Culbreth v. Henry A. Kries & Sons Co.

Adkins, J., delivered the opinion of the Court. The appellant in this appeal was solicitor for W. R. Grace 'and Company, a corporation, which filed a bill of complaint against the Frederick AY Lipps Company of Baltimore City. The bill was filed by the plaintiff corporation, “acting on its own behalf, and on behalf of all others similarly situated who may come in and contribute to the expenses of these ⁴⁹⁸ proceeding’s”; it alleged that the defendant corporation was insolvent, and prayed for the appointment of a receiver and for the dissolution of said defendant corporation. Receivers were appointed and a larg’e number of claims Were filed against the insolvent estate, one of which was that of the Manufacturers’ Finance Corporation for $290,233.23.

To this claim, and several others, exceptions were filed by appellees, as creditors, through Barton, Wilmer & Barton, their attorneys. These attorneys, together with the receivers, for more than a year were negotiating with the Manufacturers’ Finance Corporation looking to a compromise. The testimony indicates that at one time they hoped to have the claim reduced by about one-half, and were informed that such a settlement had been advised by claimant’s attorney. But these negotiations apparently failed/ By reason of the delay Mr. Culbreth, who represented the plaintiff, one of the largest creditors, became impatient and undertook to máke an analysis of the finance corporation claim, which resulted in the discovery that included in that claim was about twenty-three per cent, interest on a much larger original claim, amounting to more than two-thirds of the claim filed, which discovery he believed could be successfully used to bring about a satisfactory settlement, inasmuch as the charge of usurious interest, in his opinion, endangered the claim not only to the extent of the overcharge of interest, but for the full amount, and possibly made claimant liable for a large sum which it had already collected by the sale of certain collateral.

Whereupon he, in the name of his client, filed a petition setting out the facts, citing section 124 of article 23 of the Oode¡, and suggesting that it would be convenient to have decided the questions of law involved before any evidence was taken, the questions of law being: (a) Are said loans and said security absolutely null and void ? (b) If said loans' and said security are not absolutely null and void, to what extent, if any, are they null and void? On which petition ⁴⁹⁹ the Court ordered that said questions be raised for the opinion of the court and that- a copy of the petition and order be served on said claimant. Some months later the receiver tiled a petition reporting to the court that they had been advised by the solicitors for W. R. Grace and Company and for Manufacturers’ Finance Corporation “that they have agreed to settle and compromise the matters in dispute between them by the deduction of the sum of $12.5,000 from the amount of the claim of said Manufacturers’ Corporation as filed in the cause, said agreement having been made subject to tbe approval of this honorable court”; that the receivers “deem a settlement on the aforesaid terms to be advisable and recommend the approval thereof by” tbe court.

A formal approval was also filed by Mr. Culbreth as solicitor for W. R. Grace & Company, and by the solicitors for the Finance Corporation; and the court so ordered. Whereupon Mr. Culbreth filed a petition in which he set out the facts hereinbefore recited; that the result of the settlement obtained by him “is to reduce the claim of Manufacturers’ Finance Corporation from $290,733.23 to $165,-733.23, and its dividend from $74,707.25 to $42,593.44, thereby increasing the fund for distribution $32,113.81, and reducing the total amount of claims from $788,938.48 to $663,938.48. That your petitioner has received no compensation for said services; and while his client is able and willing to compensate him, yet your petitioner respectfully submits bis services were for the benefit of all tbe creditors other than