Gordon v. Morrow

• Decision Date: 13 February 1920
• Citation: 218 S.W. 258,186 Ky. 713
• Parties: GORDON ET AL. v. MORROW, GOVERNOR.
• Court: Kentucky Court of Appeals

218 S.W. 258

186 Ky. 713

GORDON ET AL. v. MORROW, GOVERNOR.

Court of Appeals of Kentucky.

February 13, 1920

Suit by Robert G. Gordon and others against Edwin P. Morrow, Governor of the Commonwealth of Kentucky. On motion to dissolve injunction granted to plaintiffs by the circuit court. Motion granted.

A. C Van Winkle, J. S. Laurent, and Trabue, Doolan, Helm & Helm all of Louisville, for plaintiffs.

Chas I. Dawson, Atty. Gen., for defendant.

CARROLL C.J.

This case, presenting a very unusual state of fact as well as novel questions of law, comes before me on a motion to dissolve an injunction granted to the plaintiffs by the judge of the Franklin circuit court in the suit of Robert G. Gordon, Hite Huffaker, and James Garnett against Edwin P. Morrow, Governor of the commonwealth of Kentucky.

The suit was brought by the plaintiffs, who are attorneys at law, to restrain Gov. Morrow from canceling or attempting to cancel, by executive order or otherwise, a contract entered into on October 10, 1917, between the commonwealth of Kentucky and these attorneys, under which they were employed to ascertain the value of the estate of Mrs. Mary Lily Bingham and collect therefrom the inheritance taxes due the commonwealth.

The circumstances out of which this litigation arose are these: On October 10, 1917, Hon. Charles H. Morris, then Attorney General of the state, addressed a letter to Hon. A. O. Stanley, then Governor of the commonwealth, setting forth in substance that, after investigating conditions connected with the estate left by Mrs. Mary Lily Bingham in reference to the amount of inheritance taxes due therefrom to the commonwealth, he was of the opinion that special counsel should be employed to investigate the question and take such action as might be necessary to collect for the state the inheritance taxes, and, therefore, he requested the appointment by the Governor of special counsel.

Pursuant to this request, Gov. Stanley, on October 10, 1917, entered into a written contract with Robert G. Gordon, Hite Huffaker, and James Garnett, under which they were employed "to represent the commonwealth of Kentucky in the ascertainment of the amount and collection of inheritance taxes due or which may be due the commonwealth of Kentucky from the estate of the beneficiaries of said Mrs. Mary Lily Bingham, deceased, or the legal representatives of said estate."

In accepting the employment, the attorneys obligated themselves to investigate the nature and extent of the estate subject to inheritance tax, and to institute and conduct, in any and all courts within or without the commonwealth, any and all litigation which in their judgment or the judgment of the Attorney General might be necessary and proper to collect any tax found to be due.

It was further provided in the contract that all reasonable traveling and other necessary expenses incurred by the attorneys, both in and out of the state, on business connected with the employment, should be treated as a part of the consideration for the contract and as a part of the compensation for the services rendered, and be paid on vouchers approved by the Governor, when accompanied by proper receipts. It was further stipulated that the compensation to be paid to the attorneys out of the state treasury was a certain fee of $10,000, $5,000 of which should be paid upon the execution of the contract, and the remaining $5,000 on January 1, 1918, by vouchers approved by the Governor; that, in the event the taxes should be collected without litigation or with litigation in the county court of Jefferson county, they should receive as compensation a sum equal to 2 1/2 per cent. of the amount of taxes collected to be paid, less the sum of $10,000 as and when the taxes were collected, or the payment secured by bond, as prescribed by law; that in the event the collection of taxes should involve litigation in any court or courts other than the county court of Jefferson county, Ky. then the attorneys, in lieu of the 2 1/2 per cent., were to receive a sum equal to 5 per cent. of the aggregate amount of all taxes collected or secured to be collected, less $10,000.

This contract was signed by A. O. Stanley, as Governor of the commonwealth, and the attorneys, and approved by Charles H. Morris, Attorney General.

