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December 19, 1957

Ruth P. MACK and Lucy P. Elias, Executrices of the Estate of Clara B. Prince, deceased, Plaintiffs, and Samuel F. Slaff et al., Plaintiffs-Intervenors,

The opinion of the court was delivered by: WORTENDYKE

For some of the early history and background of the present case reference is made to this Court's opinions reported, respectively, in 134 F.Supp. 281 and 150 F.Supp. 221. The Court was more recently confronted with the application of Walter G. Winne, as sole surviving substituted trustee for certificate holders of East Ridgelawn Cemetery, for allowance of his first intermediate account, which shows a balance in his hands on October 9, 1957, of $ 438,740.19, plus uncomputed interest accrued since June 28, 1957, upon a portion of said balance carried by accountant in his 'time deposit account' with Hackensack Trust Company, of Hackensack, New Jersey. Upon hearing on return of due notice this account was allowed.

In his verified petition in support of the foregoing account, the trustee discloses that, pursuant to this Court's order of November 19, 1956, there have been filed with him certificates, or affidavits as to lost certificates, together with proofs of claim, for an aggregate of 13,003 shares, and proof of a temporary certificate for 5 shares, in the proceeds of the judgment recovered by the substituted trustees against East Ridgelawn Cemetery in the Superior Court of New Jersey. Trustee's petition further represents that there are outstanding 557 permanent shares, as well as 59 temporary shares in said judgment, for which no claims have been filed with him. Thus, although only 13,500 shares were authorized to be issued, there appear to be an aggregate of 13,624 shares outstanding. Trustee represents that the cost of litigation to adjudicate the validity of the 124 shares excess over the authorized total would exceed the aggregate of pro rata payments to be made on each share. However, Clarabel B. Mulholland, claiming to own 438 shares, Winfield Bonynge, claiming to own 218 shares, Grace B. Taylor, claiming to own 99 shares, and East Ridgelawn Cemetery, claiming to own 2,770 shares 'of the East and West Ridgelawn Cemeteries' oppose the recommendation of the accounting surviving trustee that the holders of the foregoing excess of 124 shares be included as distributees of the fund in trustee's hands because, as these objectors assert, 115 of these 124 shares 'represent an erroneous duplicate issue of shares' in respective amounts of 100 to Robert Simpson and 15 to Edward T. Moore. These objections relate to share certificates respectively numbered 153, 720, 722, 723, 726, 122, 617 and 704. The amount per share hereinafter determined to be presently distributable by the accounting surviving trustee which would otherwise be payable upon the 124 excess shares shall be withheld by the trustee pending the further order of this Court after hearing, upon notice, respecting title to the shares represented by all questioned certificates.

 The terms of the agreement between the trustee and the Cemetery respecting the satisfaction of the said judgment against the Cemetery included the provision that the trustee should pay to the Cemetery, out of the proceeds of his subsequent sale of the lands which the Cemetery agreed to convey to him, the sum of $ 10,000 for surrender by the Cemetery of certificates for 2,643 shares owned by the Cemetery. The trustee reports that the Cemetery has filed proof of claim for 2,770 shares (127 shares more than stated in the agreement). Upon the recommendation of the trustee, and in the absence of objection, the Cemetery will be allowed to participate, as a holder of 127 shares, in the funds to be distributed by the trustee, and also to receive from the trustee payment of the $ 10,000 as provided in the agreement aforesaid. Trustee is also authorized to pay to Cemetery, as provided in the same agreement, the sum of $ 6,871.58, for costs and counsel fees, out of the proceeds of sale of the lands described in the agreement.

 Trustee reports that a question has arisen respecting his liability, if any, to the United States Government for taxes, by reason of the difference between the amount realized by him upon the sale of lands conveyed to him by the Cemetery in satisfaction of his judgment against the Cemetery and the amount due upon the judgment on the date of said conveyance. In order that he may have in hand ample funds with which to pay any such tax liability, if and when established, trustee seeks authorization to pay at this time, to each shareholder, a dividend of $ 10 per share. I believe payment of $ 12 per share is warranted at this time, and the trustee will be directed to proceed accordingly.

 The accounting surviving trustee, the estate of his deceased co-trustee, Toby Furst, and counsel for various parties now seek allowances to be paid out of the fund in the accountant's hands. This Court, sitting in equity in this case, has jurisdiction to make suitable allowances in a case of this nature. The general principles controlling the Court in exercising such jurisdiction are stated in Hobbs v. McLean, 1886, 117 U.S. 567, at page 582, 6 S. Ct. 870, at page 877, 29 L. Ed. 940:

 'When many persons have a common interest in a trust property or fund, and one of them, for the benefit of all and at his own cost and expense, brings a suit for its preservation or administration, the court of equity in which the suit is brought will order that the plaintiff be reimbursed his outlay from the property of the trust, or by proportional contribution from those who accept the benefits of his efforts. * * * But where one brings adversary proceedings to take the possession of trust property from those entitled to it, in order that he may distribute it to those who claim adversely, and fails in his purpose, it has never been held, in any case brought to our notice, that such person had any right to demand reimbursement of his expenses out of the trust fund, or contribution from those whose property he sought to misappropriate.'

