Dissenting Opinion. I recognize the general rule that an attorney cannot recover fees for services from one who has not employed him or authorized his employment although the services may have been beneficial to such person. The latest decision of this court upon that subject is Garvin v. Rappaport (1940), 216 Ind. 471,25 N.E.2d 249.
The attorneys for whose benefit the judgment of the lower court inured were employed by the American National Bank of Indianapolis and the First National Bank at Orlando, Florida, trustees of certain shareholders who owned a few units of stock of the total issued by the hotel company. The attorneys were bound to represent their clients, and, if in so doing their services inured to the benefit of all shareholders, they would not be in a position to recover from them under the general, well-recognized rule, but, as indicated by the opinion in chief, there are exceptions to this rule.
The case comes to this court on appeal from a judgment rendered by the trial court wherein an allowance was made from the general fund for the benefit of the appellees' attorneys. Their application for an allowance was made by the banks which were their employers in the joint litigation which preceded the filing of the claim for attorneys' fees. It was proper to present the claim in this manner. The allowance was asked to be made for the benefit of attorneys only. The attorneys *Page 313 could have filed a claim in their own names under the decision inPrinceton Coal, etc., Co. v. Gilchrist (1912),51 Ind. App. 216, 224, 99 N.E. 426.
When the claim for the attorneys was filed it was answered by a general denial; set for hearing; a trial was had; and the only evidence offered was the testimony offered by the petitioners in support of the attorneys' claim. The trustee offered no testimony. On appeal the facts established which influenced the court in its decision depended largely upon the testimony of the witness, Mr. Doran, one of the attorneys for whose benefit the court made the allowance. He detailed the nature of the services rendered and the many ramifications of the various transactions in connection with the hotel property.
It appears that, when financial conditions became such that the trustee was unable to rent the property or operate the hotel at a profit and not able to pay dividends to stockholders, it became concerned as to its authority and filed an action in the superior court in which it asked for a declaratory judgment. This was a private trust created by contract, and, as far as appears from the record, had not been involved in court until appellant took the action indicated. Several months later one of the shareholders instituted an action in the circuit court of the same county, whereby it questioned the correctness of the appellant's representations and transactions. Finally the two cases were consolidated in the circuit court and tried together. The trial was by the court and extended over a long period, commencing in the early summer and being continued from time to time until late fall.
It seems to be conceded that during the months of the trial the Doran firm of attorneys represented the interest of stockholders and made the only objections to the *Page 314 appellant's claims. The $701.66 transaction referred to in the opinion in chief was not settled and accounted for by the appellant until there had been one and one-half days of trial. The trustee was asserting that there had been no self-dealing, but, through the effort of these attorneys, self-dealing was established, which was sufficiently convincing to cause the appellant to charge itself with that amount during the progress of the trial. The appellant, trustee, was in court asking that a named sum for its services and for the services of its attorneys should be approved by the court. The Doran firm of lawyers opposed this allowance.
The appellant further reported to the court a proposed contract with the Albert Pick Company, and in connection with the reported contract asked that a large sum be allowed to a broker who secured the tenant to make the proposed lease. In opposing these matters for the benefit of all the stockholders, Mr. Doran testified that it was necessary for him to make several trips to the city of Chicago in order to secure a better proposition for the rental of the hotel premises, and through his efforts he did secure a party to make a counter proposal. In doing all of this work there were many conversations, many trips, and many telephone calls, all at the personal expense of the attorneys. The operation of the hotel property had covered a number of years, and it was necessary to secure an audit of the books, all of which required much time and labor.
Another attorney who early in the proceedings had commenced a contest of the claims of the trustee was eliminated from the case by a sale by his client of its interest in the hotel property, which sale was made under an agreement that that attorney should assist in securing an approval of the Pick contract. In order to take advantage of the pleadings filed by that attorney, *Page 315 it was necessary to, and the appellees' attorneys did, go into court and ask that the action filed by the other attorney be not dismissed, but that these attorneys be permitted to prosecute that action for the benefit of shareholders. This was granted. It appears from Mr. Doran's testimony that the trustee contended in every instance that its report to the court be approved in all things, and that the Pick contract be accepted and approved. The result, however, of all of this was that there was a saving to the shareholders by a reduction of the broker's commission in the sum of $23,000. The fees of the trustee were reduced $9,591.64 and its attorneys' fee was reduced $6,235.10. To this may be added the $701.66 which had been theretofore unaccounted for by the trustee. It is not sufficient or sound to presume that the trial court would have made these reductions for the benefit of the shareholders had not the Doran firm of attorneys vigorously contested all of these claims of the trustee.
