Bray v. Staples, No. 952

No. 952 | 4th Cir. | Jul 13, 1910

Lead Opinion

PRITCHARD, Circuit Judge

(after stating the facts as above). As appears from the statement of facts, on the 30th day of September, 1901, B. J. Fisher filed his pleadings in the United States Circuit Court in the action in which a receiver had been appointed, setting up a judgment of $25,000 which he had obtained in the state court, claiming enough of the fund in the custody of the court to satisfy such judgment before the trustees of the deeds of trust and the bondholders were entitled to receive anything; and this, by virtue of section 1255 of the Code of North Carolina, as will appear by the pleadings in that proceeding. His right to the fund claimed, or any part of it, was denied by the Guardian Trust & Deposit Company, the trustee in the first deed of trust. This suit was in effect a test case to determine this matter, both as to Fisher and the other judgment creditors, and the decision of that case governed the cases of the other judgment creditors; and the conduct of that case devolved entirely upon his attorneys of record, Messrs. Staples and Brooks.

An examination of the record will show that appellee and Mr. Brooks appeared as counsel for Mr. .Fisher before Judges Simonton and Boyd, who,heard the case. From the judgment rendered therein, an appeal was taken to this court, and, when the question' was argued here, appellee and Mr. Brooks appeared as counsel for Mr. Fisher and argued the different questions involved in the controversy. After argument was had before this court, the case was certified to the Supreme Court of the United States. There the appellee and Mr. Brooks again appeared as counsel for Mr. Fisher and succeeded in establishing the priority of the judgment which had been obtained in the state court.

From the time the Circuit Court of the United States assumed jurisdiction, the proceeding was purely of an equitable nature and was contested as such by appellee and Mr. Brooks as attorneys for Mr. Fisher; and, as a result of their services, it was finally decreed that Mr. Fisher was entitled to priority in that suit, and a decree was entered in his favor, by virtue of which the sum of $33,000 was adjudged to be due Mr. Fisher, and this amount was paid over to Mr. Brooks, who was, as we have said, associated as counsel with Mr. Staples.

The learned judge who heard this case below found as a fact that it was agreed between Messrs. Fisher and Staples that Mr. Staples was only to be paid a fee for his services in the event he should recover, and that his fee was to be paid out of any amount that might be recovered. It also appears, as is shown by the findings of fact, that the sum of $3,100 was to be held by Mr. Brooks to await the determination of the controversy between Mr. Staples and Mrs. Fisher (executrix of Fisher, who had died in the meantime), as to the amount of appel-lee’s fee, and that out of said sum appellee was to be paid such amount as might be found to be due him for services rendered in that suit. Counsel for appellants insist that there was a final decree entered prior to the institution of this suit by which that case was taken from the docket. That decree, however, provided that a final report should be made, and in the event no exceptions thereto were filed, that the receiver should be discharged; but an examination of the record shows that no report has ever been filed by the receiver, and, therefore, the judgment has not become effective owing to the conditions contained therein. The court below found as a fact that the case is still pending on the docket at Greensboro, and this finding of fact, in our opinion, disposes of the question as to whether this court has jurisdiction.

It is also insisted that, inasmuch as the original amount of the judgment was paid over to Mrs. Fisher, the court thereby lost control over the fund and has, therefore, no power to make any order respecting the same. The court below found as a fact, based upon the petition and the answer filed by Mr. Brooks, together with his testimony, that, during his absence, his law partner, while acting under a misapprehension of the facts, did pay to Mrs. Fisher $20,000 of the fund which had been directed to be held by him subject to the determination of the controversy between the appellee and Mrs. Fisher. It is also shown and found as a fact that, as soon as Mr. Brooks returned, he repudiated the entire transaction, and, out of other funds in his possession as agent for the Fisher estate, placed the sum of $3,100 in the bank to his credit as solicitor to await the determination of the controversy between ap-pellee and Mrs. Fisher; and this is the fund which is now being held by Mr. Brooks subject to the orders of the court to await the determination of the question as to the amount that Mrs. Fisher, as executrix, is due to appellee, as attorney.

That the court had the custody and control of the fund acquired in this suit is admitted. Having thus acquired the custody of the same, it necessarily follows that it had jurisdiction to determine when it should be disbursed and to whom it properly belonged.

Under the terms of the contract between petitioner and his client, the petitioner was only entitled to compensation out of any amount that he might recover in that suit, and it was by his skill and ability that the judgment in question was recovered. We think that the.court below very properly held that the appellee was entitled to be paid for his services out of the funds thus recovered.

Under the circumstances of this case, and in view of the findings of fact by the court below, we are of opinion that there is no error, and that the judgment complained of should be affirmed.

