United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 97-1904

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Hillside Enterprises, Inc., a Missouri *

general business corporation, doing *

business as Hillside Vineyards, *

*

Plaintiff, *

*

v. *

* Appeals from the United States

Continental Carlisle, Incorporated, * District Court for the

* Eastern District of Missouri.

Defendant - Appellee, *

*

------------------------------ *

*

John A. Walsh, *

*

Movant - Appellant. *

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No. 97-1907

No. 97-1908

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Hillside Enterprises, doing business *

as Hillside Vineyards, Inc., a Missouri *

general business corporation, *

*

Plaintiff - Appellee, *

*

v. *
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The Honorable Pasco M. Bowman became Chief Judge of the United States

1

Court of Appeals for the Eighth Circuit on April 18, 1998.

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Continental Carlisle, Incorporated, *

*

Defendant - Appellant. *

*

------------------------------- *

*

John A. Walsh, *

*

Movant - Appellee. *

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Submitted: April 16, 1998

Filed: June 23, 1998

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Before McMILLIAN, BOWMAN, and MURPHY, Circuit Judges. 1

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BOWMAN, Circuit Judge.

Hillside Enterprises and Continental Carlisle entered into a purchase agreement

whereby Continental was to develop and manufacture, and Hillside was to purchase,

a semi-disposable wine glass product. Hillside later sued Continental alleging a breach

of the purchase agreement and misrepresentation. Continental counterclaimed, seeking

to recover for shipments of the product already delivered to Hillside. On March 28,

1994, after a jury trial, the District Court entered a judgment for Hillside in the amount

of $465,000.00 on its claims and a judgment for Continental in the amount of

$164,948.17 on its counterclaim. We affirmed the judgments and ruled that

Continental was entitled to prejudgment interest on its counterclaim. See Hillside

Enter. v. Carlisle Corp., 69 F.3d 1410, 1416 (8th Cir. 1995).
Walsh has never produced a copy of the original written retainer agreement. 2

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On April 5, 1994, seven days after the District Court entered the original

judgments, Hillside and its counsel, John Walsh, executed an amendment to their

original retainer agreement. The amendment changed Walsh's compensation from one- 2

third, which was purportedly the amount provided for in the original agreement, to onehalf of all sums recovered. On February 23, 1996, nearly two years after the trial,

Walsh informed Continental for the first time that he was asserting an attorney's lien

against Hillside's judgment pursuant to Missouri law. See Mo. Rev. Stat. § 484.140

(1987). On March 8, 1996, Walsh moved to impress his lien upon Hillside's judgment

and claimed that his lien had priority over Continental's right to offset its judgment

against Hillside's judgment. The District Court held that Walsh's attorney's lien had

priority, but that the lien was limited to one-third pursuant to the purported original

retainer agreement. The court further held that Continental was entitled to prejudgment

interest only from the date on which Continental filed its counterclaim. Walsh then

moved for reconsideration, requesting a ruling that his attorney's lien also included

expenses he had incurred. The court denied Walsh's motion and held that the lien did

not include such expenses.

In this appeal, Walsh argues that he is entitled to a contingent fee of one-half and

that his expenses should be included in the lien. Continental cross-appeals, claiming

that it is entitled to prejudgment interest beginning thirty days after the date of each

unpaid invoice, that Walsh has no valid attorney's lien, and that, if the lien is valid,

Continental's right to set-off has priority. 

II.

We must first determine the date from which Continental is entitled to

prejudgment interest. In our earlier opinion, we applied Oklahoma law and determined

that Continental was entitled to prejudgment interest at the one and one-half percent
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rate set forth in the purchase agreement. See Hillside, 69 F.3d at 1416. On remand,

the District Court awarded prejudgment interest starting from the date on which

Continental filed its counterclaim. We review this award for abuse of discretion. See

United States v. Feterl, 849 F.2d 354, 358 (8th Cir. 1988). 

Under Oklahoma law, "'it is a rule of general recognition by the courts and

obtains in [that] jurisdiction that where there is a contract to pay money on a day

certain, . . . interest will be allowed from such date.'" Loffland Bros. Co. v. C.A.

Overstreet, 758 P.2d 813, 822 (Okla. 1988) (quoting Fidelity-Phenix Fire Ins. Co. of

New York v. Board of Educ. of Rosedale, 204 P.2d 982, 987 (Okla. 1949)). In this

case, the purchase agreement stated, "Terms of sale shall be Net 30 Days from date of

invoice. Past due invoices may be subject to a one and one half (1 1⁄2%) percent service

charge per month." Appellee's Supplemental App. at 82. 

Walsh argues that the one and one-half percent was a service charge and

therefore not interest. We rejected this argument the first time this case was before our

Court. See Hillside, 69 F.3d at 1416 ("Although the contract uses the term 'service

charge,' a sensible reading of the provision indicates it is an interest rate.") Walsh

further argues that, because the language in the purchase agreement states that invoices

"may be" subject to a service charge, Continental merely had the option of imposing

such a charge and never exercised that option before filing its counterclaim. Walsh

thus contends that the District Court was correct in awarding prejudgment interest from

the filing of the counterclaim. We disagree. We read the purchase agreement as a

contract to pay money on a day certain--thirty days from the date of the invoice. Under

Oklahoma law, Continental is entitled to interest from that date. The District Court

abused its discretion in finding otherwise. This result further accords with the policy

under Oklahoma law behind awarding prejudgment interest from the time an obligation

becomes due and payable: "to compensate another for the use of his money."

