Alexander v. Watson

• Decision Date: 29 May 1942
• Docket Number: No. 4915.,4915.
• Parties: ALEXANDER et al. v. WATSON et al.
• Court: U.S. Court of Appeals — Fourth Circuit

128 F.2d 627 (1942)

ALEXANDER et al. v. WATSON et al.

No. 4915.

Circuit Court of Appeals, Fourth Circuit.

May 29, 1942.

Arthur S. Dayton, of Charleston, W. Va., (William M. Robinson, of Pittsburgh, Pa., on the brief), for appellants.

Thomas B. Jackson, of Charleston, W. Va., and Thomas Watson, pro se, of Pittsburgh, Pa. (Brown, Jackson & Knight, of Charleston, W. Va., on the brief), for appellees.

Before PARKER, SOPER, and DOBIE, Circuit Judges.

PARKER, Circuit Judge.

This is an appeal by the receivers of the Tower Hill Connellsville Coke Company of West Virginia from an order allowing attorneys' fees of $10,000 to Thomas Watson, an attorney, and D. G. Sisterson, an accountant, for services rendered in the trial in the United States District Court for the Western District of Pennsylvania of the case of Tower Hill Connellsville Coke Co. v. Heiner, Collector, 25 F.Supp. 505. The allowance is opposed by the receivers on the ground that the case was tried by other attorneys as counsel for the receivers, and that Watson and Sisterson participated in the trial in the role of witnesses only and rendered no services as attorneys for which they should be compensated.

The facts are that the suit in the Western District of Pennsylvania was instituted in behalf of the Tower Hill Connellsville Coke Company by Watson, who was one of the directors and the secretary of that company, as well as its attorney. The suit was for the recovery of an assessment of income tax for the year 1918, which was paid by Tower Hill on August 26, 1925. The ground of the suit was that the tax was barred by limitations when collected; and the defense asserted by the government was that the statute of limitations was not applicable because what was in effect a claim in abatement had been filed by taxpayer and because counsel for taxpayer by their statements and actions at the time had waived the statute and taxpayer was therefore precluded from relying upon it. The questions as to whether a claim in abatement had been filed by Watson and Sisterson and whether what they had done amounted to waiver were the only questions in the case; and both Watson and Sisterson testified with respect thereto when the case came on for trial.

The claim for refund, upon which the tax recovery suit was based, was filed by Watson in behalf of the taxpayer in 1929; and the suit for recovery was filed in 1930. Thereafter nothing further was done in the case until shortly before the trial, which occurred on January 3, 1938. In the meantime, receivers had been appointed for Tower Hill, and Watson and Sisterson had filed claim with the receivers for services rendered the company, including services rendered in this and other tax suits. In 1934 Watson withdrew as counsel in all the tax suits; and in 1937 there was a compromise settlement, approved by the court of the receivership, of the claim which he and Sisterson had filed on account of services rendered. It is admitted that the effect of this settlement was to bar both him and Sisterson from recovery on account of services rendered prior thereto.

Shortly before the case in the Western District of Pennsylvania was called for trial, Seifert, one of the attorneys for the receivers, asked Watson whether he would testify in the case and received a very unsatisfactory answer from Watson to the effect that he did not know whether he would testify or not. Nothing further occurred until December 31, 1937, when Seifert telephoned Watson that he wished his help in the case, that, if the case should be won, he would ask the court to allow a fee of $75,000 in addition to the fees to counsel for receivers which had already been agreed upon, and that, if the fee were allowed, Watson and Sisterson might have 10 per cent thereof to be divided between them. At the time of this conversation, Seifert did not know of the compromise agreement under which the claim of Watson and Sisterson for past services in the case had been satisfied and released. Watson and Sisterson thereupon conferred with Seifert and Booth, another of the attorneys for the receivers, with respect to the trial of the case; and, when the case was called for trial, both took the stand and testified to the effect that no claim in abatement had been filed by them for the taxpayer and that nothing had been done upon which a defense of waiver or estoppel could be predicated which would prevent the bar of the statute of limitations applying to the taxes paid.

Neither Watson nor Sisterson took any part in the trial except to testify; and it is clear from the record that the conference prior to trial had relation to the substance of their testimony and how it was to be presented. The fact is that there was nothing else that they could have done. The questions involved were simple and the law with regard to them was clear. Counsel for the receivers had prepared the trial brief in the case and also a stipulation of facts, which, apart from the testimony of Watson and Sisterson, constituted all of the evidence offered by them in the case. It is shown that one change was made in the stipulation at the suggestion of Watson; but it is not shown what this change was and the reasonable inference is that it had relation to facts within his knowledge. Watson and Sisterson seem to think that they are entitled to an allowance because of services rendered in the case prior to the settlement of the account for services in 1937 and because of the value of their testimony in winning the case; but, as recovery for past services was precluded by the settlement, their claim resolves itself into one for services rendered in testifying, and we think that both Watson and Sisterson make this very clear in their testimony. Watson testified: "In the first place, the factor to which I attach the greatest importance is the beneficial results, and those beneficial results are these. In the Tower Hill litigation $250,000 has been realized by the attorneys here from assets which were given little or no value. I think it is a windfall. That resulted very largely from the services of Mr. Sisterson and me. If Mr. Sisterson and I had not testified in the case there would have been no recovery of the $221,000 if we had not laid the ground for it by the work we did, the letters we wrote and the records we made and the claims for refund being filed timely and in proper form, and the suit brought in the District Court in proper time and form. If it had not been for those things there never have been any recovery. I am not attempting to say that I should be compensated for those services. I think they should be taken into consideration in arriving at any compensation to me for the later services because those were the tools with which we worked and the things resulted and the receivership capitalized on the work we did. Furthermore, the receivers had released me from all liability and I was under no obligation at all. I could have let Mr. Seifert go on with his case. He could have subpoenaed me, but if I had not looked up my records I could have truthfully said `It is so long ago my recollection is hazy.' We did not do that. We left nothing undone; and I told him I thought some consideration should be given to the past work. I know that I signed a release without mental reservation. It was a joint common cause. Afterwards I was asked to waive my release and I assumed they would give consideration to what happened in the past." (Italics supplied.)

Again he said: "I want to say that Mr. Seifert and Mr. Booth handled the case perfectly. There was no criticism about the way they handled it. I will say for us also that if they had not had witnesses to prove the point in issue their efforts might have been futile; I do not know."

At another place he testified:

"Q. I understand the whole basis of your claim is, and the only basis, whatever happened between you and Mr. Seifert on December 31, 1937, is that correct? A. That spells the service we rendered, yes.

"Q. If Mr. Seifert had never had that conversation with you, you, admittedly, would have had no claim whatever? A. I would never have gone on the stand and you would never had had $221,000.

"Q. Your testimony was with respect to the one conversation in 1920? A. That clinched the whole thing.

"Q. And you discussed on that Sunday whether it would be necessary for you to go on the stand? A. We did.

"Q. Is it not a fact you only went on in rebuttal? A. That is right.

"Q. Is it not a fact that the prima facie case was made before you went on the stand? A. Yes. We discussed that on Saturday and Sunday afternoon, as to the burden of proof, as to whether our prima facie case had been made. In as much as the other people brought in the new matter the burden was on them. We expected the Government would have some witnesses there, but they did not come. I went on the stand and clinched it. No other witness was there and we put it in and clinched it, which was most important."

The claim of Watson and Sisterson for services rendered was for the sum of $25,000. Testifying with regard to the basis of this amount Sisterson said:

"Q. What items do you consider and what circumstances do you take into account and what factors are given weight by you in considering...