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Dissenting Opinion

DAYTON, District Judge

(dissenting). I very reluctantly dissent. I cannot reconcile myself to the conclusion that the court below had jurisdiction in the premises.

As I view this record, it is beyond all question that, by decree of July 18, 1901, the receiver’s sale of the waterworks company’s plant was confirmed, and -all persons claiming “any right, title, or interest in or lien upon the propertjr sold” were required to present their claims or demands within 60 days or be barred thereof; that by decree of September 3,1901, this sale was again confirmed, and the $75,000 purchase money was directed to be substituted for the property, and all rights in, and claims upon, the property were to be transferred and held against such proceeds of sale; that on September 30, 1901, B. J. Fisher, by petitioner Staples and A. L. Brooks, his attorneys, filed his answer claiming-his judgment to be a lien upon such fund prior to that of the bondholders by reason of its origin in tort and not in contract; that on March 24, 1902, decree was entered declaring the Fisher judgment and three others for this reason, in accord with a North Carolina statute, to be prior to the mortgage liens, and directing “that the receiver in this suit pay to B. J. Fisher or his attorneys of record” his judgment with its accrued interest; that by this decree and á subsequent one of January 9, 1907, the whole fund was directed to be disbursed by the receiver; that on March 15, 1907, the receiver filed his report showing all debts to have been paid and that a balance of $2,391.33 in his hands was due bondholders; that by decree of that day, declaring itself upon its face to be a final one, the receiver was directed to distribute this balance to the bondholders, and providing “that, unless exceptions are filed to the action of the receiver within 30 days next hereafter, he be discharged”; that no exceptions wei'e-filed within 30 days, and no reason whatever existed for retaining this cause, after the lapse of such 30 days, as all matters had been absolutely and finally disposed of, and the cause could have been so retained only by reason of the clerk’s inadvertence arid.failure to strike it from the docket; that on February 16; 1909, nearly two years after the entry of this decree finally- ending the cause, Staples filed his petition seeking to assert an attorney’s lien against the Fisher judgment that had been paid in full and without objection on his part to Brooks, his associate counsel, under decree entered nearly seven years before, and which, so far as Fisher was concerned, settled all his rights in the cause and in legal effect dismissed him therefrom. This petition sets up a private contract (wholly independent and’impertinent to any issue involved in the original controversy) between Staples, Fisher’s administratrix, and Brooks, whereby, it is alleged, it was agreed that Brooks, who received the Fisher money from the court’s receiver under the decree o f March 24, 1902, should hold a sufficient sum thereout as stakeholder until the amount due Staples for his services to Fisher might be ascertained and determined, and it is alleged that, to accomplish this, an arbitration was provided for between Staples and Fisher’s administratrix and actually had, the award having been made and, for defects, set aside by the state courts and further action under the agreement declined by Fisher’s administratrix.

The basis of the majority opinion seems to be that the learned judge below filed a statement of “finding of fact” from which it appears that he ascertained as facts, among other things, that an agreement existed between Fisher in his lifetime and Staples that the latter should be paid for his services only out of the amount of recovery, that the cause was still pending and the fund still under the jurisdiction of the court, which “findings of fact” are deemed conclusive of Staples’ right to recover.

With the utmost deference for the opinion of my Associates, it seems to me that this position is unsound for two reasons: First, because this “finding of fact,” setting forth as it does many things aliunde the record, is not warranted in practice in an equity case as determined by this court in Hyams v. Federal Coal & Coke Co., 82 C.C.A. 324" court="4th Cir." date_filed="1907-04-09" href="https://app.midpage.ai/document/hyams-v-federal-coal--coke-co-8763576?utm_source=webapp" opinion_id="8763576">82 C. C. A. 324, 152 Fed. 970, where it is held that evidence cannot be adduced orally in open court upon hearing unless the parties consent to do so, but must be taken and filed in form of depositions, and this, too, notwithstanding Equity Rule 67, May 15, 1893 (149 U. S. 793). In this case it is clearly shown that the defendant administratrix of Fisher was objecting to any such finding of facts by the court; she having filed plea denying in toto the court’s jurisdiction, and also having excepted on record to such finding. If, therefore, this rule of practice is to stand as fixed by this Hyams Case (the soundness of which I frankly say I have always doubted), the finding of facts from other sources than from the depositions filed is no longer warranted in equity as administered) in this circuit.

