Parish v. McGowan

39 App. D.C. 184 | D.C. Cir. | 1912

Mr. Chief Justice Shepard

delivered the opinion of the Court:

This is not the case of a creditors’ bill to enforce a lien created by a decree of court as was Price v. Forest, 173 U. S. 410, 43 L. ed. 749, 19 Sup. Ct. Rep. 434. It is an original suit on written contracts with attorneys to prosecute a certain claim against the United States to final determination, for stipulated fees equal to 20 per cent of the amount that might be collected, and with an express lien to secure the payment of the same. Setting out the contracts, the bill alleges the prosecution of the claim before Congress to the passage of a relieving act; the diligent, but unsuccessful attempt to obtain payment under said act from the Secretary of the Treasury; and a readiness and willingness to continue the performance of the contract until prevented by the wrongful acts of the said claimant, and of his executrix, who succeeded to the legal control of the claim after the death of the claimant, December 26, 1904. Upon the allegations of the insolvency of the executrix, and her intention to remove the funds from the jurisdiction of the court, an injunction to prevent her receiving the fund was obtained. It cannot be controverted that contracts like those set out in the bill—in so far at all events as they attempt to assign, or create a lien upon, a claim against the United States,—are prohibited by sec. 3477, Rev. Stat., U. S. Comp. Stat. 1901, p. 2320, and thereby made absolutely void. Nutt v. Knut, 200 U. S. 12-21; 50 L. ed. 348—353, 26 Sup. Ct. Rep. 216; National Bank v. Downie, 218 U. S. 345, 54 L. ed. 1065, 31 Sup. Ct. Rep. 89, 20 Ann. Cas. 1116. It was said, however, in Nutt v. Knut, supra, that the provision of a contract evidencing an agreement to pay the attorney a fixed portion of the sum that might be recovered through his services might stand alone notwithstanding the illegality of the provision for the lien; such provision giving the attorney no interest in the claim itself and creating no lien thereon. That ease was prosecuted to judgment in a State court. As stated in the opinion of the Supreme Court of the United States—on error to the State court—“No lien is asserted by the plaintiff in his pleadings. While the original petition asserted his right to be paid in accordance with the contract, the plaintiff claimed, if he could not be paid under the contract, that he be compensated according to the reasonable value of his services.” The plaintiff had prosecuted the claim to final allowance and appropriation for its payment. The question of jurisdiction in equity to entertain the case did not arise; and apparently could not have arisen under the procedure of the State. No such amendment was made in the case at bar. The complainants sued upon the contract as a whole, claiming the fee as fixed thereby, as well as the lien. Had there been an amendment abandoning the lien and relying on the quantum meruit, solely, the equity court would have been without jurisdiction.

It is contended that the allegations of the bill are sufficient to show that complainants had an attorneys’ lien upon the fund finally adjudged to the claimants’ executrix, which could be enforced by the equity court. The bill alleges that complainants rendered the services that procured the act of Congress, and also made diligent efforts to secure payment under that act by the Secretary to the time of his final refusal; that they were ready and willing to continue the prosecution of the claim to final determination, and could have done so had not the claimant during the remainder of his life, and 'his executrix thereafter, refused to continue their services. Assuming for the present that these facts were proved as alleged, the fact remains that after dispensing with their services, the executrix employed other attorneys, who instituted and prosecuted the mandamus proceeding which resulted in the final judgment, under a special contract for a liberal fee. The executrix had the right, nevertheless, to dispense with complainants services at any stage of the proceeding and retain other counsel (Re Paschal [Texas v. White] 10 Wall. 483, 19 L. ed. 992); though she could not thereby defeat their right to compensation for the reasonable value of their services before performed. Contracts for contingent fees are not illegal, and an attorney prosecuting a cause under such contract is entitled to a lien upon a judgment recovered by him therein as well as upon collections made by him thereunder; but the lien does not extend to a judgment recovered by other independent attorneys without his co-operation. In Re Wilson, 12 Fed. 235—237. In that case it was held in accordance with an able opinion of Judge Brown that an attorney had no lien upon a judgment in one cause for services rendered in another and related one. His conclusion was thus stated: “After examination of the numerous authorities on this subject, English and American, I am satisfied, * * * that an attorney has no general lien upon an uncollected judgment for services in other suits, but only a particular lien for his costs and compensation in that particular cause.” See also Massachusetts & S. Constr. Co. v. Gill's Creek Twp. 48 Fed. 145-147; Foster v. Danforth, 59 Fed. 750, 751; Adams v. Kehlor Mill. Co. 38 Fed. 281, 282. In the case last cited a judgment had been obtained in a State court, and the judgment on which the lien was claimed had been recovered in a suit to enforce the former judgment. The facts presented a stronger case than the one at har. In the present case the Secretary had refused to perform the act of Congress, and without his favorable action the claim was uncollectable. Nearly two years afterwards independent counsel instituted the litigation which resulted in the judgment compelling payment. There was, therefore, no attorneys’ lien on which to found jurisdiction in equity.

