Court Opinion

ID: 9777244
Source: CourtListenerOpinion
Date Created: 2023-08-29 20:03:58.045926+00
Date Added: 2024-06-11T07:32:50.234643
License: Public Domain

On Motions for Rehearing.
The judgment rendered on appellants’ motions for rehearing is set aside, the opinion then filed is withdrawn, and the following opinion is substituted. The present opinion adjudicates the appellants’ motions _ for rehearing and also'that of the appellees, and in this we repeat (with some changes) parts of the opinion withdrawn *226which are not affected by our conclusion about appellees’ motion for rehearing'.
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A motion for rehearing has been filed by the Bank and another by Raymond Mitchell, et ah, and these parties have filed supplemental transcripts in connection with their motions. Arguments responding to these motions have also been filed by appellees. Before discussing issues made by these motions and arguments we shall consider further the merits of the Point of Error assigned by the Bank in its original brief.
This point attacks the order of the trial court dated July 14, 1952, from which this suit arose. This order is discussed in our original opinion; it assessed in behalf of appellees the attorney’s fees which they claim in this suit. In the argument under this point (and on rehearing) the Bank treats the proceeding in the trial court at which the order was made as a suit and treats the order itself as a judgment. The Bank states the question as this, whether the order bound the trust, and argues that it did not because the beneficiaries of the trust were required to be but were not made parties as provided in Subdivision C of Article 7425b-24, V.A.T.S. Reference is also made to Subdivisions A and B of Section 19 of that statute as evidence of a legislative intent that notice to the beneficiaries of the cause of action adjudicated by the order of July 14th was required.
We agree with the Bank that the applicability of Sections 19 and 24 is not affected by the fact that the trust was created before the Texas Trust Act, namely, Article 7425b-l et seq., was enacted. It seems to be the position of Raymond Mitchell, et ah, that no part of Article 7425b applies to trusts created before it was enacted; but Sections 19 and 24 of this statute pertain to matters which have no logical connection with the date when the trust was created. The limitation which would be placed upon the operation of Sections 19 and 24 by Raymond Mitchell, et ah, is unnecessary, and we see no evidence in Article 7425b that such a limitation was intended. Instead, the deliberate omission of provisions for prospective operation which occurred during the enactment of Article 7425b, to which the Bank has directed our attention, indicates strongly that this limitation was not intended.
However, we think that the provisions of Article 7425b referred to by the Bank, that is, Subdivision C of Section 24 and Subdivisions A and B of Section 19, were not applicable to the proceeding determined by the order of July 14th. For these provisions of Sections 19 and 24 apply to and regulate suits and actions and the proceeding determined by the order of July 14th was not a suit or action. We are satisfied now that it was only the presentation of a claim to a court deemed to be. administering the Trust, and we think that Subdivisions A and B of Section 19 and Subdivision C of Section 24 were not intended to apply to a proceeding of that kind. The only parties essential to that proceeding were before the court — if only the consent and authority of the trial court to the payment of the claim was desired.
The Bank’s point of error is therefore overruled on its merits. Because of these conclusions we now also overrule on the merits Points 1, 2, 3, and 4 filed by the appellant remaindermen, although we remain of the opinion that these points and the Bank’s point are immaterial for the reason stated in our original opinion, namely, the judgment under review was rendered in an independent suit. The attacks made upon the judgment because certain parties were omitted are considered hereinafter and are overruled. We retract statements in our original opinion concerning a lack of authority on the part of the trial court, because of omission of parties, to pass the order of July 14th. The questions material to the trial court and to this court are, whether this order bound the beneficiaries, and if it did not, then whether the attorneys’ fee is actually owed by the Trust.
