1. When a litigant in the District Court, through the
prosecution of a suit on his own behalf and at his own expense, has
affixed a lien on earmarked funds in an insolvent bank for the
repayment in full, with ordinary costs and interest, of a sum
theretofore deposited by him in trust, and, by so doing, has
incidentally, through the principle of
stare decisis,
established like rights for other depositors, not parties to the
suit, but in like situation, it lies within the power of the court
as a court of equity to make the successful litigant an allowance
of costs "as between solicitor and client," for counsel fees and
litigation expenses, to be paid out of the earmarked funds. P.
307 U. S.
163.
2. Costs "as between solicitor and client" are allowed only in
exceptional cases, for dominating reasons of fairness and justice
in the circumstances of the particular case. P.
307 U. S.
167.
3. While a mandate is controlling as to the matters within its
compass, on the remand, the lower court is free to act as to other
issues. P.
307 U. S.
168.
4. The equitable right of a litigant to reimbursement for
expenses (costs "as between solicitor and client") incurred in a
successful suit redounding also to the benefit of others in like
situation may appropriately be asserted by supplemental petition,
after the suit, in other respects, has been finally disposed of in
the District Court and on review. P.
307 U. S.
168.
This right was not waived by failure to claim it expressly in
the original suit, nor was it impliedly an issue; hence, it was not
covered by the original decree and appellate mandates which allowed
recovery of principal, interest and ordinary costs.
5. An application to the District Court for an allowance of
costs as between solicitor and client at the foot of the main
decree and not involving any modification of it need not be made
before the expiration of the term at which the decree was entered.
P.
307 U. S.
170.
99 F.2d 583 reversed.
Page 307 U. S. 162
Certiorari, 306 U.S. 623, to review the affirmance of a decree
of the District Court denying a petition for an allowance of
counsel fees and expenses over and above the regular taxable
costs.
MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
The case is here on certiorari to the Circuit Court of Appeals
for the First Circuit which affirmed, 99 F.2d 583, a decree of the
District Court for the District of Maine,
Sprague v.
Picher, 23 F. Supp. 59, denying a petition for the allowance
of counsel fees and expenses over and above the regular taxable
costs. Certiorari was granted, 306 U.S. 623, because an important
question of judicial administration pertaining to the exercise of
federal equity jurisdiction was raised.
This case is another phase of a litigation that has been here
before,
Ticonic Bank v. Sprague, 303 U.
S. 406, the circumstances of which must be summarized to
lay bare the problem now before us. On March 28, 1931, Lottie F.
Sprague, the petitioner here, delivered $5,022.18 to the Ticonic
National Bank of Waterville, Maine, in trust in which she and
others had beneficial interests. Under the trust agreement, part of
the amount was to be deposited by the Bank in its savings
department. The rest of the funds was deposited by the Bank in its
commercial checking department, as were other trust funds awaiting
investment or distribution, secured by an appropriate amount of
bonds set aside in its trust department as required by Section
11(k) of the amended Federal Reserve Act, 38 Stat. 262, as amended,
49 Stat. 722, 12 U.S.C. § 248(k). On August 3,
Page 307 U. S. 163
1931, the People's National Bank took over all the assets,
including these earmarked bonds, and assumed the indebtedness of
the Ticonic Bank. On March 4, 1933, the People's Bank closed, and
both banks went into the hands of a receiver. Thereafter, on July
29, 1935, the petitioner and her beneficiary filed a bill in the
District Court against the banks and their receiver to impress upon
the proceeds of the bonds a lien for their trust deposit. The
District Court sustained the claim and entered a decree for the
discharge of the lien with interest from the date of the filing of
the bill and payment to the plaintiffs' of "their taxable costs,"
14 F. Supp. 900. On appeal, the Circuit Court of Appeals at first
disallowed interest, 87 F.2d 365, but, on rehearing, affirmed the
decree of the District Court "with costs," 90 F.2d 641. This Court
then granted certiorari "limited to the question as to the
allowance of interest" 302 U.S. 675. Before its disposition,
Ticonic Bank v. Sprague, supra, the present proceedings
were begun.
Petitioner alleged that, by vindicating her claim to a lien on
the proceeds of the earmarked bonds to the amount of her trust
funds, she had established as a matter of law the right to recovery
in relation to fourteen trusts in situations like her own; that she
had prosecuted the litigation solely at her own expense; that,
although the total assets of the bank were not sufficient to
satisfy the unsecured creditors, the proceeds of the bonds were
more than sufficient to discharge all trust obligations, and she
therefore prayed the court for reasonable counsel fees and
litigation expenses to be paid out of the proceeds of the
bonds.
