Tennessee

Warning: The following opinion is provided for purposes of discussion only. We have not Shepardized™ this opinion, and do not know the subsequent disposition of this case nor whether the effect of the opinion has been overruled or superceded by other law.

Thomas G. Brown v. C. Michael Conroy et al.,
1990.TN.261 (Tenn.App. 02/12/1990)

COURT OF APPEALS OF TENNESSEE, EASTERN SECTION

No. 1276

1990.TN.261

February 12, 1990

THOMAS G. BROWN, PLAINTIFF-APPELLEE

v.

C. MICHAEL CONROY, CAROLYN RUTH MITCHELL BROWN, AND CHADWICK BROWN CONROY, DEFENDANTS-APPELLANTS

From the Chancery Court, Knox County, Hon. Frank W. Williams, Judge (Sitting by Designation).

Appeal Denied May 14, 1990,

L. Anderson Galyon, III, OF Knoxville, Guardian Ad Litem, For Elizabeth Garrett Conroy, Charles Michael Conroy, Jr., and Mary Chadwick Conroy.

G. W. Morton, Jr., OF Knoxville For Carolyn Ruth Mitchell Brown.

Charles D. Susano, Jr., OF Knoxville For C. Michael Conroy.

Mack A. Gentry OF Knoxville For Chadwick Brown Conroy AT Trial Level. She IS Not A Party ON Appeal.

Maclin P. Davis, Jr., OF Nashville For Thomas Garry Brown.

Houston M. Goddard, Judge, Clifford E. Sanders, P.j.(e.s.), E. Riley Anderson, J., Concur.

The opinion of the court was delivered by: Goddard

Houston M. Goddard, Judge

Three principal separate contentions were litigated in this suit. The original complaint was filed by Thomas Garry Brown, a beneficiary under an irrevocable insurance trust established by his father, Theodore Garrett Brown, III, dated January 4, 1980, which was subsequently funded by the proceeds of various life insurance policies totaling some $700,000. The parties defendant were C. Michael Conroy, Theodore's son-in-law, Carolyn Ruth Mitchell Brown, Theodore's widow, who were trustees of the trust, and Chadwick Brown Conroy, Theodore's daughter, who was also a beneficiary.

The original suit sought an accounting from the trustees, removal of the trustees, appointment of successors, damages, both compensatory and punitive, in favor of Garry and of the trust and reasonable attorney fees for Garry's attorneys.

During the course of the litigation the children of Mr. and Mrs. Conroy were made parties defendant as they were also beneficiaries under the original trust and a second one dated August 12, 1980. By way of counter and cross-complaint Mrs. Brown sought a determination that the creation of the irrevocable trust was a fraudulent transfer within the meaning of T.C.A. 31-1-105 *fn1 and, consequently, void.

By way of cross-complaint Mr. Conroy sought a judgment against Mrs. Brown for damages, including attorney fees, should he be cast in judgment in the original complaint. He also sought a monetary award for any damages the trust may have suffered by reason of Mrs. Brown's actions. Mr. Conroy further contended that the trust of January 4 should be reformed to reflect the language of the trust of August 12 because the latter trust expressed Theodore's true intent. The minor beneficiaries also joined in this contention.

As to the original complaint, the Trial Court found that both Mrs. Brown and Mr. Conroy should be removed as trustees, that Garry be awarded 75 percent of his attorney fees against the trust, that Mrs. Brown pay the trust one-half the attorney fees allowed to Garry, that an accounting be had and that Mrs. Brown and Mr. Conroy pay the costs of the cause.

As to Mrs. Brown's contention, the Trial Court found that creation of the trust was not a fraud as to her distributive share.

As to the contentions of the minor beneficiaries and Mr. Conroy, the Court found that the January 4 trust was valid and would not be reformed to conform to the terms of the August 12 trust. He further found that Mr. Conroy was not entitled to any attorney fees from the trust's estate.

