Court Opinion

ID: 7969808
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:54:05.963751+00
Date Added: 2024-06-11T16:34:44.634983
License: Public Domain

COLLINS, J.
Prior to the year 1888, the Minneapolis & St. Louis Railway Company executed and issued its bonds to the amount of $1,100,000, secured by its trust deed, to the defendant the Farmers’ Loan & Trust Company. The bonds were negotiable, passing from hand to hand, and some of them are now owned by the defendants in this action who have taken this appeal. In 1888 certain litigation was instituted by Henry Seibert against the railroad company, in which it was sought to force a foreclosure of the trust deed or mortgage above *456mentioned. The Farmers’ Loan & Trust Company was made a defendant in that action, and appeared through its attorneys, Messrs. Turner, McClure & Eolston, of New York City, and the plaintiff H. C. Truesdale. The court refused to order a foreclosure of the mortgage held by the trust company, but did decree a foreclosure of certain other subsequent mortgages, under which the property was sold. That action was before this court on several occasions. Seibert v. Minneapolis & St. L. R. Co., 52 Minn. 246, 53 N. W. 1151; 58 Minn. 39, 59 N. W. 822 ; 58 Minn. 53, 59 N. W. 879; 58 Minn. 58, 57 N. W. 1068; 58 Minn. 65, 59 N. W. 826 ; 58 Minn. 69, 59 N. W. 829; 58 Minn. 72, 59 N. W. 828.
In the Seibert suit the court found the amount to which the trust company and its attorneys were entitled, as compensation for their services in that litigation, to be $20,000, malting an order for payment, of the import hereinafter stated, and this amount was paid. The bonds held by the appellants ran for 40 years. At the time the interest coupons payable in July, 1893, became due, the plaintiff in this action, Mr. Truesdale, instituted an action at law against the holders of the bonds personally, the parties to that action being the same as the original parties to this action, excepting that the Minneapolis Trust Company and the Farmers’ Loan & Trust Company were not made defendants in the first action. The defendants prevailed in the action, and on an appeal to this court an order denying a new trial was affirmed, and judgment was duly entered in favor of the defendants. Truesdale v. Philadelphia T., S. D., & I. Co., 63 Minn. 49, 65 N. W. 133. Prior to the entry of judgment, the garnishee asked to be allowed to deposit the money in his hands into court; and an order was made depositing the money with the Minneapolis Trust Company, one of the defendants of this action, in whose custody it still is, and against the paying out of which a temporary injunction has been issued herein.
Immediately after the entry of judgment in the Truesdale case, and about December, 1895, the plaintiff brought this suit upon the same cause of action against the same defendants, with the exceptions we have mentioned, in equity, however, and* asked that he be given judgment for the amount due him on account of his services and expenses, and that said judgment be declared a lien upon the funds in the possession of the Minneapolis Trust Company, and be paid therefrom, and if sufficient funds be not found in the hands of the Minneapolis Trust Company, that the Farmers’ Loan & Trust Company be directed to *457proceed forthwith to collect from the bondholders the sum remaining due plaintiff. The defendants who take this appeal appeared and answered, as did also the Minneapolis Trust Company and the Farmers’ Loan & Trust Company. The trust companies, however, took no further part in the defense than to see that no liability attached to them. On December 14, 1895, after the commencement of this action, the plaintiff, pursuant to the insolvent laws of the state of Minnesota, made a general assignment for the benefit of his creditors, to Cavour S. Langdon. When the case came on for trial, this fact being suggested to the court, an order was made allowing the as-. signee and also Messrs. Turner, McClure & Rolston, Mr. Trues-dale’s associate counsel in the Seibert litigation, to file intervening complaints, the order further providing that the action should proceed in the name of the plaintiff, any recovery which might be had to be paid as the court might afterwards provide.