The allegation of the insolvency of the executrix, and her intention to remove the fund from the jurisdiction upon its receipt, furnish no foundation for a creditors’ bill to enforce a simple contract. They were pertinent allegations in the bill for the purpose of obtaining the injunction prayed. It was not a creditors’ bill founded on a simple contract, invoking the interposition of equity under extraordinary conditions to prevent certain and irreparable injury, so as to bring it within some of the exceptional cases in which a creditors’ bill has been entertained upon a simple contract unreduced to judgment. Had such been its character and avowed purpose, it would seem that the complainants were not without adequate remedy in another branch of the supreme court of the District. The will of <1. W. Parish had been probated in the supreme court of the District holding a special term as a probate court, and was still in administration. The sole power of the executrix to demand the payment and to institute the action to enforce it was derived from the letters testamentary granted to her on the probate of the will. The complainants could have applied for relief to that court which, under the ample power conferred by the statute, could have required the executrix to give additional and sufficient bond for the protection of creditors, or else have revoked her letters and thus prevented her collection of the judgment. D. C. Code, secs. 263—296 [31 Stat. at L. 1232—1236, chap. 854].

Ignoring the claim of the void contract lien, there was nothing on the face of the bill to confer jurisdiction in equity. Hence the court might, in the exercise of its discretion and of its own motion, have dismissed the bill for want of jurisdiction, and should have sustained an objection thereto if presented. Were there nothing else in the case, this court would in the exercise of its discretion under such conditions direct the dismissal of the bill.

It remains, therefore, to consider the effect claimed for the interlocutory decree entered by consent of the parties. The decree was entered before the answer was filed, and no objection was raised therein to the jurisdiction. There is no question but that one consenting to a final judgment or decree in a court having jurisdiction of the subject-matter will not be heard to complain of error therein on appeal or writ of error. United States v. Babbitt, 104 U. S. 767, 26 L. ed. 921; Nashville, C. & St. L. R. Co. v. United States, 113 U. S. 261-266, 28 L. ed. 971-973, 5 Sup. Ct. Rep. 460; Ganss v. Goldenberg, post, 606. An interlocutory decree hy consent may also be binding, and work an estoppel in cases where it is expressly made for the particular purpose and to procure some benefit. Re Metropolitan R. Receivership (Re Reisenberg) 208 U. S. 90-110, 52 L. ed. 403-412, 28 Sup. Ct. Rep. 219. But in that case, which was one for a receivership, the defendant for its own advantage consented to the appointment on a bill filed by simple contract creditors, and did not seek to avoid the consequences of its consent by which others were effected. The language of the court was elicited on a proceeding by one who attempted to intervene in the cause and had been refused leave.

