Summary
In Burtman v. Butman (1947), 94 N.H. 412, 54 A.2d 367, the Supreme Court of New Hampshire found the predecessor statute (R.L.ch. 355, Section 27), to be permissive rather than mandatory.
Summary of this case from Surber v. WoodruffOpinion
No. 3677.
Decided July 2, 1947.
Although the Attorney General is an indispensable party in the enforcement and supervision of charitable trusts there is no requirement that his approval must be had of compromised claims for or against an estate even though such claims may indirectly affect a residuary charitable trust created by the terms of the will in such estate. In a bill, by a widow who waived the provisions of her husband's will in her favor, for specific performance of a compromise agreement made by the attorneys for the parties, in settlement of claims to her distributive share in his estate, the fact that such agreement was made orally and without the approval of the Superior Court does not defeat its enforcement, when made in good faith and is otherwise equitable. The statutory provision (R. L., c. 355, s. 27) that "the Probate Court may authorize [executors] . . . to compromise any controversy between them and other persons making claims against the estates in their hands" is elective and permissive rather than mandatory, and merely provides a means of protecting the executor from liability of surcharge. If the compromise settlement is reasonable and beneficial to the estate it is valid without such approval. Equity will enforce executory agreements to compromise claims against an estate when such agreements are found to be reasonable and beneficial to the estate.
BILL IN EQUITY, for specific performance of an agreement between plaintiff and the defendants, by their attorneys, for the compromise of certain claims and actions pending between the parties. The defendants filed a demurrer to the plaintiff's bill in equity setting forth various reasons why the petition should not be granted, which will be discussed in detail in the opinion. The plaintiff is the widow of the defendants' testate who filed in the Probate Court a waiver of her husband's will electing to take her distributive share as provided in R. L., c. 359. As appears from the pleadings, the plaintiff had appealed from an order of the Probate Court granting a license to the defendants to sell certain securities in the estate at prices which the plaintiff claimed inadequate. The defendants, the surviving executors under the will of Abraham Burtman, contended that the plaintiff's appeal was precluded by an ante-nuptial agreement between her husband and herself. The defendants also claimed certain furs and jewelry given to the plaintiff by her husband which had not been paid for at the time of his death.
As stated in the bill in equity, after extended negotiations between the parties and their attorneys, the parties, by their attorneys, agreed to settle all claims and disputes by the following mutual promises:
"The defendants agreed:
"(1) To pay plaintiff the sum of $225,000;
"(2) To execute and deliver to her a bill of sale to a 1938 Packard Club Sedan; . . .
"(3) To pay outstanding bills for the jewelry and furs [referred to] . . . and to save the plaintiff harmless from any claim in reference thereto; and
"The plaintiff agreed:
"(1) To accept said sum of $225,000 and the Packard Club Sedan in full satisfaction of her claims against the estate of her husband and [her right] to distributive share in his estate;
"(2) To dismiss her appeal pending in the Superior Court for the County of Strafford;
"(3) To execute and deliver to the defendants oil papers and instruments necessary to accomplish the settlement agreement."
The petition further alleges that the plaintiff has no adequate remedy at law and the defendants have refused to perform the compromise agreement.
The defendant Burns is an attorney, and the defendants were also represented by additional counsel in respect to the compromise agreement.
The questions raised by the bill in equity and the demurrer thereto, was transferred without ruling by Leahy, J.
McLane, Davis Carleton and Stanley M. Brown (Mr. Brown orally), for the plaintiff.
Hughes Burns and H. Thornton Lorimer (Mr. Burns orally), for the defendants.
The demurrer admits as true the facts properly pleaded in the petition for specific performance. Glover v. Baker, 76 N.H. 393; Forest Products Co. v. Company, 75 N.H. 493.
The Attorney General was not a party to the agreement and his approval was not obtained. It is clear that the Attorney General is an indispensable party, both at common law and by statute, in the enforcement and supervision of charitable trusts. Souhegan Bank v. Kenison, 92 N.H. 117; Akscyn v. Bank, 78 N.H. 196. There is nothing contained in the statute creating a register of public trusts in the Attorney General's office (Laws 1943, c. 181, as amended by Laws 1945, c. 92), which requires his approval of claims for or against the estate even though the compromise of such claims may indirectly affect a residuary charitable trust created therein. Whether the Attorney General should be notified concerning such claims involves questions of policy and procedure on which the Legislature has remained silent. If notice to the Attorney General and his approval are necessary, it will require legislative authority therefor. We know of no decision which requires the Attorney General's approval of all probate proceedings or the actions of executors in administering the estate before the charitable trust is in existence. In a jurisdiction where broad powers already exist in the Attorney General over the administration of charitable trusts, it was thought necessary to have additional statutory procedure to require notice of probate proceedings which might affect charities. 30 Mass. L.Q. (No. 1) 22-34 (1945).
