DODGE v. SCHELL

DODGE v. SCHELL. U. S. Circuit Court, Southern District of New York; June, 1882. Contract to Prosecute Claim for Share of Recovery.—Right of Plaintiff to Substitute Attorneys upon Death of the Contractor.—Lien.—Right of Personal Representatives of Contractor to Collect Judgment. One who was not an attorney undertook to endeavor to establish the illegality of excessive duties which had been exacted of merchants, he to proceed at his own expense, and to be paid a compensation equal to a share of the recovery. He, and after his death, his executrix, employed, and from time to time substituted attorneys, and was allowed by the real party in interest to control the proceedings until recovery of judgment in their favor. Held,, that his interest survived his death. 3. That the contract was not an equitable assignment of a share in the proceeds, and the real party in interest had a right to have their attorney substituted; but, 3.. The contract and service gave him and his executrix a lien upon the recovery, which the court would protect as a condition of allowing the substitution. The plaintiffs, composing the firm of Phelps, Dodge & Co., in or about the year 1860, entered into an agreement, which, after reciting the exaction of certain alleged excessive duties on importations by the collectors of customs at various ports in the United States, provided as follows: “The undersigned, in behalf of themselves and consignors, have employed Alfred Douglas, Jr., and Earl Douglas, of New York city, who agree on their behalf to endeavor to establish, by legal decisions or otherwise, that such exactions are illegal, and to recover the excess of duty and fees paid by us to the United States ; and in consideration of their undertaking and services rendered and to be rendered, we hereby severally agree to allow and pay to said Alfred Douglas, Jr., for himself and associate, as compensation for said services, a fee equal in amount to the one-half part of all and any sums of money they may recover. It being expressly understood and agreed that all expenses and costs are to be for account and risk of Alfred Douglas, Jr., and Earl Douglas, whether they are successful or not.” In pursuance of this agreement, Douglas commenced this action against the defendant, who was collector of customs at the port of New York, and retained control of it until his death, in 1876. It was afterwards prosecuted to judgment by his executrix, and judgment recovered in plaintiffs’ favor for $17,498. Shortly thereafter the attorney for plaintiffs died, and the- executrix substituted another attorney, and a rule was. entered to that effect. Questions having been raised as to the authority of the executrix to so appoint an attorney, the district attorney of the southern district of New York made a motion in October, 1878, to vacate such rule of substitution, which was denied. A writ of error was taken by defendant to the supreme court of the United States, and the proceedings in that court, resulting in a dismissal of the appeal, were conducted by plaintiffs’ personal attorneys, who had entered an appearance for plaintiffs as defendants in error with the clerk of that court, December 6, 1878. Upon application to the clerk of the circuit court, to have the decision of the supreme court made the judgment of that court, plaintiffs were met with the objection that an appearance for the plaintiffs had been' entered by the attorney selected by the executrix of Douglas. Plaintiffs thereupon made this motion to vacate and strike out such appearance, and to direct the clerk to annul and vacate the same. John E. Parsons, for motion. Wm. Nelson Cromwell, opposed. The motion was argued on the grounds : 1. That the contract was personal, and died with Douglas. 3. That the contract was void under the law against champerty and maintenance. The following decision was rendered November 30, 1878: A. Aymar and others against Herman J. Redfield. Blatchford, J. —1. I do not think the contract died with Douglas. 3. I do not think the contract is one which, under the law as to champerty and maintenance, as understood and interpreted by the courts of New York, is invalid. The motion to vacate the order of substitution is denied. [MAJORITY — Wallace, J.] Wallace, J. This is a motion by plaintiffs to vacate an appearance by an attorney in their behalf, as unauthorized. The attorney does not dispute the plaintiffs’ right to substitute another attorney in his place, but insists they should not be permitted to do so until they fulfill their obligations to one whom the present attorney immediately represents. Prior to 1864, Phelps, Dodge & Co., -the plaintiffs, made an agreement with one Douglas by which they employed the latter to prosecute a claim of theirs against the government, growing out of alleged illegal exactions of duties and fees. By this agreement Douglas undertook to “ endeavor to establish the claim by legal decisions or otherwise.’ ’ He was to be paid for his services a sum equal to one-half of the recovery, and was to bear all the costs and expenses of the proceedings. In 1864 he employed attorneys and brought suit in the name of the plaintiffs against the collector of the port of New York. From that time until 1876, when he died, he had the exclusive control of the suit. Substitutions of attorneys had been made by him and he had defrayed all the expenses. After his death his executrix assumed control of the suit, and under her administration the present attorney was substituted as plaintiffs’ attorney and a judgment for $17,498 recovered for the plaintiffs. Until this judgment was recovered plaintiffs took no part in the proceedings and apparently manifested no interest therein. Their first intervention in the suit was an effort to wrest its control from the executrix. A motion was made, ostensibly by the defendant in the suit, but apparently at the