Jesser v. Mayfair Hotel, Inc., 48586

• Decision Date: 10 September 1962
• Docket Number: No. 48586,48586
• Citation: 360 S.W.2d 652,15 A.L.R.2d 389
• Court: Missouri Supreme Court
• Parties: Jacob JESSER Benjamin Rosenberg; Oscar Miller, Joseph Jesser Meyer Perlstein, Charlotte Brownstein, Helen Asher, Norman Asher, and Harry O. Valleau and Angeline Valleau, doing business as Harry O. Valleau & Co., Plaintiffs-Appellants, v. MAYFAIR HOTEL, INC., a corporation, Lennox Hotel Company, a corporation, Heiss Securities, Inc., a corporation, C. Gordon Heiss, C. Gordon Heiss, Executor of the Will of Charles Heiss, Deceased, Defendants-Appellants, William S. Bedal, William C. Connett, J. L. Davis, and Clarence M. Turley, Respondents.

Page 652

360 S.W.2d 652

15 A.L.R.3d 389

Jacob JESSER Benjamin Rosenberg; Oscar Miller, Joseph Jesser Meyer Perlstein, Charlotte Brownstein, Helen Asher, Norman Asher, and Harry O. Valleau and Angeline Valleau, doing business as Harry O. Valleau & Co., Plaintiffs-Appellants, v. MAYFAIR HOTEL, INC., a corporation, Lennox Hotel Company, a corporation, Heiss Securities, Inc., a corporation, C Gordon Heiss, C. Gordon Heiss, Executor of the Will of Charles Heiss, Deceased, Defendants-Appellants William S. Bedal, William C. Connett, J. L. Davis, and Clarence M. Turley, Respondents.

No. 48586.

Supreme Court of Missouri, En Banc.

Sept. 10, 1962.

Rehearing Denied Oct. 8, 1962.

Harold C. Ackert, John W. Giesecke, St. Louis, for plaintiffs-appellants.

Joseph H. Grand, Orville Richarson, St. Louis, for defendants, Mayfair Hotel, Inc., et al.

R. H. McRoberts, Bryan, Cave, McPheeters & McRoberts, St. Louis, for said respondents.

STORCKMAN, Judge.

These cross-appeals are from an order and judgment allowing plaintiffs' attorneys $80,000 as fees for services and $4,327.77 for expenses incurred in the prosecution of an equity action involving the construction of a voting trust agreement. One ground of defendants' appeal is that the allowance of attorneys' fees is excessive by at least $75,000, while the plaintiffs in their appeal assert that the allowance is inadequate in the sum of $60,000. The amounts involved vest jurisdiction in this court. Art. V, Sec. 3, Constitution of Missouri 1945; Section 477.040 RSMo 1959, V.A.M.S.

The history and outcome of the principal litigation is set out in Jesser v. Mayfair Hotel, Inc., Mo., 316 S.W.2d 465, but a brief resume may be helpful at this point. The voting trust agreement was made as of January 1, 1943, pursuant to a plan of reorganization of Mayfair Hotel, Inc., a corporation, under orders of the U. S. District Court for the Eastern Judicial District of Missouri. Under the reorganization plan, the previous shareholders were wiped out and the income bondholders of the old company, for each $100 bond, received $60 principal amount of new income bonds and a voting trust certificate for one share of the common stock of the new Mayfair Company. The plan and voting trust agreement required the Mayfair Company to issue and deposit with five voting trustees a total of 14,035 shares of its capital stock. The trustees held the legal title and voting trust certificates were issued by the trustees to the persons entitled 'evidencing their respective interests in that portion of the capital stock of the Company issued to the Voting Trustees for their benefit.' Specific shares were not set aside or identified as being for the use and benefit of particular certificate holders. The trust agreement further provided that the capital stock so deposited by the Mayfair Company should be held for a period of fifteen years and the powers and duties of the trustees with respect thereto were set out in the trust instrument. Mayfair Hotel, Inc., owned and operated Hotel Mayfair in downtown St. Louis and also owned approximately 75 per cent of the capital stock of Lennox Hotel Company, a corporation, which owned and operated Hotel Lennox, also in downtown St. Louis.

In August 1955, the voting trustees were Charles Heiss, William S. Bedal, William C. Connett, J. L. Davis, and Clarence M. Turley. At that time voting trust certificates had been issued for a total of 13,988 sheres of the capital stock held in the voting trust. Charles Heiss and others cooperative with him owned voting trust certificates representing 9,668 shares of the capital stock. Mr. Heiss was one of the voting trustees and had been active in the management of the Mayfair and Lennox hotels for a number of years. The plaintiffs were the owners of voting trust certificates representing 244 shares of the remaining 4,320 shares of stock held in trust. These 4,320 shares or certificates therefore will sometimes be referred to as the minority shares or the minority interest.

