The sole question on this appeal is whether the District Judge had authority to allow an attorney’s fees of $3,500 in favor of the appellees, plaintiffs below, against the assets of the ten corporate appellants in the hands of a receiver. The amount of the allowance is not contested. The specification of errors asserts (1) that appellants’ motion to dismiss the suit for want of federal jurisdiction; and (2) for failure to state a claim authorizing any relief, should have been sustained; and (3) the attorney’s fee for plaintiffs could not be allowed because the suit was not in behalf of the corporations; and (4) no judgment was obtained of benefit to them.
We have no brief for appellees, and the judge in his decree did not state the grounds for allowing the fee, nor have we the evidence on which he acted. We must take the allowance as correct unless the record we have demonstrates its incorrectness.
1. The complaint showed that the appel-lees, the Parkers, were prior to May 21, ■1938, the equal owners of certain stock in the ten corporate appellants, and on that date sold it to appellant Cannon for $1,600,-000, for which his notes were given payable $100,000 principal each year and interest monthly at 3%. Seventy-five percent of the entire stock of each corporation indorsed in blank was deposited in a bank as security for the notes, with an agreement as to the disposition of the dividends on it, to the general effect that nine-tenths would be applied so far as needed in payment of the notes and the overplus invested in stocks or bonds to be also deposited as security. $300,000 of these notes were transferred to others before the suit was filed and the transferees were not parties to this suit. The complaint alleged further that Cannon had joined with himself appellants Gar-nett and Roberts, who together held all the stock (75% being under pledge as above stated) and they were respectively President, Treasurer and Secretary of each corporation and the board of directors of each ; and in conspiracy together were dissipating the corporate assets by selling them, by using the dividends otherwise than as agreed, and by making additional personal withdrawals which at the filing of the complaint on May 8, 1943, exceeded $1,500,000; so that the corporations were about to be stripped of their assets. A full and complete audit and account was sought, and a receiver for the conduct of the business if necessary, it being alleged that since the three individual defendants controlled the corporations, and Cannon and Garnett were insolvent aside from their interests in the corporations, plaintiffs could have no relief through the corporations. Plaintiffs had requested a full statement from Cannon and Garnett, but only a dividend statement was furnished. An audit had been agreed to, but it had been hindered by defendants and was not full and complete. There was no allegation of default in the payment of the notes, nor election to accelerate their maturity, nor prayer for judgment on them. The claim was for the aid of the Court “for the protection o.f their rights as pledgees of the stock in the corporations named against respondent T. P. Cannon, together with the right to have all funds illegally or unlawfully withdrawn from said corporations repaid.” A right was asserted also to recover $15,000 already paid out by plaintiffs for the auditing, as well as a reasonable attorney’s fee for investigating and bringing this action, to be charged against Cannon and also against said corporations. The prayers covered all these points.
We think it quite clear that federal jurisdiction is shown. There is diversity of citizenship. The amount involved exceeds $3,000. A judgment for $15,000 auditing expense and an attorney’s fee is asked. While no judgment is sought on the notes, the protection of a security apparently valued at more than a million dollars is sought and the return of $1,500,000 alleged to have been diverted from the corporations whose stock constituted the security. The value of a right sought to be protected often constitutes the measure of the amount involved for jurisdictional purposes.
*7082. No great argument is needed to show that a good claim for relief in equity is alleged. Corporate officers, while not technical trustees, are fiduciaries, and those interested in corporate assets may seek the protection of them in equity against the unfaithfulness of the officers when no other remedy is available. Irrespective of the claim to recover a judgment for auditing costs and attorney’s fees, there is equity in the complaint.
3. It is not clearly true that the suit was not in behalf of the corporations, as separate legal entities, as well as in behalf of plaintiffs. As above quoted, plaintiffs as pledgees of stock were seeking to have improper withdrawals of corporate assets restored after a full audit should determine them, and to take the assets from the unfaithful officers and protect them by a receiver if found necessary. The court authorized a further audit, which was quite extensive and cost $7,942.50 which was by an interlocutory decree ordered to be paid by plaintiffs by reason of an agreement made by them. It was further decreed that the complaint was filed in good faith; that the individual defendants had not properly dealt with the dividends; and that excessive withdrawals had been made and charged on the books, but without fraud. A receiver was denied, but the officers were enjoined from making further withdrawals beyond their dividends and salaries, or any sales of property save oil and gas products without approval of the court. The cause was kept open for further proceedings, including the matter of attorney’s fee for plaintiffs. Semiannual reports to the court were required to be made of the handling of the affairs of the corporations. Six months later another interlocutory decree on supplementary pleadings was made to the effect that since the former decree plaintiffs had agreed to accept payment of principal and accrued interest on their notes, but had since repudiated the agreement; that other persons who held by transfer before the suit some of the series of notes had filed suit on them for a receiver in a State court, and that it was necessary for the District Court to appoint a receiver to protect its jurisdiction over the corporations. The previous denial of a receivership was set aside, and Cannon himself was made receiver for the ten corporations. The issue as to plaintiffs’ claim for attorney’s fees was again left open. Five months after-wards the receiver made a final report, to the effect that the plaintiffs in the District Court and in the State court had come to a full settlement whereby they were to be paid principal and accrued interest, and that arrangements had been made to borrow the money, and proper action by the corporations had been had under order of the court, and he presented his claim for expenses to-talling $1,593, mostly attorney’s fees, he claiming no compensation beyond his salary from the corporations. The judge made fact-findings which included some that Cannon had withdrawn from the corporations before the complaint was filed $234,056 in addition to his dividends and salary, and Roberts $121,291, and Garnett $72,126 in addition to their dividends and salaries; and that plaintiffs’ audit before the suit and that during it had cost between $21,000 and $25,000 which they had paid; and that the assets of the ten corporations, according to the auditor’s report, exceeded $3,000,000. The judge allowed the receiver’s expense bill; and the contested attorney’s fee for plaintiffs in an amount of $3,500, all as a charge against the properties, which the receiver was oi'dered to return to the corporations; and the case was otherwise ended.
