ARR:] WRIGHT V: WEBB. 1145 • WRIGHT V:WEEB. • ' WERB V•.401■ITGOMERY.. OPinion . deliVered December 7;1925', . TRUSTS—FRAUD.—Evidence held not to show that the trustees of a common7 law trust' violated any legal' duty to th* interested in 'the trust estate 'or coininit t' ed 'fraud or rildiaiwrOpriated any fimds of the : esidte in g elling their •iersOnal interest g to 'otlierS and; resigning from. the :trusteeship. • .:: • . 2. ATTORNET AND CLIENT—RIGHT TO . FEE.—Evicldne held to support • a, finding that an attorney. suing for. fees ;performed substantia,1 : services on behalf 1 of his clients, and that his acting :as,attorney for the clients; opponent in another snit did not bar recoverY: ,Appeal from:Lafayette Chancery,Court; Steyr ens, Chancellor.; affirmedv ...i . :-.:i! II, •
R. L. Montgomery and John'W. Tope, lof appellant: • Charle.§ M:,Cocke and King,& Whatley; . for appellee: • 'McCuLLocH; , C. J. :On : January, 2, 1919, W. M. Webb, one of the appellees, and.A. .4: Cocke. created a common law trust by proper , declarations :in .writing; duly acknowledged . and placed`of record, .för the ! purpose of operating, under .the . name of, United Hoine Ruilders of America, the business ,of selling interest-heaiingi cOntracts and lending.money,to,hOlders of contracts:ut a low rate of. interest for the purpo :building:homes:: . The place of Inisiness of the concehi was 'At the City of•Dallas, Texas. The declaration, which was the foundation of the trUst, provided for issuing,. contract Certificate's;
1146 WiuditT v: WEBB.: [169 which were to .be. .paid..for . in installments, and ,lending money. to contract holderS., and tho two .parties mentioned .above,W. NI: Webb and.A. A. .Cocke. , were ;ea& ,declared • to be a trustee until he should die or resign. (Ine • of the.- stipulations in • the:trust . Was•,that,,.after.: e yery contract; had:been called :in .by. the . ,trustees. . .` and every .012- ligation has beeit met, and; fully ;satisfied; there :being no outstanding , against. the :United,. Home Builders of America, then the trustees shall have any balance left in the reserve fund. as further reward or compensation for faithfully and honestly carrying out the trust committed to. them." Authority was conferred upon the contract holders to appoint or approve new trustees upon the: death- or' . resignatien of both of the trustees mentioned . in the .de,claration..Full.. power and , authority is conferred upon. , the trustees with reference tO the 'thailagenieneof 'the buSiness. .T4elpainess .of :the . cpncern , was ptit'intO;'operation by 'the; trustees,l,and .the,..funds j . tandled,,in ,the progress of the affairs reached the'sum .. of. more than .$1,500,000. Webb■and; Cocke served together as , eo-trustees. un-tiF'D'eCember 2,4921; When''CbCk'e'resigned and 861d his intere'st- in"the Concern to , , Willinin'::SackS, , Who. Served with Webb a traStee froth:then 'Until No .-Vent:her 17;1922,, when they.. (Webb . and . ' Sadks), isold:their .interest 's:• in the concern to the Hawkins Mortgagei . CompanY, a cOrporal tion doing businesS t at Indianapolis, Indiana: ! Webb and SaCks ; then xesigned as trustees,' and,M. HaWkins and A: A. : Schieb, Who were.' 'President .and.: vice-PreSident, respectively,' of the Hawkins Mortgage Company; shortly thereafter. : becante the , 'trustees in , isuccession to . Webb and ,Saeks: : The terms of the.sale by . Webb.. and- Sables to-the: Hawkins Mortgage Company • .were expressed in writing:in •the form of proposal...from the purchaser's; which :was :accepted , 'by Webb: and Sack& The. writing prOVided that Webb and Sacks should,ln consideration of the sum • of $150,000 .paid , to, each,: sell, to the . Hawkins. Mortgage Coinpany all of their right, • title , and interest of• 'every kind whatsoever in and to the capital :stock;
AinZ.1 WRIGHT. V. WEBB. 1147 ig sned and unissued : , owned by the two'tru g tees,. nainely.• Sadks . and'Webb,.and every other inte'rest ;of whatSoever exCepting contracts •.per'sonally . oW-ned, including whatever is left to the trnstees after liquidation:" The 'contract Proidded that the : purchase' price due 'fo 'Webb shbuld be 'paid .bye the assiknment of certain-Arkansas mortgages in the aggregate sum of. $76,000 :and.'a 'note' .the purchaser for $65,000.; . due-in , f our yedrs: After this tran.sfer wds ' consummated . , Hawkins and Schieb. werb! nained . as trnstees . At ..a meeting. of ' the cOntrac't• holders, luit at that time there .. was pending in the:distriets court at 'Dallas' a pr6ceeding . by certain holders of..con-: tracts for the • appOintment •:of a. 'receiVer, and I subge-qnently . the . appellant, .G.' , G: Wright,, was appointed as receiver.' ';, ) •• • On October 30;:1920; the . Mis g issiPpi Valley,Land..