265 F. 86 | 8th Cir. | 1920
This is an appeal by F. T. Van Slyke, the defendant below, from a decree of the District Court rendered November 26, 1918, that the complainant in that court, Fred G. Huntington, as alleged trustee of Amanda Heggeseth and Fgil T. Haugsjaa, copartners doing business under the name of F. T. Haugsjaa, and as individuals, recover of him $909.09 and interest thereon from October 2, 1917. The parties will be styled complainant and defendant, as they were in the District- Court. The complainant elected to bring this case, both parties tried it as a suit in equity without objection that the complainant had an adequate remedy at law, and the defendant has brought it to this court by an appeal. An appeal
The complainant alleged that for some time prior to July 1, 1916, Amanda Heggeseth and Egil T. Haugsjaa were copartners under
The defendant Van Slyke and C. A. Sasse were and are attorneys at law in South Dakota. Eor Mrs. Branch, in the early part of the year 1916, with great difficulty and much labor, on account of hex-inability to speak, read, or write the English language, and her ignorance of her rights and acts, they searched out the facts about her loss of her property to Haugsjaa, and in March, 1916, brought a suit in the circuit court of Day county, S. D., for her against Haugsjaa to recover the stock of merchandise, to avoid the bills of safe-for Haugsjaa’s fraud, for the immediate appointment of a receiver of the merchandise, for its sale, and for the payment of the proceeds to Mrs. Branch. Haugsjaa appeared and answered the coxnplaint in that suit, and contested every claim of the plaintiff. The state court appointed a receiver, who seized the stock of merchandise in March, 1916, and under the orders of that court conducted the retail business with it until July, 1916. That case was tried, and the state-
“An attorney lias a lien for a general balance of compensation in and for each case upon: (1) Any papers,” etc. “ * * * (2) Money in liis hands belonging to his client in the case.”
The court below failed to find or adjudge the amount of compensation to which the defendant and Mr. Sasse were entitled, but without doing so ordered the defendant to pay over to the alleged trustee the $909.09, and also ordered that the defendant might present his claim for compensation to the referee.
Moreover, the equity of Mrs. Branch in this stock of merchandise, and of Van Slyke and Sasse, her attorneys in bringing the suit, in that stock and in the proceeds thereof for their compensation for services in recovering it, arose and vested in them in March, 1916, more than five months before the alleged filing of the petition in bankruptcy, when they commenced the suit for her in the state court, secured the appointment of the receiver in that court, and through him took possession of the stock of goods, and those equities, thus initiated, are far superior to those of any of the mercantile creditors of E. T. Haugsjaa while he was conducting his business after he had defrauded Mrs. Branch of her property.
And here, also, is the answer to the contention of the plaintiff that the payment of the $909.09 to the defendant within four months of the alleged filing of the petition in bankruptcy constituted, was intended to constitute, or effected a preference of the defendant over other creditors of the same class. These mercantile creditors of Haugsjaa, as we have seen, were not creditors of Mrs. Heggeseth, and, if they had been, they could not have been of the same class as were Van Slyke and Sasse, because the latter would have-had, as they did have, their existing equitable right ever after they brought Mrs. Branch’s suit in March, 1916, to receive compensation for their professional services in bringing and maintaining that suit out of the amount which they should recover therein before either Mrs. Branch or any of her creditors were entitled to share therein. Their equity arose when the suit was commenced and the possession of the property taken by the receiver more than four months before the alleged petition was filed, and it continued superior to that of Mrs. Branch or any of her creditors until the proceeds of that suit were realized, and will continue until that compensation is adjudged paid out of the fund their services earned. There was no evidence in- this case of any intent on the part of Mrs. Branch or the defendant Van Slyke to hinder, delay, or defraud any creditors of any one. The money was the just equitable proceeds of a suit in equity received by the defendant in the discharge of his duty as the attorney for his client from a receiver of the state court, which had jurisdiction of the case and of the parties, and under the evidence in this case his equity is superior to that of any other parties in or represented in the suit in hand.
The claim of the defendant that the court below had no jurisdiction of this suit under sections 60b, 67e, or 70e of the Bankruptcy Eaw of 1898, 30 Stat. 562, as amended by 'the Act of Eebruáry 5, 1903, 32 Stat. 799, and by the Act of June 25, 1910, 36 Stat. 842, 9 U. S. Comp. Stat. 1916, pp. 11538, 11539, 11638, 11720, §§ 9644, 9651, 9654, because the defendant did not consent to the suit in the court below, has not been discussed, because before the defendant raised that objection he had applied to that court for and had obtained an order granting him permission to file and had filed his answer out
Let the decree below he reversed, and let the case be remanded to the court below; with directions to dismiss the complaint.