Riley v. Bradley , 252 Ala. 282 ( 1948 )

This suit is collateral to others relating to the administration of the estate of Edward Wilkinson, Sr., deceased, who died November 6, 1941, leaving a widow and four children, naming two of them, Edward Wilkinson, Jr., and Elizabeth Wilkinson Lanier, executors of his will. Much litigation has been conducted in respect to various aspects of their controversy. Much of it has been collateral to the main issues. Such is the instant case. Wilkinson v. McCall, 247 Ala. 225, 23 So. 2d 577; Riley v. Wilkinson, 247 Ala. 231, 23 So. 2d 582; Ex parte Riley, 247 Ala. 242, 23 So. 2d 592; Mudd v. Lanier, 247 Ala. 363, 24 So. 2d 550; Riley v. Wilkinson, 247 Ala. 579, 25 So. 2d 384; Mudd v. Wilkinson, (Memo.) 247 Ala. 699, 23 So. 2d 602.

The deceased had been the principal stockholder of Western Grain Company, which had proved to be a very successful business. He had created a living trust for his wife and each of his children, respectively, consisting of shares of stock in said corporation. When he died, he owned, apart from those trusts, one hundred and fifty-one shares of the common stock, which he placed in a trust created by his will for the benefit of his widow and four children, share and share alike. The Internal Revenue Department levied an estate tax. The executors filed a petition in equity, to which the estate had been removed, for instructions as to how best to raise the money to pay that tax. This is known as the petition of October 16, 1943. The court made a decree which was the subject of one of the appeals to this Court. Riley v. Wilkinson, 247 Ala. 231,23 So. 2d 582. But that decree not having been complied with, but superseded on appeal, the Revenue Department having attempted to seize the one hundred and fifty-one shares for sale to satisfy the tax, proceeded to make a sale of thirty-four shares at public outcry to Mrs. Lanier, one of the heirs who was not then a co-executor, having previously resigned and McCall had been appointed and qualified as such. Mrs. Lanier's bid and purchase of the stock was for an amount substantially equal to the assessment which had been made. Edward Wilkinson, Jr., as co-executor is alleged to have united in the sale to her. Mrs. Mudd and Mrs. Riley, two of the children, had lined up against Edward Wilkinson, Jr., and Mrs. Lanier. The former two contended that the sale was invalid for various reasons, not necessary here to discuss.

On June 29, 1944, a petition was filed in the matter of the estate by Edward Wilkinson, Jr., as a coexecutor by Lee C. Bradley, Jr., as his attorney. This is referred to as the "petition of June 29." It sought to authorize a transfer to Mrs. Lanier of the thirty-four shares of stock alleged to have been bought by her, Mrs. Lanier filed a cross bill by Mr. Bradley, as her attorney, seeking to obtain from the estate the thirty-four shares of the Western Grain Company, or recover the $50,320, paid by her for them, which went to satisfy the federal tax claim, and for that purpose to be subrogated to the lien of the United States, and be paid said sum of $50,320, out of the estate. Mrs. Mudd and Mrs. Riley were made parties to the petition and cross bill, and are now actively defending against them. The instant petition is by Mrs. Mudd and Mrs. Riley against Mr. Bradley to enjoin him and his partners from prosecuting against the executors of the will of Mr. Edward Wilkinson, Sr., deceased, the claim of Mrs. Lanier for the thirty-four shares or for $50,320, in the alternative, and from representing, advising or counseling Mrs. Lanier or Edward Wilkinson, Jr., as executor in connection with the assertion by Mrs. Lanier of her said claim against said estate or giving advice, etc., in that connection.

A temporary injunction was issued without notice and hearing under section 1054, Title 7, Code. Thereupon, Mr. Bradley moved to discharge the injunction. From a decree sustaining that motion and discharging the injunction, petitioners, Mrs. Mudd and Mrs. Riley, prosecute this appeal. Sections 757, 1052, Title 7, Code.

