98 F. 776 | U.S. Circuit Court for the District of South Carolina | 1896
Among the matters to be settled in these cases is the question of compensation of the trustees of the Augusta & Knoxville Railroad Company, including the compensation for their counsel. Perhaps no more embarrassing question can be presented to a court. Were it governed by fixed rules, this embarrassment would be measurably removed. But in a matter of this sort, regard being had to the amount of compensation, each case is a rule mito itself. A suit was brought originally by the trustees of the first mortgage of the Augusta & Knoxville Railroad Company, seeking foreclosure of their mortgage. The Augusta & Knoxville Railroad owned a line of road from Augusta, Ga., to Greenwood, S. C. It there met other lines of railroad, and by an agreement between it and these concurring roads a combination was formed, and a new corporation created, embracing all the contracting roads, and known as the Port Royal & Western Carolina Railroad. Each of the combining roads had upon it á mortgage securing certain coupon bonds. By the combination agreement, all these mortgages, except that of the Augusta & Knoxville, were taken up and satisfied with a
This is not a suit like that in Trustees v. Greenough, 105 U. S. 532, 26 L. Ed. 1157; Railroad Co. v. Pettus, 113 U. S. 124, 5 Sup. Ct. 387, 28 L. Ed. 915, and Hobbs v. McLean, 117 U. S. 581, 6 Sup. Ct. 870, 29 L. Ed. 970, in which a person interested in a fund, but charged with no special duty with regard to it, undertook the risk, labor, and expense of recovering, restoring, or securing the fund, as well for himself as for all others interested. The trustees in the present case, wiien they accepted the trusts of the mortgage deed, assumed the duty which they subsequently performed. And, having the alternative of taking possession of the property or asking the aid of the court, they wisely pursued the latter course. They selected able counsel, committed to (hem the interests in their charge, and were fully represented in the subsequent litigation. No special duties were required of them. No labor was thrown on them. As no litigation or dispute over the special interests they represented arose in the progress of the case, they could not have been called upon to advise their counsel on difficult or embarrassing questions. They have no part in the receipt or distribution of the proceeds of the sale. In Williams v. Morgan, 111 U. S. 684, 4 Sup. Ct. 638, 28 L. Ed. 559, trustees of a
As a matter of course, the counsel whom they employed must be compensated. With great force, counsel seek to measure their compensation by a percentage on the amount of the recovery, or rather of the sum which the bondholders will receive; and they press upon the court the rule of compensation in Georgia, and the contract which they could have, made with the trustees, exhibiting the approval of the trustees of a charge of 5 per cent, on the recovery. It is unnecessary to say that no contract or understanding of the trustees can bind this court. They have come in, and have submitted their case to it, and have craved its aid. Nor is the court bound by any state rule or law on this subject. As it would not be bound by a state law or practice expressly prohibiting courts of equity from making allowances to trustees or their counsel (Dodge v. Tulleys, 144 U. S. 457, 12 Sup. Ct. 728, 36 L. Ed. 501), it is hot in any way regulated by them in the amount of the allowance, or the mode in which it is reached. There is no such rule in this court as the one contended for. The rule here is that a reasonable allowance be made (Dodge v. Tulleys, supra), or, as it is expressed in Trustees v. Greenough, 105 U. S. 536, 26 L. Ed. 1157:
“Allowances of this kincl, if maUe with moderation, and a jealous regard to the rights of those who are interested in the fund, are not only admissible, hut agreeable to the principles of equity and justice.”
The testimony contains estimates of experienced and able witnesses, some of whom have filled judicial positions. It has received the careful and respectful consideration it so well deserves. But it is impossible to concur in the large estimate which has been made. Indeed, allowances of the character they suggest are inconsistent with the uniform practice of this circuit, and are against the current of authorities from the supreme court of the United States. In Williams v. Morgan, quoted above, Messrs. John E. Parsons, of New York, and Hon. John A. Campbell, formerly Mr. Justice Campbell, were of counsel. They were allowed, the one $15,000, the other $20,000. That case was full of litigated points, and counsel were called upon to advise as to the administration and management of the railroad system for over five years. In the case before .the court there were three counsel representing the trustees. Their management of their case, shown as well by the tact and discretion as by the learning which they displayed, deserved and has the com
The counsel who represent the counties and towns have submitted to the court a claim 1'or compensation out of the general fund. This fund belongs primarily to the bondholders. It is, no doubt, true that the fund must be used to compensate all who contributed, to its recovery. When the services of counsel were rendered, not in aid of the bondholders in securing their rights, but in interposing obstacles and obstructions in their enforcement, — -when these counsel acted in hostility to the bondholders,- — -they do not come within this rule. Hobbs v. McLean, 117 U. S., at page 581, 6 Sup. Ct. 870, 29 L. Ed. 940. The rule and exception to it are fully stated in this case, at page 582, 117 U. S., page 877, 6 Sup. Ct., and page 946, 29 L. Ed.:
“When many persons have a common interest. In a trust property or fund, and one of them, for the benefit of all, and at his own cost and expense, brings a suit for its preservation or administration, the court of equity in which the suit is brought will order that the plaintiff be reimbursed his outlay from the property of the trust, or by proportional contribution from those who accept the benefits of his efforts. See Trustees v. Greenough, 105 U. S. 527, 26 L. Ed. 1157, where the subject is discussed by Mr. Justice Bradley, and the cases cited, and Railroad Co. v. Pettus. 113 U. S. 116, 5 Sup. Ct. 387, 28 L. Ed. 915. But where one brings adversary proceedings to take the possession of trust property from those entitled to it, in order that he may distribute it to those who claim adversely, ami fails in his purpose, it has never been held, in any ease brought to our notice, that such person had any right to demand reimbursement of his expenses out of the trust fund, or contribution from those whose property he sought to misappropriate.”
The comities and towns intervened and, came into this case of their own motion. They resisted the foreclosure of the general mortgage, and denied the validity of the bonds and the rights claimed by complainant. Their contention was not successful. They surely did not contribute to the protection, security, or recovery of the fund which the bondholders will get. They are not entitled to fees out of this fund, or as against the purchasers of the property.
No opinion filed.