Potter v. Ajax Mining Co.
JOSEPH F. POTTER v. THE AJAX MINING COMPANY
Headnotes
Summary
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Opinion of the Court
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After stating the facts, Miner, J.
delivered the opinion of the court.
Plaintiff’s attorneys base their right to have the order for the dismissal of the action set aside and the case tried upon the issues joined between the parties, under Sec. 135, Rev. Stat. 1898. This section provides that:
‘ ‘ The compensation of an attorney and counselor for his services is governed by agreement, express or implied, which is not restrained by law. From the commencement *429 of an action or the service 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 verdict, report, decision, or judgment in his client’s favor, and the proceeds thereof in whosesoever hands they may come; and can not be affected by any settlement between the parties before or after judgment.7’
The appellant claims that this contention is erroneous, and that the statute did not affect the plaintiff’s case, or create the lien of plaintiff’s attorneys, because the act was not retroactive under a proper consideration of the statute, and of Section 2490 Rev. Stat., which provides that no part of the Revised Statutes is retroactive unless expressly so declared.
The contract in question was made on July 23, 1897. This action was commenced October 11, 1897. The statute giving an attorney’s lien was passed and became operative January 1, 1898. The action was dismissed by the plaintiff, through the settlement he made with the defendant March 9, 1898. The judgment appealed from was rendered March 28, 1898.
In the case of Sandberg v. The Victor Gold and Silver Mining Company (decided at the September term of this court, 1898), we held that prior to the enactment of Section 136, Rev. Stat. 1898, there was no attorney’s lien for fees on a cause of action before judgment, but that the court would not aid a party in cheating and defrauding his attorney out of his costs and fees; and in Victor Gold and Silver Mining Co v. National Bank of the Republic (decided at the same term), we held that attorneys have a lien upon the judgment for costs advanced by them, and that the judgment being for costs imported notice of the lien.
Sec. 135, Rev. Stat, 1898, is a copy of Sec. 66, Code *430 of Civil Procedure of the State of New York for 1879. In Astrand v. Brooklyn Heights Ry. Co., 53 N. Y. Supp., 294 , it is held that the case of Coughlin v. R. R. Co., 71 N. Y., 445 , holding that there could be no lien on nonassignable causes of action that did not survive, was before the amendment of 1879, above referred to, and that such statute covers and includes all causes of action, contract and tort alike, and those that do not survive.
We believe this holding to be correct.
The language of Sec. 135, if applicable to this case, is comprehensive, and creates a direct lien in favor of the attorney upon his client’s cause of action, whatever form it may assume in the entire course of litigation, and entitles the attorney to follow the proceeds without regard to any settlement, before or after the judgment. It being a statutory lien every one must take notice of it, and any one settling with the client, without the knowledge of the attorney, does so .at his own risk.
In common fairness to an attorney, no settlement should be made by the party where an attorney has an interest, without full knowledge of the attorney, and under such conditions as will protect his lien. The attorney being an officer of the court, is under its control, and no unfair demands on his part should be permitted by the court. Under the statute the attorney is entitled to such legal fees and allowances as he can establish by agreement with his client, which is not restrained by lawThis agreement, however, does not deprive the party of the right to control the management of his case and determine when the litigation shall cease, providing he is able and willing to satisfy the just claim of his attorney.
So, also, under Sec. 135, the cause of action, although for an injury to the person, which would not survive to the administrator at common law was assignable and the *431 subject of a contract, sucb as was made in this case. Peri v. R. R. Co., 152 N. Y., 521 ; Astrand v. Brooklyn Heights R. Co., 53 N. Y. Supp., 294 ; Lee v. Vacuum Oil Co., 126 N. Y., 579 .
As held in Santi Peri v. N. Y. C. & H. R. R. Co., 152 N. Y., 521 , this statutory attorney’s lien operates as a security and lien upon the cause of action which attaches to the .judgment, and if a settlement is made by the parties without the consent or knowledge of the attorney having a lien and in prejudice of his rights, or by reason of the insolvency of his client, or other sufficient cause, the court will interfere and protect the officer by vacating the satisfaction of judgment and by placing the parties in the same situation they were in .before, for the purpose of satisfying the lien of the attorney, under the statute, and the action may be prosecuted by the attorney, for his benefit, under his lien. O'Brien v. Metropolitan Ry. Co., 50 N. Y. Supp., 159 ; Sternburgh v. Miller, 42 N. Y. Supp., 333 ; Palmer v. Van Orden, 64 How. Pr. 79 ; Carpenter v. Meyers, 90 Mich., 209 .
So, also, at common law, without the intervention of the statute, it has long been the practice of courts to intervene to protect attorneys against settlements made by their clients to cheat them out of their costs. If an attorney has commenced an action and his client settles it with the opposite party before judgment, collusively, in fraud of his rights, and to deprive him of his costs, the court will permit the attorney to go on with the suit for the purpose of collecting his costs. Coughlin v. N. Y. C. & H. R. R. Co., 71 N. Y., 448 ; Randall v. Van Wagener, 115 N. Y., 531 ; Weeks v. Wayne County Judge, 73 Mich., 256 .
