Barcus v. Gates

130 F. 364 | U.S. Circuit Court for the District of Eastern Virginia | 1904

WADDIEE, District Judge

(after stating the facts as above)'. From the above statement, there are presented for the consideration of the court the following questions: First. Whether the petitioner is limited in his recovery by the contract aforesaid. Second. What services were had in view by the contract of employment; what recovery was contemplated ; what was meant by the reference in the contract to “about twenty or twenty-five thousand dollars”: and what is the effect of the use of the language in the contract, “They agree to pay him a sum equal to ten per cent, of all he shall collect, either in money, land, or any other thing of value, that may be accepted by said parties in settlement.” Third. What method of valuation should be adopted, and what valuation be placed upon the recovery heretofore had.- Fourth. What services were rendered, if any, not covered by the contract, and the value to be placed thereon.

x. That the petitioner would be precluded from a recovery under his contract if the saíne was complete, plain, and explicit, both as to the services to be rendered and the method of paying for the same, may be conceded, as to the services clearly covered by the contract; but as it is uncertain just what services were to be performed, or what recovery was contemplated, and precisely how payment therefor was to be made, parol evidence should be admitted to show precisely what the parties had in view by their undertaking; and, to this end, the contemporaneous statements, oral and in writing, of the parties, in reference thereto, may be considered. Maryland v. The Railroad, 22 Wall. 113, 22 L. Ed. 713; 8 Rose’s Notes (U. S.) 503; 9 Rose’s Notes (U. S.) 666, 952; Brick v. Brick, 98 U. S. 514, 516, 25 L. Ed. 256; West v. Smith, 101 U. S. 263, 271, 272, 25 L. Ed. 809; Walker v. Brown, 165 U. S. 654, 668, 17 Sup. Ct. 453, 41 L. Ed. 865; Michels v. Olmstead (C. C.) 14 Fed. 219; The Wanderer (D. C.) 29 Fed. 260; Bacon v. Poconoket, 70 Fed. 640, 17 C. C. A. 309; Harman v. Harman, 70 Fed. 894, 17 C. C. A. 479; Peabody v. Bement, 79 Mich. 47, 53, 44 N. W. 416; Basshor v. Forbes, 36 Md. 166; Greenleaf on Evidence (16th Ed.) § 284a, and authorities cited; Id. § 205 “b” and “f,” note 1.

2. From the language of the contract, read in the light of the circumstances under which it was executed, as shown by statements, explanations, and the conduct of the parties thereto leading to the execution thereof, and what was done as a result of such contract, it is quite clear that the real recovery had in view, should litigation become necessary, was the farm Northberry, in New Kent county, Va., on account of which the entire engagements and undertakings sought to be annulled by the defendants in the petition were entered into. The facts are briefly as follows: One Henley, as the representative of a corporation known as the American Plant Food Company, claimed that said farm was immensely valuable, as having upon it certain beds of phosphate, which could be used with great profit in the manufacture of fertilizer, and that the said company had acquired the farm at $100,-000, and owed on account of the purchase money thereof $27,000; and he succeeded in inducing the defendants in the petition, residents •of the state of Indiana, to take stock in said company, and to become largely interested in the same, and on account of which they paid in cash some $20,640, and executed their notes for other considerable sums. In the future conduct of the affairs of the company, it shortly became apparent that the defendants in the petition had been defrauded, and that they alone had actually paid their money into the ■company, and that the other incorporators had used bogus checks in making their supposed payments into the company, which were never used, but, on the contrary, were returned to the makers, and that while the farm was a fine one, having upon it valuable marl beds, the same could not be profitably used in making fertilizer, and that the high grade ■of analysis shown in the samples of the marl and so-called phosphate beds was the result of “salting” the samples. Upon the discovery of the true condition of affairs, the defendants in the petition entered into the contract aforesaid with the petitioner; their object and purpose at the time being to secure what they had paid, which they hoped they would be able to do without suit, by reason of the prominence of some of the parties to the transaction, and the still greater prominence of others who were supposed by them to be connected with it, and, upon failure to realize in this way, then at least to recover the farm aforesaid, which was believed to be worth not less than $25,000. The effort at settlement having finally failed, the original suit, in which the petition herein is filed, was instituted, from which it will appear that the primary purpose was to recover the farm, if settlement could not be had. A letter of one of the defendants in the petition, J. M. Thompson, written -on the 28th of December, 1898, after the rendition of the decision of the Circuit Court of Appeals on the law of the case, to Judge Yarrell, ■and filed Exhibit “FDY. No. 4,” with Yarrell’s deposition, abundantly shows the manner in which the settlement was first hoped for, as it does, also, what the property was supposed to be worth. He says, on the question of values:

