Johnson v. Missouri Pacific Railroad
139 Ark. 507
Ark.
1919
Check Treatment

Lead Opinion

HART, J.,

(after stating the facts). Tt appears from the record that the administrator of the estate of John Fulson, deceased, brought suit against the railroad company for negligently causing the death of said John H. Fulson, while in its employ as a locomotive engineer. Jo Johnson was his attorney under a contract executed by himself and the administrator. The administrator. in succession discharged Johnson and dismissed the action brought by him. The administrator then instituted a friendly suit against the railroad company for the purpose of effecting a compromise with it and, pursuant to their agreement, a judgment was rendered against the railroad company for $10,000. Johnson claims that, the suit having been settled without his consent, he is, under our statute, entitled to recover his compensation as an attorney from the railroad company as declared in St. L., I. M. & S. R. Co. v. Hays & Ward, 128 Ark. 471.

The contract under which he seeks to recover is set out in our statement of facts and need not be repeated here.'

(1) The circuit court was of the opinion that the contract sued on was not ambiguous and should be construed by the court. It was held that the contract on its face showed that the administrator was entitled to recover $10,000 before the attorney was entitled to recover anything; and that, the administrator, having compromised with, the railroad company for $10,000 by recovering an agreed judgment rendered against it for that amount, as he had a right to do, Johnson was not entitled to recover anything against the railroad company. This holding was in the application of the well known rule that parol testimony is not admissible to contradict, vary, add to, or take from the terms of a written contract. This brings us to a consideration of the question of whether or not the language of the contract rendered it ambiguous or uncertain in its terms; for it is well settled that when the written instrument when applied to its subject-matter shows a latent ambiguity parol testimony of the facts and circumstances surrounding its execution may be given to clear away its uncertainty.

(2) This doctrine has been repeatedly announced by this court and several of our earlier decisions on the subject are cited in the late case of Brown & Hackney, Incorporated v. Daubs, 139 Ark. 53. Indeed the rule is well settled in the text books and in the adjudicated cases elsewhere. The only difficulty is in its application to the facts of a given case. It is not contemplated by this rule that a written contract can be added to or subtracted from by evidence of surrounding circumstances. 'But as said in United Iron Works v. Outer Harbor Dock & Wharf Company, 168 Cal. 81, this rule of evidence is- invoked and employed only in cases where upon the face of the contract itself there is doubt and the evidence is used to dispel that doubt, not by showing that the parties meant something other than what they said, but by showing what they mean by what they said.

(3) In the application of this rule to the case at bar, the majority of the court is of the opinion that when the contract, which is the basis of this lawsuit, is read and considered from its four corners, it is uncertain whether the words, “My part to be not less than $10,000” in the first part of paragraph seven refer exclusively to the compromise to be attempted and effected before suit was to be instituted as contended by counsel for Johnson, or whether they mean that no fee was to be received by Johnson unless a recovery in excess of $10,000 was had against the railroad company. It will be observed that under paragraph five of the contract, it is provided that the attorney is to have as his compensation one-half of the amount recovered, in the event of a recovery. When the provisions of this and other paragraphs are read in the light of each other and paragraph seven, it is uncertain whether the words “My part to be not less than $10,000” in the beginning of paragraph seven refer to the compromise provided for in that paragraph, or mean that in no event, regardless of whether a compromise was effected, should the attorney be allowed any compensation unless the amount recovered be more than $10,-000. It is conceded by counsel for both parties that the latter part of paragraph seven was inserted in the contract for the purpose of giving the administrator four or five days within which he might effect a compromise with the railroad company before suit was instituted under the contract. The words, ‘ ‘ My part to be not less than $10,-000,” are in the beginning of this paragraph and they may or may not refer exclusively to the compromise provided for in this section.

(4) It appears from the records that these words are in the handwriting of the attorney and that the succeeding words of the paragraph are in the handwriting of the administrator, while the remainder of the contract is on a printed form. Hence it is insisted that in case of conflict, the written part of the contract should control that part which is in print. This does not solve the doubt. The uncertainty is whether the words in question refer exclusively to the compromise provided for in the paragraph in which they are written, or are to be considered a limitation of the right of the attorney to compensation under paragraph five. Therefore, a majority of the court is of the opinion that the trial court erred in holding that the contract was not ambiguous or uncertain, and in not admitting parol testimony of conversations and negotiations had between the parties at the time of the execution of the writing which served to eonstrue the latent ambiguity in the contract in tbe respects pointed out above.

