Read v. Memphis Gaslight Co.

64 S.W. 769, 107 Tenn. 433
CourtTennessee Supreme Court
DecidedJune 22, 1901
StatusPublished
Cited by3 cases

This text of 64 S.W. 769 (Read v. Memphis Gaslight Co.) is published on Counsel Stack Legal Research, covering Tennessee Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Read v. Memphis Gaslight Co., 64 S.W. 769, 107 Tenn. 433 (Tenn. 1901).

Opinion

McAlister, J.

The question presented for decision upon this record is in respect of the right [434]*434of a trustee to compensation for his time and trouble, and to an allowance for expenses incurred, including a reasonable fee to the solicitor who represented him in certain litigation. The facts necessary to be stated are that, in 1873, the Memphis Gaslight Co. executed a trust deed to the complainant, S. P. Read, as .trustee, to secure the payment of 250 bonds of SI,000 each ($250,000). Creditors and stockholders of the Memphis Gaslight Co., in different suits, attacked the validity of this trust deed, making the complainant trustee a party defendant in each case. These causes were consolidated and finally determined by this Court at last term here, and are reported in 105 Tenn., 268. The trustee employed counsel, and answers were filed denying the allegations made against this deed, and the litigation was-defended in the Chancery Court and in this Court. In that case this Court said that ‘ 1 the trustee was under legal obligation to protect this trust deed, assailed as it was, and that he was authorized to employ a lawyer to this end, and that the gentleman so engaged rendered valuable services to his client. But, said the Court, the fixing of the fee and the security for its payment must be between the two. There is no fund under the control of the Court upon which it could fix a lien, and no adverse parties against whom a decree in his favor could be rendered. To determine the amount due for the solicitor’s service or to grant a lien in these cases would be bruturn fuT/mem.”

[435]*435The present bill was filed on September 21, 1900* by S. P. Read, trustee, against the Memphis Gaslight Co., the Equitable Gaslight Co., the Colonial Trust Co., of New York, and the unknown holders of the first mortgage bonds of the Memphis Gaslight Co., the object of which was to recover, first, the expenses incurred by the trustee in the administration of the' trusts of the mortgage, including a reasonable compensation to the solicitor employed, and, second, a reasonable compensation for himself, on account of his responsibility and services in respect of the defense of the said litigations.

The defendants, the Equitable Gaslight Co. and the Memphis Gaslight Co., filed the following demurrers: First, it is denied- that it was the right and duty of the trustee to • retain counsel to defend the suits mentioned in the bill, and, second, it denied the right of the trustee to have spent time, or performed labor or incurred responsibility therein.

The cause was heard upon the two assignments of demurrer, and, upon leave being granted, an additional ground of demurrer was filed; and defendants, also, demur to the complainant’s bill, on the following ground: “Even if the trustee, Read, had the implied right and power to employ counsel in the lawsuits referred to in his bill, he had no right to make the fees of said counsel a lien or charge upon the property covered under the trust deed, nor had he any right or power to charge the maker or beneficiaries under the trust deed, nor any [436]*436of the defendants, with the responsibility for such fees. If he undertook to employ counsel without direction from the Court, or without authority from the makers or beneficiaries under the trust deed, then it might (be that he would make himself responsible for the fee of such counsel. The fixing of this fee, and the security for its payment, would be a matter of contract between the trustee and counsel employed by him, and the trustee’s responsibility would depend upon this contract. Suit might be brought on such contract against the trustee, but in no event, as defendants contend, could the trustee and his counsel, by any arrangement between them, charge either the corpus of the property or the makers or beneficiaries under the trust deed, or any of the defendants, with the responsibility for such fee. But said trustee, in his bill, does not charge or claim that the employment by him of complainant, McDowell, was done under the direction of the Court, or after consultation with the maker or any of the beneficiaries under the trust deed. And so defendants say, that if said counsel has any redress, it is against the trustee employing him, and not against either the property conveyed in the trust deed or any of these defendants. ’ ’

The Chancellor sustained all the demurrers and dismissed the bill. Complainant appealed and assigned the action of the Chancellor as error. It will be observed that two questions are raised by the pleadings. First, whether the trustee is entitled to any [437]*437compensation for bis own services and trouble in and about the litigation; and second, whether he is entitled] to an allowance for expenses incurred, including a reasonable fee for his counsel.

The position of counsel for complainant is that the trustee is entitled to recover, as an expense incurred, the counsel fee of the solicitor he employed to defend the litigation in the interest of the trust estate; that that claim is a lien upon the trust estate, and unless it is paid he is entitled to have the trust estate sold for the payment thereof; and further, that in equity the oestui que trust are liable for the payment thereof. In support of this proposition counsel cites Woodruff v. The N. Y. & Lake Erie & Western R. R. Co., et al., 129 N. Y., 27, in which it is said, viz.: “It is a cardinal principle in the disposition of trust estates that -the trust fund shall bear the expenses of its administration, and that one who successfully conducts a litigation en autre droit for the benefit of a fund, shall be protected in the distribution of such fund, for the expenses necessarily incurred by him in the performance of his duty.” In re Holden, 126 N. Y., 589; Trustees v. Greenough, 105 U. S., 527.

It is laid down as an elementary rule, in Perry on Trusts, that trustees have an inherent equitable right to be reimbursed all expenses which they reasonably incur in the execution of the trust, and it is immaterial that there is no provision for such expenses in the instrument of trust. If a person un[438]*438dertakes an office for another, in relation to property, he has a natural right to be reimbursed all the money necessarily expended in the performance of the duty. Lewin on Trusts, 557; Perry on Trusts, Sec. 910.

This right is extended not only to necessary traveling expenses, but to all reasonable fees paid for legal advice in the discharge of his duties, and in most of the States includes compensation for time labor, and trouble. Perry on Trusts, Secs. 910, 917, 918.

It was held in Wetmore v. Parker, 52 N. Y., 450, that this Court has decided in two cases (Downing v. Marshall and DeCourville v. Ray, 57 N. Y., 380) that the special term has power to make allowances to trustees and others acting in a fiduciary capacity, for all expenses necessarily incurred in the faithful performance of their duty, including counsel fees.

In Downing v. Marshall, supra, the Court said that persons acting en autre droit, as executors, administrators, trustees, guardians, receivers, etc., are, upon a faithful execution of their trusts, to be indemnified out of the trust property for all expenses necessarily incurred in the faithful performance of their duties.

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Bluebook (online)
64 S.W. 769, 107 Tenn. 433, Counsel Stack Legal Research, https://law.counselstack.com/opinion/read-v-memphis-gaslight-co-tenn-1901.