Court Opinion

ID: 8031981
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:16:32.106912+00
Date Added: 2024-06-11T16:37:00.036453
License: Public Domain

Cornish, J.,
dissenting.
If the opinion properly states the law, then I think the next legislature should enact a new law, as the «legislature of 1917 considered doing. The opinion in effect holds that the parties to a lawsuit cannot settle their controversy without the consent of their attorneys — a rule never before announced, so far as I know, by any court.
It would not be surprising if we lawyers, who have ourselves received contingent fees, should be biased in favor of a practice absolutely forbidden at the common law. At common law, settlements were always encouraged by the courts. Lawyers were regarded as officers of the court, and anything which had a tendency to change the attitude of the lawyer, so that he might become interested as a litigant, was frowned upon as against public policy. Beginning with Chancellor Kent, all of the great lawyers, whose names are honored by the profession, *307have condemned or expressed forebodings of the practice. The objection is not that a litigant, unable to raise cash in order to be represented by an attorney, is permitted to let the fee be contingent upon success, but to a situation, illustrated by the case in hand, where the attorneys have more to win or lose, as a result of the lawsuit, than the litigant himself. The emolument going to the attorney should bear some proper relation to the service rendered. I have known an attorney to receive a fee of $5,000 for a day’s work, when the same attorney would be ready to give his services for $50 a day, or less. The practice should be regulated by law. The attorney should not be permitted, unbeknown to the jury and perhaps to the judge, to become, in all essential respects, a litigant. Chancellor Kent said: ‘ ‘ The purchase of a lawsuit by an attorney * * * is champerty in its most odious form; and it ought equally to be condemned on principles of public policy. It would lead to fraud, oppression, and corruption. As a sworn minister of the courts of justice, the attorney ought not to be permitted to avail himself of the knowledge which he acquires in his professional character, to speculate in lawsuits. The precedent would tend to corrupt the profession, and produce lasting mischief to the community.” Arden v. Patterson, 5 Johns. Ch. (N. Y.) *44.
My special criticism here is that this decision violates precedent. Hitherto, while all of the decisions have not agreed in certain important respects, they have agreed upon certain propositions as follows:
(1) Any contract between an attorney and his client which seeks to give the attorney control over the litigation and to make him a part owner of the lawsuit is void as against public policy. The contract here does not, by its terms, attempt to give the attorney control of the lawsuit; the opinion does that.
(2) It is always the right of the parties to a lawsuit pending to come together and settle it. If eollusively done to defraud the attorney, then there are varying *308rules for the protection of the attorney against the fraud. Even after final judgment, when the rights of the attorney might be said to be more or less fixed or vested, the courts have held that the attorney cannot prevent a settlement for less than the amount of the judgment, if fairly made.
(3) A settlement, fairly made, is binding upon the litigants and their attorneys according to its terms. In such case, however, if the defendant has notice of an attorney’s lien which has attached, he must not disregard it.
Coming now to the case in hand, it is to be observed that there was absolutely no fraud in the settlement made by the litigants, unless fraud can be predicated upon the mere fact that the -litigants settled the case for less than the attorney would advise or consent to. Surely, if it was the right of the litigants to settle, it necessarily follows that no fraud can be found in the mere fact that they did settle. To say otherwise would be like disputing the sun.
To state, as in the syllabus of the majority opinion, that the settlement was had, “all without the laiowledge of plaintiff’s counsel,” is inaccurate, -unless the statement relies for its confirmation upon what, may we not say, comes near .being a quibble. The opinion shows the contrary. "When plaintiff came to defendant to settle, the defendant peremptorily refused to settle until plaintiff had received the advice of his attorney. This was had and settlement advised against. Afterwards the defendant told the attorney of the proposed settlement. The attorney had full knowledge of what the defendant proposed to do, even to the very terms of the settlement.
It would be foolish in the law to require that the settlement be had in the presence of the attorney who refuses to'participate, or that he should know the hour and place Of the settlement. -It would be foolish also to require that the settlement be had in Lincoln, or Omaha, local *309offices of defendant, rather than in Chicago, at its general office.
In the opinion it is said that the settlement was 1 ‘ surreptitious.” Here, too, the opinion shows the contrary. A high court of justice cannot afford to attach such an epithet, which implies malice, to a litigant without good reason. The word should not be used.
A settlement without fraud having been made, a dismissal of the cause, in the absence of the attorney, could not make-it fraudulent, because he was thereby deprived of no right. Dismissal follows settlement as a matter of course. The attorney could not prevent it. From first to last, no effort was ever made by defendant to deprive the attorney of his share of the amount to be paid in settlement. Primarily, fraud consists in colluding to defeat the attorney of his lien.
The opinion, as a whole, would hardly seem to make the ease turn upon fraud. Constructive fraud, based upon the fact that the attorney was not notified of the proposed settlement, has never been found in any well-considered case. The settlement must be collusive, or, as the opinion says, “surreptitious.” In any event, such a rule could not apply here, because the attorney had notice. Logically considered, it makes the attorney a part owner of the lawsuit, so that the litigants, in dealing with each other, are bound to procure the attorney’s consent before a final settlement can be reached. For this, as I said, there is no precedent either in any text-book or decided case. In Minnesota, where the statute attempted to give the attorney a lien upon the cause of action (a state standing almost alone in this respect), it was held that .the litigant could make a fair settlement against the consent of his attorneys.