The exception to the general rule as to the allowance of attorneys' fees in such cases includes services of counsel which preserved common rights or common property in the interest of all parties concerned. It does not seem to me that there is any more reason for saying that an allowance should be made to the attorney who brings into the estate assets not theretofore accounted for than it is to allow an attorney compensation for his services where he succeeds in preventing dissipation of the assets already in the hands of the trustee. It is just as important to the shareholders to have the assets preserved as to bring into the estate other assets. A very good authority upon this exception is found in Dreifus v. Colonial Bank TrustCo. (1911), 127 La. 1086, 54 So. 358. This case suggests that there may be exceptions to the general *Page 316 rule where the services of counsel have preserved common rights or common property.
In the case at bar it seems quite clear that through the efforts of appellees, as counsel, the shareholders were benefited in the amounts above named. The appellant first brought this trust estate into court whereby it asked for instructions and the approval of its acts. Several of the shareholders appeared by counsel who did not follow through the trial. Most of the shareholders were not represented by counsel. One appeared in person and expressed his desire to abide the judgment of the court. The entire trust estate was voluntarily brought to the court by appellant, and it is out of this fund that the court made allowances for the services rendered by these attorneys. The court was fully advised as to all the services they had rendered. That the attorneys rendered valuable services is not questioned. Their right to recover is based upon an exception to the general rule, that the attorney must look to the one who employs him for his compensation. When the trust estate is brought before the court, and the court is called upon to approve or disapprove certain acts, to hear all contests in connection therewith, and is in possession of all the facts relative to the rights of the parties, the question then belongs rather to the equitable power of the court in distributing the fund than to actual contract. While the Doran firm had a contract with their clients to perform certain work, the court possessed equitable power, with the fund in court, to make such allowance to these attorneys as in equity and justice they were entitled. 7 C.J.S. 1096, Attorney and Client § 193, lays down the rule:
". . . where a fund is brought into a court of equity through the services of an attorney who looks to such fund alone for his compensation, *Page 317 or from which alone he is entitled to compensation, he is regarded as the equitable owner of the fund to the extent of the reasonable value of his services, and the court administering the fund will intervene for his protection and award him a reasonable compensation to be paid out of the fund."
Said section 193 further states:
"The power of the court to award such compensation out of the fund, is impersonal, and acts only on the res, when within the custody and control of the court. The allowance of the fee out of the fund is within the judicial discretion of the court."
The same authority on page 1098 lays down the rule:
"An attorney who renders services in recovering or preserving a fund, in which a number of persons are interested, may in equity be allowed his compensation out of the whole fund, only where his services are rendered on behalf of, and are a benefit to, the common fund. If he acts only for particular interests, his right to an allowance, ordinarily, extends only to the part of the fund which belongs to those whom he represents. . . .
"If, however, the attorney's services, although employed by a part only of the persons interested, are for the benefit of all and have protected or preserved the whole estate or fund, his compensation may be allowed therefrom, where the other persons interested have stood by without counsel and will reap the benefits of such services." (My italics.)
Many authorities are cited in support of the text.
It is further stated as a rule that the mere fact, that some of the persons interested have employed counsel and opposed the suit which has benefited them, will not prevent their interest from being subjected to the payment of reasonable compensation to counsel who has succeeded in recovering or preserving the fund which is brought into the custody of the court. Under *Page 318 such circumstances a court of equity, with the entire trust estate before it, may exercise its discretion concerning allowances made to an attorney who has rendered valuable services for the benefit of the entire estate.
There is no showing that any other attorney participated or assisted in the trial. I do not think that it is any answer to the question to presume that the trial court might have ordered the appellant as a trustee to reduce its charges, its attorney's fee, and eliminate the brokerage commission, or account for the $701.66. No presumption can be indulged to that effect. In an action of this nature, the decision of the court, sitting as a court of equity and exercising its sound judicial discretion, should not be disturbed upon appeal unless it is clearly shown that there has been an abuse of discretion, or that the allowance made is contrary to the principles of law.
I am firmly of the belief that the appellees in this case brought themselves well within the exceptions to the general rule. They asked for an allowance of $3,500. They introduced witnesses to testify as to the value of their services. The court could have allowed $4,000 and been sustained by the testimony, but, having heard the testimony, being fully advised as to all prior transactions in connection with the trust estate, it was within the court's discretion to order that the attorneys be allowed a fee of $3,000. I think the judgment should have been affirmed.
NOTE. — Reported in 27 N.E.2d 764. *Page 319