The decision in the first action brought by this plaintiff was placed upon the ground that, as the trustee named in the trust deed had employed plaintiff to render the services without stipulating it should not incur any personal liability, and without professing or undertaking to create a lien on the trust estate for the value of such services, and, further, that, as the trustee was not insolvent, plaintiff could not recover of the beneficiaries of the trust estate, but must look to the trustee for compensation. In this case, brought to enforce an. equitable lien upon the trust funds, the court found that during the progress of the Seibert case the court made an order directing that the receiver pay to plaintiff, on account of his services, the sum of $5,000, which was paid; and that, at the time of the findings of fact and conclusions of law in that case, there was allowed to the attorneys of the trustee the further sum of $15,000, out of the funds in the hands of the receiver. And thereafter' the court made its order directing the payment of that sum to plaintiff, to which order we shall hereinafter refer. The payment was duly made out of the general funds in the receiver’s hands, and not out of moneys to which the bondholders were or could be entitled. It also found that plaintiff’s services in protecting the interests of these bondholders in the Seibert litigation were of the value of $50,000, and that he had necessarily expended in and about the matter the sum of $3,300. Judgment was ordered for the difference between what had-been paid and the value of the services, with the sum so expended, and *458this was made a lien on the fund in the hands of defendant Minneapolis Trust Company. This appeal is from an order denying defendant bondholders’ motion for a new trial.
A consideration of the assignments of error which assail the first conclusion of law and the findings upon which it must have been based will dispose of plaintiff’s case; a reversal of the order appealed from, with directions to enter judgment in defendants' favor, being inevitable. The conclusion was that plaintiff: was not barred from recovering in this action by reason of the allowance made to and accepted by him in the Seibert foreclosure proceedings.
On the trial,'defendants introduced in evidence a petition filed in the Seibert foreclosure proceedings by defendant the Farmers’ Loan & Trust Company, the trustee named in the trust-deed made to secure defendant bondholders. This petition was made by plaintiff: Truesdale and the firm of Turner, McClure & Eolston, intervenors herein, as attorneys for and in behalf of said trustee. It set forth in detail the interest of the trustee in the Seibert litigation; the employment of (hese attorneysi to protect said interest; the object and purpose of the defense made as against plaintiff: Seibert, and also as against an intervening complaint filed in that action by one Griggs; that pending the litigation these attorneys prepared and filed a complaint in an action in which the petitioner, as trustee, was named as plaintiff:, for the purpose of foreclosing the trust deed and also papers moving for the appointment of a receiver in said action. To state it concisely, this petition exhibited in a very circumstantial manner this plaintiff’s claim for compensation for himself and Turner, McClure & Eolston in all matters connected with the Seibert litigation; and it included compensation for the services, and for the money expended, upon which plaintiff relied in the present action. It stated that, by reason of the facts, the petitioner had become liable to its attorneys in the sum of $50,000 for sendees, and was also liable for the money necessarily expended by them; that such services were of the value of $50,000, no part of which had been paid except $5,000, paid out of the trust funds by order of the court, and of which mention has already been made. By reason of the statements in the petition, the petitioner prayed for a further allowance of $45,000, and for an order directing the receiver to pay that sum to it, as and for its compensation, and for the liability and expenses so incurred. To this petition was attached the affidavit of this plaintiff *459of the same general import, alleging necessary and proper expenditures in (he sum of $1,500. This was supplemented by the affidavit of Mr. Turner, of the firm of Turner, McClure & Rolston, as to the extent and value of the services rendered, including an imperfect memorandum showing items of services rendered in New York from July 10, 1888, to April 12, 1893. Mr. Turner also sought to impress upon the court the fact that, for various reasons, it was a case in which liberal compensation should be awarded counsel, as well as fees to the trustee.
The court acted upon this petition and the attached affidavits, so much of.its conclusion of law in the foreclosure proceedings as relates to the allowance of attorney’s fees, reading as follows:
“Thirteenth. Upon the showing made to the court in respect to the reasonable charges for attorneys and counsel employed in this action by the several trustees of the different mortgages described in the complaint, there is allowed * * * to the attorneys and counsel of the Farmers’ Loan & Trust Company of New York, defendant, trustee of one of the mortgages, in addition to the sum of $5,000, heretofore allowed and paid to them, the further sum of $15,000.”