instigation or in the interest of the ' plaintiffs, to vacate the appearance of the attorney substituted by the executrix, upon the ground that the agreement between plaintiffs and Douglas was champertous and void, and if not, because the executrix had no power to appoint an attorney for the plaintiffs. This motion was heard before my predecessor in this court, and denied. Notwithstanding this, the plaintiffs succeeded, through the co-operation of the defendant’s attorneys, in ejecting the attorney from the suit during pendency upon a writ of error from the judgment. Upon the affirmance of the judgment, however, when they applied to enter a mandate in this court, the clerk , of this court refused to recognize the right of any attorney to appear for them except the present attorney. Hence this motion. The plaintiffs now insist that their contract with Douglas was one for his personal exertions, and by his death before entire performance they are released from all obligations to his executrix ; that his interest did not survive his death, and his executrix was not authorized to assume charge of the suit and appoint the present attorney. ' That the executrix of Douglas hás a valid claim, against the plaintiffs for the value of his services up to the time of his death, the entire performance of the contract, on his part, being prevented by his death, is established by many authorities, among which are Wolfe v. Howes, 20 N. Y. 197; Spalding v. Rosa, 71 N. Y. 40, cited in the brief of plaintiffs’ counsel. It is more doubtful whether the executrix upon Douglas’s death had the right to control the further prosecution of the action. But after she was permitted to do so by the -plaintiffs for a considerable period of time, and by her exertions and at her expense the judgment was obtained which the plaintiffs now seek to control, the objection to her conduct seems an ungracious one, and should not be willingly enforced. • The question of her authority to appoint the attorney must have been passed upon by Judge Blatchford on the former motion to vacate the appearance,, and have been determined affirmatively, otherwise the motion would have prevailed. Whether this authority was held to be within the scope and contemplation of the original contract between plaintiffs and Douglas, or to be implied from the subsequent conduct of the parties, does not appear; nor is it material now. It suffices that there are no clamorous equities in the present application to urge a reconsideration of that adjudication. For thirteen years the plaintiffs acquiesced in what was done by Douglas and his executrix; but from the time they ascertained that a large judgment had been recovered, they have seemingly been unwilling to recognize the agreement. They now present affidavits in which, upon information and by innuendo, they impute fraudulent conduct to Douglas, not toward themselves, but toward the government. They claim that the judgment would not have been affirmed upon the writ of error, except for the exertions of counsel employed by themselves ; but it appears that competent counsel were employed by the executrix and ignored by the plaintiffs. They represent themselves willing to pay a reasonable compensation to the executrix; but at the same time they are insisting they are under no legal obligation, and they have made no definite proposition of judgment. Notwithstanding all this, the plaintiffs have the right to collect the judgment themselves, and for that purpose to appoint such attorney as they desire. They did not transfer the cause of action to Douglas, nor did the agreement effect an equitable assignment to Douglas of half of the proceeds of the suit. The suit now being at an end, the executrix has no interest in controlling its further disposition. She has, however, the right to assert any -lien upon the judgment which exists by virtue of the agreement and the service rendered under it. If Douglas had been an attorney, the agreement and services would have created a lien. There is no magic in the name “attorney” which conjures up a lien. It is the nature of the services and the control, actual or potential, which the mechanical or professional laborer has over the object intrusted to him, which determines whether a lien is or is not conferred. The services which Douglas was employed to render and did render, were in character attorneys’ services. As he appointed and discharged attorneys, he had through them the same control over the suit as he would if he had been an attorney himself. It was said by Best, Ch. J., in Jacobs v. Latour (5 Bing. 130). “ As between debtor and creditor the doctrine of lien is so equitable, it cannot be favored too much.” The remark is peculiarly applicable in the present case. It would not be proper to determine now, or by any proceeding which, cannot be reviewed, the amount of the lien to which the executrix is entitled. But for present purposes, it should be held that she is not to be turned over to a suit at law to receive that measure of compensation at the end of the litigation to which she is entitled now before surrendering her lien. It may be, the plaintiffs have equities and legal rights with which the court has not been impressed, and from which they should not be definitely precluded by the present decision. It may ultimately appear that the executrix should not receive the whole compensation contemplated by the agreement, but the burden should rest upon the plaintiffs, who are seeking to show that she is not entitled to the sum which they promised to pay when their claim should be established. It is therefore ordered that the plaintiffs’ motion be granted, upon the payment to the executrix of Douglas of one-half of the amount of the judgment, without prejudice to the right of the plaintiffs to recover at law if they can show themselves entitled to the whole sum, or such part thereof as may be just.