Case Name: Dombey, Tyler, Richards & Grieser, v. Detroit, Toledo & Ironton Railroad Company
Court: United States Court of Appeals for the Sixth Circuit
Jurisdiction: United States
Decision Date: 1965-09-30
Citations: 6 Ohio Misc. 185
Docket Number: No. 15787
Parties: Dombey, Tyler, Richards & Grieser, v. Detroit, Toledo & Ironton Railroad Company.
Judges: Before Cecil and O’Sullivan, Circuit Judges, and Smith, District Judge.
Reporter: Ohio Miscellaneous Reports
Volume: 6
Pages: 185–213

Head Matter:
Dombey, Tyler, Richards & Grieser, v. Detroit, Toledo & Ironton Railroad Company.
[Cite as Dombey v. Detroit, Toledo & Ironton Rd. Co., 6 Ohio Misc. 185.]
(No. 15787
Decided September 30, 1965.)
United States Court of Appeals, Sixth Circuit.
Mr. John D. Holschuh, Messrs. Alexander, Ebinger, Wenger & Holschuh, for appellant.
Mr. C. Richard Grieser, for appellee.
Before Cecil and O’Sullivan, Circuit Judges, and Smith, District Judge.
Reversing 93 Ohio Law Abs. 217 (U. S. D. C.).
District Judge Talbot Smith of the Eastern District of Michigan.

Opinion:
O'Sullivan, Circuit Judge.
Plaintiffs-appellees, Dombey, Tyler, Einhards & Grieser, a Columbus, Ohio, law firm, recovered a $12,500 judgment against the appellant Detroit, Toledo & Ironton Eailroad as their contingent fee under a representation contract with an injured railroad workman, one Craig. Whatever services these attorneys provided Craig were performed between November 14 and November 17, 1960, and consisted of the interview with Craig on November 14th at which they obtained the contingent contract, the opening of a file on the matter and one or two telephone calls to Craig on November 17. On that date Craig, with the knowledge and consent of the plaintiff attorneys, made a direct settlement of his claim against the defendant railroad for the sum of $50,000 and some other benefits. Plaintiffs ' complaint charges the railroad with liability for their contingent fee of 25 percent of $50,000 on the ground that the settlement with Craig constituted an intentional interference with their representation contract, and also on the ground that the railroad had promised to be responsible for Craig's contractual debt to them for their fee. The District Judge found for plaintiffs upon a holding that defendant had intentionally interfered with the plaintiffs' representation contract with their cilent Craig and had induced Craig to rescind such contract. Dombey, Tyler, Richards & Grieser v. Detroit, Toledo & Ironton Railroad Company (S. D. Ohio, 1964), 226 F. Supp. 345. The District Judge allowed plaintiffs 6 percent interest on the $12,500 award from November 17, 1960, the date when the railroad settled with Craig. Jurisdiction is founded on diversity of citizenship.
By agreement of the parties this case was submitted to the District Court, sitting without a jury, on the pleadings and depositions taken by the parties. From such depositions and the findings of the court, it appears that Carl K. Craig, an employee of the Detroit, Toledo & Ironton, was injured in a work accident on October 11, 1960. Craig's injuries were serious and required almost immediate amputation of his left leg above the knee. Although plaintiffs state that Craig had a "valuable" and "dangerous" claim against the railroad, we have no information that would permit any conclusion as to the validity of such adjectives unless we assume that now all FELA claims are "valuable" and dangerous."
