Title: Hulse v. Brotherhood of Railroad Trainmen
Citation: 340 S.W.2d 404
Docket Number: 47293
State: Missouri
Issuer: Missouri Supreme Court
Date: November 14, 1960

340 S.W.2d 404 (1960)
Fred B. HULSE, James M. Reeves, Forrest M. Hemker, Clyde J. Linde and C. Wallace Walter, members of the Advisory Committee, Informants,
v.
BROTHERHOOD OF RAILROAD TRAINMEN, an International Railroad Labor Union, and W. P. Kennedy, C. R. Maher, Phillip B. Lush, Dan McGlynn, W. A. Woodson, E. G. Gunn, Frank Zamarioni and G. A. McNurlan, individually and as class representatives of all of the members of Brotherhood of Railroad Trainmen, Respondents.
No. 47293.

Supreme Court of Missouri, En Banc.
November 14, 1960.
Now on this 14th day of November, 1960, this matter came on to be heard before this Court, the informants appearing by their attorneys, Roberts P. Elam and George S. Hecker, the respondents, Brotherhood of Railroad Trainmen, W. P. Kennedy, W. A. Woodson, E. G. Gunn and Dan McGlynn and Frank Zamarioni appearing by their attorney, Daniel P. Reardon, the respondents Phillip B. Lush and G. A. McNurlan appearing by their attorneys, Lyman Field and Clay C. Rogers, and the respondent, C. R. Maher, having never been served with process, not appearing, the report of the Special Commissioner heretofore appointed by this Court being before this Court, and the Court, being fully advised in the premises, finds as follows:
1. The parties hereto have entered into a written stipulation filed herein, which stipulation and the report of the Special Commissioner are by this reference made a part hereof.
2. The respondent, Brotherhood of Railroad Trainmen (hereinafter sometimes referred to as the "Brotherhood"), is a railway labor union, having in excess of 200,000 members, the great majority of whom are employed as railroad trainmen. It is governed by a body known as the "Grand Lodge of the Brotherhood of Railroad Trainmen," and it conducts its business functions and operations through subordinate lodges, sometimes referred to as "local lodges," located in the various states of the Union, some 35 of which are located in the State of Missouri.
3. In 1930, the Brotherhood established a "Legal Aid Department" by order of its then president, following a referendum ballot of its local lodges, which was explained in Special Circular No. W-28 from the office of the then president of the Brotherhood, A. F. Whitney under date of April 15, 1930, as follows:
"Contracts will be entered into directly between these lawyers and the claimants on forms approved by the Legal Aid Bureau. Regional attorneys will be required to advance all necessary court costs, expert witness fees, expense of medical examinations, etc. These expenses will be deducted from *407 the amount of the recovery before a division is made of the net amount recovered. All expenses incurred in handling of claims by regional attorneys will be subject to approval by the Legal Aid Bureau. A small portion of the attorney's fee, not yet definitely determined upon, will be turned over to the Grand Lodge for the purpose of maintaining the Legal Aid Bureau. There will be no obligation upon the part of members to consult or employ regional counsel, but we believe it will be to their best interest to do so in cases where such consultation seems advisable for the reason that the Brotherhood will contract with only high class, capable and experienced railroad damage suit lawyers, and the charges in such cases will be from thirteen to thirty percent less than is now charged for similar service.
4. The Legal Aid Department of the Brotherhood maintained and maintains a central office in Cleveland, Ohio, at the national headquarters of the Brotherhood. In that office, it has a chief clerk, who is in charge of the Department, stenographers, file clerks and a research analyst. The Cleveland office of the Legal Aid Department serves as a clearing house which receives reports from all Brotherhood subordinate or local lodges of instances in which members have been injured or killed in railroad accidents. It notifies the appropriate regional counsel, and regional investigator, hereinafter referred to in more detail, of all such accidents.
