Hadlock v. Brooks

59 N.E. 1009, 178 Mass. 425

• Court: Massachusetts Supreme Judicial Court
• Decided: April 3, 1901
• Status: Published

Opinion

Barker, J.

In each of these cases, tried together before the Superior Court with a jury, there was question whether Hadloclc, who acted as senior counsel for the children of Henry Gray in the case of Codman v. Brooks, reported in 159 Mass. 477, and 167 Mass. 499, was employed under a champertous agreement.

The defendant’s evidence tended to show that by the terms of Hadlock’s employment his compensation was to be a percentage of whatever sum should be recovered by his clients in the litigation, and also that it was to be contingent upon their success in securing such a recovery in the action.

In the case brought by Hadlock’s administratrix, the defendant Brooks in substance asked the court to rule, that if he employed Hadlock as counsel in the case of Codman v. Brooks under an agreement by the terms of which Hadlock’s fees and compensation were contingent upon the recovery of some part of the money held by Codman and were to be paid out of the fund so recovered, the agreement was illegal and that Hadlock was not entitled to any compensation for any services rendered thereunder.

In the case brought by Merrow the defen dint Brooks asked the court to rule that if Hadlock made an agreement with the defendant Brooks, or those he represented, to render legal services in the case named, on condition that his compensation was to be paid out of the fund recovered, the agreement was illegal and void, and that if Merrow knew the nature of the agreement, and the order sued on was given and accepted for the purpose of securing to Merrow payment of such compensation or a part thereof, Merrow could not recover.

The court declined to give these requests and gave the following as an instruction applicable to both cases :

« He ” (the defendant) “ says that the contract which took place was champertous, and therefore illegal, and therefore a void contract, and no contract at all. What is the meaning of a champertous contract ? It is this: If in the assumed case of you going to a lawyer to hire him to take a certain case, you said to him, ‘ I have n’t any money, and unless I win this ease I sha’n’t have any money to pay you. Will you take this case, charge me either a certain percentage, or such amount as you think best, if you win the case ; and if you lose the case, charge me nothing ’; that is a champertous contract; that is an illegal contract and is a void contract. There are contracts that look a great deal like it upon the face of it that are not void; that is, are not champertous. It is competent for the parties to say,61 have no money and I can’t pay you until I get the verdict.’ If they stop there, if they simply make it a question of the time of payment, it is perfectly competent. It is perfectly competent for the client to say, and the lawyer to agree to it, ‘ I will pay you, if you are successful, a quarter of what you recover ’; if they don’t add the further condition, 1 Nothing if you don’t recover.’ Or, in other words, to put it in brief, if they make the payment of any fee at all contingent on the success, that is a champertous contract; but any other kind of a contract they may make; and there are infinite varieties of it, and there are infinite ways in which they may make the size of the fee depend upon the result, and they may maké the time of payment dependent upon the result, etc.”

In the Merrow case the jury were further instructed as follows:

“ The defendant says that the original contract upon which this was based was a champertous, illegal and void contract, and that therefore this contract being made by the parties, and by a man who knew that the contract was champertous, illegal and void, is in itself void. To put it another way: That this contract being based upon a void contract is in itself void; and that I instruct you is true. If you find that the contract in the first place was champertous, as I have described it, that is to say, if you find that it was a contract such as I have described as champertous — and you find that Mr. Merrow knew the facts about the contract, then this contract is itself void. But bear in mind this thought: That Mr. Merrow may not have ever heard the word champertous ; Mr. Merrow very likely never did; Mr. Merrow may not have known that it was illegal; the point is, was the contract a contract whereby Mr. Hadlock was to receive nothing if unsuccessful, and receive a considerable fee if successful, and did Mr. Merrow know of these facts?”

As between an attorney at law and his client it is of the essence of champerty that the attorney, having no previous interest to justify him, upon recovery is to have as his own some part of the thing recovered, or some profit out of it. Thurston v. Percival, 1 Pick. 415. Lathrop v. Amherst Bank, 9 Met. 489. Lancy v. Havender, 146 Mass. 615. But an agreement that one not previously interested and who agrees to prosecute a suit, upon recovery shall have a share of the thing recovered is not for that reason alone ehampertous. The bargain to be illegal must have the further element that the attorney’s services shall not constitute a debt due him from the client, and that his prospective share is to be the only compensation which the attorney shall receive. If in effect he “ agreed to look for his compensation to that alone which might be recovered, and thus to make his pay depend upon his success ” the bargain is ehampertous and void. Ackert v. Barker, 131 Mass. 436, 438. “ Where the right to.compensation is not confined to an interest in the thing recovered, but gives a right of action against the party,” the agreement is not ehampertous. Blaisdell v. Ahern, 144 Mass. 393, 395. See Scott v. Harmon, 109 Mass. 237.

