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Mendenhall v. Stovall

Supreme Court of Georgia
Dec 18, 1940
12 S.E.2d 589 (Ga. 1940)




Receivership and fees. Before Judge Pomeroy. Fulton superior court. September 4, 1940.

John E. Feagin, for plaintiff in error. A. E. Wilson, contra.

1. A judgment on one of the substantial issues in an equity case, which if not superseded would work an injury to the losing party that would not be completely cured by a reversal, is reviewable by the Supreme Court on a direct bill of exceptions while other issues in the case are still pending in the trial court.

2. While it is the province of the judge in equity cases to determine upon whom costs shall fall, this is a matter that rests in the sound discretion to be exercised upon full view of all the merits and circumstances of the case. The rule excludes arbitrary action by the judge. An award of attorney's fees at an interlocutory hearing, based solely upon the pleadings, where the verified answer shows that one partner is suing another, and that the defendant owns all the assets of the business, and the plaintiff has no interest therein, but has been guilty of converting to his own use property belonging to the partnership, and that the case is being prosecuted solely for the purpose of enabling the plaintiff's counsel to obtain an order granting to the plaintiff's counsel a fee of $300 is an abuse of discretion, and must be reversed.

No. 13540. DECEMBER 5, 1940. REHEARING DENIED DECEMBER 18, 1940.

P. M. Stovall filed an equitable petition against C. M. Mendenhall, alleging that the parties were partners in a certain business known as Glenwood Seating Company engaged in selling certain types of furniture. A copy of the partnership contract was attached to the petition as an exhibit. The contract provided that the defendant should arrange the financing of the original purchases of furniture, handle the general administration of the business, handle correspondence, furnish office space, local telephone and secretarial services; that the cost of the capital funds employed would be treated as an expense to be first taken out of any profits accruing to the business; and that the defendant should receive forty per cent. of the profits from the business. It provided that the plaintiff should act as purchaser and salesman, bear all of his traveling expenses incident to his making purchases and sales, and receive sixty per cent. of the profits. It further provided that on the first day of each month the defendant should draw an operating statement showing the condition of the business; and that the contract should continue in force as long as the parties should mutually agree to carry on the partnership.

The petition alleged that the parties had disagreed, and prayed for an accounting, receivership, and injunction. The defendant's answer admitted the execution of the contract and the operation thereunder; and further alleged, that the plaintiff had violated his fiduciary relationship to the defendant by slipping into a warehouse leased by the defendant in Lexington, North Carolina, and taking therefrom 600 chairs valued at $700, disposing of the same and converting the proceeds to his own use, without informing defendant or accounting for the same; that because of such misconduct on the part of the plaintiff, the defendant informed him that the partnership relation would be terminated, and offered to sell the business to the plaintiff, which offer the plaintiff refused. The answer admitted that an end to the contractual relationship was necessary, and offered to make a full and complete accounting of every item of business transacted, but denied that plaintiff was entitled to any other relief. The answer further alleged, that for each month of the operation of the business the defendant had given to the plaintiff a full and complete statement, and had paid in full the sixty per cent. of the profits to which the plaintiff was entitled; that the plaintiff had been paid every penny that he was entitled to from the business; that the defendant was solvent; that the assets of the firm represented the original money which the defendant put in the business and other money which he had individually placed in the business subsequently, and that they were liquid with the exception of certain chairs in the warehouse in North Carolina, which the defendant could dispose of for a better price than they would bring under court procedure. It was further averred that the plaintiff claimed no interest in the business, and had expressed himself as desiring only to be relieved of any responsibility for its affairs and from criminal responsibility for his actions, that this entire proceeding was brought for the sole purpose of aiding plaintiff's attorney in his demand for a large fee from the assets of the business, and that the plaintiff's attorney was threatening lengthy court proceedings elsewhere unless his demands for a fee were met. The answer offered to post security bond, in whatever amount the court should fix, binding the defendant to account for the affairs of the partnership, and prayed that plaintiff's prayers be denied, and that plaintiff and his attorney be enjoined from filing further suits in connection with the business. This answer was duly verified.

