Lamar v. Hall & Wimberly
| Decision Date | 01 March 1904 |
| Docket Number | 1,274. |
| Citation | 129 F. 79 |
| Parties | LAMAR et al. v. HALL & WIMBERLY et al. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Wm. K Miller, for appellants.
Marion Erwin, John I. Hall, and Olin J. Wimberly, for appellees.
Before PARDEE, McCORMICK, and SHELBY, Circuit Judges.
Hall & Wimberly and Erwin & Callaway, attorneys and solicitors filed a petition in the court below praying that fees for services rendered by them be fixed and allowed, and paid out of a trust fund which was in court for distribution. The petition was referred to a special master, who made a report adverse to it; but, on exceptions filed by the petitioners the report of the special master was disapproved by the court, the exceptions sustained, and a decree entered allowing the petitioners $1,500 as compensation for their services as solicitors, and directing that the same be paid by the receiver out of the trust funds in court. William Firth Co. v. Millen Cotton Mills, 129 F. 141. This appeal was taken from that decree, and it is assigned that the court erred in sustaining the exceptions to the master's report, because the solicitors named were not entitled to have their fees paid out of the trust fund in court.
In order to understand the question to be decided, it is necessary to make a statement of the facts:
Three bills in equity were filed in the court below:
(1) William Firth Company et al. v. Millen Cotton Mills. This was a suit brought January 6, 1902, by creditors having liens upon the property of the Millen Cotton Mills, a corporation. The bill described the debts and liens, and prayed for their enforcement by a sale of the property of the defendant corporation, and a distribution of the assets among the lien creditors. There was a prayer, also, for the appointment of a receiver of the property of the defendant. The circuit court on January 6, 1902, appointed John R. L. Smith receiver, who took possession of the property of the defendant corporation.
(2) C. E. Riley & Co. et al. v. Millen Cotton Mills et al. In this suit, brought April 11, 1902, it was asserted that the complainants had furnished machinery to the defendant corporation, and the complainants claimed liens therefor, and sought to enforce them. It was alleged that the court was already in possession of the defendant corporation's property, and that the complainants' liens were superior to the mortgage debts; that defendant corporation was insolvent; and that the stockholders had no interest in the property of the defendant corporation 'until they pay or cause to be paid off its debts.'
(3) Southern Cotton Mills & Commission Co. v. Millen Cotton Mills et at. The bill beginning this suit was filed January 23, 1902, after a receiver had been appointed under the first bill, and after he had taken possession of the property of the defendant corporation. In this suit the complainant's solicitors were Hall & Wimberly and Erwin & Callaway, the petitioners in the court below, whose compensation is involved in the present appeal. The complainant in this suit, a minority stockholder in the Millen Cotton Mills, alleges that the first suit was--
'A part and parcel of a fraudulent and wrongful scheme, purpose, and conspiracy on the part of the defendants herein named to wreck the said Millen Cotton Mills, and cause its properties to be sold and purchased for the benefit of the majority stockholders of the Millen Cotton Mills, to the utter destruction of the rights and interest and property of the minority stockholders therein.'
The third paragraph of the bill is as follows:
'Your orator, the Southern Cotton Mills & Commission Company, is a minority stockholder in said Millen Cotton Mills, and brings this bill against the said Millen Cotton Mills and its officers, directors, and majority stockholders, and the other defendants named, colluding and confederating with them; and your orator brings this as a stockholders' bill, for the benefit of itself and all other stockholders similarly situated who may come in and be made parties hereto, and share the expense and costs of this proceeding.'
The details of the wrongful scheme are stated, but it is unnecessary to repeat them. It is alleged that the mill properly operated could reduce and in time pay its indebtedness, and that in that way the property could be saved to the stockholders. In brief, the purpose of the bill was to prevent the sale of the Millen Cotton Mills, on the ground that the suit brought by the William Firth Company and others was a fraudulent scheme between the complainants in that suit and the majority stockholders of the defendant corporation, and to provide for the payment of its debts by operating the mills. The prayer was for the appointment of a receiver or receivers, and that the court 'may, through its receiver, hold said property until said property can be turned over to the stockholders who are not participants or guilty of any of the fraudulent acts or wrongs hereinbefore complained of.'
This bill was presented to a judge of the court below on January 21, 1902, and an order was made appointing Tracy I. Hickman and John R. L. Smith temporary receivers to take charge of all the property 'and continue the possession now exercised by John R. L. Smith as temporary receiver. ' It was further ordered that the receivers investigate the condition of the property, and report to the court the practicability of operating and paying off the debts, in accordance with the 'declared purpose of the bill.' The defendants named in the several bills filed their several answers. On April 12, 1902, it was ordered that 'the said several cases (referring to the three chancery suits) be consolidated and tried as one cause,' and that the temporary receivers be made permanent receivers. On June 7, 1902, an order was made in the cases directing the sale of the property of the Millen Cotton Mills. It provided that the successful bidder should deposit a certified check for $10,000 on account of his bid. The property was purchased for $50,000 by Joseph R. Lamar, trustee for the lien creditors. He made the deposit of $10,000 required by the order. The sale having been reported to the circuit court, the Southern Cotton Mills & Commission Company, represented by Hall & Wimberly and Erwin & Callaway, filed objections to the confirmation of the sale. These objections were sustained, the circuit court refusing to confirm the sale. The circuit court directed the commissioners, who were theretofore ordered to sell the property, to advertise for bids, and to endeavor to procure a bid for it at 'an upset price' of $90,000. Under this order Joseph R. Lamar, trustee for the lienholders, increased his bid to $90,000, and at that price the sale was confirmed. Lamar, as trust...
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