Court Opinion

ID: 3984569
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:40:50.852647+00
Date Added: 2024-06-11T13:36:14.847346
License: Public Domain

The item of $40,000 for special fees earned under what in the record is termed the "Silver King-Conkling" Case, hereinafter referred to as the Conkling Case, to my mind presents the principal difficulty on this appeal. I voted for a rehearing of the case for the reason that after a more careful examination of the record I seriously doubted the correctness of the result reached in the original opinion. After the rehearing was granted and the case was reargued, I again went over the record and also made a somewhat careful research of the authorities. After doing so I have become convinced that the original opinion should not stand. The question, however, still remains: How shall the case be decided?
There is no doubt under the authorities that, ordinarily, where a law partnership is dissolved which is engaged in the general practice of the law, in the absence of a special arrangement or agreement between the partners, each partner is entitled to his pro rata share of the fees earned in the process of winding up the pending business of the partnership, and in case of the death of any one of the partners pending the winding up of the partnership business his heirs or personal representatives succeed to his share. There may, however, be special conditions or circumstances when in an equitable accounting a different rule should apply as between the partners. That such may be the case is recognized by the United States Supreme Court in the case of Denver v. Roane, 99 U.S. 355,25 L. Ed. 476. While the general rule is applied in that case, the court nevertheless, in the course of the opinion, said:
"There may possibly be some reason for applying a different rule to cases of winding up partnerships between lawyers and other professional men, where the profits of the firm are the result solely of professional skill and labor." *Page 435 
The same thought is expressed in Justice v. Lairy,19 Ind. App. 272, 49 N.E. 459, 65 Am. St. Rep. 405, and is recognized inRoth v. Boies, 139 Iowa 253, 115 N.W. 930. I refer to the foregoing only for the reason that the record in the case at bar leaves no room for dispute that the firm of Dickson, Ellis 
Schulder was employed in the matters in controversy here for the sole purpose of obtaining Mr. Dickson's experience and skill in particular cases, and that is especially true with respect to the employment in which the $40,000 fee was earned. The record is conclusive upon the question that Mr. Schulder's services were not considered in that employment, and that he rendered no assistance to Mr. Dickson or to Mr. Ellis in that matter. Indeed, Mr. Schulder very frankly testified that it was Mr. Dickson's skill and experience that was sought in mining cases like the one in question.
Mr. Schulder, however, bases his claim upon the sole ground that the fee of $40,000 was earned in a case which was pending when the partnership of Dickson, Ellis  Schulder was dissolved and that he is entitled to his pro rata share by reason of that fact. That is, that he is entitled to his pro rata share of that fee pursuant to the partnership agreement respecting the division of fees earned by the partnership. If it be true, therefore, that the $40,000 fee was earned in an action that was pending when the firm of Dickson, Ellis  Schulder was dissolved and that it is a fee which was earned in winding up the pending partnership business of the firm, then Mr. Schulder should prevail in his contention. The question, therefore, that arises is: Does the record sustain Mr. Schulder's contention?
It is unnecessary for me, nor shall I attempt, to go into detail with respect to what the record discloses regarding that matter. While it is true (and upon that there is no dispute in the record) that the Conkling Case was pending when the firm of Dickson, Ellis  Schulder was dissolved, yet it is equally true that before the particular proceedings in which the $40,000 was earned there had been a full and complete settlement and payment of all the fees that had been earned in that case by the firm of Dickson, Ellis  *Page 436 
Schulder, and that the settlement and payment was made for the express purpose and with the intent of paying off the judgment obtained in the Conkling Case which had been ob-firmed in the United States Circuit Court of Appeals. After the fees had been paid, negotiations for the purpose just stated were opened by the respective parties to the litigation but failed of consummation. The reasons why they failed are not now material. It was while negotiations were pending, however, that it was suggested that a new application for a writ of certiorari should be made to the Supreme Court of the United States and that such a writ, if granted, might prove successful. It was upon that suggestion, and not otherwise, that Mr. Dickson, Mr. Ellis, and Judge Marioneaux applied for and obtained the writ from the United States Supreme Court and finally succeeded in obtaining a reversal of the judgment which had become final in the United States Circuit Court of Appeals. Under all of the circumstances, a part of which I have very briefly outlined, I have no doubt that the matter of obtaining the writ of certiorari from the United States Supreme Court was manifestly in the nature of a new employment of Judge Dickson and Mr. Ellis who acted in conjunction with Judge Marioneaux in that matter. The conclusion that it was so considered at the time by all concerned, the record, I think, fully justifies. Further, that what was done in the regard was done in good faith, and not for the purpose of in any way preventing Mr. Schulder from obtaining what was justly due him in winding up the business which was pending when the partnership was dissolved. If the new employment had been merely colorable or for the purpose of depriving Mr. Schulder of his pro rata share of the fees, a different question would be presented. The facts and circumstances which caused the application for the writ of certiorari to be made leave little, if any, doubt in my mind, however, that the employment of Judge Dickson, Mr. Ellis, and Judge Marioneaux was by all considered a new employment and for a special purpose. That it was so considered is somewhat strengthened by the fact that when Judge Marioneaux was first employed, the amount of his fee, *Page 437 
it appears, had been agreed upon, but after the writ of certiorari had been obtained, and when final settlement was made, the judge demanded and was paid an additional amount for the services rendered in the certiorari proceedings by him in conjunction with Judge Dickson and Mr. Ellis. In view of all the facts, therefore, there is no doubt in my mind that if under the circumstances Mr. Schulder had died either just before or just after Judge Dickson and Mr. Ellis were employed in connection with Judge Marioneaux to obtain the writ of certiorari in the United States Supreme Court, his heirs or personal representatives would not have been entitled to any part of the $40,000 fee which was paid to Judge Dickson and Mr. Ellis for the services rendered in the certiorari proceedings. Had there been an existing agreement at the time the firm of Dickson, Ellis 
Schulder was dissolved, that the firm should prosecute the case upon a writ of certiorari in the Supreme Court in case they failed of success in the Circuit Court of Appeals a different rule would apply. There is, however, not the slightest evidence of any such an agreement. Nor is it contended that such an agreement existed. Indeed, the officers of the mining company by whom Judge Dickson and Mr. Ellis were employed did not so consider the matter. Nor, so far as the record discloses, did any one else so consider it.
