No. 389 Philadelphia, 1981, Appeal from Decree of the Court of Common Pleas, Orphans' Court Division, of Montgomery County, No. 38456 and 79902.
Marvin Comisky, Philadelphia, for appellants.
Joseph W. Swain, Jr., Philadelphia, for appellee.
Wieand, McEwen and Montgomery, JJ. McEwen, J., files a dissenting opinion.
[ 314 Pa. Super. Page 179]
The appeal in this case is from a final decree of the Orphans' Court Division of the Montgomery County Court of Common Pleas which refused to allow attorneys for Christopher G. Kellogg, a beneficiary of the trust estate of Rodman Wanamaker, deceased, to recover counsel fees from a fund created when the estate sold the stock of John Wanamaker, Philadelphia ("J.W.P.") to Carter Hawley Hale Stores, Inc. ("C.H.H.") for $60,000,000.00. This price produced, after taxes, a net of approximately $11,000,000.00 more than C.H.H.'s initial offer. The auditing judge found that legal services rendered by Morton P. Rome, Esquire, now deceased, and Edwin P. Rome, Esquire, although valuable to their client, had not contributed to the increased sales price and that their fees, therefore, could not be recovered from the trust estate. We affirm.
The general rule is that each party to adversary litigation is required to pay his or her own counsel fees. Chatham Communications, Inc. v. General Press Corp., 463 Pa. 292, 300, 344 A.2d 837, 842 (1975); Shapiro v. Magaziner, 418 Pa. 278, 280, 210 A.2d 890, 892 (1965); Hempstead v. Meadville Theological School, 286 Pa. 493, 495, 134 A. 103, 103 (1926); Harrison's Estate, 221 Pa. 508, 70 A. 827 (1908). In the absence of a statute allowing counsel fees, recovery of such fees will be permitted only in exceptional circumstances. One of the exceptional situations in which counsel fees may be recovered is where the work of counsel has created a fund for the benefit of many. See: Wilbur's Estate, 334 Pa. 45, 72-74, 5 A.2d 325, 339 (1939); Hempstead v. Meadville Theological School, supra. This rule was stated by the Supreme Court of the United States in The Boeing Co. v. Van Gemert, 444 U.S. 472, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980), as follows:
[ 314 Pa. Super. Page 180]
"[A] litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole . . . . The common-fund doctrine reflects the traditional practice in courts of equity . . . and it stands as a well-recognized exception to the general principle that requires every litigant to bear his own attorney's fees . . . . The doctrine rests on the perception that persons who obtain the benefit of a lawsuit without contributing to its cost are unjustly enriched at the successful litigant's expense." (Citations omitted).
Id. at 478, 100 S.Ct. at 749, 62 L.Ed.2d at 681-682. See also: Lindy Bros. Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 540 F.2d 102 (3rd Cir.1976).
It is fundamental that an attorney seeking compensation from an estate has the burden of establishing facts which show that he or she is entitled to such compensation. Hempstead v. Meadville Theological School, supra. The allowance or disallowance of counsel fees rests generally in the judgment of the auditing judge, and his or her findings of fact, approved by the court en banc and supported by competent evidence, are binding on appeal. Bennett Estate, 366 Pa. 232, 237, 77 A.2d 607, 609 (1951); Davidson Trust, 354 Pa. 333, 335, 47 A.2d 145, 146 (1946). The judgment of the auditing judge regarding the allowance or disallowance of counsel fees will not be interfered with except for abuse of discretion or, as some cases express it, palpable error. LaRocca Estate, 431 Pa. 542, 548-549, 246 A.2d 337, 340 (1968); Thompson Estate, 426 Pa. 270, 281-282, 232 A.2d 625, 629 (1967); Rambo's Estate, 327 Pa. 258, 266, 193 A. 1, 4 (1937). Here, the auditing judge found that the services rendered by appellants had not contributed to the creation of the fund against which counsel sought to charge their fees. We turn, then, to a review of the evidence to determine whether the auditing judge committed palpable error.
[ 314 Pa. Super. Page 181]
The evidence discloses that on March 7, 1978, at a meeting of trust beneficiaries, the chairman of the trustees reviewed the difficulties being experienced in the retail trade by J.W.P. and reported that C.H.H. had expressed interest in purchasing J.W.P. in exchange for two million shares of common stock of C.H.H. and approximately $12,628,000.00 in cash. The trial court estimated the value of this offer to be $45,027,551.38. A majority of the beneficiaries expressed a willingness to sell on those terms. However, one of the beneficiaries, Christopher G. Kellogg, was strongly opposed and promptly contacted his attorney, Palmer K. Schreiber, Esquire. It was Schreiber who thereafter engaged Morton P. and Edwin P. ...