Court Opinion

ID: 8807498
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:51:59.617578+00
Date Added: 2024-06-11T17:04:09.413092
License: Public Domain

Mr. Presiding Justice Thompson delivered the opinion of the court. A motion has been made by the appellants to strike out certain parts of the statement of facts and argument from the brief and argument filed on behalf of appellees, for the reason that they are based upon the unsworn answer of defendants. What is said in said brief and argument is based upon the record. It is contended by appellants that the receiver was appointed without objection, and that such appointment was for the mutual benefit of all parties concerned and for that reason the receiver’s fees should be paid out of the common property—the property of the corporation. • • “The amount of the receiver’s compensation is generally held to be a part of the costs in a cause, and falls within the meaning of the term ‘costs’ which are awarded to the prevailing party.” McAnrow v. Martin, 183 Ill. 467. Where a receivership is procured under the assertion of an unjust and wrongful claim, and the receiver takes possession of the property, the court can protect the injured party by returning the property he was divested of without its being diminished to pay the receiver’s charges. Highley v. Deane, 168 Ill. 266; Leigh v. National Hollow Brake Beam Co., 224 Ill. 76. “The question of the distribution of the. costs in a chancery proceeding is largely a matter of discretion with the trial court, and a court of review will not interfere unless such discretion has been abused.” Leigh v. National Hollow Brake Beam Co., supra; Askew v. Springer, 111 Ill. 662. The evidence heard on the motion to tax the costs to complainants shows that the defendants did not consent to the appointment of a receiver, but objected to the appointing of a receiver, and when it was apparent a receiver was to be appointed by the court the defendants then took part in the selection of the party to be the receiver. This was apparently for the purpose of avoiding, as far as possible, damage that might result to them from the appointment of a receiver. The allegations in the hill if true were sufficient to procure the appointment of a receiver. The answer filed denied all the fraudulent charges in the bill and makes counter charges of a very serious nature against the complainants. Complainants took no further action towards the prosecution of the suit after the answer was filed; three weeks thereafter on motion of the' defendants the cause was referred to the master to take the proofs of the respective parties. Thereafter the complainants gave notice that they would move to amend their bill, but never took any action on that motion. If the statements of the answer are true, then the only cause for the company not having money to pay its employes was the failure of the complainants to pay interest upon a note they owed to the company, or the refusal of Jarvis R. Burrows, who was the secretary of the company, to countersign a note for a loan to the corporation for which arrangements had been made. The company had ample assets to conduct its business and pay all its financial obligations. The company had declared and paid very large dividends on its capital stock under the same management it had at the time the receiver was appointed and had large assets, and was apparently doing a prosperous business. Its resources on May 29, 1907, were $223,248.42, while its liabilities, not including its liability on its capital stock, only amounted to $66,056.87. There were but six stockholders in the corporation, five of whom were directors. The two Burrows who owned one-half of the stock were directors, while the other half interest was represented by the two Merrifields and George B. Wood. Complainants allege in the bill that they were insisting that the number of directors should be increased so that their stock might be represented by three directors, although the only stockholder who was not a director is a defendant. At the term of court at which the suit was returnable complainants moved to dismiss the bill without prejudice, and in an affidavit in support of the motion say it is for the best interests of all the parties that the suit be dismissed. No change is shown in the conditions that existed when the bill was filed. A letter attached to the affidavit of complainants in support of the motion shows that because of the receivership, business relations of the company long established were about to be lost, or in other words that the appointment of the receiver was a mistake. The evidence heard on the motion to tax the receiver’s compensation to the complainants shows that the refusal of the secretary to countersign the note, as such secretary, was one reason why money was not raised to meet the pay roll. The affidavit of one of the complainants states that the business which was about to be lost through the appointment of the receiver amounted to about $100,000 per year. The complainants voluntarily dismissed their bill without prejudice, thereby reserving the right to renew the controversy should they see fit to do so. Such a dismissal should he at the complainants’ costs. Langois v. Matthiessen, 155 Ill. 230. To tax the costs against the property of the company, it was necessary that the material allegations of the bill should be sustained by proof after the answer had been filed. The trial court in the exercise of its discretion taxed the compensation of the receiver and the attorney’s fees of the receiver’s attorney to the complainants. We see no abuse of discretion in the order, and hold that such taxation was proper, and we affirm that part of the order. It is argued that the court should have heard evidence on the value of the receiver’s services and attorney’s fees, and the evidence should have been preserved by a certificate of evidence,' or there should be a finding of facts from the evidence in the decree. The record shows that the Ottawa Banking and Trust Company acted as receiver for the company from May 29, 1907, to November 18th of the same year and was responsible for the conduct of this company’s extensive business, which had a pay roll of over $1000 per week and resources amounting to $223,248.42 when the receiver was appointed. The rule is firmly established that the facts upon which decrees in chancery are based must appear in the record, or the decree must recite the hearing of evidence and the facts found from the evidence. There is no evidence in the record tending to show the reasonable value of either the receiver’s compensation or that of its counsel. A court should not, without evidence showing what is proper compensation in a given case, determine and award the compensation to be paid to a receiver; if it fails to follow such rule, a reviewing court may, upon appeal, set such award aside. Heffron v. Rice, 40 Ill. App. 244. An allowance of a solicitor’s fee cannot be sustained where no evidence showing what services the solicitor performed, or the value thereof, is preserved in the record. Metheny v. Bohn, 164 Ill. 495; McMullen v. Reynolds, 209 Ill. 504; Jevne v. Osgood, 57 Ill. 340; Hunter v. Hunter, 121 Ill. App. 380. While courts have a general knowledge of the value of such services, yet if they may fix such compensation without any evidence as to their reasonable value, such a practice might lead to grave irregularities. Because of the failure to preserve any evidence of the value of the services performed, either by a recital in the decree or by a' certificate of evidence, that part of the decree fixing the amount of the receiver’s compensation and its attorney’s fees must be reversed and the cause remanded for a retrial on those questions. It does not appear that the defendants took any part in procuring the assessment of such compensation, and the receiver having been appointed on the motion of complainants, it was their duty to see that the amount of its compensation was properly assessed. One half of the costs of this appeal are taxed to the complainants and one-half to the company. Affirmed m part, reversed in part and remanded.