Edwards v. United Food Brokers Inc. , 196 Ga. 241 ( 1943 )

1. Where in an equitable proceeding against a husband and his wife judgment was sought against the husband on a note and open account, and it was sought to subject to such judgment funds alleged to be fraudulently held by the wife and belonging to the husband, and where under proper order of the court a receiver conducted the business of the wife but found it necessary to be discharged, and where by agreement of the parties, approved by the court, the wife executed a bond obligating her to pay to the petitioner any judgment that might be rendered against the husband, and the business was surrendered to her, and verdict and judgment were rendered against the husband, and a verdict was directed in favor of the wife under the equitable prayers of the petition, and a decree was entered against her on the bond for the amount of the verdict and judgment against the husband, and taxing her with a portion of the expense of the receivership, the husband's motion for new trial suspended the portion of the judgment based upon the verdict against him and the question of the wife's liability on the bond, but not that portion providing for payment of fees to the receiver and his attorney. Accordingly the wife's writ of error excepting to the decree is premature as to the former but not as to the latter.

2. The taxing of administrative expense in an equitable proceeding is left to the discretion of the trial judge, and his action in such a matter will not be disturbed unless a manifest abuse of discretion is shown. Under the record we find no abuse of discretion as to the amount of the fees awarded, or in taxing one half of such amount against the plaintiff in error; and under the well-settled rule in such a case the action of the trial court will not be disturbed.

No. 14544. JUNE 12, 1943. STATEMENT OF FACTS BY DUCKWORTH, Justice. United Food Brokers Inc. filed an equitable petition against G. T. Edwards, Mrs. Irene Edwards, his wife, and Roy R. Cooper. The plaintiff sought to recover $1387.33 and interest on a promissory note and an open account, and alleged that G. T. Edwards operated a candy and confection business in the City of Atlanta, that Mrs. Edwards operated a business in the name of Sunshine Peanut Butter Company, and that Cooper was her bookkeeper. Certain transactions between the defendants were attacked as fraudulent as against the plaintiff and other creditors of Edwards, it being alleged that both he and his wife were insolvent; and an accounting by her was sought as to funds which it was alleged had been diverted by Edwards to her, and a receiver was alleged to be necessary to take over and operate the two enterprises for the benefit of the plaintiff and other creditors of Edwards. The prayers were, for "judgment against the three defendants named, for the several amounts sued for;" for immediate appointment of a receiver for the assets of Edwards trading as Edwards Candy Company, and Mrs. Edwards individually and trading as Sunshine Peanut Butter Company, with direction to continue the operation of the business known as Edwards Candy Company and Sunshine Peanut Butter Company for the benefit of all creditors, and direction to take charge of all books and records of the several defendants and remove the same from the premises of Edwards trading as Edwards Candy Company and Sunshine Peanut Butter Company, so that the same may be protected; that all the defendants be enjoined from changing the books or records of either of the defendants; that all creditors similarly situated be allowed to intervene; and that petitioner have such other relief as may be meet and proper. A more detailed statement of the pleadings may be found in Edwards v. United Food BrokersInc., 195 Ga. 1 (22 S.E.2d 812), where this court affirmed the judgment overruling the motion of two of the defendants to dismiss the action.

On June 24, 1942, a receiver was appointed and took charge of the two enterprises pending a decision on the merits of the case. After a hearing on February 24, 1943, the court rendered a judgment which in its recitals set forth the proceedings and facts before the court, and which for a proper understanding of the assignments of error raised in the bill of exceptions before this court, and for a consideration of the motion of the United Food Brokers Inc. to dismiss the writ of error, we quote as follows:

After reciting the affirmance by this court of the trial court's judgment on the motion to dismiss the plaintiff's action.

