Court Opinion

ID: 8654495
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:14:31.285805+00
Date Added: 2024-06-11T16:56:38.627539
License: Public Domain

After stating the facts,
Miner, J.,
delivered the opinion of the court:
The appellant alleges that the court erred:
1. In setting aside the entry of dismissal of the case by the plaintiff.
2. In admitting in evidence over the objection of the defendant, the contract between plaintiff and his attorneys.'
3. In instructing the jury that plaintiff’s attorneys had a lien upon the plaintiff’s cause of action for their fees. (This instruction, however, was not given.)
5. In instructing the jury that if the plaintiff was entitled to recover, their verdict should be for fifty per cent of the amount of damages which the plaintiff was entitled to recover, under their contract, if anything.
1st. The respondents — the attorneys — insist that the former decision is res adjudicata; that the same evidence based upon the same state of facts, is now before the court on this appeal as was on the former, and that all the issues and questions now before the court were decided adversely to the appellant on the former appeal, and that such decision is final in this case.
Upon this question we recognize the general rule to be *283that a previous ruling and decision by the appellate court upon questions arising in a case before it is a final adjudication of those questions in that suit upon the same state of facts, from the consequences of which the court will ■ not depart in a subsequent appeal. But this rule does not apply to the argument or to expressions or illustrations in the argument that are obiter, and not pertinent nor required for a disposition of the particular questions arising and decided in the case. The reasoning and illustrations do not constitute the decision, although important in determining what was decided. Nixon v. Devine, 80 Cal. 385; Elliott App. Proc. Sec. 578; Barney v. R. R. Co., 117 U. S. 228; Brim v. Jones, 13 Utah, 440; Silva v. Pickard, 14 Utah, 245; Venard v. Green, 4 Utah, 458; National Bank v. Lewis, 13 Utah, 509; Krantz v. Rio Grande, 13 Utah, 1; Leese v. Clark, 20 Cal. 417; Horn v. Jack, 115 Cal. 29.
Upon an examination of the opinion in the former case it will be seen that the court held that the settlement and dismissal of the action, as shown by the proof, was collusive, fraudulent, and prejudicial to the rights of the. attorneys, and was made for the purpose of cheating and defrauding them out of their just compensation for services rendered and agreed to be rendered in that action, of which fact the Guaranty Company, through its agents, had actual notice; that the order setting aside and vacating the satisfaction and dismissal of the action, so collu-sively and fraudulently obtained, could properly be made by the court under the common law, to protect one of its officers from the fraud of a client; that in permitting the attorneys to continue the prosecution of the case and proceed to judgment, so as to determine the amount of compensation due the attorneys for services rendered and agreed to be rendered by them in the case upon a written *284agreement, was a proper mode of reaching the amount of such compensation, without reference to Sec. 135 E.. S. 1898, under the proof of fraud in the case; that instead of pursuing this remedy the attorneys based their right to have the dismissal set aside and the case tried alone upon Sec. 135, but that this act was not retroactive in its operation, and did not affect the plaintiff’s case based upon a contract made prior to its enactment.
This holding and opinion covers the right of the attorneys to have vacated and set aside the order of dismissal of the action, fraudulently and collusively obtained, for the purpose of cheating and defrauding them out of their fees and compensation for their services, (there having been no plea set up alleging the champertous provisions of the contract), and in allowing the attorneys to continue to prosecute the case to determine the amount of their compensation for services under the contract because of the fraud shown, as well as the holding that they had no right to proceed under Sec. 135. As to these matters the decision in the former case is decisive of this case. While that decision was a little too broad to come within the decisions of some courts as to attorneys liens on the cause of action for fees and compensation under the common law rule before judgment, yet it is clearly within the rule as applied to the costs of attorneys. The rule announced, however, has been carried in some cases to the extent that where plaintiff’s attorneys have contracted in writing for compensation for services in a sum equal to a certain amount of the judgment recovered as a measure of their compensation of which the plaintiff has notice and who is shown to be irresponsible, and thereafter the plaintiff and defendant collusively, fraudulently and for the purpose of cheating the attorneys out of their fees, settle the case without their knowledge, it is held that the *285attorneys have a vested interest in the claim and suit depending upon the amount ultimately realized by the plaintiff, and to establish the claim the court will permit the attorneys to continue in the name of the plaintiff to determine and satisfy their claim.
