In re Interstate Trust & Banking Co.

• Decision Date: 13 July 1943
• Docket Number: 37068.
• Citation: 15 So.2d 369,204 La. 323
• Court: Louisiana Supreme Court
• Parties: In re INTERSTATE TRUST & BANKING CO.

15 So.2d 369

204 La. 323

In re INTERSTATE TRUST & BANKING CO.

No. 37068.

Supreme Court of Louisiana

July 13, 1943

Rehearing Denied Oct. 5, 1943.

Samuel J. Tennant, Jr., and William H. McClendon Jr., both of New Orleans, for Interstate Trust & Banking Company in liquidation, appellants and appellees.

O'Niell & O'Niell and James C. Henriques, all of New Orleans for Marcus & Corkern & Flanders, and Walter V Marcus, and Bert Flanders, Jr., appellants.

HIGGINS Justice.

Walter F Marcus and Bert Flanders, Jr., attorneys-at-law, and the partnership of Marcus and Corkern and Flanders, of which they are members, filed a rule against the Interstate Trust & Banking Company, in liquidation, claiming the sum of $165,000, alleged to be the balance due them as an attorneys' fee for services rendered in the liquidation.

The plaintiffs, in a very lengthy motion, alleged that they were employed and served as the attorneys for the liquidation estate from January 4, 1934, to May 15, 1941, when they resigned, with full reservation of their rights to claim the balance due them on account for services rendered under a contract of general employment; and that on May 13, 1942, after they had requested the Bank Commissioner in charge of the liquidation to fix the balance of the fee due them, he fixed the amount at $10,150, which they refused to accept.

The Commissioner then filed a petition in the district court, asking that his action be approved by the judge in an ex parte order. Upon his refusal to approve the fee of $10,150, without a hearing, the Commissioner applied to this Court for a writ of mandamus (No. 36,829) and his application was denied on the ground that he had an adequate remedy by appeal.

The present rule followed and the Commissioner then defended the case in the trial court on three grounds, to-wit:

(1) That under Section 6 of Act 300 of 1910, the authority for fixing the compensation of the plaintiffs, as attorneys, rested in the State Bank Commissioner, and the court is without authority to increase the amount of the compensation fixed by him;

(2) That the plaintiffs' claims for services rendered prior to May 25, 1939, are prescribed by three years' prescription, under Article 3538 of the Revised Civil Code; and

(3) That the sum of $10,150 tendered by the Commissioner, together with the sums of money heretofore paid to the plaintiffs on account, adequately and reasonably compensate them for all services rendered in the liquidation of the bank.

The judge a quo overruled the first two defenses and, after a trial on the merits, during which time he heard a voluminous amount of testimony and considered numerous exhibits, all contained in the transcript constituting six large volumes, as well as a number of other original court records, awarded the plaintiffs $35,000, over and above the amounts previously paid to them.

The party litigants on both sides appealed.

We shall consider the issues herein in the same order in which they were presented in the trial court.

Section 6 of Act 300 of 1910 provides:

'Section 6. Be it further enacted, etc., That the compensation of the Special Agent, counsel, clerical assistance and all other necessary expenses of liquidation and distribution, shall be fixed by the State Examiner of State Banks subject to the approval of the District Court of the Judicial District in which the corporation under liquidation is domiciled, (provided that the court shall not have power to increase said compensation) and after such approval they shall be paid, on the certificate of the said Examiner as privileged claims, out of the funds of such corporation in his hands, before applying the same to any other liabilities of said corporation. * * *' (Italics ours.)

The attorneys for the Commissioner contend that under the above quoted section of Act 300 of 1910, the Commissioner is vested with the sole power and authority to fix the fees of counsel employed in the liquidation; that the district judge has no discretion thereunder and it is his mandatory duty to approve the fees fixed by the Commissioner; that the district judge, in granting his approval, performs merely a ministerial or administrative function and does not exercise judicial authority; and that under the proviso in that section the court is expressly denied the power to increase the compensation fixed by the Commissioner.