*227What effect, then, did the order of July 14th have? Seawell v. Greenway, 22 Tex. 691, decided at the Galveston term in 1859, was an instance of the administration of' a trust by the district court. There the trust was for the benefit of creditors, but the court was exercising the powers of a court of equity and was not proceeding under a statute. The earliest statute we have found regulating assignments for creditors was the Act of March 24, 1879. G.L.1879, p. 57, Vernon’s Ann.Civ.St. art. 261 et seq. In the case cited, the trial court had in term time approved a claim by the trustee for a credit on his account of a sum of money which had been stolen from him, and for a commission on this money; but at the next term the court entertained objections to this claim and disallowed it. On appeal from the order of disallowance the trustee argued that-the original order allowing his claim could not be set aside at a later term and that this order conclusively established his right to the credit. The Supreme Court held, however, that the trial court had properly set aside the original order allowing the claim. Said the Court: “The proceedings of the court, in the administration of the trust, were, for the most part, ex parte. The Court was exercising the powers of a court of chancery, and it was very proper to consider all orders passing the accounts of the trustee, as orders or judgments nisi, subject to be set aside upon future inquiry into the correctness of the accounts. It was competent for the court, in the administration of the trust, to proceed in such manner as1 best suited its own convenience, and the convenience of the agents who assisted the court in the administration of the trust, and above all, in such manner as would best attain the object to be accomplished, which was the fair and just administration of the trust estate for the benefit of the creditors.”
This decision shows that an ex parte order of the district court allowing a claim in the administration of a trust is not necessarily final in the sense that.it cannot be set aside or disregarded at a later term, and we think that the trial court’s order of July 14th need not, and indeed ought not to be given any greater effect in the present suit than was given the order in the decision cited, for the reasons stated in our original opinion, namely, that the interests of the trustees and the remaindermen concerning the payment of the attorneys’ fee to appellees were inconsistent. In our original opinion we made this holding only as respects the practice in equity independent of statute, ■but we now make this holding generally as regards such a proceeding as that of July 14th. The inconsistency of interests, without the usual equitable grounds of attack on final judgments, was alone enough to authorize the court to reconsider the merits of the attorneys’ fee and, if the fee be found not owing, to set aside the order of July 14th and deny recovery of the attorneys’ fee. The trial court erred in holding that the order of July 14th bound the beneficiaries as a final judgment on the merits binds a party to a suit.
This conclusion, of course, does not apply to suits and actions, and it does not require that the beneficiaries of the Mitchell Trust be made parties to every claim presented in the trial court while that court may be engaged in the administration of the Trust; our conclusion only means that an ex parte order by that court allowing a claim against and payable out of the Mitchell Trust does not necessarily bar the beneficiaries through the principles of finality of judgments, res judicata,-or es-toppel by judgment from contesting the claim allowed. If on a beneficiary’s contest the claim be found to be a proper one, the contest will fail; but claimant or trustee may have to depend on the merits of the claim for a defense, instead of on the principles of finality of judgments, res ju-dicata, or estoppel' by judgment; and unless there is a genuine question about the claim it is not apparent to us that a trustee needs any other defense. The situation here is like that stated. The order of July 14th expressed the trial court’s consent that the trustees of the Mitchell Trust pay the attorneys’ fee and thus authorized them, a's far as the court was concerned, to pay *228the fee; but as regards a subsequent attack on the order and the attorneys’ fee by a beneficiary, the trustees of the Mitch.ell Trust, after the order of July 14th was made, were dependent for a defense on the actual merits of the claim for the fee, as determined on the beneficiaries’ suit contesting the claim. And this, of course, is one answer to the appellees’ argument that the order of July 14th bound the beneficiaries of the Mitchell Trust because the trustees, with the court’s consent, had authority to pay a claim for services which they had authority to engage. There is no conflict between our original conclusion that the trustees had authority to contract for the services of appellee attorneys and our conclusion that the order of July 14th did not bar a subsequent attack on the fee by a, beneficiary who was not a party to the proceeding of July 14th.
We proceed to consider the motions for rehearing.
Ground I of the motion filed by appellants Raymond Mitchell, et al., .assigns as fundamental error that “the minor remain-dermen” for whom Morris was appointed guardian ad litem were indispensable parties to the present suit because the attorneys’ fee will be paid out of property in which they have an interest, but that said minors were not served with citation and were not brought within the jurisdiction of the court. It is not clear to us that any'of this group of appellants except Mr. Morris has any interest in the subject matter of this ground, but Mr. Morris does have such an interest.
