Watson v. Johnson, 24458.

• Decision Date: 03 August 1933
• Docket Number: 24458.
• Citation: 174 Wash. 12,24 P.2d 592
• Parties: WATSON v. JOHNSON.
• Court: Washington Supreme Court

24 P.2d 592

174 Wash. 12

WATSON v. JOHNSON.

No. 24458.

Supreme Court of Washington

August 3, 1933

Department 2.

Appeal from Superior Court, King County; Chester A. Batchelor Judge.

Action by Cora L. Watson against Harry C. Johnson, as receiver of the Home Savings & Loan Association, a corporation. From an order of the superior court, both parties appeal.

Order affirmed in part, and in part disapproved, and cause remanded, with direction.

Riddell & Brackett and Harold Worford, all of Seattle, for appellant.

Bausman Oldham, Cohen & Jarvis, of Seattle, for respondent.

MAIN Justice.

This proceeding involves various claims asserted against the receiver of the Home Savings & Loan Association. After all the claims had been assigned to Cora L. Watson, she petitioned the receiver for their allowance. A hearing was had upon the claims in the superior court, some of which were allowed and some rejected. The petitioner appealed from the order of the superior court in so far as it disallowed the claims, and the receiver appealed from the order wherein two of the claims were allowed.

The Home Savings & Loan Association was a corporation organized and existing under the laws of this state relative to savings and loan associations. July 7, 1931, the state director of efficiency took charge of the affairs of the association and gave its officers twenty days' notice, requiring them to put the affairs of the association in a sound condition otherwise, an application for a receivership would be made. At this time the approximate capital of the association was $4,500,000, which had been impaired to the extent of over $400,000 by misappropriation of its funds and securities. A meeting of the shareholders of the association was held September 7, 1931, at which it was resolved that the association proceed to voluntarily liquidate. On the same day, the board of directors of the association successively resigned, and as one resigned another director was elected and qualified. This continued until an entirely new board was elected. The director of efficiency objected to two of the directors elected, and declined to allow the association to proceed with a voluntary liquidation. He gave another notice to the new board directing them to put the affairs of the association in a sound condition within twenty days, otherwise a petition for a receivership would be filed.

September 23, 1931, the board of directors employed the law firm of Riddell, Brackett & Fowler to advise and assist them in proceeding with voluntary liquidation, and, in the event that the same was refused by the director of efficiency, to defend any action brought looking to a receivership. Thereafter the director of efficiency, in a proceeding brought for that purpose, and on October 28, 1932, was appointed receiver. The order appointing the receiver was superseded and an appeal taken to this court, where, on November 27, 1931, the order of the trial court was affirmed ( In re Home Savings & Loan Ass'n, 165 Wash. 351, 5 P.2d 511).

November 30, 1931, and prior to the time that the remittitur from this court was filed in the superior court, the directors passed a resolution fixing the compensation of the attorneys in the sum of $5,000. After the remittitur was filed in the superior court, and on the same day, the board of directors authorized the attorneys to make an application in the United States District Court for the Western District of this state, Northern Division, for an adjudication of voluntary bankruptcy. On the same day that the remittitur was filed in the superior court, an order was entered dissolving the Home Savings & Loan Association. The United States District Court denied the application for voluntary liquidation, and an appeal was taken to the United States Circuit Court of Appeals for the Ninth Circuit. While that appeal was pending, and Before it was disposed of, Congress passed, and the President of the United States approved, an act which specifically exempted savings and loan associations from the provisions of the Bankruptcy Act (11 USCA § 22).

One of the claims presented by the assignee was that for attorneys' fees in the sum of $5,000, for services rendered the association subsequent to their employment and prior to the time that the remittitur from this court was filed in the superior court approving the order appointing the receiver. One was for $922.42, which had been advanced to the attorneys by various shareholders to defray the costs of resisting the receivership suit. One was for $3,000 attorneys' fees in the federal bankruptcy proceeding, and the other was for the costs of that proceeding. The trial court fixed the attorneys' fee in the state case at $3,500 instead of the $5,000 claimed. The claim for advancements was allowed in the sum of $661.66. The claims for attorneys' fees and costs in the federal bankruptcy proceeding were disallowed. The claimant appeals from the order disallowing the attorneys' fees in the sum of $5,000, and also from that part of the order which disallowed attorneys' fees and costs in the federal court. The receiver appeals from the part of the order allowing attorneys' fees in the state case, and also from the allowance of costs in that case.

The first question is whether the attorneys were entitled to attorneys' fees in resisting the receivership in the state court. They were regularly employed by a board...