The restraining order in this case stopped the payment of the entire fund of $181,358.95 in the hands of the Treasurer of the United States. It may be readily inferred that the ¡.consent to the decree was given to retain a sum sufficient to safely cover the full claim of complainants, namely $41,000, in order that the remainder of the fund might be withdrawn at once from the Treasury. It is true that the defendant profited by the decree modifying the restraining order and releasing the remainder. But that would seem no more than she was entitled to demand of the court in any event; for even if the complainants’ lien had been valid and enforceable, they could not insist upon retaining more, subject to the process of the court, than enough to satisfy their lien and the costs of suit. The suit was upon the contract, as we have seen, and to enforce the lien created thereby. It was upon that contract, and lien that the equity jurisdiction was invoked and assumed; and it was upon the assumption of that jurisdiction that the interlocutory decree was founded.

The answer of the defendant, filed after the entry of the decree, shows that she regarded the suit as based solely upon the entire contract. She attacked the contract as illegal and void, and submitted that issue for determination. She also sought to avoid it by alleging the failure of complainants to prosecute the claim to final determination; and also charged its voluntary abandonment. She presented no objection to the jurisdiction, and none was necessary under the allegations of the bill, as the case presented turned upon the validity of the contract and would be disposed of by its determination. Certain recitals of the decree, supplemented by the answer, would seem, however, to amount to a waiver of the question of jurisdiction to the extent that complainants might claim the reasonable value of their services, and such waiver would, under the circumstances, justify an appellate court in exercising its discretion in retaining the cause for hearing on its merits. Reynes v. Dumont, 130 U. S. 354—395, 32 L. ed. 934—945, 9 Sup. Ct. Rep. 486; Kilbourn v. Sunderland, 130 U. S. 505-514, 32 L. ed. 1005-1008, 9 Sup. Ct. Rep. 594; Brown, B. & Co. v. Lake Superior Iron Co. 134 U. S. 530—536, 33 L. ed. 1021-1025, 10 Sup. Ct. Rep. 604; Hollins v. Brierfield Coal & I. Co. 150 U. S. 371-381, 37 L. ed. 1113-1115, 14 Sup. Ct. Rep. 127; In Re Metropolitan Receivership (Re Reisenberg) 208 U. S. 90—110, 52 L. ed. 403—412, 28 Sup. Ct. Rep. 219; Tyler v. Moses, 13 App. D. C. 428-443. The recital of the decree is that the $41,000 shall be held subject to the further order of the court, “subject to the determination by this court 'in this cause whether any amount, and, if so, what amount, is justly due the complainants or either of them for professional services rendered by them or either of them for and in respect of the matters described in the bill of complaint.” The answer reciting the above proceeds as follows: “This defendant is advised, and, being so advised, charges, that the utmost which either complainant could claim for legal services would depend upon their reasonable value; and that their reasonable value would depend upon what legal services, if any, have been rendered. In directing attention to the inhibition interposed by said sec. 3477 to the relief prayed for in the bill, viz., that the court decree the said Jonas TI. McGowan ‘has an equitable lien on said finding and award and on the moneys payable, and that may be paid thereunder to the amount and in respect of $18,135.89/ the object of defendant is not to secure the transfer to another forum of any valid contention, which it is in the power of complainants to make under their alleged contracts, but simply to exhibit, as her duty requires, the limitations imposed by law thereon, in whatever forum the same may be adjudicated.”

