*1 GROBER, W. MAURICE PLAINTIFF-RESPONDENT AND KAHN, CROSS-APPELLANT, GERTRUDE HERMAN KAHN, WEINTRAUB, ALICE BROOKS AND CAROL DE AND FENDANTS-APPELLANTS CROSS-RESPONDENTS. Argued January 25, 1966 May 2, 1966. Decided *2 Mr. Walter B. Van the cause for defendants- Riper argued appellants and Van and Mr. cross-respondents Riper {Mr. Villanueva, Charles counsel; E. Messrs. Van Riper Belmont, attorneys).
Mr. Israel B. Greene the cause for plaintiff-re- argued and Mr. spondent Greene and Laurence cross-appellant {Mr. Greene, brief; B. on Orloff, Mr. attorney).
The of the court was delivered opinion by is whether C. J. question plaintiff Weintraub, entitled to counsel and incurred in expenses fees proving case. The trial court held our rule of did not court authorize Kahn, an Grober v. J. 83 N. Super. (Ch. allowance. Div. Division, . The there was 1964) Appellate holding power award, matter make remanded the to the trial court for reconsideration in that Div. light. Super. (App. . certification. 1965) We for 45 N. J. granted cross-petitions 596 (1965).
I. Plaintiff was an officer of a Grober corporation, Condenser Co., Service & Inc. Engineering (herein con- Condenser), Kahn. A trolled defendant New York by who attorney had Condenser before Kahn represented acquired it and had Grober, become friendly Grober’s brought attention a business opportunity Company Camden involving Eorge (herein attorney. Camden also that Eorge), represented by Grober laid the which proposal before Kahn. The transaction involved of the Condenser emerged purchase by (1) merchandise and raw material of Camden inventory Eorge of its book $1,000,000; value of completion by (2) 60% Condenser of work in Eorge Camden progress, would receive of the and de- profits; purchase by (3) 50% Kahn fendant real and remaining tangibles, personal, $500,000. Camden for Eorge This arises of the controversy out of the third aspect transaction, Kahn assets acquisition bjr remaining of Camden As matter, to that a written Eorge. agreement Kahn, which, was executed after by Grober reciting Kahn had those assets from Camden acquired Eorge $500,000, $495,000 an of which Kahn had borrowed from him, other owned in corporation wholly by provided $1,250 Grober, consideration of a like sum paid paid wife, Kahn’s each Kahn’s paid by $675 two daughters, Kahn and transferred to and Mrs. Kahn assigned Grober each and to Kahn’s each of Kahn’s daughters 25% 12%% title and interest Kahn retained those assets. right, sole The contract called for Kahn power disposition. all the real and personal and to disburse liquidate property proceeds the net accordance with the interests percentage stated. just Kahns, all present action brought venture,” it, dissolution of this “joint as he
seeking labels *4 and an and the to him of his payment share of accounting Kahn denied the proceeds. by the net held Grober writing of was true Much the trial involved the that eon- agreement. and as to it prevailed. Grober Part of the trial troversjr, that Mrs. Kahn concerned and the allegation Grober’s daugh- fronts for Kahn. The were mere of significance ters that to us but in apparent any is event Kahn and allegation on that prevailed allegation. Einally family trial as to which the trial accounting phase, concerned court found that Kahn was receipts with net chargeable (after $495,000 of and other payment loan mentioned above interest expenses $431,400.60, of of and with liquidation) $506,572.81. thereon for a total of Each of the daughters from $3,000 was found liable with Kahn for received jointly $250,000 him. The trial of the principal court found that had been actual loaned to Condenser Grober’s figure $181,400.60, consent. The which is less than balance claimed, sums the trial court additional represents Kahn from but had not found had received the sale assets accounted for. $506,572.81 interest in the sum of mentioned just
