In re Bank of Genesee
| Decision Date | 11 November 1897 |
| Citation | 51 P. 406,5 Idaho 482 |
| Parties | IN RE BANK OF GENESEE v. DENNING |
| Court | Idaho Supreme Court |
INSOLVENCY-ATTORNEY'S FEES-TO WHOM ALLOWED BY THE COURT.-Costs incurred by the assignee of an insolvent estate in proceedings in insolvency for reasonable and necessary attorney's fees incurred in protecting the insolvent estate, should be allowed to the assignee, on his application, and not to the attorney.
ASSIGNEE-DISTRICT JUDGE-CREDITORS.-Orders allowing attorney's fees for services rendered the assignee of an insolvent debtor, which are made upon ex parte application of the attorney by the district judge, either in open court or at chambers, are in violation of the rights of the creditors, and unauthorized.
JURISDICTION OF JUDGE AT CHAMBERS IN INSOLVENCY PROCEEDINGS.-A district judge has no jurisdiction at chambers to make an order allowing or fixing the compensation of an attorney for an assignee of an insolvent debtor whose estate is being settled by proceedings in insolvency.
(Syllabus by the court.)
APPEAL from District Court, Latah County.
Reversed and remanded, with directions. Cost of this appeal awarded to appellant.
J. T Morgan and R. T. Morgan, for Appellant.
The client may change his attorney when he becomes satisfied that it is for the interest of the estate that he is managing, or when he is confident that it would be for his own interest to do so, in case the attorney is acting for the client in an individual capacity. (Curtis v. Richards, 4 Idaho 434, 40 P. 57; Weeks on Attorneys, secs. 250, 267, and cases there cited; Mechem on Agency, sec. 856; In re Herman, 50 F. 517; Ronald v. Association, 30 F 228; Butchers' Union Slaughter House etc. v. Crescent City Livestock etc. Co., 41 La. Ann. 355, 6 South, 509; Gardner v. Tyler, 36 How. Pr. 63.) An order or judgment for fees of attorney cannot be made at chambers, but must be made in open court and upon application of the assignee for leave to pay, and this is true when the fund is in the hands of the court. The court must make an allowance which the auditor should pay when the court appoints an attorney to perform services. (Baker v. Knox Co., 18 Ind. 170; Wyant v. Pottorff, 37 Ind. 512; Mathews v. Norman, 42 Ind. 176; State v. Boyd, 85 Iowa 740, 52 N.W. 513; Hamilton v. Baker, 91 Iowa 100, 58 N.W. 1080; Smith v. Bell, 25 S.W. 725.) The allowance for attorney's fees is made to the assignee and not to the attorney directly, and is always made in open court upon application of assignee for approval of his account. (Hobbs v. McLean, 117 U.S. 567, 6 S.Ct. 870.)
S. S. Denning and Warren Truitt, for Respondents.
As to the law cited by counsel we take no issue, as earlier in this matter all of the fees had been allowed by the court and paid by the assignee, and no matter if we conceded that such a procedure may have been erroneous it was not void. (Branch v. American Nat. Bank, 57 Kan. 282, 46 P. 305.)
OPINION
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 assignee. 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 Denning 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 change 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...
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