The District Court held that it "had no authority to grant the
petition" on the ground that, after the appeal from its decree in
14 F. Supp. 900, it
"had no further function to perform other than to carry out the
mandate of the Supreme Court when received. The mandate from
Page 307 U. S. 164
the Supreme Court simply had the effect of directing this court
to carry out the mandate of the Circuit Court of Appeals which, in
turn, simply, in effect, required this court to execute its
original final decree by issuing its execution for a certain sum of
money with costs of both courts."
The Circuit Court of Appeals affirmed "for the reasons stated"
by the District Court, and "for the further reason that the term of
court at which the decree was entered, when the petition to amend
was filed, had long since passed. . . ." Obviously, both courts
disposed of the petition not as a considered disallowance of
attorney's fees and litigation expenses in the circumstances of the
particular suit, but because they deemed award of such costs beyond
the power of the District Court.
Whether action by the District Court on the merits of the
petition was foreclosed by this Court's mandate in
Ticonic Bank
v. Sprague, supra, and was further limited by restrictions
which terms of court may impose, are questions subsidiary to the
power of federal courts in equity suits to allow counsel fees and
other expenses entailed by the litigation not included in the
ordinary taxable costs recognized by statute.
Allowance of such costs in appropriate situations is part of the
historic equity jurisdiction of the federal courts. The suits "in
equity" of which these courts were given "cognizance" ever since
the First Judiciary Act, 1 Stat. 73, constituted that body of
remedies, procedures and practices which theretofore had been
evolved in the English Court of Chancery, [
Footnote 1] subject, of course, to modifications
Page 307 U. S. 165
by Congress,
e.g., Michaelson v. United States,
266 U. S. 42. The
sources bearing on eighteenth-century English practice -- reports
and manuals -- uniformly support the power not only to give a fixed
allowance for the various steps in a suit, what are known as costs
"between party and party," but also as much of the entire expenses
of the litigation of one of the parties as fair justice to the
other party will permit, technically known as costs "as between
solicitor and client." [
Footnote
2] To be sure,
Page 307 U. S. 166
the usual case is one where through the complainant's efforts a
fund is recovered in which others share. Sometimes the complainant
avowedly sues for the common interest, [
Footnote 3] while in others his litigation results in a
fund for a group, though he did not profess to be their
representative. [
Footnote 4]
The present case presents a variant of the latter situation. In her
main suit, the petitioner neither avowed herself to be the
representative of a class, nor did she automatically establish a
fund in which others could participate. But, in view of the
consequences of
stare decisis, the petitioner, by
establishing her claim, necessarily established the claims of
fourteen other trusts pertaining to the same bonds.
That the party in a situation like the present neither purported
to sue for a class nor formally established by litigation a fund
available to the class does not seem to be a differentiating factor
so far as it affects the source of the recognized power of equity
to grant reimbursements of the kind for which the petitioner in
this case appealed to the chancellor's discretion. Plainly, the
foundation for the historic practice of granting reimbursement for
the costs of litigation other than the conventional taxable costs
is part of the original authority of the chancellor to do equity in
a particular situation. [
Footnote
5]
Page 307 U. S. 167
Whether one professes to sue representatively or formally makes
a fund available for others may, of course, be a relevant
circumstance in making the fund liable for his costs in producing
it. But when such a fund is for all practical purposes created for
the benefit of others, the formalities of the litigation -- the
absence of an avowed class suit or the creation of a fund, as it
were, through
stare decisis, rather than through a decree
-- hardly touch the power of equity in doing justice as between a
party and the beneficiaries of his litigation. As in much else that
pertains to equitable jurisdiction, individualization in the
exercise of a discretionary power will alone retain equity as a
living system and save it from sterility. In the actual exercise of
the power to award costs "as between solicitor and client," all
sorts of practical distinctions have been taken in distributing the
costs of the burden of the litigation. [
Footnote 6] And so, the circumstances under which the
petitioner enforced the fiduciary obligation of the Ticonic Bank --
the relation of its vindication to beneficiaries similarly situated
but not actually before the court, as well as the interest of the
common creditors where the funds of the bank are not sufficient to
pay them in full, and doubtless other considerations -- must enter
into the ultimate judgment of the District Court as to the fairness
of making an award, or the extent of such award, "as between
solicitor and client" in this case. In any event, such allowances
are appropriate only in exceptional cases, and for dominating
reasons of justice. But here we are concerned solely with the power
to entertain such a petition.
Without considering the historic authority of a court of equity
in such matters, the District Court deemed itself
Page 307 U. S. 168
powerless because foreclosed by the mandate in
Ticonic Bank
v. Sprague, supra. The general proposition which moved that
Court -- that it was bound to carry the mandate of the upper court
into execution, and could not consider the questions which the
mandate laid at rest -- is indisputable.
Compare Kansas City
Southern Ry. v. Guardian Trust Co., 281 U. S.