Shortly after Craig's injuries, a report of his accident went to the Grand Lodge of the Brotherhood of Railroad Trainmen. This was promptly followed by a series of visits by one Taylor who was then an "investigator" for a Chicago law firm, Henslee, Monek and Henslee, and who solicited Craig to hire that firm to handle whatever claim Craig might have against the defendant railroad. The Chicago lawyers were among the Brotherhood's designated regional counsel. Notwithstanding some five visits to Craig at the hospital and at his home, Taylor was unable to get the business for his Chicago principals. Taylor requested Craig to write a letter to the Chicago firm asking them to come and see him. Craig refused. Thereafter Crawford, the local representative of the Brotherhood, continued to visit Craig, who asked concerning his hospital and doctor bills "and stuff like that" and requested that Crawford arrange for him to talk to somebody from the Lodge about these matters. Although Craig did not ask Crawford to get him a lawyer, Crawford asked Craig if he would see someone from the office of the plaintiff law firm. Craig agreed and Crawford brought plaintiffs Dombey and Richards to the Craig home on November 14. Dombey's firm was identified as being regional counsel for the Brotherhood. At this meeting, Dombey and Richards discussed matters with Craig and finally entered into an agreement giving their firm the exclusive right to prosecute Craig's claim and providing that the firm was to get 25 percent of any sum received through suit or settlement, "in consideration of services rendered." Plaintiff Richards said that Craig's wife counseled against signing the contract, saying that "you shouldn't be rushing into these things," but Craig said "I am going to have to have somebody to help me on this. I'm going to sign this." Thereupon, Mrs. Craig began to cry, but was comforted by Dombey's assurance that they could have twenty-four hours to consider it and by Bicharás' statement that "we will hold it for a couple of days." In all events, it is clear that Craig thereafter considered the contract in force. Dombey and his partner thereupon went off on a hunting trip and did nothing in connection with Craig's claim except to open a file on the matter, send a letter of representation to the railroad, and call Craig on the morning of November 17 with regard to living expenses.
Between the date of Craig's injury and November 17 a claims representative of the railroad had called on Craig several times, but until then no talk of settlement was had. In the evening of November 17, two railroad representatives, one Woodard and another, called on Craig at his home and after some discussion offered him $50,000 in settlement of his claim against the railroad. Craig asked for an hour to consider the matter and the railroad representatives then left the Craig home. Craig told Woodard that he had made an agreement with the Dombey firm to represent him, but Woodard was not shown the agreement nor specifically advised that it involved a con tingent fee. After the railroad men left, Craig called the local representative of the Brotherhood, Crawford, and told him that he was inclined to accept the settlement offer. Crawford called Dombey's partner. Dombey was notified and called Craig, telling the latter that he would be a "damn fool" to settle for $50,000 but to go ahead if he wished. As witnesses, Dombey, Craig and Woodard disagreed as to what was said by Dombey concerning his fee. It appears that Dombey and Craig were talking on the phone when Woodard returned to the Craig house. Dombey's account was that he told both Craig and Woodard on the telephone that he expected that his fee would be taken care of by "responsible parties" and specifically to Woodard that he "expected him to take care of our fee in the event that he settled the case with Craig." Dombey said that no amount of fee was mentioned to Craig or Woodard, but he assumed that Woodard would know that he had a contingent fee agreement even though he (Dombey) did not say so. The claim agent Woodard testified that he could not recall Dombey saying that he would expect the railroad to pay his fee and that Dombey made no reference to a contingent contract but merely advised "you know we represent that boy." Craig testified that Dombey said "what fee he had coming he was going to collect it" and that his fee would be only a nominal one. The District Judge found as a fact, however, that Dombey did not use the term "nominal fee" upon his view that an experienced personal injury attorney would not waive a valuable contract right "by telling a client over the telephone that he would charge only a nominal fee." We cannot say that such a finding of fact was clearly erroneous.
Immediately following Dombey's November 17th conversation with Craig and Woodard, Craig requested that the railroad agree to be responsible for any fee that he might owe Dombey. Such an agreement was finally made, the railroad promising to be responsible for "any settlement to be made to the law offices of Dombey, Tyler, Richards & Grieser for any fees that is owed to them till 11:30 p. m., November 17, 1960." At the same time, the claim agent typed a letter from Craig to Dombey stating that "I have decided to negotiate a settlement in my own behalf," and that "this will be a notice that your services are no longer needed. You may issue a bill for services thus far rendered." Because this letter is important to the question of interference with Dombey's contract to represent Craig, we note that the District Court merely found that it was ' 'prepared'' by railroad representatives. The claim agent testified clearly that he merely typed such letter as dictated by Craig and his wife after Mrs. Craig experienced difficulty in attempting to type it on her own machine. Craig stated that he asked the agent to type it for him on the agent's portable typewriter.
