Source: https://supreme.justia.com/cases/federal/us/250/208/
Timestamp: 2019-04-23 13:56:14+00:00

Document:
For the prosecution of a claim for taking and use of private property in the Civil War, claimant agreed to pay an attorney's fee of 50% of the amount to be collected, to be a lien on any warrant to be issued in payment of the claim; the bill was referred by the Senate under § 14 of the Act of March 3, 1887, c. 359, 24 Stat. 505, now Jud.Code § 151, to the Court of Claims, where, after evidence and trial, favorable findings were secured, upon which Congress appropriated an amount in payment, but with the restriction that no part thereof in excess of 20% should be paid to or received by any attorney on account of services rendered in connection with the claim, the act further declaring it a misdemeanor for any attorney to exact or receive for such services any sum exceeding that percentage of the amount appropriated, any contract to the contrary notwithstanding.
Assuming the provision for a lien not violative of Rev.Stats. § 3477, and the contract valid when made, held that while the attorney's right to collect his fee from other assets of the client was not affected, the restriction as to the fund appropriated was within the power of Congress, and did not deprive him of property or of liberty of contract without due process, although subsequent to the making of the contract and rendition of the services. P. 250 U. S. 217.
Defendant in error Calhoun and Calhoun & Sizer, a firm composed of C.C. Calhoun and Adrian Sizer, attorneys at law, appeared in the proceeding and by cross-petition prayed judgment against the trust company as such administrator for the sum of $1,504.50, with interest from July 10, 1915.
Thomas N. Arnold, prior to his death, believing that he had a just claim against the United States, entered into a contract with the firm of Calhoun & Sizer and employed it to undertake the prosecution of the claim, and on August 1, 1905, entered into a written contract with it by which, in consideration of the services rendered and to be rendered by it in the prosecution of the claim, he agreed to pay it a fee equal in amount to 50% of whatever sum of money should be awarded or collected on the claim, the payment of which was made a lien upon the claim or upon any draft or evidence of payment that might be issued in liquidation thereof.
The firm undertook the prosecution of the claim, and bills were introduced in Congress for its payment, and on May 22, 1908, it was referred to the Court of Claims by a resolution of the United States Senate for findings of fact under § 14 of the Act of March 3, 1887, c. 359, 24 Stat. 507, now § 151 of the Judicial Code. About that time, the firm of Calhoun & Sizer was dissolved, and subsequently Arnold died and the beneficiaries of the estate entered into a written contract with defendant in error, C.C. Calhoun, to continue the prosecution of the claim, and agreed to pay him 50% of the amount which might be collected, the fee to be a lien "on any warrant" which might "be issued in payment of the claim."
January 15, 1912, the Court of Claims made findings of fact in the matter of the claim and stated the amount thereof as $5,051. The court's findings were certified to Congress, and that body, by an act approved March 4, 1915, 38 Stat. 968, c. 140, made an appropriation for the payment of the claim and the Secretary of the Treasury was directed to pay it.
paid or delivered to or received by any agent or agents, attorney or attorneys on account of services rendered or advances made in connection with said claim. It shall be unlawful for any agent or agents, attorney or attorneys to exact, collect, withhold, or receive any sum which in the aggregate exceeds twenty percentum of the amount of any item appropriated in this bill on account of services rendered or advances made in connection with said claim, any contract to the contrary notwithstanding. Any person violating the provisions of this act shall be deemed guilty of a misdemeanor and upon conviction thereof shall be fined in any sum not exceeding $1,000."
Afterward, on July 1, 1915, notice was given to Calhoun, as attorney for the claimant, that, in settlement of the claim, a check was mailed to him for $1,003, being 20% of the claim, and to the trust company as administrator de bonis non of Arnold, check for $4,012. A part of this money is still in the hands of such administrator, and there is no other property belonging to the estate.
The cross-petition additionally asserts the following: no part of the fee except the sum of $1,003 has been paid, and there is a balance due of $1,504.50, with interest from July, 1915, the date the money was received by the trust company.
remains unpaid, and he, Calhoun, has a lien upon the fund for the payment, he having accepted the check for $1,003 under protest and only on account. The contract preceded the act of Congress, and when the act was passed, such contracts were lawful and Congress was without authority to take from him his property without due process of law or just compensation therefor or to deprive him of his liberty of contract.
This is repeated and emphasized in various ways, and the Fifth Amendment is especially invoked as sustaining it, and for which reasons it is alleged that the "attempted limitation of attorney's fees by said act" was "null and void."
A demurrer to the cross-petition was overruled, and the trust company answered. A detail of its averments is not necessary. It practically admits those of the cross-petition, and pleads in defense the provisions of the act of Congress, and also § 3477, Rev.Stats..
