Akers v. Rowan

The opinion of the court was delivered by Mr Justice McGowan.

The three cases above stated were all concerned about an assignment which J. S. Robbins executed for the benefit of his creditors. Robert IV. Shand, Esq., was the assignee.'and the'case first above stated wa's brought against him to set aside the assignment, and the other two case3 he had to institute for the benefit of the assigned estate. See Akers v. Rowan. 33 S. C., 452.

On April 14, 1891, his honor. Judge Hudson, passed the following order: “On motion of John T. Sloan, Jr., and Maishall & Weston, for the defendant in the two last above entitled actions, and with the-consent of Clark & Muller and Lyles & Haynsworth, attorneys for plaintiff in the last above entitled actions, &c.. it is ordered, that Robert VV. Shand, Esq., as assignee, do show cause before me on April It), 1891, at 10 o’clock, a. m., or as soon thereafter as counsel can be heard, wh.y he should not apply the funds now in his hands, as assignee, to the payment of the costs and disbursements of the defendants’ attorneys, including fees of the officers of the court, in the two last above mentioned actions.” To this rule the assignee, R W. Shand, Esq., made “return,” which should appear in full in the report of the case.

ITis honor, Judge Hudson, upon the-return to the rule, made the following order: “On hearing rule to show cause, and the sworn return thereto of Robert W. Shand, assignee, and after hearing argument by Messrs. Sham and Weston in support of the rule, and Mr. J. S. Muller contra, it is ordered and adjudged, that said'return is sufficient, and that the said rule be, and the same is hereby, discharged. It is-further ordered, that sajd Robert W. Shand, assignee, be and is hereby authorized to pay out of the assigned estate in his hands, the said fees and disbursements of his said attorneys, amounting in the aggregate to $337.50, and the costs of the officers of court, exclusive of defendants’-attorneys, in the two cases last above stated, the fees and disbursements of said attorneys of said assignee and the costs of said officers of court to be paid ratably ; and that he apply the residue, if any there be, to the payment of the costs and disbur-ements of defendants’ attorneys in the two cases last above stated,” &c.

From this order The Central National Bank of Columbia ap *91 peals to tills court on the following grounds : I. That his honor erred in holding that the return of Robert W. Shand, assignee, made hefein is sufficient, and discharging the rule. II. That his honor erred in adjudging that said Robert W. Shand be and he is hereby authorized to. pay out of the assigned estate in his hands the said fees and disbursements of his said attorneys, amounting in the aggregate to $337.50. III. That his honor erred in holding that the said assignee should pay out of the said assigned estate in his hands “the costs of the officers of the court, exclusive of defendants’ attorneys, in the two cases last above stated.’’ IV. That his honor erred in holding that the fees and disbursements of said attorneys of said assignee, and the costs of said officers of court, be paid ritably out of said assigned estate. V. That his honor erred in holding that he (Robert W. Shand) apply the residue, if any there be, to the payment of the costs and disbursements of defendants’ attorneys in the two cases last above stated. VI. That his honor erred in not holding that the judgment of the Supreme Court, “tlirlt the costs of the two'actioñs last slated should be paid out of the assets uf the assigned (state in the hands of the plaintiff,” is res adjudicatn, and shall govern the assignee as to the manner of the payment of costs out of the assets of the assigned estate in his hands. VII. That his honor erred in not holding that the costs of the defendant in the two actions last above stated should be paid by the plaintiff, Robert W. Sliarid, out of assets of the assigned estate in his hands, exclusive of the fees and disbursements of his said attorneys, amounting in the aggregate to $337.50.

The assignee, Robert W. Shand, Esq., was a trustee for the proper administration of the assigned estate. The seeming complications in the matter of costs and fees has arisen out of the fact, that the assigned fund found in the hands of the assignee has, turned out to be insufficient to satisfy all the costs and fees properly chargeable. It is not. and could not be, properly charged, that the assignee had made himself personally liable for costs and fees, “for mismanagement or bad faith 'in the conduct of the business,’’ under section 330 of the Code.' It is unfortunate that the assigned funds in the hands of the assignee are not sufficient to *92 pay all proper charges; but it is so, and the duty is devolved upon the court of deciding who is entitled to the fund in hand.

1 In the first place, we do not think there is any question of res adjudieata in the matter. The direction in the former decree of this court, “that the costs of the two actions last above stated should be paid out of the assets in the hands of the plaintiff,” was perfectly proper; the-plá'intiff failed to recover, and the consequence was that the assets should pay the costs. That, however, was on the assumption that the available assets were sufficient for that purpose. At the time the decree was rendered, it could not be foreseen that the assets would not' be sufficient to pay all claims; and, of course, the question of priorities was not then before the court at all. That is a new question, which has arisen out of the developed deficiency of assets, and must be decided on principle, without being controlled by the former decree.

2 It is well settled, as a rule, that a trustee is entitled to be reimbursed for all the legitimate and proper expenses of administering the trust. Without citing the numerous authorities upon the subject, it will be sufficient to say that Chancellor Johnston stated the rule as we understand it in Wham v. Love, Rice Ch., 54: “An administrator [or assignee] is certainly entitled to all expenditures made by him for the preservation and benefit of the estate in his hands, as for expenses incurred in resisting a questionable claim set up against the estate. * * * .So, also, for fees paid for general advice as to the most proper and profitable course of administration.” See Perry on Trusts, section 907, and Burrill on Assignments, section 417. Besides this general principle, there was in this assignment an express provision, that all expenses of the assignment, and of carrying into effect the trust thereby created, should be first paid. The exact truth is, that there can be no clear “assets,” subject to order, until all proper expenses of administration are paid; only what remains after their payment can properly be called “assets,” in the sense of a fund for distribution.

It follows that the only question is, whether the fees and disbursements of the lawyers employed by the assignee to assist him in his duties were necessary and proper expenses, incurred in *93 good faith in the administration of the trust estate. - If so, there can be no doubt that-the assignee might have paid them out of the fund in his hands, and, upon an accounting,- produced the receipts as expenditures made in the due course of administration. It seems to be admitted that the charges were reasonable and proper for the services rendered; and while, of course, we regret that the fund in hand is not sufficient to pay all just claims, with our view of the law we cannot say that the Circuit Judge erred in discharging the rule.

The judgment of this court is, that the judgment of the Circuit Court be affirmed.