Rochester v. Gonterman

• Decision Date: 17 February 1932
• Docket Number: No. 30028.,30028.
• Citation: 49 S.W.2d 71
• Parties: ROCHESTER et al. v. GONTERMAN et al.
• Court: Missouri Supreme Court

49 S.W.2d 71

ROCHESTER et al. v. GONTERMAN et al.

No. 30028.

Supreme Court of Missouri, Division No. 2.

February 17, 1932.

Appellant's Motion for Rehearing Overruled April 8, 1932.

Appeal from St. Louis Circuit Court; Frank Landwehr, Judge.

Suit by Nesbit Rochester and others against C. J. Gonterman and others, wherein Max Sigoloff and another were appointed receivers of the Midcontinent Finance Corporation. From an order allowing Taylor R. Young attorney's fee for services rendered in receivership proceeding, Taylor R. Young appeals.

Affirmed.

Abbott, Fauntleroy, Cullen & Edwards, of St. Louis, for appellant.

Karol Korngold, and Foristel, Mudd, Blair, & Habenicht, all of St. Louis, for respondents.

WESTHUES, C.

Appellant in this case appealed from an order, entered by the circuit court of the city of St. Louis, Mo., which allowed appellant $2,000 as an attorney's fee, for services rendered in a receivership proceeding, between the above-named plaintiffs and defendants. Appellant asked for an allowance of $35,000 to be taxed as costs in the case. The court after hearing evidence on the motion, allowed appellant $2,000.

Appellant takes the position that he personally performed the major portion of the legal work, filed the original receivership suit, and thereby brought into court and preserved the assets of the Midcontinent Finance Corporation, which amounted to over $400,000 for the benefit of the innocent stockholders; that the allowance of $2,000, as an attorney's fee, under the circumstances, is grossly inadequate.

Respondents' position is: First, that appellant represented parties whose interests in the receivership suit were, to some extent at least, antagonistic to that of the stockholders; second, that the receivers were not appointed at the behest of appellant's clients; third, that the receivers were appointed at the request of intervening petitioners, who were innocent stockholders represented by Macauley, an attorney.

A short statement of the controversy in the receivership suit will be necessary in order to understand the issues presented in this appeal. The defendant Midcontinent Finance Corporation was a Missouri corporation with headquarters in the city of St. Louis, Mo. Defendant C. J. Gonterman was its president; plaintiff R. S. Mitchell, vice president; and plaintiff Nesbit Rochester, secretary and treasurer. The directors of this corporation consisted of the above-mentioned officers, and defendants Henry W. Dohrman, Leo Menner, L. B. Porter, Joseph R. Braun, Henry Osterhage, and Herman Weilbacher, residents of the state of Illinois. The business of the corporation consisted chiefly of dealing in subdivisions and additions to certain cities in the state of Illinois. Through a lure of big profits, the company sold stock amounting to approximately $409,000. It held unsecured notes, valued at $270,000, and installment notes, valued at $55,000, which were partly secured by lots in various subdivisions. We will not go into detail, as to the business dealings, except to state that they were of a questionable character and in lieu of the large profits promised were ultimately bound to result in much grief and financial loss to the stockholders and investors. Gonterman was the dominating figure in the corporation. He was appointed fiscal agent of the corporation by the board of directors. At various times Gonterman misappropriated money belonging to the corporation. This resulted in differences between Gonterman and plaintiffs Mitchell and Rochester. The misappropriations continued and the breach between the officers widened, finally resulting in an agreement whereby Mitchell and Rochester sold their stock to Gonterman and resigned as directors. Rochester, as treasurer, had in his possession all of the assets of the corporation and refused to deliver them to the corporation until Gonterman paid for the stock. During these various disputes Gonterman threatened to return the notes, held by the company, to the makers thereof, marked paid. When Rochester refused to deliver to the corporation the assets, which he held as treasurer, Gonterman and the other directors prepared to file a replevin suit. It was at this point that Rochester and Mitchell first consulted appellant and advised with him as to what course to pursue. Rochester and Mitchell, at the advice of appellant, rescinded their contract for the sale of their stock and also recalled their resignation as members of the board of directors. Rochester also retained the assets of the corporation. Appellant then prepared and filed in the circuit court of St. Louis a petition asking that a receiver be appointed for the defendant corporation, with Mitchell and Rochester as the only plaintiffs. Appellant also, on behalf of the plaintiffs, tendered in court the assets of the corporation to be distributed as the court directed. While this suit was pending, appellant performed much labor preparing for trial. It was a very difficult and tedious task to collect the evidence and examine the corporation's numerous transactions with regard to the sale and resale of lots and the exchange of notes and stocks. Appellant testified that he realized, as the court later found, that his clients could not maintain their suit for receivership, because they had participated in some of the questionable transactions and shared in the profits resulting therefrom. Appellant then sought to have a number of stockholders file intervening petitions, asking that a receiver be appointed for the corporation. A number of stockholders did file such petitions but afterwards withdrew their names, apparently at the request of Gonterman. Finally a number of stockholders intervened, who did not withdraw, and were made parties plaintiffs. Macauley filed these intervening petitions, as attorney for the stockholders. The trial court appointed receivers for the corporation, on the petition of these intervening stockholders. The trial court in its final judgment dismissed the petition of Mitchell and Rochester, as to all of the defendants, because the court found that they had not come into court with clean hands. Appellant testified that while Macauley filed the intervening petitions, he (appellant) prepared or dictated them and was instrumental in having them filed. Appellant also testified that the last-named plaintiffs, Bolgard and Grossheim, were his clients throughout the entire litigation. On the other hand, Macauley testified, in substance, that he personally represented the intervening petitioners throughout the entire trial. Macauley explained appellant's connection with the intervening petitioners in the following language: "Now, during the progress of the trial, I think the third day of the trial, in order to avoid delaying the Court by making objections — I think it was the third day of the trial — I suggested Mr. Young be made associate counsel for intervening petitioners for the purpose only of the — to save me the trouble of offering the same testimony that was offered for his client, and to save me making objections to any testimony that might be offered by the other side. Mr. Young prepared that memorandum, but he didn't limit it to that particular purpose, simply entered his appearance as associate counsel for the intervening petitioners." Appellant evidently realized that he could not maintain his petition for Mitchell and Rochester and that it was necessary to have some of the innocent stockholders intervene. Note appellant's testimony:

"Mr. Cullen (interrupting): The decree speaks for itself.

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