Upon appeal the following issues are raised:

Mrs. Brown insists the Trial Court was in error in finding the establishment of the January 4 trust was not fraudulent as to her distributive share of Theodore's estate and she should not have been onerated with any attorney fees to Garry's counsel.

Mr. Conroy insists that the evidence preponderates against the finding that the attorney fees allowed Garry's counsel were incurred for the benefit of the trust, and likewise against the finding that none of the attorney fees incurred by him was for the benefit of the trust and, consequently, not a proper charge against either the trust estate or against Mrs. Brown. He also insists that he should be awarded additional attorney fees and expenses on appeal and should not have been onerated one-half the court costs. Finally, he contends that the Court should have declared the August 12 trust instrument contained the terms and conditions which would control the trust created on January 4.

The minor Defendants appeal making the same contention as Mr. Conroy as to the August 12 trust.

Garry appeals insisting that he and the trust should have been awarded damages against Mrs. Brown and Mr. Conroy. He also seeks an award of additional attorney fees and expenses on appeal and additional damages because Mrs. Brown's appeal is frivolous. Finally, he seeks to recover compensatory damages because of the delay in collecting the insurance proceeds, as well as the attorney fees expended in an attempt to collect the interest on the policies.

One preliminary matter needs to be addressed. Mr. Conroy has filed a motion to consider post-judgment facts pursuant to Rule 14 of the Tennessee Rules of Appellate Procedure. In our view the facts attempted to be placed in the record by this motion do not meet the requirements of Rule 14 and are not, as suggested in the advisory commissions' comment, "unrelated to the merits" of the case. The motion is accordingly overruled.

The Trial Judge accurately and, for the most part, fully summarized the proof adduced in the lengthy hearing held in this case as follows:

In 1979, and for many years prior thereto, T. G. Brown owned fifty percent of the corporate stock in Brown Bakeries, Inc., and an equal share of stock in subsidiary corporations. His brother, Roy Brown, owned an equal number of shares in each of the corporations. Brown Bakeries, Inc. is the operator of Kern's Bakery in Knoxville, Tennessee.

T. G. Brown suffered from health problems related to the consumption of alcohol, and as a result was rendered uninsurable by companies which provided standard individual coverage. In 1979 Brown began, with the assistance of experts in the field of estate planning, to look at options by which he could provide assets at his death for his children and liquidity for his estate. It was important to Brown that exact equality in the ownership of the corporate stock be maintained. Should only one share of stock pass from T. G. Brown's side of the family to Roy Brown or his family, then Roy Brown would have effective control of the corporations and the value of the minority shares would be greatly diminished.

On January 4, 1980, he executed the document entitled "The Theodore Garrett Brown, III Irrevocable Trust", (Exhibit 1) which was also signed by the trustees, Carolyn Brown and Michael Conroy. Immediately after the execution of this instrument Brown assigned to the Trust several pre-existing policies of life insurance which he owned. However, he borrowed against those policies so that at the time of the assignment there was zero cash value. The trustee, Michael Conroy, opened a bank account for the trust and deposited a small amount into that account. Thereafter, he began to apply, with Brown's participation, for policies of insurance on T. G. Brown's life. Those policies had been arranged by insurance agents who obtained coverage by creating groups of persons within the Brown Bakery organization. By creating groups and spreading the risk of loss among many people, these agents were able to obtain coverage for T. G. Brown. These policies were owned by the Trust and the premiums were paid by Brown Bakeries, Inc. or one of the subsidiary corporations.

In addition, the corporation had Brown insured as a member of its management team, and upon his death the proceeds were payable to the Trust as beneficiary.

Proceeds from the policies on the life of T. G. Brown were payable to the Trust, thereby providing to the beneficiaries funds that they could use to pay estate taxes and administration expenses and also to purchase stock in Brown Bakeries, Inc., and subsidiary corporations should that become necessary. In this way T. G. Brown's children would have a source of funds with which to maintain their equal position in the ownership of the various corporations.

