Court Opinion

ID: 7959238
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:29:22.347481+00
Date Added: 2024-06-11T16:34:22.696566
License: Public Domain

W. R. Peterson, J.
(dissenting). "Millions for defense, but not one cent for tribute” is easily said when the defense can be financed with funds legally owing for tribute (or restitution). I would affirm the trial judge, his ruling on the claim for attorney fees being mandated by his findings in the case in chief which resulted in dissolution of the defendant corporation. Those findings are substantiated by the evidence and have withstood the efforts of counsel to overturn the judgment on appeal.
*438Now appellant attorneys contend that their unsuccessful efforts to overturn the judgment should be financed from the corporate assets intended for the benefit of the prevailing plaintiffs and legitimate creditors. Appellants represented both the corporation and defendants Young who, as officers of the corporation, were using the corporation as an instrument of fraud. Their fees and expenses for the trial were paid. The bill in question, $44,001.82, is solely for appellate proceedings. They told the trial judge:
"We have always taken the position that our fees were payable by the church * * * we are not looking to Dr. and Mrs. Young individually.”
Of course! That is the ultimate service to the losing client — make the winning victim pay. I have not heard such an outrageous claim since an enterprising barrister moved that the impounded proceeds of a robbery be applied to his fees for defending the convicted robber.
It is a non sequitur to say that the Youngs were acting as corporate officers and, given the findings of the trial judge, it is clear that there can be no significance attached to his description of the Youngs as "defendant officers of the corporation” apart from his finding that they were using the corporation to perpetrate a fraud. If the corporation had no raison d’etre except as a tool of the Youngs’ fraud, it is a distinction without a difference to say that appellant counsel were representing the corporation and not the Youngs.
I do not quarrel with the proposition that attorney fees and expenses incurred in a good faith effort to oppose dissolution of a corporation and appointment of a receiver may become a valid claim against the receiver. The good faith requirement, however, is that of the corporate officers and not of counsel.
*439In Watson v Johnson, 174 Wash 12; 24 P2d 592; 89 ALR 1527 (1933), the court noted that the underlying principle for allowance of such fees from the assets of the receivership is that such fees are incurred in a good faith effort on reasonable grounds to preserve the trust which the officers represent. Magnusson v American Allied Ins Co, 282 Minn 287; 164 NW2d 867 (1969), and McConnell v All-Coverage Ins Exchange Automobile & Fire, 229 Cal App 2d 735; 40 Cal Rptr 587 (1964), cited by my brethren, are such cases. But where the efforts of the officers are not devoted to that trust, their fees are not allowable. Commonwealth Finance Corp v Missouri Motor Bus Co, 251 SW 756 (Mo App, 1923); Esarey v Pierson, 84 Ind App 109; 141 NE 87 (1923); People v Commercial Alliance Life Ins Co, 148 NY 563; 42 NE 1044 (1896), and Witherspoon v Hornbein, 70 Colo 1, 4; 196 P 865 (1921), where the court said:
"Certainly wrongdoers in a suit in equity cannot ask in good conscience to be saved harmless from attorney’s fees incurred in defense of their wrongful, unlawful conduct. It seems clear that the directors of the corporation who are responsible for the conditions which made the stockholders suit necessary, should bear the expenses of the attorneys employed by them to defend their own misdeeds in office, instead of the corporation.”
My brethren cite In re Dissolution of Detroit Metropolitan Corp, 289 Mich 358; 286 NW 646 (1939), but the attorney fee discussed therein was not opposed and there was no wrongdoing by corporate officers. A more appropriate case is In re Hutto Engineering Co, Inc, 261 Mich 433; 246 NW 172 (1933), where an attorney representing stockholders in an unsuccessful opposition to a petition to dissolve a corporation was denied the right to recover his fees from the receiver, the court saying that his services had "resulted in no benefit or *440advantage to the receiver or to the corporation, no saving of waste, no recovery of funds * * *.”1
The retention of counsel by the Youngs to defend the action was not in preservation of the trust which they represented as corporate officers but to preserve the fruits of their wrongdoing. The services of counsel resulted in no benefit or advantage to the receiver or to the corporation’s proper ends. Appellant counsel have no just claim against the assets in the hands of the receiver and should be required to look only to the Youngs personally for their fees.

 The Court cited Sant v Perronville Shingle Co, 179 Mich 42; 146 NW 212 (1914), a case which is the converse of the instant case, allowing the prevailing minority stockholders’ attorney the right to recover his fees from the receiver appointed on dissolution of the corporation because of the wrongdoing of the corporation’s officers.