Opinion ID: 1476460
Heading Depth: 1
Heading Rank: 8

Heading: Accountants' Fees.

Text: The master recommended the allowance of the fees of Touche, Niven & Co., accountants, for $17,591.21 for their services. The court in its opinion disallowed the fees as costs, but gave no reason. There is nothing in the decree thereon, and so far as this may be regarded an adjudication we consider the item, and the very full discussion thereof in the briefs and arguments. The decree of the District Court authorized the master to employ accountants, which he did, and their fees of $7,359.50 have been properly ordered allowed as costs. Each party additionally employed its own accountants  Touche, Niven & Co. by Larson. The master's recommendation of allowance was upon the theory that the account filed by Wrigley was not correct, and not such an account as was contemplated by equity rule 63. It is true that the accounts filed showed for the accounting period a substantial loss on Doublemint. The very important elements of sales of Doublemint, manufacturing costs, and gross profits were accepted without dispute, and likewise substantially all of the item of nearly $1,000,000 for overhead expenses. The loss shown is made to appear from items, the allowance or disallowance of which was influenced rather by the correct principle to be applied, than by falsity in the disclosure. As to the most important item, advertising, there was no dispute as to amounts paid, but as to their allocation. Wrigley asserted that something over $2,800,000 should be charged to Doublemint. Touche, Niven & Co. reported slightly over $1,000,000 as so applicable. Various theories of allocation were put forth  proportion of sales, space method, brand advertising, and institutional advertising. To elaborate each of these, with the exception of the first, involved investigation and computation of vast data. Such data as Wrigley had were without objection or concealment at the disposal of all concerned. Then there was Wrigley's contention of nearly $300,000 for interest on good will, which was rejected, and for federal income tax, which was also disallowed, and certain other items claimed, the allowance of much of which would indeed have wiped out all the profit on Doublemint. The fact that such were claimed as deductions from the gross profits which were truly disclosed, was not, in our judgment, such a transgression of equity rule 63 as to have warranted the allowance against Wrigley of this item of accounting expense, and the court properly disallowed it.