7 N.W.2d 398 | Minn. | 1943
The pleadings allege the following facts. On February 19, 1927, Florence H. Vose died testate. Harold N. Falk and John S. Bauman were appointed coexecutors of the estate by the will. The estate was inventoried at more than $200,000. On April 19, 1927, Falk and Bauman made a written application to plaintiff for an executors' bond in the sum of $125,000. The bond was issued on the day of application. In applying for the bond and as a consideration therefor, Falk and Bauman covenanted with plaintiff as follows:
"To indemnify and save the Company harmless from any and all loss, costs, charges, suits, damages, counsel fees and expenses *140 of whatever kind or nature, which it shall or may, for any cause, at any time, sustain or incur, or be put to, by reason or in consequence of its having executed said bond."
The estate was administered, final account was allowed, and final decree of distribution was entered June 7, 1929. Subsequently, on November 20, 1936, one Ann Hill Grant, an heir at law, filed a petition in probate court praying that the decree of distribution be set aside and the executors compelled to make a proper accounting. Among other things, this petition alleged that the executors did not make an accounting of the proceeds received from certain checks totaling $111,421, but fraudulently and without legal authority converted the said sums to their own uses and purposes, and that the allowance of the final account and the discharge of the executors was made by the probate court upon false and fraudulent representations.
On November 21, 1936, the probate court issued an order directed to the executors and the surety company "to show cause, if any you have, why the relief demanded by said petition should not be granted." The company immediately notified the executors that the petition and order had been served and demanded that they appear and defend against the proceeding. The executors refused to defend for the reason that the proceeding was allegedly one merely to reopen the estate, and, if granted, they could then defend. And further, even if they and the surety were unsuccessful in the probate court, they could have appealed to the district court for a trialde novo. Nevertheless, the surety retained counsel and defended against the petition and order, and did so successfully.
The attorneys retained by plaintiff were the same as those who had represented the executors throughout the administration of the estate. These counsel rendered a bill for $1,751 for their services in defending against the petition and order to show cause. Plaintiff demanded that the executors pay this bill, which they refused to do. Subsequently the surety succeeded in compromising this expense for $900 and then paid the same. Upon due demand *141 of defendants that plaintiff be reimbursed in this sum and defendants' refusal to pay, this action was brought to recover this fee, alleged to be reasonable and incurred in an action the surety was obliged to defend. Defendant Bauman made separate answer to the complaint. Falk did not appear. Judgment for $1,254.15 in favor of plaintiff was entered pursuant to the orders of the trial court granting its motions as follows:
"(a) A motion for leave to amend the complaint by adding certain allegations, including a request for $300 additional attorneys' fees to plaintiff's counsel allegedly incurred by plaintiff in prosecuting this action * * *
"(b) A motion to strike out certain denials and allegations of the separate answer of defendant Bauman; and
"(c) A motion for judgment for plaintiff on the pleadings as so amended and as so stricken."
The questions raised are whether the court was justified (1) in ordering judgment against defendant Bauman without granting him an opportunity to answer the amended portion of the complaint; (2) in allowing the amendment to the complaint concerning attorneys' fees in this action; (3) in ordering judgment without requiring proof of the reasonable value of attorneys' fees claimed to have been paid in the prior action; and (4) whether defendant Bauman's answer was sham and frivolous.
1. The original complaint was brought to recover $900 alleged to be the reasonable value of attorneys' fees expended in the prior action. Upon the motion to amend the complaint, an additional attorneys' fee of $300 was sought, and judgment was ordered for plaintiff without giving defendant an opportunity to answer the complaint as amended. Plaintiff claims that defendant's original answer was considered an answer to plaintiff's complaint as amended. There is, however, nothing in the record to support any such theory. It is fundamental, as it is a matter of orderly procedure, that a party should be entitled to formulate and present by appropriate pleading what he claims the facts to be and to meet *142
his opponent's assertions by his own proof. Before judgment is entered against him this right should be accorded him. It is true that when a complaint is amended after answer, the defendant is not bound to answer de novo. Ermentrout v. American F. Ins. Co.
2. Under the indemnity agreement quoted above, plaintiff claims that it can recover counsel fees incurred in prosecuting this action. Such an expense cannot be recovered under the general right of indemnity, which allows recovery of fees and expenses incurred only in defending a claim made by some third person against the principal. Hartford Ace. Ind. Co. v. Dahl,
In American Surety Co. v. Heether,
3. This action is one for indemnification under a contract entered into between the parties. It is claimed that the contract included a promise to indemnify plaintiff for attorneys' fees expended in defending a prior suit in which the surety and defendants were joint defendants. The trial court granted judgment for the amount claimed in plaintiff's complaint without a trial on the fact questions involved. We cannot see how such issues as the necessity of the surety, or the good faith of the surety, in incurring the claimed counsel fees and the reasonableness of the amount *144 actually expended by it could be decided as a matter of law on the pleadings. Defendant has denied that plaintiff was obliged or compelled to retain counsel or to appear in the reopening proceedings, and has denied the reasonableness of the fees paid in that action. Facts summarized in defendant's counteraffidavits support his contention on these issues.
The requirement of proof on these issues is sustained by the cases. In U.S. F. G. Co. v. Garrett,
"It does not follow, however, that in the case at bar the plaintiff is entitled, as a matter of law, to recover from the defendants the full amount paid by it as counsel fees in the Greenville County suit. The defendants had no part in fixing the amount of such fees and are not concluded by any agreement between the company and its counsel as to such amount. They should be required to pay only such amount as would be reasonable under the facts of that case, and the fixing of such amount would be for the jury, which might decide that $500 was reasonable or that it was excessive. The case should have been given to the jury with instructions to find for the plaintiff an amount, not in excess of $500, which, under the testimony, would be, in their opinion, a reasonable fee for the plaintiff's attorneys in the Greenville County case."
So far as the language quoted suggests that a jury should determine the question of reasonable attorneys' fees as a wholly independent question, it should be qualified. If the plaintiff here necessarily employed attorneys in good faith, and later compromised the claim of the attorneys for services by payment of $900, or any other definite sum, it was entitled to recover the amount actually paid, provided the amount was such as an ordinarily prudent person, in the conduct of his own business, would have *145
paid to settle such attorneys' claim. See Indemnity Ins. Co. v. McMillan (Tex.Civ.App.)
In Bankers Surety Co. v. Cross,
Plaintiff cites a number of cases which hold that when an indemnitee (surety) brings an action against its indemnitors to recover loss or damage, it is entitled to recover the damages sustained by it, including attorneys' fees. We have no quarrel with this rule provided there is proper proof of the good faith of the surety and the reasonableness of the fees charged and paid. Plaintiff, in support of its contention that no issue of fact is raised, *146
cites U.S. F. G. Co. v. Pullen,
4. The remaining question, whether the answer was properly stricken as sham and frivolous, may be quickly disposed of. A sham pleading is the one that presents no issue to try and therefore is false. Western Gravel Co. v. M. J. Nolan Co.
It was error to strike the answer. The fact issues presented by the pleadings should be determined by trial.
Judgment reversed. *147