On August 5, 1955, C. Gordon Heiss, a son of Clarles Heiss, acting on behalf of Heiss Securities, Inc., submitted to the four trustees (excluding Charles Heiss) a written proposal to purchase from the trustees at $90 per share 4,320 shares of Mayfair stock described in the offer as being held by 235 persons in different amounts. Thereupon the four trustees sent out a notice to minority holders of the voting trust certificates describing the offer received and stating that they had agreed to sell their 4,320 shares and would consummate the sale on or before September 9, 1955, unless the holders of voting trust certificates representing not less than 1,440 of these minority shares notified the trustees of their objections prior to August 31, 1955. The trustees recommended acceptance of the offer. Owners of certificates representing 683 shares of stock sent in objections.

On August 25, 1955, the plaintiffs, as beneficial owners of a part of the shares designated, filed a class action in equity for an injunction to prevent the trustees from consummating the proposed sale and for other relief. The defendants, in addition to the five trustees, were Mayfair Hotel, Inc., a corporation, Lennox Hotel Company, a corporation, Heiss Securities, Inc., a corporation, and C. Gordon Heiss, a son of Charles Heiss, and the vice-president of Heiss Securities. While the action was pending, Charles Heiss died and C. Gordon Heiss, executor of the will of Charles Heiss, deceased, was substituted. The trial on the merits in October 1956 was before the court without a jury; the judgment and decree was in favor of the defendants on all of the issues and the injunction sought was denied. The plaintiffs appealed to this court where the judgment was reversed and the cause was remanded with directions to enter a decree enjoining the sale by the voting trustees of the 4,320 shares and dismissing the counterclaim of the defendant trustees at their cost without allowance of attorneys' fees to the defendant voting trustees; and, the voting trust agreement having expired by its terms, the voting trustees were directed to deliver the stock of Mayfair to the registered holders of the voting certificates in accordance with the provisions of the voting trust agreement. Jesser v. Mayfair, Mo., 316 S.W.2d 465, loc. cit. 474.

In due time after remand, the plaintiffs filed an amended petition for attorneys' fees asking an allowance of $140,000 for fees and $4,325.25 for expenses. The court heard evidence and allowed $80,000 for fees and $4,327.77 for expenses. The plaintiffs appealed and so did all of the defendants except the four surviving trustees. The parties have stipulated that in determining the issues presented on these appeals the court may refer to any matter, record, transcript or briefs filed in the supreme court in connection with the previous appeal. To the extent necessary, additional evidence will be referred to in the course of the opinion.

The plaintiffs and their attorneys, Harold C. Ackert and John W. Giesecke, the petitioners in the application for fees and expenses, have filed joint briefs and will be referred to as the plaintiffs. The defendants, Mayfair Hotel, Inc., Lennox Hotel Company, Heiss Securities, Inc., and C. Gordon Heiss, individually, and as executor of the estate of Charles Heiss, deceased, have filed joint briefs as appellants and will sometimes be referred to collectively as Mayfair. The four surviving trustees are respondents and have filed a joint brief as such.

Appellant Mayfair's first contention is that the trial court had no jurisdiction or power to entertain plaintiffs' petition for an allowance of attorneys' fees and expenses because the supreme court reversed the judgment and remanded the cause with directions which were dispositive of all issues raised by the pleadings thereby depriving the circuit court of further jurisdiction to entertain the plaintiffs' application. Prior to the previous appeal, the trial court by consent of the parties and as a part of its judgment retained jurisdiction to receive and consider an application by any party for allowance of attorneys' fees and expenses incurred in connection with the litigation.

Considerable stress is placed upon the fact that the opinion dismissed the trustees' counterclaim at their costs and denied the claim of the trustees for an allowance of attorneys' fees and expenses. The trustees' counterclaim and cross-bill, in addition to asking for a construction of the trust instrument, prayed "(c) that the Court allow these defendants their reasonable attorneys' fees, costs and expenses in connection with this counterclaim and cross bill, to be charged against the trust estate and to be reimbursed to them by Mayfair Hotel, Inc.; * * *." In granting the injunction and dismissing the counterclaim, the supreme court was confronted with the proper disposition of the trustees' claim for attorneys' fees and expenses which was a part of the counterclaim. The denial of attorneys' fees to the trustees was ancillary to the court's determination that the trustees were attempting to act without lawful authority and that they were not entitled to relief under the counterclaim. The per curiam opinion modifying the judgment and overruling the motion for a rehearing states: 'Our denial of attorneys' fees to the voting trustees upon the facts of this case followed on our findings that the voting trustees were acting beyond their powers.' 316 S.W.2d 465, 474.

There was no issue before the supreme court as to the fees and expenses of plaintiffs' attorneys and such issue was not adjudicated. The directions in the opinion and mandate did not deprive the circuit court of its jurisdiction and power to hear and determine the application for allowances of fees and expenses to plaintiffs' attorneys. Sprague v. Ticonic Bank, 307 U.S. 161, 168-169, 59 S.Ct. 777, 83 L.Ed. 1184.

One of the contentions urged most strenuously by...