Opinion
13598
March 11, 1933.
In the Original Jurisdiction, October, 1932. Modified and confirmed.
Action by G.M. Faile and others in the original jurisdiction of the Supreme Court to procure process in nature of mandamus to compel Lewis M. Clyburn, as Superintendent of Education of Lancaster County, and others to pay to petitioners certain moneys which resulted in a decree for petitioners and a reference in the matter of attorney's fees of petitioners. On motion to confirm referee's report.
Referee's report directed to be reported is as follows:
To the Honorable Eugene S. Blease, Chief Justice, John G. Stabler, Jesse F. Carter, and M.L. Bonham, Associate Justices of the South Carolina Supreme Court:
By the order of Chief Justice Eugene S. Blease, dated October 14, 1932, the above-entitled matter was referred to me, as special referee, to take testimony and to report to the Court concerning the right of petitioners' attorneys to be paid a reasonable fee out of the moneys paid over as a result of the settlement had between the parties to this proceeding, also concerning the amount of such fee.
Pursuant to said order, and after giving ten days' notice in the Lancaster News, a newspaper published and of general circulation in Lancaster County, S.C. of the time and place of the first reference, I held four references in this matter, the first on October 28, 1932, at Lancaster, S.C. another in Lancaster, S.C. on November 1, 1932, the third in Columbia, November 5, 1932, and the last in Lancaster, S.C. on December 6, 1932. A transcript of all the testimony and exhibits taken at said references is hereto attached. After careful consideration of all the testimony, arguments of counsel, and the authorities cited by both petitioners and respondents, I respectfully submit the following report:
This proceeding in the original jurisdiction of the Supreme Court was commenced on August 17, 1932, by petition seeking the preservation and recovery on behalf of the petitioners and those who were in like situations of a certain sum of money alleged to be owing to them as creditors of the State of South Carolina and Lancaster County, which they allege had been paid to the county treasurer of Lancaster County for the specific purpose of paying same to the school teachers of Lancaster County as required by Section 2205 of the Code of Laws of South Carolina, 1932. Of the total amount received by the county treasurer of Lancaster County from the State authorities, it was admitted that $30,502.40 was paid to the Bank of Lancaster instead of being paid directly to the school teachers or their assigns as required by said Act. The petition was made returnable before the Supreme Court on October 14, 1932. However, it appears that the petitioners and respondents reached an agreement prior to the hearing of this cause by the Court and that in accordance with the terms thereof respondents have heretofore caused the amount of money involved, to wit, $30,502.40, to be returned into the hands of the county treasurer of Lancaster County for distribution among the school teachers of said county and assignees from teachers.
The first issue to be passed upon is the question of whether or not the attorneys for petitioners are entitled to be paid a reasonable fee out of the funds recovered or realized for the benefit of the petitioners.
From the evidence produced before me, I find that a great many teachers of Lancaster County received only two months' salary for their work during the school session of 1931-32, and that some time after the receipt from the State authorities of the sum of money in controversy these teachers, or some of them, undertook an investigation to find out why all the money sent to Lancaster County under the provision of Section 2205 of Code of 1932 had not been paid to the school teachers of said county. As a result of these investigations a group of these teachers appointed a committee to demand of the county officials the unpaid part of said money due them, and empowered said committee to secure legal assistance if necessary to collect the same. This committee approached Mr. Hines, of petitioners' counsel, upon whose advice they made demand upon the county officials that said money be paid to them within ten days. The county officials failed to comply with the demand of this committee. The matter was naturally one of vital concern to the school teachers because the evidence shows that in order for them to raise any cash on their respective school vouchers it had been necessary to borrow on or discount same at various rates, ranging from 5 to 30 per cent., and that it likewise was a matter of grave concern to the public generally and especially to the faithful and efficient county officials, who, according to the evidence, were trying to devise some means of taking care of the situation. The County Superintendent of Education, in a statement published in the Lancaster News on August 2, 1932, stated that it appeared to him that possibly fifteen years might elapse before the school teachers could be paid in full under the present law and suggested some change be made in the law or that there should be a bond issue to meet the emergency. Exhibit C. On August 6, 1932, Mr. B.F. Faile, a member of the teachers' committee, reported to Mr. Hines the result of the demand made on the county officials, and thereafter, on August 17th, this proceeding was commenced. In the meanwhile Mr. J.H. Glenn, of the Chester bar, another of petitioners' attorneys, had been consulted by another Lancaster County teacher and also by one of the assignees of said teacher's school claim. Mr. Glenn and Mr. Hines agreed to join forces in endeavoring to recover the amount of money for the benefit of petitioners and all others similarly situate. Respondents contend that these attorneys, Messrs. Hines Glenn, had a contract with petitioners themselves and the teachers whom they represented to accept 3 per cent. of any amount recovered by them as compensation for their services, and in support of their contention introduced in evidence a circular letter, Exhibit E, sent out by the committee to some of the teachers of Lancaster County, which circular contains an agreement to pay 3 per cent. of the amount collected as expense in collecting same. However, both members of the teachers' committee who appear as witnesses and Mr. Hines testified that the 3 per cent. clause of said letter was inserted without consulting Mr. Hines, who, according to their testimony, had informed the members of the committee that in a case of this nature the fee would have to be fixed by the Court. The members of the committee further testified that the amount of 3 per cent. was arrived at by their estimate that 3 per cent. of the amount which they considered involved, to wit, $40,000.00, would be a reasonable fee and that they wished to have some basis to work on in employing attorneys. Since the evidence shows that Mr. Hines, who had all the preliminary conferences and negotiations with this committee prior to the institution of this proceeding, had no knowledge of and never agreed to this amount of 3 per cent., I find that, while Mr. Hines and Mr. Glenn, petitioners' attorneys, were regularly employed by the petitioners and those whom they represented to bring this proceeding in their behalf, there was no contract between these attorneys and the petitioners as to the amount of attorneys' compensation for their legal services in connection with this matter.
