Mecartney v. Guardian Trust Co.

• Decision Date: 17 February 1922
• Docket Number: 5582.
• Citation: 280 F. 64
• Parties: MECARTNEY v. GUARDIAN TRUST CO. et al. [1]
• Court: U.S. Court of Appeals — Eighth Circuit

280 F. 64

MECARTNEY v. GUARDIAN TRUST CO. et al. ^[1]

No. 5582.

United States Court of Appeals, Eighth Circuit.

February 17, 1922

James A. Reed and J. G. L. Harvey, both of Kansas City, Mo., for appellant.

Justin D. Bowersock and C. W. German, both of Kansas City, Mo., for appellees.

Before HOOK, Circuit Judge, and COTTERAL and JOHNSON, District Judges.

JOHNSON District Judge.

On the 29th day of August, 1916, Henry C. Flower was appointed by the court below receiver of the property of the Guardian Trust Company in a suit pending in said court in which Edward A. Shedd and others were plaintiffs and the Guardian Trust Company and others were defendants.

On May 12, 1919, the appellant, an attorney at law, filed in said cause a claim against the Guardian Trust Company for the sum of $75,000 and interest thereon from the 15th day of April 1916. He claimed this amount as the reasonable value of legal services rendered by him and associate counsel in behalf of the Trust Company. In his claim he averred, among other things 'That his claim herein asserted is for legal services * * * rendered * * * in a certain cause formerly pending in the United States Circuit Court of Appeals for the Eighth Circuit, entitled 'Central Improvement Company Appellant, v. Cambria Steel Company, Guardian Trust Company et al., Appellees, No. 3489, and Guardian Trust Company, Appellant, v. Cambria Steel Company, Kansas City Southern Railway Company et al., Appellees, No. 3490 Consolidated Cause.' That such cause involved a review of the record in case No. 2468 of this District Court in which latter cause the Cambria Steel Company was complainant, the receivers of the Kansas City Suburban Belt Railroad Company-- herein called the 'Belt Company'-- et al. were ancillary complainants, and the Kansas City Southern Railway Company, intervener, and to which the Guardian Trust Company, the Central Improvement Company, and various other companies were defendants.

'That the said services * * * were rendered * * * more particularly in and about the issues raised upon and occasioned by two different intervening petitions filed in said cause in the said Court of Appeals by and in the name of Edward A. and Charles B. Shedd and Robert H. Law, stockholders of said Guardian Trust Company on behalf of said Trust Company, and have resulted in a large financial benefit to said Guardian Trust Company and all its stockholders. * * *

'That the said legal services for which compensation is here asked were rendered and furnished by this claimant and by associate counsel who were employed and paid by this claimant. * * * '

The trial court found that the sum of $15,000 was the reasonable value of the services rendered by claimant in behalf of the Trust Company and entered judgment in his favor for said sum. Claimant has appealed the case to this court and urges that, under the uncontradicted evidence in the case, he was entitled to the whole of the sum claimed by him.

The consolidated cause above mentioned was argued and taken under advisement on the 26th day of May, 1911, by the court which will be referred to hereafter when necessary for clearness as the Circuit Court of Appeals.

The status of the litigation at the time the cause was submitted will be seen from the following statement which we quote from the opinion subsequently filed in the case and reported in 201 Fed.pp. 816, 817, 120 C.C.A. 126, 127:

'On September 6, 1900, the Cambria Company filed a creditor's bill against the Belt Company, Trust Company, and other companies, the object and purpose of which was to recover certain securities belonging to the Belt Company, which had been deposited with the Trust Company and security for the Belt Company's indebtedness to the Trust Company, claiming in its bill that the Belt Company was not in fact indebted to the Trust Company, and made an application for the appointment of a receiver, and on that day receivers were appointed for the Belt Company upon the joint application of the Cambria Company and the Provident Company complainant in the foreclosure suit against the Belt Company.