1. [
Footnote 7] But
that leaves us still to consider whether the immediate issue now in
controversy was disposed of in the main litigation, and therefore
foreclosed by the mandate. While a mandate is controlling as to
matters within its compass, on the remand, a lower court is free as
to other issues.
See In re Sanford Fork & Tool Co.,
160 U. S. 247;
Ex parte Century Indemnity Co., 305 U.
S. 354. Certainly the claim for "as between solicitor
and client" costs was not directly in issue in the original
proceedings by Sprague. It was neither before the Circuit Court of
Appeals nor before this Court. Its disposition, therefore, by the
mandate of either Court could be implied only if a claim for such
costs was necessarily implied in the claim in the original suit,
and its failure to ask for such costs an implied waiver. These
implications are repelled by the basis on which such costs are
granted. They are not of a routine character like ordinary taxable
costs; they are contingent upon the exigencies of equitable
litigation, the final disposition of which in its entire process
including appeal place such a claim in much better perspective than
it would have at an earlier stage. Such are the considerations
which
Page 307 U. S. 169
underlay the decision in
Trustees v. Greenough,
105 U. S. 527,
105 U. S. 531,
in holding that an order allowing costs "as between solicitor and
client" was a final judgment for purposes of appeal because "the
inquiry was a collateral one, having a distinct and independent
character." [
Footnote 8] We
therefore hold that the issue in the instant case is sufficiently
different from that presented by the ordinary questions regarding
taxable costs that it was impliedly covered neither by the original
decree nor by the mandates, and that neither constituted a bar to
the disposal of the petition below on its merits.
Finally, we must notice the separate ground taken by the Circuit
Court of Appeals on the basis of what it deemed the requirements of
terms of court. The new Rules of Civil Procedure have rendered
anachronistic the technical niceties pertaining to terms of court
as to both law and equity, [
Footnote 9] but the ruling of the District Court here
Page 307 U. S. 170
in question was made prior to the operation of the new Rules.
Since we view the petition for reimbursement as an independent
proceeding supplemental to the original proceeding, and not a
request for a modification of the original decree, the suggestion
of the Circuit Court of Appeals -- that it came after the end of
the term at which the main decree was entered and therefore too
late -- falls.
The decision of the Circuit Court of Appeals must be reversed so
that the District Court may entertain the petition for
reimbursement in the light of the appropriate equitable
considerations.
Reversed.
MR. JUSTICE McREYNOLDS and MR. JUSTICE BUTLER concur in the
result.
MR. JUSTICE DOUGLAS took no part in the consideration or
decision of this case.
[
Footnote 1]
See Robinson v.
Campbell, 3 Wheat. 212,
16 U. S. 222;
Boyle v.
Zacharie, 6 Pet. 648,
31 U. S. 658;
Pennsylvania v. Wheeling
Bridge Co., 13 How. 518,
54 U. S. 563;
Payne v. Hook,
7 Wall. 425,
74 U. S. 430;
Rule XXXIII, Rules of Practice for the Courts of Equity of the
United States, 1822, 7 Wheat. v. xiii; Rule XC, Rules of Practice
for the Courts of Equity of the United States, 1842, 1 How. xli,
lxix; 1 Story, Equity Jurisprudence (14th Ed.) §§ 57, 58; 1 Street,
Federal Equity Practice, § 97.
[
Footnote 2]
See Lomax v. Hide, 2 Vern. 185;
Ramsden v.
Langley, 2 Vern. 536;
Attorney General v. Carte, 1
Dick. 113;
Attorney General v. Haberdashers' Co. and
Tonna, 4 Brown C.C. 179;
Ex parte Thorpe, 1 Ves.Jun.
394;
Moggridge v. Thackwell, 1 Ves.Jun. 464;
Dungey v.
Angove, 2 Ves.Jun. 304.
See 2 Adair, Law of Costs in
Courts of Equity, 81, 87, 179; 2 Barbour, Chancery Practice (2d
Ed.) 889-894; Beames, Costs in Equity (2d Ed.) 144-146; 3
Daniell's, Chancery Pleading and Practice (2d Ed.) 1434-1435; 2
Smith, Chancery Practice (2d Ed.) 697-700. One must, of course, be
not unmindful of the inadequacy of eighteenth-century chancery
reports,
see 2 York, Life of Lord Chancellor Hardwicke
429, particularly as to matters of costs.
See Beames,
Costs in Equity (Advertisement to Second Edition). But the current
of authority is uniform and unequivocal.
The power of the federal courts to give costs was recognized by
implication in the First Judiciary Act. Act of September 24, 1789,
Ch. 20, § 20, 1 Stat. 83. The statutory system prior to 1853
required "party and party" costs to be taxed on the basis of the
fees allowed by state practice, but the Act of Feb. 26, 1853, c.
80, 10 Stat. 161, set a uniform scale of fees for "party and party"
costs in the federal courts.
