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Behrman v. Egan
Citations: 16 N.J. 97; 106 A.2d 284; 1954 N.J. LEXIS 201
Court: Supreme Court of New Jersey; June 28, 1954; New Jersey; State Supreme Court
The judgment below is affirmed with notable modifications based on Judge Grimshaw's prior opinions. Key points include: 1. The accountants' total bill of $26,278.50 is to be charged entirely against the trust estate, as their retention was appropriate, and their services were necessary. The accountants should not be involved in the disputes among other parties or forced to sue the trustees for payment. 2. The trial court previously acknowledged that while the accountants' charges were generally reasonable, $4,547 of their fees stemmed from inadequate accounting preparation due to instructions from the surviving trustees. These trustees are responsible for this cost. However, since some of the work contributed to subsequent accounting, not all of this amount will be disallowed. An additional $7,000 in fees will also be disallowed, with the original trustees surcharged $4,547 for the inadequate services, which is inconsistent with prior opinions. This amount is to be charged to the current trustees instead. The remaining surcharge of $2,453 will be equally distributed among all trustees, past and present, due to shared fault. 3. Concerns were raised regarding surcharges against the estates of trustees Charles A. Bergen and Hugo Huettig, related to actions taken after their tenure ended. The current record is insufficient for a detailed determination, warranting a reconsideration of related judgment paragraphs by the trial court. Any erroneous charges against Bergen and Huettig's estates must be reassigned to the responsible trustees. The case is remanded to the Chancery Division for further proceedings. It is noted that the trustees' liability includes fraud, bad faith, and gross negligence, but not mere errors in judgment. The contractual terms specify that a trustee is only liable for personal malfeasance. Malfeasance refers to the wrongful execution of an act that one is not permitted to perform, particularly in violation of a contract. In this case, the contractual exoneration for trustees does not extend to gross negligence in fulfilling fiduciary duties. The complexity of the trustees' role suggests that they should not be held to a standard of accountability for acts not amounting to fraud, bad faith, or willful negligence. The contract in question establishes a liquidating trust, allowing trustees to define their responsibilities, but public policy prevents them from neglecting their primary duty to protect trust assets. The Superior Court’s judgment requires reevaluation of the trustees’ liability in light of the contract. Allegations of fraud and bad faith lack sufficient evidence. Compensation for legal services rendered to the trust by Roemer and his associates should not be denied, as the trust indenture permits hiring such professionals. The contract stipulates that trustees can charge a nominal attendance fee, but this does not preclude compensation for specialized services rendered. The surcharge against the trust for services provided by Roemer is unwarranted, as it unjustly benefits the trust by avoiding payment for necessary services rendered. Similarly, the surcharge for trustee Radcliffe's maintenance management is unjustifiable. The trustees' decision to reduce the sale price of a mill property, due to a vendee's refusal to perform the contract, is deemed reasonable and falls within their discretion. The claims against the trustees are based on suspicion rather than concrete evidence of bad faith, and there is an error in requiring Roemer and O’Brien to surrender "A" certificates without reimbursement for their cost. Trustees are not seeking personal profit but request reimbursement for amounts they paid for certificates, arguing this supports proper trust administration. The purchase of these certificates was beneficial to the trust, and penalizing the trustees unjustly enriches the trust. Evidence does not indicate any fraudulent behavior by the trustees. The court will not impose costs for preparing the summary of accounts on the trustees and will reduce the surcharge related to delays in accounting. All accountants' fees for services will be charged to the trust, but the interest charged to the trustees is deemed excessive. The disallowance of attendance fees is also found to be unwarranted. The judgment will be modified accordingly, and the case is remanded to determine the trustees' liability on remaining issues. Chief Justice Vanderbilt and Justices Heher, Oliphant, Wacinefeld, Burling, and Brennan concur, with no opposition noted.