Opinion
No. 3990
Decided January 2, 1951
Where an executor takes possession and control of the testator's real estate and seeks to have his expenditures of estate funds thereon allowed in his account he may not object if the corresponding duty of using reasonable care and skill to make the property productive is imposed upon him. Certain evidence justified the finding that since it was not reasonable for the executor, looking ahead, to keep the real estate beyond a certain date, he was not entitled to an allowance for services and expenses in connection therewith after that date. Where the settlement of an estate is unduly delayed by the executor himself, he is not entitled to credit in his account for premiums paid on his bond as a result of such delay. Where the Trial Court has found that an estate should have been closed by the executor by a certain date, it was proper for the Court to disallow a charge by the executor in his account for interest on inheritance taxes permitted to accrue by him after that date.
PROBATE APPEAL, from a decree made on the first and second accounts of the plaintiff as executor of the will of Ida O. Folsom, late of Stratham. Some of the facts are to be found in McInnes v. Goldthwaite, 94 N.H. 331. In accordance with that opinion further hearings were held before the Superior Court (Goodnow, C.J.).
On the question of how long under the circumstances it was reasonable for the executor looking ahead to keep a certain parcel of real estate in Stratham of which the decedent died seized, and what credit should be given the executor for expenditures he made thereon (McInnes v. Goldthwaite, supra, 337), the Court made these findings: "The real estate consisted of a tract of land of about 125 acres located two and a half miles from Exeter on a dirt road, with a main house of brick construction and an ell and barn of wood construction." The taxes for the years 1931 to 1935 inclusively were $1,578.43. The services of a tree surgery company and a caretaker and grounds man for that period cost approximately $500 per year. In 1933 there was a fire insurance premium of $214 and in 1934 an expense of $85.93 for work on a chimney. Considering those expenses, "the general market condition for real estate of this sort, the condition of the remaining assets of the estate and his success or lack of success in securing offers to purchase the property . . . under all the circumstances the Court finds that it was not reasonable for the executor, looking ahead, to keep the premises beyond 1935." He sold them in 1940.
As to expenditures "for the period through 1935 the executor is entitled to be credited with the expenses he reasonably incurred for maintenance and carrying charges." These are taxes $1,578.43, fire insurance $214, repair to chimney $85.93, Delco electric system repairs $48.57, work on roof $8.75, telephone exchange service $20.32, revenue stamps $8.50 (commission on sale already allowed). "Considering the type of property, its lack of ready saleability and the other factors involved, the expenditure of over $250 per year in connection with the care of the lawn, shrubs, trees and gardens is found to be unreasonable, and the executor is credited only with $250 per year for the years through 1935 in connection with the work on the grounds. These credits total $3,214.50."
On the question of credit for additional reasonable expenses, "the Court finds that the price of $8,000 net obtained in 1940 did exceed what would have been received by exercising reasonable diligence in securing a customer and selling the property within the period ending in 1935; but the plaintiff has not proved, nor is there sufficient credible evidence before the Court on which the Court can determine what would have been received upon sale of the property if it had been sold during the period between February 27, 1931, and the end of 1935 . . . the Court is unable to determine the gain resulting from the delay in selling. . . . The plaintiff is accordingly entitled to no credit for any additional expenses beyond the end of 1935. . . ."
In his accounts the executor asked for additional fees for services, commissions and allowances for counsel fees.
As to fees for services the Court made these findings and rulings: "By February 1934 there was nothing left for the executor to do except to dispose of the real estate, account for his actions as executor and pay over the balance in his hands under the terms of the will. The Court finds that, from the nature and condition of the estate, the period reasonably required for the settlement of this estate terminated February 27, 1936. The services rendered by the plaintiff . . . if rendered within the period between February 27, 1931, and February 27, 1936, and considering what detriment they would have been if rendered during that period, would have been worth $6,500." Having received $2,500 he is entitled to an additional allowance of $4,000.
The Court rejected and disallowed the plaintiff's claim for commissions on income of the estate.
Plaintiff's claim for bond premiums, expenses of hearing and legal expenses after February 27, 1936, were also rejected "on the grounds that where they cover what he should reasonably have done by February 27, 1936, he has been paid by the above allowance of $6,500, and where they cover further matters they have been incurred only by his mismanagement of the estate, and the estate should not further suffer because of that mismanagement on his part."
The Court also ruled that on a balance due the State of New Hampshire for inheritance taxes "the executor should be allowed credit for the amount of the balance of the state tax as computed on the basis of the final account and with the interest on the amount of that balance to February 27, 1936" and not thereafter.
The plaintiff took certain exceptions to these findings and rulings which were reserved and transferred. They will be set out in detail in the opinion.
George R. Scammon and Edmund W. Ogden, for the plaintiff, filed no brief.
McLane, Davis, Carleton Graf and Stanley M. Brown, for the defendant.
The plaintiff first excepted "to the finding, `the buildings were in the process of being remodeled at the time of Miss Folsom's death and were not in a completely habitable condition during the time the property was held by the plaintiff, although they could have been made habitable for use as a summer residence without an expenditure of a large amount of money,' in that by this finding the court has considered the imposition upon the executor of a duty he could not legally perform." It is true, of course, that the executor of solvent estate cannot legally spend estate funds to improve the decedent's real estate. The reason being that the real estate is vested in the devisee or heir and not under the management or control of the executor. Lucy v. Lucy, 55 N.H. 9, 10; Ruel v. Hardy, 90 N.H. 240, 242. When, however, as is the case here, the executor does in fact take over the possession and control of the real estate and seeks to have his expenditures of estate funds thereon allowed in his account he cannot complain if the corresponding duty of using reasonable care and skill to make the property productive is imposed upon him. Spooner v. Dunlap, 87 N.H. 384, 386; Restatement, Trusts, s. 181. Plaintiff's exception is overruled.