The respondents moreover contend that the petitioners had no authority to contract with attorneys in behalf of the other school teachers of Lancaster County and the other assignees and that the other teachers and assignees are not bound by any action taken by the committee that urged action. In this connection it is well to take into consideration the fact that there are 221 school teachers in Lancaster County entitled under the law to participate in the fund in question. Under these circumstances it would have been practically impossible for these attorneys to have consulted and secured express authority to act in behalf of all of said 221 teachers and/or their various assignees before taking prompt action. It is evident that this entire matter had wide publicity and was generally known of and discussed throughout Lancaster County. No one objected to or protested against the institution of this proceeding having been brought in behalf of all the teachers of Lancaster County and the assignees as a class, nor was any dissatisfaction ever voiced until after the funds had been recovered from the Bank of Lancaster and made available for payment of salaries, all as a result of the proceedings instituted by said attorneys. No single one of the 221 teachers or their various assignees are unwilling to or have refused to accept the benefit of their services in connection with this matter. On account of the large number of persons affected and in view of the fact that all of them benefited as a result of this proceeding, I feel this case is governed by Section 406 of the Code of Laws of South Carolina: "And when the question is one of a common or general interest of many persons, or when the parties are very numerous and it may be impracticable to bring them all before the Court, one or more may sue or defend for the benefit of the whole."
Since the petitioners in this proceeding had a right under the law of this State to maintain this proceeding in behalf of themselves and all others similarly situate, it would seem to follow that they also had the right and authority to employ counsel to represent the entire class in this litigation. While this proceeding was commenced by what was denominated a petition for writ of mandamus, it likewise combines the characteristics of a suit in equity, in that the primary and fundamental object of the entire proceeding was the preservation to and recovery on behalf of the petitioners, as creditors of Lancaster County and the State of South Carolina, of a certain sum of money, which, in accordance with the decision of this Court in the case of Inman School District No. 26 of Spartanburg County v. Law et al., 166 S.C. 304, 164 S.E., 839, had been paid to the officials of Lancaster County by the State in trust for the specific purpose of being disbursed to the teachers of Lancaster County, as funds due them under the law, which said amount has been recovered and made available for distribution as the result of this action. The law is well settled in this State that where petitioners are numerous and have an interest in common, for the benefit of which professional services are rendered at the instance of one or more of petitioners interested, that the Courts generally deem it just and equitable that services rendered for the benefit of a common interest should, as upon a quantum meruit basis, be paid out of the common fund.
"It is a rule of equity, universally recognized, that where one creditor institutes proceedings for the benefit of all creditors, those creditors who claim the benefit or fruit of the action must contribute to the expenses, including counsel fees, and the Court will direct the payment of such fees and expenses before the division of the property recovered." Buist v. Williams, 81 S.C. 495, 62 S.E., 859, 860; Nimmons v. Stewart, 13 S.C. 445; Hand v. Savannah C.R. Co., 21 S.C. 162; Standard Oil Company v. Powell Paving Contracting Company, 139 S.C. 411, 138 S.E., 184.
Especially is this principle applicable to the present proceeding because the evidence shows that there was no contract between any of the petitioners named in the proceeding and their attorneys, as to the amount of fee; on the contrary all the petitioners who had any conferences with the attorneys for the petitioners had been advised by Mr. Hines that the amount of the attorneys' compensation would, in a case of this nature, be fixed by the Court.
I therefore conclude that since by this proceeding the attorneys for petitioners have made immediately available for distribution among all the teachers of Lancaster County or their assignees the sum of $30,502.40 in payment of services long since rendered, and since all said teachers and their assignees have, certainly to the extent of getting prompt payment of their claims, all directly benefited by the legal services undertaken in their behalf, that the attorneys for petitioners should be paid a reasonable fee out of the funds recovered by them, a portion of which is now held subject to the orders of this Court.
