Perry Mason Shoe Co. v. Sykes

• Decision Date: 18 February 1895
• Court: Mississippi Supreme Court
• Parties: PERRY-MASON SHOE Co. ET AL. v. W. G. SYKES

17 So. 171

72 Miss. 390

PERRY-MASON SHOE Co. ET AL. v. W. G. SYKES

Supreme Court of Mississippi

February 18, 1895

FROM the chancery court of Monroe county, R. C. BECKETT, ESQ. Special Chancellor.

The opinion states the case.

Decree accordingly.

Clifton & Eckford, for appellants, Blacker, Gerstle & Co.

The receiver is only authorized to employ counsel and charge the trust estate with attorney's fees where the litigation is for the protection and benefit of the estate. 20 Am. & Eng Enc. L., 189, note 2; Bank v. Duncan, 52 Miss. 740; 16 Wall., 218; 96 Am. Dec., 488; 2 Story on Eq. Jur., 36; 4 Gratt., 208; High on Receivers, § 865. The law does not contemplate that the receiver shall pay attorney's fees for defending the assignment when there are in court preferred creditors represented by attorneys asserting the validity of the assignment. The receiver has nothing to do with the issue involved or validity of the assignment. The trust is to be administered by him, whether the assignment be good or not. If held good, he must be governed by the directions of the assignment; if set aside, he administers the estate as directed by the statute. It is as just that the receiver should pay the attorneys' fees of the creditors who successfully attacked the assignment by cross petition as to pay the attorneys of the preferred creditors who unsuccessfully attack it. There is no requirement that the receiver shall answer the cross petition. He is a mere stakeholder, without interest in the litigation. He should protect the estate from all unnecessary litigation, but should not participate in a conflict between creditors over the trust fund. He can only be allowed counsel fees for preserving the estate for the successful parties. 20 Am. &amp Eng. Enc. L., 189; Edwards on Receivers, 93; 6 Paige, 215; 8 Col. 317; High on Receivers, 216. It is contended that there is identity of interest between the receiver and Mrs. Howard, because it was the receiver's duty to defend the assignment, and, in doing so, to show the validity of her debt, and that, as there is no conflict, it was legitimate for both to employ the same attorneys. The statute, however, requires each creditor to establish his own claim.

Houston & Reynolds, for appellant, Perry-Mason Shoe Co.

Sykes & Bristow, for appellee.

The statute having made the assignee receiver, he is entitled to expenses as ordinary receivers. Code 1892, §§ 119, 582; 133 U.S. 78; 20 Am. & Eng. Enc. L., 171. The allowance was within the discretion of the court, and will be sustained unless it appears that the discretion was abused. Lichtenstein v. Dial, 68 Miss. 54; High on Receivers, § 783; Beach on Receivers, § 774.

The bill of exceptions having been excluded, the point that the compensation allowed was excessive cannot be considered. The only question remaining now is whether, under any conceivable state of facts arising under the record, the allowance can be held legal. Bernheim v. Brogan, 66 Miss. 184. That the receiver may be allowed compensation payable out of the estate in his hands, has been expressly decided in Memphis Grocery Co. v. Leach, 71 Miss. 959.

Whether it was improper for the counsel of the receiver to represent the preferred creditors must depend upon whether the interests represented were antagonistic. The interest of Mrs. Howard and that of the receiver were identical, each seeking to uphold the assignment. See High on Receivers, § 217; Beach on Receivers, § 751.

George C. Paine, on the same side,

OPINION

WHITFIELD, J.

The Perry-Mason Shoe Company, in its original cross petition, states that it "submits to the jurisdiction of the chancery court in respect to all litigation and liability growing out of the bond given in this cause," and, in its bond, obligates itself to "pay, to whomsoever the . . court shall order, the damages," etc. There is, therefore, no error in the alternative direction to pay Elkin and Goodbar Shoe Co. $ 561.20

The original cross petition of the Perry-Mason Shoe Company, "seeking," in the language of the chancellor in the final decree, "to rescind the sale of certain goods, and replevy the same," is the one dismissed, not the amended cross petition asking the fixing of a lien and personal decree against W. E. Howard for $ 1,055.45 worth of goods alleged to have been sold as a "different lot of goods" from the lot replevied. On the return of the case into the court below, such personal decree Should be entered. The case is still pending there. There was no error, in this view, in not entering the decree on the amended cross petition still pending.