"The receiver was appointed in this case on June 24, 1942. The order continuing the receivership was dated July 3, 1942. It appears from the original petition and the answer of G. T. Edwards and Mrs. Irene Edwards that the business of Edwards Candy Company was enjoined by the United States Government from making its products or selling the same, for a violation of the pure food and drug act between January 14, 1942, and February 1, 1942 (paragraph 12 original petition; paragraphs 12 and answers of G. T. Edwards and Mrs. Irene Edwards). On August 10, 1942, Stephens Mitchell filed an intervention in this case, in which he alleged that at the time the petition for a receiver was brought he was representing Mrs. Irene Edwards in the United States district court for the northern district of Georgia in a case involving the pure food and drug act, whereby it was sought to close up the business now in controversy; this litigation had successfully terminated, and his agreed compensation was $250; that he had received $50, and he had rendered valuable service to Mrs. Irene Edwards in the present case, and he asked for an allowance as compensation for his services in the case pending in the northern district of Georgia for an alleged violation of the pure food and drug act, and a reasonable allowance for his service to Mrs. Irene Edwards and the Sunshine Peanut Butter Company in the present case. A rule nisi returnable to August 26, 1942, for the parties to show cause why this compensation should not be paid. On August 26, 1942, an order of court was passed, awarding Stephens Mitchell the sum of $200 requested in his application. No exceptions have been taken to this order by any party in this case.

"During the receivership and before the receiver was called into active military service, in addition to the compensation paid to Mrs. Irene Edwards and her counsel there had been awarded and paid by the receiver the sum of $950 as compensation to the receiver, his attorney, and attorney for the plaintiff. After these sums had been awarded and paid, and on January 28, 1943, all of the defendants united in giving a bond payable to the plaintiff, conditioned to pay the plaintiff any judgment rendered in this case up to $1383.33; and upon this bond being approved by the clerk of this court the receiver, in compliance with the order of January 28, 1943; surrendered the assets to the defendants, including the net profits as appears from his report, and was required to file a report showing his acts and doings in this case. As required by the order allowing the defendants to give a bond and directing the receiver to file a detailed report of his acts and doings in this case, the receiver did file such report on February 5, 1943, and set out that he had paid the fees previously awarded, and had paid an allowance to Mrs. Irene Edwards of $50 during the receivership, and she had assisted him in the operation of the business, and after paying these sums he had a net profit of $2399.53 which he had reinvested in the business, and the entire business, including this profit, was turned over to Mrs. Irene Edwards in compliance with the order of January 28, 1943.

"The court awarded the receiver the further sum of $350 covering the balance of his compensation, and awarded the receiver's attorney the further sum of $200 covering the balance of his compensation. The report of the receiver was ordered filed, and all parties were present and given copies of the receiver's report, and an order of court was passed providing that any objections to the report of the receiver should be filed on or before February 5, 1943, otherwise the report would stand approved and the receiver discharged. No objections were filed to the receiver's report by any party to this case.

"The case came on for trial before me on February 10, 1943, and was concluded on February 11, 1943. At the beginning of the trial the United Food Brokers, through its counsel, announced that inasmuch as the receivership had been continued since June 24, 1942, and on January 28, 1943, in order to obviate the necessity for a successor receiver, because of the present receiver being called in active military service, that all of the defendants had given a bond payable to the plaintiff, conditioned to pay any judgment in this case up to $1387.22, and all of the assets including the net profits made by the receiver had been surrendered to the defendants; and inasmuch as each and all of the defendants were liable for whatever judgment may be rendered in this case up to the amount of said bond, that it, the plaintiff, asks for a judgment against G. T. Edwards, trading as Edwards Candy Company, for the sum sued for and a permanent injunction against Mrs. Irene Edwards to prevent her from prosecuting the trover proceeding in the civil court of Fulton County against Earl Cox.

