Ballinger v. Lee

43 App. D.C. 422, 1915 U.S. App. LEXIS 2631

• Court: Court of Appeals for the D.C. Circuit
• Decided: April 5, 1915
• Docket: No. 2764
• Status: Published

Opinion

Mr. Justice Van Orsdel

delivered the opinion of the Court:

It is urged by counsel for defendant that the act of Congress declaring the contracts which formed the basis of the copartnership void operated to so taint the partnership contract as to nullify it. We are unable to agree with this contention. It is agreed that the partnership contract, when made, was valid. Indeed, the fee contracts were then legal. The statute striking, down the fee agreements did not totally destroy the relation of attorney and client thereby established. The rights of the partners were reserved to the extent of establishing a claim to compensation' for services rendered in quantum meruit before the Secretary of the Interior. When the copartnership agreement was made, it was familiar law in this country that the United States, as custodian of Indian funds, in the exercise of its inherent powers of sovereignty, could limit the amount of compensation to be paid counsel for representing even a citizen of the United States who made a claim against such a fund, although it might involve the destruction of an existing contract for fees. Ball v. Halsell, 161 U. S. 72, 40 L. ed. 622, 16 Sup. Ct. Rep. 554; Marchie Tiger v. Western Invest. Co. 221 U. S. 286, 55 L. ed. 738, 31 Sup. Ct. Rep. 578. Plaintiff and defendant were advised of this ruling when the copartnership was formed, but it still remained for Congress to apply the rule to their agreements. Under these circumstances, it is doubtful if the validity of the partnership agreement would have been nullified had the partners’ right to recover anything against the Indian fund been denied. A legal infirmity which will enable a party to a contract to avoid it must be inherent at the time of its inception. The act not only does not declare the services of attorneys an unlawful consideration upon which to base a charge against the fund of the Indians, but it specifically preserves this right.

It appears that services were performed by this copartnership which form a legal charge against the Indians, and it follows that whatever is recovered is an asset of the firm. The act only provides for justice between the Indians and counsel who have performed services for them. It has no concern for existing contracts between attorneys which may govern the distribution of the fees so obtained. If, in the last analysis, no fees should be recovered, it would not affect the validity of the partnership in its adjustment and disposition of expenses, office fixtures, or whatever assets and liabilities it might have.

But is there ground for the interposition of equity by injunction and the appointment of a receiver? Defendant is enjoined from presenting any claim for services to the Secretary of the Interior, either on his own behalf or on behalf of the firm, in any matter growing out of the cases involved in the partnership. A receiver has been appointed to appear in the Department to assert the claims of the partnership, and to receive such compensation as may be allowed by the Secretary of the Interior. We think no reason in equity exists for either an injunction or the appointment of a receiver. The act of Congress, the rules of the Secretary made pursuant thereto, and the terms of the partnership agreement fully and amply protect plaintiff. The act of Congress permits all parties interested to present their claims to the Secretary of the Interior for compensation for services rendered. This opens the door not only to plaintiff and defendant individually, but as partners, to submit proof of services in all cases involved in the partnership. For the proper protection of all parties, the Secretary, by rule, has required all fee agreements to be filed with him, and when it is made to appear to him that outstanding fee agreements exist as an original basis for the claims of the partnership, he will undoubtedly require compliance with his rules and block every avenue of recovery until the contracts and such records of the partnership as appear essential in the case have been produced. The act then provides “that before payment is made to any attorney or attorneys there shall be filed a receipt in full of all claims or demands on the part of such attorney or attorneys in such form as may be prescribed by the Secretary of the Interior.” [38 Stat. at L. 600, chap. 222.]

With such a legal tribunal open to plaintiff, what protection can he claim in equity ? His course is plain. All he is required to do is to place before the Secretary of tbe Interior the partnership agreement, or a true copy thereof; and the Secretary, in the proper performance of his duties, will not order payment in any claim in which it appears the firm-is interested until a full receipt and acquittance has been executed by the partners jointly or as a firm. A like duty devolves upon the Secretary to see that the warrant or evidence of indebtedness is delivered to the person authorized to receive it. In this instance, by reference to the partnership agreement, it appears that plaintiff is alone authorized to receive payment from the Government on behalf of the firm. It thus appears that the Secretary, in the due performance of his duty, must, of necessity, pursue a course which will amply protect plaintiff.

The decree is reversed with- costs, and the cause is remanded with directions to dismiss the bill. Reversed and remanded.