“I told Mr. Sherwood in Chicago last week, that we would be willing to ■accept the property in lieu of all claims against the Virginia parties; * * * and further, I think the property is worth $50.000.00, but under forced sale it might not bring that, but then we would be able to hold the Virginia parties for the balance of the money.”

The result of the litigation was that the court decided that, on account of the fraudulent transactions as charged by the complainants, the entire dealings between the parties should be annulled and set aside, and the defendants in the petition should recover back the amounts paid by them, as far as possible, from the parties participating in the fraud, and that, so far as the farm was concerned, the vendors thereof having sold the same to the American Plant Food Company, and taken a lien thereon for the unpaid purchase money of $27,000, complainants could ■only recover, as against the said farm, the money which was paid thereon, out of the amounts paid by them into the company, to wit, the sum of $3,466.67, with interest from 6th February, 1895, and accordingly decreed that said last-named sum was a lien upon said farm, and that the farm should be sold in default of payment thereof, and a decree entered in favor of the defendants in the petition for the amounts paid by them against those participating in the fraud as aforesaid, with interest from times of payment. The meaning of the language “of about twenty or twenty-five thousand dollars,” in the contract named, was that said farm was believed to be worth that much, and that petitioner, Sherwood, might expect a recovery of property worth that much under his contract; and by the language, “they agreed to pay him a sum equal to ten per cent, on all he should collect, either in money, land, or any other thing of value, that might be accepted by said parties in settlement,” that said Sherwood is entitled to an interest equivalent to io per cent., under his contract, of the value of whatever might be recovered, and to that extent he took a joint interest with the defendants in the petition in such recovery.

3. In ascertaining the value to the petitioner in the recoveries had, it is clear that, where property was taken in by his clients in order to effect a settlement with their debtors, he should receive a contingent fee on the fair valuation of the property, as distinguished from the price at which it was actually taken; and, so far as Northberry farm was concerned, since the farm was not actually recovered, but a lien secured thereon, and on account of which it was purchased, that the same rule should prevail. Adopting this method of settlement, the petitioner should not receive a contingent fee on the price at which Northberry was brought in by the defendants in the petition, under the lien, of some $5,200, but upon its real value, which the court ascertains to be at least $10,000. It is true that the evidence taken by the defendants in the petition fixes the values at from $8,000 to $10,000; but the court, in ascertaining this valuation, should not lose sight of the history of the farm, as shown by this previous litigation, and, indeed, of what it knows of its own knowledge, and certainly the figure named is the lowest that hould be stated. Defendants in the petition received $4,000 in cash on account of their money decree, and $1,125 rents on account of Northberry farm, making $5,125 received in money, and sundry parcels of real estate from Lefew, one of the defendants in the first-named cause, the value of which is variously estimated at from $11,500 to $15,320. The conclusion reached by the court is that the fair valuation of this Lefew property is $13,314, and that that much could be realized on it at this time, as could $10,000 on the farm aforesaid. The Lefew property, which was recovered about two years ago, is admirably located, where property is enhancing in value as much or more than in any other point in the city of Richmond. It is all within two blocks of Lee Monument, in which section handsome residences are rapidly being erected. And the farm Northberry, though somewhat run down now, is especially easy of improvement, by reason of the green sand marl beds thereon, and is and has always been considered one of the fine farms of the state. Upon these figures, the petitioner, Sherwood, is entitled to and should receive by way of contingent fee, under his contract, xo per cent, of the cash received and values aforesaid, amounting to $2,843.90.