Ground IV of the Bank’s motion assigns as error to our judgment that none of the remaindermen and contingent beneficiaries who were not entitled.t.o receive distribution from the Trust when the action was filed were made parties to this suit and did not become parties and were not served with citation, but that said persons were necessary parties if such a judgment as that under review was to be rendered.
If these grounds are to be given any effect, they must have a basis in the record; and the only - part, of the record (except some pleadings by persons other than appellees) which tends to show that such persons as are mentioned in these two grounds actually exist is the provision of the trial court’s judgment appointing Morris guardian ad litem for minor contingent remaindermen as a class and appointing him representative of existing (and future) remaindermen not entitled to income, as a class. However, in deference to this provision we assume that such persons, namely, contingent remaindermen not now entitled to income, do exist. It is not at all clear that these persons are not included in the persons shown by the evidence at S. F. 3 and 4 to be beneficiaries of the Trust; but the purport of this testimony seems to be, and we will construe it as showing, that these persons, who are the ones (other than Mr. Morris) named as defendants in the Bank’s petition, all of whom were served with citation on the Bank’s original petition, were only the particular existing beneficiaries who were then entitled to income. We infer from the nature of Mr. Morris’ appointment, which seems to refer to persons not otherwise .named, that .the persons .for whom he was appointed guardian ad litem were not of this class. If our construction of the evidence at S. F. 3 and 4 is right, then the pleadings show that the contingent remain-dermen not entitled to income were not named as parties, either individually or as a class, in any pleading, and thus were not and did not become parties to the suit, and there was no basis for the trial court’s appointing Mr. Morris their guardian or representative. Mr. Morris was sued as guardian ad litem before his appointment in this suit and the minors were not sued independently as a class, nor individually if our conclusions above are right. This procedure did not make these minors parties to the suit or give them notice of the suit. Mr. Morris’ appointment in the suit of Mitchell v. Mitchell did not authorize him to appear in that capacity in the present suit, which is an independent proceeding, not only in form but .also in issue. Thus, in Wright v. Jones, Tex.Com.App., 52 S.W.2d 247, at page-251, it is said: “A guard*229ian ad litem or next friend is recognized only for certain specific purposes; his powers are limited to matters connected with the suit in which he is appointed (22 Gyc. 661) and do not include the right to appear either actually or constructively in answer to a cross-action * * And see Hartford Accident & Indemnity Co. v. Proctor, 206 App.Div. 510, 201 N.Y.S. 420; Shaw v. Shaw’s Adm’r, 174 Ky. 398, 192 S.W. 524; Meairs v. Kruckenberg, 171 Kan. 450, 233 P.2d 472, 31 A.L.R.2d 525; Waitt v. Badger, 318 Mass. 101, 60 N.E.2d 375, at page 380.
Ground III of the Bank’s motion for rehearing assigns as error that some of the defendants named in the Bank’s petition, although served with citation on that petition, did not answer and were never served with any other pleading, and thus, with no pleading demanding the attorney’s fee; and under Ground II the Bank argues that the only citations issued in the cause were issued on its original petition and that this petition did not put the right of the appel-lee attorneys to the fee in issue.
To the extent that these grounds and the statements and arguments thereunder (and the other grounds, and arguments thereunder, made for the first time in the motions for rehearing) raise attacks on the trial court’s judgment, we will treat them as amendments of the parties’ briefs. We are authorized to do this since the cause was tried to the court without a jury and no motion for new trial was necessary and none was filed. See T.R. 431; Texas Cities Gas Co. v. Gomez, Tex.Civ.App., 160 S.W.2d 74; Gillette Motor Transport Co. v. Wichita, F. & S. R. Co., Tex.Civ.App., 170 S.W.2d 629. Also, see: T.R. 422, 429, 437, 469, 481, 491 and 504.