Under the views expressed, this decree and pleading furnished a ground for amending the bill, converting the suit into one on a quantum meruit. No amendment was had, and the cause was heard upon the theory that the allegations of the original bill were sufficient for the purpose. While evidence was taken at length to show the character of the services rendered to the time of the rejection of the claim of the Secretary, there was no evidence of their reasonable pecuniary value. The sole reliance for proof is the express stipulation of the contract. The admissibility and sufficiency of this is rested on the opinion of the court in Nutt v. Knut, 200 U. S. 12-21, 50 L. ed. 348-353, 26 Sup. Ct. Rep. 216. After holding that the contract for the lien was void, but that the agreement for the fee could nevertheless be enforced, it was there said: “Such an agreement did not give the attorney any interest- of share in the claim itself, nor any interest in the particular money paid over to the claimant by the government. It only established an agreed basis for any settlement that might be made, after the allowance and payment of the claim, as to the attorneys compensation.” The court was not then considering the evidence on which the demand was submitted in the court below. There is, moreover, an essential difference between the two cases. In that it appeared that the plaintiff had prosecuted the claim with diligence to final and successful determination. All that remained was to receive the money appropriated. The labor of the attorney was completely performed, and nothing remained for him to do but to demand and receive his share of the second and final payment made to his client. Assuming that complainants were superseded in this case, without cause, by the defendant, yet the fact remains that the claim was still denied, and was not put in a situation for collection until some years thereafter. It was through the intelligent efforts and arduous labors of other attorneys that the action instituted by them resulted in forcing the final payment of the claim. As we have seen, a party may change his attorney at any time before the litigation shall have ended, remaining liable, of course, to the superseded attorney for the reasonable value of the services already performed by him. Re Paschal (Texas v. White) 10 Wall. 483—496, 19 L. ed. 992—997. But it does not follow that the terms of the original contract furnished the measure of the reasonable value of the services partly performed. Such a doctrine would throw upon the client the burden of showing that the services performed were not of the actual value of the contract stipulation. It has no logical or just foundation. These conclusions would require the decree to be reversed and the cause remanded so that the pleadings may be amended and proof introduced on the issue of reasonable value. But it would serve no useful purpose to prolong the cause should the evidence fail to show that the complainants performed their contract so far as permitted by the claimant and his executrix, and indicated their readiness and willingness to continue the same to the final determination of the claim.

The original contract was with Jonas H. McGowan, who was thereby given control of the prosecution of the claim. An interest of one third in the fee contracted for was subsequently assigned by McGowan to complainant Brookshire. Later, another contract was entered into between Parish and Brookshire, whereby the latter was to receive an additional fee of 5 per cent. It seems to be a settled rule of law that an attorney who is retained generally to conduct a cause is under obligation to conduct the proceeding to its termination. Nicholls v. Wilson, 11 Mees. & W. 106, 2 Dowl. N. S. 1031, 12 L. J. Exch. N. S. 266; Tenney v. Berger, 93 N. Y. 524-529, 45 Am. Rep. 263. This, however, McGowan expressly promised in the concluding paragraph of his contract. The evidence shows that McGowan and attorneys acting under and in co-operation with him labored long and earnestly in procuring an acknowledgment by Congress of this ancient claim, during which period there was complete harmony with the claimant. McGowan himself drafted the bill which became a law February 17, 1903. Just as the troubles seemed to have ended, they began afresh. The act was an ambiguous one, and the Secretary of the Treasury hold that it vested him with discretion to examine and pass upon the right of the claimant to an assessment of damages. Although complainants diligently prosecuted the demand before the Treasury Department, the Secretary rejected it on May 31, 1904. It appears that shortly after the Secretary’s decision a conference was had—Parish being present—to consider what additional steps might be taken to prosecute the claim. Three plans were considered,—mandamus to the Secretary; a rehearing before him; reference to the court of claims. Nothing was. decided upon. Later, in August, 1904, Parish said he would like the opinion of some attorney not connected with the case, lie produced an opinion, but what it was does not appear. It. seems to have been given August 8, 1904. It was suggested that the opinion of other and more distinguished counsel be obtained; but none was had. The matter seems to have rested a while in this condition. Parish was then in Washington, 'where he remained until his death December 26, 1904. On August 16th, desiring to raise money on his claim, he wrote McGowan to that effect, saying that if given a free hand he had the prospect of raising money to meet pressing demands at a reasonable cost. He asked for the return of a power of attorney held by McGowan. The power of attorney apparently referred to is one given to McGowan on March 25, 1903, making him his attorney to prosecute the claim before the Treasury Department and conferring general powers of representation. McGowan wrote back from Ontario, under date of August 21, 1904, saying he did not have the paper with him, but consenting to any arrangement Parish might make for a loan. It seems that Parish was negotiating with one Whitney, and under date of August, 31, 1904, Mr. E. P. Morey, who had been associated with complainants, wrote Whitney that there was. every reason to believe that if other plans failed in the next ninety days, at the next session of Congress a direct appropriation would be made for payment of the full amount due as. found by the auditor. Nothing apparently was effected in the matter of the loan. The next thing that occurred was the following letter from Parish, which was produced from the files-of McGowan’s letters by his partner, tire witness Serven:

Committee On Claims,

House of Representatives, H. S.