The plaintiff excepted next "to the finding that by holding the property beyond the year 1935 the executor acted unreasonably and thereby caused loss to the estate." The plaintiff assumed the control of the real estate in February, 1931. Besides paying taxes which averaged about $315 per year from 1931 through 1935, he also paid about $500 per year for grounds maintenance and the services of a caretaker plus insurance premiums and incidental expenses. All the while receiving no income therefrom, no offer for the purchase thereof and maintaining an asking price of $15,000. On those facts the Court's decree that it was not reasonable for the executor, looking ahead, to keep the premises beyond 1935 must be affirmed and plaintiff's exception thereto overruled. Ricard v. Insurance Co., 87 N.H. 31, 33; Irwin v. Company, 95 N.H. 20, 22.
The plaintiff further excepted "to the finding that the expenditure in connection with the care of the grounds, lawn, trees and gardens, was unreasonable." The amount of certain expenses, such as taxes, could obviously not be controlled by the plaintiff. He could however regulate how much should be expended on the care of the grounds. It seems to us that the Trial Court could reasonably decide that it was unreasonable for the plaintiff to expend moneys in excess of $250 per year for the care of the grounds on these premises when, among other factors, the kitchen as well as the two upstairs bedrooms in the house were all torn to pieces thereby making the premises not completely habitable. Irwin v. Company, supra. This exception is also overruled.
Plaintiff's next exception is as follows: "To the finding of the Court that the sale price of Eight Thousand ($8,000) Dollars net did exceed what would have been received by exercising reasonable diligence in securing a customer during the period 1931-1935, and at the same time disallowing expense beyond the end of 1935. No credible evidence having been before the Court as to the market value in this period it must be found that no market value existed thereby making the gain to the estate the amount of the sale price." The plaintiff had the burden of proving not only that the price received for the property in 1940 exceeded what it would have brought between 1931 and 1935 but also the extent of the net benefits which the estate received. McInnes v. Goldthwaite, supra, 337. This he has failed to do and is therefore not entitled to credit for additional reasonable expenses. We cannot subscribe to his argument that because he has failed to prove what this property, for which he was asking $15,000 and which was inventoried at $12,000, would have brought between 1931 and 1935 it consequently had no market value.
Plaintiff also excepted to the finding and ruling, "the plaintiff is entitled to credit in his final account for maintenance and carrying charges in the sum of Three Thousand Two Hundred Fourteen Dollars and Fifty Cents ($3,214.50) as an error based upon a plain mistake and without support of credible evidence, this finding and ruling thereby disallowing the sum of Five Thousand One Hundred Sixty-Nine Dollars and Thirty-Seven Cents ($5,169.37)." The plaintiff was seeking credit in his final account for maintenance and carrying charges on the real estate in the amount of $8,383.87. This covered the entire period in which he held the real estate. We have upheld the decision of the Trial Court in allowing certain maintenance charges and in disallowing others. The charges allowed amount to $3,214.50. Those disallowed to $5,169.37. This exception must therefore be overruled.
As to the disallowance of bond premiums after February 27, 1936, the plaintiff took two exceptions (1) "This disallowance presupposes no litigation if the estate had been settled as the court finds it should have been settled, does not allow for any premium during the period of successful litigation and disregards honest management of which bond premiums are a required expense." (2) "To the finding in relation to bond premiums, and where they cover further matters they have been incurred only by his mismanagement of the estate, and the estate should not further suffer because of that mismanagement on his part, as a conclusion based purely upon guess and speculation and not supported by a mere scintilla of evidence either of mismanagement or that the estate had suffered in spite of honest management." The reasonable and necessary expense of procuring a bond by an executor which is required before his appointment as such by the Judge of Probate (R. L., c. 352, s. 13) is an allowable expense of administration. 33 C.J.S. 1233. However when the settlement of the estate is unduly delayed by the executor himself, he is not entitled to credit in his account for the premiums paid on his bond as a result of such delay. In re See's Estate, 38 N.Y. Supp. (2d) 47. On the record the Court was justified in not providing for bond premiums for litigation beyond the period when he found the estate should have been closed as there was no evidence to warrant much less compel a finding that premiums would have been required after February 27, 1936. These exceptions are also overruled.
The plaintiff excepted "to the ruling of the Court requiring the plaintiff to pay the accrued interest on inheritance tax as accrued after February 27, 1936, as arbitrary and without justification in law or in fact." The tax on legacies and successions is due and payable at the expiration of fifteen months after date of the decedent's death (R. L, c. 87, s. 47) and interest at the rate of ten per cent per annum is charged and collected from the time the same became payable. Id, s. 49. The Court having found that this estate should have been closed no later than February 27, 1936, was correct in disallowing interest permitted to accrue by the plaintiff after that date.
Plaintiff's final exception is "[t]o the attempted inclusion of the Court in its findings and rulings of any matters beyond the date of the account which is subject to this appeal." It is not apparent from the record that the Court did improperly include in its findings and rulings matters not properly before it for decision. This exception is overruled and the order must be
Exceptions overruled.
All concurred.