Taylor v. St. Louis Transit Co.

BRACE, P. J.

On the 24th of October, 1902, the following contract in writing was entered into:

“Whereas, we, J. W. Aston, Eurenia Aston and Irene Violet Aston, of the city of St. Louis, Missouri, have a claim against the St. Louis Transit Company for injuries by us sustained on the 28th day of September, 1902, at or near Macklin avenue on a Chouteau avenue car, on Chouteau avenue, in the city of St. Louis, for the aggregate sum of $50,000; and having this day employed S. N. & S. C. Taylor and Eugene Hale, attorneys at law, of St. Louis, Missouri, as our attorneys, to prosecute our said claim for us to a final judgment or settlement, using their skill and best ability in the prosecution of the same in our behalf. And in consideration of the services and advice rendered and to be rendered herein by my said attorneys, we hereby agree to pay the necessary court costs and to pay our said attorneys a fee or .compensation equal to twenty-five per centum of whatsoever amount may be realized on said claim, whether the same be collected by suit, compromise, settlement or otherwise. And we further agree with our said attorneys that we will not settle or offer to settle our claims only in the presence of our attorneys.”

Thereafter, on the 13th day of November, 1902, the said Taylors and Hale, in pursuance of said contract, instituted suits against the St. Louis Transit Company, in the St. Louis City Circuit Court, one in favor of the said Eurenia Aston for $25,000 one in favor of the said Irene Violet Aston for $15,000, returnable to the De *723 cember term, 1902, and, on the 4th of May, 1903, one the entry of satisfaction was set aside and execution to the June term, 1903, of said court, and sued out writs thereon which were duly served on said Transit Company.

Afterwards, on the 5th of May, 1903, the said Transit Company, without the knowledge or consent of the said Taylors or Hale, compromised and settled said causes of action in favor of said Eurenia Aston and the said J. W. Aston for the sum of $2,250, paid to them by the company, and the said Astons executed releases to the company of their respective causes of action and dismissed their said suits. The Astons were insolvent, and, thereafter, the said Hale assigned all his interest in his claim for legal services rendered in said suits to the said Seneca N. and Seneca C. Taylor, who, afterwards, on the 16th of May, 1903, instituted this suit in which they seek to recover the sum of $562.50 from the Transit Company, to which they claim they are entitled by reason of the premises. Their claim was sustained by the trial court and from a judgment in their favor for that amount the defendant Transit Company appealed.

The appeal comes to this court because of constitutional questions duly raised in the course of the trial.

The law under which plaintiffs claim the right to recover is an act of the General Assembly, approved February 25, 1901, which is as follows (Laws 1901, p. 46.):

“Section 1. The compensation of an attorney or counsellor for his services is governed by agreement, express or implied, which is not restrained by law. From the commencement of an action or the services of an answer containing a counterclaim, the attorney who appears for a party has a lien upon his client’s cause of action or counterclaim, which attaches to a *724 verdict, report, decision or judgment in Ms client’s favor, and the proceeds thereof in whosever hands they may come; and cannot he (effected) [affected] by any settlement between the parties before or after judgment.

“Sec. 2. In all suits in equity and in all actions or proposed actions at law, whether arising ex contractu or ex delicto, it shall be lawful for an attorney at law either before suit or action is brought, or after suit or action is brought, to contract with his client for legal services rendered or to be rendered him for a certain portion or percentage of the proceeds of any settlement of Ms client’s claim or cause of action, either before the institution of suit or action, or at any stage after the institution of suit or action, and upon notice in writing by the attorney who has made such agreement with his client, served upon the defendant or defendants, or proposed defendant or defendants, that he has such an agreement with his clients, stating therein the interest he has in such claim or cause of action, then said agreement shall operate from the date of the service (s) of said notice as a lien upon the claim or cause of action, and upon the proceeds of any settlement thereof for such attorney’s portion or percentage thereof, which the client may have against the defendant or defendants, or proposed defendant or defendants. and cannot be affected by any settlement between the parties either before suit or action is brought, or ■before or after judgment therein, and any defendant or defendants, or proposed defendant or defendants, who shall, after notice served as herein provided, in any manner, settle any claim, suit, cause of action, or action at law with such attorney’s client, before or after litigation instituted thereon, without first procuring the written consent of such attorney, shall be liable to such attorney for such attorney’s lien as aforesaid upon the proceeds of such settlement, as per the *725 contract existing as hereinabove provided between such attorney and his client.”

I. No notice of the contract aforesaid was given to the defendant as provided in the second section of said act, and if the plaintiffs can recover at all it must be under the provisions of the first section thereof, which is a literal transcript of the New York Act of 1879, N. Y. Code of Civ. Pro., sec. 66, and which does not require any other notice than the institution of the suit. [Coster v. Greenpoint Ferry Co., 5 N. Y. Civ. Pro. Rep. 146; Keeler v. Keeler, 51 Hun 505 ; Quinlan v. Birge, 43 Hun 483 ; Vrooman v. Pickering, 54 N. Y. Supp. 389 ; Peri v. Railroad, 152 N. Y. 521 .]

