Olson v. State Bank

COLLINS, J.

Appeals taken from orders, original and supplemental, made by the district court when passing upon a partial report and account of a receiver of a banking corporation, which report and account included an attorney’s claim for legal services rendered and for disbursements made, a part of said claim being rejected and disallowed.

The claim in question was itemized, quite in detail, each item being numbered, and is known in the paper book as “Exhibit O.” The items numbered from 1 to 7, inclusive, and items 10 and 11, were wholly disallowed, for reasons hereinafter stated. Items 8, 9, 12, 14 and 15, aggregating .the sum of $1,675, were allowed in full, while on account of items 13, 16, and 17, $25 was allowed; thus making a total allowance of $1,700. Several of the rejected items were charges for advice to the receiver in respect to legal matters. Some were for drawing legal documents, and one, for quite a large sum of money, was for “investigating law and precedents on proceedings against foreign stockholders” for over three months.

This entire exhibit was supplemented by oral testimony in respect to each item, the nature of the services, the length of time consumed in the work, and the value thereof, all of which testimony stood uncontradicted. And the reasons which seem to have actuated the court when refusing to allow a number of the items constituting the attorney’s account are thus stated in the supplemental order:

“All of the services set forth in the attorney’s bill (Exhibit C), in items disallowed, should either have been performed by the receiver, or if performed by another, at his request, should be paid for by him out of the said percentage,”—referring to a percentage agreed to by the receiver, at the time of his appointment, as compensation for his services in making certain collections.

It appears from this excerpt that it was the opinion of the court that the duties of a receiver included those ordinarily performed by an attorney at law, and these duties he was expected to perform himself, if qualified, or, if not, he was to employ an attorney at his own expense. If, then, the receiver is an attorney, it becomes his duty to perform legal services of the character described in the disallowed items, for which he is not to be paid. And if he is not an attorney, and for that reason is compelled to take counsel and advice of a man of that profession, or if it becomes necessary to have the authorities examined upon some question of law by a properly qualified person, the receiver must pay the fees himself for such examination, out of the percentage stipulated as his compensation for collecting claims due the estate.

We do not understand this to be the law in any case, and certainly it ought not to be where, as in the present, the order of appointment specifically provided for the employment of such counsel as the receiver deemed necessary for the management of all actions, suits, or other affairs as had arisen or might arise in the execution of the trust, and also for the purpose of advising such receiver in the performance of his duties, and further provided for the payment of proper counsel fees for such services.

Again, the receiver, if he is an attorney, is not required himself to perform any other duties than those strictly administrative or executive, or, if he does, he is entitled to additional compensation for his services. Farmers L. & T. Co. v. Central Ry. Co., 8 Fed. 60. And when employing counsel the receiver must also remember that it is his duty to perform such duties as any ordinarily competent business man is presumed to be capable of performing. These are his duties, and he is paid therefor. It is only for services requiring special legal skill that he will be allowed counsel fees. Henry v. Henry, 103 Ala. 582, 15 South. 916. See, also, Stuart v. Boulware, 133 U. S. 78, 10 Sup. Ct. 242; Adams v. Haskell, 6 Cal. 475.

There must be a real occasion for the employment of counsel, and, if there is no necessity shown for this employment, the court will not ordinarily allow his fees as a necessary expense. We cannot agree with the court below that all of the services mentioned in the disallowed items should have been performed by the receiver, for in some instances, at least, the work required the investigation and advice of counsel,—the services of an attorney at law. Much that was done could not have been done by the ordinary business man, nor was it either administrative or executive. It was not incumbent upon the receiver to perform these duties simply because he happened to be an attorney, nor would it have been his duty, had he been a layman, to secure counsel at his own expense to examine into some of the matters in question, that he might be advised and the estate properly protected.

The real difficulty with the position taken by the judges who refused to allow any of these items is in holding, in effect, that legal services were required of the receiver as a part of his duties, and that if the services were not performed by him when so required, but were performed by counsel, the obligation was upon the receiver himself to pay for the services.

We agree with counsel for the present receiver that, when passing upon the*reasonableness of the attorney’s charges, the judges could rightfully use their personal knowledge of what had been done in respect to the estate by the attorney, and they could also take into consideration the character of legal services theretofore rendered by counsel, and the amount already allowed on account of the same. The correctness of such an account is not to be determined, as in.ordinary cases, exclusively upon the evidence introduced on the hearing, for the judges have personal knowledge of the proceedings, of what has been done, and of the general nature and extent of the services alleged to have been rendered, and this knowledge may properly be used when determining what would be fair compensation for the attorney’s services. This is the rule laid down when considering an assignee’s account (In re State Bank, 57 Minn. 361, 59 N. W. 315), and is strictly in point here.

And, further, we agree with counsel that it is always the duty of the court, whether objections are or are not made by the creditors of a trust estate, to supervise and scrutinize closely the trust account. When this is done in accordance with the rules of law hereinbefore stated, this court will not interfere or direct a revision, except where there has been an abuse of that sound discretion which, of necessity, rests with the court below.

Assuming that the order appealed from would be reversed, we are asked by counsel to fix and determine in this court the amount which should be allowed on account of the services mentioned in the rejected items; and no objection thereto seems to be made by opposing counsel. But it is not within the power of this court, in the first instance, to fix the fees or compensation to be allowed to trustees for their personal services, or for the services of counsel employed by them, in proceedings pending in the district court, and over which such courts have original jurisdiction.

The orders appealed from in so far as they disallowed the first, second, third, fourth, fifth, sixth, seventh, tenth and eleventh items of said, partial report and account, are reversed, and the cause is remanded for further proceedings in accordance with the views herein expressed.