On August 1 , 1980 T. G. Brown executed a second instrument entitled "The Theodore Garrett Brown, III Irrevocable Trust". (Exhibit 14) The principal difference in the two trusts is with regard to the distribution of assets to the beneficiaries. Under the first trust, Garry Brown, and his sister, Chadwick Conroy, were each to receive one-fourth of the trust assets, with another one-fourth being paid to the children of Garry Brown, if any, and one-fourth to the children of Chadwick and Michael Conroy. The share designated for Garry Brown's children would be paid directly to Garry Brown in the event that he was still without children at the time of his father's death. The second trust instrument differed from the first in that the one-fourth share designated for the children of Garry Brown would be paid to the children of Chadwick and Michael Conroy in the event that Garry Brown had no children at the time of his father's death.

T. G. Brown died testate on January 3, 1984 and at the time of his death Garry Brown had no children. Under the January 4, 1980 trust Garry Brown would be entitled to receive one-half of the trust assets. But under the August 1 , 1980 document he would receive one-fourth and the minor children of Chadwick and Michael Conroy would receive one-half.

By way of supplementing the foregoing facts, there is no proof in the record to indicate any discord or disharmony between Theodore and Mrs. Brown at the time the trust was executed or funded.

We shall now turn to the issues raised by the parties, which will be treated separately.

ISSUES RAISED BY MRS. BROWN

1. The Court erred in denying to Carolyn Brown as Dissenting widow a one-third of the insurance policy proceeds collected by C. Michael Conroy as trustee of an irrevocable trust dated January 4, 1980, said trust being a component of a plan to deprive Mrs. Brown of the minimum elective share of the assets of T. G. Brown III assured her under the Statutes of Tennessee.

2. The Court erred in sustaining a motion for partial summary judgment to the effect that insurance policies applied for by a trustee, owned by the trust and on which premiums were paid by Brown Bakeries, Inc., or one of the subsidiary corporations did not constitute a fraudulent conveyance within T.C.A. § 31-1-105.

3. The court erred in taxing Carolyn Brown for payment of one-half of the attorneys fees allowed against the trust corpus on behalf of plaintiff's counsel.

The determinative question relative to issue one in our view is whether the Trial Court was correct in finding that Theodore did not intend to deprive his widow of her elective rights as to his estate. The Trial Court, in addressing this question, found as follows:

The defendant, Carolyn Brown, contends that "The Theodore Garrett Brown III Irrevocable Trust" was intended by her deceased husband to defraud her of her distributive share of his estate in violation of T.C.A. § 31-1-105. The Court disagrees. The factors to be considered are set out in Warren v. Compton, 626 S.W.2d 12 (Tenn. App. 1981), but as the Court noted the "Circumstances which establish fraudulent intent are as varied as the ingenuity of the human mind may devise". 626 S.W.2d at 17. In this case Carolyn Brown claims that she was fraudulently induced to sign the instrument as trustee. The only statement attributed to Brown by his widow relating to her execution of the trust were to the effect that if anything happened to him "she would be taken care of", and that she would be a "rich widow". Certainly, these statements do not constitute a fraudulent inducement to have her join in the trust.

Carolyn Brown also argues that the combined effect of the trust and the provisions of T. G. Brown's Last Will and Testament circumstantially prove an intent to defraud her of her distributive share. On this issue there was extensive testimony about the distribution of assets which make up the estate of T. G. Brown. This suit does not directly involve any matter affecting the administration of Brown's estate, and the evidence related to estate assets and the terms of his Last Will and Testament is relevant only insofar as it bears on Carolyn Brown's claim that the trust was intended to defraud her. Her principal complaint is that Brown's Last Will and Testament provides that none of the corporate stock pass to her but that all stock be included in the residuary estate of which his children, Garry Brown and Chadwick Conroy, are the beneficiaries. (Exhibit 19, Items XXI and VII) She claims that the estate taxes, debts and administration expenses consume most of the remaining estate assets so that she will not receive her distributive share without having an interest in the corporate stock. Because of this she has Dissented from the will. It appears that there were options available to the Executors of Brown's estate by which funds could be made available to satisfy the marital deduction trust under the will. But in any event, Carolyn Brown's Dissent from the will cures any objections she may have had about its terms and she can now compel payment to her of a child's share of the estate.