Gov. Stanley resigned his office in May, 1919, and Hon. James D. Black succeeded him as Governor, and held the office until December 9, 1919, when he was succeeded by Hon. Edwin P. Morrow, who had been elected Governor for a term of four years at the November election, 1919. It further appears that during the administration of Gov. Black the contract was by agreement so modified as that the attorneys relinquished one-fourth of the contingent fee to which they might become entitled under the contract.

The petition asking for the injunction, which was filed by the attorneys on December 9, 1919, the day on which Edwin P. Morrow was inducted into office as Governor of the commonwealth, set out in substance: That immediately upon the execution of the contract they entered upon and began to discharge the duties undertaken by them, and proceeded to make a thorough investigation of the nature, extent, and value of the property belonging to the estate; that for this purpose they were required to and did make trips to the state of New York and to the state of Florida, interviewed a great number of persons, and examined and cross-examined many witnesses in the taking of depositions; that they made an extensive and thorough examination of the legal questions presented, and instituted proceedings that are yet pending in the Jefferson county court, for the purpose of recovering the inheritance taxes that they believed to be due by the estate; that the estimated value of the estate subject to inheritance taxes in this state was found by the appraiser to be more than $103,000,000; that every step in the proceedings has been vigorously contested by counsel representing the estate; that since the institution of the proceedings and as a result of their efforts the administrator of the estate has paid inheritance taxes to the sheriff of Jefferson county, Ky. for the commonwealth, the sum of $853,258.84; that in their opinion there is yet due from the estate the further sum of $3,854,062.04; that they are the only persons who represent the commonwealth in connection with the collection of these taxes; that the only compensation they had received for their services was the $10,000, stipulated as a certain fee in the contract; that all papers relating to the case in which the commonwealth has an interest have been filed in the Jefferson county court, and they have no money or property in their possession of any kind belonging to or in which the commonwealth has any interest.

They further averred that Gov. Morrow, during his campaign for the office of Governor, "repeatedly and publicly stated his intention to discharge these plaintiffs and to repudiate and cancel their contract with the commonwealth of Kentucky immediately upon his becoming Governor of said commonwealth, and to substitute other attorneys in place of these plaintiffs in said proceedings," and that said threat has been by him reiterated on numerous occasions since his election.

They further averred they had at all times, since their employment, taken all steps that could or should be taken in behalf of the commonwealth, and have prosecuted faithfully and vigorously all proceedings that were proper or necessary for the purpose of collecting the inheritance taxes; that Hon. Edwin P. Morrow, Governor-elect, was, without right or justification, wrongfully threatening to cancel the contract with the commonwealth and to prevent the prosecution by them of the proceedings for which they were employed, and was wrongfully threatening to deprive them of the rights and benefits to which they were entitled and of the compensation agreed to be paid to them by the commonwealth under the terms of the contract; that he has not offered to compensate or secure them for any services they have performed under the contract; and that, unless the services agreed by them to be performed are actually performed by them, as provided in the contract, they will be unable to collect by suit or otherwise their contract compensation, for the reason that they cannot maintain a suit against the commonwealth for the purpose of recovering it.

They further averred that, unless Gov. Morrow was enjoined and restrained, he would carry out his threatened repudiation of the contract and cancel or attempt to cancel the same, and that such an act or attempted act on his part would produce great and irreparable injury and damage to them, as well as to the commonwealth. Therefore they prayed in the petition that Gov. Morrow be enjoined and restrained from canceling or attempting to cancel, by executive order or otherwise, the contract entered into on October 10, 1917, by the commonwealth of Kentucky with these plaintiffs, and that he be enjoined and restrained from interfering or in any wise attempting to prevent these plaintiffs from carrying out and performing the terms of said contract.

Upon the same day that the petition was filed, Hon. Robert L. Stout, judge of the Franklin circuit court, on the motion of the plaintiffs, made and issued a temporary restraining order in accordance with the prayer of the petition, which was on that day executed upon Gov. Morrow.

Thereafter counsel for Gov. Morrow filed a special as well as a general demurrer to the petition, and, the case having been submitted on the plaintiffs' motion for an injunction and the demurrers filed on behalf of Governor Morrow, Judge Stout overruled the demurrers and continued in force the restraining order...