Estate Bernice P. Bishop , 36 Haw. 403 ( 1943 )

With respect to the subject of estate charges of administrative expenses for assistance in the delegable work of the trust created by the will of Bernice Pauahi Bishop, deceased, I concur with the opinion of the Chief Justice.

This court for the past thirty-five years has consistently upheld the fair and just principle, sustaining the common-law right of the trustee, that an estate should bear the reasonable administrative expenses for assistance when the employment thereof is reasonably necessary to its efficient administration. Under this principle an employment may not be warranted in one estate and yet be indispensable in another.

No disturbance whatsoever is made thereby of the general obligation imposed upon every trustee by the trust to fully perform all the trust duties necessary for the efficient administration of the trust estate. It is only when the efficient administration dictates that a reasonable necessity exists for outside assistance that an additional obligation arises to perform the duty of securing the required assistance for the benefit of the estate. The cost thereof is unquestionably administrative and therefore an estate expense. On the other hand, it is perfectly clear that the personal expenses of the trustee must be borne by the trustee and a personal expense includes the cost of employing an assistant when the employment is not reasonably necessary to the efficient administration of the estate.

In widely different kinds of estates of the Territory, this distinction is discernible and through which the principle of reasonable necessity operates justly. The principle is therefore durable, fundamental and applicable to all estates with equal effectiveness. It thus cuts through that which is unessential and is independent of that which is extrinsic, mattering not whether the nature of the assistance required for the efficient administration of the trust be deemed ordinary or extraordinary, routine or unusual, regular or special, simple or complicated, within or beyond the skill and experience of the ordinary trustee. It further makes a salutary and sound rule, prevailing in other jurisdictions and recognized by eminent authorities in the law of trusts.

Applying this basic principle in passing upon the trustees' fifty-third annual, fifty-fourth annual and special accounts now before this court, the record shows that the expenses for assistance are all unquestionably reasonable and the employment reasonably necessary to the efficient administration of the estate. This is not disputed by the master nor by the appellant. Hence the expenses are administrative and therefore proper estate charges, aside from any additional assurance which may be drawn from the doctrine of res judicata.

It may be of interest in considering the inception of this litigation and the proportions to which it has grown that the record, the master's reports and appellant's briefs and arguments show that the opinion of the court in the Estate of Mary E.Foster, 34 Haw. 417, inspired the presiding chancellor on June 27, 1939, to vacate his order which a month earlier had approved not only such expenses as charges to the estate but the entire fifty-third annual account, acted as a guide to the master in subsequently recommending the surcharge of such expenses and the disapproval of all three sets of accounts before the court, and strengthened the appellant's support of the master's recommendations in opposing the application by the court of this essential principle, both below and on appeal. However, the court in the Mary E. Foster case pointed out that it is entirely the court which passes upon the necessity and amount of an estate's administrative expenses and that section 3793, Revised Laws of Hawaii 1935, has nothing to do with the charging of an estate therewith. In carrying into effect this observation, the authoritative holding upon analysis of the Mary E. Foster case is that, there being no necessity in the efficient administration of the Foster estate for the employment of a bookkeeper by the month to keep its books and to render its annual accounts, the expense for his service was personal rather than administrative and therefore not chargeable to the estate. As an adjudication it is complementary of the principle of reasonable necessity, the court never intending that its language should have the broad and general application as urged by the appellant.

Realizing the utter sincerity and good faith of the chancellor, master and appellant, it should be noted, in fairness to them, that the court did not expressly enunciate this intrinsic principle in the Mary E. Foster case. However, every adjudication must rest upon the facts peculiar to it and the issues before the court. This is especially true where this court has disallowed charges against smaller estates, differing greatly in their character and size from other estates, and in the type, volume and degree of work required. Language in such cases sometimes may appear to state general rules, which apparently might be applicable to larger estates, but in reality reflect merely the specific problem at hand, as well as being extrinsic to the reason for the adjudication. A danger therefore is present in placing too great a reliance upon isolated parts thereof to prove a thesis for general application in other cases.