The preponderance of the evidence is that T. G. Brown did not intend to defraud his wife of her distributive share by the creation and subsequent funding of the trust. Likewise, the preponderance of the evidence is that there was no fraud in the purchase or transfer of the individual policies of insurance which made up the trust assets. The trust will not be vitiated so as to throw the proceeds of the various policies of insurance into the estate.

In addition to Warren, Finley v. Finley, 726 S.W.2d 923 (Tenn. App.1986), is instructive. In that case this Court set out factors to be considered in determining whether a husband intended to practice a fraud upon his wife, as follows (at page 924):

he following factors should be considered in determining whether the husband intended to practice a fraud upon his wife: (1) whether the transfer was made with or without consideration, (2) the size of the transfer in relation to the husband's total estate, (3) the time between the transfer and the husband's death, (4) relations which existed between the husband and the wife at the time of the transfer, (5) the source from which the property came, (6) whether the transfer was illusory, and (7) whether the wife was adequately provided for in the will.

Although not specifically noted in Finley, Warren also recognized that inter vivos gifts to the wife may also be considered.

In this connection the proof shows that in 1967 Mrs. Brown was made tenant by the entirety of certain real estate owned by her husband. Subsequent thereto he built a house on the property, all of which became hers upon his death. She later sold the house and some 15 acres for $733,000. She retained 14 to 16 acres in the vicinity of this house. The value of this acreage is not shown, but a portion consisting of .59 acres sold for $9000. She also owned a condominium in Florida given to her by her husband during their marriage, which she sold for $108,500. Still further, she received gifts during their marriage having the following value: Jewelry--$134,656; Furs--$12,900; Silverware--$10,675.

An agreement was reached with IRS whereby Theodore's net estate was valued at $2,489,600. Mrs. Brown opted to take an elective share, which would be one-third of the net value of his estate. In addition, Mrs. Brown was awarded $80,000 as a year's support.

Upon considering all of the foregoing, we are convinced that the Trial Court was correct in finding that Theodore did not intend to defraud his wife. Parenthetically, we note that even if he has intended to defraud her and leave her destitute he failed miserably.

In view of our determination of issue one, issue two need not be addressed.

With regard to the third issue, the Trial Court made the following finding with which we also concur:

Turning finally to the question of damages and attorney fees, the Court finds that the defendant, Carolyn Brown, individually, and through her attorney, set about to thwart the efforts of the co-trustee, Michael Conroy, and the beneficiaries of the trust to collect the proceeds of the insurance policies which made up the corpus of the trust. Carolyn Brown had signed the trust instrument accepting the responsibilities which accompany the office of trustee. She owed a fiduciary duty to the plaintiff and the other beneficiaries. However, her actions in regard to the trust assets were designed to procure personal benefits. Immediately after the death of her husband, Carolyn Brown, who had the only key to his safe, removed the documents which were in it, including the subject insurance policies, and turned them over to her attorney. He, in turn, kept them for approximately one year, during which he refused requests to collect the proceeds or deliver them to the co-trustee, Michael Conroy. By refusing to turn over the policies of insurance for collection, she hoped to obtain a greater share of the assets which made up the estate of T. G. Brown and sought to gain an advantage in the corporate affairs of Brown Bakeries, Inc. and related corporations. It is significant that during this time Carolyn Brown never resigned as trustee and it was not until she obtained other counsel and turned over the policies for collection that she repudiated the office. As one witness described the situation, the insurance policies were "held hostage" by Carolyn Brown for her own purposes and contrary to the best interests of the trust and its beneficiaries.

