Murphey v. Salvation Army

Opinion

SULLIVAN, J. This is an appeal from a judgment settling and approving the first account current and report of the trustees of a testamentary trust, and allowing fees to the trustees in the sum of $125,000 and to the attorneys for the trustees in the sum of $25,000. The only portion of the judg[58]ment attacked on appeal is the above award of trustees’ fees. Although making no claim that the sum of $125,000 is unreasonable compensation for the services rendered, appellants contend that the award cannot be upheld because not all the services being compensated were rendered to the trust. We have concluded that there is substantial evidence in the record to support the fee on the basis of services rendered solely for the benefit of tfye trust. We, therefore, affirm the judgment.

William L. Murphey, Norman J. Essig and Union Bank (trustees) are co-trustees of a testamentary trust established under the will of Elsinore Gilliland. On October 31, 1967, by preliminary decree the probate court distributed property to the trust of an appraised value of $16,500,000. The trustees immediately undertook administration of the trust. On December 12, 1968, the trustees filed their first account current, report and petition for compensation for trustees and fees for their attorneys (first account) for the period October 20, 1967 to October 31, 4968, requesting inter alia $125,000 in trustees’ fees. The Salvation Army, Braille Institute of America, Inc. and American Heart Association (appellants), three residual beneficiaries of the trust, filed exceptions to the first account.

The conflict centered upon the proper compensation for the services rendered by the trustees in view of the fact that the trustees during the accounting period had overlapping functions. Murphey, Essig and Union Bank were not only co-trustees, but also co-executors of the estate. Essig owned 41.6 percent of the stock of Sky Harbor Ranchos & Estates (Sky Harbor), a land development corporation. Essig and Murphey were officers and directors of Sky Harbor. At the beginning of this period the trust was a minority shareholder in Sky Harbor.

During the year covered by the first account, Murphey, Essig and their attorneys settled a dispute with John Haskell, an officer and shareholder of Sky Harbor and a debtor of the estate. The ensiiant agreement of compromise provided in part that all Haskell’s debts to the estate be cancelled, that he resign as an officer of the corporation, that his shares be transferred to the trust and that Haskell receive his $25,000 legacy under the will. As a result of the settlement the trust became a 58 percent shareholder in Sky Harbor.