Court Opinion

ID: 5168367
Source: CourtListenerOpinion
Date Created: 2022-01-02 04:50:36.128076+00
Date Added: 2024-06-11T08:25:57.982289
License: Public Domain

QUAKLES, J.
The Bank of Genesee, a corporation, filed its petition in insolvency, and was, on the twenty-seventh day of November, 1895, by adjudication in the court below, declared to be insolvent. At a meeting of the creditors, John H. Gaffney, the appellant, was elected assignee of said insolvent; and he was thereafter, by order of the lower court made April 23, 1896, duly confirmed as such assignee, and required to execute an undertaking as such assignee in the sum of $5,000, which undertaking was thereafter given by said as-signee. It appears from the record that said assignee employed the respondent S. S. Denning to act as his attorney. Said respondent performed services as attorney for the said assignee in various suits. Later it appears that the respondent Warren Truitt became associated with the respondent Den-ning as attorney for said assignee. It appears that the district court and the judge thereof, at chambers, between December 16, 1896, and May 17, 1897, made numerous orders allowing attorney’s fees to the respondents for alleged services rendered to the assignee in the administration of the estate of the insolvent, the amounts varying from twenty-five dollars to $1,500, and aggregating $2,292.50, for services claimed to have been rendered within a period of six months. On June 14, 1897, the appellant, as said assignee, served on respondents, and filed in the district court in this proceeding, a notice of *484change of attorneys, dismissing the respondents, and substituting for them Messrs. J. T. and R. T. Morgan. The appellant moved the court to set aside the various orders allowing the said attorney’s fees against the appellant, as said assignee, on the following grounds, to wit: 1. The application for each and all of said orders were made without notice to appellant; 2. The said orders were made without the knowledge or consent of the appellant; 3. The fees charged and allowed were 'exorbitant and excessive; 4. That one of the fees allowed, in the sum of $1,500, was for services claimed to have been rendered the respondents in a certain case in the United States, circuit court, district of Idaho, northern division, was not within the control of the court below, the jurisdiction to fix said fee being vested solely in the said United States circuit court. The court heard the said motion, and made its order denying the said motion, from which this appeal is brought to this court.
It is difficult to imagine upon what theory the respondents and the honorable district judge assumed the authority to dissipate the assets of the insolvent estate by orders made by the district judge, either in court or at chambers, without notice to the assignee, and without any opportunity to the creditors to resist or protest against such unwarranted proceedings. The motion made by appellant to set aside said orders should have been sustained, on the ground that said orders were made without notice to the assignee and creditors who had appeared. The assignee and creditors of an insolvent estate which is being settled by a judicial proceeding under our statutes have some rights relative to the distribution of the assets of such insolvent estate, notwithstanding the views of the learned district judge and the respondents to the contrary. Assignees and receivers are entitled to necessary costs, including reasonable and necessary attorney’s fees, incurred in the protection of the estate which has been intrusted to them. The claim for attorney’s fees must be made through the assignee, the attorney looking to the assignee for his compensation, and is properly presented in the accounts of the assignee, and, like other items in his account, may be contested by creditors. Where it is necessary for an assignee of an insolvent estate to employ *485an attorney, be should do so with the understanding on the part of both that the fee must be for necessary services, reasonable in amount, and subject to the control of the court when settling the accounts of the assignee. It is the duty of the court to allow an assignee costs incurred necessarily, in the way of attorney’s fees, in protecting the estate; but the court should first ascertain that the attorney’s fees are necessary and reasonable. "While this question is before us, we deem it proper to suggest that where an assignee of an insolvent estate, or other fiduciary, employs an attorney in a number of cases, the fee should not be as large in any one ease as it should be if there was only one case.
It appears by the application for writ of review, made to this court, in this insolvency proceeding, that the district judge, at chambers, in addition to the orders allowing fees heretofore mentioned, after appeal was perfected, allowed additional fees to the amount of $750, making the total allowance of attorney’s fees to respondents, for services rendered within a period of six months, reach a grand total of $3,142.50. The last order named was, at this term of this court, annulled, for want of jurisdiction in the district judge to make such order at chambers. (See Gaffney v. Piper, ante, p. 490, 51 Pac. 99.) It is not only proper, but the duty, of the assignee in presenting his accounts, to embrace therein such amount as he and the attorney may agree upon for services rendered, as a preferred claim against the estate, such item subject to contest by any creditor. But, if the assignee and his attorney cannot agree on the amount of fee due the attorney, the assignee should fix the amount; but in either and all events the court should control the matter, and when the amount is to be changed, or a motion heard for that purpose, the court should fix a time and place to hear such motion, due notice of which should be given to the creditors who have appeared, and the matter determined in open court, where all parties interested are given an opportunity to be heard. The assignee is selected by the creditors, and it is his duty to protect their interests by protecting the insolvent estate against loss as far as he can reasonably do so.
The fourth ground upon which appellant’s motion is based is not tenable, as the accounts of the assignee, and every item *486thereof, is under the control of, and to be settled by, our state district court. The order appealed from is reversed, and. the proceeding is remanded, with directions to the lower court to sustain the motion of appellant, and to set aside each and all of the orders named in the motion of appellant, and for further proceedings consistent with the views herein expressed. The cost of this appeal is awarded to appellant.
(December 9, 1897.)
Sullivan, C. J., and Huston, J., concur.