Later, counsel moved for an order directing the receiver to make this payment, expressly reserving all rights which they might have against other persons for further compensation. On the hearing of this motion, an order of the court was made, directing such receiver to pay over to the trustee or to plaintiff, as its attorney, the sum of $15,000, out of the earnings and income of the property in his hands. This order concluded as follows:
“And it is further ordered and adjudged that such payment to said trust company, or to said Hiram C. Truesdale, its attorney, shall not be construed, and shall not be a waiver of any rights that it or its attorneys may have against the persons or parties whom they represent and have represented in this matter to such further compensation for their services and expenses, respectively, over and above the said amounts so allowed by this court; and that this order is made and any money paid hereunder shall be without prejudice to any such rights.”
From an examination of the petition and the affidavits, it is obvious that the whole matter was before the court when it made its conclusion of law in the Seibert case, awarding to plaintiff the additional sum of $15,000, all that it considered the petitioner and its counsel were entitled to on the showing made. The court passed upon the claim for an allowance of $50,000 for the identical services on which this *460action was founded. It determined that the trustee was entitled to $20,000 in all, and no more, out of the trust estate, and as compensation for its services. The petitioner, by its counsel, accepted this allowance as in full for his claim against the estate when they applied for and obtained the order directing payment by the receiver. In so far as the trust estate was concerned, it is apparent that this was a final adjudication of the claim for attorney’s fees, and that the proceeding as conducted and concluded was a bar to a distinct and independent action to recover additional compensation for the same services. The application and petition for fees and allowances in the Seibert case were analogous to a motion in the ordinary civil action.
In the case of Heidel v. Benedict, 61 Minn. 170, 63 N. W. 490, it was stated that the determination of a motion is not res judicata, so as to prevent the parties from drawing the same matters in question again in an action. But on petition for reargument it was said that, possibly, this statement was too broad, and not universally true under our practice. The correct rule is that in the case of an order affecting a substantial right, and appealable, when a full hearing has been had on a controverted question of fact, the decision of a point actually litigated upon the motion is an adjudication binding upon the parties, and conclusive to that extent. Dwight v. St. John, 25 N. Y. 203; Riggs v. Pursell, 74 N. Y. 370. This rule is directly applicable to the facts in the case at bar, and precludes the maintenance of an action designed to reach any part of the trust funds.
The question therefore is, was this such an action? Of this there can be no doubt, for replying to the contention of defendants’ counsel that the funds upon which plaintiff is trying to impress a lien for services are not part of the trust estate, but have been set apart, and are now the individual property of the owners and holders of the interest coupons for the payment of which the court has directed that they be appropriated, counsel for plaintiff insist that it is nothing more than a proceeding or an independent action to enforce equitable rights in a fund still in the possession or under the control of the court, as a part of the trust estate. The very foundation of their case, whether it is a proceeding in the Seibert case or an original action, independent of that, is based upon the contention that the funds upon which a lien is sought are quite as much under the dominion of the court as they were prior to the making of the order setting them apart for a specified purpose. So *461that the case is precisely in the situation it would have been had it been instituted before that order was made.
But it is urged that the order of the court upon which plaintiff received the allowance of $15,000 expressly provided that payment should not be construed, and should not be a waiver of any rights that the trustee or its attorneys might have against the parties or persons whom they represented in the Seibert action, and hence this action may be maintained. There would be much force in this claim if this action was against the parties or persons so represented. But, as we have said, it is not. It is a proceeding to reach the funds in the hands of the court as part of the trust estate, and does not come within the exception provided for in the order. It is not an action to recover the balance due for services from the parties or persons the attorneys represented in the Seibert litigation.
To conclude: If the funds are still a part of the trust estate, plaintiff is. barred by the final order of allowance; and, if the funds in question do not belong to that estate, the plaintiff has no lien upon them which he can enforce in a court of equity.
The order is reversed, and, upon remittitur, judgment will be entered in the court below in favor of defendants.