But the contract may be illegal without stipulating in terms that compensation is to be solely by way of an interest in the thing to be recovered. That element of illegality may be inferred from an agreement to prosecute at one’s own expense and risk unless successful. Belding v. Smythe, 138 Mass. 530. See Williams v. Fowle, 132 Mass. 385, 388. As was held in Blaisdell v. Ahern, there may be circumstances in which the attorney may lawfully agree to give his services without charge, if the suit should not be successful, and if in case of success, and not otherwise, the attorney’s fees are to constitute a debt due from the client and give a right of action against him to recover them, so that the attorney’s right is not confined to an interest in the thing recovered, it is immaterial that the avails of the suit or a part of them are pledged as security, or that such avails are the means and the security on which the attorney relies for payment. And as was also said in Blaisdell v. Ahern, there maybe circumstances in which an agreement by an attorney to give his services in the prosecution of a suit with the understanding that they are to be free unless the suit is successful may partake of the worst evils of maintenance.

In view of this statement of the law of champerty as it has been held by this court the instructions requested by the defendant were erroneous. .The request in the case brought by the administratrix would require the jury to find champerty at all events if Hadlock’s fees were to be contingent upon success and to be paid out of the fund recovered, whereas both of those things might concur and yet if there was a personal obligation upon his employer to pay his compensation his employment would be legal. The request in the other case would require the jury to. find champerty at all events if Hadlock agreed to render his services on condition that his compensation was to be paid out of the fund recovered, whereas under many circumstances such a stipulation alone does not constitute champerty.

The exceptions to the refusal to give these requests must therefore be overruled.

The instructions given were colloquial in style, and evidently intended to enable the jury to decide correctly as to the precise controversy as it stood upon the evidence before them, rather than as a full exposition of the law of champerty as between an attorney and his employer. The plaintiff had introduced evidence tending to show that the defendant was acting- as solicitor for the children of Henry Gray in the suit of Codman v. Brooks, and that upon the death of senior counsel, while the litigation was pending, the defendant had employed Hadlock as his senior counsel; that Hadlock had rendered professional services in the cause, and that after a determination in favor of his clients in it by the Supreme Court of the United States, it had been agreed between the defendant and Hadlock that the compensation of the latter should be the sum of $8,000. On the other hand the defendant had himself testified that at the time of engaging Hadlock the defendant told him that he, the defendant, had no money, and the heirs had no money to pay lawyers, and that if Hadlock was contented to go into the case contingent upon its success, and to be paid out of the sums recovered, the defendant would like to have him; that Hadlock said he would do so, and that the defendant said to Hadlock “ If I am successful in getting my claim, in getting my fees, you shall be paid what your services are worth.” The defendant had testified further that afterwards Hadlock made claim to twenty-five per cent, to which the defendant did not agree; also that both agreed that the amount of compensation was to be contingent and to come out of the fund, Hadlock claiming that it was to be twenty-five per cent, and the defendant that it should be what was reasonable; but that in any event Hadlock and himself were to receive compensation out of the sum recovered, if any. On the same subject Merrow testified that Hadlock told him that the defendant agreed to give him twenty-five per cent of it, if he won it, and that the inducement held out was that he, Hadlock, was to have twenty-five per cent of the amount recovered for the parties whom he represented. Another witness called for the defendant testified that Hadlock said he was going to get $15,000 based on twenty-five per cent, and that Brooks did not owe him anything, that the heirs owed him.

