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In Re Estate of Breault

OCTOBER 4, 1965.

IN THE MATTER OF THE ESTATE OF OSCAR J. BREAULT, DECEASED. HIRSCH E. SOBLE, PETITIONER-APPELLEE,

v.

WILLIAM JOSEPH BREAULT AND BONNIE JO ELLEN BREAULT, MINORS BY FLORENCE B. BREAULT, THEIR NEXT FRIEND AND GUARDIAN, RESPONDENTS-APPELLANTS.



Appeal from the Circuit Court of Cook County, Probate Division; the Hon. JAMES M. CORCORAN, Judge, presiding. Affirmed.

MR. JUSTICE KLUCZYNSKI DELIVERED THE OPINION OF THE COURT.

Kathryn M. Breault died in August 1952 leaving a last will and testament which devised and bequeathed the bulk of a substantial estate to Harold L. Feigenholtz and Richard Dahm, as trustees, for the benefit of her son, Oscar J. Breault, during his lifetime. The will also bestowed a general testamentary power of appointment over the trust assets in the following manner: "Upon the death of my son, Oscar J. Breault, the property of the trust estate shall be distributed according to the provisions and terms of the Last Will and Testament of my son, Oscar J. Breault, and if he shall fail to execute a Will or such Will should not be admitted to probate, I hereby direct distribution of said estate in the following manner:" etc., naming three charities which were to share equally. Oscar died July 16, 1959. His will dated November 18, 1954, was admitted to probate on October 14, 1959. (In re Estate of Breault, 29 Ill.2d 165, 193 N.E.2d 824). He was married three times, his third wife, Estelle, surviving him. William Joseph Breault and Bonnie Jo Ellen Breault, minor respondents, are children of his second marriage. Kenneth Breault, son of the first marriage, also survived him.

Feigenholtz qualified as executor under Oscar's will which, after directing payment of debts and taxes, contained in pertinent part: "I give, devise and bequeath all the rest, residue and remainder of my property, of whatsoever character and wheresoever situate, be it real, personal or mixed, belonging to me at the time of my death, or over which I have power of disposition, to Harold L. Feigenholtz of Chicago, Illinois, and his successor or successors as trustee for and upon the following trusts, purposes and conditions. . . ." (Emphasis ours.) Subsequent provisions directed that the income from the trust should be paid to Estelle during her life, and upon her death in equal shares to Oscar's three children until the youngest should reach the age of 40 years, at which time the corpus was to be distributed between the children (5% each) and a charitable institution (85%). At the time of Oscar's death, when his will took effect, the trust estate over which he had been given a power of appointment by his mother's will totaled in excess of $400,000 and included residential property in Florida which had been purchased with trust funds for Oscar's use.

The Probate Court held that Oscar's will manifested an intention on his part to appoint the trust assets of his mother's estate to his own estate, thus making the appointive property assets of his own estate which necessarily had to be inventoried and accounted for by his executor.

An appeal to the Illinois Supreme Court was taken regarding this ruling and various other orders. The Supreme Court, in the appeal In re Estate of Breault, 29 Ill.2d 165, 178, 193 N.E.2d 824 (1963), said:

"Considering the will [Oscar's] in its entirety we do not find the requisite intent of the donee to make the property a part of his estate for all purposes. This being so, the appointee takes from the estate of the donor as in the normal case. For this reason, it follows that the orders of the probate court were in error insofar as they ordered the appointive assets to be surrendered to and inventoried in Oscar's estate. . . ."

The matters before us on this appeal arose when petitioner-appellee, Hirsch E. Soble, petitioned the Probate Court in the pending proceedings involving Oscar's estate, to enter an order for partial allowance of fees earned by him as attorney for the executor, payable out of the Kathryn M. Breault trust assets. Petitioner described in detail the legal services he performed for and on behalf of the executor alleging that they were reasonable and necessary; that Oscar's estate is small and hopelessly insolvent; that the fees constitute an equitable charge against the Kathryn M. Breault trust assets; that the trustees are made parties and that an order may be entered against them in the proceedings to pay a partial allowance, as the court may deem proper, out of the assets of said trust.

Respondents answered the petition claiming that the services charged were not made on behalf of and beneficial to the estate; contesting the right of the probate court to order an executor's attorney to have his fees paid out of property not part of the probate estate, and which was the subject matter of a prior pending declaratory judgment and accounting action in the federal court; and denying the insolvency of Oscar's estate.