In Stewart v. Hilton, 19 Blatchford, 390, it is said, quoting from the syllabus:
“A. appeared on the record as attorney for S., as plaintiff in a suit at law founded on a contract, under an agreement between S. and his son, and A., that A. should have a permanent lien on the claim and the suit, for his fees, charges and disbursements, and that the control of the suit should be in the son, to secure the agreement. An irrevocable power of attorney, with power to employ other attorneys, was made by S. to the son. A. and the son had incurred liabilities and expenses, and A. had made charges, none of which had been repaid or reimbursed. S. afterwards agreed with the defendant to discontinue the suit, against the wishes of A. and the son. B. then entered an appearance for the plaintiff, the power of attorney was revoked, and, on the call of the case in court, A. desired to have it set for trial, and B. asked to discontinue it: Held, that A. and the son had a vested interest in the claim and the suit, and that A. must be allowed to control the proceedings in court, in the name of the plaintiff.”
Substantially the same rule was announced in Wright v. Wright, 41 N. Y. Supr. Court Rep. 432, where it held that the attorney may so recover his costs and for his services. In this case the agreement was that the attorney should be paid for his services and costs out of the amount collected in the suit.
In Terney v. Wilson, 45 N. J. L. 282, it was held, in substance, that an agreement between an attorney and *286bis cbent that the attorney shall have a lien upon a certain judgment to be recovered, for a specified sum,' as compensation for his services, constitutes a valid equitable assignment of the judgment pro tanto which attaches to ' the judgment as soon as entered. ■
In Jones on Liens, Sec. 223 and 224, it is said:
“Where a client agrees that his attorney shall have a paramount lien upon the claim in suit for fees, charges and disbursements, and to secure this agreement executes a power of attorney to a third person giving him the control of the suit, such power of attorney with the agreement operates to vest in the attorney an interest' in the claim of which he cannot be divested by the client of his own motion, without satisfying his part of the agreement. It is the duty and practice of courts to protect attorneys in rights so acquired against hostile acts of those from whom they are acquired.
In Weeks on Attorneys, Sec: 369, p. 746, it is said: “But where the attorney’s only chance of payment depends upon the result of the case, the courts will not allow even a release obtained from the plaintiff pending the proceedings to be set up to defeat the claim, unless the proceedings are taken by an unauthorized attorney, when they may be adjusted without the concurrence of the attorney.” .
In Weeks v. Circuit Judges, 73 Mich. 256, it is held: “An agreement between attorneys and their client that they are to be paid for their services rendered in the prosecution of a suit, and reimbursed for moneys advanced, from the proceeds of the judgment which should be obtained, operates as an assignment of the judgment to the attorneys to the extent of such claims, and until the same are paid the plaintiff can give no valid discharge of the judgment, The rule that courts look with favor upon a *287compromise and settlement made by the parties to a suit, to prevent the vexation and expense of further litigation, only applies where all the rights and interests of all of the parties concerned, both legal and equitable, have been respected, and in good faith observed.”
In Reed v. Dupper, 6 T. R. 361, the rule is settled that a party should not run away with the fruits of a case without satisfying the legal demands of his attorney. Louisville R. R. Co. v. Wilson, 138 U. S. 507.
See also: Talcott v. Branson, 4 Paige Ch. 500; Ely v. Cook, 28 N. Y. 365; Rooney v. R. R. Co., 18 N. Y. 368; Howard v. Town of Osceola, 22 Wis. 433; Williams v. Ingersoll, 89 N. Y. 508; Hutchinson v. Buchanan, 15 Vt. 176; In re Wilson & Greig, 12 Fed. 235; Hesiter v. Dem Mount, 17 N. J. L. 438; Koons v. Beach, 45 N. E. 601; Clark v. Smith, 6 Mann & Granger, 1050.
We are not unaware of the line of authorities at common law holding that a lien for costs only attaches to the cause of action before judgment, and for fees and compensation after judgment. But Sec. 3683, Laws of 1888, which was operative at the time the contract was made, has modified the force and effect of the common law as to champertous contracts, and mode and manner of compensation was by it left to agreement between counsel and client, and no legal restrictions, were placed on such agreement at the time this contract was made. Croco v. Oregon Short Line, 18 Utah, 321.
