Opinion
38551.
DECIDED NOVEMBER 21, 1960. REHEARING DENIED DECEMBER 9, 1960.
Complaint. Gwinnett Superior Court. Before Judge Clinkscales. July 6, 1960.
Edward S. White, Allen E. Lockerman, Dudley S. Hancock, for plaintiff in error.
John S. Wood, Merritt Pruitt, J. Ray Merritt, A. J. Henderson, contra.
1. Under the allegations of the petition it is a question for a jury to determine whether the former county commissioners abused their discretion and breached their trust by making an arrangement with one attorney to settle the county's indebtedness to two other attorneys employed by the county whereby such attorney retained out of an amount paid to him for his services a sum alleged to be far in excess of the reasonable value of his services. The court erred in sustaining the general demurrers filed by former commissioners who allegedly made such arrangement and by the attorney with whom it was allegedly made.
2. This action is not predicated on an unenforceable contract.
3. The county is the proper party plaintiff.
4. The fact that there is no fixed standard by which attorney's fees may be determined does not mean that in a particular set of circumstances a fee paid by trustees may not be so excessive as to amount to an abuse of discretion and breach of trust.
DECIDED NOVEMBER 21, 1960 — REHEARING DENIED DECEMBER 9, 1960.
Gwinnett County brought suit in the Superior Court of Gwinnett County against Weldon B. Archer, O. D. Cain, Paul F. Dover and James M. Roberts to recover the sum of $53,535 and alleging in its petition as follows: "1. Plaintiff is a corporation and political subdivision organized and existing under the laws of Georgia. 2. O. D. Cain and Paul F. Dover are individuals who are residents of Gwinnett County, Georgia. Weldon B. Archer is an individual who is a resident of either DeKalb County or Gwinnett County, Georgia. 3. James M. Roberts is an individual who is a resident of Fulton County, Georgia. 4. Defendants are indebted to plaintiff in the sum of $53,535 on account of the facts set out below. 5. At all times in 1954, 1955 and 1956 defendants Archer, Cain and Dover, who are sometimes referred to below as "Commissioners," were members of the board of county commissioners of plaintiff county and constituted the entire membership of said board. 6. The terms of office of said commissioners expired on December 31, 1956, and none of them has been a member of said board of county commissioners since that date. 7. On November 2, 1954, the voters of plaintiff county ratified a local amendment to the Georgia Constitution (Georgia Laws of 1954, page 247 et ff.) authorizing the governing authority of said county to establish a county water system and finance the same by the issue of revenue anticipation bonds. 8. Defendants Archer, Cain and Dover, as the board of county commissioners, constituted the governing body of said county within the meaning of said constitutional amendment. 9. At all times mentioned herein defendant James M. Roberts was a lawyer engaged in the practice of law in the State of Georgia with an office in the First National Bank Building, Atlanta, Georgia. 10. In order to establish the county water system it was necessary for said board of county commissioners to obtain professional legal assistance in negotiating and drafting contracts, preparing opinions on questions of law, drafting legislation, validating and issuing bonds, examining the title to real property and rights-of-way and other similar matters. 11. At all times mentioned herein A. G. Liles, of Lawrenceville, Georgia, was county attorney of plaintiff county. 12. Effective February 1, 1955, defendant commissioners employed R. F. Duncan, of Lawrenceville, Georgia, as assistant county attorney of plaintiff county to work on problems of a legal nature involved in the establishment of said water system. 13. In March, 1955, on a date known to defendants but not known to plaintiff, said commissioners verbally employed defendant James M. Roberts, referred to below as Roberts, as special counsel to work on matters of a legal nature involved in the establishment of said water system. 14. No contract or agreement in writing between the said Roberts and plaintiff county or said board of county commissioners was at any time executed, and no agreement or understanding was then reached regarding the amount or method of computing the compensation to be paid to Roberts for his services. 15. In employing defendant Roberts as special counsel for plaintiff county defendants failed to comply with the provisions of Section 23-1701 of the Georgia Code which required that in all counties, including Gwinnett, in which a board of commissioners constituted the governing body all contracts entered into by the commissioners with other persons on behalf of the county shall be in writing and entered on the minutes of said board of commissioners. 16. As a preliminary to selling the revenue anticipation bonds with which to finance said water system defendant commissioners adopted a budget in which the legal expenses to be incurred in connection with said project were estimated, on the advice of defendant Roberts, as follows: Special Counsel — $74,062, Bond Attorneys — $74,062. 17. It was understood from the time defendant Roberts was first employed that the bond attorneys in connection with said project would be the firm of Spalding, Sibley, Troutman Kelley of Atlanta, Georgia, and that Roberts would not be called upon to assist in the validation or issuance of said revenue anticipation bonds or furnishing opinions regarding the use of funds produced by the sale of said bonds. 18. Between the time of his employment and November, 1955, defendant Roberts performed various legal services at the request of defendant Commissioners including the following: (a) Assisting in the negotiation of contracts between Gwinnett County and some thirteen municipalities in said county and one municipality outside of said county under which said municipalities agreed to buy water from said county's proposed water system. (b) Attending meetings with the governing authorities of said municipalities, drafting and arranging for the execution of such contract documents. (c) Drafting a contract for the purchase by Gwinnett County from DeKalb County of certain water lines located in Gwinnett County. (d) Negotiating with the U.S. Army Corps of Engineers in an effort to obtain permission for the Gwinnett County water system to take water from Lake Lanier. (e) Attending meetings of defendant commissioners in Gwinnett County, conferring with said county's engineers and fiscal agent and conducting correspondence. 