Respondents, further answering, alleged that the Supreme Court (In re Estate of Oscar J. Breault 29 Ill.2d 165, 193 N.E.2d 824 (1963)), held that the assets of the Kathryn M. Breault trust were not appointed to Oscar's estate; that they could not be charged with costs of administration of that estate; that the federal court had jurisdiction of the trust assets in the prior pending suit for declaratory judgment and accounting; that there were questions at issue in the federal court as to whether the trust assets were properly subject to a power of appointment by Oscar, and if so, whether his will was a product of undue influence or otherwise invalid; that the petition failed to show any benefit to the estate, and that the services performed in fact were detrimental to the estate.

Upon a full hearing thereof the trial court entered an order finding that it had jurisdiction of the parties and the subject matter; that the allegations of the petition were true; that the estate was small, insolvent and unable to pay fees; that petitioner's services were of great value and benefit to the trust estate under the last will and testament of Kathryn M. Breault, deceased; that the successful defense of a federal suit instituted by Sylvia Jackson against Oscar's estate for an alleged assault and battery committed during his lifetime prevented subsequent recourse against said trust estate; that the executor had a statutory duty to defend Oscar's exercise of the power of appointment of said trust assets; that the legal services rendered by petitioner as the executor's attorney in defending the will contest in the Federal Court, and in the suit for declaratory and equitable relief, and in defending against plaintiff's petition for removal of the executor, and against their objections to the executor's amended first account and to the amount and nature of the executor's bond, and, in prosecuting the executor's appeal to the Supreme Court were all directly related to and reasonably and necessarily incurred in the performance of the executor's statutory duty and that the legal fees should fairly be charged to the Kathryn M. Breault trust estate regardless of the outcome of said litigation; that a fair and reasonable value of petitioner's legal services to February 6, 1964, was $67,630; and that petitioner was entitled to an order against the trustees to pay out of the assets of the trust a partial allowance of $45,000 on account of his legal services.

The court ordered Feigenholtz and Dahm as such trustees to pay out of the assets of the said trust estate to petitioner the sum of $45,000 as a partial allowance of his fees, and that in default of such payment execution issue. The court ordered that upon payment of said sum the trustees shall be entitled to take credit therefor in their account and accountings.

Respondents appeal from the order. The services rendered by the petitioner, and the reasonable value thereof, were not disputed at the trial level and are not questioned in this appeal. But respondents contend that the petition did not state a cause of action for the enforcement of a lien; that the court had no authority to order that the attorney for the executor be paid fees out of property which is not part of Oscar's estate; that the probate court erred in entertaining a petition for fees to be paid out of non-probate property which was the subject matter of a prior suit for a declaratory judgment and accounting in the federal court; that it was error to allow fees to the attorney for services which were of no benefit to the probate estate; and that it was error to undertake to find the probate estate insolvent in the absence of any accountings by the executor and when Oscar's estate had an unliquidated claim against the trustees of Kathryn's trust for undistributed income.

Initially, we consider respondents' contention that there was no proof or finding that the services were beneficial to the estate. They argue that the petitioner was first employed by Feigenholtz in his individual capacity as well as executor, and that it was for Feigenholtz in his individual capacity that the services had been performed.

It is well established that the probate court had the right to allow an executor credit in his account for reasonable attorney's fees for aid in enabling such officer properly and efficiently to perform the duties of his office. In re Gilbert's Estate, 319 Ill. App. 15, 19, 48 N.E.2d 567, 569 (1943). Moreover, this right of the executor to procure legal services and grant compensation for such is expressly recognized in Illinois by Statute. Ill Rev Stats 1963, c 3, § 337. The attorney's fees should be allowed commensurate with actual services rendered necessary to the orderly and prompt closing of the estate and protection of its assets. In re William's Estate, 324 Ill. App. 584, 59 N.E.2d 333 (1945). However, where the services are not in the interest of the estate but rather in the interest of the executor, counsel's fees will be rejected. (James, Ill Probate Law and Practice, Vol 5, pp 510, 511).

