Case Name: West v. Meillmier
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1926-12-20
Citations: 172 Ark. 485
Docket Number: 
Parties: West v. Meillmier.
Judges: 
Reporter: Arkansas Reports
Volume: 172
Pages: 485–493

Head Matter:
West v. Meillmier.
Opinion delivered December 20, 1926.
Hays, Pridcly & Hays and John W. Goolsby, for appellant.
A. M. Dobbs, for appellee.

Opinion:
Hart, J.,
(after stating tbe facts). It is tbe contention of counsel for appellants, West and Roughley, that W. H. Meillmier had no interest in the fund involved in this lawsuit; that Philbeck is entitled to one-half of it, and that the balance should be distributed equally between W. E. West, Abe Roughley and the widow and heirs of John W. White, deceased, as the distributees of his estate.
The undisputed facts show that these parties originally advanced to the Roughley Coal Company the amount of its income tax, which is the basis of the refund to that corporation by the United States of the $1,773.01 involved in this case. In this contention we think counsel are correct.
Counsel for appellee, Meillmier, bases his right to a distributive share of the funds under his contract whereby he acquired the one-third interest of Abe Roughley in the Roughley Coal Company.
The record shows that Roughley sold his stock to West, and West at once transferred the same to Meillmier. The bill of sale provides that it ' ' shall include all debts, demands or other credits due the said Roughley •Coal Company, whether liquidated or otherwise, and it is understood the purchaser shall assume all debts and other demands against said Roughley Coal Company."
Counsel for appellee seeks to uphold the decree upon the principles of law decided in Delano v. Butler, 118 U. S. 634, and Bidwell v. P. O. & E. L. Pass. Ry. Co. 114 Pa. 535, 6 A. 729.
In the case first cited, a national bank became insolvent, and the Comptroller of the Currency authorized an increase of the capital stock of the bank in order to enable it to resume business. The stockholders voluntarily paid an assessment for this purpose. The capital stock was increased to an amount equal to' the aggregate sum of the voluntary assessments, and the money so obtained was used by the bauk in the regular course of business. Under these facts the court held that the assessment was a voluntary one, made by the stockholders themselves under authority of law, to increase the capital stock to enable the bank to resume business, and therefore was not a loan of money to the bank.
In the second case cited, the affairs of the corporation were in bad condition. A large part of the track of the company needed repairing, and new station houses were needed. New equipments of cars and horses were also needed. The treasury was empty. To meet the emergency the three persons who owned all the corporate stock voluntarily assessed their stock and applied the money thus raised to the improvement and repairing of the company's property. This resulted in the enhancement of the value of the corporate property and in the betterment of their stock. It was held that, as a matter of fact, the transaction amounted to a voluntary assessment of their stock, and was not a loan of money by the stockholders to the corporation.
The facts are materially different in the case at bar. The transaction did not result in the increase in value of the property of the corporation or in the betterment of its stock. No new assets accrued to the corporation. The money advanced was not placed in the general assets of the corporation and used by it in due course of business. The money was paid in by the stockholders for a specific purpose, and used for that purpose alone. While the proof is not definite and specific, it is fairly inferable, from the agreed statement of facts, that the three stockholders intended to advance what money was actually needed to pay the income tax of the corporation for the year 1917. They evidently thought that the amount demanded was the amount due the United States. They only intended to advance the amount due to the United States, and there is nothing to show that it was intended that any excess payment should be returned to the cor poration and constitute a part of its assets. Rather, the equity of the case is that, if the amount advanced by the stockholders was in excess of the income tax due by the "corporation for the year 1917, the payment of the excess was made either under a sort of compulsion or under mistake of fact. The excess should be returned ratably to the persons who contributed it, and not to the corporation for whose benefit it was paid.
In this connection, it may be stated that neither of the parties to this suit knew of the excess payment of taxes at the time West sold to Meillmier. The equity of the case upon the merits is with the persons who advanced the money with which to pay the income tax of the corporation for the year 1917, and we hold that they are entitled to the excess thereof in equal shares as a loan of money to the corporation.