Washington, D. C. Sept. 15, ’04.

Hon. J. H. McGowan,

My Dear Sir and Eriend:—

Tour letter of the 25th ult. received in due time and contents-noted, which I answered best I could but have no answer thus far to hand and will repeat in substance what I wrote, to wit: You will remember before you left Washington for your summer respite, you said substantially that you had done your best to get the auditor’s report in my case paid by the Secretary of the Treasury, and failed, etc., “that you turned over to me the case to be managed in the future and do whatever I deemed best,” etc.

Some time next Congress I propose to organize a practicable method and resurrect the claim from its unfortunate condition, and I must have unrestricted and unrestrained control. If an attorney is required after I get the matter advanced in Congress there will be no trouble to find one. Furthermore I said that I would reimburse those who had advanced money to promote the case thus far, and will do very much better for you than you expressed yourself to Mr. Brookshire, to wit, “that you would be glad and well satisfied to get the money advanced me” returned. My past record as to compensation—who had rendered me service you have not surely forgotten which was generous and as I remember very satisfactory to all concerned as living witnesses will testify. I am in the best of health and my time profitably employed in assisting an Illinois firm who is doing business here and in New York.

Yours hastily,

J. W. Parish, 211 A. Str., S. E.

This letter either recited the truth as to McGowan’s surrender of the case before going to Ontario, or a deliberate falsehood. A slight circumstance supporting its truth is the letter asking the return of the power of attorney and McGowan’s consent thereto. Another circumstance is found in the testimony of McKee, an impartial witness, who had been journal clerk of the House of Representatives, and in the year 1904 had resigned to practice law. About a week before his death Parish asked witness to take up his claim, and several conversations were had. Witness called upon McGowan and asked him who were the attorneys of record. McGowan said that he had prepared it and followed it np to the time it was rejected by the Secretary, and added: “I don’t care who collects it, I want my fee ont of it.” If false, McGowan was under obligation to contradict it. It is probable that other counsel associated with McGowan were not aware of this letter; but whether so or not, they are bound by his actions. E. L. Morey, one of the associates, testified that he called at Parish’s house in October, 1904, to make an appointment with him for a consultation in reference to further proceedings. Not finding him, he left word for him to call at the office. Parish did not come. The following letter was received by Parish from Morey, to which no response was made in any way:

Sunday, October 9, 1904.

Dear Mr. Parish:—

I called at your house to-day but failed to find you. I am extremely anxious to see you, as I have some very important news concerning your case, and therefore ask that you call at my office to-morrow morning without fail. However, if for any reason you do not care to call at my office, telephone me and I will meet you at any place you suggest.

Tours truly,

E. P. Morey.

The letter to McGowan, above recited, remained unanswered. If its recitals were true, no reply was necessary; if untrue it should have been replied to promptly. The parties apparently met no more. On November 19, 1904, the following letter was mailed to Parish and received by him:

November 19, 1904.

Mr. J. W. Parish,

217 A. Str. S. E. City. Dear Sir: •—•

We have done what we could to secure an interview with you concerning the ice claim. You have • deliberately avoided us. The time has come when the matter should have attention. If we do not see you on or before Wednesday next, we shall proceed as we deem best under the ample authority which we have.