By this section, as we have seen, the question of the measure, mode and manner of the attorney’s compensation was left to the agreement of the parties, express or implied. This power conferred necessarily included the power to take security for the payment of the fees and for the services rendered, and to be rendered in the case. *288The use of the words “mode of compensation” seems to leave open to agreement the manner of obtaining or securing the payment of the fees agreed upon. The right to contract for the measure and amount of compensation, and the mode, manner or way of receiving or securing its payment, whether in cash, or security upon the judgment, or for a share of the proceeds of the judgment to be obtained was left to the agreement of the parties, express or implied. After entering into the contract with the plaintiff, the two corporations (the defendant and the indemnity company) could not by conspiring together, nullify and abrogate its terms and absolve the defendant from liability thereon. One party cannot be held to have such power over the vested rights or contract of another. The agreement being made either party had a right to enforce it as against the fraud of the other to his injury. Under Sec. 135 the lien attached without any express agreement as to the mode or manner of compensation.
While the facts present an extreme case of wrong, yet in determining the liability of the defendant we do not mean to disturb the so called common law rule, except as it is affected by statute. The contract gave to the attorneys the power to act in that case, and as full compensation for their services in the courts of Utah to recover plaintiff’s damages, they were to have one-half of any amount received either by judgment or settlement. The plaintiff and defendant fraudulently conspired with the indemnity company to prevent the attorneys from fully carrying out their agreement, and collusively settled the case for $1,200, being for less than plaintiff’s actual damages, so as to deprive the attorneys' of their rights under the contract. This payment was an admission of the claim of the plaintiff against the defendant for $1,200 over and above the attorney’s agreed compensation, of *289which plaintiff was aware, and was quite as effectual in fixing the rights of the attorneys to their agreed compensation out of a judgment to be thereafter rendered and to determine it as if a judgment has already been rendered for the. amount of plaintiff’s full damages whereto an attorney’s lien would attach. While plaintiff may have had a right to settle his damages, he had no right fraudulently to settle the rights of the attorneys under the contract which were known to the defendant, nor prevent them from doing as they agreed they should do to recover their compensation.
The attorneys had a right under the statute to proceed to judgment for the purpose of ascertaining the amount of their compensation under the contract, and when ascertained collect the same.
2d.’ The distinguished counsel for the appellant ably contend that the contract for services was against public policy, champertous and void, because it provided that the attorneys should receive one-half of any amount that might be recovered from the defendant on a judgment or-settlement, and further provided that no settlement to be made without the consent of both parties. It is further provided that the parties of the second part shall advance the necessary court costs and witness fees.”
The same question was raised on the motion to set aside the dismissal of the action, and when the contract was offered and received in evidence against the objection of the defendant, and again when the court refused the defendant’s request for a non-suit. Practically the same question is also raised in the exceptions to the instructions of the court to the jury.
Sec. 3683, C. L. U. 1888, which was in force at the time this contract was made, provides that “the measure and mode of compensation of attorneys and counselors at, law, *290is left to the agreement, express or implied, of the parties.”
In Croco v. Oregon Short Line R. R. Co., 18 Utah, 321, this court held that the common law was in force in Utah at the time of the adoption of our present constitution so far as compatible with our situation and government, but that its force and effect as applied to cbamper-tous contracts. was modified by the above section. We also held that under this section it was competent and legal for an attorney and client to agree upon the attorney’s compensation; that no legal restrictions were placed upon their agreement for compensation at the time it was made by Sec. 3683, and a right to enforce it was implied; that such compensation may legally be made contingent upon success in the case, and payable by percentage, share, or otherwise,' out of the judgment or proceeds of the litigation, but that it was not competent to agree to pay the advance fees and costs of a suit thereafter to be commenced as a consideration for-such agreement, irrespective of the client’s liability to refund the same.
This "holding may properly be extended to cover this case, with the addition that in no case should the agreement be champertous or illegal, when the attorneys simply agree to advance the necessary costs and witness fees, under an agreement as testified to by plaintiff, ‘ ‘ that the costs were advanced by his attorneys because he had no money to enter suit with; that the attorneys loaned him that much money.”
