In Re Interstate Trust & Banking Company

On Rehearing

HAWTHORNE, Justice.

We granted a rehearing in this case in order that we might give further consideration to our original decree denying to ■these appellants the attorneys’ fees which they sought.

The appellants are attorneys who represented a comparatively small group of the depositors of the Interstate Trust & Banking Company, now in liquidation, and who initially in behalf of their clients opposed the homologation of certain tableaux of distribution of the funds of the bank in liquidation proposed by the state bank.commissioner, contending that 5 per cent interest per 'annum'' should' be’ paid on the deposits from January 4, 1934, the date the bank was placed in liquidation. After trial the lower court rendered judgment ordering the commissioner to pay all depositors interest at the rate of 5 per cent per annum from January 4, 1934, on the full amount of their deposits frozen on that date. On appeal this court annulled and set aside the lower court’s judgment insofar as it related to unopposed tableaux of distribution filed by the bank commissioner, but affirmed the judgment insofar as it related to the tableaux of distribution which were opposed. As stated in appellants’ brief, the effect of the decree of this court was to order the commissioner to pay S per cent interest on the principal' sum of frozen deposits still undistributed (17i/^ per cent of the total frozen deposits) from January 4, 1934, tire date of the liquidation, until paid. See In re Interstate Trust and Banking Company, 222 La. 979 , 64 So.2d 240 . Thus it will be seen that this court recognized the right of all depositors to be paid 5 per cent interest on 1per cent of all their frozen deposits. This interest ordered paid to all depositors amounted to $728,281.01 as of July 15, 1957.

The attorneys who initially represented only some of the depositors in the Interstate Bank case above cited and discussed contend in the instant proceedings that but for their labor and skill the depositors as a class would have received no interest, *837 and accordingly they ask for attorneys’ fees of 25 per cent of the interest decreed to be due all depositors, amounting, as stated above, on July 15, 1957, to more than $700,000. The lower court denied petitioners’ claim, and they appealed. On original hearing this court affirmed the judgment of the lower court, and it is our decree which we are here reexamining.

The principal ground on which our decision on original hearing was based was that in Louisiana “the right of an attorney to remuneration for his professional services depends on a contract, either express or implied”. This is undoubtedly a correct and well recognized principle of law, but there are certain exceptions to this legal principle, and we have reached the conclusion, for reasons which will hereafter be apparent, that the facts of the instant case bring it under one of those exceptions.

This court on original hearing discussed the doctrine that where one litigant has borne the burden and expense of litigation that has inured to the benefit of others as well as to himself, those who have shared in the benefits should contribute to the expense. The court there stated that, even if it were conceded that this doctrine is recognized in this state, these attorneys have not brought themselves within its scope.

The doctrine which the court was there discussing is stated in 49 A.L.R. 1150 thus:

“The rule is that a court of equity, or a court in the exercise of equitable jurisdiction, will, in its discretion, order an allowance of counsel fees, or, as it is sometimes said, allow costs as between solicitor and client, to a complainant (and sometimes directly to the attorney) who at his own expense has maintained a successful suit for the preservation, protection, or increase of a common fund, or of common property, or who has created at his own expense, or brought into court, a fund in which others may share with him.” '

This court has in several cases discussed, and in one applied, this so-called fund doctrine. In McGraw v. Andrus, 45 La.Ann. 1073 , 13 So. 630 , 633, Andrus made what purported to- be a cession of property, but did not include all of his property in the schedule of assets and shortly thereafter began to dispose of the withheld property through a third person. Some of Andrus’ creditors sued to recover the property which had been fraudulently withheld to satisfy their particular claims, and they were successful, the court decreeing that the property withheld by Andrus be sold to satisfy the debts of the particular creditors who had brought suit. On appeal this court rejected the lower court’s judgment insofar as it held that the proceeds of the attached property be applied to the claim of the petitioners alone. Instead it *839 was ordered that the funds be turned over to the provisional syndic of the insolvent estate of Andrus, subject to the claims of all the creditors. In McGraw this court said:

“The provisional syndic has not aided in unmasking the fraudulent concealment of the debtor’s property. This has been accomplished by the plaintiff creditors, who have devoted time, money and labor to reach this property. The mass of creditors receive the benefits of it. They must pay for all costs and expenses, including attorneys’ fees.”

On application for rehearing the court amended the judgment thus:

“In relation to the application of appellees, we will leave the amount of attorneys’ fees to be fixed in the insolvent proceedings. We are not in the possession of sufficient facts to definitely ascertain the amount.”

In discussing this doctrine the court in Succession of Kernan, 105 La. 592 , 30 So. 239 , 243, had this to say:

“In the case at bar the parties employing the attorneys did not profess to act for parties other than themselves. Had they, in making the employment, done so professedly for other parties, either separately or jointly with themselves, it could be conceded that these attorneys would have a direct right of action against the latter, if they stood by, making no objection, and finally availed themselves of the benefits resulting from their labor. The absence of actual authority originally to have so employed them would be replaced or cured by a ratification of that act

However, it is to be observed that this court evidently overlooked the McGraw and Kernan cases when it said in Dreifus v. Colonial Bank & Trust Co., 127 La. 1086 , 54 So. 358 , 359:

“ * * * it would serve no useful purpose to review the jurisprudence as to the right of an attorney to recover fees from parties who have not employed him, but who have been directly benefited by his services. The jurisprudence of this state has uniformly denied such right in cases where the services of counsel have been most valuable to parties not represented by him. Roselius v. Delachaise, 5 La.Ann. 481 , 52 Am.Dec. 597; Forman v. Sewerage & Water Board, 119 La. 49 , 43 So. 908 . There may be exceptions to this rule in other jurisdictions, where the services of counsel have preserved common rights or common property, in the interest of all parties concerned. It will be time enough to consider such a case when it is presented.” (Italics ours.)