"Counsel for the plaintiff, United Food Brokers, assumed the position that the petition sought a judgment for an indebtedness due it by G. T. Edwards trading as Edwards Candy Company, the tracing of funds alleged to belong to G. T. Edwards and in the hands of Mrs. Irene Edwards, and an accounting from Mrs. Irene Edwards as to alleged transfers of property between G. T. Edwards and Mrs. Irene Edwards, they being husband and wife, and all of the defendants having united in giving a bond to pay the United Food Brokers any judgment rendered in this case up to $1383.33, that it was unnecessary to introduce any evidence on the question made in the pleadings, except the indebtedness due by G. T. Edwards to the plaintiff, in that all of the defendants were liable to the plaintiff on the bond. Upon the statements made by counsel for United Food Brokers and the assumption of this position by it, counsel for Mrs. Irene Edwards announced they would dismiss the trover suit. After hearing evidence offered in support of the plaintiff's claim against G. T. Edwards, there being no evidence offered except such as related to such claim, the court directed the jury to return a verdict finding in favor of United Food Brokers and against G. T. Edwards trading as Edwards Candy Company, in the sum of $225.52 principal, with seven per cent. Interest from January 2, 1940, on the open account, and $926.81 principal and interest at eight per cent. from March 21, 1939, upon the note sued upon and finding in favor of Mrs. Irene Edwards and Roy Cooper.

"Therefore it is ordered and adjudged that the plaintiff, United Food Brokers, do have and recover from G. T. Edwards trading as Edwards Candy Company the sum of $1152.33 principal and $341.31 interest, and future interest as provided by law.

"It appearing to the court that the defendants have given bond conditioned to pay the plaintiff any judgment rendered in this case up to $13887.33, it is ordered and adjudged that United Food Brokers do have and recover judgment of G. T. Edwards, Mrs. Irene Edwards, Roy Cooper, and Aetna Casualty and Surety Company as surety, the sum of $1383.33 upon said bond.

"This is an equity case; and the receiver having been appointed and the judgment of this court affirmed, and taking into consideration all the facts and the net profits made by the receiver which were surrendered to the defendant, Mrs. Irene Edwards, the court is of the opinion that this is a case where he should exercise his discretion in taxing costs. No sums have been charged in this case that would not have had to be spent by Mrs. Irene Edwards had the receiver not been appointed, except the compensation paid to the receiver and attorneys. Therefore it is ordered and adjudged that the compensation paid to these parties and the accrued court costs be and the same are hereby taxed as follows: (1) The cost of this proceeding, including the cost of the appeal to the Supreme Court which is fixed by operation of law, is taxed one half against the plaintiff and one half against the defendants. (2) The allowance made and paid during the operation of the receivership, as compensation for the receiver in the sum of $450, his attorney in the sum of $300, and the attorney for the plaintiff in the sum of $200, and $200 to the attorney for Mrs. Irene Edwards, is taxed against the defendants G. T. Edwards and Mrs. Irene Edwards jointly and severally. (3) The balance of the compensation of $350 awarded to Alton T. Milam, as receiver, and $200 to Ellis Barrett, the receiver's attorney, is taxed against the plaintiff, United Food Brokers, to be paid out of the recovery in this case."

The bond executed by the three defendants, as set forth in the bill of exceptions, is as follows: "Whereas, under date of January 25, 1943, an order of court was passed dissolving the receivership upon the defendants giving bond, and it appearing the amount of said litigation is $1287.33, therefore, pursuant to said order the undersigned principals and sureties bind themselves, their heirs and administrators, unto the United Food Brokers Inc., in the sum of $1387.33, conditioned to pay any judgment rendered in said case not exceeding the above amount. Given under our hands and seal this the 28th day of January, 1943. [Signed] G. T. Edwards; Mrs. Irene Edwards; Roy R. Cooper." Although the name does not appear in the quoted portion of the bond in the bill of exceptions, it appears from the recitals in the judgment of the court that Aetna Casualty and Surety Company signed as surety.