On August 5, 1940, the court entered a consent order authorizing the defendant to sell certain property belonging to the partnership, and to deposit the funds derived therefrom with the clerk of the court, and permitting the defendant to execute an indemnity bond in the sum of $5000, conditioned to pay the plaintiff any sum that might be found in his favor on final accounting. By a subsequent order the court authorized the defendant to accept a ninety-day note for the merchandise which he had been authorized to sell, and personally indorse the note and deposit it with the court. Pursuant to such orders, certain funds were deposited with the clerk of the court. Thereafter the plaintiff's counsel made application to Hon. Edgar E. Pomeroy, judge of the court, for an allowance of fees to himself as counsel for the plaintiff, in which application it was alleged that as a result of plaintiff's action there was in the custody of the court cash or its equivalent of an unspecified amount, and that, having been instrumental in bringing said sum into court and having rendered services incidental to said case, he was entitled to compensation for such services from said fund. On this application, with no evidence except the pleadings, the following order was entered by the judge: "The foregoing application read and considered, and upon consideration thereof it is ordered and adjudged that the clerk of this court do pay to A. E. Wilson the sum of three hundred dollars from the funds in his custody, same to apply on account of services rendered in the said case. This order to be superseded for five days. This 4th day of Sept., 1940." To this order the defendant excepted.

1. Although no motion is made in this court to dismiss the writ of error on the ground that the bill of exceptions is premature, we believe that question is close enough to warrant consideration by the court to determine our jurisdiction. The general rule is that no cause shall be carried to this court upon any bill of exceptions while the same is pending in the court below, unless the decision or judgment complained of, if it had been rendered as claimed by the plaintiff in error, would have been a final disposition of the cause or final as to some material party thereto. Code, § 6-701; Ross v. Byrd, 65 Ga. 41; Marks v. Hertz, 65 Ga. 119; Lambert Hoisting Engine Co. v. Dexter, 127 Ga. 581 ( 56 S.E. 778); Burgess v. Simpson Grocery Co., 128 Ga. 423 (3) ( 57 S.E. 717). However, when equity cases require final judgments on separate issues, such judgments are reviewable by direct bills of exceptions while other issues made in the case are still pending in the court below. Moody v. Muscogee Mfg. Co., 134 Ga. 721 (2) ( 68 S.E. 604, 20 Ann. Cas. 301); Capital City Tobacco Co. v. Anderson, 138 Ga. 667 ( 75 S.E. 1040). These rulings make it difficult to determine at once what constitutes a final judgment reviewable by a direct bill of exceptions before a judgment is rendered on all issues in the trial court. Rulings on demurrers and on procedure may be adequately protected against by exceptions pendente lite, and if reversed on final review the losing party may again assert his rights without injury; but any ruling which deprives a party of his money or property and delivers it over to the other party, unless superseded, may easily do irreparable injury to such party. If the trial court would grant a supersedeas upon the filing of exceptions pendente lite to such rulings, then a review could await final judgment in the main case without doing injury to the party required to pay out his money. But a vital right of a litigant, in the absence of a statute controlling the same, must never be dependent upon the choice of the trial judge. Such protection must not be one of grace, but rather of absolute right. Therefore, as the only adequate protection against injury from such judgment, the losing party is entitled to a review by direct bill of exceptions and to supersede such order as provided in the Code, § 6-1002. In the present case, had plaintiff's counsel received the money awarded by the judgment under review, and had the defendant excepted pendente lite, and had this court reversed the judgment now excepted to, on review after final judgment in the main case, the defendant would have been confronted with the necessity of either collecting or losing his money. Hence it must be held that the plaintiff in error is entitled under the law to a review of the judgment complained of by direct bill of exceptions, although other portions of the case are yet undisposed of in the trial court.