Having arrived at the conclusion that petitioners' attorneys are entitled to be paid a reasonable attorneys' fee out of the funds still controlled by this Court, it becomes necessary to determine what fee is just and reasonable. It is always embarrassing for any Court to undertake to fix counsel fees, and especially is it embarrassing for one practicing attorney to be called upon in a case of this kind to undertake to place an estimate on the value of the legal services of other practicing attorneys.
If the fee involved were to be paid by prosperous clients or a large business concern engaged solely in private enterprise for profit, I would unhesitatingly agree with the prominent attorneys who have stated that a fee of from Two Thousand to Three Thousand Dollars would be proper. However, such is not the case and when there is taken into consideration the fact that all the school teachers involved have been rendering a public service and are doubtless dependent upon their salaries for a livelihood, I feel that a fee of $1,200.00 is a just and reasonable one.
It may be true as contended by able counsel for the teachers protesting against the payment of an attorneys' fee that the funds would have been paid out without any litigation; on the other hand there is no doubt about the fact that when the advice of attorneys was sought and the proceedings were started that the funds had been diverted in payment of a note at the Bank of Lancaster and there was certainly an apparent need for prompt action. It is also well to bear in mind that all of the teachers who were in need of ready cash had been forced to borrow on or discount their pay warrants at a cost to them varying from 5 to 30 per cent. While there is no way of determining with any degree of certainty what might have happened if litigation had not been commenced, it is an established fact that promptly after the commencement of litigation the teachers got their money in cash. An attorneys' fee of $1,200.00 will not cost any teacher as much at 4 per cent. It would not be fair to leave to the committee and other petitioners who were acting in behalf of all the duty of paying the attorneys for legal services rendered.
I therefore respectfully recommend that a fee of $1,200.00 be paid Messrs. Hines Glenn out of the funds in the hands of the County Treasurer of Lancaster County held subject to the order of the Court, and a proper order do issue carrying into effect this recommendation and providing for the complete disbursement of said fund after the payment of costs of this proceeding.
Messrs. James H. Glenn and Harry Hines, for petitioners.
Messrs. Gaston, Hamilton Gaston, Williams Stewart and A.M. Sapp, for respondents.
March 11, 1933. The opinion of the Court was delivered by
This proceeding was brought in the original jurisdiction of this Court to procure the process of the Court in the nature of mandamus to compel the respondents, who are the Treasurer, the Superintendent of Education, the County Board of Education of Lancaster County, and the Bank of Lancaster, to pay over to petitioners, who were during the scholastic year 1931-1932 teachers in the public schools of Lancaster County, certain moneys which, the petitioners allege, were transmitted by the State Superintendent of Education and the State Finance Committee to G.O. Mobley, as Treasurer of Lancaster County, to be paid to the unpaid teachers of Lancaster County, and the holder of claims for salary assigned by them to others; that the sum so transmitted was not applied to the purpose for which it was sent, but, for reasons unknown to petitioners, was paid over to the respondent the Bank of Lancaster; that respondents, after demand made, refused to pay the said moneys to petitioners. Upon the verified petition the Honorable, the Chief Justice of the Court, issued an order requiring respondents to show cause before the Supreme Court why the relief sought should not be granted. On the day fixed for the hearing attorneys for petitioners and respondents appeared before the Court and stated that they had agreed upon an order which would end the proceeding. After some alterations in the proposed order, made to meet suggestions of the Court, the order was signed and the proceeding terminated. Thereupon the Court made its order referring the matter to Paul Hemphill, Esq., to take the testimony and report whether petitioners' attorneys were entitled to be paid a fee out of the funds recovered in the proceeding, and, if they were so entitled, to determine and report what would be a reasonable fee for them.
The referee has filed his report, finding that petitioners' attorneys are entitled to be paid a fee out of the funds recovered, and recommending that they be paid a fee of $1,200.00.
We are in accord with the finding and conclusion of the referee that petitioners' attorneys are entitled to be paid a fee out of the funds recovered, and his report thereabout is confirmed.
We think, however, the fee suggested by him is too high. The bulk of the services rendered by the attorneys consisted of consultations with each other and conferences with the committee of teachers who engaged them, the preparation of the petition, and order to show cause. There was no trial and no argument. The large majority of the teachers took no part in the proceedings, and are opposed to paying any part of the fee. Those who instituted the action have indicated that they thought a fee of 3 per cent of the sum recovered would be reasonable, and we are of the same opinion.
To this extent, and in this particular, the report of the referee is modified. In other respects it is confirmed.
The referee made a lucid statement of the case and a well-considered report of the law of the proceeding. It is ordered that out of the funds retained for the purpose he be paid a fee of $150.00. When this, with the fee fixed for petitioners' attorneys, has been paid, let the balance of the money retained be distributed to the teachers and assignees proportionately as their interests appear. Let the respondents pay the costs of the proceeding.
Let the report of the referee be reported.
MR. CHIEF JUSTICE BLEASE and MESSRS. JUSTICES STABLER and CARTER and MR. ACTING ASSOCIATE JUSTICE W.C. COTHRAN concur.