Aside from consideration of public policy, the rule announced is unjust. A litigant’s cause of action is his property. In all reason, he, and not his agent, must be permitted to manage his private affairs according to his own best judgment. In the absence of fraud, it will sel*310dom happen that any wrong will thereby be done to his attorney. In the instant case, the written contract between the attorney and client anticipated the case might be settled.
In 2 R. O. L. 1080, sec. 171, where the right of litigants to settle is discussed, it is said: “The lien of the attorney may be defeated by such act of the client, though the latter agreed to pay the attorney a percentage of the proceeds of the judgment, and notwithstanding an express agreement on the part of the client not to dismiss, settle, or compromise without the consent of the attorney. Even in those jurisdictions where the attorney’s lien attaches by virtue of statute to the cause of action, to the property involved, or to money in the hands of the adverse party, it has been held that the client may compromise or settle the litigation without the consent of the attorney, but where such right is exercised the lien of the attorney will not be defeated thereby, but will attach to the proceeds of the settlement.” And, further, at p. 1001, sec. 80: “The great weight of authority sustains the right of a client at any time before judgment, if acting in good faith, to compromise, settle, or adjust his cause of action out of court, without his attorney’s intervention, knowledge, or consent.”
In 6 C. J. 791, sec. 404, the right of the attorney, where compromise is effected before final judgment, is discuss-' ed. It is said that the amount of the lien is controlled by the settlement. 2 Thornton, Attorneys at Law, sec. 435; Williams v. Miles, 63 Neb. 851, 855.
In. Corson v. Lewis, 77 Neb. 446, cited in the opinion, the right to settle was not in dispute. The attorney’s lien filed was lost because the settlement was in good faith.
In Cones v. Brooks, 60 Neb. 698, it was held that our attorney’s lien statute was “declaratory of the common law. ’ ’ At common law the attorney had no lien upon the judgment.
*311In Patrick v. Leach, 12 Fed. 661, the Nebraska statute was construed, and it was held that the attorney has no' lien upou the judgment obtained by him in favor of his client. He has a- lien on money in the hands of the adverse party going to his client. If we follow these decisions, the attorney could no more control the judgment or the lawsuit, in this state, than he could at common law.
In Reynolds v. Reynolds, 10 Neb. 574, where the client refused to go forward with the case and the attorney had spent his time and money in prosecuting it, the court permitted the attorney to be substituted as party plaintiff and proceed with the case. No settlement between the litigants was made. In Jones v. Duff Grain Co., 69 Neb. 91, it was claimed by the attorney that a fraudulent settlement had been made to defeat him of his lien. The agreement was collusive. The attorney was not permitted to recover in that suit. It was stated, however, that if the settlement was collusive the attorney, in a proper case, might be permitted to prosecute the case to final judgment. This decision is contrary to the great weight of authorities. It has no application here, because here the case was not settled without the knowledge or consent of the attorney and by collusion. If, however, we concede the dicta in this case to state the law, anct that the -settlement was fraudulent and collusive, then the remedy would be that the settlement would be set aside and the attorney be permitted to prosecute the case to final determination. This right of the defendant, to have the case proceed after the settlement is set aside as fraudulent, is denied the defendant in the instant case.
In the majority opinion it is said in one place that the settlement was had while the action' was still pending. This is true. In another place, it is said that the settlement was had after judgment and the rights of the attorney had become absolute. Just how there can be a judgment, giving the attorney or any one else absolute rights while the action is pending, I do not understand.
*312If it wore suggested that, independent of a statutory lien, the attorney, by virtue of the contract made with his client, had some equitable rights in the . cause of action, or the judgment appealed from, which would entitle him to control the cause, contrary to the judgment of his client, then the contract would be void as against public policy. Only by virtue of a statute, giving a lien upon final judgment, has he any rights in the judgment as such.
Since writing the above, I observe that A. L. R. has some late cases upon the subject:
In Andrewes v. Haas, 214 N. Y. 255, 3 A. L. R. 458, the court uses this sound language: “The notion (that the client must continue the litigation) that such a thing is possible betrays a strange misconception of the function of the legal profession and of its duty to society.”
The opinion cites a Kentucky case. A later one, Procter v. Louisville & N. R. Co., reported in 3 A. L. R. 461 (156 Ky. 465), holds that in a settlement like the one in hand attorney’s fees, are “to be computed as though the amount paid by way of compromise constituted the entire recovery.”
The opinion also cites a Minnesota case. A later one, Southworth v. Rosendahl, reported in 3 A. L. R. 468 (133 Minn. 447), holds squarely that the litigant may settle without the knowledge or consent of his attorney, and in so doing “does not subject himself to the payment to the attorney of a contingent fee agreed upon in case of the successful outcome of the ease.” At page 472 there is an exhaustive note, and at page 485, discussing settlement after judgment, the note writer says: “But where the judgment has not become final, as where an appeal or a motion for a new trial is pending, the amount of the settlement, and not the amount of the judgment, controls as a general rule. (Cases cited.) And this is true, though the defendant was guilty of such fraud and undue influence in procuring the settlement as would entitle the client to have‘it set aside, where he has not *313sought to have it set aside, hut by his inaction has ratified the settlement.”
I would have preferred an opinion more in accord with the Code of Ethics, adopted by the American Bar Association, which prohibits an attorney from acquiring an interest in the subject-matter of the litigation, and expresses the opinion that agreements for contingent fees should be under the supervision of the court.