Ryan v. Philadelphia & Reading Coal & Iron Co.

| U.S. Circuit Court for the District of Eastern New York | Jun 22, 1911

CHATFIELD, District Judge.

A perfectly proper settlement of this actipn was consummated as the trial was about to be started. The plaintiff’s attorney and his counsel had conducted the case ably, and the defendant was relieved by the settlement from a possibly large recpvery, if the plaintiff could establish its legal liability under the statutes of the state where the accident occurred. A further payment for witnesses’ fees (agreed upon by the parties as to amount) was also made. Both the plaintiff and the plaintiff’s attorney are entitled to be repaid their actual disbursements out of that sum, and the balance, if any, would go into the general fund for the settlement of the case. The infant plaintiff will arrive at his majority within a very short time. He has no general guardian, and the money cannot be paid over unless a guardian be appointed, and bond given, or unless the payment be delayed until the infant arrives at.the age of 21. But no difficulty arises on this score. The sole question is whether or not the plaintiff is entitled to a 50 per cent, compensation, upon the basis of a contingent fee, for his services in the case, no written retainer or contract having been signed until after the case had been substantially settled and the lack of such a contract noticed.

[1] The amount paid plaintiff’s counsel was entirely proper, and his services seem to have been valuable, but the question of his payment is a matter between him and the attorney for the plaintiff, and is of use to the court only as a guide to the value of the services rendered by the attorney for the plaintiff in the entire action.

[2] This court is bound to hold that a guardian ad litem, being an officer of the court, even though appointed in the state court before removal of the action, cannot enter into a contract with any attorney, who is necessarily an officer of the court, which shall bind, the ward of the court, unless that agreement meet with the court’s approval. The guardian ad litem is not a party who is independent, in the ordinary sense. Tie is rather a party capable of entering into legal relations, who thus supplies the lack of capacity on the part of the infant.

[3] .But the very fact that he is appointed to represent a ward of the court, and that his appointment is by the court, leaves his actions and the actions of all who are responsible to the court, subject to the court’s scrutiny, before the court can be asked to lend its authority to a determination of the rights of the party whose protection is being attempted. For this reason the guardian ad litem has the right to call into question the action of the attorney in obtaining from her the signature of a contract for a 50 per cent, attorney fee, upon such terms as might have been asked before bringing the action, and at a time when the possibility of recovery or the obtaining of evidence was entirely undetermined. Such a charge would be unconscionable and entirely out of proportion, no matter what the hazard of recovery might previously have been, if this charge were made for nothing but the actual settlement of a case already on trial, and in which an amount in settlement had been offered.

The plaintiff’s attorney might well have reported to the court the exact situation and asked its approval of the signing of the agreement, which seems to have been contemplated by all of the parties throughout the entire proceeding, but no percentage or definite amount had been mentioned, so far as the affidavits of either party show. A 50 per cent, contingent fee, in a case like the one under consideration, was not out of proportion, iE an attorney were agreeing to bring such a suit. A fee of this amount even in settlement also does not seem to be out of proportion or unconscionable in this case, from the standpoint of fair compensation to the attorney, including the payment of counsel fees. Especially is this true where the plaintiff will be reimbursed for disbursements or witness fees. And the only question to be considered is whether or not the attorney should have voluntarily offered to take less than lie would have insisted upon at any time prior to the actual trial of the action, because he had then learned that the services which he had undertaken without definite agreement were not to be entirely fruitless. He could at no time exact or expect more than would be fair and reasonable for what he was doing, whether it related to past or future services.

The court feels that unless all contingent fees are to be discountenanced, and unless an attorney is to be punished for ultimately charging what in ordinary practice he might have insisted on, if the parties had not been content to leave the entire matter in his hands, and in a case where all of the circumstances indicate that the parties would have previously consented to the exact arrangement which they did make, the contract entered into between the guardian ad litem and the attorney should be carried into effect.

An order may be entered, therefore, approving of the settlement by the guardian ad litem and directing that judgment for the amount of the settlement may be entered.

The amount paid for witness fees will be used for the payment ■of the actual disbursements of the plaintiff and of her attorney for securing the attendance of the witnesses, and any balance therefrom will be added to the general recovery for the benefit of the plaintiff.