Error is assigned on the judgment, on the grounds, that the assessed fees of $950 covering remuneration to the receiver and his attorney, which were paid from the income of the business, were excessive, and were awarded in an improvident receivership, and constituted an abuse of discretion, and that if any fees were assessable none should have been taxed against her, as such assessment did not follow the verdict which was rendered in her favor; and that the action of the court in rendering judgment against her on the bond which she executed with the two other defendants, to pay the amount of the judgment recovered by the plaintiff, was contrary to law in that the bond could not apply in case no verdict was found against her, and that to enforce it would be to make her liable for the debt of her husband.

In this court the defendant in error suggested a diminution of the record, averring that a motion for new trial, as per certified copy attached, had been filed in the trial court by G. T. Edwards and had not been disposed of; and moved that this court have such record transmitted, and to dismiss the writ of error as premature, in that the case was still pending in the trial court. 1. With respect to the motion to dismiss the writ of error as prematurely brought, on the ground that the case is still pending in the trial court, for the reason that a motion for new trial filed by G. T. Edwards has not been disposed of, and requesting that a copy of such motion be transmitted to this court, such additional record is unnecessary, inasmuch as on the argument before this court counsel for the plaintiff in error admitted that such a motion for new trial was pending. In the brief of counsel it is stated that the plaintiff in error was not made a party thereto and served, and that as to her the case is not pending. It is true that upon the agreement of the parties in open court, that no successor receiver be appointed in lieu of the original receiver who had been called into the armed forces of the United States Government, and that the receivership be dissolved and the business of the plaintiff in error be surrendered to her in consideration of her executing with the other two defendants the bond which has been hereinbefore set out, the case proceeded solely on the issue whether or not the defendant G. T. Edwards was liable on the promissory note and open account sued on, and Mrs. Edwards is not an indispensable party to that phase of the case, the merits of which are not here involved. While the trial court rendered judgment against her on the bond in consequence of the judgment against G. T. Edwards, the filing of the motion for new trial by him solely with respect to his liability, under the evidence on the issue made by the suit on the promissory note and open account, suspended the question of liability, of all obligors under the bond. Manifestly, if a new trial be granted, and on a second trial no judgment be rendered against G. T. Edwards, and that issue is finally determined, neither Mrs. Irene Edwards nor either of the other two obligors under the bond will be bound by its provisions. Accordingly, the contention of Mrs. Edwards that a proper construction of the bond is that it was meant to be enforceable against her only in the event a judgment was obtained against her under the equitable prayers of the petition, and that in any event it is not enforceable against her because to do so would be to make her liable for the debt of her husband, and the contention of United Food Brokers Inc., on the other hand, that the bond is an original undertaking on her part, the consideration for which is not primarily the debt of her husband, but the releasing of her from a possible verdict, or, as we gather, the consideration for the release of her from the pending litigation under the original equitable features of the case, are at this time only academic questions not necessary to be answered, for the reason that the question of ultimate liability under the bond is now suspended by the existing motion for new trial filed by G. T. Edwards. In respect to the assignment of error on that part of the judgment establishing against Mrs. Irene Edwards a liability under the bond, it must be held that to this extent the writ of error is premature; and such assignment of error is not passed on.

