Court Opinion

ID: 6516612
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:27:15.233568+00
Date Added: 2024-06-11T15:55:02.627655
License: Public Domain

HEAD, J.
In the case of Horse Creek Coal & Coke Company v. Lady Ensley Coal, Iron & Railroad Company, the Central Trust Company of New York, ct al., pending in the chancery court of Walker county, involving the administration and disposion of the property of the said Lady Ensley Company, the appellant, W. K. Saulsbury, was, on application of the complainant for the appointment of a receiver of such property, duly appointed as such on the 19th day of April, 1893, and he qualified and entered upon the duties of his office. Pending an appeal from the register’s order appointing him, towit, on the 4th day of May, 1893, he filed in the cause his resignation of the office. On May 8, 1893, the chancellor, bv a decretal order duly enrolled, accepted the resignation, to take effect upon the qualification of his successors therein appointed, and ordered him to turn over to such successors, A. G. Smith and George L. Morris, when qualified, all the property of the said Lady Ensley Coal, Iron & Railroad Company, and to *593file Ms accounts for a final settlement. TMs order was obeyed. Smith and Morris qualified, and received from Saulsbury immediate possession of all the property. Saulsbury filed his accounts for a final settlement of his receivership, and thereupon the chancellor rendered a decretal order directing the register to audit the same and report, and, further, to ascertain and report a reasonable allowance to be made to the outgoing receiver for his services, and also what sums should be allowed for reasonable solicitor’s fees incurred by him in the administration of the trust. This order was based upon a written application by Saulsbury, filed in the cause, showing compliance with the previous order in reference to delivery of the property to his successors, and the filing of the accounts for settlement, and alleging that, during his receivership, he operated the mines and furnaces, and carried on all the business of said company, and that in conducting the same, he required, and secured by employment, the assistance and advice of competent solicitors, and that neither the value of his own services nor of his solicitors had been paid. The petition prayed that the accounts of his receivership be audited and settled, and that reasonable compensation for his own and his solicitors’ services be ascertained and allowed. His account and vouchers, which were subsequently reported and adjudged correct, showed that, during his term of official service, he received, in cash, at the four several offices of the company, viz., Birmingham, Horse Creek, Russellville, and Sheffield, the aggregate sum of $24,452.22, and disbursed $22,704.90, leaving a cash balance in his hands of $1,747.32. These disbursements included nothing for his own or his solicitors’ services; so that, divested of the possession and control of the property of the company by its delivery to his successors, under the order of the chancellor, for the continued administration of the trust,there remained nothing capable of being applied by him to the payment of his own and solicitors’ services except the said balance in his hands of $1,747.32.'The register reported an allowance of $2,500 for the services of the receiver; $200 for his solicitor, E. H. Cabaniss, for a special service, and $1,050 for his general counsel, John J. Moore. There is no controversy as to either of these allowances, except the latter; and in respect of *594that the chancellor ordered that, upon. J. J. Moore filing with the register an itemized statement, under oath, of the services he rendered as solicitor in the cause for the former receiver, showing the value of each and all of such services, the register should hold a reference, and ascertain and report what services were so rendered by said Moore, and the value of the same. The itemized account was filed, and the register reported allowances for Moore’s services aggregating $2,275.
