Trimble v. Texarkana & Ft. S. Ry. Co.

• Decision Date: 30 June 1906
• Citation: 199 Mo. 44,97 S.W. 164
• Court: Missouri Supreme Court
• Parties: TRIMBLE et al. v. TEXARKANA & FT. S. RY. CO.

97 S.W. 164

199 Mo. 44

TRIMBLE et al. v. TEXARKANA & FT. S. RY. CO.

Supreme Court of Missouri.

June 30, 1906.

Rehearing Denied October 19, 1906.

ATTORNEY AND CLIENT—COMPENSATION—EMPLOYMENT — RELATED CORPORATIONS — IMPLIED CONTRACTS—SERVICES OF ATTORNEYS.

Plaintiffs were employed as attorneys by the G. company, which owned the stock and bonds of and controlled the T. and S. companies, and operated the whole line of railroads owned by them; and, without any other express contract, they rendered services for all the companies for several years, rendering bills therefor to, and being paid by, the G. company, till institution of suit to foreclose the mortgage of the G. company, as collateral for which the bonds and stock of the T. company had been hypothecated; and in such suit, in which receivers were appointed, so that earnings of the T. company no longer came directly to the G. company, plaintiffs continued to render services to all the companies. Held, that a contract of the T. company to pay plaintiffs for the services rendered it in such suit could be implied, notwithstanding the relation of the companies.

Appeal from Circuit Court, Jackson County; Jas. Gibson and A. L. Cooper, Special Judges.

Action by J. McD. Trimble and others against the Texarkana & Ft. Smith Railway Company. Judgment for plaintiffs. Defendant appeals. Affirmed.

Lathrop, Morrow, Fox & Moore and Cyrus Crane, for appellant. J. A. Eaton, for respondent.

VALLIANT, J.

Plaintiffs, who are attorneys at law, sue to recover the value of legal services alleged to have been rendered by them to defendant in certain negotiations and suits which resulted in a foreclosure of the mortgages and a reorganization of a system of railroads of which the defendant was one of the constituent parts. The Kansas City, Pittsburg & Gulf Railroad Company was a Missouri corporation operating a system of railroads extending from Kansas City, Mo., to Port Arthur, Tex. One of the railroads in the system was that of the defendant, the Texarkana & Ft. Smith Railway Company, a Texas corporation, and another that of the Kansas City, Shreveport & Gulf Railway Company, a Louisiana corporation. The Kansas City, Pittsburg & Gulf Railroad Company, the Missouri corporation which hereinafter we will call the "Gulf Company," owned or controlled all of the stock and the bonds issued by the other two companies and operated the whole line. On the one side, it is said that the Gulf Company, the Missouri corporation, was really the parent and owner of the whole system extending from Kansas City to the Gulf; that the Texas and Louisiana corporations were but subsidiary organizations; that the only reason for the organization of a separate corporation in Texas was that by the laws of that state a domestic corporation only could own or operate a railroad therein, and the reason for the Louisiana corporation was that only a Louisiana corporation could exercise the right of eminent domain in that state. The plaintiffs, on the other hand, deny that the Texas corporation was a mere subsidiary organization, and assert that it was formed before the Missouri corporation was, but, at all events, it was, under the laws of Texas, required to have and did have its offices and officers in that state; that it owned 200 miles of railroad, and had issued its mortgage bonds to the amount of $5,591,000. But plaintiffs admit that the Gulf Company owned all of the stock and bonds of the Texas company and had hypothecated them as collateral security for its own mortgage bonds and other indebtedness, and it operated the whole system as one road. For several years before the litigation out of which this suit arises, the plaintiffs had been the attorneys for the Gulf Company, and under that employment had rendered services to the defendant, the Texas company, and also to the Louisiana company. They always rendered their bills to the Gulf Company, and the latter paid them, and that course of business continued down to the time when, under the foreclosure litigation out of which this suit grew, receivers for the several roads were appointed. About the 1st of April, 1899, the Gulf Company made default in payment of its mortgage debt, and a suit was filed against it in the state circuit court in Jackson county, in the name of Grannis and others as plaintiffs, under which receivers were appointed who took charge of the railroad in Missouri. The plaintiffs in the suit at bar were the attorneys who filed that suit for Grannis, but it was done at the instance of the Gulf Company and to forestall an anticipated suit from a more hostile source. That suit was removed into the federal court on the petition of one of the defendants, and, pending a motion to remand it to the state court, the State Trust Company, a foreign corporation, one of the trustees in the deed of trust that was being foreclosed, filed a like suit in the federal court at Kansas City praying a receiver, foreclosure, etc.

The only real controversy seems to have been in regard to who should dominate the litigation. That point was finally settled by agreement between the plaintiffs as attorneys in the Grannis suit representing the Gulf Company on the one side, and the attorneys who had filed the other foreclosure suit in the federal court and who represented the creditor interest, on the other side; the substantial point in the agreement being that one set of receivers should be appointed by the federal court who should have charge of the whole system of railroads from Kansas City to the Gulf, and that these plaintiffs and the attorneys who had commenced the suit in the federal court were to be employed as the attorneys for the receivers along the whole line. After that agreement was reached, an amended bill was filed in the federal court in which this defendant, the Texas company, and the Louisiana company were made parties defendant, and their appearance was entered. Thereafter everything was harmonious, and the cause proceeded to a final decree of foreclosure, a sale followed, and the property of the railroad companies passed into the ownership and possession of a corporation formed for the purpose by agreement of the parties called the "Kansas City Southern Railway Company," and the receivership was wound up. Before the final decree the whole matter had been settled by agreement, and the final proceedings in court were in accordance with the agreement. The agreement also covered other valuable railroad properties theretofore controlled by the Gulf Company, consisting of terminal railroads at Kansas City and at the Gulf end of the line. In addition to the suits above mentioned, there were other...