Stone v. Omaha Fire Ins. Co.

• Decision Date: 22 May 1901
• Citation: 86 N.W. 468,61 Neb. 834
• Parties: STONE v. OMAHA FIRE INS. CO. ET AL.
• Court: Nebraska Supreme Court

61 Neb. 834

86 N.W. 468

STONE

v.OMAHA FIRE INS. CO. ET AL.

Supreme Court of Nebraska.

May 22, 1901.

Syllabus by the Court.

1. The expenses of procuring a receivership of an insolvent corporation, including services of an attorney in consultations, preparing papers, and procuring the appointment of receiver, are properly chargeable against the fund so brought into the court's control.

2. Where the value of an attorney's services rendered to a receiver is admitted or clearly established, it is an abuse of discretion of the trial court to order the attorney's claim for such services to be reduced a certain amount below such value, on the ground that the corporation is insolvent, and the creditors will be compelled to lose a large proportion of their claim, and that the attorney received a large volume of business from one client.

Appeal from district court, Douglas county; Scott, Judge.

Action by Emerson L. Stone against the Omaha Fire Insurance Company and others. Judgment for plaintiff, and W. W. Morsman appeals. Reversed.W. W. Morsman, in pro. per.

L. F. Crofoot, for appellee.

SEDGWICK, C.

The directors of the Omaha Fire Insurance Company, finding that its affairs had become embarrassed, and it could no longer continue business upon the lines that had been pursued, consulted the appellant, Mr. Morsman, who is a member of the Douglas county bar, as to the condition of the affairs of the corporation, and as to the best course to be pursued. After several consultations, in which the affairs of the company seem to have been thoroughly investigated, it was thought best, and the directors were advised by their counsel, to make application to the district court of Douglas county for the appointment of a receiver to take charge of the property and business of the corporation and wind up its affairs. Thereupon the appellant, under the instruction of the directors, began an action in the name of Emerson L. Stone, one of the directors, against the Omaha Fire Insurance Company, and procured the appointment of a receiver, who duly qualified as such, and took possession of the assets of the company, which were then supposed to be about the value of $50,000, but were afterwards found to be of somewhat less value. The receiver was continued a little more than a year, when he was discharged by the court, upon complaint of one of the creditors, on the ground that he was directly or indirectly personally interested in the assets. No charges of mismanagement or any default were made against the receiver; and, indeed, the affairs of the receivership, so far as appears from the record, were faithfully and efficiently conducted during his receivership. Upon the discharge of the first receiver, the present receiver, Mr. Crofoot, was appointed by the court. The appellant seems to have acted as sole attorney for the first receiver. The business that came into the hands of the first receiver was somewhat complicated, and occasioned a more than usual demand for the services of an attorney. On the 6th day of February, 1897, near the end of the first year from the time of his employment, the appellant presented to the first receiver an account for specified services, amounting in the aggregate to $935. The receiver presented it to the district court and recommended its allowance. It was soon after that that the receiver was removed, and Mr. Crofoot appointed in his place. Two of the creditors filed exceptions to appellant's first claim, in which they specified two items, and object “that they were for services rendered to the plaintiff and other stockholders,” and then say, “While no fault could probably be found with any item in this bill if it stood by itself, we respectfully suggest that since all of these services were rendered to one party, and because the assets on hand are very limited, the whole bill ought to be reduced 30%.” The record does not disclose any ruling of the court upon this bill at that time, but the court ordered the new receiver to investigate this claim and report to the court. In accordance with this order, the receiver reported, and speaks of the first item of the claim, to wit, “Preparing papers, consultations, procuring order, and appointing receiver, $150.00,” as having been already rejected by the court, and, specifiying three other items, suggests that a smaller charge would be reasonable, and says that the remaining items of the bill are just and reasonable. The exceptions filed by the two creditors above referred to, and this report of the receiver, appear to have been treated by all parties as constituting an answer to plaintiff's claim; and there was no controversy in regard to any item of the first claim, except as to the four items referred to. On the 4th day of May, 1897, the appellant filed a second claim, for services rendered or completed after the filing of the first claim. The second claim was for $765, the total amount of both claims being $1,700. There was a hearing had on these claims, and the court disallowed the first item of the first claim, to wit, “February 24th, 1896, preparing papers, consultations, procuring order, and appointing receiver, $150.00,” for the reason, as stated in the order, that it was “an improper charge against the receiver, the same being for services rendered the corporation,” and allowed the appellant on both claims $1,200, and no more. From this order the appellant has appealed to this court.

1. Was the service of February 24, 1896,--preparing papers, consultations, procuring order appointing receiver,--an improper charge against the funds in the hands of the receiver? It seems clear to us that it was not. In Trustees v. Greenough, 105 U. S. 527, 26 L. Ed. 1157, the court said: “It is a general principle that a trust estate must bear the expenses of its administration. It is also established by...