In Davis v. Webber, 66 Ark. 190, tbe court held that a stipulation in a contract for an attorney’s fee for prosecuting a suit that the client shall not settle the suit without the attorney’s consent is void as against public policy ; and that if such stipulation is not severable from the rest of the contract, but is an inducement for entering into it, the entire contract is void. Counsel for the railroad company invoke this rule to defeat the attorney in his right to recover in this case. We do not think that rule has any application to the contract sued on.

(5) The particular parts of the contract relied upon to support counsel’s contention are paragraphs four and six. In the former, the attorney is given the power to conduct, manage and settle the case by suit or otherwise, with the right to employ assistant counsel and expert witnesses. In the latter paragraph, it is reiterated that the client is not in any way to interrupt the attorney’s management of the case. The clauses in question are not fairly susceptible to the construction that they prohibit the administrator from making a settlement without the consent of Johnson. Indeed, it appears from the whole contract that such was not the case. The contract is in the record. It shows on its face that there was a printed clause which had for its object the prohibition of the administrator from making a settlement without the attorney’s consent, and this clause was marked by the parties before the contract was signed.

(6) It is next insisted that the contract is champertous and void because it contains a provision binding the attorney to pay the costs of the litigation. On this point it may be said that under the terms of the contract the attorney was bound to advance the costs of the suit, and in the event of recovery, such costs were to be deducted from the amount recovered, and the attorney was to get one-half of the remainder as his fee; and in the event of a failure to recover in this action, the attorney agreed to lose the money he had advanced for expenses of litigation and to charge no fee.

Authorities which adhere rigidly to the common law with respect to the doctrine of champerty and maintenance are cited by counsel in support of their contention. We do not deem it necessary to cite or review these cases; for this court has held that the common law in regard to the offense of champerty has never prevailed in this State. In the early case of Lytle v. State, 17 Ark. 608, hi a syllabus prepared by Judge Scott, who also delivered the opinion, it is said that an attorney at law may purchase his client’s interest in the subject-matter of the suit, in consideration of services rendered and to be rendered in the prosecution of the suit, and become bound for the costs in the prosecution of his own and client’s rights, without the violation of any law of champerty in this State. In the opinion, the learned Justice referred to the fact that under the English law there was a total incapacity in counsel to make any contract whatever with his client for his professional services, while in this State the right of making contracts is a high personal privilege of the citizen, which could be claiméd by lawyers as well as by any other classes of citizens.

In the later case of Davis v. Webber, 66 Ark. 190, the court again held that a contract between an attorney and client, allowing the former a contingent interest in the subject-matter of litigation as compensation for his professional services, is not void for champerty, though the courts will scrutinize such a contract closely to see that the attorney has» taken no unjust or unfair advantage of his client. In Davis v. Webber, supra, the court referred to the fact that in Lytle v. State, supra, the court had traced the origin and reviewed the history, of the law of maintenance and champerty as enacted into statutes and declared by the courts of England. Continuing, the court said: “The conclusion reached was that such 1-aws were not applicable to contracts between attorney and client providing remuneration to the attorney for services rendered his client in conducting litigation. The English rule avoiding such contracts upon the ground of maintenance and champerty was repudiated, as repugnant to our Constitution and statutes, and the court showed and anight have added, that such a rule was contrary to the genius of our institutions.”

In discussing the question in 11 C. J., pp. 242 and 243, it is said that in the States in which the common law doctrine of champerty and maintenance has not been adopted, it is nothing contrary to law, morals or public policy in a contract by an attorney to recover land or other property for an interest in it, even though he also agrees to pay the costs and expenses; and Lytle v. State, 17 Ark. 608, is the first case cited in support of the text.

There was an early statute passed in the State of Michigan directed against champerty and maintenance. The statute was in reality but an affirmance of the common law. Subsequently a statute was passed providing that the compensation of attorneys might be fixed by agreement between them and their clients and further providing that all laws in conflict with it should be repealed. It was held that this statute repealed the earlier one prohibiting champerty and maintenance, and that under it, a contract between an attorney and his client that the attorney should pay all costs incurred on account of bringing an action, in case he failed to recover anything, was valid. Wildey v. Crane, 63 Mich. 720, 30 N. W. 327, and Lehman v. Detroit etc. R. Co. (Mich.), 147 N. W. 628.

In Brown v. Bigne (Ore.), 27 Pac. 11, 28 A. S. R. 752, 14 L. R. A. 745, it was held "that the doctrine of champerty is directed against speculation in lawsuits and to repress the gambling propensity by buying up doubtful claims; that it is not and never was intended to prevent persons from charging the subject-matter of the suit in order to obtain the means of prosecuting it. It has been said that such statutes have been passed so that the'doors of justice shall not be shut to the poor, who may be oppressed, or to those who have no other means of prosecuting their suits except the subject-matter of them.