Relevant also to the question of interference with the representation contract is the claim agent's testimony that although he knew Craig had retained counsel, he did not see the contract itself and understood from Craig that only a nominal fee was to be charged. The District Court found that the agent knew the contract was based on a contingent fee, but we have not been pointed to the testimony underlying this finding. Plaintiffs in their brief rely instead on the assertion that an experienced claim agent must be aware of the universal custom of attorneys to use such contracts in such cases, but we do not deem it important to determine whether this assertion is sufficient to support the District Court finding in view of our holding that in any event the claim of intentional interference has not been made out.
About a week after the settlement, plaintiff Richards came to the Craig home and, as recounted by Craig, "He wanted me to sign a statement saying that I had requested that his firm represent me, that they come and see me, that I requested for them to come and discuss this case — that was prior to November the 14th — which I did not. Mr. Crawford [the Brotherhood representative] was the go-between. He is the one that asked me if I would talk to these people." Craig did not sign the requested statement. At the same interview, plaintiff Richards said to Craig that the plaintiffs "had nothing a'gin me as far as any legal fees that it would be between the D. T. & I. Railroad" and plaintiffs. The proposed statement, an exhibit to Craig's testimony, states that plaintiffs came to see him "at my request."
We consider that three questions are presented by this appeal. First, was there an intentional interference by defendant with the contractual relationship between plaintiffs and Craig; second, were the plaintiff attorneys entitled to recover as tMrd party beneficiaries of the defendant railroad's agreement to be responsible for any fee that Craig would owe them; and, finally, was the contract between plaintiffs and Craig unenforceable as being champertous and against the public policy of the state of Ohio?
1) Defendants charged interference with contract.
The District Court concluded from the foregoing facts that,
"[t]he manner in which the defendant railroad company effected the settlement and especially the inducing of Craig to sign and mail the letter [terminating further legal services] constituted intentional interference with the contractual relationship between plaintiff and Craig." 226 F. Supp. 348. (Emphasis supplied.)
Our examination of the controlling Ohio law convinces us that tMs conclusion cannot stand.
The fundamental principle from which analysis must begin is that a representation contract which restricts a tort claimant's right to settle his claim without his attorney's consent is completely void and unenforceable. E. g., Davy v. Fidelity & Gas. Ins. Co. (1908), 78 Ohio St. 256, 267, 17 L. R. A., N. S., 443. In recognition of this principle no claim is made that the mere fact of settlement between Craig and the railroad would in any way interfere with plaintiffs' representation contract. We are unable to find anything in the "manner" of settlement wMch changes the application of this principle.
Most basically, there- is no showing that Craig has ever, in any manner, attempted to repudiate his representation contract or refused to pay a bill for services rendered. To the contrary, it is conceded by all that no bill was ever presented to him and that plaintiffs intended to look solely to the railroad for their compensation. The letter from Craig relied on to show some interference with the representation contract simply asks for "a bill for services thus far rendered." On its. face the letter recognizes the contract and evinces Craig's willingness to comply with its obligations, whatever they might be. Nothing in the record indicates that a bad faith motive prompted this seemingly innocent letter. And the assertion in plaintiff's brief that a request for a bill for services rendered is inconsistent with the written terms of the contingent fee contract amounts to no more than a tacit recognition that no services were rendered and a claim (which we shall shortly examine) that the full contingent fee is nonetheless owing; the most that can be said is that the letter reflects a determination to pay no more than Craig was legally obligated to pay. Finally, it should be remembered that even if this letter were somehow construed as a denial of Craig's contract obligations the only evidence in this record is that Craig himself was responsible for the language chosen.