Upon this situation of the evidence it was not necessary for the court after refusing the defendant’s requests to give the jury an exhaustive statement of the law of champerty; and if the instruction given contained no erroneous statement prejudicial to the defendant his general exception to this portion of the charge must be overruled. Construing the instruction in view of the state of the evidence upon which the defendant relied to show champerty in Hadlock’s employment, we think it was not erroneous in any point prejudicial to the defendant. On the other hand it left the jury free to find champerty if Hadlock ■was to receive nothing if unsuccessful and a considerable fee if successful, although they might also find in accordance with the defendant’s own testimony that he had himself agreed with Hadlock that if the defendant was successful Hadlock should be paid what his services were worth, that in case of success there was a personal obligation upon the defendant to pay Had-lock the worth of his services. Accordingly the defendant’s exceptions to those portions of the charge which dealt with champerty are overruled.

There was evidence tending to show that at some time after Hadlock’s original employment he and the defendant agreed that Hadlock’s compensation for services should be the sum of $8,000. In view of this the defendant asked for an instruction that if the compensation was contingent upon success and was to come out of the fund recovered any subsequent agreement after the services were performed to pay a fixed sum therefor was not binding upon the defendant. The instruction given upon the subject of this request said that if the contract was champertous in the first place the plaintiff could not recover. This covered the request in a way sufficiently favorable to the defendant. But he contends in support of his exception to the whole portion of the charge upon the agreement to pay the fixed sum, first that it was a charge upon the facts, and next that it contained a wrong rule that the burden of proof was upon the defendant to establish the champerty.

Heither of these grounds for the defendant’s exception is shown to have been called to the attention of the court at the trial. The first is not supported by an examination of this part of the charge. All that the court did was to call the attention of the jury to the contention of the plaintiff that the original hiring was not champertous, and this was not improper.

Considering the state of the pleadings and the circumstances of the trial we think the exception to the ruling as to the burden of proof must be overruled. Two cases were upon trial together. In one the declaration was upon an order payable upon a contingency drawn by Hadlock and accepted by the defendant, with a second count alleging that after the order was given the defendant for a valuable consideration promised the plaintiff to pay him the amount of the order at all events. In the other case the declaration was in account the debit charge against the defendant being for $8,000 for professional services rendered by Hadlock in the litigation named “ being the compensation for said services agreed upon by the defendant with ” him. In that case the answer was a denial of all the plaintiff’s allegations, and also a plea of payment, and a plea of Pub. Sts. c. 78, § 1. In the action upon the order, the defendant, besides a denial of all allegations not specifically admitted, admitted that as administrator he employed Hadlock in the litigation mentioned, but denied all personal liability, alleged that the order was accepted upon condition that the defendant was not to be personally liable, alleged that the services were of no value, that they had been fully paid for, and also set up Pub. Sts. c. 78, § 1.

In neither case did the answer allege that Hadlock’s employment was ehampertous or state any fact from which that result would follow, nor did the plaintiff introduce any evidence upon which it could be contended that Hadlock’s employment was ehampertous. The defendant thus came to the trial admitting that he had employed Hadlock in the litigation and contending among other defences that the plaintiffs could not recover because the agreement for Hadlock’s employment was champertous. In substance this defence was a confession and avoidance, and like payment and other such defences must be proved or fail. The fact that the defendant was allowed to attempt to prove it without having set forth in his answer in clear and precise terms the substantive facts upon which he intended to rely in avoidance of the obligation flowing from the admitted employment of Hadlock, gave the defendant no greater right jthan if his pleadings had conformed to the provisions of Pub. Sts. c. 167, § 20. That there was champerty was a matter which he asserted as a defence and which for that reason he must be required tp prove. Jones v. Ames, 135 Mass. 431.

In the ease brought by Hadlock’s administratrix there was an exception to the refusal of the court to allow one of the defendant’s witnesses to testify to a conversation had between the witness and the defendant. The bill of exceptions does not state what the conversation was, but if we assume in favor of the defendant that it tended to prove an admission made by Mrs. Hadlock before she was finally made administratrix and when she was not clothed with any representative capacity, such an admission could not be put in evidence. Her subsequent appointment as administratrix did not have the effect by relation to make her declarations previously made competent as admissions, they not being acts of administration. This exception must be overruled. The exception in the same case to the refusal to give three instructions, based upon the contention that Hadlock’s employment was upon the credit of the children of Henry Gray and not upon that of the defendant, has not been argued and we treat it as waived.