Where by agreement between attorney and client the attorney is to have a lien for his services to a certain *432 amount upon the judgment to be recovered, this constitutes an equitable assignment of the judgment which attaches to the judgment as soon as rendered. 1 Jones on Liens, Secs. 43, 62, 223, 224.
Again it is held in Weeks et al. v. Wayne Circuit Judges, 73 Mich., 256 , that in the absence of a statute ‘ ‘ an agreement between attorneys and their client that they are to be paid for their services rendered in the prosecution of a suit, and reimbursed for moneys advanced, from the proceeds of the judgment which should be obtained, operates as an assignment of the judgment to the attorneys to the extent of such claims, and until the same are paid the plaintiff can give no valid discharge of the judgment. The rule that courts look with favor upon a compromise and settlement made by the parties to a suit, only applies where all of the rights and interests of all of the parties concerned, both legal and equitable, have been respected, and in good faith observed.”
To the same effect are, Carpenter v. Myers, 90 Mich., 209 ; Andrews v. Morse, 31 Am. Dec., 752 ; Weeks on Attorneys, 369; Hutchinson v. Howard, 15 Vt., 544 , and Jones on Liens, Secs. 223, 224.
IJpon full examination of the record we find that the settlement and dismissal of the action as shown by the proof, was collusive, fraudulent, and prejudicial to the rights of the attorneys for the plaintiff, and was made for the purpose of cheating and defrauding them out of their just compensation for services rendered and agreed to be rendered in that action, of which fact the Guaranty Company, through its attorney, had actual notice.
The order setting aside and vacating the satisfaction and dismissal of the action so collusively and fraudulently obtained could properly be made' by the court under the common law to protect one of its officers from the fraud *433 of bis client. In permitting the attorneys to continue tbe prosecution of the case, so as to determine the amount of the lien for their compensation for services in the action, as agreed between them and their client, was a proper mode of reaching the amount of their compensation, without reference to the statute, - under the proof of fraud shown in this case. The attorneys were entitled to proceed to judgment under the rules established by courts to protect attorneys from dishonest clients. But the plaintiff in this case did not see fit to adopt the course of procedure so established. The attorneys for the plaintiff based their right to have the dismissal set aside and the' cause tried alone upon Section 135, Rev. Stat. This statute did not go into effect until Jan., 1898. It gave the attorneys certain rights, but was not remedial in its nature. It was not retroactive in its operation, and did not affect the' plaintiff’s cause of action or suit brought upon the contract made, before the statute became operative. At common law the rule was that a statute is never to be construed to operate retrospectively, unless such intention is clearly expressed in the act.
Sec. 2490 Rev. Stat. expressly provides that no part of the Rev. Stat. is retroactive, unless expressly so declared. It is clear that the act applies to cases that might afterward be commenced, and not to contracts or causes ^of action previously commenced. Donahy v. Clapp, 12 Cushing, 440 .
If the statute had been operative upon the cause of action in question, a lien upon the plaintiff’s cause of action might have been created. The cause was tried upon the theory that the statute was retroactive and entitled the plaintiff to recover under its provisions. The court instructed the jury that the statute applied to this case, and that by its provisions the attorneys had a lien *434 upon plaintiff’s cause of action, which attached to the verdict, decision, or judgment, and that the settlement made did not affect the attorney’s lien upon the cause of action created by virtue of statute.
We are of the opinion that the court erred in submitting the case to the jury upon this theory, and in giving such instruction.
The case is reversed and remanded, with directions to the district court to vacate and set aside the judgment, and to grant a new trial. Defendant is entitled to costs.
Concurrence
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Bartoh, C. J.
I concur in the result, but not in all the statements in the opinion respecting liens, as applied to this case.
Dissent
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BASKIN, J.,
DISSENTING :
I can not concur in the conclusions announced in the opinion of the majority of the court in this case.
A settlement of the case having been made by the parties thereto, and an order having been made in the court below dismissing the case, on motion of plaintiff’s attorneys an order .was made setting aside the former order of dismissal and allowing said attorneys to prosecute the action for the purpose of determining the amount of and recovering their attorneys’ fees, to which the defendant duly excepted. For such purpose and for that alone, the judgment in the case was obtained against defendants.
The plaintiff and his attorneys entered into a written agreement, which is set out in the record, in which it was stipulated that said attorneys were to receive as full compensation for their services, in said case, in the courts of Utah, one half of any amount that might be recovered, either by judgment or settlement; that no settlement was to be made without the consent of both parties to said *435 agreement, and that said attorneys should advance the necessary costs and witness fees. At the trial the defendants’ counsel requested the court, at the close of the testimony and before the jury had been charged, to instruct the jury that “ said agreement is against public policy, and void, and that there is'no lien for attorneys’ fees thereunder, and your verdict should be for the defendant. ’ ’ The court refused to so instruct the jury, and the defendant duly excepted. This action of the court is assigned as one of the errors upon which defendant relies.