Rendezvous Trails of Am. v. R.T. Ayers, 612 P.2d 1384, 1385 (Okla. Ct. App. 1980)

(footnote omitted). Finally, awarding prejudgment interest from the time at which the
Hillside and Continental stipulated to this figure. 3

The District Court concluded that, by relying upon Hinde, "the Missouri

4

Supreme Court [in Benton] may have made an error in judgment" in its holding because

at the time Hinde was decided, the statute in effect made set-off mandatory. Hillside

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payments became overdue is consistent with the result in our previous decision in this

case. It would be anomalous to hold that Continental is entitled to prejudgment interest

according to the contract rate, see Hillside, 69 F.3d at 1416, and then disregard for no

apparent reason the terms of the contract that state the time at which the interest is to

accrue. We therefore hold that Continental is entitled to prejudgment interest from the

time each invoice became overdue, which amounts to $248,541.94 for a total judgment 3

of $413,489.51 plus postjudgment interest at the rate of 4.22 percent per year from

March 28, 1994.

We next address whether the District Court erred in holding that Walsh's

attorney's lien has priority over Continental's right to offset its judgment against

Hillside's judgment. As the District Court determined, we apply Missouri law to this

issue because Missouri law governs Walsh's relationship with his client and, indeed,

Walsh asserts his lien pursuant to Missouri law. See Mo. Rev. Stat. §§ 484.130 and

484.140 (1987). 

The District Court ordered that Walsh's lien should take priority over any set-off

of Continental's judgment against Hillside. We conclude that this result is contrary to

Missouri law. In Benton v. Alcazar Hotel Co., 194 S.W.2d 20, 25 (Mo. 1946), the

Missouri Supreme Court held that an attorney's lien is "subsequent and subservient" to

the right of an opponent to set off its award where the claims "arose in the course of

[the] very action and inhered in and arose out of the same transaction." Benton in turn

relied upon State ex rel. Hinde v. United States Fidelity & Guar. Co., 115 S.W. 1081,

1083 (Mo. Ct. App. 1909), wherein the court held that a defendant's right to set-off is

superior to an attorney's lien. "[W]here the cause and the set-off are related to the 4
Enter., Inc. v. Carisle Corp., 944 F. Supp. 793, 801 (E.D. Mo. 1996). It is not the

place of the federal courts, however, to reexamine state court determinations of state

law questions. "We are . . . bound to accept the interpretation of [state] law by the

highest court of the State." Hortonville Joint Sch. Dist. No. 1 v. Hortonville Educ.

Ass'n, 426 U.S. 482, 488 (1976). To do otherwise "exceed[s] the bounds of federal

court authority." Reeves v. Hopkins, 76 F.3d 1424, 1427 (8th Cir.), cert. denied, 117

S. Ct. 307 (1996). Moreover, notwithstanding that Hinde was decided at a time when

set-off was mandatory, we believe that the rationale upon which Hinde relied equally

applies in the present case. 

The amended retainer agreement states that Walsh's compensation "shall be one- 5

half of all gross sums recovered, before counterclaims, set-offs and expenses are

deducted therefrom." Appellant's Addendum at 18. While it is the prerogative of

Walsh and Hillside to establish the figure from which Walsh's fee should be computed,

here the total amount before counterclaims and set-offs, we decline to give effect to the

agreement insofar as it would unfairly prejudice Continental. 

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same matter, the lien attaches only to the surplus that may be adjudged the plaintiff after

a balance is struck." Id. Further, this Court has applied Benton, holding that "[the

plaintiff's] counsel's attorney lien against [the plaintiff's] $450,000 judgment is inferior

to [the defendant's] right to obtain a final judgment for the net amount." James E. Brady

& Co. v. Eno, 992 F.2d 864, 870 (8th Cir. 1993). We are, of course, bound by this

decision. See United States v. Mason, 74 F.3d 890, 891 (8th Cir.) (per curiam), cert.

denied, 517 U.S. 1239 (1996). 

In this case, the judgments Hillside and Continental obtained against each other

arose out of same transaction pursuant to the same purchase agreement. We therefore

hold that under Missouri law Walsh's attorney's lien is inferior to Continental's right to

set off its judgment. This result also comports with Missouri's policy "that an attorney

is entitled to a percentage of the amount of the verdict after it is reduced by any

counterclaim or offset." Kramer v. Fallert, 628 S.W.2d 671, 674 (Mo. Ct. App. 1981). 5
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In further keeping with Missouri law, one final judgment representing the net

difference in awards should be entered. See Buss v. Horine, 819 S.W.2d 762, 770 (Mo.

Ct. App. 1991). Accordingly, Continental should first offset its judgment of

$413,489.51 plus postjudgment interest from Hillside's judgment of $465,000.00 plus

postjudgment interest. A final judgment should be entered in favor of Hillside for the

difference. Only then may Walsh assert his attorney's lien over the net sum due to

Hillside. 

Because we conclude today that Walsh's attorney's lien does not take priority

over Continental's judgment, we need not decide the percentage of Hillside's recovery

Walsh is entitled to have under his contingent fee arrangement with Hillside, whether

Walsh's expenses should be included, and whether the attorney's lien is even valid. It

is for Walsh and Hillside to determine the portion of Hillside's recovery to which Walsh

is entitled; the amount of his attorney fee is now irrelevant to this proceeding. 

III.

We hold that Continental is entitled to prejudgment interest beginning thirty days

after the date of each invoice and that Continental's right to set-off has priority over

Walsh's attorney's lien. We therefore remand to the District Court to enter one final

judgment in favor of Hillside for the net difference between $465,000.00 plus

postjudgment interest and $413,489.51 plus postjudgment interest. 

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.