4. That the services for which petitioner claims compensation, independent of or outside of the contract, are not such services as are embraced within the terms of the contract, upon any fair interpretation that can be made thereof, is too plain to admit of serious doubt or cavil. They consist, in effect, of two items — the first, of traveling over the country, spending as much as three weeks on one occasion in Virginia, nearly 1,000 miles from his office, in search of evidence to be used upon the trial; and the other, of a month or more time spent after the final decree had been entered in the cause on its merits, with a view of ascertaining what, if anything, could be recovered from the different parties against whom the decree had been entered, and professional services in connection therewith. That this character of work and this service were not covered by the original contract would seem to be too plain to be controverted. Indeed, it is hardly among the • probabilities that a contingent arrangement for io per cent, would have been entered into at all, had any such litigation been in view as this resulted in, if, indeed, employment could have been secured by contingent arrangement for such work at any figure; but to include such services as are now being considered under the io per cent, contract would riot only be unreasonable, but to do what manifestly could never have been within the minds of the parties at the time, and is clearly neither within the letter nor spirit of the contract made by them. The letters written by James Q. Barcus, the most active of the complainants in the original suit in the prosecution of the case, as late as December 27, 1898, and April 8, 1899 (Exhibits LDY. Nos. 2 and 3 with Yarrell’s deposition), long after the litigation had been inaugurated, and subsequent to the rendition of the decree, favorable to the complainants in the Circuit Court of Appeals had been entered, shows that it was not the purpose of the parties to impose this sort of work on their counsel, as also that they were without evidence to sustain their case, but for this extra service of counsel.

The court concludes, upon the evidence in this case, taking into consideration the character of the case, and all the circumstances surrounding it, and the success attained, that the petitioner, Sherwood, should be allowed at least the sum of $2,000 for the work performed by him outside of the contract aforesaid, making a total allowance for professional services rendered of $4,843.90, from which should be deducted the payments and credits heretofore claimed by the defendants in the petition, amounting to $2,175.

In what has been said, no special reference has been made to the character of the litigation out of which the claim for fees on the part of the petitioner arose, or to the manner in which he performed his part of the undertaking. The suit was an exceedingly difficult one to maintain, and every question of law and fact arising in it was bitterly and vigorously contested from its institution to its close, many doubtful and difficult legal questions arising; and the best legal talent in the state — seven lawyers, as I now recall — were engaged on the part of the several defendants in the cause. The question of fraud being involved, and plainly charged against prominent and leading business men, who indignantly resented the accusation, the litigation was conducted with an earnestness and asperity that rarely occurs; and it required counsel of high order of talent to maintain the cause of the complainants. The work done in the cause was enormous. The trial alone, which was had before the court, under the equity rules so providing, took over two weeks; and the evidence, as taken by stenographers at the time, covered over 1,000 pages of typewritten matter. While the petitioner, Mr. Sherwood, was not the only counsel in the cause for the complainants — he having associated with him Judge E. D. Yarrell from the commencement, and Mr. C. V. Meredith at the final hearing — it is doing no injustice to either of these gentlemen, who well and ably performed their duties, to say that the laboring oar in the litigation, from its inception, fell to Mr. Sherwood. He was the counsel near to the complainants, and upon whom they mainly relied. He did most of the work —indeed, his master mind directed and controlled it; and it is only just to him to say that he showed great skill as a lawyer in the performance of his duties, and spared no labor that would inure to the benefit of his clients.

The court is satisfied the fee herein allowed is as small compensation as was ever allowed an attorney for like services, and that the amount thus named, with what the defendants in the petition admit they have paid for counsel in the cause, is only what would have been a very small fee, upon a cash basis, for the work performed by the combined counsel, or if performed by one of them. In this case, if the court were called upon to allow compensation to counsel out of the recovery had, or of funds under its direction, uncontrolled by the terms of any contract between parties, it would not, in view of the doubtful and unpleasant character of the litigation, the onerous services performed, and the success attained, think of allowing less than 50 per cent, of the recovery had, or of the amount under its control. To do otherwise would be unjust and unfair to counsel.

A decree may be entered in favor of the petitioner, Sherwood, against the defendants in the petition, for the amount hereinbefore allowed, less the sum received by him as aforesaid.