Rude v. Buchhalter, 736

• Decision Date: 23 May 1932
• Docket Number: No. 736,736
• Citation: 286 U.S. 451,52 S.Ct. 605,76 L.Ed. 1221
• Parties: RUDE v. BUCHHALTER
• Court: U.S. Supreme Court

286 U.S. 451

52 S.Ct. 605

76 L.Ed. 1221

RUDE

v BUCHHALTER.

No. 736.

Argued April 28, 1932.

Decided May 23, 1932.

Mr. Ernest Morris, of Denver, Colo., for petitioner.

[Argument of Counsel from pages 452-453 intentionally omitted] Mr. Henry E. Lutz, of Denver, Colo., for respondent.

[Argument of Counsel from page 454 intentionally omitted] Mr. Justice BUTLER delivered the opinion of the Court.

This suit was brought in the federal court for Colorado by petitioner against respondent, the First National Bank of Denver, and the members of a law firm to obtain judgment against respondent on an oral promise to pay a large sum, and to establish and foreclose a lien therefor upon certain bonds and cash held by the bank in escrow. The principal controversy was between petitioner and respondent. The bank claimed a lien on the fund to secure payment of a small sum owing to it by respondent. The lawyers asserted a claim under an attachment to enforce payment of an amount to be fixed as their compensation for services in a proceeding in the state court. After trial, at which much evidence was heard, the court dismissed the complaint on the merits. Respondent appealed, and petitioner took a cross-appeal. On respondent's appeal, the Circuit Court of Appeals remanded, with instructions for further proceedings in the District Court, and on petitioner's appeal affirmed. 54 F. (2d) 834.

This writ brings here for review the part of the decree directing the District Court to deduct from petitioner's share of the fund in escrow the expenses, including reasonable attorneys' fees to be fixed by the District Court, to which respondent and the bank have been put in this litigation.

The evidence and findings disclose facts, occurring before those alleged in petitioner's complaint, that shed light upon the question presented. In June, 1929, at a state court receiver's sale, he and one Bronstine each bought an undivided half of the property of the Colorado Pulp & Paper Company. The purchase price was paid in cash and in bonds of that company. Under an agreement between petitioner and respondent, the former furnished $61,000 and the latter $53,922, making the total required to pay for the half interest bought by petitioner. It was transferred to petitioner, and later a quarter interest was conveyed by him to respondent. Possession of the property was given to Bronstine, who carried on the business for account of all concerned. Petitioner and respondent wanted to sell their interest, and, in order to force Bronstine to buy them out, they pursued a course of hostile and threatening criticism of his management. And when a partition suit by Bronstine seemed imminent, they, conspiring to embarrass and delay him should he seek relief by that means, falsely made it to appear of record that a quarter interest in the property was subject to a heavy incumbrance. For that purpose they caused to be made and recorded a deed transferring petitioner's quarter interest to respondent, and also a trust deed to the public trustee purporting to secure a note made by respondent to petitioner for $67,500. Respondent soon succeeded in selling the half interest to one Binstock, an associate of Bronstine, for $28,080 in cash, and $92,500 in bonds of the Colorado Paper Products Company. Petitioner, as a condition of clearing the title of record, required that all the cash and bonds should be delivered to the bank to be hald in escrow until he and respondent should agree in writing as to the disposition of the same. They promptly divided nearly all of the cash, but came to no agreement for division of the remaining money or the bonds.

Later, petitioner brought this suit claiming that the fictitious note and trust deed were valid, and alleging that, when the cash was divided, respondent promised to pay him the full amount of the note and $7,500 out of the profits of the venture, and that the bonds should be held in escrow until the balance alleged to be owing, $59,699.61, should be paid. And the complaint alleges that the lawyers had attached the interest of petitioner and respondent, and claimed a prior lien on the fund. The prayer is that petitioner have judgment against respondent for the amount claimed; that the same be declared a lien upon the fund; and that the bank sell the bonds and apply the fund to the payment of the judgment. Respondent's answer alleges that the note and trust deed were fictitious, denies the alleged promise, avers that he and petitioner had approximately equal interest in the property, and that the only agreement between them was that the sale of their half interest be joint, and entire and the proceeds be equally divided between them, and prays that the complaint be dismissed on the merits. The lawyers' answer asserts that they have a lien upon the fund, denies that petitioner has any, and prays that he be denied relief. The bank's answer shows that the cash and bonds were deposited with it to be held in escrow until petitioner and respondent agree in writing as to the disposition of the same, sets forth the division of the cash, alleges that respondent assigned his interest in the fund to the bank as security for the payment of $1,250 and prays that it be declared to have a first lien on the fund, be instructed as to disposition of the balance, and have costs and attorneys' fees incurred in this suit.

After hearing the evidence and before making findings under Equity Rule 70 1/2 (28 USCA § 723), the District Court filed a memorandum showing that petitioner had failed to make out his case. Then respondent submitted requests for findings of fact, and, in addition to those negativing petitioner's cause of action, asked the court to find that peti...