On appeal from the Superior Court, Chancery Division, Camden County.
Morton I. Greenberg, J. H. Coleman and Long. The opinion of the court was delivered by Long, J.A.D.
[207 NJSuper Page 31] The sole question presented on this appeal is the sufficiency of an award of fees to The Bank of New Jersey in connection with its role as trustee for the Garden State Racing Association (GSRA) Liquidation Trust. Because we have concluded that the trial judge, Judge Lowengrub, applied appropriate legal and equitable principles in determining the amount of the award, we affirm.
Eugene Mori, Sr., founder of GSRA, died on October 8, 1975. The Bank of New Jersey (the Trustee) was appointed administrator pendente lite of Mori's estate pending resolution as to which of Mori's two wills would be admitted to probate. In this capacity the Trustee held 11.6% of the outstanding common stock of GSRA and approximately 92% of the Cumberland Companies, two holding companies with the majority of outstanding GSRA stock. Prior to Mori's death, GSRA was a New Jersey corporation primarily in the business of racing thoroughbred horses; it also owned Garden State Park, the Cherry Hill Inn, the Cherry Hill Lodge and extensive undeveloped tracts of land in New Jersey and Florida.
As a result of a fire at the racetrack on April 14, 1977 the Trustee convened a meeting of the directors and majority shareholders of GSRA in order to adopt a plan liquidation under I.R.C. § 337. The Probate Court confirmed the power of the Trustee as Administrator of Mori's Estate to vote the estate shares of GSRA and the Cumberland Companies in favor of adoption of a liquidation plan and of a Liquidation Trust Agreement. That is the Agreement which undergirds the Trustee's application for fees in this case.
During its stewardship, the Trustee was involved in every aspect of GSRA life including overseeing the day to day operations of the racetrack; extensive efforts to sell the track; monitoring improvements to the Cherry Hill Inn and the Lodge; negotiating labor issues with Inn and Lodge personnel; and processing large insurance claims. Eventually the track was sold for $15 1/2 million; the Inn for $4,675,000, and the Lodge for more than $12 million. In addition, the Trustee successfully prosecuted and defended a series of litigations including several to forestall foreclosure of the racetrack property; one to set aside the sale of the track as fraudulent; a tax assessment proceeding; a suit against Eugene Mori, Jr. for damages and to rescind a Florida land sale to GSRA; a suit to dismiss a bankruptcy petition by Eugene Mori, Jr. in connection with the Florida land sale, and a class action by Mori and Richard
Burket, aggregate owners of less than 2% of the trust, alleging mismanagement by the Trustee and seeking damages, an accounting, removal of the Trustee and invalidation of a portion of the Trust Agreement.
There is absolutely no claim in this case of lack of diligence or wasting of assets by the Trustee. Indeed, it is clear from the facts that the Trustee's actions resulted in large tax savings to the beneficiaries throughout the life of the trust and substantial increases in the value of the corpus.
On August 29, 1983, the Trustee filed a complaint in the Superior Court, Chancery Division, for approval of its First and Final Accounting and to fix compensation for services rendered during the five year life of the trust. Judge Lowengrub entered an order to show cause, directed to the beneficiaries of the trust, affording them an opportunity to file objections and exceptions. Objections aimed primarily at the amount of compensation sought ($1,896,354) were filed by the Major Beneficiaries who hold 63.55% of the trust. They are the Cresci Family, the English Family, the Cunningham Family, Joan McCrane, and Fidelity Union Bank as successor trustee, C.T.A. under the will of Eugene Mori, Sr. Exceptions were also filed by Edward H. Ellis and Eugene Mori, Jr. (Mori's objections were eventually dismissed for procedural deficiencies.)
Section 26 of the Liquidation Trust Agreement provides:
Due to the uncertainties recited herein, it is not possible to provide in this Agreement the amount of compensation that Trustee . . . shall receive from the Trust Estate for the services it or he may render in that capacity. For that reason, the only provision it is feasible or practicable to make regarding the amount of such compensation is, and it hereby is provided, that for the services it or he may render in that capacity, Trustee . . . shall be paid and shall receive from the Trust Estate reasonable compensation in keeping with the usual compensation charged in the Philadelphia, Pennsylvania -- Camden, New Jersey vicinity, for services of like character, payable quarter-annually, semi-annually or annually, as Trustee, in the exercise of its discretion and judgment may determine to be in the mutual best interests of the Trustee . . .
Following negotiations between the parties, the beneficiaries and Ellis entered into Stipulations with the Trustee in ...