To the extent that these grounds of the motions for rehearing complain of the omission of parties they are overruled. The pleadings of the appellee 'attorneys show that their claim to the attorneys’ fee is based on a contract between them and the persons who were serving as trustees of the Mitchell Trust and on their performance of this contract; and the Bank’s original petition at least implies this. The prosecution of such a claim by suit (as distinguished from the presentation of claim to a court administering a trust, discussed above) is regulated by Section 19, Article 7425b, and according to this statute the only indispensable parties defendant (by which we mean those to be named in a pleading) to the demand for the fee by appellee attorneys were the trustees of the Mitchell Trust. The beneficiaries were not necessary parties. All of the trustees mentioned were parties- to this suit, and two of them, Leon Mitchell and Vick Mitchell, were defendants and filed a pleading showing their consesnt to performance of the order of July 14th. Thus the parties required by Section 19, Article 7425b, to be named as parties in a pleading if the attorneys were to have a judgment against the-Trust collectible out of .assets of the Trust were parties to the suit.
Furthermore, to the extent that these grounds assign a lack of service of citation upon beneficiaries as error we also overrule them. The beneficiaries were not necessary parties to the suit and the failure to serve them with citation upon the appellee attorneys’ demand for their .fee or upon a pleading putting the.validity of that fee in issue, if the Bank’s original petition did not (and we think that it necessarily did), was not material. The Bank’s original petition gave notice that the merits of the fee were involved because this pleading shows, by necessary implication if not in so many words, that the appellees’ right to the fee was being disputed- by .parties omitted from the -proceeding of July 14th.
We turn now to Grounds II and V of the Bank’s motion for rehearing. On the first rehearing we stated that these grounds were not material for reasons which need not be stated. This holding is withdrawn and these grounds are adjudicated on the merits thereof.
The Bank’s Ground II- assigns error to our conclusion that the trustees were entitled to attorneys’ fees because “the judg*230ment of the trial court - held only that the judgment of July 14th, 1952, which awarded attorneys’ fees, was a valid judgment and binding on the trustees, beneficiaries and remaindermen - and that payment could be made under - such judgment of July 14, 1952, and therefore, the trial court did not directly or by implication pass on or - adjudicate that attorneys’ fees as such, independent of the judgment of July 14, 1952, were owing or payable by the Trust.” Ground V reads: “This court committed error to Appellant’s prejudice in making findings of fact on the issues pertinent to the question of whether or not an attorneys’ fee, as such, was owing by the Trust, independent of liability under the judgment of July 14, 1952, when such issues were not before the court under the pleadings, when the necessary parties for deciding such issues were not properly'before the court, and because the trial court did not make any holding directly or by implication, that attorneys’ fees as such were owed by the Trust independent of what might be owing under the terms of the judgment of July 14, 1952.”
These assignments raise questions which were not raised on the original hearing and the questions raised are based on a construction of the pleadings and of the judgment under review which is inconsistent with contentions made on the original hearing by the other parties, that is, the appellant remaindermen and by the appel-lees.
Our original opinion shows that our discussion of the merits of the attorneys’ fee was made in our discussion of Points 5, 6 and 7 filed by the remaindermen. Of these three the basic point is Number 5, which reads: “The trial court erred in awarding any attorneys’ fees for defendants out of the Mitchell Estate because the services of such attorneys were not rendered for the benefit of the estate and the position of the trustees and their attorneys was antagonistic to the estate.” Appellees joined issue with the contentions made under these points; and their Counter-Point 3 reads as follows: “Since the judgment, from which this appeal was taken, was entered after all present and future beneficiaries had been made parties or had waived citation, the order of July 14, 1952, was merged into and became a part of the judgment rendered March 27, 1953, the trial court had the power, authority and jurisdiction to hear and determine whether appellees were entitled to be paid attorneys’ fees out of the trust, and the amount of such fees.” After this cause was argued the appellant remainder-men filed a second brief and to that the appellees filed a brief in reply, and in these briefs these parties continued their arguments respecting the merits of the attorneys’ fee.