Thus there is no showing that anyone interfered with or attempted to deny Craig's obligations under the representation contract. Even if some repudiation could be made out, moreover, it affirmatively appears that the railroad, the only defendant here, promised to be responsible for any fees owed plaintiffs. How this undertaking can be squared with a finding that defendants interfered with plaintiffs' rights is unclear. By this agreement the railroad undertook to pay the full contingent fee unless it could be shown not to be legally due plaintiffs or perhaps unless it could be shown that the railroad's agent in good faith believed that plaintiffs had agreed to accept a lesser sum. None of these alternatives is consistent with a finding that the railroad interfered with plaintiffs' contractual rights.
2) Status of plaintiffs as third, party beneficiaries.
Ohio recognizes the general right of a third-party beneficiary to sue on a contract intended for his benefit. E. g., Visintine & Co. v. New York, C. & S. L. R. R. (1959), 169 Ohio St. 505. And at least one Ohio court has expressly anticipated a situation much like that presently confronting us. Hawke v. Baltimore & O. S. W. Rd. (1917), 9 Ohio App. 195, 199. Our examination of the railroad's agreement and the circumstances surrounding its inception convince us that it was intended that plaintiffs be able to look directly to the railroad without first dunning Craig, but that the railroad would only be required to discharge any legally binding obligations of Craig.
Many possible defenses to payment of the full contingent fee are presented for our consideration. We find no merit in defendant's claim that the representation contract is vitiated by the manner in which the Brotherhood local chairman recommended plaintiffs' services. In Brotherhood of R. R. Trainmen v. Virginia ex rel. State Bar, (1964), 377 U. S. 1, 8, 84 S. Ct. 1113, 1118, 12 L. Ed. 2d 89, the Supreme Court determined that the Brotherhood is constitutionally protected in carrying out its plan "for advising workers who are injured to obtain legal advice and for recommending specific lawyers." Any contrary view as to the legality of plaintiffs' retainer by Craig because of the manner in which it was obtained (except as to the claim of maintenance discussed hereinafter) is foreclosed by this decision. Thus we need not concern ourselves with the possibility that such conduct might be considered unethical under Section 2 of Rule XIX of Ohio's Rules of Practice, 176 Ohio St. lxiii (1964) and conceivably under Canon 27 of the American Bar Association Canons of Professional Ethics, 176 Ohio St. lxxi (1964).
We briefly mention other claims of defendant. The argument that Dombey waived his full fee is lost with the District Court's finding that Dombey did not in fact express his willingness to accept a nominal fee. Adequately supported adverse findings similarly dispose of the claim that the representation contract was void because procured under duress. The railroad has not raised the argument that its undertaking to be responsible for Craig's fees was conditioned on its mistaken belief that only a nominal fee would be charged, nor do we believe it to claim a legal obligation less than Craig's. Thus the defenses of waiver, mistake and duress are without validity.
The most difficult question presented by this case is whether plaintiffs have a right to collect a $12,500 contingent fee for doing virtually nothing. There can be little serious question of the reasonableness of a 25 percent contingent fee contract as such. Direct precedents are wanting, however, to control decision of the precise problem raised by the events following formation of this particular contract.
Different rules are applied in different states to determine the damages owed an attorney who is discharged from a per centage contingent fee retainer without cause. E. g., Anno., 136 A. L. R. 231 (1942); 7 Am. Jur. 2d Attorneys at Law, Section 256 (1963). Ohio, however, is clearly committed to the rule that the attorney is entitled to his agreed percentage. Bolton v. Marshall (1950), 153 Ohio St. 250, 255, 91 N. E. 2d 508; Roberts v. Montgomery (1926), 115 Ohio St. 502, 154 N. E. 740; Scheinesohn v. Lemonek (1911), 84 Ohio St. 424, 95 N. E. 913. This rule applies even though the attorney has done nothing whatever toward earning his fee. Schienesohn v. Lemonek, supra. Nor do we believe that the analysis adopted by the Ohio Supreme Court in Mahoning County Bar Ass'n. v. Ruffalo (1964), 176 Ohio St. 263, 264, 265, 199 N. E. 2d 396, cert. denied, (1964), 379 U. S. 931, 85 S. Ct. 328, 13 L. Ed. 2d 342, would lead that court to repudiate the result announced in these cases.
