257 F. 898 | 6th Cir. | 1919
John Brogan and one Rich, copartners as Brogan & Rich, had a contract with the Escanaba Traction
On March 16, 1915, Brogan & Rich, through Brogan, and with the participation of the attorneys who had represented them in securing the judgment, effected a settlement with the traction company, whereby the latter paid $12,500, of which $7,700 was paid by the traction company to the bank in payment of its claim, with interest thereon, the remaining $4,800 being paid by the traction company to Messrs. Martin, Martin & Martin, attorneys for Brogan & Rich. The judgment against the traction company was thereupon formally discharged, and under stipulation of- counsel the writ of error from this court was dismissed. No question of Brogan’s authority to represent Brogan & Rich in making this settlement is involved. Martin thereupon paid Ryall $400 for his services as attorney for Brogan & Rich in the suit against the traction company, paid Calnan & Riley $723.38 in settlement of a claim presented by them as members of the firm of John Brogan & Co., for work done and materials furnished under a subcontract for the construction work in question, retained for themselves $1,835, partly for services rendered and expenses incurred in the suit against the traction company and partly for services and expenses in connection with other suits in which John Brogan and others were interested, and tendered to Joseph Burns the remaining $1,831.72, which Burns refused to accept.
Joseph and Ellen Burns, Catherine Kane, and James Brogan thereupon brought the instant suit, to set aside the satisfaction of the judgment against the traction company and for an accounting with the sev
‘‘Did Joseph Burns authorize or consent to the settlement? Upon this cuestión the testimony is in sharp conflict. Burns not only denies that he gave his consent to the settlement, but asserts that he refused to consent thereto. His testimony is corroborated to some extent by that of John Brogan and one other witness and by the fact that he refused to sign a power of attorney authorizing Brogan to act for him in the settlement. On the other hand, the two attorneys who negotiated the settlement are equally positive in their statements that Burns authorized them to act for him. These attorneys are men of integrity and high standing in their profession. That they believed themselves to be clothed with full power to act cannot be doubted. Burns knew approximately the amount of money which could he obtained; he did not openly object to the settlement until after it had been made and he had discovered the small amount he was to receive. From the whole record it fairly appears that the attorneys were authorize'd by Burns t<3 settle the judgment for the sum of $12,500.”
The entire testimony in the case, except that of Rich, who did not attend the conference, was taken in open court. There was express testimony supporting the court’s conclusion; and this conclusion we are bound to accept, unless the evidence decidedly preponderates against it. Cleveland v. Chisholm (C. C. A. 6) 90 Fed. 431, 33 C. C. A. 157;
It seems reasonably clear that both Martin and Ryall understood Burns to give them the claimed authority. They say that both Brogan and Burns understood that $12,500 might prove to be all the traction company would pay; that Burns told them to “do the best you can, get $13,000 if you can, but do the best you can”; and that the settlement was made in reliance upon this authorization from Burns and a similar one from Brogan. While there is evidence of assertion by the attorneys that they would exercise the right to settle, even if the consent in question was not given, we think the testimony falls short of proving duress.
Burns was naturally disappointed with the amount left for him. The interest on the bank’s claim made it $200 greater than treated at the conference; but the trial court was clearly right in recognizing the' bank’s lien at $7,700 and as prior to plaintiffs’ liens. The claim of Cal-nan .<& Riley, however, was not mentioned at the conference. They had in fact no lien upon the judgment. Its payment is defended largely on the ground that the services it represented entered into the amount of the recovery against the traction company; and Martin, who represented Calnan & Riley also, had agreed to see to its payment. Brogan, however, had given what he asserts to be adequate security for the claim and was umyilling to have the deduction made. The services and disbursements of Martin’s firm, for which he retained $1,835.00, included items amounting to several hundred dollars rendered in other matters, for which no lien could be claimed. The right to retain or disburse these items was open to controversy. But the traction company, having in good faith paid the money to Martin, under authority therefor by Joseph Burns, was not liable to him for Martin’s claimed misapplication in part; and the proper' course was taken in not passing upon those items, and in making the award to Burns without prejudice to future recovery on account of them.
