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Grober v. Kahn

Decided: April 28, 1964.

MAURICE W. GROBER, PLAINTIFF,
v.
HERMAN KAHN, GERTRUDE KAHN, ALICE BROOKS AND CAROL WEINTRAUB, DEFENDANTS



Mintz, J.s.c.

Mintz

In this proceeding plaintiff essentially sought to establish his interest in a joint venture and demanded an accounting from defendants Herman Kahn, his wife and two daughters. He additionally contended that Herman Kahn's wife and two daughters were mere nominees and not bona fide co-venturers. The female defendants asserted counterclaims against plaintiff. After protracted litigation this court found, inter alia , that plaintiff has a 25% interest in the joint venture, that defendant Herman Kahn is accountable to the joint venture in the sum of $431,400.60, and that the two daughters were each liable to the joint venture in the amount of $3,000. Plaintiff now moves for an award of counsel fees in the amount of $100,000, accountant's fees in the amount of $40,000, and appraisers' fees to be paid either out of the sum adjudged due from defendant Herman Kahn or to be charged against him personally.

R.R. 4:55-7 prescribes when counsel fees may be allowed. In the instant situation R.R. 4:55-7(b) is controlling. That section is as follows:

"(b) Out of a fund in court. The court in its discretion may make an allowance out of such a fund, but no allowance shall be made as to issues triable of right by a jury. * * *" (Emphasis supplied)

The purpose of the rule limiting the kinds of cases in which counsel fees might be allowed was to eliminate the abuses of the power to grant counsel fees that prevailed under the former practice in the Court of Chancery. The rule rejects the philosophy that counsel fees should be liberally available to successful litigants, particularly where the defense of the losing litigant had no reasonable basis and adopts the rationale that the interests of sound judicial administration will be

advanced by having every litigant bear his own counsel fees except in a few specially designated situations. State v. Otis Elevator Co. , 12 N.J. 1, 10 (1953).

The term "fund in court" was analyzed in Sunset Beach Amusement Corp. v. Belk , 33 N.J. 162, 168, 169 (1960), where the court stated:

"'Fund in Court' is not too happy a term. It is a shorthand expression intended to embrace certain situations in which equitably allowances should be made and can be made consistently with the policy of the rule that each litigant shall bear his own costs. The difficulty with the term is that literally it may connote a fund within the precincts of the court in a physical or geographic sense whereas 'in court' refers to the jurisdictional authority of the court to deal with the subject matter * * *. And for that matter, the existence of power in the court to control the subject matter is not itself enough to demonstrate the existence of a 'fund in court' within the purpose of the rule."

The court went on to provide the following test for allowing counsel fees:

"In general, allowances are payable from a 'fund' when it would be unfair to saddle the full cost upon the litigant for the reason that the litigant is doing more than merely advancing his own interests. Thus, for example, when there are classes of claimants to the fund and the services redound to the benefit of others as well, it is fair that all contribute to the cost by a charge against the subject matter. * * * Typical is a controversy among stockholders with respect to dividend rights in the surplus of a corporation. Cintas v. American Car & Foundry Co., supra [133 N.J. Eq. 301, 304 (Ch. 1943), affirmed and modified on other grounds 135 N.J. Eq. 305 (E. & A. 1944)].'"

The final expression by our Supreme Court on this issue is Sarner v. Sarner , 38 N.J. 463 (1962). There two plaintiffs, each holding a 10% interest in three corporations, brought suit against defendant, who owned the remainder of the stock of the corporations. Ultimately plaintiffs prevailed to the extent that defendant was ordered to pay approximately $400,000 to the corporation. The court, in holding that plaintiffs were entitled to ...


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