19. Between November 1, 1955, and June 6, 1956, defendant Roberts performed other legal services for plaintiff county including the following: (a) On November 17, 1955, he attended a commissioners' meeting in Lawrenceville, Georgia, and assisted the county's engineer in opening the bids for the general contract for the construction of said water system. (b) On or about December 12, 1955, he accompanied defendant commissioners to New York in connection with the execution of said revenue anticipation bonds. (c) In January, 1956, he assisted in the preparation of a contract with Garcia Associates, Inc., a firm of engineers, for the inspection and supervision of the construction of said water system. (d) He drafted a bill permitting the Gwinnett County water system to take water from Lake Lanier, and cooperated with United States Senator Richard B. Russell in arranging for the passage of such bill by Congress. (e) Attended meetings of defendant commissioners and conducted correspondence. 20. On January 10, 1956, plaintiff county issued and sold the revenue anticipation bonds mentioned above and received therefor the sum of $5,925,000. 21. Said sum constituted a trust fund for the construction and establishment of said water system, and defendant commissioners were trustees and fiduciaries in respect thereto. 22. On February 12, 1956, defendant commissioners paid, from said trust funds, the said R. F. Duncan $10,000 for legal services and defendant Roberts $10,000 for legal services. 23. In January, 1956, after defendant Archer had requested him to submit a bill for his legal services, Sumter Kelley, of the law firm of Spalding, Sibley, Troutman Kelley, submitted a statement for such services in the amount of $40,000. Subsequently, at the request of defendant Archer, the said Sumter Kelley agreed to accept $30,000 in compensation for said services. 24. On June 6, 1956, defendant commissioners paid defendant Roberts $128,000 for his legal services. 25. Said payment of $128,000 constituted, in substance, the entire balance of the amount shown in the water system budget for legal expenses. 26. At the time said payment was made defendant Roberts agreed to pay, out of said sum, whatever amount plaintiff county then owed to the said Sumter Kelley and R. F. Duncan for their legal services in connection with said water system project. 27. Shortly thereafter defendant Roberts paid $30,000 to Sumter Kelley and $15,000 to R. F. Duncan and retained the balance as additional compensation for his own legal services. 28. Said balance of $83,000 plus the $10,000 theretofore paid to him on February 12, 1956, made a total of $93,000 paid by defendant commissioners from said trust funds to defendant Roberts for his legal services in connection with said project. 29. When said agreement was made for substantially all of the balance of the amount estimated in the budget for legal expenses to be paid to defendant Roberts none of the defendants knew how much would be required to discharge the obligations of plaintiff county to Sumter Kelley and R. F. Duncan, and none of the defendants knew how much of said sum defendant Roberts would be able to retain for himself. 30. After the date said $128,000 was paid to him, defendant Roberts attended several meetings, the exact number of which is not known to plaintiff, and performed other minor services for which no payment was made. Plaintiff alleges that the services performed after the date of said payment were not substantial in character. 31. Defendant Roberts did not at any time submit any written statement or bill to plaintiff county for his legal services. 32. Defendants did not at any time agree upon a specific amount that would constitute reasonable compensation for said legal services. 33. In determining the amount of compensation to be paid by plaintiff county to and accepted by defendant Roberts all of the defendants were required by law to exercise the utmost good faith, fidelity and integrity. 34. There is no fixed standard by which the reasonable value of professional legal services can be determined, and the discretion of trustees and those dealing with them in the determination of fees for such services will not be controlled by this court as long as such discretion is not abused. 35. Plaintiff county alleges that even after allowing for the exercise of discretion on the part of the defendants in the circumstances set forth above the reasonable value of all services rendered by defendant Roberts in connection with said water system project could not exceed $50,000. 36. In paying defendant Roberts more than $50,000 defendant commissioners abused their discretion and committed a breach of trust and were guilty of a misapplication of trust assets in which Roberts participated with full knowledge of all the facts. 37. Section 108-423 of the Georgia Code, which was in force and effect at all times mentioned herein, provides as follows: `All persons aiding and assisting trustees of any character, with a knowledge of their misconduct, in misapplying assets, are directly accountable to the persons injured.' 38. At all times mentioned herein defendant commissioners were trustees for plaintiff county, and a fiduciary relationship existed between said defendants and said county. 39. By reason of said breach of trust and misapplication of trust assets in which all of the defendants participated as alleged above plaintiff county is entitled to recover the difference between the amounts actually paid to defendant Roberts and $50,000, to wit $43,000, with interest thereon at the legal rate of 7% per annum since June 6, 1956."