Mr. Schulder's contention, as I have already pointed out, is entirely based upon the hypothesis that the proceedings happened to be in a case which was pending when the partnership of which he was a member was dissolved. While that has its proper bearing in the case, yet, standing alone, it is not conclusive. That such is the law is clearly pointed out by the Supreme Court of California in the case of Little v. Caldwell, 101 Cal. 553,36 P. 107, 40 Am. St. Rep. 89. In that case a law partnership was dissolved by the death of one of the partners. Before the dissolution the partnership had entered into a contract to conduct certain litigation for a contingent fee. Some time after the dissolution of the firm by the death of one of the partners and after the case was decided adversely to the contention of the partnership's clients, *Page 438 
as is the case at bar, the surviving partner entered into a new agreement with the partnership's clients whereby it was agreed that the case should be appealed to the Supreme Court and that the contingent fee should be greatly increased in case he was successful in that court. The surviving partner accordingly appealed the case and reversed the judgment of the lower court and was thus entitled to receive the increased fee. The heirs of the deceased partner then brought an action for an accounting and insisted that they were entitled to a division of the entire fees upon the ground that the case was pending at the time of the death of their ancestor and hence was unfinished partnership business. The court, however, held that the heirs were entitled to their share only of the original fees agreed upon, and that the surviving partner was entitled to all of the increased fee. In that case the court recognizes and approves the general rule that the fees derived from all pending partnership business must be distributed in accordance with the partnership agreement, and that each partner is entitled to his pro rata share, although one of the partners in winding up the partnership business may have rendered more services than the other. The court, however, held that the facts of the case carried it outside of the general rule and that equity and justice required that a different rule should be applied. Upon reason and principle I can discover no essential difference between the California case and the case at bar. If there is any difference, the case at bar, in view of all the circumstances, is stronger in favor of the contention of Judge Dickson and Mr. Ellis than is the California case. The California case was appealed after an adverse decision in the court below. In the Conkling Case, a writ of certiorari, which was intended as a writ of review to review the decision of the United States Circuit Court of Appeals, was obtained. In the California case the decision of the lower court was reversed and such was the effect of the decision of the Conkling Case in question here. In the California case the partnership's clients obtained a large advantage by the appeal and such was the case here. In the Conkling Case there was, however, a full settlement *Page 439 
and payment of the fees earned up to the time the judgment became final in the Circuit Court of Appeals. In the California case there was no such settlement but there was merely an agreement that the case should be appealed to the Supreme Court and the contingent fee agreed upon by the partnership should be increased. In the Conkling Case, as pointed out by Mr. Chief Justice GIDEON, Mr. Schulder could not have been held liable for any act of negligence, carelessness, or omission on the part of Judge Dickson or Mr. Ellis. It is elementary that in case of legal partnerships each partner becomes liable for the acts of his co-partner if within the scope of the employment. Upon what principle of law, therefore, could Mr. Schulder have been held for any act of negligence or malpractice on the part of Judge Dickson and Mr. Ellis in prosecuting the certiorari proceedings? In view of all the circumstances, therefore, how can it be successfully contended that Mr. Schulder can share in the earnings of Judge Dickson in prosecuting the certiorari proceeding when it must be conceded in advance that he assumed neither a legal nor a moral responsibility in that matter?
It is argued, however, that according to Judge Dickson's own statements which were made in a letter or letters written by him to Mr. Schulder, the former acknowledged that Mr. Schulder was entitled to his pro rata share of the fees which would be earned in case Judge Dickson should argue the certiorari proceedings in the United States Supreme Court. That letter, as pointed out by the Chief Justice, can, however, not be relied on as constituting a contract. Under certain circumstances it might be construed as an admission that there was a contract under which Mr. Schulder might prefer a claim. The language of the letter, however, in and of itself, refutes such a contention. What Judge Dickson wrote in the letter is:
"If the writ (certiorari) is granted and I argue the case in that court (the United States Supreme Court), you will receive one-fourth of the fees therein."