Grober’s was thereof, is interest Kahn quarter 25% $39,080.43, a credit out of a entitled to adjudged arising made Kahn to Internal Revenue on Grober’s payment out of the “fund” a account. Nonetheless Grober sought $40,000, fee $100,000, counsel fee of accountant’s he appraisers allowance for the fees whom paid employed case. In an in the of the allowance prosecution denying : pp. 386-387) trial court said (83 Super., urges proceeding Disregarding “Plaintiff that this is a class action. looking litigation, substance of the instant form and actively engaged mainly apparent plaintiff in an action directed incidentally against against defendant Herman Kahn and Kahn’s wife basically sought daughters. Plaintiff a determination of his and two joint accounting managing from in the venture and interest joint Kahn, allegedly fiduciary, funds venture mis- Herman for rights complaint sought appropriated. to defeat the of Kahn’s The unsuccessfully urged they joint daughters. two Plaintiff were wife and genuine Kahn, with no interest in the ven- ‘fronts’ Herman litigation designed any Obviously, plaintiff’s was not to benefit ture. of the defendants. my opinion case, As I noted this dated Febru- ary 21, 1964: naturally observed, expect, would as one that Mrs. is further ‘It joined daughters have in the Kahn two defense with Kahn and the handling joint apparently acquiesced in his of their interest in practical purposes family presents Kahn for all Hence venture. plaintiff.’ opposed to the claims of interest united 75% plaintiff’s counsel were to services rendered advance can and no one else. There be no clearer of his client ease claims an adversary proceeding.” *5 Sunset The trial court deemed our decision in controlling Belk, Beach Amusement J. 162 (1960). v. 33 N. Corporation within The Division the situation came Appellate thought Sarner, held and on that basis Sarner 38 N. J. 463 (1962), of R. R. a “fund in within meaning there was court” 4:55-7 which reads in part: legal costs or for shall be allowed in the taxed “No fee services
otherwise, except: may (b) make fund in in its discretion Out of a court. The court fund, made as an allowance out of such no allowance shall be but * *”* jury. right by to issues triable of remanded on that Division premise Appellate Although reconsideration, the trial plain the matter for it made it discretion, deny court in the exercise of its again might, : allowance, N. J. Super., p. 358) saying (88 holding have allowed a counsel fee to “In that the trial court could deciding attorney, plaintiff’s are wish to make that we we it clear plaintiff’s awarded, at- that torney should been or that a counsel fee have case, right, of this is entitled as of under the circumstances court,’ involving is one a ‘fund a counsel fee. Whore the case of the court. of a counsel fee rests within the ‘discretion’ allowance aught know, court, 4:55-7(b). For trial recon- R. R. we light application in the our for counsel fees sideration of opinion, may no in its discretion and for valid reasons decide that plaintiff’s attorney. opinion allowed counsel fee should be portrayed plaintiff, as on the main issue as well defendant trial court unworthy individuals, Kahn, each with unclean hands. If the trial attorney plaintiff’s fee, does allow a counsel court in its discretion quantum, thereof is for the trial court to fix.” to fees Grober to accountant paid by also with respect So “Here, too, Division said appraisers, Appellate * * * well adhere its very trial court may previous and, for perhaps, good exercise of discretion reason deny * * application payment (88 plaintiff’s again at p. Super., 359.) Division should Appellate
Plaintiff contends the have held of discretion to be exercise allowances made. proper requires also of the statement Appellate He Division complains *6 plaintiff’s that “unclean hands” would be consider- proper ation. plaintiff’s Basin to that this liti- position is the claim conferred a Kahn and his gation family; “benefit” that “benefit”; so, this of should share the that being they cost and that their is of the benefit no less because enjoyment his, of Grober’s, “unclean hands.”
