Case Name: FORD v. GILBERT
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1904-02-01
Citations: 44 Or. 259
Docket Number: 
Parties: FORD v. GILBERT.
Judges: 
Reporter: Oregon Reports
Volume: 44
Pages: 259–263

Head Matter:
Argued 11 January,
decided 1 February, 1904.
FORD v. GILBERT.
[75 Pac. 138.]
Claim by Attorneys on Fund in Court.
1. An attorney who represents an insolvent in resisting the efforts of creditors to reach his property is not entitled to compensation out of any fund in court created from the property in litigation, whatever may be the rule where attorneys have assisted in creating or preserving a fund.
Power op Insolvent Over Property in Hands oe Receiver.
2. An insolvent debtor, after the appointment of a receiver of his property, has no authority to subject the fund in the hands of the receiver to any legal liability.
From Marion: Reuben P. Boise, Judge.
This is a proceeding by J. N. Brown and F. T. Wright-man, seeking to be allowed a payment out of a fund in the hands of a receiver appointed in a suit brought by Tilmon Ford, as executor, against A. T. Gilbert and others. From an order disallowing the petition the claimants appeal.
Affirmed.
For appellants there was an oral argument by Mr. John A. Carson, with a brief to this effect:
I. Where attorneys have recovered or protected property for creditors, or have in good faith rendered services looking to that end, though unsuccessful, they should be paid a reasonable fee out of the fund in court: Re Tallassee Mfg. Co. 64 Ala. 567; Hunt v. McClanahan, 1 Heisk. 503; Weaver v. Cooper, 73 Ala. 318; 3 Am. & Eng. Ency. Law (2 ed.), 458; 4 Cyc. 983; Beach, Receivers, 814; Attorney-General v. Continental Life Ins. Co. 62 How. 130; Trustees v. Greenough, 105 U. S. 527; Hay’s Estate, 153 Pa. 328; Mann v. Wakefield, 11 Pa. Sup. Ct. 18; Weigand. v. Alliance Supply Co. 44 W. Va. 133 (28 S. E. 803).
II. As to what matters should be considred in estimating a reasonable attorney’s fee for services rendered, see Stevens v. Ellsworth, 94 Iowa, 758 (63 N. W. 683); McMannomy v. Chicago D. & V. R. Co. 167 111. 497 (47 N. E. 712).
For respondent's there was an oral argument by Mr. Wm. M. Kaiser, with a brief over the names of Woodson T. Slater, John H. & C. L. McNary, W. M. Kaiser, and R. J. Fleming, to this effect:
(1) It is true there is a fund in court, but it is not there by any effort of any of the claimants, nor did they obtain any judgment or decree to which such a claim could attach. The fatal defect in the present case is that the claimants did not assist in either creating or protecting the fund out of which they ask payment. Re Tallassee Mfg. Go. 64 Ala. 567, settles the law on this subject.
(2) Where an attorney does not look to the fund alone for his compensation, hut takes security in advance for his services, he cannot claim any lien on the fund : 3 Am. & Eng. Eucy. Law (2 ed.), 458; McKelvey’s Appeal, 108 Pa. St. 615.
(3) An attorney is not entitled to any fee out of the property in the hands of the court for services rendered to the insolvent after sequestration by the court: Beach,. Receivers, 814; Barnes v. Newcomb, 89 N. Y. 109.

Opinion:
Per Curiam.
On April 22,1901, the defendant Gilbert, who was conducting a general banking business at Salem, in the name of Gilbert Bros., was served with process in a suit brought against him and the plaintiff herein, as executor of the estate of William Cosper, deceased, by a Mrs. Johnson, one of the Cosper heirs, in the United States court, for an accounting and the appointment of a receiver. In her complaint Mrs. Johnson charged, in substance, that for many years prior to Cosper's death Gilbert had been his confidential agent and trustee, and during that time had received about $350,000, which he had failed to account for; that Ford was the executor of the Cosper estate, but was in fact the attorney and confidential adviser of Gilbert, and had wrongfully and unlawfully conspired and associated with him to defraud the estate, and to that end had failed to file a true inventory thereof, and had refused and neglected to institute proceedings to compel him to account for the money in his hands belonging to Cosper. Owing to the commencement of this suit, Gilbert was compelled to close his bank, which he did on the 22d, and never thereafter reopened it for business. On the same day or the following morning Gilbert employed the petitioners to appear for and represent him in the suit and any other litigation which might arise out of the closing of the bank. No special agreement was made as to the time of their employment or the amount of their compensation, but at their request Gilbert delivered to them, certain notes belonging to the bank amounting to $884 as collateral'security for the payment of their fees and claims against the bank held by clients and others. On April 25th the United States court appointed a temporary receiver of the assets of Gilbert, who immediately took charge thereof, and retained the same until he turned them over to the present receiver, appointed by the state court. Pending the determination of the suit in the United States court the plaintiff, as executor of the Gosper estate, conceiving that it had no jurisdiction in the matter, brought a suit in the state court against Gilbert for an accounting, on substantially the same grounds alleged in the complaint of Mrs. Johnson, and Claud Gatch was appointed receiver therein. The federal court held, on separate demurrers filed by Ford and Gilbert, that it did not have jurisdiction of tire subject-matter, dismissed the suit (109 Fed. 501), and directed its receiver to turn all the property in his possession over to Gatch, which was done accordingly. Thereafter some of the creditors of Gilbert instituted proceedings in the federal court to have him. adjudged an involuntary bankrupt, and the petitioners were retained and employed by him as his attorneys therein. They were also retained to file an answer for him in the present suit. The cause never came to trial, but so far as the claim of the heirs of the Cosper estate is concerned was settled by stipulation. The petitioners filed a claim in the present suit for $2,500 as attorneys' fees in the Johnson suit, $3,000 as attorneys' fees in the bankruptcy proceeding, and $1,000 as attorneys' fees in the present suit, and asked for an order directing-the receiver to pay the same out of the assets in his hands in preference to the general creditors of Gilbert. The court disallowed the claim as a charge upon the assets in the hands of its receiver, but permitted the petitioners to retain and appropriate to their own use the collateral received by them at the time of their retainer by Gilbert.
1. The services rendered by the petitioners were personal'to Gilbert. They did not recover a fund for the common benefit of the creditors, or add to the assets now being administered by the court. The Johnson suit was dismissed for want of jurisdiction, leaving the merits wholly undetermined. The bankruptcy proceeding was merely a contest as to the forum in which the insolvent's estate should be administered, and the present suit, so far as the claim of the Cosper heirs is concerned, was voluntarily discontinued by them. When a fund is brought into court through the service of an attorney, or where his services have added to or preserved or increased the amount being administered, the court of primary jurisdiction may properly allow a reasonable compensation for his services to be paid from the fund; but an attorney who is employed by and represents an insolvent debtor to resist the claims of creditors has no lien on the fund in court for his compensation, nor is he entitled to be paid therefrom: Beach, Receivers, § 764; In re Tallassee Mfg. Co. 64 Ala. 567.
An insolvent debtor, after the appointment of a receiver of his property, has no authority to subject the fund in the hands of the receiver to any legal liability: Barnes v. Newcomb, 89 N. Y. 109. The petitioners have a claim against Gilbert for their services as his attorney, but it cannot legally be paid from the assets in the hands of the receiver, and now being administered by the court below. The judgment is affirmed. Affirmed.