 We proceed to analyze the pending applications in the light of the foregoing statement of principles.

 The Substituted Trustees.

 The present suit was instituted by the executrices of a deceased holder of a certificate or certificates for 266 shares, issued pursuant to the trust agreement of December 21, 1906, to which the predecessor of the original defendant, Passaic National Bank and Trust Company, as trustee, was a party. In their complaint plaintiffs prayed that the trustee (bank) account, that it be removed as trustee, and that a substituted trustee be appointed for the benefit of the holders of certificates of shares under the original declarations of trust. Other certificate holders were, from time to time, by court order, permitted to intervene as plaintiffs. This Court's order of May 29, 1944 permitted the trustee (bank) to resign, and appointed Walter G. Winne, Toby Furst and another, as substituted trustees under the declarations of trust referred to in the complaint 'to the extent necessary for the collection and preservation of any and all assets and income due to the Trustees or shareholders under such agreements, and with full power and authority to liquidate the assets of the trust estate.' This appointment was made permanent as to Winne and Furst, by order of this Court of November 27, 1944. No allowance appears to have been made by this Court to the resigning trustee (bank) or to its counsel. A decree in an accounting suit brought by the trustee (bank) in the former Court of Chancery of New Jersey against the Cemetery had adjudicated that the latter owed $ 205,973.63 to the dividend fund contemplated by the terms of the original Declaration of Trust. This decree was the trust res to which the substituted trustees succeeded upon their qualification. On December 6, 1944 this Court designated Isadore Glauberman to act as counsel for the substituted trustees, and he has continued to act in that capacity for them and for the survivor of them until the present time. Toby Furst died November 20, 1952.

 The existence of the present fund of over $ 438,740 in the hands of the surviving substituted trustee unquestionably results from the joint efforts of the substituted trustees, of their counsel, Mr. Glauberman, and of Messrs. Samuel I. Kessler and Samuel Kaufman, respectively counsel for certain intervening certificate holders. For these contributive and fruitful efforts each of them is justly entitled to pecuniary compensation. The creation of the fund resulted from multifarious, protracted and arduous litigation, supplemented by creative planning, effective negotiation and special knowledge of real estate values and sales possibilities. Substituted trustee Winne embodies in his petition for allowances for his services and for reimbursement of estimated disbursements, verified October 16, 1957, a general narrative statement of the nature of his services which extended from his temporary appointment (with Toby Furst and Benedict Krieger) on May 29, 1944 to the present time (a period of approximately 13 years), of which Toby Furst served with Mr. Winne as co-trustee until the former's death in 1952. In addition to conferring and cooperating with their attorney, Mr. Glauberman, these trustees attended court upon various phases of litigation instituted and prosecuted by their counsel, and Mr. Winne participated in numerous conferences which ultimately resulted in the agreement with the Cemetery to convey the lands to the trustee in satisfaction of his judgment against it. He also personally conducted the two sales of this property which ultimately yielded a net price of $ 445,468.90. Between the sales the surviving trustee was compelled to negotiate further with the Cemetery respecting the establishment of the location of a sewer easement through its retained property which contributed to an increase in the value of the land which it had conveyed to the trustee. In this country, '* * * a trustee should receive a fair compensation for his services; and in most cases it is gauged by a certain percentage on the amount of the estate.' Barney v. Saunders, 1853, 16 How. 535, 541, 57 U.S. 535, 541, 14 L. Ed. 1047. Recognition of this principle is found in N.J.S. 3A:10-1, N.J.S.A., the provisions of which, however, do not govern the present application. I find that the substituted trustees rendered valuable services contributory to the creation and enhancement of the fund now constituting the trust corpus. I will allow Mr. Winne, ad interim, for his services as substituted trustee, $ 20,000, and the estate of Toby Furst, deceased, for his services as substituted co-trustee, $ 5,000, and additionally, to Mr. Winne, the sum of $ 1,515.45 as reimbursement for his disbursements.

 The Attorney for Substituted Trustees.

 Mr. Glauberman, as attorney for the substituted trustees, has performed his duties in that capacity faithfully, effectively and efficiently. The development of the judgment of $ 102,115.38, plus interest, into the present fund of $ 438,740.19, through sale of the land conveyed in satisfaction of the judgment, was achieved by his efforts in combination with those of Messrs. Kessler and Kaufman, respectively attorneys for certain intervening certificate holders. His services to the sole surviving trustee will continue to be required for some time in the future. At the ...

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