Carolyn Brown feigns innocence in this matter, pointing an accusing finger at her former attorney, Keith McCord. The scheme to benefit Carolyn Brown originated with counsel, but she undoubtedly knew of and acquiesced in her attorney's actions and approved of the goals which he sought on her behalf, even though she may not have realized the potential consequences of such conduct. All actions on the part of counsel which are inconsistent with the fiduciary duty owed to the trust are imputed to Carolyn Brown.

In Tennessee the general rule is that in civil cases attorney fees are not recoverable in the absence of a statute or contract specifically providing for such recovery or a recognized ground of equity. Pullman Standard v. Abex Corp., 693 S.W.2d 336 (Tenn.1985).

Marshall v First Nat. Bank of Lewisburg, 622 S.W.2d 558 (Tenn. App.1981), although not allowing attorney fees under the particular facts of that case, recognized that they are recoverable against a trustee for breach of a fiduciary duty. We recognize that Hail v. Nashville Trust Co., 31 Tenn. App. 39, 212 S.W.2d 51 (1948), cited as authority in Marshall, is not squarely in point because the attorney fees in that case were allowed against the trust fund rather than the trustee. Moreover, under the facts of this case we believe that attorney fees should be recoverable if not under a recognized ground of equity as an exception to the general rule.

Finally as to this point, the award of attorney fees against Mrs. Brown could be sustained as a judgment for damages for breach of her fiduciary duty.

ISSUE RAISED BY MINOR PARTIES,
ELIZABETH GARRETT CONROY, CHARLES MICHAEL CONROY, JR.,
and MARY CHADWICK CONROY

1. DID THE TRIAL COURT ERR IN FAILING TO REFORM THE T. G. BROWN IRREVOCABLE TRUST, EXHIBIT 1 HEREIN, TO CONFORM TO THE PROVISIONS OF THE AUGUST, 1980, TRUST DOCUMENT, EXHIBIT 19 HEREIN?

In addressing this issue the Trial Court made the following finding:

Elizabeth Garrett Conroy, Charles Michael Conroy, Jr., and Mary Chadwick Conroy, the minor children of Chadwick and Michael Conroy, were joined in the suit as beneficiaries of the Trust and their Guardian Ad Litem filed a counter complaint and cross complaint on the wards' behalf seeking to reform the trust instrument dated January 4, 1980 to conform to the provisions of the instrument dated August 1 , 1980. They allege that Brown's intent was to distribute trust funds as set out in the latter instrument but that because of a mistake the first document did not reflect Brown's true intent. The Court concurs in their claim that Brown had intended to distribute funds as set out in the second trust document and on or before January 3, 1980 told the attorney preparing the documents to make the changes which were ultimately incorporated into the August 1 , 1980 trust.

But this is not a complete statement of his intent. Brown intended to shield the assets held in trust from state and federal estate taxes and this required that the trust which he executed on January 4, 1980 be irrevocable. The trust instrument contains express provisions [Exhibit 1, Item I) which prevent its revocation or amendment. Had he retained any control over the trust assets or subsequent designation of beneficiaries, the value of those assets could have been included in his estate for tax purposes and a major objective of the trust would have failed. All of these considerations had been explained to him on or before January 3, 1980. Therefore, the trust could not be altered, amended or revoked by Brown without the concurrence of the trustees and beneficiaries. The plaintiff, who is a beneficiary, did not join in the second trust instrument for the purpose of giving his consent to the new terms affecting the distribution of trust assets, and, consequently, his interest in those assets could not be divested from him by his father's execution of the second trust.

Nevertheless, counsel for the minor children of Chadwick and Michael Conroy argues that the facts justify the reformation of the first trust so that they would receive the one-fourth share allocated in that trust for Garry Brown's children. The Court disagrees. A trust may be reformed where the settlor intended to reserve the power of revocation but omits it by mistake from the trust agreement. Hines v. Louisville Trust Co., 254 S.W.2d 73 (Ky.App.1952); Restatement Second) of Trusts, Ch. 10, § 333.