But, second, aside from all this, it cannot be questioned that the orders and decrees in an equity cause must speak for themselves, arid the interpretation of their scope and effect involves, not a question of fact, but is matter purely legal. The mere findings of the court below to the effect that the fund was still under its jurisdiction and the original cause was still pending can be held as nothing less and nothing more than its judicial construction of the decrees and orders entered in the cause, and we cannot avoid a review of this judicial act by calling it a “finding of fact” on its part. The true question is:. What was the legal effect of the decrees of March 24, 1902, declaring the Fisher judgment to be prior to the mortgage liens and directing its payment in full by the receiver to Fisher or his attorneys of record, and of March 15, 1907, ascertaining that the receiver had paid all the debts decreed, including, of course, this Fisher one, disbursing the balance in his hands to the stockholders, and directing his discharge unless exceptions be filed in thirty days? If these decrees or either of them were final ones, they could only be set aside, modified, or corrected, after the lapse of the terms when rendered, by bill of review or by appeal. Bronson v. Schulten, 104 U.S. 410" court="SCOTUS" date_filed="1882-01-18" href="https://app.midpage.ai/document/bronson-v-schulten-90470?utm_source=webapp" opinion_id="90470">104 U. S. 410, 26 L. Ed. 797; Klever v. Seawall, 12 C. C. A. 653, 65 F. 373" court="6th Cir." date_filed="1894-05-14" href="https://app.midpage.ai/document/klever-v-seawall-8851490?utm_source=webapp" opinion_id="8851490">65 Fed. 373.

What constitutes a final decree ? In the determination of this question it is to be remembered that the test of the finality of a decree is not whether the cause remains in fieri, in some respects, in the court of chancery, awaiting further proceedings necessary to entitle the parj ties to the full measure of the rights it has been declared they have, but whether* the decree which has been rendered ascertains and declares these rights. If these are ascertained and adjudged, the decree is final. Ex parte Norton, 108 U.S. 237" court="SCOTUS" date_filed="1883-04-09" href="https://app.midpage.ai/document/ex-parte-norton-90851?utm_source=webapp" opinion_id="90851">108 U. S. 237, 2 Sup. Ct. 490, 27 L. Ed. 709" court="SCOTUS" date_filed="1883-04-09" href="https://app.midpage.ai/document/ex-parte-norton-90851?utm_source=webapp" opinion_id="90851">27 L. Ed. 709; St. Louis, etc., R. R. Co. v. Southern Express Co., 108 U.S. 24" court="SCOTUS" date_filed="1883-01-29" href="https://app.midpage.ai/document/st-louis-iron-mountain--southern-railroad-v-southern-express-co-90821?utm_source=webapp" opinion_id="90821">108 U. S. 24, 2 Sup. Ct. 6, 27 L. Ed. 638" court="SCOTUS" date_filed="1883-01-29" href="https://app.midpage.ai/document/st-louis-iron-mountain--southern-railroad-v-southern-express-co-90821?utm_source=webapp" opinion_id="90821">27 L. Ed. 638; Grant v. Life Ins. Co., 106 U.S. 429" court="SCOTUS" date_filed="1882-12-18" href="https://app.midpage.ai/document/grant-v-phoenix-ins-co-90691?utm_source=webapp" opinion_id="90691">106 U. S. 429, 1 Sup. Ct. 414, 27 L. Ed. 237" court="SCOTUS" date_filed="1882-12-18" href="https://app.midpage.ai/document/grant-v-phoenix-ins-co-90691?utm_source=webapp" opinion_id="90691">27 L. Ed. 237; Forgay v. Conrad, 6 How. 201" court="SCOTUS" date_filed="1848-03-18" href="https://app.midpage.ai/document/forgay-v-conrad-86449?utm_source=webapp" opinion_id="86449">6 How. 201, 12 L. Ed. 404; Winthrop Iron Co. v. Meeker, 109 U.S. 180" court="SCOTUS" date_filed="1883-11-12" href="https://app.midpage.ai/document/winthrop-iron-co-v-meeker-90920?utm_source=webapp" opinion_id="90920">109 U. S. 180, 3 Sup. Ct. 111, 27 L. Ed. 898" court="SCOTUS" date_filed="1883-11-12" href="https://app.midpage.ai/document/winthrop-iron-co-v-meeker-90920?utm_source=webapp" opinion_id="90920">27 L. Ed. 898; Dainese v. Kendall, 119 U.S. 53" court="SCOTUS" date_filed="1886-11-15" href="https://app.midpage.ai/document/dainese-v-kendall-91729?utm_source=webapp" opinion_id="91729">119 U. S. 53, 7 Sup. Ct. 65, 30 L. Ed. 305" court="SCOTUS" date_filed="1886-11-15" href="https://app.midpage.ai/document/dainese-v-kendall-91729?utm_source=webapp" opinion_id="91729">30 L. Ed. 305; Lodge v. Twell, 135 U.S. 232" court="SCOTUS" date_filed="1890-04-28" href="https://app.midpage.ai/document/lodge-v-twell-92775?utm_source=webapp" opinion_id="92775">135 U. S. 232, 10 Sup. Ct. 745, 34 L. Ed. 153" court="SCOTUS" date_filed="1890-04-28" href="https://app.midpage.ai/document/lodge-v-twell-92775?utm_source=webapp" opinion_id="92775">34 L. Ed. 153.