On the merits the chancellor must have found, as facts, that the representations made by Howard to Perry were made not to induce the sale of goods, but to secure an extension of time on past-due indebtedness, for the payment of which Perry was then making very exigent demand--threatening suit; that the goods sold by the agent, Craddock, were sold before, and not on the faith of any such representations, if then made "in general conversation" by Howard; and that the goods originally sold, and those sold through Craddock, were not sold in reliance upon the reports of the commercial agencies. We cannot say that these findings of fact are unwarranted. This disposes of the appeal by the Perry-Mason Shoe Company,

The appeal of Blacker, Gerstle & Co. (it is not a cross appeal) questions the correctness of the chancellor's action in allowing the sums set out in the decree to the receiver and assignee as compensation for his services as receiver and assignee; to the receiver and assignee as attorney's fees, and as compensation for W. E. Howard, for services as clerk.

The assignment was set aside, the debt preferred by Howard in favor of his wife being void under § 1178, code 1880, the chancellor finding that both Mr. and Mrs. Howard acted "in perfect good faith." The bill of exceptions has been stricken from the record, and we can only look to the record, aside from the bill of exceptions, in determining as to the propriety of the court's action on these points.

As to the allowance made to the receiver for Howard, we are not prepared to say it is unreasonable, in the absence of the bill of exceptions. Respecting the amount decreed to W. G. Sykes, as receiver, the chancellor manifestly made the allowance as a gross sum for the entire service as receiver not as part for salary as clerk, and part as commissions; and this, as to the mode of fixing his compensation, was correct, the receivership being one "in which the receiver was at once receiver and manager of a business." Lichtenstein v. Dial, 68 Miss. 54, 8 So. 272. As to the reasonableness of the compensation, as to amount, in the absence of a bill of exceptions, and "in view of the facts of the case, and the duties and responsibilities of the receiver," we cannot say the chancellor erred in the exercise of the large discretion committed to him in such matters. Bernheim v. Brogan, 66 Miss. 184, 6 So. 649.

More difficulty is encountered in the consideration of the allowance of the attorney's fees to the receiver and assignee. We concur entirely with the learned chancellor in holding that it was perfectly proper, under the circumstances of this case, for the attorneys of the receiver and assignee to accept, subsequently, employment by Mrs. Howard, the preferred creditor. The service rendered was in all respects the same identical throughout with that which would have been necessary to be rendered by the attorneys, had Mrs. Howard not been in the case. "The validity of her debt went to the whole assignment," as correctly observed by the chancellor. High on Receivers (3d ed.), § 217; Beach on Receivers, § 263.

Leaving entirely out of view, however, the bill of exceptions, it clearly appears--especially from the statements in the "petition for assignee and attorney's fees," and the "receiver's final report"--that the amount allowed manifestly embraced, in part, fees for services in defending unsuccessfully the suits brought by the cross petitioners, Blacker, Gerstle & Co., and others, to declare the assignment void. The former recites that, "soon after the filing of his [assignee's] petition, numerous cross petitions were filed by various parties claiming to be creditors," etc., "setting up various claims to and liens upon the property in petitioner's hands as an officer of this court, whereby divers issues were taken requiring adjudication by this court," and that said attorneys represented "this receiver on the trial of the said issues," etc.

The question is thus squarely presented, in the construction of chapter 8 of the code of 1892, where an assignment for the benefit of creditors is declared void, not for actual fraud, but by reason of failure to comply with some positive requirement of statute law, can the assignee--regarded in the character of assignee or of receiver--be allowed fees for attorney's services rendered in an unsuccessful defense of the assignment against cross petitioning creditors, who set aside the assignment, and secure prior liens, under § 121 of the code of 1892, such fees to be charged upon and payable out of such assigned property on which such liens have thus been fixed

It will serve to clear the real, point under review of embarrassment to say the services of the attorneys of the assignee and receiver rendered in successfully defending the claims made by Bolton and the Perry-Mason Shoe Company in their cross petitions, whereby they sought to rescind the sales, and recover the specific goods, were services for which compensation was properly allowable, as having been rendered in litigation resulting in the preservation for all entitled to the property of the assignor, either under the assignment or the cross...