The defendant is not shown to have disclosed at the trial upon what ground he based his request to direct a verdict in his favor. He now contends that by reason of an order which there was evidence tending to show had been given by Hadlock to his wife and a letter written by the wife to the defendant Hadlock had deprived himse.lf of a.ny right to compensation and could not agree upon its amount. It is enough to say upon this exception that the bill of exceptions does not purport to state all the evidence, and that nothing which it does state would require the court to order a verdict for the defendant.

The order declared on by Merrow in his case was conceded to be on account of the compensation to be received by Hadlock for his services in the case of Codman v. Brooks, and is expressed to be payable “ when the final distribution is made ” of the sum due by virtue of an opinion of the Supreme Court of the United States. It was addressed to “ William Gray Brooks, Esq., Administrator of Henry Gray, deceased, and Solicitor of the children of said Henry Gray.” The acceptance is in these words : “ The foregoing order is hereby accepted. William Gray Brooks, Administrator and Solicitor.” The defendant was administrator of the estate of Henry Gray and was also solicitor in the case of Oodman v. Brooks for the children of Henry Gray, and they were entitled to share in the fund or sum to be distributed mentioned in the order.

The first of the exceptions, stated in the bill in this case is to a refusal to rule that the order was not a bill of exchange, but a simple agreement to pay money upon the happening of an uncertain event. The instruction requested was immaterial, and the court was therefore justified in refusing to give it.

The second request stated in the same bill was upon the theory that the order and acceptance were not an undertaking to pay anything beyond what the defendant should receive upon the distribution mentioned in the order in bis capacities as administrator and as solicitor for the children of Henry Gray. The court refused so to rule and instructed the jury that by the contract the defendant personally agreed to pay Merrow the sum of $3,000 when the money should be distributed.

The order is addressed to the defendant by his name with these additions : “ Esq., Administrator of Henry Gray, deceased, and Solicitor of the children of said Henry Gray.”' Its acceptance was by the signature of the defendant, with the addition merely of the words “ Administrator and Solicitor.” There is no expression of an intention to bind the estate or the children. There was no evidence tending to show that the children knew of the order or authorized the defendant to accept it.

The defendant had as solicitor no power to bind his clients by the acceptance of an order, and as administrator he had no power to bind the estate by such an acceptance. The form of acceptance does not purport to bind either the children or the estate, and there was no evidence that the defendant in fact intended to bind either the children or the estate. These circumstances distinguish the case from that of Grafton National Bank v. Wing, 172 Mass. 513, in which the executor purported to bind the estate by the form of his indorsement, and claimed that he had the right to bind it, and so was held not to have bound himself personally. We think therefore that the order and acceptance must be construed to bind the defendant personally, and that upon the evidence the court was right in so instructing the jury. The facts that the defendant was administrator of the estate and solicitor for the children, and that there was no money of the estate or of the children in prospect with which to pay the order except what was to be received in the litigation mentioned did not create an ambiguity which made it necessary to leave the meaning of the contract to the jury. See Shoe & Leather National Bank v. Dix, 123 Mass. 148.

The third request in the Merrow case brought up the subject of champerty in the employment of Hadlock, and of the effect of that champerty upon the validity of the order. The instructions as to whether Hadlock’s employment was or was not cliarnpertous have been dealt with in considering the case brought by his administratrix. After those instructions the jury were told in substance that if Hadlock’s employment was champertous, and this was known to Merrow, the contract made on the order and acceptance was void. This was sufficiently favorable to the defendant. The ruling in this connection that the burden was upon the defendant to establish this defence of illegality in the order and the acceptance was right, for the reasons stated in connection with the similar ruling in the case of the administratrix.

It appeared at the trial that after the giving of the order a payment had been made by six of the children of Henry Gray upon the settlement of suits brought by the defendant against them, in which suits the defendant sought to recover of them severally one tenth of the fees of Hadlock for his services in the case of Codman v. Brooks, as well as for one tenth of the defendant’s own services in that litigation. These payments were made in May, 1898, and amounted to $5,500. Before the settlement the children insisted upon a release from the administratrix of the estate of Hadlock, which was given upon the payment of $1,000, part of the $5,500, to Sampson the attorney for the administratrix, who was then also the attorney for Merrow for the collection of the order now in suit. Merrow knew nothing of the settlement or the payment of the $1,000 to Sampson, and received no part of the money.