But the claim that Grober enriched the Kahns this suit them in against rests The claim is on the fantasy. dispelled face of the complaint Drawn toward itself. eye allowances, the Cihis complaint asked that Grober have reason costs, able expenses, fees, accountants’ and counsel including to defendant, fees be paid by the Herman or Kahn, out of his share of the trust property, or out of the fund in court.” To that end the first that paragraph alleged Grober “brings this action for and on behalf of himself and all others simi situated, an interest in the larly having joint venture herein after described.” Who are those “others”? Kahn could be hardly the beneficiaries of among the suit him. against only “others” could who be similarly situated would be Kahn and the Mrs. but as to daughters, them the complaint proceeded to that were charge they merely fronts for Kahn prayed that effect as well as judgment the recovery of the moneys from That daughters. left as the sole in in prosecution action, interest party as the trial court held. And trial also accurately court having that, found he came out on notwithstanding top on the trial, not, of suitor, record Grober does as a rank above bested, the man he understandable that Grober would if anticipate that the remand to the trial court does no more than discretion, commit its subject remand is no rate, At at all. for the reasons victory any which follow, we trial are satisfied the court held our correctly rule court allowances. not authorize does
II. Constitution Prior the former Court of in its discretion could award Chancery counsel fees in any that R. rule court rejected ap cause. S. 2:29-131. Our As Amusement proach. Corp. we said in Beach Sunset Belk, J.,N. 167: supra, 33 p. legal provides shall "R. R. no services 4:55-7 that fee except set in in situations taxed costs allowed or otherwise policy to break in This decision forth rule. constituted a rule Chancery practice authorized with the of the former Court of adversary proceeding. ordinary See the victor counsel fees to (1953). practice Co., had v. Otis Elevator 12 N. J. That State proved operation it obtained in the courts of law. In actual never spawned charges unduly upon litigants of favoritism. onerous plaintiff Although or who sues fees sanction counsel commend has much to defends in manifest bad faith a defendant who problem confining precisely it, yet situation allowances any rate, practice the rule would formidable one. At actual be a *7 adopted policy except within in the situations its of court expenses prosecuting litigant and of defend each shall bear the terms ing supra Co., (12 v. Elevator individual interests. State Otis p. Janovsky J., pp. (dissenting opinion)); v.
N. at and at 26-27 10 Co., 1, (1952).” Insurance 11 N. J. 7 Motorists American to Indeed when the a bill which Legislature passed sought court, our rule overturn the of Governor Driscoll approach measure, it revive an unhappy vetoed “would saying has been See practice repudiated.” dissenting generally Co., N. 1, State v. Elevator 12 27 (1953). Otis opinion, done, are situations in which the course, wrong there Of made, is offender could or the defense so that the provoking But, costs, with the of the other side. for be saddled justly above, our reason in the rule made no given quotation Indeed, a became evident shortly for such ease. this exception when the Court had before it after the rule was promulgated which, a in under different an policy, kind a situation The was & Liberty be case Title fitting. allowance would Plews, v. It an Trust Co. N. J. 28 involved (1950). express The were to proofs found “dem paid fiduciary. trust the trustee was conclusively that self- guilty onstrate interest, profit-taking self-dealing, private flagrant the time of the intermediate account, to mismanagement prior from concealed the court and successfully all of which it exceptants” our was (at p. Nonetheless rule of court 37). held not to authorize assessment of counsel fees against the trustee. And our Court con- added that “It was not templated that the rule would or could be dis- completely ** with pensed in individual cases (at p. 44.)
As noted, we have the trial court deemed Sunset Beach Belk, Amusement 33 N. J. Corp. supra, control J., this case in We there said principle. (33 pp. : 168-169) “ happy ‘Fund in court’ is too a term. It a shorthand ex not is
pression equitably intended embrace certain in which situations consistently allowances should be and can made be made with the policy litigant of the rule that shall each bear his own costs. difficulty literally may with the term is that within connote fund precincts physical geographic of the court or sense whereas jurisdictional authority ‘in court’ refers to the to deal the court * * * subject matter, matter. And for that the existence subject power in the court control is itself matter enough to existence demonstrate the of a ‘fund court’ within the purpose Burlington County Bridge Comm., of the rule. Haines v. (1952). N. J. general, payable In allowances are from a ‘fund’ it would when litigant unfair to saddle the full cost for the reason that the Thus, litigant doing merely advancing than more his own interests. example, when there are classes of fund claimants and the well, redound to the benefit of services others as it is fair that