Notwithstanding the fact that there is a motion for new trial pending in the trial court with respect to the action against G. T. Edwards on the promissory note and open account, and that we have ruled that the aforementioned assignment of error is prematurely here, does this court have jurisdiction to pass on the question raised as to the legality of the assessment of the fees of the receiver and his attorney? In Booth v. State ofGeorgia, 131 Ga. 750, 756 (63 S.E. 505), it was said: "It is difficult sometimes in actions on the equity side of the court, especially in cases of receivership, to determine whether an order is administrative in its character, resting in the sound discretion of the chancellor, or final in its nature. To be final it does not necessarily mean that the judgment disposes of the entire case. A judgment may be rendered separable from a judgment disposing of the entire case, and yet be a judgment that is final as to some of the substantial rights of the parties as contended for in their pleadings. It is final when, as to the subject-matter of the judgment, any of the substantial rights of the parties litigant are finally settled by the judgment." InCooper v. Reeves, 161 Ga. 232 (131 S.E. 63), it was ruled: "A final decree disposing of all of the substantial equities of the case, such as the conflicting claims to an estate, is not made interlocutory by the mere fact that final settlement with the rightful heirs has not been decreed." See Miller v.Gibbs, 161 Ga. 698 (2) (132 S.E. 626); Hicks v. AtlantaTrust Co., 187 Ga. 314 (200 S.E. 301); Mendenhall v.Stovall, 191 Ga. 452, 455 (12 S.E.2d 589); Trustees v. Greenough, 105 U.S. 527 (26 L. ed. 1157); Williams v. Morgan,111 U.S. 684 (4 Sup. Ct. 638, 28 L. ed. 559); Rubert Hermanos Inc. v. Puerto Rico, 118 F.2d 757 (3). While in Moody v. Muscogee Mfg. Co., 134 Ga. 721 (2), 730 (68 S.E. 604, 20 Ann. Cas. 301), it was said that "The general practice under our system of pleading is to enter only one final decree on the merits of an equity cause. The practical advantage of concluding all issues in a single comprehensive decree is the prevention of a review of litigated cases by piecemeal," that rule does not militate against the right of one defendant to appeal in a case against two or more defendants, where separable decrees are rendered in one single order of the court establishing different liabilities against the respective defendants, and one of such separable decrees remains as final and the others do not. In the present case the trial court made a final disposition of the question of assessment of fees for the receiver and his attorney. Whether it was done in a separate judgment or adjudicated with other issues in a single judgment is immaterial on the question of finality. The only question that could arise if G. T. Edwards be granted a new trial would be as to his liability for the amount of the note and open account sued on. Why should the receiver and his attorney, in no way interested in the result of such litigation, be required to wait until the conclusion of it before it is finally established that their compensation is proper, especially in a case like the present, where the approved payments have been made out of income derived from a successful operation by the receiver of the business involved, where his reports have been filed, the interested parties have been furnished copies, have been required to make objections, if any, by a named date, and have made no objections, as is revealed by the recitals in the comprehensive decree of the trial court? Being final as to such fees, that portion of the decree may be appealed from by Mrs. Irene Edwards, though the motion for new trial filed by her husband be pending. This court has jurisdiction of the writ of error in respect to the assignment of error on the allowance of the fees of the receiver and his attorney. The motion to dismiss is overruled; but, as hereinbefore ruled, the assignment of error on that part of the decree establishing liability on the bond is prematurely here and will not be passed upon.

2. The assignments of error as to the excessiveness of the award of fees to the receiver and his attorney, and taxing one half of such amount against the plaintiff in error, may be considered together. The sum of $950 was paid for this service out of income in a successful operation of the business of the plaintiff in error, as is shown by the report of the receiver for a period beginning June 15, 1942, and ending December 31, 1942. Upon application of her counsel an additional sum of $200 was paid to him out of such income. It appears that when the receiver took over the business her counsel was representing her in the Federal court in a case in which she had been charged with violating the pure food and drug act of Congress. Her exoneration from guilt occurred during the operation of the business by the receiver. This payment of $200 was not only acquiesced in as proper in amount and act, but was sought by her counsel; and it is only the value of the services of the receiver and his attorney that is brought into question, though without concrete demonstration of unreasonableness. The report of the receiver evidences an efficient administration. The fees were paid with the approval of the court by appropriate orders. Though invited to file objections to the receiver's reports, which are included in the record, Mrs. Edwards made none, and the court's tentative approval became final on February 5, 1943. From the operation of the business the receiver not only paid her $50 per week as salary, but so successfully conducted it as to increase its net worth and show a profit of $2135.09 for the period between June 15, 1942, and December 31, 1942, and upon surrendering the business to her on January 28, 1943, left in it a total profit of $3089.30. It further appears that no disbursements, other than the fees objected to, were made for any expense that would not have been sustained had she been conducting the business herself. "The considerations which should control in fixing the compensation are the value of the property in controversy; the particular benefit derived from the receiver's efforts and attention; time, labor, and skill required, and experience in the proper performance of the duties imposed; their fair value measured by common business standards; and the degree of integrity and dispatch with which the work of the receivership is conducted." 45 Am. Jur. 224, § 288. To the same effect see 53 C. J. 386, § 629. "The power of courts of equity to fix the compensation of their own receivers is well established, and results necessarily from the relation which the receiver sustains to the court, he being its officer or agent, deriving his functions only from that source. In the absence, therefore, of any legislation regulating the receiver's salary or compensation, the matter is left entirely to the determination of the court from which he derives his appointment." High on Receivers, 915, § 781. Where a business is conducted by a receiver "the judge may allow compensation for such services in lieu of commissions as may be reasonable, not exceeding the compensation paid by persons in the usual and regular conduct of such business." Code, § 55-315.

