Stone v. Hart

• Decision Date: 15 January 1902
• Citation: 66 S.W. 191
• Parties: STONE et al. v. HART et al. [1]
• Court: Kentucky Court of Appeals

66 S.W. 191

STONE et al. v. HART et al. ^[1]

Court of Appeals of Kentucky.

January 15, 1902

Appeal from circuit court, Fleming county.

"Not to be officially reported."

Action by R. K. Hart and R. H. Sousley, assignees of David Wilson against David Wilson and others, to settle the assigned estate. Judgment as to attorney's fees, and H. L. Stone surviving partner, and the Louisville National Banking Company, appeal. Reversed.

H. L Stone, Leopold & Pennebaker, Barnett & Barnett, and Hazelrigg & Chenault, for appellants.

W. G Dearing, G. A. Cassidy, B. S. Grannis, J. H. Power, A. M. J. Cochran, and John P. McCartney, for appellees Hart and Sousley. St. John Boyle and L. R. Yeaman, for appellee surety company.

O'REAR, J.

Appellees Hart and Sousley are the trustees named in, and qualifying and acting under, a general deed of assignment for the benefit of creditors executed by David Wilson, banker. The trustees employed counsel to assist them in the management and settlement of the trust. Sudduth, of the law firm of Stone & Sudduth, having peculiar personal reasons for keeping in close touch with the management of the trust, agreed to, and did, give his professional attention to the trustees' affairs, agreeing to charge no fee therefor. Of this arrangement his partner was ignorant. At the close of the suit brought to settle the trust, a motion was made by Stone, as surviving partner,--Sudduth having died,--for an allowance to him, as such, of a reasonable fee for the services of his partner. On the facts stated, the court is of the opinion that the agreement of Sudduth was the condition upon which he was permitted to render the service, and, as between his partner and the clients, the partner should suffer, if either must. For the breach of duty was to the partner. The clients have done no wrong in the matter. The circuit court having ruled accordingly. its action is approved.

A more serious question is presented, however, on the claim of the Louisville National Banking Company. Sudduth was indebted to this bank several thousand dollars. The bank had placed the paper with its attorneys for suit, and was taking steps to coerce the payment of the money. In order to procure further time, Sudduth proposed to assign to the bank, as collateral on his indebtedness to it, his fee against the trustees of Wilson in the matter of the trust estate. Sudduth's purposes and necessities in this matter were known to the assignees, Hart and Sousley, and they executed with him the following paper in the form shown, to wit:

"As additional security for my indebtedness to the Louisville Banking Company, I hereby assign to said Louisville Banking Company all of my fee for services as attorney for the assignees of David Wilson in the settlement of the assigned estate, which fee is to be allowed by the Fleming circuit court in the case of R. K. Hart and R. H. Sousley vs. David Wilson, etc., and authorize said assignees to pay such fee to the Louisville Banking Company, which sum shall be applied to my said debt or debts, and the remainder, if any, paid over to me. August 31st, 1897. [Signed] W. A. Sudduth.

"As assignees of David Wilson, we accept notice of the above assignment, and agree to pay the Louisville Banking Company whatever sum in fees may be allowed to W. A. Sudduth. This August 31st, 1897. [Signed] R. K. Hart, R. H. Sousley, Assgs. of David Wilson. Attest: [Signed] Lawrence S. Leopold."

To have this act confirmed before finally accepting it, the president of the bank wrote the assignees the following letter:

"Sept. 8, 1897. Mess. R. K. Hart & R. H. Sousley, Assignees of David Wilson, Flemingsburg, Ky.--Gentlemen: Mr. W. A. Sudduth has delivered to us his assignment to us of his fee for services as your atty. in the settlement of the estate of David Wilson, together with your acknowledgment of notice thereof, and your promise to pay us. But I beg to ask you when W. A. Sudduth's fee will probably be allowed, and what you think will be the amount of it? Also the 5% divd. upon the cerf. of deposit we hold, and which we have written you about. May I again request that you will have the kindness to remit it to us? Very resp'y [signed] Theodore Harris, Pt."

To it they responded thus:

"Sept 10th, 1897. Theodore Harris, President, Louisville, Ky.--Dear Sir: We are unable to say what Mr. Sudduth's fee will be in the settlement of the affairs of the Exchange Bank, as the fee will be regulated by the court. It should be a large one. He has done very valuable services. We will be unable to remit 5% to you until further orders of court. Yours, truly, [signed] Hart & Sousley, Assignees."

Later, having his fears aroused by some rumor reaching him that Sudduth was to have no fee, the bank's president wrote one of the assignees, and the following correspondence ensued:

"July 2, 1898. Mr. R. K. Hart, Flemingsburg, Ky.--Dear Sir: I wish to trouble you for a little information. There is a mystery in the matter of yours and Mr. Sudduth's and our affairs, which I am sure you will be able to solve. Mr. Sudduth insists that there is a fee coming to him in the case of yours and Mr. Sousley's as assignees of Wilson. He seems to have good reason, too, for thinking so. He refers me to his assignment of his fee dated August 31, 1897, and to your acknowledgment of that assignment, and agreement to pay us whatever sum in fees should be allowed Mr. Sudduth. Moreover, we have your letter of September 10th, 1897, answering our questions as to what Mr. Sudduth's fee would be, wherein you say it should be a large fee, as he had done very valuable service. Now we understand you to doubt if anything will be allowed Mr. Sudduth. Please explain this, for I do not understand it. How is it Mr. Sudduth, who was the attorney for yourself and Mr. Sousley as assignee, and his services were very valuable, is to get nothing, or next to nothing? Very truly yours, [signed] Theodore Harris, President."

"Flemingsburg, Ky. July 4th, 1898. Theodore Harris, Pres., Louisville, Ky.--Dear Sir: Yours of July 2nd to hand. Now, as to what you may understand as to something that has been told you I should have said, I am not responsible. I say to you that whatever fee the court allows Mr. Sudduth in the case of Hart & Sousley, assignees, vs. David Wilson, you shall have. I hope this will be satisfactory to you. Yours, truly, R. K. Hart."

Without the knowledge of the bank, and by the procurement of the assignees, allowances were made to them of $9,500, as counsel fees, in addition to the allowances for their own services. The most of this sum they disbursed to other attorneys. But ...