In the Matter of the Final Accounting of Irving Trust Co., 48 N.Y.2d 97 (1979)
When a trust agreement specifies the compensation a trustee shall receive for its services, the trustee is generally limited to that compensation, even if statutes enacted after the trust’s creation provide for additional fees.
Summary
This case concerns whether a trustee is entitled to annual principal commissions authorized by statute after the execution of a trust agreement that specified a different compensation structure. Alfred G. Vanderbilt established a trust in 1941, directing the trustee, Irving Trust Company, to pay income and principal to his wife, Manuela. The trust agreement outlined specific commissions for the trustee. After Manuela’s death, the trustee sought additional annual principal commissions based on a 1943 statute. The court held that the trust agreement’s compensation provision was exclusive, precluding the trustee from receiving additional statutory commissions. The court reasoned that the agreement constituted a “specific compensation” for the trustee’s services, barring any further allowance.
Facts
In 1941, Alfred G. Vanderbilt created an irrevocable trust with Irving Trust Company as trustee, benefiting his wife, Manuela. The trust directed the trustee to pay net income and up to $100,000 of the corpus to Manuela during her lifetime, with the remainder to their daughter, Wendy, upon Manuela’s death. The trust agreement contained a clause, Article Ninth, specifying how the trustee would be compensated. Specifically, it outlined a commission on the initial principal and commissions on income and principal disbursed, calculated at the rates for testamentary trustees at the time of the trust’s creation.
Procedural History
The matter was submitted to the Appellate Division as a court of first instance on an agreed statement of facts. The Appellate Division held that the trustee was entitled not only to the commissions in the trust agreement but also to annual principal commissions permitted by statute as of 1943. The New York Court of Appeals reversed the Appellate Division’s order.
Issue(s)
Whether an inter vivos trust specifying trustee compensation precludes the trustee from receiving annual principal commissions permitted by a statute enacted after the trust’s creation.
Holding
No, because Article Ninth of the trust agreement provides a “specific compensation” for the trustee’s services, which precludes the trustee from receiving any additional allowance for those services.
Court’s Reasoning
The court emphasized that where a settlor provides “specific compensation” for a trustee’s services, the trustee is not entitled to additional compensation under CPLR 8005 and SCPA 2308(11). The court interpreted Article Ninth of the trust agreement, stating, “As compensation for its services in the administration of the trust,” as an intent to make the article the exclusive source of compensation. The court rejected the argument that this introductory phrase modified only the sentence about principal receipt commissions, deeming that interpretation incorrect because it would render the rest of the article meaningless. The court referenced Matter of Schinasi, where the court held that an express preclusion of additional compensation is not required if the agreement implies such a limitation. The court stated, “That the Legislature thought it appropriate in 1943 to provide trustees with a statutory right to annual principal commissions in no way justifies the abrogation of portions of trust agreements, executed prior to that time, in which the parties have agreed to a specific compensation scheme.” The legislation’s purpose to ensure fair compensation is fulfilled when parties have already established the trustee’s remuneration in the trust agreement.