all * * * subject charge contribute to the cost matter. controversy among Typical respect ais stockholders with to dividend * * * corporation. rights surplus in the of a . *8 litigant others, again Where the creates fund which will benefit just charged. by that the fund be Included are actions a stock- corporation holder on behalf of the to recover assets diverted or with- from held it.” In effort to demonstrate a benefit Kahn and his and thus within family come the thesis, foregoing Sarner, refers to Sarner v. 38 N. J. supra, 463. Sarner involved derivative corporate claims (1) asserted by two mi- nority stockholders the against majority stockholder to re- assets, cover diverted further (2) claims the same the effect defendant to individual the same plaintiffs against enterprise in a they were partners management Plaintiffs pre- such to shares of profits. entitled as receive as to the partner- vailed both claims and corporate as the a counsel fee the payable action. were allowed ship They from fee either but were not allowed counsel corporations, partner. or the defendant the assets partnership against no allow- there should be Defendant appealed, (1) claiming were the the the litigants ances because against corporations reason suits to be stockholders and for that ought sole plaintiffs’ to have been to advance own brought solely deemed Beach; and stated in Sunset principle interests within were corporations that since the allowances against (2) which on an of services included services in based affidavit claims, furtherance the trial court partnership ap- services into account making took those parently corporations. allowances We held allowances made with actions corporate but properly respect were the matter to the end that there be deleted so remanded allowances, of the if reflected rendered any, much services suits. partnership In Sarner each held stock of each plaintiff 10% defendant, brother, and the their held the remain corporation plaintiffs Defendant should be deemed argued ing 80%. their own interests because beneath furthering only to be three surface were but co-owners. corporate contending To v. Schaefer, that end defendant cited 136 Wash. Tefft view 1925), P. 837 Ct. did take that (Sup. so We however declined to hold for similar scene. it seemed unjust would be ignore to us that it form. corporate in law were and in corporations realities, The economic fact. have sued on their own Plaintiffs could not account and not have for their could obtained own judgments interests have so could not done directly, nor, alone. They holding interests, could they readily have done so minority but indi dissolution by way corporations. sums rectly had to defendant to the recovered against go corporate *9 treasuries. Indeed, plaintiffs moneys were entitled to have the returned to those treasuries, to work for the aggrandizement of their investment. experience Moreover adverse corporate might consume the money restored so that litigation plaintiffs would ultimately Hence, receive to require nothing. the corporations to the same fees would have pay they paid if had they the suits was the cost brought merely pass the corporate who will receive the litigation someday those benefit of the Eor we were corporate recovery. those reasons satisfied that whether the few, stockholders be or many would be fiction deny fact. corporate
But as to the partnership litigation, in Sarner opinion moved on premise that the action for between accounting partners just was suit advance ordinary litigant his own interest. Plaintiffs contended were they partners and defendant said were not. they won, Plaintiffs and defendant had to account to each for share of Ho profits. 10% one so much as that the suggested defendant should be com- court all of pelled to into bring profits, then to be “en- riched” return of upon the less a counsel fee it. 80% Rather the defendant to judgment plaintiffs the required pay them, due percentages the matter was remanded because there was the entitled possibility plaintiffs, to no allow- suit, ance in the had partnership been inadvertently granted one in the allowances the corporations. view of a
That
suit between partners squared with earlier
our
Heinowitz,
decisions under
rule
court. Midler
1950),
N. J.
Div.
Super,
involved an
(App.
accounting
partners (the opinion
action between
speaks interchangeably
venture” and
“joint
“partnership venture”). There, as
here, the
was found
partner
defendant
guilty
fraudulent
of assets and failure to
diversion
account. Counsel fees were
Plaintiff
to avoid our rule
sought
denied.
of court on the
the suit was started in the former
ground
Court
at a
when counsel
time
fees could
Chanceiy
be awarded the
in the discretion of the court
victor
under R. S. 2:29-131.
Division noted
our
John
Appellate
holding
S. Wester-
*10
,
rule
Inc.,
our
that
Regency,
velt’s Sons v.
3 N. J. 472 (1950)
rule
our
and concluded that
(cid:127)of court
that statute
superseded
partner.
favor of the prevailing
barred allowances in
without
affirmed,
was
Division
Appellate
judgment
J. 123
10 N.
mention, however, of the issue of counsel fees.
Mertz,
401 (App.
v.
N. J.
also,
Super.
21
Long
See
(1952).
Div.
Katz,
185
N. J. Super.
(App.
Blut v.
36
Div. 1952);
Kirschenbaum, 39
v.
Marcus
Estate
Schmerer
1955);
fac
which, although
Div. 1956),
N. J.
475
Super.