In this case there was no mistake which would justify reformation of the first trust. Others, who were advising Brown on insurance matters, encouraged him to act promptly to apply for life insurance to avoid the possibility that the insurance would be claimed to have been purchased in anticipation of Brown's death had he died within three years of the date of purchase. Because of this influence Brown executed the first trust knowing that the terms were not exactly as he wanted them to be and that the trust, once executed, was irrevocable. These facts are distinguishable from those in the Hines case. In this case, Brown knew and understood the terms of the trust and elected to execute the instrument in spite of any reservations he may have had about its content. There was no mistake or other basis which would justify the reformation of the first trust to conform to the terms of the second.

Furthermore, it is irrelevant that others may have been mistaken about the events surrounding the execution of the two trusts. In August, at the time of the execution of the second trust, Brown's attorney, Steve Raville, did not know that Brown had signed the first instrument in January. Had Raville known this, he could conceivably have accomplished an effective reformation by simply directing that existing trust insurance policies be allowed to lapse for nonpayment of premiums, and that other policies be purchased pursuant to the second trust. There would have been nothing to prevent the funding of one trust and not the other, or, for that matter, the funding of both trusts. But it is not Raville's mistake that is at issue. The trust was that of T. G. Brown and he had been fully advised prior to executing the first trust, which was the only funded trust.

Our review of the record persuades us that it fully sustains the Trial Court's findings. In the argument section of the Guardian ad litem's brief relative to the Trial Court's findings, counsel asked the following question:

If he believed that he could not change legally the trust, why did T. G. Brown subsequently attempt to do so in executing the August trust instrument?

There are several possible answers to this question. First, it may have been that--given his propensities as to strong drink--at the time he executed the second trust he might not have remembered the first. Second, it may have been that he intended to let the insurance policies lapse as to the first trust and thereupon purchase new policies to fund the second trust, but neglected to do so. Third, given the time constraints relative to initiating the trust so that sufficient time might pass that it would not be subject to attack as a gift in contemplation of death, it was more important to him that he sign the first trust than wait a period of time to have the instrument changed. A fourth possibility is that he intended the August 12 trust to be effective at the time it was executed, but later changed his mind and did not choose to have it funded.

Supportive of the last hypothesis is the fact that on May 28, 1982, over 21 months after the execution of the August 12 document, application was made to have one policy (exhibit 48) converted from a term policy to an extraordinary life one. This application was signed by Theodore as insured and by C. Michael Conroy, "trustee for the Theodore Garrett Brown, III, irrevocable life insurance trust dated January 4, 1980," as policy owner.

ISSUES RAISED BY C. MICHAEL CONROY, TRUSTEE

1. WHETHER THE EVIDENCE PREPONDERATES AGAINST THE CHANCELLOR'S FINDING THAT ALL OF THE ATTORNEYS' FEES AND LITIGATION EXPENSES OF THE PLAINTIFF WERE INCURRED FOR THE BENEFIT OF THE TRUST AND ARE A PROPER CHARGE AGAINST THE TRUST ASSETS?

2. WHETHER THE EVIDENCE PREPONDERATES AGAINST THE CHANCELLOR'S FINDING THAT NONE OF THE ATTORNEYS' FEES AND EXPENSES INCURRED BY TRUSTEE MICHAEL CONROY WERE INCURRED FOR THE BENEFIT OF THE TRUST AND ARE A PROPER CHARGE AGAINST EITHER THE TRUST ASSETS OR AGAINST MRS. BROWN AS PRAYED FOR BY TRUSTEE CONROY IN HIS CROSS-CLAIM AGAINST HER?

3. WHETHER TRUSTEE CONROY SHOULD BE AWARDED HIS ADDITIONAL ATTORNEYS' FEES AND EXPENSES ON APPEAL.

4. WHETHER THE CHANCELLOR ERRED IN ASSESSING ONE-HALF OF THE COURT COSTS AGAINST TRUSTEE CONROY.

5. WHETHER THE EVIDENCE PREPONDERATES AGAINST THE CHANCELLOR'S FINDING THAT NONE OF THE ATTORNEYS' FEES AND EXPENSES INCURRED BY CHADWICK BROWN CONROY WERE INCURRED FOR THE BENEFIT OF THE TRUST AND ARE A PROPER CHARGE AGAINST THE TRUST ASSETS OR AGAINST MRS. BROWN UNDER THE TRUSTEE'S CROSS-CLAIM AGAINST HER?