In making his motion for discharge much of the history of the litigation shown by the records of the circuit court and of this Court was referred to. That includes the petition of "May 15, 1947" by these petitioners and three children of Mrs. Mudd to secure the removal of Edward Wilkinson, Jr., as a coexecutor and co-trustee of the living trusts. One ground set up is that Edward Wilkinson, Jr., and his attorney, Mr. Bradley (respondent here) are aiding, assisting and abetting Mrs. Lanier in her efforts to secure the thirty-four shares, above mentioned. That Mr. Bradley could not serve petitioners, as beneficiaries ofthe will, because he is also representing Mrs. Lanier in her efforts to recover said thirty-four shares of stock over the active opposition of petitioners. That he represents conflicting interests, and the petition of May 15th sought injunction against Edward Wilkinson, Jr., and his attorneys from prosecuting, maintaining or continuing any and all suits in his name or his behalf as a coexecutor or co-trustee, including the petition of June 29th. It is then alleged in the motion to discharge, after much other detail, that the circuit court, in equity, entered a decree in which it refused to remove Edward Wilkinson, Jr., as coexecutor and co-trustee, and seems to have made no specific ruling on prayer for injunction, referred to above. From that decree, appeal is pending to this Court, as alleged. The court removed McCall as coexecutor and co-trustee, and appointed the First National Bank of Birmingham in his place, and as such becomes a party to the petition of June 29th, and it becomes its duty to protect the estate in respect thereto.

It would therefore appear from such records that the question here involved was in substance acted on by the circuit court, in equity, on the petition of "May 15," supra, now on appeal to this Court, though it has not actually reached the point of submission, nor has the record been received. It is insisted that the temporary injunction here was ordered by a judge who had no knowledge of the history of the litigation, and that when that was brought to the attention of the judge on the motion, he discharged it properly on the theory that the matter had been acted on and that it was improvidently issued, and that therefore it was an irregularity which sustains a motion to discharge rather than one to dissolve.

Since the substance of the matter involved on this appeal had been heard and determined by one branch of the trial court before the petition in the instant case was filed, we think that another branch of the trial court properly discharged the temporary injunction, which it had ordered as having been improvidently granted in ignorance of such prior determination. Sellers v. Valenzuela, 249 Ala. 620, 32 So. 2d 520, 525; Acker v. Green, 216 Ala. 445, 113 So. 411; Barnett v. State ex rel. Simpson, 235 Ala. 326, 179 So. 208. Whether it was also considered and determined in other proceedings, as contended in the motion to discharge, need not be considered.

We also think it was properly discharged if the petition on its face, together with other records referred to, show that petitioners are not the appropriate parties to raise the question, as presented. Skyline Missionary Baptist Church v. Davis, 245 Ala. 455, 17 So. 2d 533. The principle seems to be fully established that only a party who sustains the relation of client to an attorney, who undertakes to represent conflicting interests, may be entitled to object to such representation for that reason alone. 7 Corpus Juris Secundum, Attorney and Client, § 47, page 827, note 20; Otis Co. v. Pennsylvania R. R., D.C., 57 F. Supp. 684(4); Forecki v. Kohlberg, 237 Wis. 67, 295 N.W. 7, 10; Ferguson v. Alexander, Tex.Civ.App., 122 S.W.2d 1079, 1081; Harvey v. Harvey,202 Wis. 553, 231 N.W. 580, 583; Michel v. McKenna, 199 Wis. 608,227 N.W. 396.