5. Operating in conjunction with the Legal Aid Department were approximately sixteen lawyers, each designated by the Brotherhood as a "Regional Counsel," and assigned a zone, or region, of operation, which at times followed geographical lines, but at other times instead, tended to follow railroad system lines. The dominant considerations in the selection of regional counsel were the Brotherhood's confidence in the ability of the attorney. Also operating in conjunction with the Legal Aid Department were a number of "Regional Investigators," whose principal function and duty was to see to it that the officers of the local or subordinate lodges reported to the Legal Aid Department instances of injury *408 to and death of members of the Brotherhood so that the records of the Legal Aid Department would be complete. They sometimes made preliminary investigations of the facts surrounding such an injury or death. They also engaged in other activities hereinafter referred to, relating to the employment of Regional Counsel in cases involving such injuries and deaths.
Respondent McNurlan stated that his duties as Regional Investigator were as follows:
6. The 1930 plan for the operation of the Legal Aid Department originally was that the injured member, or survivor or representative of a member who had sustained fatal injury, would contract with regional counsel for representation in a claim or case against the railroad on a 20 per cent contingent fee basis, with the agreement on the part of regional counsel to turn over one-fourth of that fee, or 5 per cent of the recovery, to the Brotherhood for maintenance of the Legal Aid Department. Such contracts were to be on forms approved by the Legal Aid Department, and such regional counsel was to advance all necessary court costs, expert witness fees, expense of medical examinations, and like expenditure items. These expenses were to be deducted from the amount of recovery before a division would be made of the net sum between the regional counsel and the claimant. Subsequently, and about in the year 1938, a change was made in the contingent fee provisions so that the claimant was required to sign two contracts covering a contingent fee of 25 per cent one contract calling for 19 per cent to the regional counsel for his services, and the other for 6 per cent to the Brotherhood for *409 the maintenance of the Legal Aid Department, with its investigating service. As of June 15, 1946, this fee procedure was again changed so as to permit regional counsel to handle the cases on a flat 25 per cent basis, but requiring them to pay the investigators, members of the Brotherhood staff, on a quantum meruit basis, for their services. Another change in this fee and expense procedure subsequently occurred, which persisted up until the time of the filing of the instant proceeding. Under this change, regional counsel agreed with the Brotherhood to, and did, charge a 25 per cent contingent fee, and agreed to, and did, pay all court costs, medical examination fees, expert witness fees, transcript costs, cost of printing on appeals, and the total cost of operating the Legal Aid Department. This latter itemi. e. the total cost of operating the Legal Aid Department was apportioned among the regional counsel in the ratio that the respective gross recoveries of each regional counsel bore to the total gross recoveries by regional counsel throughout the country. Periodically throughout the year the Legal Aid Department assessed each regional counsel for his proportionate share of the total cost of operating such Department, and at the end of the year each regional counsel was billed for the balance of his assessment. The Brotherhood also maintained a practice of apportioning the expenses of its conventions amongst its various "departments" on the basis of the amount of time spent in discussing, on the floor of the convention, the affairs of that department. The Legal Aid Department's share of this cost was assessed against and paid by regional counsel.
7. The Brotherhood constitution requires that the secretary of each local lodge submit to the Legal Aid Department a report on each injury or death of a member in railroad service, and blank forms were furnished to the local lodges for the making of such reports. It was the duty of the local chairman of each lodge of the Brotherhood, or some other official of such lodge, to call upon the injured member, or the bereaved family of a fatally injured member, and advise them that they were entitled to avail themselves of the benefits of the Legal Aid Department free of charge, could consult regional counsel regarding their rights arising out of the injury or death free of charge, and could employ regional counsel at a charge not in excess of 25 per cent of the amount of any recovery, and that such percentage would include expenses incidental to the investigation and litigation of the claim. These representatives of the Brotherhood's local lodges and the regional investigators recommended and urged the injured member, and the families of deceased members, that their claims and cases against railroads be handled by the Legal Aid Department, and that the Brotherhood's regional counsel be employed to prosecute such claims and cases.