6. WHETHER THE CHANCELLOR ERRED IN FAILING TO DECLARE, PURSUANT TO TENN. CODE ANN. SEC. 29-14-103, THAT THE AUGUST 1, 1980 TRUST INSTRUMENT, EXHIBIT 19 HEREIN, CONTAINED THE TERMS AND CONDITIONS WHICH SHALL CONTROL THE THEODORE GARRETT BROWN, III, IRREVOCABLE TRUST CREATED JANUARY 4, 1980?

Under the first issue complaint is made that most attorney fees for Garry were incurred in the defense of the first trust to the neglect of the second trust. Having previously found that the first trust is the viable one, it follows that counsel for Garry had no obligation to be concerned with the second. Consequently, counsel's expending time and energies on the first was entirely proper. Additionally, Mr. Conroy complains that his counsel and that of his wife's played the major role in defending the claim of Mrs. Brown against the trust. While it is true that counsel for them asked more questions of Mrs. Brown on cross-examination, we are nevertheless persuaded that Garry's counsel played a significant role in protecting the trust and note that had it not been for the original suit filed by him the trust might never have been funded.

It should also be pointed out that only 75 percent of the fees incurred by Garry were assessed against the trust.

As to the second issue, counsel plausibly argues that Mr. Conroy did not have some of the policies and until Mrs. Brown surrendered them was unable to submit them for payment. He also plausibly argues that given the delicate balance of the Brown Bakery stock, it was to the advantage of his wife and children as well as of Garry that it remain in perfect equipoise as to Roy Brown and the estate of Theodore. Consequently, it would have been injudicious of him to have filed a suit which might cause Mrs. Brown to precipitously obtain her elective share, which would include most assuredly a part of the Brown Bakery stock, and perhaps selling it to Roy which she in fact had agreed to do. *fn2

While, as indicated, we find the foregoing arguments tenable, we nevertheless conclude, contrary to Mr. Conroy's insistence, that the Trial Court was correct in finding that he had a conflict of interest which justified denying him fees from the trust. We think this particularly true when he insisted at trial and continues to insist that the first trust should be reformed to reflect the provisions of the second trust, which significantly increased the share of his children.

In view of our determination as to issue two, issue three need not be addressed.

As to issue four, Mr. Conroy was the unsuccessful party in that he was removed as trustee and was unsuccessful in his insistence that the first trust should be reformed. Consequently, a portion of the costs, which are in large measure within the discretion of the Trial Court, were properly assessed against him.

We conclude that Mr. Conroy has no standing to raise issue five relative to his wife's attorney fees, and any issue regarding them should be raised by her.

Issue six, of course, has been resolved by our determination as to the issue raised by the minor beneficiaries.

ISSUES RAISED BY PLAINTIFF

As to Mrs. Brown:

7. WHETHER THE IRREVOCABLE TRUST AND GARRY BROWN SHOULD BE GIVEN JUDGMENT AGAINST MRS. BROWN FOR COMPENSATORY DAMAGES OF $44,281.58 WHICH RESULTED FROM MRS. BROWN'S BREACH OF TRUST BY PREVENTING THE COLLECTION OF THE PROCEEDS OF INSURANCE POLICIES FOR MORE THAN A YEAR AFTER THE DEATH OF MR. BROWN.