There is in the record much to sustain and nothing to question the propriety of the court in fixing the administration of the business as reasonably worth the compensation awarded. Certainly no abuse of discretion is shown in taxing the plaintiff in error with half of such fees as are complained of. While it is urged in the brief of counsel that the receivership was improvidently granted and no judgment was rendered against the plaintiff in error under the equitable prayers of the petition, this argument loses sight of the fact that by agreement entered into between the parties, and recited in the judgment of the court, the question of the truth of the alleged collusion on her part to defeat recovery by the plaintiff of the claim against her husband was left undetermined and not adjudicated; she making no retraxit, but, in consideration of the bond given by her conditioned to pay the amount of any judgment rendered against her husband, being content to have the receivership dissolved and to proceed only on the issue of the husband's liability under the note and open account. In any event, as was said in Pearce v.Chastain, 3 Ga. 226, 230 (46 Am. D. 423), consistently recognized by this court, "Costs in chancery do not always follow the event of the suit, but are awarded according to the justice of the cause." See Peninsular Naval Stores Co. v. Culbreth,162 Ga. 474 (134 S.E. 608); Grizzard v. Ford, 167 Ga. 531 (3) (146 S.E. 126). It is axiomatic that the taxing of administrative expense in equitable proceedings is left to the discretion of the trial judge, and that his action in such matters will not be disturbed unless a manifest abuse of such discretion is shown. See Guernsey v. Phinizy, 113 Ga. 898 (3) (39 S.E. 402, 84 Am. St. R. 270); Biggers v. Noland,175 Ga. 874 (166 S.E. 645); Brown v. Parks, 190 Ga. 540 (8), 549 (9 S.E.2d 897); United States Fidelity c. Co. v.Clarke, 190 Ga. 46 (5) (8 S.E.2d 52). Hamilton v.Dupre, 103 Ga. 795 (30 S.E. 248), is an isolated instance where this court held a division of expense an abuse of discretion, but, as pointed out in Lowe v. Byrd, 148 Ga. 388,393 (96 S.E. 1001), decided in 1918, the facts in that case were extreme, and it was the only case that had come to the attention of this court where the judgment of the trial court had ever been reversed for an alleged abuse of discretion in determining upon whom the costs should fall. See Lane v. Tarver, 153 Ga. 570, 586 (113 S.E. 452), decided in 1922, and Biggers v. Noland, supra, decided in 1932, distinguishing the Hamilton case, supra, as unusual.

Under the record we find no abuse of the discretion of the court in taxing one half of the $950 fees against the plaintiff in error, and under the well-established rule in such a case the action of the court will not be disturbed.

Judgment affirmed as to the award of fees to the receiver and his attorney; but no judgment is rendered on the premature assignment of error here on the trial court's decree against the plaintiff in error on her bond.

All the Justices concur.