*841 The doctrine which these attorneys, appellants, seek to invoke is well recognized and applied by the United States Supreme Court and other federal courts. See Trustees v. Greenough, 105 U.S. 527 , 26 L.Ed. 1157 ; Central Railroad & Banking Co. v. Pettus, 113 U.S. 116 , 5 S.Ct. 387 , 28 L.Ed. 915 ; Sprague v. Ticonic National Bank, 307 U.S. 161 , 59 S.Ct. 777 , 83 L.Ed. 1184 ; Bishop and Collins v. Macon Lumber Co., D.C.1957, 149 F.Supp. 46 .

For instance, in Central Railroad & Banking Co. v. Pettus, supra [ 113 U.S. 116 , 5 S.Ct. 391 ], some unsecured creditors of the railroad company in Alabama instituted proceedings in equity on behalf of themselves, and of all other creditors of the same class who would come in and contribute to the expenses of the suit, to establish a lien on the property of that company in the hands of other railroad corporations. The creditors were successful. The attorneys of the creditors who had brought the suit then filed a petition by which they sought payment of attorneys’ fees out of a percentage of the money obtained for the unsecured creditors. In applying the fund doctrine and allowing the attorneys to recover under it the United States Supreme Court said:

“ * * * It is true that the bill states that it was brought for the benefit of all creditors who should become complainants therein; but it was intended to be, and throughout was, conducted as a suit for the benefit, not exclusively of the complainants, but of the class to which they belonged. It was so regarded by all connected with the litigation.”

Due solely to the efforts and industry, of these attorneys in the case of In re Interstate Trust and Banking Company,, 222 La. 979 , 64 So.2d 240 , a fund amounting to more than $700,000 was created and brought into existence, and except for their services none of the depositors would have received any interest on any of their frozen deposits. Consequently all depositors as a class benefited and were enriched by these attorneys’ efforts. There can be no dispute as to this fact or as to the fact that these attorneys here are seeking attorneys’ fees to be paid out of the very fund which their efforts created.

In briefs and argument on rehearing the appellant attorneys stressed and brought forcefully to our attention for the first time the fact that although initially they instituted proceedings to recover interest in the Interstate Bank case in behalf of a small group of the depositors, whose deposits had been frozen, both the trial judge and this court considered the case as one for the benefit of all depositors. The judgment of the trial court awarded all depositors interest, as stated above. On appeal these attorneys no longer sought interest for a small group by preference and priority over all other persons, but *843 sought affirmance of the judgment of the lower court which allowed interest, all the way back to the institution of the liquidation proceedings, to all of the depositors. In other words, in that appeal these attorneys championed the cause of all depositors of the bank in liquidation as a class, and although this court amended the judgment, it itself showed that it considered the case as one in behalf of all depositors by awarding interest to all depositors as stated above.

Under these facts and circumstances we can reach no other conclusion than that these attorneys have brought themselves within the scope of the doctrine which we have discussed above and on which they rély for the recovery of their fees, and that the facts of this case bring it under this exception to the principle on which our decision on original hearing was based. Consequently it is only fair and equitable that these appellants should recover reasonable attorneys’ fees for their services.

We do not think, however, that we should determine on this appeal the amount of their fee. They seek to recover 25 per cent of the total amount of the interest due to all depositors, but the trial judge denied them any fee whatever. We have decided that the better course under these facts and circumstances is to remand the case so that the judge of the lower court can determine the amount of the award to which these attorneys are entitled. In determining the amount to be awarded them as reasonable attorneys’ fees, that court should consider the extent and nature of the services rendered by these attorneys; the labor, time, and trouble involved; the results achieved; the character and importance of the matter; the amount of money involved; the learning, skill, and experience exercised; and the difficulty of the legal problems. In fixing these fees on a quantum meruit basis, the trial judge should also take into consideration, but of course not be bound by, the terms of the contracts for compensation which these attorneys had with their original clients. 1 Moreover, the trial court may on the remand hear any evidence, such as expert testimony, which may be necessary, and any depositor or other party at interest may intervene.

For the reasons assigned the judgment of the lower court denying to these ap *845 pellants attorneys’ fees to be paid out of the interest fund due to all the depositors of the Interstate Trust and Banking Company in Liquidation is annulled, reversed, and set aside. It is now ordered that these attorneys recover reasonable attorneys’ fees to be paid from this fund, and it is further ordered that the case be remanded to the district court for determination of the amount of their fees.

HAMITER, J., dissents adhering to the reasons assigned with original hearing.

. The attorneys here are seeking to recover their fees in quantum meruit from all the depositors, including their original clients. Of course they cannot be permitted to recover both in contract and in quantum meruit from their original clients; nor should the depositors they did not represent initially, under the facts of this case, be required to pay a greater percentage of the fund created than that which may be called for in the contracts of employment which these attorneys had with their original clients. See Central Railroad & Banking Co. v. Pettus, 113 U.S. 116 , at page 128, 5 S.Ct. 387 , 28 L.Ed. 915 .