If this were a "typical situation in which the Attorney General should and probably will receive notice" (Note, State Supervision of the Administration of Charitable Trusts, 47 Col. L. R. 659, 662 (1947), no such notice is required in the absence of legislation so providing. The demurrer is overruled insofar as it relies on the position that the Attorney General was an indispensable party entitled to notice.
There appears to be some support for defendants' contention that the compromise agreement cannot be specifically enforced since the bill fails to allege that the agreement was in writing, filed in court or entered upon the docket. Fernald v. Ladd, 4 N.H. 370; Vaughan v. Morrison, 55 N.H. 580, 590. However, these cases must be read in connection with Barber v. Company, 80 N.H. 507, 513, 514: "`We entertain no doubt, that an attorney may be ordered to perform a contract made by him in court, in relation to an action, and that the performance of the order may be enforced by an attachment . . . .' While it is also said that such proceeding will not be taken except in a clear case and that the court would not be disposed to take it on a mere oral agreement (Fernald v. Ladd, supra; Vaughan v. Morrison, 55 N.H. 580), yet the existence of the power to act is clearly recognized. The statement as to oral agreements is a mere counsel of caution. The case should be clearly made out . . . . The law is not so impotent that oral deceit can be practiced with impunity, nor is such wrong of a preferred class so that the aggrieved party must be put to his independent suit to recover what could be obtained immediately if the deceit had been in writing." It does not appear that the agreement in the instant case was made in open court as in the Barber case but this fact alone should not prevent its enforcement if made in good faith and it is otherwise equitable. To enforce such mutual promises of traders in the market place and attorneys in open court and not to enforce them when made by attorneys in their office is neither logical nor just. The agreement should receive the same treatment whether made in the courthouse or on the courthouse steps.
The defendants assert that the failure to have the compromise agreement approved by the Superior Court is a ground for demurrer. The answer is found in Beliveau v. Amoskeag Co., 68 N.H. 225, 229: "In our opinion, the law in cases like the present one is correctly stated in Tripp v. Gifford, supra, which recognizes the fact of an extensive practice with regard to the adjustment and settlement of such cases, and in which it is said ( 155 Mass. 109): `Sometimes, but very rarely, the proposed arrangement is brought to the attention of the court, and its sanction obtained. In most instances, however, the settlement is made and the judgment entered without calling the attention of the presiding justice to it, or obtaining his approval.'" Situations in which prior approval of settlements by the court is mandatory are the exception rather than the rule and governed by special legislation. R. L., c. 341, s. 2; Merchants Mutual c. Co. v. Kiley, 92 N.H. 323.
It is the further contention of the defendants that the compromise agreement cannot be enforced without the prior approval of the Probate Court. This involves an interpretation of R. L., c. 355, s. 27: "The probate Court may authorize administrators and guardians to adjust by compromise or arbitration any controversy between them and persons making claims. against the estates in their hands." The legislative history of this statute indicates that it is elective and permissive rather than mandatory. As stated in the title of Laws 1872, c. 7 it was "An Act Extending the Power of Executors . . . to Settle Controversies by Arbitration or Compromise." It did not cut off the preexisting power of executors and other fiduciaries to compromise without prior probate approval subject to the chance of surcharge. 2 Woerner, American Law of Administration (3d ed.) s. 326. So long as the settlement was reasonable and beneficial to the estate it was as valid without court approval as with it. Simes v. Ward, 78 N.H. 533. The statute provides a means of protecting the executor from liability but it is not a prerequisite to its enforcement.
Unless the statute of probate approval is mandatory, the weight of authority holds a reasonable compromise valid and enforceable. 85 A.L.R. 199; Simes v. Ward, supra. In so far as the dictum and alternative holding in Phinney v. Bank, 91 N.H. 184, 190, is contra it is not followed.
Since the record in this case does not contain any evidence or findings and consists only of the pleadings, no premature opinion is expressed as to whether or to what extent the defendants are subject to individual liability. Such a determination necessarily depends on the evidence when and if produced. Carter v. Provo, 87 N.H. 369; Jones Brewing Co. v. Flaherty, 80 N.H. 571; Brown v. Churchill, 89 N.H. 441; Restatement, Trusts, ss. 201, 267.
There is able support for the proposition that equity will enforce executory agreements to compromise claims against an estate. 6 Williston, Contracts (Rev. ed.), s. 1845; Restatement, Contracts, s. 417. Whether the compromise agreement in the instant case will be enforced in equity will be determined by equitable principles in the Superior Court. So far as this case stands on the pleadings, the defendants have refused to carry out an agreement entered into by their attorneys and the attorneys for the plaintiff. Equity can compel specific performance thereof on equitable grounds if the agreement is found to be reasonable and of benefit to the estate.
"The foregoing views are considered to meet the reasonable needs of standard and ethical practices of men in their business dealings with each other . . . . It is not practical that the law should adopt all precepts of moral conduct, but it is desirable that its rules and principles should not run counter to them in the important conduct and transactions of life." Watkins v. Carrig, 91 N.H. 459, 465.
Demurrer overruled.
All concurred.