(App.
nonetheless
us,
the one before
were not like
tual patterns
action between
that an accounting
the premise
on
proceeded
a
in
fund
court.
did not involve
partners
for some purposes
that a
is
partnership
It is true
we
but, as
the partners,
and
from
apart
an entity separate
N. J. 15
Silberberg,
(1959),
v.
in Mazzuchelli
out
pointed
result, can
further a just
which exists to
concept,
the entity
There we would
unjust
an
one.
not
invoked to achieve
be
workmen’s
entitled to
partnership employee,
a
permit
as a
sue a
third
benefits,
partner
negligent
to
compensation
would
com
policy
for to do so
conflict with
party,
be
here,
cannot
concept
statute.
the entity
So
pensation
of our rule of court that
defeat the policy
merely
invoked
a
is free to
partner
his own costs. Where
each
bear
litigant
a
what is due him
get
own account
sue on his
benefit
favor, the action is not for the
in his own
judgment
reason,
and we see no
consistent
him
of those who oppose
court,
rule of
it is.
pretend
our
with the
policy
v.
Thus involve does not a partnership. this case admittedly although of our rule impact litigation discussed haveWe between because Grober claims there partners “joint adventure” before us with we should dealing draw upon principles partnership. relating amorphous Joint Adventure is In concept. general way objective it is a business venture more limited in its than Crane, a partnership. See ed. Partnership p. 159; (2d 1952), Jur., Adventures, 30 Am. Joint 939. p. Whether the § before us should so labeled is debatable arrangement but of moment, no because the really question ultimate is whether on the total facts there is than suit anything more one *11 man another. does not create a agreement purport to ven- business
ture. Rather the thesis is in common ownership specific assets with in Kahn alone to sell them. It recites authority Kahn had to agreed purchase real and personal property from Camden and had title thereto Forge acquired by deed and bill of sale for $500,000, that, and in consideration of the payments $1,250 to Kahn of each Grober and Mrs. by Kahn and of $675 each “Kahn by hereby daughters, assigns and transfers” to men- already them percentages tioned “of his title right, and interest in and to the real estate, equipment, machinery personal and other property purchased by him.” It continues that “Kahn reserves unto himself, however, the right, and sell or power authority to lease in his name” or all the any bona sale properties by fide or lease at the best terms to offered him. The parties agree “the terms this agreement constitute, shall not or be in wise any considered, a lien upon or properties premises,” and that the shall agreement become null and void as to any who participant places on record. Kahn agrees “dis- tribute to the in the Participants, of their percentages in- terest, the net profits realized such sale and liquidation,” “to distribution be made after immediately liquidation to cash of the real and estate all of substantially the machinery, and other equipment personal property.” is conducted;1 there no Thus there is no business to is no managerial there mutual to incur obligations; agency or Kahn’s wife the daughters; or in voice whatever Grober alone losses, running Kahn there no to share is agreement him from his $495,000 borrowed respect risk with $500,000 to him .to pay to enable corporation owned wholly one for common simply The arrangement Camden Forge. and with Kahn holding sale ownership objective of disposition. the exclusive power we said, tag place it is not what important As we have is whether the The question on this economic arrangement. shonld find he whether we should personified, arrangement and from the entity, separate contracting parties, there is the title notwithstanding agree that the holds say entity it, and that although that the have parties ment provides and shall the assets pay Kahn says liquidate agreement promises directly shares respective running others their to that them, only entity Kahn can respond nonetheless it. We see no thus claim reason only through can not to do so Surely ought transaction. we this complicate our rule of court that policy to circumvent merely his own hear expense. each litigant revolves of Grober about argument Much of the was a “trustee” Kahn obligation proposition *12 was “fiduciary.” he violated controversy of is not advanced by the
The solution of a trust. the concept Actually the agreement to resorting The Appellate to create one. Division purport does trust,” we assume respect was a with “resulting there thought in But whether there properties. interest was to GrobeRs notwithstanding finding 1 below This statement seems accurate “joint venture,” perform Kahn, to of undertook that on behalf Depart- Navy Forge “servicing” agreement and the between Camden property premises respect Navy of Camden ment on the to cost, servicing Forge. agreed do at with Kahn to Condenser moneys Ultimately joint due from without risk to the venture. thus Navy property, property Navy buy be- used to were subject agreement here involved. to the written came
149 a trust of kind all any of the assets or of in Grower’sinterest sale, them or the proceeds of their is irrelevant, for reason that this action would nonetheless be one brought his own interest. of a Hypothetically, the fact trust could be in a “fund in court” significant if controversy a beneficiary trust, because of its duration prescribed or reason, some other could not obtain a present recovery own economic loss and could obtain is what due him n onlyif what was taken is restored co-bene- defaulting to ficiary to trust be devoted to its In other purposes. words, a trust could be a jural akin, within entity, prin- of ciple fees, our rule to counsel to a relating corporate entity. But in us, the case before even if the or property Grober’s trust, interest in it were held to be in is there in the nothing terms of such trust which would this distinguish action enforce from suit to the explicit contractual to obligation a share of the net However pay proceeds. the action is la- beled, it remains one brought by Grober for Grober.