The plaintiffs maintain that the correct construction of the above quoted section is that the Commissioner cannot legally fix the attorneys' fee without the approval of the judge; that the Commissioner's action in stating what amount should be paid the attorneys is a mere recommendation to the court; that the action by the court in granting its approval to the Commissioner's recommendation is a judicial function requiring the exercise of discretion which necessitates a hearing and a judgment by the court passing upon the issues before it; that to adopt the interpretation placed upon the provisions of the section by the Commissioner would make the Act unconstitutional, because it would deny the plaintiffs their constitutional rights granted under Section 6 of Article I (Bill of Rights) of the Constitution of Louisiana, to have their rights determined in court through adequate remedy and by due process of law, and would be conferring upon the Commissioner judicial powers, contrary to Section 1 of Article VII of the Constitution of Louisiana, vesting judicial power in the several courts of this State; that the prohibition against the court increasing the fee fixed by the Commissioner has application only when both the Commissioner and the judge have acted; that until the judge has approved the fixing thereof, the fee has not been fixed but only recommended; that as the fee cannot be legally fixed until both the Commissioner and the judge have acted, there can be no increase of a fee that has not been fixed; and that when both the Commissioner and the judge have acted, the judge cannot thereafter increase the fee.

It is a well-recognized rule of statutory construction that when the provisions of an Act are susceptible of two constructions, one which would make the Act unconstitutional, and the other which would uphold its constitutionality, the court should adopt the one that gives validity to the statute.

In the case of Meyer v. Board of Trustees, etc., 199 La. 633, 6 So.2d 713, 716, the widow sued for a pension and the defendant Board, which had refused the widow's claim for the pension, contended that under the express provisions of Section 3 of Act 43 of 1902, as amended by Act 27 of 1914, its action was final and conclusive. The plaintiff's attorney countered by stating that if that construction were placed upon the provisions of the Statute, it would render it unconstitutional in violation of Section 6 of Article I and Section 1 of Article VII of the Constitution of the State of Louisiana.

In affirming the judgment of the trial court, we stated:

'It would be most unusual, if not extraordinary, to hold that the Legislature intended that the Board, which is given the full power and authority to administer the pension fund, is the sole and only judge of the legal rights of the widow under the provisions of the statute and that its decisions would not be subject to review by the courts. The Board under these circumstances would be the final judge of its own case in which it was involved as a party.

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'* * * As the language in question is susceptible of a construction other than that given it by the defendant, in order to avoid declaring that part of the statute unconstitutional, we shall not construe it as an attempt by the Legislature to deprive the claimant of her right to resort to court, and the court, of its jurisdiction to hear and determine the case. State ex rel. Tulane Homestead Association v. Montgomery, 185 La. 777, 171 So. 28; 16 C.J.S., Constitutional Law, � 98, p. 234 et seq. * * *

'Counsel for the defendant argues that the district court and this Court have no right to consider the question of the constitutionality of the pertinent part of Section 3 of the statute, because the plaintiff did not specially plead it.

'In the instant case, the special plea, the exceptions of no right and no cause of action, and the objection to the evidence all being founded on the defendant's interpretation of Section 3 of the statute, that the Board's decision was final and not subject to judicial review, the jurisdiction of the district court to hear and determine the case was necessarily involved. In short, the proper interpretation of Section 3 was placed squarely before the court by the defendant. The Legislature is powerless to deprive the courts of their constitutionally conferred jurisdiction. When the defendant's attorney in his argument before the district court made clear his position that under his interpretation of the statute, the court had no jurisdiction to entertain the case the plaintiff's attorney promptly met this construction by pointing out that to give Section 3 of the statute the effect which the defendant sought would render it unconstitutional. Therefore, the issue of the proper construction of Section 3 of the act was raised by the defendant and was met by the plaintiff, and the trial judge had the right to pass upon it.

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'We conclude that the trial judge had the right and jurisdiction to consider the contentions made by the defendant and the plaintiff, respectively, as to the proper interpretation of the part of Section 3 of the act in question and that he correctly maintained the plaintiff's construction thereof, giving it constitutional effect.'

See, also Kemp, Dist. Atty. v. Stanley, Atty. Gen., La.Sup., 15 So.2d 1, this day...