2. Since no receiver has been appointed in the present case, Code, §§ 55-314 and 55-315, providing for attorney's fees in cases where a receiver has been appointed, have no application here. The Code, § 37-1105, relating to equity cases, declares: "Special verdicts may be found by the jury, and they may recommend to the court the assessment of costs upon the respective parties. It is the province of the judge, however, to determine upon whom the costs shall fall." In construing this section this court, in Hamilton v. DuPre, 103 Ga. 795 ( 30 S.E. 248), said: "While, in equity cases, `it is the province of the judge . . to determine upon whom the costs shall fall,' he has no arbitrary power in this respect, but must exercise a sound discretion in deciding by whom the costs shall be paid." It was further held that it was an improper exercise of discretion and was reversible error to tax any portion of the expenses of the litigation against a party "who was entirely free from either fault or liability." In Peninsular Naval Stores Co. v. Culbreth, 162 Ga. 474, 480 ( 134 S.E. 608), it was said: "The rule excludes arbitrary action by the judge, and an award taxing costs will be arbitrary and amount to an abuse of discretion where the award is contrary to law and equity and justice." From the authorities cited the conclusion is inevitable that the trial judge does not possess uncontrolled power to assess such costs. True he is vested with discretion, but, as ruled in Peninsular Naval Stores Co. v. Culbreth, supra, that discretion is abused when such costs are assessed arbitrarily and contrary to law and equity and justice. In the present case the judge acted solely upon the pleadings before him. Without requiring evidence to disprove the allegations in the answer, he was bound to accept such allegations as true. Under those allegations the plaintiff had not a penny in the assets of the partnership. No creditor was complaining or seeking payment. The defendant was entirely solvent, and the only possible result of the proceedings would be to impose upon the defendant an interference with his business and a loss of the expense of litigation. Even the petition of plaintiff makes no better case than a grievance of one plaintiff against a defendant, and no reason is alleged for compelling the defendant to pay the plaintiff's counsel. In MohrWeil Lumber Co. v. Russell, 109 Ga. 579 (2) ( 34 S.E. 1005), this court said: "No party is entitled to such an allowance out of the proceeds of property which he, for his exclusive benefit and to the injury of his adversary, causes to be placed in the hands of a receiver; nor can any party, except in cases of bad faith, stubborn litigiousness, and the like, charge against the opposite party as `costs' attorney's fees incurred in litigation." In Herndon v. Sheats, 176 Ga. 199 (2) ( 167 S.E. 506), two croppers who were in prison brought proceedings for a receiver for the harvesting of their crops, and the landlord was appointed receiver. After harvesting and marketing the crops, the receiver made his report to the court showing expenses exceeding receipts in the amount of $59.26. A case was made on objections to the report, in which case verdict and judgment were entered, balancing all accounts. By a separate order the court directed that plaintiffs pay half of the costs of court, and that the defendant pay the other half. On the hearing of an application of the plaintiffs' attorney for fees for services rendered in the case, the plaintiffs introduced no evidence, and the defendant testified that he had received no benefit from the receiver, and that the receiver had never had funds to which the plaintiffs were entitled. Judgment was rendered awarding a fee of $100 to the attorney, one half to be paid by the defendant, and the defendant excepted. This court held: "As against the defendant the judgment for one half of the attorney's fees was general, and was not restricted to payment from any funds in court, produced by the services of the attorney which were beneficial to the defendant. In the circumstances the defendant was not liable for any part of the attorney's fees." On the facts in the present case, as shown by the pleadings which constitute the only evidence upon which the judgment excepted to is based, the judgment was an abuse of discretion, and was contrary to law, equity, and justice. In Eckford v. Borough of Atlanta, 173 Ga. 650, 653 ( 160 S.E. 773), this court said: "The allowance of counsel fees from a fund is capable of great abuse, and should be exercised with the most jealous caution in regard to the rights of litigants, lest thereby the administration of justice be brought into reproach. In most cases it is better to leave those concerned to contract for the compensation to be paid for the services rendered or received." See Christian Women's Benevolent Asso. v. Atlanta Trust Co., 181 Ga. 576 (4) ( 183 S.E. 551).

Judgment reversed. All the Justices concur, except

While agreeing to the ruling in division 2 of the decision, which deals with the substantive law involved, I dissent, because of my conviction that the order excepted to is not such a final judgment as can be made the basis of a direct bill of exceptions; and accordingly the writ of error should be dismissed. See especially Ross v. Byrd, 65 Ga. 41, and Marks v. Hertz, 65 Ga. 119, cited in the opinion of the majority. It appears to me that this is an instance where "hard cases make bad law."

Summaries of

Mendenhall v. Stovall

Supreme Court of Georgia
Dec 18, 1940
12 S.E.2d 589 (Ga. 1940)
Case details for

Mendenhall v. Stovall

Case Details


Court:Supreme Court of Georgia

Date published: Dec 18, 1940


12 S.E.2d 589 (Ga. 1940)
12 S.E.2d 589

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