Nor does it that Kahn help say owed Grober a he did, Of course “fiduciary” obligation. least as to Grober’s interest. Co-owners of property, such, have a “confidential relation” with respect certain aspects Jaehnal, their common v. interests, Breitman 99 N. J. Eq. 1926), 243 affirmed o.b. 100 N. J. & (Ch. 559 (E. A. Eq. Johnson, v. Hardy 12 N. J. 1927); 268 Super. (Ch. Div. 1951); 141 N. J. Leppert Leppert, Eq. 1948); (Ch. 2d, Cotenancy Am. Jur. Joint 2, 93; Ownership, p. § and if Kahn’s role with respect to the sale Grober’s in is terest treated as one of merely agency, obli “fiduciary” undeniable. Marchitto v. gation is Central R. Co. New 2d, Jersey, 3 Am. Jur. (1952); Agency, § 580. But that the p. obligation quality'-is here with, of no To Grober’s significance. begin claim does not of an the existence depend upon obligation quality, for it adds to the dimensions of nothing the expressed a share of the promise pay profits say obligation is as well as contractual. More to fiduciary the present point, *13 does well as contractual is as fiduciary the say obligation by brought from one the suit not the character of change his own interests. to further the of in the solution does not aid that reason it For so To do fraud or trust. talk of problem immediate situation. simple a rather otherwise obscures what is merely fees should counsel a that feeling is defensible There has breached the fraud, of and if wrongdoer in a awarded case if But is intensified. feeling that a duty loyalty, well fraud, we should in cases fees impose we want to counsel upon wayward fees counsel impose want to so, if we say resort to a should not We fiduciaries, say we should so. bene- is made to account a who pretense wrongdoer fited the him. by judgment against in fact would the fiction of a fund-in-court be service-
Nor fraud if we were minded to counsel fees cases of impose able a or fraud of It would make the size fiduciary. generally fee the size of the but depend, upon counsel wrong, the i.e., fact, a irrelevant the size wholly wrongdoer’s upon Thus, if a holds plaintiff interest in the so-called fund. 5% $1,000,000 and holds worth the defendant property interest in fee remainder, “recovery” the counsel awarded upon have no on the $1,000,000 would relation to the loss inflicted interest, culprit while if the holds brunt plaintiff, 5% if would fall his victim. And upon of the allowances no dollar all one—had stake at in the paid trustee —even res, he, approach problem, this fictional would him, as indeed was any against without allowance away walk Plews, &Title Trust 6 N. J. Liberty supra, Co. the case held, with our present rule, consonant that a 28, where we for hire was not with counsel trustee chargeable defrauding defendant myth won Further, upon fees. same if would experience imaginary gain he losing, rather fraud, him were for than negligence action fiction, one distaste for factual pat generated and thus in a setting quite foreign would find tern, application stimulant. initial
As said, we have or a whether fraud breach question aof should fiduciary obligation warrant counsel imposition fees is a issue which was policy resolved when our rules of court were made, formulated. If is to be it should change be made with directness and in relevant terms. Meanwhile of our policy rule should be honored.
III. At the oral before was argument us it revealed that some alleged creditors filed proofs claim the receiver ap- pointed connection with the were told liquidation. We these are creditors corporations controlled Kahn and that by the claims assert they are large.
Grober did not
this action on behalf of creditors
bring
“joint
venture” and we do not know whether he agrees
nonetheless,
are
there
any.
upon the disclosure before us of
claims, we
creditor
invited attention to the
whether
question
should
such creditors
contribute to the cost of Grober’s victory
if the assets
on hand do
already
not suffice to
them
pay
(after
the costs
the receiver’s administration have been
and
met)
moneys
Kahn is here
accountable
adjudged
will
be available to
thereupon
them.
Sprague
Ticonic
Cf.