Most states follow a parallel rule allowing recovery of the agreed percentage of any settlement arrived at by the client without his attorney's knowledge or consent. Annos., 3 A. L. R. 472 (1919); 40 A. L. R. 1529 (1926); 7 Am. Jur. 2d Attorneys at Law, Section 257 (1963). Ohio has no such cases dealing with settlement without prior discharge of the attorney. But Roberts v. Montgomery, supra, involved a situation where the attorneys had done substantial work before their client discharged them without cause and then settled his claim. Nothing in the Ohio opinions suggests that the contractual liability of Craig and the defendant railroad should be affected by the fact that they did not seek to repudiate the representation contract before settling or by the fact that plaintiffs had performed no work. We emphasize that the settlement involved was made with the knowledge and consent of plaintiff attorneys and we observe again that there was no breach of contract by Craig. The reasons for allowing full recovery of the contingent fee advanced in the Scheinesohn and Roberts cases, indeed, apply regardless of the formal act of discharge. Thus, as the court noted in Roberts, a settlement offer may well be prompted because "the wrongdoer has learned that lawyers possessing the skill and ability to recover judgments fully measuring up to the extent of the injuries inflicted have been retained to prosecute the case." 115 Ohio St. 507. And as ruled in Scheinesohn, the fact that no work has been done does not defeat recovery of the full fee since the parties have agreed on their own price and it is difficult to discover an alternative basis for computing damages absent any performance suitable for quantum meruit recovery.
In short, we believe that Ohio would ordinarily rule that an attorney may recover the full percentage of his contingent fee upon settlement by his client, regardless of the fact that he has performed no work. Part of the rationale for this rule is in effect that the client has bargained not only for the performance of representation services but also for the status of representation ; a claimant represented by skilled counsel often gains much simply from their undertaking to furnish whatever services may be needed. Failure to perform actual services, then, is not a failure of the consideration underlying the promise of representation which is both formally and actually the consideration for the promise to pay. At the same time, the client has himself elected to dispense with the services part of his bargain in order to reach a result — settlement—obviously within the contemplation of the parties when their agreement was formed. Thus the suggested Ohio rule is consistent with the general failure of consideration doctrine also recognized by the Ohio courts, e. g., French v. Millard (1853), 2 Ohio St. 44, 51-52; Darst v. Brockway (1842), 11 Ohio 462, 472; Henry v. Reich (1947), 80 Ohio App. 185, 187, 72 N. E. 2d 500; 11 Ohio Jur. 2d Contracts, Sections 91, 218, 219 (1955).
It remains to inquire whether the general rule of Ohio law thus understood should be avoided in the present case because Craig promised to pay a contingent fee "in consideration of services rendered." We are tempted by the circumstances of this case to seize on this particular phase as an indication that Craig's intentions were significantly different from those of an ordinary contingent fee client as contemplated by Ohio law, and to rule that he anticipated payment only for actual rendition of legal services. But we are forced tó conclude that the happenstance of plaintiffs' own choice of phraseology cannot properly be made to alter their significant rights.
3) Does public policy forbid recovery by plaintiffs?
We have already observed that the Supreme Court's decision in Brotherhood of R. R. Trainmen v. Virginia ex rel. State Bar (1964), 377 U. S. 1, 84 S. Ct. 1113, 12 L. Ed. 2d 89, protects plaintiffs' representation contract against a defense of invalidity based upon the solicitation of Dombey's employment by a representative of the Brotherhood of Railroad Trainmen.