There are two stipulations in said agreement which are against public policy. 1st. The one which provides that no settlement should be made without the consent of both parties thereto; and 2d. The one by which the attorneys agreed to advance the necessary court costs and witness fees.
In regard to the first stipulation, in the case of Boardman & Brown v. Thompson, 25 Iowa, 487 , the contract between the attorneys and the client stipulated that the attorneys were to advance all the costs and have for their services a certain per cent of the recovery, and no settlement was to be made without the attorneys’ consent, but if the client did thus settle, the sum claimed in the petition, in a suit to be instituted, was agreed upon as the amount of the recovery, and they were to have the per cent on said sum, agreed' upon for their fees. In pursuance of this agreement, a suit was instituted by the client, Thompson, against the Chicago & Northwestern K. K,. Co., and settlement was made by Thompson, without the consent of the attorneys. The attorneys brought suit on said contract against Thompson and the railroad company, to recover the fee stipulated for in said contract. The supreme court of Iowa, on an appeal in said case, held that the contract was void as against public policy.
*436 In the case of Key v. Vatter, 1 Ohio, 132, the contract between the attorney and client provided for the payment of a contingent fee, and that no compromise should be made unless the attorneys joined in it, and the court held the contract was void as against public policy.
The same doctrine is also held- in che following cases : Lewis v. Lewis, 15 Ohio, 715; Weakly v. Hall, 13 Ohio, 167; Elwood v. Wilson, 21 Iowa, 523 ; North Ohio St. Ry Co. v. Ackley, 49 N. E. Rep., 222.
I have been unable to discover any case or authority which announces a contrary doctrine.
The second stipulation, before quoted, renders the contract champertous and void.
Champerty is not only malum prohibitum, but is malum m se at common law, and renders void all contracts with which it is tainted. Bacus v. Bryon, 4 Mich., 535 ; Thurston v. Percival, 1 Pick., 415 .
In the case of Croco v. Oregon Short Line Ry. Co., decided by this court, and reported in 54 Pac. Rep., 985 ; 18 Utah, 321 , it is held that £‘the common lawwas inforce in this State at the adoption of the constitution, but that it is believed that its force as applied to champertous contracts was ^modified by the passage of Section 3683 of the compiled laws of 1888, which was in force at the date of the contract involved in the case. ’ ’ Said section was also in force at the date of the contract involved in the case at bar.
The contract in the former case provided that the attorneys should pay the advance costs of filing the suit, and the sheriff’s fees for serving the same, and likewise pay the railroad fare of necessary witnesses from the State of Idaho in case of suit.
In the opinion rendered in the case, the court further held that, ££ Under' said Section 3683, it was competent *437 for an attorney and client to agree upon the attorney’s compensation; and such compensation may be made contingent upon success, and payable by percentage, or otherwise, out of the proceeds of the litigation, but it was not competent for the attorney, in consideration thereof, to agree to pay the advance fees and costs of the suit thereafter to be commenced.” With this I heartily concur. The defendant’s attorneys asked the trial court to instruct the jury to find for the defendant, because said contract was champertous, but the request was refused. This court sustained the lower court on the ground that other persons not parties to the suit should not be permitted to exonerate themselves from their just obligations because other parties had made a champertous contract regarding the suit, and that the defendant did not set up in its answer the plea of champertous contract.
The case at bar is distinguished from the case of Croco v. Oregon Short Line Ry. Co.
In that case there were no proceedings like in the present one to enforce the champertous contract. A judgment only was sought against the defendant for damages sustained by plaintiff. In the case before us the order setting aside the order of dismissal and judgment was not obtained at the instance of the plaintiff, or for his benefit, but was obtained solely at the instance of the attorneys, for the purpose of enforcing a contract which is cham-pertous and against public policy, a contract which is malum i/n se.
In the affidavit in answer to that of the attorneys, made on the motion to set aside the order dismissing the case, the contract was set out as an exhibit, and it was therefore brought to the attention of the court in a proceeding, the only object of which was the enforcement of a contract both champertous and against public policy. The *438 attention of the court was again specifically called to the matter by the instructions asked for' by the defendant. No court should in any way lend its aid to any proceeding to enforce such a contract.
The motion to set aside the order dismissing the case should have been denied, and this court should reverse the judgment and dismiss the case.
I do not wish to be understood as in any degree approving the methods resorted to in settling the case, for they were in my opinion, reprehensible; but that fact does not justify the enforcement of the contract.
How later courts describe this case
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(holding defendant who had notice of plaintiff's attorney lien could not fraudulently defeat lien by settling directly with plaintiff without knowledge of plaintiff's attorney)
Cited by 14 cases
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