It is not against public policy for an attorney to loan his client money with which to pay costs of suit, nor to advance the money necessary to carry on the suit, as needed, when such advances are made as a loan, with the express or implied understanding or agreement for its repayment, and there is no contract of indemnity against *291the clients’ liability'to pay costs. A contrary rule would embarrass the profession in its legitimate practice, and render attorneys a constant mark for dishonest clients. This is so because it is seldom that for some cause attorneys are not required to advance fees with which to commence suit and to pay officers and witnesses and other necessary expenses, when their clients may not be accessible, or when they may have a meritorious cause, but so impecunious as to be unable to meet, at the time, the necessary expenses.
In this view, we find no merit in the contention that the contract to advance the costs was illegal or champertous. But that part of the agreement contained in the contract providing that “no settlement to- be made without the consent of both parties” was inoperative and against public policy as the law then stood,' because settlement of causes and differences between persons are encouraged by the law. While this sentence in the contract- is against public policy and inoperative, yet the making of the contract with that provision in it is neither malum pro-hibitum nor malum in s'e. No criminal liability attaches to the persons entering into such a contract, nor is the making of it reprehensible; neither is it always considered of questionable propriety. The balance of the contract is not affected by it. Therefore courts although refusing to enforce that part of such a contract, will allow compensation for valuable services rendered, under the remaining portion of it, which is separable therefrom.
In Davis v. Webber, 49 S. W. R. 825, the court said :
“While the contract sued on is against public policy, and therefore void, yet the making of such a contract is neither malum prohibitum nor malum in se. It is not even of questionable propriety. Therefore the courts, although refusing to enforce such a contract, will never*292theless grant compensation for valuable services rendered under it, upon the rule of quantum meruit.”
In Stearns v. Felker, 28 Wis. 294, it is said: “There is almost or quite an unbroken line of authorities which hold that although attorney ánd client may have entered into an agreement in respect to the compensation for the services of the former, which is void for champerty, yet the attorney does not thereby forfeit his right to full com- < pensation for his services, nor the client his right to the. fruits of the litigation after paying for such services what •the same are reasonably worth. Such is undoubtedly the law, and it harmonizes with the plainest principles of justice.” 5 Am. & Eng. Enc. of Law (2d ed.) 828, 9. Ziegler v. Mize, 132 Ind. 403.
Under the circumstances of this case we are of the opinion that the objectionable feature of the contract was separable from and forms no part of an otherwise binding contract, upon which a liability arose for services rendered, and in good faith performed. With these exceptions the contract was authorized by Sec. 3683 heretofore referred to.
3d. Heretofore we have discussed the case independent of the pleadings.
In this case the attorneys for the plaintiff are seeking to set aside a fraudulent and collusive settlement and dismissal of this case, made between the plaintiff and the defendant and the London Guaranty Company, which company had insured the defendant against loss and damage by reason of accident and injuries to defendant’s employés, and had agreed to indemnify it against damages arising from accidents such as was claimed in this action. The settlement was made in the interests of this company and the defendant. Plaintiff’s attorneys seek to prosecute the suit for their own use and benefit in the *293name, of the plaintiff, because of the fraud practiced upon them by both plaintiff and defendant. The defendant’s attorneys disclaim and are not chargeable with any agency in procuring the settlement, although the defendant is anxious and willing to receive the benefits, if any, arising from it, notwithstanding its collusive and fraudulent character.
The petition of the attorneys on motion to set aside the order of dismissal of the case, set out the contract between the plaintiff and the attorneys, including the objectionable features thereof, alleged fraud in the settlement of the case, and the irresponsibility of the plaintiff. After this the defendant amended its pleadings by setting up in its supplemental answer the settlement and compromise of said action and all claims arising therein, but in no way pleading the unlawful or champertous nature of the contract.
The plaintiff’s attorneys contend that this contract is not between the plaintiff and defendant, but between plaintiff and his attorneys; that the defendant is not affected by it, and has no right to intermeddle in this suit, and that in no case can it do so; that neither can the defendant be heard without pleading by way of abatement or defense, the unlawful or champertous nature of the contract relied upon. "We believe the attorneys for the plaintiff are correct in their contention.