For defendants it' is contended that they cannot recover under the first section “because it is neither alleged nor proved that the suits compromised by this defendant had been reduced to a verdict or judgment, as the lien given by that section is not perfected until the cause of action has been reduced to a verdict, report, decision or judgment.” If this contention can be maintained, then the defendant having settled with the plaintiffs’ clients and they having dismissed their suits, the plaintiffs, of course, cannot recover; but the statute will not bear such a construction. The plain and obvious meaning of the section is that an attorney of record shall have a lien upon his client’s “cause of action” from the commencement of the suit thereon; and, if, afterwards, the same becomes merged in “a verdict, report, decision, or judgment in his client’s favor,” such lien shall attach thereto, and cannot be affected by “any settlement between the parties before or after judgment.” This lien is upon the cause of action until merged and then it attaches to the thing into which the cause of action is merged. It is just as perfect before as after the judgment, and if the cause of action is not merged in a judgment, the lien *726 thereon remains and “cannot be affected by any settlement between the parties.”

This statute has been much thrashed over in the courts of New York, whence it comes to us. Speaking of it, the Court of Appeals, in Peri v. Railroad, supra, said:

“This language is very comprehensive and creates a lien in favor of the attorney on his client’s cause of action, in whatever form it may assume in the course of the litigation, and enables him to follow the proceeds into the hands of third parties, without regard to any settlement before or after judgment. This is a statutory lien of which, all the world must take notice, and any one settling with a plaintiff without the knowledge of his attorney, does so at his own risk. [Coster v. Greenpoint Ferry Co., 5 Civ. Pro. Rep. 146; affirmed, without opinion, 98 N. Y. 660 .]

“It is urged by the defendant’s counsel that this construction of the section is against public policy, as the law favors settlements; that the plaintiff’s attorney might refuse to disclose his lien, and thereby stand in the way of settlement, and compel parties to litigate who desired to compromise their differences. This criticism overlooks the fact that the existence of the lien does not permit the plaintiff’s attorney to stand in the way of a settlement. The client is still competent to decide whether he will continue the litigation, or agree with his adversary in the way.

“The lien operates as security, and if the settlement entered into by the parties is in disregard of it and to the prejudice of plaintiff’s attorney, by reason of the insolvency of his client, or for other sufficient cause, the court will interfere and protect its officer by vacating the satisfaction of the judgment and permitting execution to issue for the enforcement of the judgment to the extent of the lien, or by following the proceeds in the hands of third parties, who received them *727 before or after judgment impressed with the lien. [Poole v. Belcha, 131 N. Y. 200 ; Bailey v. Murphy, 136 N. Y. 50 ; Lee v. V. O. Company, 126 N. Y. at page 587.]”

And the construction put upon it in that State, as disclosed in that case and in the other eases herein-before cited and the many other eases therein cited and applicable to the case in hand, is well expressed in Keeler v. Keeler, supra, the decision in which is as follows:

“Section 66 of the Code of Civil Procedure is explicit in regard to the lien of an attorney upon his client’s cause of action for his services. The amount of it ‘is governed by agreement, express or implied, which is not restrained by law.’ It attaches upon the service of the first pleading, ‘and cannot be affected by any settlement between the parties before or after judgment.’ No notice of the lien need be given to the adverse party. The statute makes the lien complete. Payment in settlement of the cause of action to the party himself without notice to the lienor, and without affording him an opportunity of protection, unless' he has waived his rights, cannot prejudice him. A right so fully and completely vested must necessarily draw to itself a remedy adequate to its enforcement. The simplest remedy in the case of the attorney for the plaintiff, where the parties settle before trial, is to permit him to continue the action and recover so much upon his client’s cause of action as it existed before settlement, as equals the amount of the lien. Such was the course here pursued, and is sanctioned by authority. [Coster v. Greenpoint Ferry Co., 5 Civ. Pro. 146; s. c., 98 N. Y. 660 ; Wilber v. Baker, 24 Hun 24 ; Forstman v. Schulting, 35 Id. 504 ; Pickard v. Yencer, 10 Week. Dig. 271; Albert Palmer Co. v. Van Orden, 64 How. Pr. 79 .]”

These cases also illustrate the mode of procedure *728 in that State. In the first case the settlement was made after judgment, and, on application of the attorneys, the entry of satisfaction was set aside and execution awarded thereon to the extent of their lien. In the second case the settlement was after suit brought but before issue joined; and, afterwards, the defendant answered, alleging the settlement and payment; the agreement with the attorney was that he was to have one-half of the recoyery. The settlement was for $300, and the court directed a verdict in favor of plaintiffs for $150. In this class of cases this is the usual course of procedure by attorneys to enforce their lien under this statute in that State, which is characterized by the court of appeals in the first case as “a special proceeding and cannot be regarded in any proper sense as a motion in the action.” In none of the New York cases is it held or intimated that the attorney’s lien is dependent upon the prosecution of his client’s case to judgment on the original cause of action. In O ’Brien v. Railroad, 50 N. Y. Supp. 159 , the only New York case bearing upon, and cited in support of this contention it was held:

“1. Where plaintiff has settled the case, and given defendant a release, the fact that he had agreed with his attorney that the latter should receive as compensation for his services a percentage of the recovery constitutes no reason why, as between plaintiff and defendant, the release should not be pleaded, for the attorney’s rights, under his agreement, are not prejudiced either by the release or pllea.