It appears, from.the evidence, that the receiver voluntarily resigned, after serving 15 days, for the reason that he became tired of the trouble and annoyance of the office. We will not inquire whether a receiver, after accepting the appointment, may, as matter of right, renounce the office and its duties; for, however that may be, the court appointing him may sanction it, as was done in the present case. It does not appear that appellant was guilty of any malfeasance or improper discharge of duty which superinduced his resignation and its acceptance by the court. Under these circumstances, it is equitable that lie be protected, within the limit of just principles, against personal loss in respect to the expenses of his administration. In awarding him this protection, care should be taken that no burden be imposed upon the trust estate which ivas rendered inequitable by his-voluntary and premature termination of his office. The estate will not, by his act, be subjected, in his favor, to a double burden. As he was entitled to reasonable legal advice and assistance, so were his successors ; and lie can not ask allowance for the value of legal service which must needs have been secured and paid for by his successors. .When witnesses, therefore, fix the value of a general retainer for the whole administration, which was, as to the appellant, cut short, almost in its inception, by his voluntary resignation, they 'reckon upon an improper basis. It is not, in such case, a question of the value of such retainer, as between attorney and client. If the contract between them entitles the attorney to full compensation for the whole trust, the client assumes the personal burden and duty of its discharge, without reimbursement, when, by his own act, he deprives the estate of the benefit of the service. We can not, therefore, act upon the estimates of those witnesses who ignore these qualifying cond-i--*595tions. The estimate, under the circumstances of the case, should be confined, in considering the value of the general retainer, to the reasonable value of the general legal advice and assistance actually rendered the appellant during his administration: and, indeed, if his resignation rendered necessary a duplication, by the successors, of any such service actually rendered by appellant’s counsel, and which would not have been incurred if appellant had continued in office, the value of the same should be excluded from appellant’s allowance. Again, as we attempted to make clear in Henry v. Henry, 103 Ala. 582, care must be taken to distinguish, between the ordinary duties, which the receiver is presumed to know how to perform as well as one skilled in the law, and those duties which require special legal skill.
The appellant was entitled to legal advice as to the' general nature and extent of the duties enjoined upon him by the order of his appointment, but it was not the province of an attorney to hunt up and take into possession the property which belonged to the estate. That was the receiver’s duty, and if he required aid in finding the property, he should have looked to the complainant, who was moving in the matter, and who procured his appointment, to furnish it. A lawyer could not have done it better. Any complication or obstacle arising, requiring legal advice or proceedings, in the reduction of the property to possession, would have justified the expense of an attorney. Nonesuch arose in this matter. At Sheffield, the officer in charge at first demurred, but readily yielded upon production of the receiver’s commission. The evidence shows that the property to be administered consisted of iron furnaces in Sheffield, coal and iron mines, in operation, in Walker and .Franklin counties, sundry stores, and many other articles of equipment of the various enterprises — all worth, perhaps, $1,500,000. General legal advice covering these vast duties was necessary, and the proof shows it was furnished by Mr. Moore. His competency and the efficiency of his advice are not assailed. Eleven witnesses for appellant fix the value of a general retainer for the entire receivership at from $1,250 to $2,000, averaging about $1,700. Three witnesses contra, — two say $150, and the other $150 or $200, for Moore’s general advice: *596The register allowed $1,000, which we think, was excessive .
If it was customary and necessary for furnace and coal and coke operators to employ agents in writing, of which we see no proof, the preparation of a form of appointment would require some legal skill, for which a reasonable fee would be allowed. So, also, as to drafting contracts and bills of sale of iron, upon proof of facts showing that it was necessary. It appears that the two contracts were drawn in order to secure bank accommodations to meet pressing need of funds to operate the furnaces, by pledges or sales of iron. In such cases, it was necessary to have the services of an attorney.
In reference to the defendant’s appeal from the order appointing appellant as receiver, it was a matter which did not legally concern him. The complainant procured the appointment, upon the apparent equity of its bill and necessity for a receivership. Whether the appointment of a receiver was necessary and proper was for the complainant to show. The duty of sustaining the appointment devolved upon it. The receiver^ need have paid.no attention to the matter. If he chose to defend the appointment, it was his duty to pay for it. Compensation for that service will not be allowed.
Giving bond was a part of the receiver’s qualification. He was not receiver until, his bond was given and approved. It was his personal duty to prepare and execute it, and if he needed an attorney to do it for him, it must have been at his expense. The clerical duties of preparing and rendering inventories were merely ordinary duties of the receiver. It was proper for his general counsel to advise him of his duties to render inventories, and see that they were in proper shape, but such legal service is comprehended in the general retainer.
The necessity for application to the court for orders to the succeeding receivers, Smith and Morris, to pay laborers employed and worked by appellant, was brought about by the appellant’s voluntary resignation. The order of his appointment authorized him to “employ all agents, clerks, attorneys, and servants necessary and proper to aid him in the discharge of his duties as such receiver.’’ This carried with it authority to pay the reasonable cost of such assistance, without further ap*597plication to the court. He incurred the expense, but, before reaching the condition enabling him to exercise the right of paying it, he resigned, and brought on the necessity of petitions to the court for special orders upon his successors. The expense of those petitions was his own.