'In the suit brought by the Cambria Company issues were joined, the receivers appointed for the Belt Company filed a cross-bill against the Trust Company, denying indebtedness upon the part of the Belt Company to the Trust Company, but claiming that the Trust Company was in fact a debtor of the Belt Company. The case was, in November, 1900, referred to Hon. Shannon C. Douglass, as special master, to take the testimony, etc. The hearing proceeded before the master, and after much testimony had been taken an order was made by the court in February, 1905, pursuant to a stipulation of parties, admitting the Southern Company as a party and giving it leave to file a petition of intervention, and the Southern Company filed its petition of intervention on the 27th day of that month, claiming that the various securities held by the Trust Company to secure its indebtedness against the Belt Company were covered by the mortgage which was foreclosed against the Belt Company, and sought to recover such property by its bill of intervention.

'The hearing before the master extended over several years, upwards of 34,000 pages of testimony was taken, and the master, on the 21st of May, 1910, filed his report, which comprises 381 pages of the printed record. The evidence has not been brought to this court; hence all questions of fact as found by the master are conclusive upon the parties on this appeal.

'The master found that the evidence did not support the claim of the Cambria Company and recommended that its bill be dismissed for want of equity. The master found upon the accounting that there was due from the Belt Company to the Trust Company the sum of $639,658.86.

'The master found fully the facts as to the reorganization plan (referred to in the preceding pages of the opinion), the acquiring by the Southern Company of the stock and bonds of the Gulf Company, Dock Company, and Belt Company, the issuing of its new stock and bonds to the holders of the bonds and stock of those companies, in exchange for the bonds and stock of the respective companies held by them. * * *

'The master found, as a matter of law, that the Southern Company was not liable for the debts of the Belt Company.

'The Trust Company filed exceptions to the report of the master, among other things to the finding that the Southern Company was not liable for the floating indebtedness of the Belt Company, giving as reasons therefor that that was not an issue in the case, and no finding thereon should have been made by the master. * * *

'Subsequently, a hearing was had by the court upon the report of the master and the exceptions thereto, the exceptions were overruled, and the report of the special master was in all things approved and confirmed, and a decree entered in accordance with the findings and recommendations of the master, from which the Trust Company and the Central Improvement Company have prosecuted their appeal. * * *

'The assignments of error relied upon in this court are: (1) That the court erred in including in said decree the finding that the Southern Company did not assume or agree to pay or become liable for the indebtedness owing by the Belt Company to the Trust Company,' etc.

The case was submitted in behalf of the appellant Guardian Trust Company upon the assignment of error above quoted.

On the 16th day of June following, claimant through associate counsel presented to the Circuit Court of Appeals the first of the two intervening petitions above mentioned and asked leave to file the same. In the petition the attention of the court was called to the finding in the decree of the lower court that the Southern Company was not liable for the debts of the Belt Company, and the suggestion was made that this finding was not supported by the facts found by the master appearing in the record. It was also called to the attention of the court that in the briefs filed by the Trust Company the only question argued was the right of the lower court to make a finding in respect to the liability of the Southern Company for the indebtedness of the Belt Company to the Trust Company, and the suggestion was made, if the court should hold that the lower court had the right to make a finding in respect to the liability of the Southern Company for this indebtedness of the Belt Company, it would follow, if the merits of the ruling of the trial court were not gone into, the Trust Company would lose its right to a decree against the Southern Company for the amount due from the Belt Company.

On the return day counsel for the Trust Company joined hands with counsel for the Southern Company in opposing the application of the stockholders to intervene and present the issue raised by them in their petition. Among other things, he said:

'The law covering that application is in our judgment quite fully and ably presented by the counsel opposed to us. We are, counsel on both sides of this case, of the opinion that the petition of these stockholders should not be granted. Both sides are desirous of the speedy determination of the case; both sides are desirous of the judgment of the court on the issue of the case.

'We believe, for the reasons already stated, that the application is not proper. It comes untimely and from persons not entitled to be heard by this court. * * * We desire to say further in respect to our personal conduct in this litigation, that not only did we prepare the case, but as to policy to be adopted and the manner of presentation to this court, and the subject-matter of this appeal, but the matter was taken up before the appeal was taken with the members of the executive

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