Defendant, however, has also suggested that the representation contract is unenforceable because it included an agreement to maintain Craig until prosecution of his claim was concluded by settlement or litigation. We have above recited in part the testimony which suggests that there was an understanding with Craig that Dombey's firm would advance necessary living expenses to him pending disposition of his claim against the railroad and that nothing was said as to repayment if nothing was recovered from the railroad. While Dombey at one point indicated that no discussion was had with Craig on the matter of advances, at another part he said simply that "if they were discussed to any extent, I don't remember" and indirectly suggested that such maintenance arrangements may be part of his firm's general method of operation by observing that "each case was handled on its own faets and circumstances." Dombey's partner stated that there was no agreement to loan money to Craig, but admitted that "the understanding was that I was to get in touch with him as to whether he was going to be able to get along with just the railroad benefits." Richards further said that he later called Craig and asked whether "he was getting along all right on his benefits, financially." No money was ever paid to Craig by plaintiffs.
The District Judge made no finding as to whether there was an' agreement to advance money to Craig for living expenses pending disposition of his claim. Neither did the District Court discuss whether such an agreement would render the representation contract champertous. Such a defense was raised by defendant's answer which charged broadly that the agreement between Craig and plaintiff lawyers "was champertous, contrary to public policy, unenforceable and void." We consider that this defense was presented here by the statement of question "Was the contingent fee contract in the present case unenforceable because it was obtained by the law firm in a manner contrary to public policy?"
We believe that the question of champerty remains in the case but cannot be evaluated without resolution of what may or may not be disputed issues of fact as to the existence of an agreement by plaintiffs to ".maintain" Craig. In view of the decisions discussed below, we feel it appropriate to remand this case to the District Court for findings upon the facts relevant to this question of maintenance. Since the question was not fully briefed on appeal and its consideration requires a clear understanding of the basic facts, we do not intend the following discussion to establish the firmly binding law of this case. We are interested instead in pointing out the possibly relevant lines of inquiry and further argument.
Canon 10 of the Canons of Professional Ethics, adopted in Ohio (176 Ohio St. lxv, lxvii) provides that a lawyer "should not purchase any interest in the subject matter of the litigation which he is conducting." The Supreme Court of Ohio has recently held that this Canon prohibits a contingent fee lawyer from advancing money as a loan to a disabled and destitute client to enable him to meet living expenses pending litigation. Mahoning County Bar Ass'n. v. Ruffalo (1964), 176 Ohio St. 263, 264, 265, 199 N. E. 2d 396, cert. denied, 379 U. S. 931, 85 S. Ct. 328, 13 L. Ed. 2d 342 (1964). Reasoning that the disabled client's promise to repay "would not have the effect of providing the attorney with any reasonable source of repayment other than the proceeds received on trial or settlement of his client's claim" the Ohio Court ruled that the loan is in effect a purchase of an interest in the subject matter of the litigation. Reliance was placed on the parallel reasoning underlying the like determination of the Committee on Professional Ethics and Grievances of the American Bar Association, Opinion 288 (1954). The Committee's opinion is also relied on in Janny v. Cleveland Tankers, Inc. (N. D. Ind. 1962), 209 F. Supp. 91, 94, where the District Court held that it would "not lend its office to, or in any way, encourge or sanction the practice of attorneys advancing or loaning funds to clients for living expenses ." We must accept the Ruffalo decision as a binding rule of Ohio law. We note, however, that in varying contexts such maintenance agreements have withstood a charge that they were champertous. People ex rel. Chicago Bar Ass'n. v. McCallum (1930), 341 Ill. 578, 589, 173 N. E. 827; Johnson v. Great Northern Ry. (1915), 128 Minn. 365, 369, 151 N. W. 125, L. R. A. 1917B, 1140; In re Sizer and Gardner (1924), 306 Mo. 356, 375, 267 S. W. 922; 6 Cyclopedia L. & Proc. Champerty & Maintenance 865 (1903); see also Grievance Committee of Fairfield County Bar v. Nevas (1953), 139 Conn. 660, 96 A. 2d 802, 805; 7 American Jurisprudence 2d Attorneys at Law, Section 216 (1963); 14 Corpus Juris Secundum Champerty and Maintenance, Section 13 (1939); 7 Corpus Juris Secundum Attorney and Client, Section 23, pages 745, 761, 762 (1937). These decisions and the general reluctance to apply the full rigors of ancient learning on champerty and maintenance counsel strict interpretation of the Ohio rule.