"This case runs on all fours with Black v. O'Hara's Adm'r, 175 Ky. 623, where it was held that the act of Congress approved March 14, 1915, appropriating money for the payment of similar claims and containing a similar provision limiting an attorney's fee to twenty percent of the amount recovered, was, insofar as it attempted to limit the amount of the fee heretofore earned, unconstitutional and invalid."
"We have been urged to recede from the rule announced in Black v. O'Hara's Adm'r, supra, as being unsound in principle; but after a careful reconsideration of the reasoning by which the decision in that case is supported, we are satisfied of its soundness, and reaffirm it."
of the judgment. The cross-petition was presented in a proceeding to require an accounting of the administrator of Arnold, and the petition asserted a claim and lien upon the money in the administrator's hands received from the United States government. The judgment, however, does not refer to that money or the lien upon it; it provides only that Calhoun recover of the administrator "the sum of fifteen hundred four and 50/100 dollars, with interest from July 1, 1915, and his costs herein and may have execution," etc.
If the judgment only establishes a claim against the administrator to be satisfied not out of the moneys received from the United States, but from other assets of the estate, a situation is presented which it was said in Nutt v. Knut, 200 U. S. 13, 200 U. S. 21, would not encounter legal objection. In other words, the limitation in the act appropriating the money to 20% as the amount to be paid to an agent or attorney would have no application or be involved.
is, a distinction between a lien on the claim and a lien "upon any draft or evidence of payment," to quote from the first agreement, or "on any warrant which may be issued in payment," to quote from the second agreement.
So far as the contract fixed the amount of fee, it is within the rule of Nutt v. Knut, supra, and, for the sake of the argument, the lien may be conceded to be valid against § 3477, Rev.Stats., to the contrary, if it be regarded as having been given not upon the claim, but upon its evidence, as counsel contend. It may therefore not only escape the defect that was held fatal to the lien asserted in Nutt v. Knut, but may claim the support of McGowan v. Parish, 237 U. S. 285.
We, however, need not dwell upon the distinctions (their soundness may be disputed) nor upon the contentions based upon them, because, as we have said, we consider the other proposition -- that is, the power of Congress over the appropriated money and the limitation of payment out of it to an agent or attorney to 20% of the claim -- to be the decisive one.
In its discussion, counsel for Calhoun have gone far afield and have invoked many propositions of broad generality -- have even adduced as impliedly against the power, if we understand counsel, the constitution of the Court of Claims and its jurisdiction as weight in the same direction.
counsel;" it is a matter of great business hazard and risk to counsel when done upon purely contingent fees. And in many cases, it is further urged, no other than contingent fees are possible, and to deny them is practically to deny the right to counsel. Mr. Justice Miller is quoted from, in Taylor v. Bemiss, 110 U. S. 42, in illustration of such result and its injury.
The right to counsel being thus recognized, and recognized antecedently to the contract now involved, it became, counsel contend, a "preexisting valid right," and to take it away is to divest the right -- to take it away is to deprive of property of value assured of protection by the Constitution of the United States. To sustain the contentions a number of state cases are cited. Among them is Black v. O'Hara, Adm'r, 175 Ky. 623, the case which the Court of Appeals regarded as authority for its ruling in the present case.
was optional, not compulsory, and it would seem to require no argument to convince that the terms of its enactment must be taken as expressed and the relief it granted accepted with the condition imposed upon it. Indeed, the proposition is confused by its discussion. And it is certainly difficult to deal with the distinction that counsel makes between preexisting and prospective transactions. The right is absolute and universal, and necessarily must be to have any strength at all. It is only arbitrary in the sense that many of the faculties of government are. And we have seen there was exertion of one of its powers in the present case -- not, however, to interfere with or lessen the asserted obligation of the contract between Arnold and Calhoun, but to limit only the application of the money gratuitously appropriated in the payment of attorney's fees. The contention is that this cannot be done, or, to put it another way, that the appropriation, though it could not be compelled, was yet subservient to the contract of Calhoun (and, we may interject, if for 50%, for any percent, or terms) and that he was entitled to all the contract provided, denuded of the condition imposed upon the appropriation.
the moving considerations, the power exercised must be sustained. Frisbie v. United States, 157 U. S. 160; Ball v. Halsell, 161 U. S. 72.
The first case dealt with conditions upon pension legislation; the second concerned a claim against the United States on account of Indian depredations. It is therefore contended that they are unlike Calhoun's contract with Arnold, and that their principle is not applicable. We think otherwise. The legislation passed on was sustained as within the power of government.

References: § 14
 § 151
 § 3477
 § 14
 § 151
 § 3477
 v. 
 v. 
 v. 
 v. 
 § 3477
 v. 
 v. 
 v. 
 v. 
 v. 
 v.