8. While the members of the Brotherhood were not compelled to employ regional counsel for the handling of their claims and suits, the fact that Regional Counsel had been designated, who they were, and that they were available to the Brotherhood members through the Legal Aid Department was regularly brought to the attention of the membership, not only in the manners above set out, but through the Brotherhood's publications, circulars and convention programs, and by announcements and talks on the subject made at meetings of various sorts. We note that, in two jurisdictions other than Missouri, namely; California and Illinois (Cf. Hildebrand v. State Bar of California, 1950, 36 Cal. App. 2d 504, 225 P.2d 508, 509, and In re Brotherhood of Railroad Trainmen, 1958, 13 Ill. 2d 391, 150 N.E.2d 163), it has been found that the following practices were carried on in those jurisdictions under the Brotherhood's national Legal Aid Department plan, viz.: the local lodge officers or representatives who made contact with the injured member, and the regional investigator, carried blank copies of contracts for the employment of regional counsel, *410 or the firm of attorneys with which the regional counsel was affiliated; if a signed contract of employment of regional counsel was not obtained in the field, an injured member, or the representative of a deceased member, or the other interested party, were often brought to the office of regional counsel, sometimes by a regional investigator, and sometimes by some other member-representative of the Brotherhood; in such cases, the expenses of the trips were paid by regional counsel, and the expenses of the regional investigator or other member-representative (including reimbursement of the latter for his time at his regular hourly wage rate) were also paid by regional counsel; and, in addition, on many occasions, the person or persons bringing an injured member, or the representative of a deceased member, to the office of regional counsel would be given a "gratuity" in money by regional counsel. However, neither of the respondents Lush, McGlynn, McNurlan, Zamarioni, Gunn or Woodson were parties to the California or Illinois proceedings.
9. The respondent Phillip B. Lush was and is a lawyer admitted to the practice of law within the State of Minnesota. Since May 23, 1949, he has been one of the Regional Counsel for the Brotherhood under the Legal Aid Department plan, assigned to a zone, region or territory which included portions of the State of Missouri, and mostly in western Missouri. Since February 1, 1952, he has been a member of the Brotherhood. Prior to January 1, 1956, he was a member of the law firm of Davis, Rerat, Yeager &amp; Lush located in Minneapolis, Minnesota, and, since January 1, 1956, he has been the sole member of a law firm known as Davis &amp; Lush, located in said city and state.
10. The respondent Dan McGlynn was and is a lawyer admitted to the practice of law in the State of Illinois, with an office in the City of East St. Louis, Illinois. Since July 1, 1954, he has been a member of the Brotherhood of Railroad Trainmen. Since May 1, 1954, he has been a Regional Counsel of the Brotherhood under the Legal Aid Department plan of the Brotherhood, and, as such, since March 1, 1956, was assigned to a zone or region of operation which included portions of the State of Missouri, mostly in eastern Missouri.
11. The respondent W. P. Kennedy, was, and now is, a member and President of the respondent Brotherhood of Railroad Trainmen, and a member of its Grand Lodge. Amongst his functions as such President were the appointment and removal of the Regional Counsel and the Regional Investigators, who served at his pleasure, the determination and designation of the zone, region or territory for their operations, and the general control and supervision of the Legal Aid Department.
12. The respondents W. A. Woodson and E. G. Gunn, were, and now are, residents of the State of Missouri, members of the Brotherhood, and officers of local or subordinate lodges of the Brotherhood located in the State of Missouri. As such members and lodge officers, each performed in Missouri the duties required of them by, and conducted themselves in Missouri in accordance with, the aforesaid Legal Aid Department plan.
13. The respondent G. A. McNurlan was and is a resident of the State of Wisconsin. He has been, since October 15, 1954, a Regional Investigator for the Brotherhood under the aforesaid Legal Aid Department plan for the zone, region or territory which coincided with the zone, region or territory of respondent Lush's operations in Missouri as Regional Counsel. In addition to being such Regional Investigator, and paid by the respondent Brotherhood as such, respondent McNurlan was employed by respondent Lush as an investigator of so-called "non-brotherhood cases," and was paid a salary and expenses by respondent Lush in that capacity.
