Cook v. McHenry & Seemann

• Citation: 223 N.W. 377,208 Iowa 442
• Decision Date: 05 February 1929
• Docket Number: 39104
• Parties: ARTHUR COOK et al., Plaintiffs, v. MCHENRY & SEEMANN et al., Defendants; SIMS & PAGE, Claimants, Appellees; M. L. RUNGE, Receiver, Appellant
• Court: Iowa Supreme Court

223 N.W. 377

208 Iowa 442

ARTHUR COOK et al., Plaintiffs, v. MCHENRY & SEEMANN et al., Defendants;

SIMS & PAGE, Claimants, Appellees; M. L. RUNGE, Receiver, Appellant

No. 39104

Supreme Court of Iowa, Des Moines

February 5, 1929

REHEARING DENIED JUNE 24, 1929.

Appeal from Crawford District Court.--R. L. MCCORD, Judge.

A receiver was appointed for the property of the defendants. The claimants filed a claim for attorney fees rendered in a bankruptcy proceeding. The court allowed the claim in an amount fixed by the court. Both parties appeal. The receiver having perfected his appeal first, will be deemed the appellant, and the claimants the appellees.

Reversed.

L. W Powers, for appellant.

Sims & Page and Lee & Robb, for appellees.

FAVILLE, J. ALBERT, C. J., and EVANS, KINDIG, and WAGNER, JJ., concur.

OPINION

FAVILLE, J.

McHenry & Seemann were a copartnership, consisting of Sears McHenry, George McHenry, and Jennie McHenry Seemann. The partnership owned and operated two private banks, and were stockholders in a national bank. The said banks closed on December 31, 1924. The assets of the national bank were administered under the treasury department of the government. Shortly after said banks closed, the depositors in said banks elected a committee to represent them, and this committee brought an action in the district court of Crawford County, seeking the appointment of a receiver and the sequestration of the assets of the partnership that were not involved in the national bank. In pursuance of said matter, in due time a receiver was appointed, who qualified and proceeded to take charge of said assets of said partnership. Sometime thereafter, and more than four months after the receiver had been appointed, certain creditors filed a petition in bankruptcy in the Federal court against the members of said partnership. Thereupon the members of the partnership employed the appellees herein as their attorneys to resist the proceedings in bankruptcy. It also appears that the receiver was authorized by the court to appear in said bankruptcy proceedings and resist an adjudication in bankruptcy, and the attorneys for the receiver did appear in said bankruptcy proceedings and resist an adjudication in bankruptcy. It appears that the receiver and his attorneys co-labored with the appellees herein in making said resistance. A large amount of testimony was taken, and much time was spent in investigating, securing testimony, and trying the questions presented in the bankruptcy case. The result was that the Federal court dismissed the petition in bankruptcy. Thereafter, these appellees filed their claim in the receivership matter in the state court, and sought an allowance for their services as attorneys in resisting the bankruptcy proceedings. The receiver filed objections to the allowance of appellees' claim, and a trial was had thereon, and the court allowed said claim, and fixed the amount thereof at a less sum than the amount claimed.

The sole legal question presented for our consideration is whether or not, under said state of facts, the appellees are entitled to have their claim for attorney fees allowed and established against the assets in the hands of the receiver in the state court. It is to be observed at the outset that the receiver, with the approval of the court, employed attorneys who appeared in the bankruptcy proceedings in resistance to the application for an adjudication in bankruptcy. The record disclosed that an attorney fee was allowed said attorneys for the services so rendered. The appellees were employed solely by the members of the partnership, and appeared in said bankruptcy proceedings for and in behalf of said partnership. Said appellees were not employed by the receiver, and there was no order of court directing their employment in behalf of the receiver.

Appellees invoke the general rule that they rendered services in behalf of the estate under the receivership, by reason of the fact, as contended by them, that their services preserved the estate from being transferred into the Federal court for liquidation in bankruptcy proceedings, and enabled the receiver to administer it. The leading case on this question in this country is Trustees v. Greenough, 105 U.S. 527 (26 L.Ed. 1157), wherein the Supreme Court of the United States laid down the general rule as follows:

"It is a general principle that a trust estate must bear the expenses of its administration. It is also established by sufficient authority that, where one of many parties having a common interest in a trust fund at his own expense takes proper proceedings to save it from destruction and to restore it to the purposes of the trust, he is entitled to reimbursement, either out of the fund itself, or by proportional contribution from those who accept the benefit of his efforts."

This general rule has been announced by many of the states and applied under a great variety of circumstances. We have recognized it in Graham v. Dubuque Specialty Mach. Wks., 138 Iowa 456, 114 N.W. 619.

One of the most familiar situations under which counsel have been allowed attorney fees for services rendered to an estate has been in cases where attorneys for unsecured creditors of an insolvent debtor are successful in having conveyances, liens, preferences, assignments, or other similar transactions set aside and declared void, thus bringing the property of the debtor within the jurisdiction of the court and securing the same for the benefit of the unsecured creditors. Under such circumstances, a fee for the attorney of the creditor who has thus secured the property of the debtor for the benefit of the unsecured creditors is allowed. Examples of the allowance of attorney fees under such circumstances may be found in the following cases and others: Weed's Estate, 163 Pa. 595 (30 A. 272); Stoneburner & Richards v. Motley, 95 Va. 784 (30 S.E. 364); In re Insolvent Estate of Leiman, 32 Md. 225 (3 Am. Rep. 132); Anniston L. & Tr. Co. v. Ward & Co., 108 Ala. 85 (18 So. 937); Shively v. Daviess County Bank & Tr. Co., 144 Ky. 299 (137 S.W. 1086).

It also seems to be the established rule that, where one creditor brings an action and secures the appointment of a receiver for the property of the debtor, and all other creditors of the debtor participate in the administration of the estate so placed in the hands of the receiver, the...