& Livestock 'Company, being the owner 'of' a tract Of fdrin: land containing 1920 acres' in . Lafayette' County -, 'Ar-kansas, eiecuted 'to the Indiana Life Insurance-Company; of . Indianapolis- a 'mortgage on . 'said lands to,sécure indebtedneSS of • , $76,000,.. evidenced by three I negotiable. promissory 'notes. The' 'Indiana• Life ' Insurance ' pany Assigned thok nOtes 'before maturitY to : the .HaviL kins ; Mortgage. Company,. and thelatterassigned the sanie to . W: M.' Webb asliart 'of the Inirchase price 'of Ms' in--; terest 'in the business' of . the. United Homei'Builder'sITA. Anieriea stipnlated in'tfie conlidetlif parehase.. . Webb' subsequentry 4ssigned:the I ribte to' his ivife; Laura 'Ai Webb, And the two joined' in this Action in the chanCer: cOurt of 'Lafayette- County to . foreeloSe; 'the': Mortgage. This was after . the'appointment 'of the receiVer at toallas; and , :he. intervened , for ; the ;purpok of 'a ssertino- Owner'-' ship in . behalf*of the. Unite'd-HoMe . ' Builders . of 7AnieriC'A' of . the•notes'in suit-.. He allege'd 'snbStabce' that ali-pellee Webb; a.-e . ting in . COlinsimi With liaivkinS and Sack,' had fraudulently 'misappropriated the ...hinds' 'Of; the' United' Ilome 'Builders Of Anieiica, had sold the busi: ne§s arid preperty' of 'the 'cOncern and converted' the" pro:- ceeds of the' sale 'to their own n g e; 'and' 'thati the' trans'-'
1148 WRIGHT V. WEBB. [169 fer of the notes from the Hawkins Mortgage Company to-Webb was paid Tor 'by the sale of the property of :the United Home Builders .of America in violation . of :the trtist. • e alsO -alleged , that Mrs.. Webb , accepted , the notes: with,knowledge of the fact that they had been de— rived. by her'husband through a misappropriation of the funds ,of the trust *estate. • • • Appellees answered denying all the charges•of fraud and•misapproptiation of funds; denied that Webb and Sacks had sold the buSiness of the United Honie Builders of America or niisappropriated any of' its funds, and alleged, on the contrary, that they had merely sold their interests in the business •and capital • ,stock, and their right to share in the remainder after final liquidation in accordance with the terms of the declaration of trust, and that they had resigned as trustees, and were succeeded by Hawkins and Schieb. , • . • , • The appellees first employed.R. L. Montgomery, an attorney .at law• at Lewisville; the county seat of . La, fayette County; to institute the foreclosure ,proceeding,. • and .agreed to spay. him a . fee of $1,000. , After a ,time, they discharged. him ' and 'employed other attorneys. Montgomery then sued appellees for his. fee, and the two cases were consolidated , and tried together, restilting in a decree dismissing the intervention of app4lant for want Of: .equity, ,and a • decre,e in favor of Montgomery. against appellees, the- Webbs, for the recovery of the full amount. of his . fee. Each, of the .unsuccessful , .parties. in the two controVersies • has . appealed. • . - • • . • • • • ,;.Learned counsel for appellant- has discussed with much learning:and zeal the principles of law bearing upon the controversy and the authorities in support thereof. There,seems, .however, to be, no controversy with reference ,to the law, applicable•to the case. The 'sole .controversy relates to thefacts established by the evidence, or. rather, to, the effect of the testiniony.. It is contended on, behalf of appellant that the. evidence .establishes the charge that Webb and . Sacks violated the trust by selling out.the property and business
ARR.] WRIGHT V. WEBB. 1149 • of the United Home Builders of Amercia and, appropriating the funds to their own.use, and that the.notes in.suit were received by Webb from the Hawkins , Mortgage Company in consideration of the sale of the trust ,estate., We are ,of the opinion, however, that . the evidence does. not establish the charge made by appellant. The con., tract between Webb and S' acks and. the Hawkins Mortgage Company is in writing,, and . speaks for itself. It slmws that the , trustees, Sacks and Webb, were not . selling the trust estate, but were merely selling their interest therein,, and their Tight to receive whatever . might reinain ,after the , termination of the trust. The trustees were:clothed with great power and authority . in the: management of the trust estate, and it was a valuable position they, occupied for the reason that they could fix their own salaries, and coUld hold the position for life. It is clear , from the evidence that all that they did was to sell thei , interest and agree to resign as trustees so that Hawkins and Schieb could. be