2. The Traction Company’s Appeal. At the date of the decree below the balance of the Brogan & Rich judgment against the traction company, above the $12,500 paid on the compromise, was $4,547.-97. This amount was ordered paid to Ellen Burns, Catherine Kane, and James Brogan, the face of whose claims aggregated $9,000, in the order of priority given by the respective assignments.
(a) The contention that these appellees consented to or authorized the settlement needs little attention. On this subject Judge Sessions said:
‘'The other plaintiffs [those other than Joseph Burns] not only were not represented and did not participate in the negotiations, but positively refused to appoint an agent to represent them or consent to the settlement.”
The record' so amply supports this conclusion as to make discussion or statement of evidence unnecessary.
(b) The traction company, however, urges that the assignment, being merely by way of security and-not absolute, being not of the entire claim, but only of part thereof, and the control of the claim being left with the assignor, the transaction amounted to' a splitting up of the claim and rendered the assignments unenforceable against the traction company, except so far as accepted by it. In a fair sense, the record indicates a practical, although not a formal, acceptance by the traction company of the assignments. The whole theory upon which its defense below was rested recognized that the assignments were valid and binding upon the traction company. Its answer admits notice of the assignments and the receipt of copies of the same, and alleged “that in making the settlement” it “relied expressly upon the terms and conditions of said assignments thus served upon” it.
The real contention in this respect is that each of the four plaintiffs authorized the attorneys for Brogan & Rich to make the settlement, but that, even if Catherine Kane and James Brogan did not give the authority, Joseph and Ellen Burns did, and that the traction company was protected by that consent, inasmuch as the claims of the two Burns were more than enough to exhaust the remnant of the judgment. The traction company’s manager, who made the settlement, testified:
“I knew of these assignments before I went out. I knew, because they were served on me, sent by mail to me, copies of each assignment.”
He also said he had read them, and knew they were expressly “subject one to the other after Joseph Burns,” and again:
“I relied upon the statements in the assignments in making the release. I would not have made this settlement in the way we did, if it had not been that those assignments were made subject to Joseph Burns.”
The learned counsel who represented the traction company on the hearing below stated, in answer to the court’s question, that “we do not
■‘The release oí the security did not constitute payment and discharge of the debt beyond the amount actually paid and applied thereon. The most that' can be claimed for Joseph Burns’ assent to the settlement is that, in consideration of the payment to him of whatever sum might remain from fhe 812,500 after the satisfaction of all valid prior claims or liens upon the fund, he released and discharged his lien upon the judgment. * * * Burns was the antagonist of the traction company, and, in agreeing to the settlement, was acting solely in the interest of himself and the other assignees. He agreed to and did release and surrender his security and nothing else. The traction company obtained from him such release and nothing else."
If Burns saw fit to release his security on receiving less than due him, there is, in our judgment, no more inequity as against the traction company in giving the subsequent security holders the benefit of the remaining security than if Burns’ debt had been decreased by payment directly through Brogan & Rich, instead of indirectly through the traction company. The whole difficulty in this respect has grown out of the fact that the traction company mistakenly accepted the authority of Martin to act for both Joseph and Ellen Burns, coupled with the assumption that the other plaintiffs had no concern with what was done.
We are the better satisfied with this conclusion from the facts (not, however, forming its basis) that, although the traction company is protected by the form of the assignments to the extent of what was ac
While by the decree below the three appellees will normally receive through the traction company in the aggregate (one at least individually) more than they would had the judgment against Brogan & Rich been originally paid in full, yet not only is this result at the expense of Burns, and not of the traction company, but the remnants of their respective debts against Brogan & Rich are correspondingly decreased.
We have carefully considered-all the criticisms made to the decree below, although we have not discussed them all. We find no error in the decree, and it is accordingly affirmed.