The Bank, however, took no exception to these contentions being made by remain-dermen and appellees, and unless there is no basis whatever in the trial court’s judgment for these contentions, we will allow our ruling upon these contentions to stand and will overrule the Bank’s Grounds II and V. It is our conclusion that the trial court’s judgment does afford a basis for these contentions by remaindermen and appellees. We do not agree with the Bank as to the effect which is to be given the trial court’s judgment.
The question raised by the Bank’s Grounds II and V is, what does the trial .court’s judgment mean? and this question must be determined by construing the record. The judgment under review declares that “the order - by this court - dated July 14, 1952, - is a valid, subsisting and proper order of this court and - is in all things binding on the trustees - and upon all - beneficiaries and remaindermen and that - payment of attorneys fees by the trustees - pursuant to - said order of-July 14, 1952 is - authorized and proper.” This language expresses two determinations, first, one of validity, a matter of substance, and next, one of conclusiveness, a matter, perhaps, of parties and procedural rules; and the language is general and will extend to and adjudicate all attacks, of substance or otherwise, on the order of July 14th, which were made in *231the pleadings. The question then is, what attacks were made on the order of July 14th by the pleadings? Did the parties actually make an issue on the merits of the order as well as on the conclusiveness of the order? It seems to us that the parties did make an issue on the merits of the order because the order awarded the fee and the pleadings made an issue on the fee. The attack on the fee is necessarily an attack on the order which allowed the fee.
These are the relevant parts of the pleadings. The Bank’s trial pleading was the first amended original petition, to which were subjoined pleas answering appellees’ cross action. The amended petition added to allegations of the original some statements describing parties and then copied paragraphs 1 to 6, inclusive, of the original. In these paragraphs was alleged an omission of parties from the proceeding of July 14th. The original petition also contained paragraphs numbered 7 and 8 and contained a prayer, and so does the amended petition. Various changes in paragraphs 7 and 8 and in the prayer were made in the amended petition. In paragraph 7 the Bank alleged in substance that necessary parties were omitted from the proceeding of July 14th and therefore the order of July 14th was void or voidable; that some beneficiaries were now so claiming and were claiming further that the trustees were not authorized to pay the fee; and that before the Bank paid the order (termed “judgment”) or “the attorneys fee therein decreed to be due and payable” it was necessary that the Bank “have adjudicated and determined that the payment of said judgment of July 14, 1952, or of the attorneys’ fees therein decreed to be due and payable, out of the funds of the - Trust is in all things authorized, proper and valid.” Paragraph 8 alleges that by reason of claims made in behalf of appellees “there now exists a substantial dispute as to the liability of the - Trust for interest on said attorneys’ fees from the date same were ordered payable by said judgment of July 14, 1952.” The prayer was that the Bank “have judgment - declaring - said judgment of July 14, 1952, is invalid and void,” but that the $1,500 fee actually paid under that order was reasonable and chargeable to the Trust “and in the alternative (if). said judgment - is held - valid or - an approved claim against the - Trust - now due and payable that it have judgment that the - attorneys’ fees awarded by said judgment is payable” in certain ways. The Bank also prayed for general relief.
This pleading very clearly raised the issue, whether the attorneys’ fee was nevertheless owed if necessary ' parties were omitted from the proceeding of July 14th. Did this involve the “validity” of the order? It seems to us that it necessarily did, and the existence of this question was, of course, the justification for this suit by the Bank. For it was of no consequence to the Bank as Trustee or to the beneficiaries that parties were omitted from the proceeding of July 14th if the fee was owed and was not disputed.