In the case of Croco v. Oregon Short Line, 18 Utah, 311, this court held: “4th. If it be conceded that the common law, as modified, was in force at the time the contract was made, and that it was of a champertous character, and therefore void, yet it appears the contract was entered into between the plaintiff and his attorney, and that the defendant was in no way a party thereto. The defendant being a stranger to the contract, had no *294right to question its validity in a collateral attack. There seems to be no sound reason in a rule which would allow a party to defeat a just cause of action because the opposite party has made a contract which is absolutely void, and which therefore cannot be enforced by either of the contracting parties. As to the defendants the rights of the parties are the same as if the illegal contract had never been executed. The champertous contract being void would divest the plaintiff of no cause of action. He is still the real party in interest. While the party to the illegal contract might be allowed to repudiate it, other persons not parties to it, should not be permitted to exonerate themselves from their just obligations on account of it. If, for instance, a defendant when sued upon his valid promissory note can avoid payment thereof, and interpose a bar to a recovery, by showing that the plaintiff made a champertous contract with his attorney for its collection, then is a meritorious plaintiff placed, to a large extent at the mercy of a dishonest debtor. Under such circumstances it does not lie in the mouth of the defendant to set up that fact for the purpose of escaping the payment of an honest.debt or avoiding a just liability. The law in such a case will compel the defendant to perform his undertaking, and leave the question of champerty to be determined between the plaintiff and his attorney.
We are of the opinion that the defendant is not in a position to avoid a legal obligation because the plaintiff and his attorney may have entered into a champertous contract to enforce the obligation. Small v. Railroad Co., 8 N. W. R. 437; Hoffman v. Vallejo, 45 Cal. 564; Barnes v. Scott, 117 U. S. 582; Duke v. Harper, 66 Mo. 51; Thalheimer v. Brinkerhoff, 3 Cow. 623; Boon v. Chiles, 10 Pet. 177; Hilton v. Woods, L. R. 4 Equity, 432; Elborough v. Ayres, L. R. 10 Equity, 367; Allison *295v. C. & N. W. Co., 42 Ia. 274; Pike v. Martindale, 91 N. W. R. 263; Cartwright v. Bunnes, 13 Fed. Rep. 317; Gage v. DuPuy, 137 Ill. 652; Hart v. State, 120 Ind. 83; Ziegler v. Mize, 132 Ind. 403; Insurance Co. v. Way, 62 N. H. 622; Chamberlain v. Grimes, 42 Neb. 701; Davis v. Settle, 26 S. E. R. 557.
It does not appear that the liability or obligation of the defendant is enlarged or affected by the contract in its entirety, even if champertous and against public policy. Whatever damages followed the injury complained of by the plaintiff was a liability of the defendant. This liability was irrespective of the alleged champertous contract, or of the plaintiff’s claim under it. Damages for the personal injuries was a question between plaintiff and the defendant. How much of such sum recovered as damages was paid, or agreed to be paid to plaintiff’s attorneys for success in recovering it, was no concern of the defendant. The liability was not increased if the attorneys agreed to take all the damages; nor was it affected if they took one-quarter of it. The amount of the attorney’s compensation depended upon the judgment, but' the amount of the defendant’s liability did not depend upon the contract of the attorneys, or their compensation.
The general rule applicable to this case, as held in Croco v. Oregon Short Line R. R. Co., 18 Utah, 324, is that where such champertous contracts are questions between the parties who made them, a plea or answer of the fact on .the part of the defendant is necessary in order to make the defense availing. It is just as necessary as it is to plead the statute of limitations, or a fraud in proper cases. Sec. 2968 Rev. Stat. 1898; Croco v. Oregon Short Line, 18 Utah, 324; Moore v. Ringo, 82 Mo. 468; Pike v. Martindale, supra. Brumback v. Oldham, 1 Idaho, 710; Allison v. Railroad Company, 42 Ia. 275; Reed *296v. Insurance Company, 61 Pac. 21, 21 Utah, 295; Vimont v. R. R. Co., 69 Ia. 304; McMullen v. Guest, 6 Texas, 215; Suit et al v. Woodhall, 116 Mass. 547; Bliss on Code Pleading, Sec. 364; Dixon v. Burke, 6 Ark. 412; 2 Saunders on Pleading, 1041; 4 Enc. Pl. & Pr. p. 370.
This plea was not interposed by the defendant as it could have been, and therefore the defense that the contract was against public policy and void, and was cham-pertous is unavailing to the defendant in this case.
The instructions of the court to the jury were in accordance with the views expressed herein and in the former opinion. We find no reversible error in the record. The judgment of the district court is affirmed, with costs.
Bartch, C. J. concurs.
Baskin, J., dissents.