14. The respondent Frank Zamarioni was and is a resident of the City of East St. Louis, Illinois. Since March 12, 1956, *411 he has been a Regional Investigator for the Brotherhood under the aforesaid Legal Aid Department plan, for a zone, region, or territory which included a portion of the zone, region or territory of respondent McGlynn's operations in Missouri as Regional Counsel.
15. None of the respondents has ever been admitted to the practice of law in the state of Missouri, or authorized to practice law in said State.
16. Each subordinate lodge of the respondent Brotherhood had one or more designated persons whose duty it was to report to the Cleveland office as aforementioned, and aid the regional investigator in contacting its injured members, or the dependents of a member who had been killed in a railroad accident, and the respondents W. A. Woodson and E. G. Gunn, among others, acted in such capacity in Missouri.
17. In the opinion of this Court, the national Brotherhood Legal Aid Department plan, as it has evolved and to the extent it has been followed and observed in Missouri, providing for contacting such injured member of the Brotherhood, or the dependents of a member who had been killed, by the representatives of the Brotherhood, including respondents McNurlan, Zamarioni, Woodson and Gunn, has been conducive to and has resulted in solicitation in Missouri of the employment of regional counsel, including respondents Lush and McGlynn, for the purpose of collecting damages against railroad companies. The Court also has been advised by the Informants, and this Court believes, that there has, in some instances, been solicitation in fact by the respondents. This Court further finds, in this connection, that, in accordance with the Legal Aid Department plan of the Brotherhood, in some instances as a result of some contacts in Missouri on the part of the said representatives of the Brotherhood, contracts were secured with such prospective clients whereby regional counsel, including respondents Lush and McGlynn, were employed to represent such clients in their claims for personal injuries or damages for death; and such regional counsel, including respondents Lush and McGlynn, acknowledge that they have in some instances with respect to such clients advanced funds for medical examination, other costs and expenses of litigation and, in some instances, would advance funds for living expenses of the clients while said action was pending.
18. The persons so contacted represented both members and non-members of the Brotherhood, and, where the client was a member of the Brotherhood, generally provided for the payment of a contingent attorney fee in the amount of 25 per cent of whatever was recovered, and in the case of non-members for a fee of 331/3 per cent of whatever was recovered.
19. Salaries and compensation paid to the respondents McNurlan and Zamarioni as Regional Investigators were paid by respondents Lush and McGlynn, either directly, or indirectly by having such sums channeled through the Legal Aid Department of the Brotherhood.
20. The aforementioned law firm of Davis &amp; Lush, of which respondent Lush was the sole member, employed, among others, one Louis N. Crill, an attorney residing in Excelsior, Minnesota, the respondent McNurlan, another Regional Investigator named G. A. Clinkenbeard, and three stenographers named Romayne Chiorabel, Mary C. Graham, and Joy Shughart. During the period from March 1, 1956, to February 15, 1959, there was maintained at Room 508 Wirthman Building, 3100 Troost Avenue, Kansas City, Missouri, an office which was designated upon its door, upon the building directory, and in the Kansas City telephone directory, as "Brotherhood of Railroad Trainmen, Investigation Office." The business in said office was conducted by respondent Lush, and the employees of his law firm just above mentioned. Some correspondence *412 was carried on from there on the letterhead of respondent Lush's Minneapolis law firm. There was available there, as well as in the possession of McNurlan, a form of letter, which in the opinion of the Informants here amounts to a form of contract and which respondent Lush acknowledges amounts to a "form of offer to contract," as follows:
"Gentlemen:
Railroad Company arising out of my accident on ______.