James M. Roberts filed a general demurrer to the petition. Defendants Archer, Cain and Dover filed general and special demurrers to the petition jointly. The general demurrers of all of the defendants were sustained and the petition dismissed. Thereafter the plaintiff moved to vacate the judgment sustaining the demurrers and to permit the plaintiff to amend the petition, which motion was overruled by the court. The plaintiff excepts to the foregoing judgments adverse to it.
1. Accepting the facts alleged in the petition as being true, except in one instance where a contradiction appears, the petition sets forth a cause of action against all the defendants on the theory that the former commissioners paid an excessive fee to their attorney Roberts and delegated to him the authority to settle with and pay other attorneys for the county so as to enable Roberts to retain for himself an exhorbitant amount for the services rendered by him. There will be no attempt on the part of this court to construe the petition except in case of conflicting allegations. We take the unambiguous allegations as being true and as meaning exactly what they say. The petition alleges that the former commissioners paid Roberts $128,000 for his legal services with the understanding that he pay out of said sum the amounts the county then owed to Sumter Kelly and R. F. Duncan for their legal services. This means that the county through the then commissioners delegated to Roberts the authority to at least fix or settle the Duncan fees, pay Kelly the agreed fee of $30,000 and keep the balance for himself. This was an improper and illegal delegation of authority whether the $128,000 was paid to Roberts for his services or whether it was paid to him for the services of all named attorneys with the burden on Roberts to settle with one of the other attorneys. The two arrangements mean the same thing and had the same effect. It was the duty of the commissioners as trustees of the fund in behalf of the county which was in turn trustee for the residents of the county and the bondholders to fix and agree separately on the fees of the attorneys whom they employed. They were without authority to delegate the final and carte balance authority to Roberts to fix or settle the fee contracts with Duncan. It is alleged that the arrangement made with Roberts resulted in excessive fees being retained by Roberts and that an arrangement having such a consequence was an abuse of discretion on the part of the commissioners, that they are liable to the plaintiff and that Roberts is liable as a participant in the unauthorized arrangement. The petition is conflicting on the question whether the commissioners knew before paying Roberts what the amount of the Kelley fee would be but it seems to us that this conflict is immaterial insofar as the Duncan fee is concerned. If the other allegations are true, the conduct of the defendants was improper. Under the authority of Malcom v. Webb, 211 Ga. 449 ( 86 S.E.2d 489) the commissioners were trustees of the funds involved and under Burke v. Wheeler County, 54 Ga. App. 81 ( 187 S.E. 246), the petition makes the issue whether the defendant commissioners manifestly abused their power and discretion to the oppression of the citizens of Gwinnett County. Under Code § 108-423 Roberts is liable if he knowingly aided in misapplying the assets. This is not a case where the defendants and the commissioners made a contract in good faith in advance of services rendered based on their honest judgment as to what the services would reasonably be worth. Paulding County v. Scoggins, 97 Ga. 253 (2) ( 23 S.E. 845).
2. This is not an action based on an illegal contract, but even if it were, the principle of law applying to individuals does not apply where the public is one of the parties. Burke v. Wheeler County, 54 Ga. App. 81, supra.
3. The county is the proper party plaintiff. We know of no law which makes the county commissioners individually the governing body of the county in cases of water systems financed by revenue bonds or certificates. Gwinnett County is not a "governing authority" separate and apart from the county itself. Acts cited in Code Ann. § 87-802 (11) (b). The county owned the system. The fact that bonds were outstanding makes no difference and the commissioners were the trustees acting for and in behalf of all concerned in the name of the county.
4. The allegation in the petition in substance that there is no fixed standard by which the value of an attorney's services may be measured does not preclude the bringing of this action to recover on the facts alleged. In spite of the lack of such a standard, if the proof shows that unreasonable and excessive fees were paid to Roberts under the circumstances a recovery is in order if a jury finds the fact of excessiveness to exist to the extent of showing a breach of discretion and trust.
The court erred in sustaining the general demurrers of the defendants and in dismissing the action.
Judgments reversed. Nichols and Bell, JJ., concur.