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In Re Estate of Veihman

DECEMBER 27, 1965.




Appeal from the Circuit Court of Wabash County; the Hon. CLARENCE E. PARTEE, Judge, presiding. The order of the Circuit Court of Wabash County is therefore affirmed.


On April 5, 1943, E. Guy Mundy was appointed Conservator for Ethel A. Veihman, an incompetent, by the County Court of Wabash County, and filed annual reports thereafter until the death of his ward. His first annual report was filed on January 6, 1944, covering the period to January 1, 1944. In this first report he listed his fees at $125, but on approval on February 18, 1944, the Court made a finding that his fees to January 1, 1944, should be $475 and directed the Conservator to take additional fees of $350, which Conservator did and reported in the next report. Thereafter, shortly after the first of each year, the Conservator filed an annual report for the preceding calendar year. Upon approval by the Court of such annual report, the Court in its order determined and fixed the fee for the preceding year, which was then reported and shown paid in the next report. This practice is shown followed until 1954. The 1954 report, and subsequent reports, included the Conservator's fee. They were approved, and in most cases the Order of Approval included an allowance of the Conservator's fee in the amount shown by the report, but no fixing of the fee by the Court. The record shows that the Order of Approval (including the fixed fee or the allowed fee), of each of the current reports was entered without the giving of notice, or the appointment of a Guardian ad Litem.

Ethel A. Veihman died July 17, 1963, and on August 15, 1963, Mundy filed his final report as Conservator covering January 1, 1963 to August 15, 1963, in which credit was asked for $680 for fees for 1963. On February 24, 1964, the Court set the final report for hearing and appointed an attorney as Guardian ad Litem, who on March 6, 1964, filed an answer demanding strict proof, and on June 2, 1964, filed his further answer in which he set forth examination of all court records and of the account book of the Conservator; it also alleged that the fees of the Conservator for the duration of the Conservatorship appeared reasonable and commensurate with services performed and that the Guardian ad Litem was satisfied as to the truth and correctness of all matters over the long period during which Guy Mundy served as Conservator.

Afterward John E. Schrodt, Plaintiff, having become Administrator of the Estate of Ethel A. Veihman, deceased, filed objections to the final report and all annual reports of the Conservator and to the answer of the Guardian ad Litem, alleging as one of his objections, excessive fees to the Conservator for all years excepting from April 5, 1943, to December 31, 1943. The objections also included charges of improper management of the estate, with which we are not concerned, although argued in appellee's brief, since no cross appeal was filed. The objections included an exhibit setting forth the income, the Conservator's fee, and the percentage of the income taken for a fee for each year. These percentages vary from 5.2% to 15.4% with the percentage for the period in 1963 being 28.3% of the income for that period.

The record discloses that in each year through 1956, more than 50% of the income resulted from the production of oil on a 200-acre farm of which about 100 acres were tillable, owned by the ward and her daughter; the farm had apparently been producing oil previous to the appointment of Mundy, and as Conservator throughout the entire period, all he did with reference to the oil income, was to receive the checks, deposit them, and keep the proceeds properly invested. Other income came from rental of a town property owned by the ward and the landlord's share of the farm income. In 1957 and the subsequent years, the largest item of income was interest from U.S. Bonds, and from paid-up stock in building and loan associations, the income from the oil decreasing. Evidence at the hearing disclosed that the Conservator thought there were 7 oil wells on the farm at one time but that the Conservator did not know how many were producing at the time of the hearing; and that the farm income was paid to the Conservator by the tenant, although he and the tenant made decisions as to crops to be planted, fertilization and crop rotation. The Conservator caused minor repairs to be made to the farm buildings from time to time. The Conservator testified that the farm was located about one mile from the county seat in which he resided. He had no definite knowledge as to acreage of the various fields, yields, or fertilizers used, and was, according to his testimony, primarily dependent on the tenant concerning the administration of the farm. During the Conservatorship, the State acquired a portion of the farm, including the house, for highway purposes for which the estate was paid in excess of $5,000.

Examination of the reports discloses that the assets of the estate as shown by the 1943 report, exclusive of real estate and the oil wells thereon, amounted to $11,779.33 and that the assets shown by the final report, excluding real estate, amounted to $80,642.14. The parties stipulated that the total income for the period for which the Conservator's fees were objected to was $147,359.40; from the farm $19,006.93; rent from the building $8,214.04; from interest and oil royalties $120,138.43; and that the total fees charged by the Conservator for the period amounted to $11,955. The increase in the value of the estate is principally accounted for by the sale to the State and the fact that the expenditures on behalf of the ward, who was during the earlier years in a nursing home, and later in a State institution, were comparatively small. Total expenditures, including repairs to real property, taxes, expenses of administration, and sustenance of the ward, annually amounted to $1,400 to $4,000, with the personal living expenses of the ward remaining constant at approximately $1,000 annually.

On behalf of the objector, the trust officer of a Danville bank, testified that the usual and customary fees for a Conservator were 5% of ordinary income, and where there were added responsibilities such as farm management, 7% would be usual and customary. One of the Conservator's witnesses testified that a local bank, which had actively engaged in administering trusts, charged 5% of gross income for performing ordinary duties of a conservatorship, but did not furnish farm management services, but also charged an acceptance charge of 1/4th of 1% and a 1% termination charge, both based on total assets. The Guardian ad Litem was called by the Conservator and testified that after thorough examination of the accounts, realizing that the fees amounted to 8.1% of the gross income, he considered the fees reasonable, and concluded that in some respects he considered the conservatorship unusual, but did not point out any unusual aspects.

The Court, after hearing the evidence entered an order containing the following findings:

1. That each of the annual reports were presented and approved by the court in an ex-parte proceeding, which reports had inserted therein the conservator's fees and in some cases attorney fees, without any formal hearing or notice and without anyone to object to the report of fees therein, there having been no Guardian ad Litem appointed to represent the interest of the ward, and the sole living person who might have objected was the incompetent's daughter, Camille C. Veihman, for whom E. Guy Mundy was also conservator of the estate.

2. That the Court has jurisdiction in this hearing to re-examine all of said annual reports and the objections raised thereto.

3. The Court finds from the evidence that for the services rendered by the conservator for the estate he was entitled to and should receive a reasonable and fair fee therefore, and the court finds that a fair and reasonable fee should have been and is as follows:

(a) 7% of all building and farm rents and farm income, other than oil royalties, said conservator having helped manage and supervise the farm and rental buildings, said rents and income being $27,220.97.

(b) 5% of all other income, said income from oil royalties, dividends, and interest being $120,138.43, said income being ordinary income involving no services other than ordinary bookkeeping services.

4. That fees heretofore charged by Conservator in excess of said 7% and 5% are excessive. 5. That conservator has performed or rendered no special or unusual service for the estate of the ward that would justify ...

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