elected as trustees in succession. ,WhateVer May be said as to ,the propriety, or impropriety on the part of these tru4te , es in thus trading upon the position of trust which they occupied, they did no violence to the legal duty, which they , nwea rto those interested in the , trust estate in selling their inter,. est, and in resigning from the , trusteeship. , They were given the right 'under the terms:of the declaration.to , resign. and, whatever their motives may have:been, • , that option,,and they had the legal right to, exercise resigning the trust they infliCted no wrong nor violated any legal duty which they, owed, to , the cestui que,,trust,. The proof fails to shoW fraud on the part , of the trustees or any misappropriation ;Of funds. The mortgage notes in snit. were neyer owned , by the United Home.Builders of America,. and were neVer in the hands .of trustees: as' the property of . that Concern,. and none of the funds ;o1.% other assets otthe trUst estate were .used in" the purchase. of , these nOtes. Under this state of iacts We -are unable to discover any principle of 'equity , Which would compel, the . trustees to account to the trust estate for this prop,
1160 WRIGHT v.. WEBB.. [169 erty, which had , been received as a 'Part of 'the'ebnsidera-tibn Of the''sale of the personalin • terests'of the trustees': We make nO cOmment upOn the Character'of the busi-hiess of the United Home BUilderS of AmeriCa its providence' br improvidence aS outlined in the ,de'claral tion' of trust. ' We . 'are not called on , t , o express 'any opinion On that subjeCt,' AS . none 'Of the contract holders' are complaining here or seeking for an aCcOuntin`gby the' trustees, further than the effort of the 'receiver to claim the . ribtes in suit as a Part of , the trusf eState On' the gronnd that they were purchased With PropertY Of the' estate. We are Of 'the opinion *that the apPellant has not made out his ,case, so aA , to entitle the' reeeiVer to recoVer 'the notes in' snit Or the ProCeeds"thereof:'" ' The 6ontroversk betWeen MOn . tiontery ' and 'the ;Webbs' is' entirely separate' froth the . , , , other controversy, bUt,' as the 'cases were ' consOlidated beloW and,' briefed fe g i ether'here; V r e diSpose of thein in one 6pinibn.' The Webb§ pleaded belOW that . they had rightfUlly discharged Montgomery 'as their'atforney o • n , .accOtin • t. • bf • his faillit t e of ditty t6 them ' in Making 'misrepreSe'ntationS as to his relationShip' With the offiCers' of the' MiSSiSSippi ValleY Land & LiveStock'(OMPany, and in Making a false indorsetnent on the 'baCk , of sphie ot the ribteS sh6livivik that the indorseraent-to Webb , ,Q'As Withent reconrSe, , and negligently to inStittite' 'the actiOn to , foreclose the' Mortgage in due tinde::' These'''gnestions were all fried in the chaneery conrt,'atid''the e'VidenCe ComPletely `..refuted'the Charge aainst MOnfioraCry ot neglect of,g-467 , and faillire to perform the fa.sk according . to, the tertn§. of hiS'employment:' , 'It is -mit tme;'ace6rding to the 6Y ,F-dence, 'that Montgomery had Misrepresentea his professional' relationship with 'the 'Officers of the Missis4ppi Valley Land & LiveStock ComPany Or that he had neglected his duty with respect to bringing the stilt, ot that he had made the 'alleged assignMent on the' back of the note, restricting' the liability , of the indorser. The:'evidence supPOrts the finding of the chancery court that he pet : formed SUbstantial service in handling the blisiness
fore appellees, ,and was entitled to . compensation: according to the terms •of the cOntract. After his discharge by appellees, Montgomery accepted employment by appellant Wright, in the litigation with the Webbs. It imist be' borne iii 'Mind that that cotreversy is entirely Separate'from thelOreclOSnrOSuit agairi gt the MissiSsippi Valley Land & LivestOck 'Company . .fact; there wraS no controversy abdut the Threclosure of the mortgage, and that waS the ?proceeding in ; Which. Montgomery was : to earn his fee.' He 'performed ,. all; sof the- dutieS . hevas called upon tb 'do with rOspect to 'that ,procoeding.!. he had; accepted employment by tho) adversary of !ap-riellees in' that proceeding, it .might Well' be Said 'that .he had acquiesced in . his discharge, ;and could recover no fep . , but this. is, not the. stato of the :case; for the.,controversy. in which; Montgomery represents appell,ant . 4s not the one in,which he was employed by appellees._ . . We . are of ,the; opinion, that, each of the decrees, was correct, and the same are in all things affirmed. *OCID and' Ii141.Pne REYS, ...J.J1; dissent' 'Only as to Wright.1). Webb. I
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.