And where a decree is made as to one of several defendants whose interests are not at all connected with that of the other defendants, such decree is final as to him,- although the cause may be still pending in the court as to the rest. Royall’s Adm’x v. Johnson, 1 Rand. (Va.) 421, 427; Bunnell v. Berlin Bridge Co., 66 Conn. 24" court="Conn." date_filed="1895-02-08" href="https://app.midpage.ai/document/bunnell-v-berlin-iron-bridge-co-6583450?utm_source=webapp" opinion_id="6583450">66 Conn. 24, 33 Atl. 533, 536; Klever v. Seawall, 12 C. C. A. 653, 65 F. 373" court="6th Cir." date_filed="1894-05-14" href="https://app.midpage.ai/document/klever-v-seawall-8851490?utm_source=webapp" opinion_id="8851490">65 Fed. 373; Hill v. Chicago & E. R. Co., 140 U.S. 52" court="SCOTUS" date_filed="1891-04-27" href="https://app.midpage.ai/document/hill-v-chicago--evanston-railroad-93061?utm_source=webapp" opinion_id="93061">140 U. S. 52, 11 Sup. Ct. 690, 35 L. Ed. 331" court="SCOTUS" date_filed="1891-04-27" href="https://app.midpage.ai/document/hill-v-chicago--evanston-railroad-93061?utm_source=webapp" opinion_id="93061">35 L. Ed. 331; Forgay v. Conrad, 6 How. 201" court="SCOTUS" date_filed="1848-03-18" href="https://app.midpage.ai/document/forgay-v-conrad-86449?utm_source=webapp" opinion_id="86449">6 How. 201, 12 L. Ed. 404.

Under these authorities, and many others that could be cited, how is it possible upon mere inspection of the decree of March 24, 1902, for us to hold otherwise than that it was final as to Fisher and his interests in the cause? It distinctly determines the question in controversy, to wit, his alleged right of priority over the bondholders, in his favor, and decrees that the receiver “pay to B. J. Fisher, or his attorneys of record, the sum of $25,000 with interest thereon from the 14th day of January, 1901,” thereby fixing the amount of his debt and directing immediate payment thereof without qualification or limitation. Nothing remained for the court to do thereafter. The execution of the decree only required the ministerial act of the receiver of paying over the money. Will it be contended for a moment «that the bondholders could have waited seven years and then appealed from this adjudication in Fisher’s favor because the cause was still on the docket and the receiver had not reported his payment over of the money or a portion of it finally to them?

But we must not forget that still another decree was entered based upon the receiver’s payment of this debt and others as directed which' ascertained the balance in his hands, directed its distribution to stockholders and his final discharge if exceptions were not filed. And this decree was entered one year and eleven months before Staples filed his petition. How can this decree, unappealed from, be held under the law as other than final as to all parties and all matters involved in the cause? Are we to hold that the mere default of the receiver to report his ministerial acts of disbursement of the small balance due to stockholders is sufficient for us to assert control over the Fisher fund, decreed near seven years before to be paid, and which Staples charges in his petition was actually paid on April 14, 1906, near three years before we are asked by this petition to do so? I cannot think so. If Staples had desired, it seems to me, to assert his attorney’s lien against the fund, he would have realized the necessity of doing so before the decree of March 24, 1902, at which time the court below could have ascertained its amount and directed its payment. He did not do this; but, on the contrary, his petition expressly shows that he entered into and relied upon a new contract constituting a new and different tribunal than this court — that is to say, an arbitration board — to ascertain and determine his rights.