These letter forms were frequently completed, by the filling in of the appropriate blank spaces and being signed, by persons having claims against railroad companies, and, when executed by said persons were forwarded to Minneapolis for acceptance by respondent Lush. All of the expenses of said office in Kansas City, in the aggregate amount of at least $23,268.15 (exclusive of salary paid to McNurlan), were paid by respondent Lush, or his law firm of Davis &amp; Lush.
21. The respondent Lush paid to the Brotherhood, as his share of the expense of operation of the Legal Aid Department, a total of $31,825.68 during the period from January 1, 1956, to March 25, 1960. The respondent McGlynn paid to the Brotherhood, for such purpose, a total of $8,622.00 during the period from August 1, 1955, to March 3, 1958.
22. Since January 1, 1956, the respondent Lush was employed by at least 27 residents of Missouri, all but one of whom resided in western Missouri, to represent them in claims against railroad companies arising out of injuries or death. Since March 1, 1956, the respondent McGlynn was employed by at least 12 persons, residents of or who were injured in eastern Missouri, to represent them in claims against railroad companies arising out of injuries.
23. The respondents, and each of them, represent that they are fully cognizant with the decision of the Supreme Court of Illinois in the case of In re Brotherhood of Railroad Trainmen, 1958, 13 I11.2d 391, 150 N.E.2d 163, 167(5), wherein it was said:
24. The respondents, and each of them, have represented that they presently are not engaging in any of the practices condemned in the above quoted decision, nor in any of the improper practices hereinbefore referred to and set forth, and that they will not engage in any such practices in Missouri at any time in the future; therefore, and thereupon, the Informants, consisting of the Advisory Committee of the Missouri Bar Administration, have dismissed their Information with respect to contempt as to all respondents, and the Citation to show cause why respondents should not be punished for contempt should be withdrawn as to all respondents without prejudice.
It Is Therefore, Ordered, Adjudged And Decreed:
I. That, as to the respondent C. R. Maher, only, who was never served with process, this cause is dismissed without prejudice.
II. That, the Information and Citation, insofar as the same relate to contempt, be, and the same are hereby, dismissed as to each respondent, without prejudice.
III. That in the procurement, within the State of Missouri, of the employment of a lawyer to render any legal services, the respondents Brotherhood of Railroad Trainmen, W. P. Kennedy, G. A. McNurlan, Frank Zamarioni, W. A. Woodson, and E. G. Gunn, and all persons in any way or in any manner acting by, through and under them or either of them, are hereby jointly and severally permanently enjoined and restrained from, in any way or in any manner:
IV. That in the procurement, within the State of Missouri, of employment of him to render legal services, the respondent Phillip B. Lush as an individual and as a lawyer admitted to the practice of law within the State of Minnesota, and all persons acting by, through or under him, in any way or in any manner, either personally or by or through an agent, servant, employee, partner, or associate are hereby jointly and severally enjoined and restrained from in any way or in any manner:
V. That in the procurement, within the State of Missouri of employment of him to render legal services, the respondent Dan McGlynn as an individual and as a lawyer admitted to the practice of law in the State of Illinois, and all persons acting by, through or under him, in any way or in any manner, either personally or by or through an agent, servant, employee, partner or associate, are hereby jointly and severally enjoined and restrained from in any way or in any manner:
VI. The respondent Brotherhood of Railroad Trainmen, its officers, employees and representatives, and all persons in any way or in any manner acting by, through or under it, are hereby permanently restrained and enjoined from in any way or in any manner fixing the fees of any lawyer or lawyers for services rendered to its members, or dependents or personal representatives of deceased members.
VII. The respondent Brotherhood of Railroad Trainmen, its officers, employees and representatives, and all persons in any way or in any manner acting by, through or under it, are hereby permanently restrained and enjoined from having any financial connection with any lawyer or lawyers wherein or whereby such lawyer or lawyers in any way or in any manner would support or maintain the Legal Aid Department, or any similar department or bureau, of said Brotherhood.
VIII. That costs of this proceeding are hereby taxed against the respondents.
BY THE COURT:
The foregoing Consent Decree is approved as to content and form.