The pleading of appellee Biggs was adopted by other appellee attorneys and it alleges facts by reason of which the fee is claimed in behalf of said attorneys and the prayer concludes with a request for judgment that Leon Mitchell and Vick Mitchell were authorized to employ counsel and that “by reason of their employment of R. E. Biggs to represent - said Trust - the said - Trust - became liable for their indebtedness to - R. E. Biggs for a reasonable attorneys’ fee for himself - with a sufficient sum” to pay the other counsel whom Mr. Biggs had employed. It was in response to this pleading that the Bank, styling itself a cross-defendant and styling Mr. Biggs and other appellee attorneys cross-plaintiffs, filed the answer, mentioned above, subjoined to its first amended original petition. Furthermore, in paragraph 3 of their answer, the trustees Leon ■ Mitchell and Vick Mitchell alleged that the order of July 14th was final but “in the alternative (if) the court - decide - it had not been fully and finally decided, these trustees - petitioned the court to allow the attorneys - a reasonable fee for their services' ■- and show the court that a reasonable at*232torneys’ fee — would.be the sum of $47,-311.35.” This '.was the sum- awarded by thé order .of July 14th.
On the other hand, paragraph 3 of the answer filed by appellant remaindermen attacked the fee on the merits, alleging that in defending Mitchell v. Mitchell the trustees Leon Mitchell and Vick Mitchell “were acting in their own behalf and to avoid their own liability tó the Trust” and that the services of appellee attorneys were actually rendered in support of an attempt to prevent said trustees being held liable to the Trust for funds which they had' wrongfully paid out. A similar attack on the merits of the fee was made in paragraph VII of tire answer filed by Alphonsince Cormier, et al.
These pleadings, the Bank’s and those of the appellees and of the beneficiaries, considered together, put in issue the question whether the fee was owed, not merely as something apart from the validity of the order of July 14th but as affecting the validity of that order. That is, the question was raised whether the order of July 14th was good on the merits of the claim it adjudicated. The language quoted from the trial court’s judgment is not limited to any specific ground of attack and the general determination that the order of July 14th was “valid, subsisting and proper” and was binding and that the attorneys’ fee should be paid pursuant to said order will be taken by us as meaning that the order was good in substance, that is, that the fee was owed, as well as good against the attack made on it for lack of parties.
We turn now to appellees’ motion for rehearing. On the first rehearing we concluded that beneficiaries not cited were entitled to the notice of the suit now on appeal which is prescribed by Subdivision B of Section 19, Article 7425b, V.A.T.S.,. but had not received this notice and that this was fundamental error which required us to set aside the trial court’s judgment and to remand the cause. To this judgment the appellees filed a motion for rehearing .which we will not discuss in full. Our conclusion that we had authority to act on the ground of fundamental error was an extension of an opinion expressed by Justice Powell in Egan v. Lockney Farmers’ Co-op. Soc., Tex.Com.App., 284 S.W. 937, at page 938, and also see Harlington Land & Water Co. v. Houston Motor Car Co., Tex.Com.App., 209 S.W. 145, at page 146. Our theory was that the appellants’ motions for rehearing suggested the question and required an investigation which gave us such information as these motions and the parties’ briefs did not contain. We were also of the belief that we had some small discretion in applying this rule, inferring this discretion from holdings in the Egan opinion, 284 S.W. 940, and in Cammack v. Rogers, 96 Tex. 457, at page 461, 73 S.W. 795, that the Court of Civil Appeals had a discretion in determining whether an assignment of error was sufficient. However, we have decided that we made use of the statement of facts which Justice Powell’s expression of opinion did not authorize and for this reason we retract our holding of fundamental error and grant the appellees’ motion for rehearing. This conclusion requires that our original judgment of affirmance be reinstated.
Appellees, in support of the trial court’s judgment, have called our attention to the fact that the Supreme Court awarded an attorney’s fee in Mitchell v. Mitchell although all of the beneficiaries were not parties to that suit. The grounds on which the court acted are not known to us, but the court did not purport to enforce a contractual obligation as the appellees do here. We infer that the fee awarded in Mitchell v. Mitchell was granted on the principle that one having an interest in a fund is entitled to expenses incurred by him in protecting the fund.
We will add this, in order that there may be no misunderstanding about the matter, that the conclusions stated in our original opinion were based upon and thus limited to the facts related in that opinion.
The judgment rendered on the first rehearing is set aside, the judgment rendered on the original hearing is reinstated, and the judgment of the trial court is affirmed.