See Costs in Civil Cases, 30
Fed.Cas.No.18,284; Street, Federal Equity Practice §§ 1984-1988. As
to costs "as between solicitor and client," the English practice
was followed by the Supreme Court, and it was held that the
allowance of such costs was within the authority of the federal
courts.
Trustees v. Greenough, 105 U.
S. 527;
Dodge v. Tulleys, 144 U.
S. 451;
Meddaugh v. Wilson, 151 U.
S. 333,
151 U. S. 353;
compare Central R. Co. v. Pettus, 113 U.
S. 116;
see 4 Cyclopedia of Federal Procedure §
1086; 2 Foster, Federal Practice (6th Ed.) § 422; 2 Street, Federal
Equity Practice §§ 2033-2048.
Compare the practice in
admiralty, shown in
The Appollon,
9 Wheat. 362;
Canter v. Insurance
Companies, 3 Pet. 307. The provisions of the fee
bill of 1853 that certain specified fees and no others shall be
taxed to attorneys in the courts of the United States applies only
to "party and party" costs.
Trustees v. Greenough,
105 U. S. 527.
[
Footnote 3]
E.g., Tootal v. Spicer, 4 Sim. 510;
Hood v.
Wilson, 2 Russ. & M. 687;
Stanton v. Hatfield, 1
Keen 358;
Sutton v. Doggett, 3 Beav. 9;
Goldsmith v.
Russell, 5 De.G.M. & G. 547;
Henderson v. Doods,
L.R. 2 Eq. 532;
Ferguson v. Gibson, L.R. 14 Eq. 379;
Jervis v. Wolferstan, L.R. 18 Eq. 18.
[
Footnote 4]
E.g., Thomas v. Jones, 1 Dr. & Sm. 134;
compare
In re Richardson, 14 Ch.Div. 611.
[
Footnote 5]
For examples of the discretionary nature of the authority of
equity to tax costs,
see 3 Daniell's, Chancery Pleading
and Practice (2d Ed.) 1381-1410; 2 Street, Federal Equity Practice
§§ 1994-2007.
[
Footnote 6]
See 3 Daniell's, Chancery Pleading and Practice (2d
Ed.) 1434-1440; 2 Street, Federal Equity Practice §§ 2033-2048.
[
Footnote 7]
In
Kansas City Southern Ry. v. Guardian Trust Co.,
supra, costs "as between solicitor and client" had been asked
in suggestions on appeal from the original disposition of the
cause. The Circuit Court of Appeals, while affirming on the merits,
passed on these suggestions in a way interpreted by this court to
allow only "party and party" costs. No appeal had been taken on
this point. A subsequent application in the District Court for
"solicitor and client" costs was therefore held barred.
In
Kansas City Southern Ry. v. Guardian Trust Co.,
supra, costs "as between solicitor and client" had been asked
in suggestions on appeal from the original disposition of the
cause. The Circuit Court of Appeals, while affirming on the merits,
passed on these suggestions in a way interpreted by this court to
allow only "party and party" costs. No appeal had been taken on
this point. A subsequent application in the District Court for
"solicitor and client" costs was therefore held barred.
[
Footnote 8]
In
Trustees v. Greenough, supra, suit was brought by a
holder of certain bonds against the trustees of the state
improvement fund alleging mismanagement and waste of the fund which
was to secure the bonds and asking that his claim be allowed, that
the fund be charged with the payment thereof, and that an
accounting be had. This relief was granted, much property was
reclaimed to the fund, and agents were appointed for the sale of
the property of the fund for the purposes of liquidation. During
the liquidation, the holder of the bonds who had initiated the
proceedings filed his petition for an allowance from the fund of
his costs as between solicitor and client. Such costs were allowed
without any suggestion that the application for them was not
timely.
[
Footnote 9]
Prior to the adoption of the new Rules of Civil Procedure, a
final decree in a suit in equity could be revised only during the
term of court of its entry.
Cameron v.
M'Roberts, 3 Wheat. 591;
Buckeye Co. v. Hocking
Valley Co., 269 U. S. 42. The
same limitation existed on the power of a district court to grant a
rehearing of an appealable decree. Equity Rule 88. These time
limitations are no longer applicable. Rules 59 and 60 of the Rules
of Civil Procedure set forth the time in which these actions may be
taken, but, under those sections, the passage of the term of court
is not material. Indeed, Rule 6(c) provides:
"The period of time provided for the doing of any act or the
taking of any proceeding is not affected or limited by the
expiration of a term of court. The expiration of a term of court in
no way affects the power of a court to do any act or take any
proceeding in any civil action which has been pending before
it."
It was stated in the Notes to the Rules of Civil Procedure,
prepared by the Advisory Committee, March, 1938, that this section
"eliminates the difficulties caused by the expiration of terms of
court."