Strictly speaking, no attorney’s lien attaches to any fund which is within the custody or control of the court; but it is the court’s right to award attorney’s fees out of the fund. But this power to award fees is impersonal, acting on the res alone, so, where the res is beyond the control of the court, the attorney must seek some other remedy. Fowler v. Lewis, 36 W. Va. 112" court="W. Va." date_filed="1892-02-12" href="https://app.midpage.ai/document/fowler-v-lewiss-admr-6594505?utm_source=webapp" opinion_id="6594505">36 W. Va. 112, 14 S. E. 447; Dubois’ Appeal, 38 Pa. 231" court="Pa." date_filed="1861-02-21" href="https://app.midpage.ai/document/duboiss-appeal-6231412?utm_source=webapp" opinion_id="6231412">38 Pa. 231, 80 Am. Dec. 478; Mordecai v. Devereux, 74 N.C. 673" court="N.C." date_filed="1876-01-05" href="https://app.midpage.ai/document/mordecai-v--devereux-3659359?utm_source=webapp" opinion_id="3659359">74 N. C. 673; U. S. v. Boyd (C. C.) 79 F. 858" court="None" date_filed="1896-04-05" href="https://app.midpage.ai/document/united-states-v-boyd-9307611?utm_source=webapp" opinion_id="9307611">79 Fed. 858; Penn’a Finance Co. v. Charleston, etc., R. Co. (C. C.) 46 F. 426" court="None" date_filed="1891-05-29" href="https://app.midpage.ai/document/finance-co-of-pennsylvania-v-charleston-c--c-r-8841792?utm_source=webapp" opinion_id="8841792">46 Fed. 426; Weigand v. Alliance Supply Co., 44 W. Va. 133" court="W. Va." date_filed="1897-11-27" href="https://app.midpage.ai/document/weigand-v-alliance-supply-co-6595709?utm_source=webapp" opinion_id="6595709">44 W. Va. 133, 28 S. E. 803; Tuttle v. Claflin (C. C.) 86 F. 964" court="None" date_filed="1898-03-29" href="https://app.midpage.ai/document/tuttle-v-claflin-8861763?utm_source=webapp" opinion_id="8861763">86 Fed. 964; Rumsey v. People’s R. Co., 84 Mo. App. 508" court="Mo. Ct. App." date_filed="1900-05-08" href="https://app.midpage.ai/document/rumsey-v-peoples-railway-co-6619705?utm_source=webapp" opinion_id="6619705">84 Mo. App. 508; Rawlings v. New Memphis Gaslight Co., 105 Tenn. 268" court="Tenn." date_filed="1900-06-26" href="https://app.midpage.ai/document/new-memphis-gaslight-co-8299663?utm_source=webapp" opinion_id="8299663">105 Tenn. 268, 60 S. W. 206, 80 Am. St. Rep. 880; 4 Cyc. 1013, and notes.

Here it seems to me that both the res is beyond the control of the court, with the full knowledge and assent of Staples (he having filed as attorney his client’s petition and having secured thereon the decree disbursing it), and that he has already sought another remedy, to wit, an independent contract between himself, his associate attorney Brooks, and his client’s personal representative. That the latter refuses to comply with this contract may be his misfortune and may disclose moral turpitude on her part, yet his right to enforce its performance would seem to be clear, provided he attempts to do so in a court of competent jurisdiction. That the court below was not such court is clear because the parties to such contract are all citizens of the same state. My conclusions therefore are:

First. That the court below had no jurisdiction to entertain this petition of Staples, as being filed in and as a part of the record in the original cause, because by the decree of March 24, 1902, all the rights of his client Fisher were finally determined and decreed, and by the decree of March 15, 1907, the cause was finally ended, and the fact that it was allowed to remain on the docket was due solely to the ministerial omission of the clerk in not striking it therefrom.

Second. That if this were not so the power of the court below to ascertain, fix, and decree any attorney’s fee claimed by Staples against the Fisher fund was limited and existed only so long as the fund remained under its control. Therefore when Staples suffered the decree of March 24, 1902, to be entered, directing payment in full to Fisher or to his attorneys without setting up his demand, subsequently entered-into the independent agreement with Fisher’s administratrix and Brooks his associate counsel as to the manner in which his fee should be ascertained and paid, and, in accord with this agreement, allowed Brooks to collect the fund, he waived all right to assert his claim in the original cause, and must be held to have elected to look to the enforcement of his rights to compensation to this new and independent contract. For the law touching such waiver, see 4 Cyc. 1011 and 1012, and notes 75, 76, and 77, and authorities therein cited.

Third. That the court below had no jurisdiction to entertain Staple’s petition as an independent and original proceeding to enforce the contract between himself, Brooks, and Fisher’s administratrix,, based upon the allegation that Fisher’s administratrix had violated it because the sole parties in such a controversy would be the three named, all of whom are citizens of North Carolina.

Fourth. That the right of Staples to appeal to a local court of competent -jurisdiction to enforce this agreement, if he can, is clear and undeniable.

The decree of the court below, therefore, in my judgment, ought to be reversed, and the petition dismissed solely for want of jurisdiction and without prejudice to any action Staples may see fit tp institute in any court of competent jurisdiction to enforce such contract.