The suit was for the protection of the corporations in at least two respects. It sought to establish a liability to them by their officers of $1,500,000 for withdrawals, and did establish a total o.f $427,472, and stopped further withdrawals. It was also the vehicle at last of protecting the assets from a State receivership which in all probability would have cost much more than that in the District Court.
4. The fact that no decree was entered against the individual defendants in favor of the corporations is probably due to the paying of plaintiffs’ claim by the settlement in which the corporations participated. The question of this fee was excluded from-the settlement. Purchasing or paying off the claims of those who procure protection or benefit to assets brought into the hands of a court of equity does not destroy the right of plaintiffs’ attorneys to their fee. Central R. R. & Banking Co. v. Pettus, 113 U.S. 116, 5 S.Ct. 387, 28 L.Ed 915. Nor does it destroy a plaintiff’s right where he has paid his attorney and retains his claim thereto as here That this case, though its circumstances are unusual, could be regarded by the district judge as one within the principle of charging assets brought into a court of equity for their protection with a reasonable part of the plaintiff’s cost in do*709ing so, will appear from a careful reading of Trustees v. Greenough, 105 U.S. 527, 26 L.Ed. 1157, and Sprague v. Ticonic Bank, 307 U.S. 161, at pages 166 and 167, 59 S.Ct. 777, 83 L.Ed. 1184.
In view of the vigorous dissenting opinion filed, it is perhaps well to correct some statements in it which we think are misconceptions of the case. The appellees were not creditors of the ten corporations, but of Cannon. Their relationship to the corporations was solely that of stockholders by in-dorsement and pledge by Cannon of shares of the capital stock. Nor were they suing Cannot to collect their debt, which was not in default. They had. a long term investment drawing monthly interest which they wished to preserve. Their aim was to maintain the integrity of the corporate assets, and restore what had been misapplied. This necessarily would benefit the corporations and all stockholders. In like case with themselves especially was the “Jimmie and LaWanda Rhea Parker Trust,” as is alleged in the petition, and it was not made party, as is alleged, because it was not desired to involve it in the expenses and costs of the proposed audit and receivership. The appellees paid all the costs of the auditing, over $20,000, and attorney’s fees in an amount not appearing in the record. Evidently the $3,500 attorney’s fee awarded them is only a fraction of the whole. When the audit established that the individual appellants were, as appellees contended, looting the corporations, and were of relatively slight means themselves, but the court denied a receiver, the trustees of the above mentioned trust, one appellee being one of them, sought a receiver in the State courts. The federal judge, foreseeing what would probably result, arranged a receivership of his own. His receivership cost only $1,593 plus the $3,500 allowed appellees for attorney’s fees. The audit disclosed corporate assets of about $3,000,000. Judicial experience authorizes us to conclude that a receivership elsewhere would probably have been much more costly.
It does not appear who the creditors of the corporations were, nor the amount of their debts. The appellees were not their creditors, but were interested as stockholders. The corporations were found to be still solvent. But it was adjudged that $427,472 had been irregularly taken from their assets. If it was not restored by the individual appellants in the general settlement of the litigation, the corporations are in position by a simple suit to collect it. The absence of a judgment of restoration in the final decree in this case suggests that it was repaid or secured in the settlement. Certain it is that the audit was needed, and resulted in putting the business of the corporations on a much better footing. Ap-pellees were required to pay for it because they had offered to. They did not get what they sought, which was the safety of a long term investment, but waived future interest and took the principal as a compromise, retaining expressly their claim to be reimbursed for attorney’s fees. We find no want of authority nor abuse of discretion in the very small award made by the judge.
Judgment affirmed.