“2. If, in such a case, the attorney desires to prosecute the action in plaintiff’s name for his own benefit, he may still do so, but in that event must assume the payment of any judgment for costs which defendant may recover. ’ ’

This case is entirely consistent with the other cases cited and in no way supports the contention that *729 a judgment on the original cause of action is necessary to support the lien, hut like the other demonstrates that such a procedure is simply a way adopted in that State of affording the attorney a remedy for the enforcement of his lien.

But, in - support of this contention, it is further argued, that as the existence of a cause of action is the sole foundation of the attorney’s lien, he must prosecute the original claim to final judgment before he can enforce his lien, else he might recover upon a lien which had no foundation, i. e., where there was in fact no cause of action. This argument is answered by the facts in this case. The defendant settled two of the causes of action upon which the plaintiffs had a lien, for the sum of $2,250, thereby admitting that plaintiff’s clients had a good cause of action for at least that amount, and he only seeks in this action to recover twenty-five per cent of that amount. Why then should he be required to prosecute his client’s action to judgment in order to show that his client had a good cause of action for that amount, and “echo answers, why?” for no good reason can be assigned why he should do so vain a thing. In support of this contention cases are cited from Georgia and Wisconsin; and against it, by the other side, from Tennessee, Iowa, Kansas and Kentucky; but, as the statutes of these States are .different from the one under consideration, we deem it unnecessary to review them. As opposed to this contention the cases of Young v. Renshaw, 102 Mo. App. 173 , and Yonge v. Railroad, 109 Mo. App. 235 , are also cited. But, as the suits in those cases were based on the second section of the act, they will not be reviewed. It is best to keep our attention fixed upon the section in question and the decisions thereon in the State from which it was derived.

The fact is, that while the act in question, in plain and unmistakable terms, gives a valuable property right *730 in the cause of action, and declares that such right cannot be affected by any settlement between the parties before or after judgment, it provides no remedy for the protection of that right; and that the right might not perish, the courts of New'York adopted the method indicated in the decisions cited for its protection. But it does not at all follow that because they did so no other mode of procedure can be followed to enforce that right- — ubi jus ibi remedium — and in this State where a right is given and no particular remedy is provided, such remedy is afforded by a civil action against the party who deprives the holder thereof of its benefit; such an action would not be, strictly speaking, an action to enforce the lien, but an action against him who deforced the lien, for the value thereof, and no good reason can be given why such an action should not be maintained in a case like this, where the defendant settles with the plaintiff, who is insolvent, for a specific amount, and the agreement between the plaintiff and his attorney was that the attorney should receive a certain per cent of that amount. This is an appropriate remedy for the protection of his right and may well be adopted. It is perfect folly to say that lie must follow the proceeds into the hands of his insolvent client, for this would be no remedy at all. That is the very evil which this legislation was intended to remedy, and this is all we deem it necessary to add in answer to the fourth point of appellant’s counsel, which is simply a repetition in different form of the argument on the preceding points.

II. It is next contended that “plaintiffs cannot recover under the second section of the Attorney’s Lien act because that section is unconstitutional.” Plaintiffs in this action do not seek to recover under that section, and it might well be that although the second section is unconstitutional, the first one might nevertheless be constitutional and valid, as the two sec *731 tions seem easily separable and one might have been well adopted without the other; as was in fact the case with the first section in New York, where it has been upheld for more than a quarter of a century. But it need not be put on that ground, as the argument in support of this contention is aimed at the whole act and the points made against its constitutionality are precisely the same as in the case of O’Connor v. Railroad, decided in Division No. 2 of this court, at this term, and reported at page 622 of this volume, in which the constitutionality of the act was upheld and all the arguments against it urged in this, as well as in that case, satisfactorily and conclusively answered in .'the able opinion of Fox, J., delivered therein, in which we concur.

III. It is next and finally contended, “that the contract between plaintiffs and their clients is champertous and therefore void.” The modern doctrine “is to allow a liberal agreement between attorney and client so that a contract for a contingent interest in the subject-matter of litigation by way of compensation for professional services instead of paying or contracting to pay absolutely a sum certain will be held valid and enforcible.” [5 Am. and Eng. Ency. of Law, p. 826.] And such is the law in Missouri. [Duke v. Harper, 66 Mo. 51 ; Yonge v. Railroad, 109 M0. App. 235; Laws 1901, p. 46, sec. 2.]

The fact that Mr. Seneca N. Taylor, after the contract was made between plaintiffs and their clients and after suits in favor of J. W. and Eurenia Aston had been instituted and plaintiff’s rights as to such suits under the contract had become vested and fixed, voluntarily became surety for costs in another suit instituted in favor of Irene Yiolet Aston, did not and could not have any retroactive effect upon the contract to render it champertous.

The judgment of the circuit court is affirmed.

All concur except Graves, J., not sitting.