The reasoning adopted by the Ohio Supreme Court in its Ruffalo opinion suggests that the Canons are not violated if there is a reasonable prospect of repayment without realizing on the client's cause of action. Given such a reasonable prospect, it could no longer be argued that the attorney was necessarily purchasing an interest in the cause of action. Parenthetically, it may also be noted that a prospect of repayment from other sources would reduce the pressure on an attorney to settle a case quickly and cheaply in order to minimize his own commitment and secure his own past investment. On remand, accordingly, it should be inquired whether any arrangement that may be found to have been contemplated included a provision for repayment by Craig independent of the disposition of his claim, and whether there was any tenable prospect of repayment independent of successful disposition of that claim.
It was established as early as the first volume of the Ohio reports that champertous agreements will not be enforced by the Ohio courts regardless of the lack of any statute establishing a broad criminal prohibition of champerty and maintenance. Key v. Vattier (1823), 1 Ohio 132; but cf. Section 2917.43, Revised Code. The Ohio courts have consistently adhered to this principle in varying factual contexts. E. g., Gross v. Campbell (1928), 118 Ohio St. 285, 160 N. E. 852; Brown v. Ginn (1902), 66 Ohio St. 316, 325, 64 N. E. 123; Stewart v. Welch (1885), 41 Ohio St. 483, 503; Weakly ex rel. Bell v. Hall (1844), 13 Ohio 167, 175; Lo Guidice v. Harris (1954), 98 Ohio App. 230, 235, 128 N. E. 2d 842. It appears, however, to be the Ohio rule that the champertous attorney may still recover the reasonable value of services rendered in quantum meruit. Brown v. Bruner (1919), 10 Ohio App. 314; see Ong v. Worden (1897), 37 Weekly Law Bulletin 108, aff'd per curiam, 55 Ohio St. 695, 48 N. E. 1115 (semble); 9 Ohio Jurisprudence 2d Champerty and Maintenance, Section 4 (1954); but cf. Rice v. Pigman (1953), 94 Ohio App. 122, 127, 128, 114 N. E. 2d 738. Although allowance of such recovery is characterized by Williston as "anomalous," 6 Williston on Contracts, Section 1713, page 4842 (rev. ed. 1938), it appears to be the majority rule. 6A Corbin on Contracts, Section 1426 (1962); 14 Corpus Juris Secundum Champerty and Maintenance, Section 47 (1939); 7 American Jurisprudence 2d Attorneys at Law, Section 229 (1963).
The reasoning of the Ruffalo opinion does not fit squarely into the mold of champerty and maintenance, but the mischief of acquiring a pragmatic interest in the client's cause of action is primarily that of creating a danger of divergence between the attorney's and the client's interests, see Comm, on Prof. Ethics, Opinion 288, supra. A similar danger exists where the attorney undertakes to be personally responsible for the costs of litigation, and the Ohio courts have included such agreements within their proscription of champertous contracts. See the summary of decisions in Reece v. Kyle (1892), 49 Ohio St. 475, 483, 484, 31 N. E. 747, 16 L. R. A. 723; Brown v. Ginn (1902), 66 Ohio St. 316, 325, 64 N. E. 123; Lo Guidice v. Harris (1954), 98 Ohio App. 230, 235, 128 N. E. 2d 842; 6 Williston on Contracts, Section 1712, page 4836 (rev. ed. 1938). The Ruffalo decision itself indicates that any inconsistency with the Ohio decisions allowing full recovery by an attorney who is discharged from a contingent fee contract is to be resolved by limiting the earlier decisions. And in any event, the Ruffalo decision clearly establishes that such arrangements are contrary to the public policy of Ohio. We suppose that they are no more contrary to public policy than ordinary champertous transactions, and hence that recovery in quantum meruit may be allowed wherever any services have been performed pursuant to the void contract.
