For reversal and remandment -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For affirmance -- None. The opinion of the court was delivered by Schettino, J.
This appeal is from an order directing three corporate defendants to pay counsel fees of $25,000 to plaintiffs' attorneys. While the appeal was pending in the Appellate Division, we certified the cause on our own motion.
The services compensated by the award were rendered in an action in which plaintiffs sought the vindication of corporate rights in a stockholders' derivative suit, as well as the establishment of certain personal interests of their own against the individual defendant. Together, the two plaintiffs and the individual defendant constituted 100% of the stockholders of the three defendant corporations.
The trial court entered judgment in favor of plaintiffs as to both aspects of the suit, but the judgment was silent as to the allowance of a counsel fee. An appeal was then taken. The Appellate Division affirmed the trial court with respect to plaintiffs' claims for an accountant's fee and money awards totaling $483,738.77 in favor of the defendant corporations and against the individual defendant, but reversed the judgment insofar as it provided for the appointment of a receiver for the corporations and the accounting of profits in favor of plaintiffs personally. 62 N.J. Super. 41 (1960). The Appellate Division remanded for further proceedings to determine the plaintiffs' interest in a partnership, i.e., the personal claims, and also stated (at page 61) that the judgment might, for the purposes of enforcement, be amplified to order defendant Sidney Sarner to make the payments to defendant corporations. Costs were disallowed on the appeal but no mention was made of counsel fees.
On October 14, 1960 plaintiffs filed a notice of motion in which they sought an order amplifying the judgment and for the allowance of a counsel fee in the event the motion was denied on the ground that the judgment had been paid or satisfied. By order filed January 19, 1961, the trial court directed Sarner to pay the judgments to the defendant corporations while the application for counsel fees was not determined undoubtedly because the need for further services was recognized. On April 12, 1961 plaintiffs obtained an order directing Sidney Sarner to show cause why he should not be adjudged in contempt of court for his alleged failure to make the payments required of him in said order. An order of dismissal was thereafter entered because defendant had made the payments.
On May 9, 1961 plaintiffs in effect renewed a notice of motion for counsel fees. Oral argument on the motion was heard on June 30, 1961. Additionally, the trial court had the benefit of memoranda of law submitted by both counsel and plaintiffs' affidavit of services rendered by their attorney. By letter dated October 5, 1961, the trial court awarded the
counsel fees. No findings of fact were stated therein with respect to the allowance. An order was made on November 30, 1961.
On this appeal, appellants argue that there was no "fund in court" warranting an allowance of a counsel fee because plaintiffs combined an action to establish their own personal interests with a class action, and all members of the class were party litigants so that no one other than the litigants benefited from the class action. Additionally, appellants argue that it was not proper for the trial court to allow a counsel fee by separate order made after the determination of several matters when the judgment and orders determining these matters did not indicate an allowance, and that if an allowance of a counsel fee was proper for services rendered in connection with the class action, the trial court did not have sufficient information on which to base or calculate a reasonable allowance.
We first consider the "fund in court" argument. R.R. 4:55-7 provides in part: "No fee for legal services shall be allowed in the taxed costs or otherwise, except: * * * (b) Out of a fund in court. The court in its discretion may make an allowance out of such a fund * * *." The spirit of R.R. 4:55-7 is that each litigant should bear his own cost of litigation. In Liberty Title & Trust Co. v. Plews, 6 N.J. 28, 44 (1950), the late Chief Justice Vanderbilt stated: "In * * * [ R.R. 4:55-7] this court has specifically enumerated the types of actions in which allowances to counsel may be made, and the discretion of the trial court is limited to the granting or denying of allowances in such actions." Cf. Westinghouse Electric Corp. v. Local No. 499, 23 N.J. 170 (1957).
The term "fund in court" is one of art. It is applied where plaintiff's actions have created, preserved or increased property to the benefit of a class of which he is a member. Sunset Beach ...