That is very far from admitting that the old firm of Dickson, Ellis  Schulder was under contract or legal obligation *Page 440 
to pay Mr. Schulder any of the fees earned in the certiorari proceeding. At most, it was merely a statement by Judge Dickson that if he argued the case Mr. Schulder "will receive" the amount stated. Judge Dickson did not, and could not, bind the partnership or Mr. Ellis by what he then wrote. As pointed out before, the employment was in a special proceeding and was undertaken after full settlement and payment of the fees earned up to the time that the judgment had become final in the Circuit Court of Appeals and after negotiations for a settlement of the judgment had either partially or wholly failed of consummation. Under such circumstances, Judge Dickson could not bind Mr. Ellis by anything the former may have said or written without Ellis' consent, express or implied. Judge Dickson, however, fully explained why he wrote the letter and why he made the statements therein contained, and no one contradicts or even questions his statements in that regard. Moreover, this is a proceeding in equity for an accounting. The burden is upon Mr. Schulder to prove that he was entitled to his proportion of the fees earned in the certiorari proceeding. In order to succeed, Mr. Schulder must show that Judge Dickson and Mr. Ellis were legally obligated to perform services in the certiorari proceeding as a necessary part of winding up the partnership business. Can any one doubt that if any one had demanded that they or either of them should commence and prosecute such a proceeding and they had refused, they would not have been clearly within their legal rights? Unless there was a legal duty imposed upon them to perform the services in such proceeding as a necessary part of winding up the partnership business, Mr. Schulder cannot recover any part of the fees earned by them in that proceeding.
In my judgment the evidence does not only not sustain the conclusion that Judge Dickson and Mr. Ellis were obligated to prosecute the proceeding as a part of winding up the partnership business, but that it is directly to the contrary. No doubt, the easy way out of the difficulty in this case would be to assume that under the partnership agreement the certiorari proceedings were merely a necessary part of winding up *Page 441 
the pending partnership business. The conclusion, to my mind, is, however, neither fair, just, nor equitable. To my mind the conclusion that is justified by the facts and circumstances is that the certiorari proceeding constituted a new and independent employment which was related to the partnership only because the original case had been commenced before the partnership was dissolved. It certainly is still the law that when a law partnership is dissolved by the retirement of the leading member of the firm clients may settle for past services and may terminate the employment of the partnership altogether. True it is that if the client permits the partnership to complete the business, he is bound to pay for the services rendered by it. The client, after the case has gone to final judgment which is adverse to him, however, may also pay the partnership all fees earned up to that time and release or discharge it from further duties. After that he may employ any other lawyer or firm or may employ any member or members of the law firm either alone or in conjunction with another. After that he is liable only to those he has so employed. In this case while it is true that Mr. Schulder is bound by any settlement that was in good faith entered into between Judge Dickson and Mr. Ellis and the mining company respecting fees yet, if it were assumed that both Judge Dickson and Mr. Ellis had been insolvent and financially irresponsible and Mr. Schulder had notified the mining company that he was entitled to a certain proportion of the fees in the certiorari proceeding and that it should not pay them to Judge Dickson or Mr. Ellis or to either of them for the services rendered and the mining company had nevertheless paid the fees to Dickson and Ellis or to either of them, could Mr. Schulder legally hold the mining company for his share of the fees? The answer is obviously no, for the reason that in so far as the certiorari proceeding is concerned Mr. Schulder had no legal relationship with the mining company and it was under no legal obligation to him. So far as the $40,000 item is concerned, therefore, Mr. Schulder cannot prevail.
As to the other items in dispute it is sufficient to say that *Page 442 
they stand upon a different footing. The district court was no doubt justified in finding that those items constituted a part of the fees earned in winding up the partnership business of the firm. I can see no good reason for disturbing the court's findings and conclusions of law regarding those items. Upon the other hand, I can discover no good reason for upholding the findings of fact and judgment respecting the $40,000 item.
I feel constrained to add that by anything I have said or omitted I do not wish to be understood as holding or intimating that Mr. Schulder did not in good faith believe that he was entitled to his pro rata share of the $40,000 item. I am convinced from the record that he was just as firmly convinced that he had a legal right to his pro rata share of the fees earned in the certiorari proceeding as I am convinced that he is not legally entitled to any part of those fees. Neither do I wish to be understood by what I have said respecting Judge Dickson's employment that Mr. Schulder was incompetent or that he was not a good lawyer. What I mean is that at the time the firm was employed by the mining company Mr. Schulder was a young lawyer of very limited experience, while Judge Dickson was easily the leading mining lawyer of the western country and so recognized by both bench and bar. It is for that reason that Judge Dickson's services were desired by the mining company rather than the services of Mr. Schulder. I have merely attempted to outline the facts and circumstances as they really exist; no more; no less.
I am of the opinion, therefore, that the findings of fact, conclusions of law, and judgment awarding to the plaintiff his pro rata share of the $40,000 item should be reversed. In other respects I concur in the views and judgment of the CHIEF JUSTICE.