact the bill of exceptions really "contains" no evidence whatever, but only a specification of a duly approved brief of evidence (in that sense only was the material evidence "contained" in the bill of exceptions), "it is evident ... that the word `contains' in the certificate was simply used (probably by mere inadvertence) in the place of the more accurate word `specifies' ... This court will not dismiss the writ of error for a mere verbal inaccuracy therein." Flanagan v. Scott, 102 Ga. 399, 402 (3) ( 31 S.E. 23). It would thus appear that the converse is true, as in this case, where the certificate uses the word "specifies" when some of the evidence is actually "contained" in the bill of exceptions.
There is no prescribed form for an assignment of error. The criterion of its sufficiency is that it specifically designates the error complained of and points out wherein the error lies. Crossley v. Leslie, 130 Ga. 782, 785 ( 61 S.E. 851, 14 AC 703); Patterson v. Beck, 133 Ga. 701 ( 66 S.E. 911).
However, the plaintiff in error in his supplemental brief filed in this court expressly abandoned all assignments of error dependent upon consideration of the evidence. It is there stated: "First, it should be pointed out that the assignments of error do not direct themselves to questions of evidence but are assignments of error which in effect say that the lower court could not pass an order containing the various provisions complained of in the bill of exceptions regardless of the evidence."
Under the rule of practice as held in Tift v. McCaskill, 171 Ga. 289 (3) ( 155 S.E. 192), where the brief of the attorneys for the plaintiff in error confines the issues involved to specified points, all other questions made by the assignments of error in the bill of exceptions will be treated as abandoned. Similar pronouncements are found in Cumby v. New Albany Box c. Co., 58 Ga. App. 843 ( 200 S.E. 307); Lander Motors, Inc. v. Lee Tire c. Co., 89 Ga. App. 194, 200 ( 78 S.E.2d 839), and in other opinions of this court. Manchester v. State, 171 Ga. 121 (1) ( 155 S.E. 11); Roseman v. Wright, 209 Ga. 748 (1) ( 76 S.E.2d 7); Wright v. State, 217 Ga. 453, 454 (1) ( 122 S.E.2d 737). So, this court is not privileged to pass upon the sufficiency of the evidence to support the parts of the decree to which exception is taken.
This leaves for consideration the remaining assignments of error enumerated in the preceding statement of fact.
2. The exception that the decree is invalid because it awarded to the trustee compensation that, according to its own recitals, was not earned and for which no liability of the trust estate had accrued when the decree was entered is well taken.
The error is apparent because neither at law nor in equity is one, in the absence of a contractual obligation of the parties, entitled to recover of another the value of anticipated services that have not been rendered, simply because it is reasonable or probable that they will be performed in the future.
3. The presumption is that the evidence supported the decree in so far as it awarded compensation to the trustee for services previously performed. But there was no specific award of compensation for past services alone. On the contrary, the decree awarded the compensation for services of the nature indicated and compensation for services to be rendered in the future in one gross or aggregate amount, so that it is impossible to ascertain from an examination of the decree how much of that gross amount is allowed the trustee for its services that had been performed and those that the chancellor anticipated would be rendered. The invalidity of the award to the trustee for services to which it was not entitled infected the whole decree, in so far as it related to the amount allowed the trustee as extra compensation. Consequently, it must be held that the assignment of error challenging its validity on this ground is meritorious.
4. We consider the assignment of error that the trial judge erred in permitting the trustee to borrow money for the purpose of paying the debts of the trust estate and decreeing that such loan became a lien against the Cumberland Island property. The plaintiff in error contends that part of the judgment was error because the trial judge was without legal authority to permit the trustee to borrow money or to encroach on the property of the trust estate. He cites as authority for this position Field v. Manly, 185 Ga. 464 (2) ( 195 S.E. 406), in which a pronouncement applicable to administrators and executors is found: "An administrator, by virtue of his appointment as such, has no legal right to borrow money and bind the estate by a note and mortgage given therefor, although the money was borrowed for the benefit of the estate. Nor will the fact that the proceeds of the loan were used for the benefit of the estate to pay debts operate to give the lender an equitable lien on the mortgaged property or other assets of the estate ... The rule is the same as that which obtains in the case of an executor, unless the making of such an obligation is authorized by the will ... Nor will the fact that an administrator ... obtained from the superior court an order authorizing such a transaction render it valid."