Yours truly,

J. H. McGowan,

E. P. Morey,

E. Y. Brookshire.

Parish promptly replied to what he characterized as an “impudent and discourteous” letter, giving notice that he would not submit to methods which he called “bulldozing.” There was also a sarcastic allusion to the ability displayed in the proceedings before the Secretary. Parish’s letter of September 15 indicated that his plan was to apply for relief at the coming session of Congress. At any rate he began no litigation if he may have contemplated any. He died December 26, 1904, leaving a will but no property save the expectancy of this claim. The executrix took no substantial action looking to the collection of the claim, though she had some conversation with McKee and others relating to it, which resulted in nothing, until on November 5, 1905, she entered into a contract with Mr. Holmes Conrad for the prosecution of the claim. He and his associate, Mr. Robinson, filed the petition for mandamus against the Secretary of the Treasury on May 2, 1906. Defeated in the trial court and the court of appeals, they obtained a reversal of the adverse decisions by the Supreme Court of the United States on May 17, 1909. See United States ex rel. Parish v. MacVeagh, 214 U. S. 124, 53 L. ed. 936, 29 Sup. Ct. Rep. 556.

The executrix knew the former history of the claim and that complainants were the attorneys engaged in it to the time of its failure in the Treasury Department; but she had no knowledge of the written contracts. No legal steps had been taken by complainants under the ample authority claimed in their letter of November 19, 1904, before mentioned, before the death of Parish. Knowing of his death and the qualification of defendant as his executrix, they gave her no notice of their contracts and their readiness to proceed with their performance with her consent. The counsel finally retained by her had no notice of complainants’ contracts; and no offer of assistance was made to them.

The executrix could readily have supposed from her father’s letter to McGowan, and the latter’s failure to reply thereto, that he had regarded the prospect for the collection of the claim such as not worth further efforts on his part, and was willing to let others undertake it. He said to McKee in December, 1904, that he did not care who collected it. That he also stated that he wanted his fee out of it is of no importance. He was entitled to no fee unless he prosecuted the case to final determination. Nor was he entitled to have the reasonable value of his services before rendered, without showing his willingness and readiness to proceed diligently, and the rejection of such tender by the executrix. The burden was upon the complainants to show this tender of their services, and there is no evidence of it. Now that the claim has been collected by others acting independently as attorneys for the executrix, it seems a great hardship to complainants to receive no compensation for the effective services that they rendered in obtaining the legislation on which the successful litigation was founded; but it is the result of their own action or inaction at the critical time.

Several questions of evidence were raised at the hearing, relating to statements made by the deceased, Parish. So far as these were testified to by one of the complainants they are inadmissible by virtue of the provisions of the Code (sec. 1064 [31 Stat. at L. 1357, chap. 854]) and have not been considered. While there may be some doubt as to the competency of similar evidence given by the attorneys, who were associated with the complainants and under contract with them for participation in their fees, we have considered the evidence without passing upon the question of its admissibility.

For the reasons given we will reverse the decree, with costs, and remand the cause with direction to dismiss the bill. It is so ordered. Reversed arvd Dismissed.

A petition by the appellees for a rehearing was denied December 2, 1912.

An application by appellees for allowance of an appeal to the Supreme Court of the United States was denied January 13, 1913, Mr. Chief Justice Shepard delivering the opinion of the Court:

Appellees, Josephine P. Me Gowan et al., pray for an appeal to the Supreme Court of the United States, basing their right thereto upon the ground that the construction of a law of the United States is drawn in question by the defendant Emily E. Parish.

The defendant relied upon sec. 3477, Rev. Stat., U. S. Comp. Stat. 1901, p. 2320, as prohibiting the lien claimed by the plaintiffs, and on that rests the contention that the construction of a law of the United States is drawn in question.

The right to appeal is one of substance, and not of mere form. The question of the validity of the lien is one that had been settled by the Supreme Court of the United States in construing sec. 3477, and was no longer an open one. The construction of the act could not, therefore, be drawn in question. Kansas v. Bradley, 26 Fed. 289; Harris v. Rosenberger, 13 L.R.A.(N.S.) 762, 76 C. C. A. 225, 145 Fed. 449-452.

We are constrained to refuse the allowance of the appeal.