This injunction petition alleges in the ninth paragraph that respondent Lee C. Bradley, Jr., has occupied continuously the relation of attorney for one of the executors and trustees, and that he "has probably obtained information and knowledge which your petitioners verily believe enables him, if presented to this Court, to defeat the said claim of Mrs. Lanier," and in paragraph thirteen, that petitioners are seriously handicapped in presenting an adequate defense to said claim of Mrs. Lanier, because some of the effective evidence of its invalidity is in the exclusive possession of Mr. Bradley. (What evidence or its nature is not alleged.) That at the instance of petitioners by their attorney J. P. Mudd, they obtained an order from the. court requiring him to furnish such information as he has concerning said matters, and thereby obtained certain information, but they believe that he has withheld information which would satisfactorily establish the complete lack of legal and moral right on the part of Mrs. Lanier to said thirty-four shares of stock. Also in paragraph twelve that Mrs. Lanier, Edward Wilkinson, Jr., and petitioners are equitable tenants in common of the property of decedent, including the thirty-four shares, and that their attorney owes them the duty to take no advantage of them by seeking to obtain a tax title to any of its assets. (He is not shown to be the attorney for petitioners.) No effort was made by them as such tenants in common to enforce an equitable right to share in such purchase by a cotenant (Gordon v. McLemore, 237 Ala. 270, 186 So. 470; Bailey v. Bond,237 Ala. 59, 185 So. 41); but they content themselves with using their resources to prevent the enforcement of the purchase by Mrs. Lanier. Also (paragraph eight) they claim that in a court of equity, the beneficiaries of a trust are the beneficial and substantial owners, and that Bradley, in representing Edward Wilkinson, Jr., as coexecutor, was under a duty to the beneficiaries of the estate to serve said estate with fairness, impartiality, fidelity and loyalty to the exclusion of all adverse and conflicting interest. There is much more such vague and indefinite allegation.

But none of it shows that Bradley stands in relation to them as attorney and client. He is attorney for the executor and trustee, not petitioners as beneficiaries. The beneficiary is affected, and may hold the trustee responsible for loss on account of bad faith in the employment of an attorney, or failure to do his duty to contest said claim. Ordinarily the executor or trustee has full authority to choose his attorney. Section 63, Title 46, Code; compare, Ex parte Riley, 247 Ala. 242 (12), 23 So. 2d 592; Strumpf v. Wiles, 235 Ala. 317,179 So. 201; Ex parte McLendon, 212 Ala. 403, 102 So. 696; 65 Corpus Juris 722, section 585.

This is personal property in dispute, section 30, Title 10, Code, and the legal title is in the executors. Sovereign Camp, W. O. W. v. Snider, 227 Ala. 126, 148 So. 831.

But the beneficiary is the equitable owner of trust property, — Ex parte Jonas, 186 Ala. 567, 64 So. 960. On the same principle, the property of a corporation is treated in equity as owned by the stockholders. Autauga Co-operative Leasing Ass'n v. Ward, 250 Ala. 229, 33 So. 2d 904; First Nat. Bank v. Winchester, 119 Ala. 168, 24 So. 351, 72 Am. St. Rep. 904.

But by reason of such equitable interest, there is no privity between them and attorneys employed by the trustee or corporation. Their right to be heard is derivative and in the right of the trustee. They have no more right to interfere with the employment of attorneys representing the trust or corporation than with any other contract or transaction of the trustee or corporation. Their rights are controlled by well defined principles.

A stockholder may come into equity and secure relief for the benefit of the corporation when its officers and directors and majority stockholders refuse to proceed or when they are themselves the parties against whom the right in favor of the corporation exists. Van Antwerp v. Cooke, 230 Ala. 535,162 So. 97; Gettinger v. Heaney, 220 Ala. 613, 127 So. 195; Hagood v. Smith, 162 Ala. 512, 50 So. 374; Farmer v. Brooks, 213 Ala. 137,104 So. 322; Glass v. Stamps, 213 Ala. 95, 104 So. 237; Mudd v. Lanier, 247 Ala. 363(18), 375, 24 So. 2d 550.

And in case a trustee refuses to perform his duty to protect the trust, the beneficiaries may sue in equity to protect their rights, in the right of the trustee, but only when that may be necessary to protect their interests. 65 Corpus Juris 864, section 78.

In general, the personal representative must take action to secure or protect the personal estate of decedent, and he is the only necessary party to represent the personal estate. Blackburn v. Fitzgerald, 130 Ala. 584, 30 So. 568. But the distributees may invoke the protection of a court of equity, and be permitted to sue or defend in the right of the personal representative to protect their secondary rights when his position is antagonistic and damage will probably result to them. They are not required to surrender their property interest for a mere right of action on the administrator's bond. Gilchrist v. Gilchrist, 223 Ala. 562, 137 So. 406; Duggar v. Tayloe,60 Ala. 504, 517; Faulk v. Money, 236 Ala. 69, 181 So. 256; Mudd v. Lanier, 247 Ala. 363(11), 373, 24 So. 2d 550.