An example of this danger appears in the appellant's position in respect to the present accounts involving one of the largest estates in the Territory, through his reliance upon a statement made in the Estate of A. Enos, 18 Haw. 542, cited in the MaryE. Foster case and involving one of the smallest estates in the Territory. The statement is that "the ordinary clerical work must be performed, or paid for, by the administrator himself." Standing alone, it might appear to be a general rule. But the statement does not stand alone, nor is it necessary to the adjudication. It is a part of a sentence which reads in full: "Recognizing that under certain circumstances clerical assistance for an administrator may be necessary and should be paid for by the estate, still the ordinary clerical work must be performed, or paid for, by the administrator himself." The court thereafter expressly disclosed the controlling, indispensable and pivotal reason and ground for its adjudication and applied the proper test by adding: "In this case there was no reasonable necessity for employing outside clerical help, and consequently the amount paid therefor is disallowed." This final statement is basically illustrative of the application of the principle of estate charges and leaves no room for doubt that the bare statement regarding the ordinary clerical work was clearly unessential to that case and subordinate to the fact that assistance was not needed. It and other statements like it are therefore limited in meaning and were intended to apply only to a case where there was no reasonable necessity for employing outside clerical help and not generally to cases where assistance is reasonably necessary. The converse of such bare statements, removed from their position in the opinion, would be that extraordinary clerical work is chargeable to an estate. However, it is obvious that all such work certainly would not be so chargeable, but would be only in cases where the employment is reasonably necessary. The converse statement therefore is subordinate and limited to an opposing factual situation.

The same danger may be found in the appellant's reliance upon comparable statements in the Mary E. Foster case, involving one of the Territory's relatively smaller estates and without any precautionary expressions by the court indicating the pivotal turning point of its adjudication. The appellant's thesis in the instant proceedings rests primarily upon two of the statements in that case, dealing with clerical assistance similar in nature to that dealt with in the Enos case. They are in effect that a clerical service within the skill and experience of an ordinary trustee is not chargeable as an expense to the estate and the converse that one beyond such skill and experience is chargeable. The former is but another way of expressing the bare ordinary-clerical-work statement. It likewise appears in an adjudication which turns upon facts showing that there was no reasonable necessity in the efficient administration of the estate to employ outside clerical help. It therefore is subordinate and limited to the same factual situation as is its counterpart in the Enos case. The converse statement of beyond-such-skill-and-experience substantially paraphrases the extraordinary-clerical-work statement. It, too, is subordinate and limited to the opposite situation where the employment is reasonably necessary.

Consequently, it is evident that the integrity of all these statements, dealing with the nature of clerical assistance in the determination of an estate charge, is contingent upon one factual situation or the other, the determining factors being the lack of any need for assistance or the presence of a reasonable necessity for the employment. Whatever utility they may have, such statements are not tests but in effect are mere guides to their related facts which in turn are determinative of the requirements of efficiency in the administration of estates, the court consistently disallowing charges when assistance is not needed and allowing them when the employment is reasonably necessary. Thus do the statements subserve the fundamental principle of reasonable necessity within the adjudications in which they appear.

There are other examples of this danger in the court's language in the Mary E. Foster case, including the so-called quantum rule, where the appellant's reliance led him directly athwart of this underlying principle, but the court in disallowing the charge was dealing strictly with an unwarranted assistance upon which its language was predicated. There being no need in the administration of the Foster estate for the additional service of a bookkeeper by the month, it follows that the employment of one by the trustee would be purely a personal expense. Consequently, the court was not in error in pointing out that in such a state of affairs the length of the books of account or accounts was immaterial and that the trustee should have serviced them himself, which was reasonably expected of him as one of the duties of the trust within the skill and experience of an ordinary trustee, and that therefore, if for any reason he were unable to perform the work of an ordinary trustee or desired to be relieved of the burden thereof, he either personally should have paid the bookkeeper to do it for him out of his trustee's fee or have declined the trust. However, it should never be lost sight of in considering any of the statements in the Mary E. Foster case that the court had before it a personal expense in a comparatively small estate whose efficient administration did not require the assistance of a regular bookkeeper. Hence its statements are dependent upon and dominated by that one factual situation, logically preventing the formulation of rules, which, if made to apply strictly to the administration of an estate in another case under an opposing factual situation, would cause the statements to react contrarily to the authoritative holding of the very case from which they were taken.

Brushing aside all matters extrinsic to what is clearly the essential principle of estate charges, the main problem in passing upon these accounts is solved simply by its application. The task here of determining whether the cost of assistance is administrative is made immeasurably easier because the expenses are admittedly reasonable and the employment concededly a reasonable necessity, the record showing it to be imperative for the efficient administration of the estate.

With the remainder of the Chief Justice's opinion in denying the entire appeal, I am also in complete accord.