If it be conceded that the $1,773.01 returned by the United States to the Roughley Coal Company is a debt or demand due said corporation and that Meillmier acquired an undivided one-third interest therein under the terms of the bill of sale, this does not help his case any. The bill of sale likewise makes him liable for all debts and other demands against the Roughley Coal Company. Now the undisputed facts show that the income tax of the Roughley Coal Company was not paid out of its assets, but was paid hy West, White and Roughley out of their individual funds. They each owned one-third of the stock of the corporation, and contributed an equal amount in the payment of the income tax of the corporation. The amount of money so advanced by them was never repaid by the corporation. Hence it is a debt due them by the corporation. The corporation has dissolved and has no other distributive assets than the amount refunded to it by the United States. This fund constitutes its sole assets for the payment of its debts. No other debts are shown to have been owed by the corporation. Hence this sum of money should have been distributed to West, Roughley, and the widow and heirs of the estate of John W. White, deceased, in equal proportion, after deducting the amount which should have been allowed and paid to John Philbeck for recovering the same.
This brings us to a consideration of the proper amount to be allowed Philbeck for his legal services in recovering the fund in question. West and Itoughley made a contract with him whereby he was to receive as a contingent fee fifty per cent, of the amount recovered. They had no authority from the corporation or from the remaining stockholder to make such a contract. Hence White could not be bound by the contract, and his proportionate part of the fund could only be charged with a reasonable attorney's fee.
There is no testimony in the record to show what would be a reasonable fee. West and Itoughley were entitled to two-thirds of the amount recovered, and the fact that they made a contract with Philbeck to give him fifty per cent, of the amount recovered indicates that they thought this to be a reasonable fee. Then, too, the fact that the corporation had been dissolved, the uncertainty of the recovery, the complex nature of the claim, and the fact that the attorney's services might be extended over a long period of time, are all elements to be considered in determining whether or not the contract fee of fifty per-cent, of the amount recovered was reasonable. The corporation had its domicile at a great distance from Washington, and the fund was recovered by the exertions of Philbeck. In the absence of any direct and positive evidence as to whether the fee was reasonable, considering the amount involved, the nature, character and extent of the services required, we are of the opinion that a contingent fee of fifty per cent, of the amount to be recovered was not unreasonable, and that such fee should be a charge against the whole fund. It follows that the court erred in the rendition of its decree as set forth in our statement of facts.-
Finally, it is insisted that the decree must be affirmed because the record does not contain all the evidence. In making this contention, counsel for appellees rely upon the principles of law in Weaver-Dowdy Co. v. Brewer, 129 Ark. 193, 195 S. W. 367, to the effect that, where there is a conflict between the recitals of the decree and the bill of exceptions, the record entry must prevail. The decree, after reciting the appearance of all the parties, contains the following:
"And all the parties announcing ready for trial, the trial proceeds upon the pleadings filed' by the parties, exhibits, oral testimony introduced and the agreements of the parties." The bill of exceptions at the commencement contains the following:
"Thereupon the pleadings in the case, the complaint of plaintiff, the answer of defendant, and interplea of the intervener, were by the respective parties presented to the court, and the cause was submitted to the court on an agreed statement of facts,-as follows."
At the conclusion of the 'bill of exceptions there is an agreement between the attorneys of the respective parties that it is a true and correct statement of the facts as agreed to in the trial of the case. In the first place, it may be said that, when the recitals of the decree and of the bill of exceptions copied above are considered together, there is no inconsistency between them. Inferentially, at least, it should be considered that the agreed statement of facts is the oral testimony referred to in the decree. This is especially true when we consider that the chancellor filed a written opinion in which the facts are set out substantially as stated in the agreed statement of facts. Then, too, the facts agreed to are' undisputed, and no amount of oral testimony could overturn facts which are undisputed and which the parties, by their agreement, have alleged to be true and to be the facts in the case. Then, too, the facts agreed to settle all the issues raised by the pleadings.
It follows that the decree will be- reversed, and the cause will be remanded with directions to the chancellor to enter a decree in accordance with this opinion.