Our Legislature lias passed an act providing that the compensation of an attorney is governed by agreement and also providing for an attorney’s lien and its enforcement. Acts 1909, p. 892. Under this statute and applying the principles of law above announced, a majority of the court is of the opinion that contracts like the one under consideration are valid and binding obligations where they are entered into in good faith. In the case at bar, there is nothing in the contract itself and no extrinsic facts in the record tending to impeach the integrity of the contract.

From the views expressed, it follows that the court erred in not receiving parol evidence as to the meaning of the contract as indicated in the opinion; and in not submitting this question to the jury.

If the jury should find that Johnson is entitled to recover, he will be only entitled to recover one-half of the amount recovered by the administrator, after deducting the expenses and costs as provided in paragraph five of the contract. See St. L., I. M. & S. R. Co. v. Kirtley & Gulley, 120 Ark. 389.

For the error indicated, the judgment must be reversed and the cause will be remanded for a new trial.





Dissenting Opinion

McCULLOCH, C. J.,

(dissenting). I fail to discover any ambiguity in the words, “my part to be not less than ten thousand dollars, ’ ’ or in the relation of that language to the other parts of the contract. If it means anything at all, it constitutes a modification of the terms specified in the printed portion of the contract and means that in the event of recovery the- plaintiff’s part of that recovery is to be as much as $10,000, and that the fee, if any, must come out of a recovery in excess of that amount. The words cannot, it seems clear to me, have any reference at all to the compromise clause, as that part of the contract which relates to the compromise, is complete without the words quoted above, for it is distinctly provided therein that the plaintiff should have the privilege of making a compromise settlement up to $25,000, and that in that event the attorney should receive no fee. The contract having unequivocally given the plaintiff the right to compromise up to $25,000 without fee to the attorney, it was entirely superfluous to add the words specifying that the plaintiff was to receive $10,000 for his part, if they were intended to apply to the compromise before suit. The fact that there is ambiguity in that part of the paragraph which refers to the “four or five days notice” does not afford grounds for the admission of testimony with respect to the unambiguous portion of the sentence. Brown & Hackney v. Daubs, 139 Ark. 53.

But if it be conceded that there is ambiguity sufficient to let in proof, of the intention of the parties, Mr. Johnson himself testified that the words “my part to be not less than ten thousand dollars” had no reference to the compromise, but that it applied to the contract after the effort to compromise had been exhausted, and his own testimony defeats his right to recover a fee in the case. Here is his testimony, literally, on that subject:

“Q. That had no reference to his settlement of the case, the part Mr. Wall wrote in the contract, and if he could get a settlement up to $25,000, he was to have it all and you was to get nothing?

“A. Yes, if he found he was in error in his then conviction that he could not get them above $5,000, but, if he could get them above that figure, even up to $25,000, and an offer that the family would accept, and he settled it and turned me loose, I was not to get any fee at all.

“Q. If he made settlement for any sum up to $25,-000, he was to get the money, and if he failed and you took it up, he was to have $10,000 before you got any fee?

“A. That special $10,000 provision was not a provision or a part of the contract at all, except on the condition that when he exhausted his efforts of settlement then he would not disturb my management of the case. ’ ’

Now, if the contract means what it seems to me that it means, and what Mr. Johnson himself says it was intended to mean, i. e., that the attorney was not to get a fee in any event except out of a recovery in excess of $10,000, then it follows that there can be no recovery in this case, for the reason that the plaintiff had the right, independently of any contract to control his own litigation and to compromise for any sum he saw fit to accept (St. Louis, Iron Mountain & Southern Railway Company v. Blaylock, 117 Ark. 504), and as the attorney agreed in the contract that he should not receive a fee except in the event of a recovery of more than $10,000, he is bound by that contract and cannot assert a lien against the railway company which is in conflict with the terms of his own contract with his client.

If the language quoted above be construed to have reference to a compromise and to operate as a limitation as to the amount for which the' client could settle his own case, then that interpretation of the contract defeats its validity under the law announced by this court in the case of Davis v. Webber, 66 Ark. 190.





Rehearing

HART, J.,

(on rehearing). The majority opinion is based on a holding by the circuit court that the contract was not ambiguous and that it showed on its face that the administrator was entitled to recover $10,000 before the attorney could recover anything.