Bank,
307 U.
National
S.
S. Ct.
We refrain from what deciding finally contribution, if any, should be made such creditors equitably in that eventual- The situation is rather odd. If Kahn ity. really controls them, these creditor claims and succeeds in he pressing may thereby compensation to Grober’s enlarge counsel. On hand, if the other Grober contests the claims of the alleged creditors, reduce, he will and out, perhaps wipe their benefit action; this if counsel, from Grober’s Grober asks him to claims, contest creditors’ bemay confronted with conflict- may interests in that he lose if compensation Grober ing suc- as to ceeds the creditors. what equi-
In we should not speculate upon this complex, than reserve for Grober there will be. do no more ties We who creditors profit whether his counsel question to the to contribute should be present required litigation cost. respect Division with judgment Appellate fees and appraiser’s accountant’s fees,
allowances for counsel court fees the trial is reversed and .the judgment III of this *15 affirmed, part opinion. to reservation in subject No costs. a just reached is not The result (dissenting).
Jacobs, rule. This was any procedural one nor is it compelled by be may fairly in each ordinary litigation litigant was It extended expenses. to take care of his own expected of a in or trustee fiduciary which the litigation managing acts of was committed joint flagrant venture found to have trial court fraud and and in which the misappropriation be restored directed funds misappropriated would That it administered receiver. court-appointed to bear to defrauded coadventurer compel inequitable come, than have them at all of his costs rather heavy legal the funds restored to the part, least in some reasonable from receiver, the court’s administered joint being venture seems me evident. entirely F. 1924),
In v. 299 746 Cir. Ruysdael, (7 Tevander for the Circuit found little diffi Court of Seventh Appeals a comparable in result in situation just culty reaching was R. in like ours (R. 4:55-7) the federal though practice their own while ordinary legal expenses bear litigants having so-called “fund” exceptions including equitable providing Moore, Federal Practice ed. 54.77(2) (2d cases. 6 See § Bank, v. 161, Ticonic National 307 U. S. 1965); Sprague 164-167, 59 Ct. 83 L. Ed. 1186-1187 (1939). S. and defendant Tevander were in plaintiff copartner The the defendant assets and trans ship misappropriated when The plaintiff a corporation. brought pro- ferred them to misappro- to have the transfer declared void and the eeeding assets delivered a receiver for distribution. She priated prevailed and to have her taxed expenses against sought legal relief, the In was entitled to defendant. that she holding ex- court should concluded that the restored fund hear “harsh and penses, out that it be a pointing inequita- would ble rule” all her that would to bear compel plaintiff F., costs in the circumstances at 749. legal presented. p. an not seek additional plaintiff impose Grober does or trustee individu charge against wrongdoing fiduciary Plews, 6 as was & Trust v. ally Title Co. sought Liberty N. J. himself within He to and does bring seeks (1950). the literal term which vests discretionary of R. R. 4:55-7 an allowance out ef a authority in the trial court to make “fund is, course, in court.” This term not self-defining and its content will court into it. Thus puts turn on what the Co., in State v. was held Otis Elevator J. 1 (1953), escheat the defendant State proceeding by over corporation compel it to turn abandoned property a,fund to the State involved in court that would though J., be so in strict sense. 12 N. 26-31. hardly any pp. See Farber, In Katz 4 N. J. 333 in court fund (1950), *16 was found to be where the obtained present purchaser specific the with the clerk performance deposited purchase price in a for distribution to the sellers who were as to dispute their interests. In the course of his for respective opinion Court, the Case illustrated the broad of the term scope Justice that his without, however, illustrations, suggesting though to cover the clearly plaintiff case, Grober’s were enough exhaustive or that there was to intended he he no equitable or v. Ticonic individualization National flexibility (Sprague Ct., Bank, S., 167, 780, 307 U. at 59 S. at supra, p. p. 83 Ed., in application at the the rule: p. 1187) L. Bartletta, supra words ‘fund in court’ in Nobile v. [112 “The N. J. 304], Indemnity Eq. Caltagirone, and Universal Insurance Co. v. 491], clearly supra Eq. [119 N. J. were intended to include such cases within classification ‘administration as trusts’ came mentioned 154 Co., 275]. L. 125 N. J. [Stetser v. American Stores