These petitioners are parties in the proceeding which is in equity, in which Mrs. Lanier is seeking to obtain the thirty-four shares of stock, or the money paid by her for it which settled the tax claim, in which they in the instant case seek to enjoin Lee C. Bradley, Jr., from representing her because he is attorney for Edward Wilkinson, Jr., one of the executors. The petition alleges that Edward Wilkinson, Jr., is aiding Mrs. Lanier in securing the benefits of her claim. He evidently thinks her claim is just. He participated in the sale to her. It is apparent, as we have said, that petitioners, two of the heirs, are lined up against Edward Wilkinson, Jr., and Mrs. Lanier, the other two. Both sides of this contest are ably represented. There is no allegation of concrete fact to support a belief that the estate will sustain damage by the dual representation.

While this petition makes vague allegations ofbelief as to information Mr. Bradley has, which he has not disclosed, no importance can be attached to such form of allegation. But the facts remain that petitioners are parties in the suit which they claim involves their rights, and in which Mr. Bradley represents adverse interests. Being parties, they can and are apparently fully and completely protecting their rights. There is no reason to assume the First National Bank as coexecutor and co-trustee cannot and will not fully represent the interest of the estate and trusts in respect to these proceedings. Petitioners cannot interfere with the coexecutor in the selection of an attorney or force him to discharge his attorney by reason of adverse interest, unless they show that to retain him will probably result in damage to the estate. They do not stand in the shoes of the coexecutor with the absolute right to object to his attorney representing opposing interest. They can only come in on the principle that it is the duty of the coexecutor as a trustee to make the objection and that his failure to do so will result in damage to the estate including their interest. Edward Wilkinson, Jr., personally has the same interest they have in that controversy. He has a right to his opinion that Mrs. Lanier's claim is just and ought to be recognized. Ex parte Riley, 247 Ala. 242(5),23 So. 2d 592. Petitioners have the right to an opposing view. Therefore, petitioners for and in the interest of the estate may contest with Mrs. Lanier the justice of her claim. This is their derivative or representative right as beneficiaries of a trust, when the trustee refuses to make the contest. These petitioners are vigorously and intelligently, by able counsel, making that contest. Likewise, they have a right to act for and in the name of the coexecutor to object to the dual representation by Mr. Bradley of Mrs. Lanier and Edward Wilkinson, Jr., as coexecutor in that matter, provided only they make a satisfactory showing that injury will probably result to the estate if such dual representation continues, and have not waived the right to do so. Edward Wilkinson, Jr., as such coexecutor, could without other reason object to his attorney representing a conflicting interest. But the beneficiaries cannot make such objection in their personal right, because they are not clients of Mr. Bradley, but may do so derivatively on a sufficient showing that injury will probably result to the estate by a continuance of the dual representation. The petition in that respect makes vague and uncertain statements as to their belief or opinion. But there must be substantial matter alleged showing the probability of injury before a court will act upon it, where probability of injury is necessary as a condition to relief. So that the bill shows on its face that on the facts alleged, Edward Wilkinson, Jr., as coexecutor, is the one primarily entitled to require respondent to terminate his dual representation, without a sufficient showing of probable injury to result. Therefore, there was an irregularity in issuing the injunction at the instance of petitioners, and the motion to discharge it was properly granted. Skyline Missionary Baptist Church v. Davis,245 Ala. 455(8), 17 So. 2d 533.

We have given no consideration to the question of whether the bank as a coexecutor and co-trustee can object to such dual representation of its associate.

And, as we have also noted, it was an irregularity to issue the temporary injunction in respect to a matter which had been decided in another suit, and from which an appeal had been taken.

The decree discharging the injunction was without error.

Affirmed.

GARDNER, C. J., and BROWN, LIVINGSTON, SIMPSON and STAKELY, JJ., concur.

LAWSON, J., concurs in result.

On Rehearing