Appellant, as receiver, made a contract with Matthew, Addy & Co., Cincinnati, for the sale and shipment of irou to certain parties m that city; the firm agreeing to honor his drafts for 80 per cent, of price with bills of lading attached. He shipped about $10,000 worth of iron, and drew on the firm accordingly. When the drafts were presented, the firm had learned that appellant’s appointment as receiver was the subject of a pending contest in court, and, fearing liability to pay the money to some one else, declined to pay the drafts, and one of them went to protest. It is admitted they were solvent and responsible, and appellant knew the cause of their refusal to pay. He was, at the time, very much engaged with the duties of his office, and needed the money to carry on the enterprises. He, therefore, procured his attorney, Mr. Moore, to go to Cincinnati to attend to the matter, with instructions to take such steps as were necessary to protect him, and, if the money could not be collected, to stop delivery of the iron to the consignees. Moore proceeded to Cincinnati, and, after considerable negotiation, procured a bank there to indemnify the firm a.gainst loss, and the consent of the latter to pay the drafts, which was done. Moore did not, himself, receive the money. We think the nature of the transaction justified the employment of an attorney to attend to it. It was a matter of importance, and might reasonably have required legal skill to determine the proper course to be pursued. If the money had been tied up and lost, through a failure to employ counsel, it is probable the receiver would have been responsible for it. As to the value of the service, 15 practicing lawyers testified. Ten placed the amount at not-less than $800 ; one, $500 to $800; another, $600 to.$800; two placed it at $100; one, at $150; and another, at $400. The register allowed $400.
It is customary and proper to allow a fiduciary the benefit of legal counsel to prepare his accounts for, and to represent him on, settlement of the trust. The set*598tlement involved nearly $25,000. There were about 200 disbursements to be sustained. There does not appear to have been any litigation over his accounts. The witnesses vary largely in their estimates of the value of the attorney’s services in this behalf. Ten, for the appellant, range from $350 to $750. Contra, one says $300; one, $200; one, $150; and another $100. The register allowed $200, and the exception to his ruling should have been overruled.
The petition to the chancellor for a decree of reference to ascertain amount to be allowed for receiver’s compensation and solicitor’s fees and an order on the successors for their payment was rendered necessary by the appellant’s resignation. Otherwise, the questions would have come up on the final settlement of his accounts, after full administration of the trust. No fee should be allowed for it. There was some contest of the receiver’s claim for his own compensation, but to what extent we are not informed. Mr. Moore represented him in that matter. There was much contest of Mr. Moore’s claim, and considerable time and labor expended on it. The amount claimed was over $5,000. The register allowed $2,275,'which the chancellor reduced to $300. We have fixed his other fees at $1,400. It thus appears how greatly excessive his claim was, so far as the estate was chargeable therewith. The burden of the litigation was evidently caused by the excess, and the estate should not suffer on account of it. The claim for cash expended is too indefinite to enable us to determine whether the estate should bear it or not. Ordinarily, such expenditures are considered in the allowance of attorney’s fees, and not as a separate charge ; and it should appear that they were incident to the performance of necessary legal services. We adjudge to the appellant the following allowances for fees of his solicitor, J. J. Moore : General retainer, $750; preparing contracts for sale of iron, $50 ; adjusting claim against Matthew, Addy & Co. $400; representing receiver on final settlement of his accounts, $200; total, $1,400.
We have seen that, before realizing money to pay these claims, the receiver resigned, which act the court ratified by accepting the .resignation, and then ordered all property to be turned over to the successors, at the same time appointed. It was, therefore, impossible for *599the appellant to pay the claims. The receivership continued.' The property and affairs of the company were kept in the hands of, and managed and controlled by, the court. As we intimated, in Henry v. Henry, 103 Ala. 582 supra, might be done, the appellant filed his petition, in substance and effect, to have the claims paid by the succeeding receivers, and that funds be raised from the assets for that purpose. It is equitable, under the circumstances, that this be clone. The fund will be under the control of the court, and the amount allowed may be paid to appellant or directly to the solicitor, as the chancellor may deem the better course. The chancellor will also have due regard to the interests of the estate in the' manner and means of raising the fund. The decree of the chancellor will be reversed, and the cause remanded, to be proceeded in in conformity to this opinion.
Reversed and remanded.