We are of the opinion, however, that further inquiry should be made as to whether arrangements for maintenance of Craig during the pendency of his claim rendered plaintiffs' contract unenforceable.
The judgment of the District Court is vacated and the cause remanded for further proceedings and fact finding in accordance with this opinion. Within the discretion of the District Court, such proceedings may include the taking of additional testimony on the subject which prompts this remand.
This letter had not yet been received by the railroad when the involved settlement was concluded.
Craig testified that at the November 14 meeting, upon inquiry as to what he was to live on, Dombey or Richards said "they would take care of that, that they would allot me so much a month or whichever way we wanted to handle it, as far as living expenses," and that such advances were usually sent out "twice a month, on the 15th and 1st of the month" and that upon settlement Craig would have to repay such advances. Craig testified that the subject of what would happen as to these advances if nothing was recovered was not discussed.
Plaintiff Richards' account of the talk as to advances to Craig was to the effect that Craig spoke of the railroad offering to advance him money to live on; that Craig was concerned as to future expenses to take care of the family before "he began to draw railroad benefits, or something, and this had not been resolved." Richards stated that "before I left the understanding was that I was to get in touch with him as to whether he was going to be able to get along with just the railroad benefits," and concluded that there was no agreement that the Dombey firm would advance Craig money.
Craig further testified that on the morning of November 17, plaintiff Richards called him and "wanted to know about advancing me money to live on, expenses and so forth, until there was a decision reached on this case"; that Richards called "to see if I needed anything" but could not recall whether a certain amount was agreed on or not.
Dombey said that the percentage in such contingent contracts "depended on cases," and agreed that "it varied from case to case."
"An attorney at law shall not solicit professional employment."
"It is unprofessional to solicit professional employment by circulars, advertisements, through touters or by personal communications or interviews not warranted by personal relations." (Emphasis supplied.)
It seems not amiss to note the following testimony from the record before us:
"Q. Had you performed any services, Mr. Dombey, from the time that you signed Mr. Craig up until this telephone conversation that night, in connection with the Craig case?"
"A. In my own mind? I certainly have. The presence of my name gave him 60,000 bucks."
Since preparation of this opinion we have received Judge Talbot Smith's opinion. He states that "behind these essentially simple facts lies a pressing social problem, the adjustment of the competing and conflicting interests of an employer, represented by a lay claims adjuster, a member of the bar, and an injured, employee," and further that "at issue is the entire area of the legal representation of injured employees who seek recompense for their injuries. At war are two conflicting interests: the injured employee, and his lawyer, seek the maximum recovery. The employer, and his claim agent, seek the minimum." (Emphasis supplied.) We indeed appreciate Judge Smith's sociological development of the pressing social problem which he postulates, but respectfully express our belief that such discussion is irrelevant to the decision which we announce. The only question involved in this lawsuit is whether plaintiff attorneys are to get their full contingent fee ($12,500.00) not out of the $50,000 paid to the employee Craig, but from the defendant railroad which agreed to protect him against liability to the plaintiff attorneys. The injured employee is not at war with anybody, he makes no claim that he was overreached, and there is nothing in the record to suggest that the $50,000 paid to him was less than adequate considering his injuries and the nondisclosed facts which may or may not have established liability on the part of the railroad. The plaintiffs' demand for the fee of $12,500, indeed, is bottomed upon the settlement being a fait accompli. Plaintiffs do claim that the accomplishment of the settlement was a tortious interference with their contract. The manner in which it was done is relevant to that issue, but plaintiffs' complaint makes no claim that the settlement price was unfair to Craig and the District Judge did not consider such an issue.