Whether or not petitioner's services in this case were in the interest of the estate, therefore, is a material issue. Section 93 of the Probate Act imposes upon the executor the duty to defend Oscar's will including his testamentary exercise of the power of appointment. That section reads as follows: "It is the duty of the executor or the administrator with the will annexed to defend a proceeding to contest the validity of the will. The court may order the executor or administrator with the will annexed to defend or prosecute an appeal from the decree. In the event of the failure or refusal of the executor or administrator with the will annexed to defend the proceeding or to defend or prosecute an appeal when ordered to do so by the court, the court upon its motion or on application of any interested party may appoint a special administrator to defend or appeal in his stead." Ill Rev Stats 1963, c 3, § 93. The actions filed by respondents in the Federal Court contested the validity of Oscar's will and made Feigenholtz, as executor of the estate, party defendant. He became duty bound to defend by virtue of section 93. Likewise, the Sylvia Jackson suit filed in the Federal Court required the executor to defend and protect the assets of Oscar's estate. The prior probate court orders, reviewed on appeal to the Supreme Court (29 Ill.2d 165), involved matters regarding the executor's duties and obligations; the appeal was therefore in the interest of the estate. The additional federal action filed by these respondents for a declaratory judgment and accounting raised the issues of construction of the wills and trusts in both Kathryn's and Oscar's estates. Respondents in that action made Feigenholtz a party defendant in his official capacities as executor and as trustee in both estates, and although they also named him individually therein, we do not consider such additional inclusion to constitute his appearance in the cause as being solely in his individual behalf.

It is thus apparent that the legal services of the petitioner on behalf of the executor related to litigation that sought in one way or another to subtract from the trust property, to destroy the effect of Oscar's exercise of the power of appointment and to capture Kathryn's trust estate. It was in this light that the trial court concluded that "the legal services rendered by petitioner . . . were all directly related to and reasonably and necessarily incurred in the performance of the executor's statutory duty," and that this was true "regardless of the outcome" of the federal litigation.

We do not agree with respondents' contention that fees are inappropriate until the questions pending in the Federal Court are settled. The disposition of those questions is not determinative of petitioner's right here to partial interim legal fees. It is true that prior to the Probate Act the executor who was defeated in a will contest ran the risk of substantial personal financial loss for his efforts in defending the will. Whether the executor is still personally liable for the expenses of an unsuccessful defense of the will under the Probate Act depends upon the interpretation given to section 93 of the Act. An astute and thorough analysis of section 93 is set forth in 44 Ill Bar Journal, pp 28, 32, 33 (1955):

The executor is given no discretion as to whether he will defend the suit, but he must defend it in all events. Surely the statute contemplates that he make a reasonable attempt to successfully defend the suit. Since he could not ordinarily expect to make a successful defense without hiring attorneys and expert witnesses and incurring such other expenses as are necessary to present his case in the best light, it would seem that the statute makes it his implied duty to incur such expenses. If this is a correct interpretation, it is difficult to believe that the legislature expected the executor to pay a substantial part, or even a small part, of the expenses of making the defense from his own pocket. Any such interpretation would completely defeat the intent of the statute, because an executor, faced with the prospect of being held personally liable for the expenses, would naturally tend to economize to such a degree that the will would not receive an adequate defense. . . . The fact that the defense turns out to be unsuccessful should not affect this result in the slightest degree, because the duty imposed upon the executor is to defend the suit to the best of his ability, not to win it. He cannot possibly know the outcome at the time he performs his duty of making defense to the action.

In the absence of bad faith, therefore, an attorney's fees in defending the will and prosecuting an appeal should not depend on the outcome of the litigation. Respondents rely on the case of In re Estate of James, 10 Ill. App.2d 232, 242, 134 N.E.2d 638 (1956). This case is not applicable to the facts in the case at bar, and indeed serves to highlight the rule that in the absence of bad faith attorneys' fees for such services should be awarded. In the James case the court observed that "while there is a duty on the part of the executor to defend the will and appeal if necessary, there is no duty or right on the part of the executor, to involve the estate in unnecessary litigation or to pursue an issue at great cost to the estate, where the executor has reasonable grounds to believe that the decree finding the will invalid by reason of undue influence was proper, as in this case." (Emphasis ours.) The case involved an appeal from a lower court decision finding the will invalid by reason of undue influence. The court, on page 243 thereof, said: ". . . [i]t further appears that the same attorney who now asks attorney's fees for ...


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