But the rule stated in the Field case has no application in the administration of a trust by a trustee acting under appointment of a court of competent jurisdiction. A well established principle of the law of trusts is that the court may, in the exercise of sound discretion, permit such trustee to borrow money and, if need be, decree such debt to be a lien against the property of the trust estate. Authority for the conclusion is Weems v. Coker, 70 Ga. 746 (2): "A chancellor may grant power to a trustee at chambers to mortgage the trust estate, on a proper proceeding for that purpose. The power to allow a sale includes the power to allow a mortgage." See Jackson v. Massachusetts Mut. Life Ins. Co., 183 Ga. 659 (2) ( 189 S.E. 243).
This broad authority of the chancellor should be prudently exercised and permission for the trustee to place a lien on the corpus of the trust property should not be granted except where the exigencies of the trust's administration render it necessary. The pleadings and evidence, sufficient to authorize the trustee to place a lien upon the corpus of the estate for the purpose of paying debts, must show the validity and approximate amount of the debts and the income of the trust estate that is, or will become, available to retire the debts.
These principles should be strictly observed where, as in the present case, the will of the settlor which created the trust estate provides the expenses of the trust be paid from its income, provides a large and apparently adequate annuity for that purpose, and in express terms forbids encroachment upon the corpus of the trust property. The pertinent provision of the will reads: "I direct my office building and real estate upon which the same is located on Fifth Avenue, Pittsburgh, Pennsylvania ... known as the `Carnegie Building' to be held and kept rented by my said Executors in their capacity as Trustees upon the following uses and trusts: To use so much of the yearly income as received as may be necessary for the purposes and expenses of the trust herein created as to my real estate located on Cumberland Island, Georgia, as long as the trust to said Island property continues; and to pay the surplus of said income, if any, yearly during the life of the trust as to said Island property to my said children then living, and to the children of such of my named children as are then dead, the children of every deceased child taking their parent's share."
The bill for direction brought by the trustee in the present case in general terms alleged there would be certain expenses necessarily incident to the further conservation of the trust property and in carrying out the purposes of the trust until it could be terminated; that named competent counsel had been retained in the condemnation proceedings instituted by the government against a valuable part of the trust estate land in suits brought by the trustee for damage done the trust property; that the attorneys should be allowed fair fees for their services and further that the trustee was entitled to extra compensation for services beyond those normally required in administering the trust estate.
Included in the demands against the trust estate, enumerated in the petition and that the trustee proposed to satisfy with money derived from the loan, were items of indebtedness that had not accrued, and there was no averment as to when they would become due and payable. Some of these demands were expenses of preserving the trust property and carrying out the trust, the fees that were to be paid the attorneys and a part of the trustee's claim for extra compensation.
The petition showed further that periodically large sums of money derived from the rents of the Carnegie Building were paid the trustee, but did not disclose when the next such payment would become due. There were averments indicating the government had condemned very valuable real property of the trust estate for which a large amount would be paid the estate as compensation, from which the fees to which the attorneys were entitled would be paid. The time when the compensation would be realized, through recovery or settlement, was not indicated.
The bill for direction did not set out the several amounts necessary to meet these obligations nor did it allege the aggregate amount that would be required for the purpose, except that it was alleged that the attorneys representing the trustee in the condemnation proceedings and suit for damages would be entitled to fees in a certain amount. However, from the averments of the petition it appeared that most of the fees to be paid the lawyers were contingent upon the amount recovered and would be paid from the recoveries or settlement made in the cases. It appeared from an exhibit in the form of a financial statement attached to the petition that the trust estate had on hand "quick liquid assets," that is money or its equivalent, $70,060.51 available for the payment of its obligations.
From the facts stated, it is apparent that the petition failed to furnish sufficient information or data, from which it could be determined whether the trustee should be granted authority to borrow money and secure the loan by a lien against the corpus of the trust property. This conclusion is bolstered by the fact that the decree did not designate the amount of money the trustee was permitted to borrow, or that the chancellor had reached the definite conclusion that it would be necessary for the trustee to obtain a loan to meet the obligations of the trust.
In the case of Bolles v. Munnerlyn, 83 Ga. 727, 733 ( 10 S.E. 365), is the obiter observation: "When a chancellor is applied to by a trustee for authority to incumber the trust property, he should set out in his order all the powers, terms and stipulations which the contract should contain." The opinion of Wagnon v. Pease, 104 Ga. 417, 425 ( 30 S.E. 895), refers to this expression approvingly.
Whether the rule suggested in the Bolles case is sound and should be adopted need not be now decided. It is, however, safe to conclude that neither the law nor the principles of equity contemplate that unbridled power be conferred upon the trustee to borrow any amount of money he may deem expedient. and bind the trust he represents for the payment of the loan. Such authority granted to the trustee would have the effect of substituting his discretion for that of the court having jurisdiction of the trust. The grant of such power in the instant case was error.
Judgment reversed. All the Justices concur.