in Stetser case jurisdiction over in ‘where the court has is a fund court There Fisher, Estate, supra estate,’ re 115 [In In Fisher’s fund re or being Eq. 329], control of the court are trust in the or ‘where funds Eq. Clements, supra administered,’ 350]. [129 N. J. Thus Clements v. executor, accounting by or a trustee or an administrator may brings figuratively such fund his fund into court. There money actually custody and is the in of the court when the litigant litigation; also, by analogy, subject court when a of the case, supra creates, produces protects, in the Cintas or as intercession 301], Foundry Co., Eq. a fund N. J. v. Car & 133 [Antas American good conscience is one so that class of which he for the benefit proper proportion proceeding should be visited in of the the cost preserved moneys produced for the members of are thus or participate litigation.” although all in the did not class the entire J., p. 4 N. 344. Division, on v. part Sarner Appellate relying Here Sarner, a fund in N. J. found that there was 38 463 (1962), the matter for the trial court’s exercise court and remanded v. under R. R. 4:55-7. Grober power of its discretionary Kahn, 343, N. J. 352-358 In rejecting Super. (1965). that, seems to take the course, position this the majority considerations notwithstanding, compelling equitable the fund in cannot himself within plaintiff bring for own his action was actually brought court rule since real not as a member of a class. Viewed larger benefit and for in Sarner also their action brought istically, plaintiffs class; and not as members of larger their own benefit for true that in form their action was the benefit while it is if form is to be but dispositive corporate entity, equity view the joint we venture may readily is not to be ignored, and the been entity proceeding having brought here as the v. Taylor, X — L 17 N. J. Liquors its benefit. See v. Ruysdael, Tevander 746. supra, 454-455 F. (1955); since the of a However, pursued, this need not be absence himself is neces plaintiff beyond to be benefited class Co., v. Trust See United States Equitable bar. sarily L. Ed. 1379 738, 51 S. Ct. State (1931); U. S. Co., supra. *17 Elevator Otis
155 “one that Otis, out Vanderbilt pointed In Chief Justice fund a doctrine of a class to support does not need to find Farber, Katz v. He cited J., 12 N. at pp. in court.” 10-11. the Supreme Trust case where and also supra, Equitable fund, fees to the of counsel permitted charging Court Indian on of an incompetent a behalf proceeding brought with the been dissipated which had property recovery Justice Van of the Interior. Secretary approval rule in courts out that it is pointed general Devanter or pre has been recovered a trust fund which “that equity with intervention may charged their served through in fees, reasonable attorneys’ and expenses, including costs Ct., S., at 744, p. at 51 S. 283 U. p. curred in that behalf.” Sarner, on Ed., a recent comment L. 1384. In 75 p. 641. Trust, need that “no class it was noted Otis and Equitable requirement all” that “substituted for exist at institute pro party an innocent situation which compels if his own are rights fund itself ceedings protect Fees Out “Allowance of Counsel Note, destroyed.” to be 17 Rutgers Jersey Experience,” The New in Court’: “Fund 634, 641 (1963). L. Rev. would have been understandable approach perhaps
A rigid revision constitutional immediately following in the days were viewed as a Chancery continuing when the abuses has Chancery But that was almost two decades ago, threat. and we now confronted but a are fading memory, become for comprehensive which call problems with more troublesome Builders, Inc. v. Hori R. 4:55-7. See Bergen of R. restudy Inc., 435, N. J. 438-439 (concur 44 (1965) zon Developers, meantime, should be ad In the the rule opinion). ring measure of flexibility with proper equitable ministered elsewhere, is the here, “justice full recognition Renner, 18 Authority Jersey Highway New polestar.” v. Han 1:27 A; see R. R. Handelman 485, (1955); N. J. Martindell, an, Martindell v. delm (1954); N. J. 349 (1956). this dissent. joins
Justice Schettino *18 For reversal —Chief Justice Weintraub Justices Francis, and Hall —4. Proctor
For Jacobs and Schettino —-2. affirmance —Justices GALL, JOHN R. AND SAHULCIK ERNEST PLAINTIFFS- RESPONDENTS, REED AND WALTER METAL POW WORKS, INC., DER CHEMICAL DEFEN DANTS-PETI TIONERS. Argued April 26, 1966 May 9, 1966. Decided