This court held, that upon the face of the contract itself, there was a doubt as to its meaning in the manner pointed out in the opinion that parol evidence might be used to dispel that doubt. In other words, the court held that it was uncertain whether the words, “My part to be not less than $10,000,” in the first part of paragraph seven refers exclusively to the compromise to be attempted and effected by the administrator in three or four days before the suit was to be brought, or whether they mean that no fee was to be received by the attorney unless a recovery in excess of $10,000 was had against the railroad company, and that, therefore, the trial court erred in holding to the contrary.

It is now contended by counsel for the appellee that the trial court heard oral testimony and that its finding was based thereon. While the trial court did hear the testimony, it reserved a ruling on its competency and at the conclusion of the hearing based its finding for appellee on the language of the contract itself, holding that it was not ambiguous.

Counsel insist that the statement made by the court and the judgment rendered show the correctness of his present contention. The concluding part of the statement sums up the conclusion of the trial court as follows :

“The only question, as I see it, for me to determine is whether or not the attorneys are entitled to recover on the contract entered into. If I can place any construction on or understand the English language, it means that there must be a recovery of more than $10,000 before the attorneys would be entitled to anything. The condition in there that ‘I, the administrator, must receive not less than $10,000,’ Mr. Johnson says that means the administrator must receive $10,000. * * * There is no question but what, if they had compromised for any amount of money over and above $10,000, the attorneys would be entitled under the terms of the contract to recover in accordance with the surplus.”

The judgment of the court is as follows: “And thereupon, the cause coming to be heard on the petition of the interveners and the response thereto, and the interveners introduced their testimony and rested, the defendants introduced their testimony and rested, and thereupon the court, having heard the argument of counsel and being fully advised in the premises, doth find that the contract for attorney’s fee as pleaded and introduced herein is for a fee of fifty per cent, of any amount received or paid in excess of the sum of $10,000, and that, the settlement being for the sum of $10,000 only, that under that contract the petitioners are not entitled to recover thereon.”

We think that a careful reading of the statement of the court shows that it based its finding on the contract itself, and that it so states in plain terms. This view is strengthened by the language used in. the judgment. After reciting that testimony was introduced, the language is that the court doth find, “that the contract for attorney’s fee as pleaded and introduced herein is a fee of 50 per cent, of any amount received in excess of $10,000.” The words, “contract as pleaded and introduced herein,” show that the court based its findings upon the language of the contract itself and did not consider the oral'testimony introduced.

Counsel for appellee in his motion on rehearing also contends that the judgment should be affirmed because the evidence of Johnson himself shows that he is not entitled to recover. He has set out certain excerpts from Johnson’s testimony which are susceptible of that construction; but we do not think his testimony considered as a whole is only susceptible of the construction placed upon it by counsel for appellee.

Mr. Johnson was examined and cross-examined at great length, and, as is frequently the case where lawyers are personally interested, his .testimony .is a jumble of facts and argument and for that reason and on account of its length it is impractical to set it out in full. The majority of the court think, however, that when all of it is read and considered together it might be legitimately inferred from it that the words in the beginning of paragraph seven quoted above, had no application except in case of a compromise before suit was brought and that, after suit was commenced, paragraph seven became a nullity and paragraph five only was operative in regard to attorney’s fees. It is evident that the trial court so understood Johnson’s testimony; fox1, if the presiding judge had uxxderstood it only to mean what counsel for appellee xxow contends it to mean, he would have held that Johnson could not recover under his own testimony coxxsidered in its most favorable light to himself.

Moreover, even if his testimony as disclosed by the record is only susceptible of the coxxstruction placed upon it by counsel for appellee, it does not follow that the judgment must be affirmed, if we are correct in holding that the judgment of the court below was based solely upon the language of the contract itself.

In St. Louis, Iron Mountain & Southern Ry. Co. v. Coleman, 97 Ark. 438, the judgment was reversed because the court was of the opinion that the circuit court erred in holding that the deceased was guilty of contributory negligence as a matter of law and the direction was that the cause should be dismissed. On rehearing the judgment was jnodified so as to remand the case for a new trial because counsel for plaintiff made a showing that they had reason to believe that they could adduce testimony on a new trial which would carry the case to the jury on the question of contributory negligence.

Johnson, in his original brief, made the same contention he now makes as to the effect of his testimony, and counsel for appellee did not challenge the correctness of his contention in his original brief. Hence this state of the record may be taken as a showing by Johnson in good faith that he can make the proof indicated on a new trial of the case.

It follows that the motion for rehearing will be overruled.