## Facts

- Federal law (the National Bank Act) authorized national banks, with approval by the Comptroller of the Currency, to act as executors of estates.
- Mary Mayfield Gutsch died on October 19, 1971, in Travis County, Texas, leaving a holographic will naming Austin National Bank as executor.
- The will was probated on November 1, 1971, and Austin National Bank qualified as a dependent executor.
- The Bank filed a declaratory-judgment action to construe the will and determine the beneficiaries’ rights; the construction dispute was ultimately resolved in *City of Austin v. Austin National Bank*, 503 S.W.2d 759 (Tex. 1973).
- As construed, the will gave: (i) a godchild the tangible personal property found in the decedent’s house, (ii) the house and land to the City of Austin for use as a public park, and (iii) the remainder of the estate (approximately two-thirds) to the Humane Society of Austin and Travis County.
- While the construction suit was pending, the Bank (joined by the Humane Society) applied to the probate court on September 11, 1972, for authority to sell certain estate stock and reinvest the proceeds in other securities yielding a better return pending distribution.
- The probate court entered an order authorizing the sale and reinvestment, including in certificates of deposit; the Bank then sold estate stock and purchased certificates of deposit issued by the Bank itself.
- After the will-construction suit ended (about 16 months later), the Bank submitted claims in probate for executor commissions and attorney’s fees; the Humane Society sought offsets and reductions, contending the Bank engaged in self-dealing, incurred unnecessary maintenance and storage expenses, and should not recover fees from the will-construction litigation.
- The probate court allowed the Bank’s claims and disallowed the Humane Society’s offsets; the court of civil appeals affirmed, and the Humane Society sought review in the Supreme Court of Texas.

## Issues

1. Whether a dependent executor bank committed impermissible self-dealing, requiring denial or surcharge of commissions, by investing estate funds in certificates of deposit issued by the bank itself under a probate-court order sought with the beneficiary’s joinder.
2. Whether the Bank’s maintenance and storage expenditures during administration were unnecessary and therefore should be disallowed or charged against the Bank.
3. Whether attorney’s fees incurred by the executor in the prior will-construction (declaratory judgment) litigation were properly payable from the estate as administration expenses.

## Decision

- The Supreme Court of Texas affirmed the court of civil appeals and upheld the probate court’s allowance of the Bank’s commissions and attorney’s fees and its rejection of the Humane Society’s offsets.
- The Bank’s investment of estate funds in its own certificates of deposit, made under probate-court authorization obtained on an application joined by the Humane Society, did not justify forfeiture of commissions or an offset on this record.
- The probate court did not err in allowing the challenged maintenance and storage expenses, which were supported as administration costs incurred while the estate remained under court supervision and distribution was delayed.
- The probate court properly allowed reasonable attorney’s fees incurred in good-faith will-construction litigation brought to determine beneficiaries’ rights under the holographic will.

## Legal Principles

- A dependent executor operating under probate-court supervision may seek court authority to sell and reinvest estate assets pending distribution; actions taken pursuant to a valid court order weigh strongly against later claims for surcharge based on those authorized transactions.
- A beneficiary’s participation in, or joinder to, the application for probate-court authorization may bar or weaken later complaints that the authorized investment decision constituted disqualifying self-interest.
- Reasonable expenses incurred to preserve, maintain, and store estate property during administration may be allowed as administration expenses when supported by the record and approved by the probate court.
- Attorney’s fees reasonably incurred by an executor in good-faith litigation to construe an ambiguous will and obtain judicial direction on distribution may be charged to the estate as part of administration.

## Conclusion

The Texas Supreme Court held that the probate court properly allowed Austin National Bank’s executor commissions, administration expenses, and attorney’s fees, rejecting the Humane Society’s effort to offset or reduce compensation based on the Bank’s court-authorized interim reinvestment of estate funds (including purchases of the Bank’s own certificates of deposit), alleged unnecessary preservation expenses, and fees incurred in the earlier will-construction proceeding.


Humane Society of Austin and Travis County v. Austin National Bank, 531 S.W.2d 574 (1975)