8. WHETHER MRS. BROWN'S APPEAL IS FRIVOLOUS.

9. WHETHER GARRY BROWN SHOULD BE AWARDED HIS ADDITIONAL ATTORNEYS' FEES AND EXPENSES ON APPEAL.

As to Mr. Conroy:

7. WHETHER THE IRREVOCABLE TRUST SHOULD BE GIVEN JUDGMENT AGAINST MR. CONROY FOR COMPENSATORY DAMAGES OF $44,281.58 WHICH RESULTED FROM MR. CONROY'S BREACH OF TRUST BY FAILING TO COLLECT THE PROCEEDS OF INSURANCE POLICIES FOR MORE THAN A YEAR AFTER THE DEATH OF MR. BROWN.

As to the Minor Parties:

2. WHETHER GARRY BROWN SHOULD BE AWARDED HIS ADDITIONAL ATTORNEYS' FEES AND EXPENSES ON APPEAL?

Garry contends that the Trial Court should have awarded $44,281.58 as damages to the trust for the income that was lost because of the failure to make timely claim on the various insurance policies and for $14,740 attorney fees expended in an effort to collect interest as to these policies.

Mrs. Brown counters that there is no proof in the record as to what income the proceeds could have generated and for that reason a judgment would be improper. Garry makes no reply to this contention, and our review of the record substantiates Mrs. Brown's claim. While it may be that a court could take judicial knowledge that funds could be invested at some rate of interest, it was incumbent upon Garry to show what the rate would be, and in the absence of such a showing the trust would not be entitled to recover.

Garry also raises an issue whether Mrs. Brown's appeal is frivolous. This issue is found adversely to him.

Having found that attorney fees were properly allowed below, we believe they are also properly allowable to Garry on appeal. We accordingly remand the case for introduction of evidence and entry of an appropriate judgment as to this feature.

Garry also insists that he is entitled to the sum of $14,740 as attorney fees alleged to have been incurred to collect interest on the various policies. Our review of the record discloses that two accountings were filed as a part of exhibit 69. One "for the 11 months ended December 31, 1987" shows legal fees of $13,863. The other "for the 12 months ended January 31, 1987" shows legal fees of $877. The two figures, of course, total $14,740, which Garry claims. The record does not, however, disclose that these legal fees were incurred in an attempt to recover interest on the policies.

In fairness, we recognize that there is some proof by Mr. Conroy, when asked concerning a $10,664 item designated as professional fees in an accounting "for the period ended January 31, 1986," that a portion of these were for that purpose. Mr. Conroy testified, "We have spent close to $5000 that I can recall off the top of my head, to Baker-Worthington trying to get the interest paid on these policies." In the absence of specific proof as to the amount paid, we are disinclined to allow any award for attorney fees. We might also add as to this feature that there is no showing whether the money was expended in connection with the policies held by Mrs. Brown or the one held by Mr. Conroy.

With regard to damages against Mr. Conroy, as already noted, all but one of the policies were in the hands of counsel for Mrs. Brown and upon obtaining them after this suit was filed and Mrs. Brown delivered them, he promptly obtained the proceeds. Moreover, as in the case of Mrs. Brown, no proof was adduced as to the sum that could have been realized had the policies been collected in due course.

Before leaving this point, we concede that Mr. Conroy could have filed suit as to the policies held by Mrs. Brown. However, if the matter were contested in all likelihood resolution would have been delayed beyond the date when the policies were in fact paid. Such a suit, as already noted, might have disastrous results as to all the beneficiaries of the trust.

As to the issue regarding the minor parties, we are of the opinion that as to them Garry would not be entitled to attorney fees unless we should find that their appeal is frivolous. We conclude it is not.

For the foregoing reasons the Trial Court is affirmed and the cause remanded for such further proceedings as are necessary and collection of costs below. Costs of appeal are adJudged against Mrs. Brown and Mr. Conroy.

Opinion Footnotes

*fn1 31-1-105. Fraudulent conveyance to defeat share voidable. --Any conveyances made fraudulently to children or others, with an intent to defeat the surviving spouse of his distributive or elective share, is voidable at the election of the surviving spouse.

*fn2 Counsel for Garry apparently appreciated this fact also as the suit was held in abeyance from January 1985, when it was filed, until April 1988, after the death of Roy.

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