In this connection the defendant asked the court to instruct the jury that if when Sampson received the $1,000 he was Merrow’s attorney to collect the order, and knew that the order was drawn on the fees to become due to Hadlock, the $1,000 should be credited on the order. The court refused this instruction, and it being conceded that there was no evidence that Merrow knew that the payment was to be made, nor that he assented thereto, instructed the jury that the $1,000 could not be credited upon the order. The refusal to instruct and the instruction were excepted to by the defendant. These exceptions must be overruled. Although Sampson was an attorney for Merrow the payment was not made to him in that capacity, but to him as attorney for the administratrix, who as wrell as Merrow had a right in the amount due on account of Hadlock’s services. Sampson could not apply the payment made to him as attorney of the administratrix to his other client, nor was the administratrix bound to the defendant to see that the order accepted by him was paid.

The order ..given by Hadlock to Merrow was to pay “ when the final distribution is made of the sum due by virtue of an opinion of the Supreme Court of the United States, and in accordance with a mandate directed to the Supreme Judicial Court of the Commonwealth of Massachusetts within and for the county of Suffolk in the case of William Gray Brooks, Admr., et al., v. Robert Codman, Admr., et al” The order was dated June 2, 1896, which was after the decision of Brooks v. Codman, 162 U. S. 439, in pursuance of which the mandate mentioned in the order was given and before the final decision of the case reported in 167 Mass. 499. By that final decision, rendered on February 23,1897, it was ordered that the money in the hands of Codman for distribution be divided into twenty-three equal shares “ of which one will be given to each of the surviving grandchildren and one to the children of each of the deceased grandchildren.”

Hadlock and the defendant were -concerned only with the ten of the twenty-three shares, which by force of the decision and order were to be given to the ten children of Henry Gray for whom Hadlock and the defendant acted in the Codman suit. When the Merrow action was commenced eight of the ten shares had been paid over in accordance with the final decision, but the two shares due to Charles R. and Frederick W. Gray, children of Henry Gray, were then and also at the date of the trial still held by Codman. It appeared that after the giving of the order to Merrow the defendant on July 7, 1896, had procured from each of these two of hiá clients an assignment of the clients’ share of the fund in litigation. It also appeared from the defendant’s testimony that in July, 1896, Charles R. Gray was over seventy-four years of age and Frederick W. Gray over seventy-one, and that when they made the assignments'"and for a long time before both lived in an asylum for the cure of mental trouble, and that after the date of the assignments guardians were appointed for each. It also appeared that in July, 1897, Codman had a decree of distribution ordering payment, that the defendant had notified Codman of the two assignments and that the defendant would claim those two shares and would bring suit against Codman for them, and that such suit had been brought by the defendant and a suit brought by the guardian to dismiss that suit, and that also suits were pending to declare the assignments invalid, and that the two shares were tied up by litigation.

Upon this evidence the defendant requested the court to instruct the jury, as follows :

“1 Final distribution,’ mentioned in said order, means distribution of the entire sum due to all the ten children of Henry Gray, and the plaintiff cannot recover unless he proves that such a distribution has been made.” The court refused and instructed the jury that if the only reason why the distribution had not been completed was the act of the defendant himself the plaintiff could recover.

We do not give to the order the construction for which the defendant contends. When the order was drawn Hadlock, the defendant and Merrow all knew that the right of the children of Henry Gray to share in the fund, the distribution of which was in litigation in the case of Codman v. Brooks, was established by the decision of the Supreme Court of the United States, and that their proportions of the fund would be determined by a decree of distribution to be entered in the cause in accordance with the mandate referred to in the order. The words “ the sum due by virtue of an opinion,” etc., the “ final distribution” of which sum is made by the language of the order its time of payment, is not the sutil coming to the clients of Had-lock and the defendant but the whole fund appropriated by Congress for the losses of William Gray the elder, the distribution of which fund was the subject of the suit mentioned in the order. We think that the time of the final entry of a decree or order of distribution of that fund was the time of payment stipulated in the order, and not the time when the last dollar of the fund should actually come to the hands of a child of Henry Gray. The stipulated time of payment therefore arrived at the latest in July, 1897, when Codman obtained his final decree of distribution, long before the bringing of the Merrow suit in June, 1898. Under our construction of the order the instruction requested was wrong, and that given did the defendant no harm because the time stipulated for payment in the order had arrived before the bringing of the suit. We intimate no opinion as to the correctness of the instruction given.

Finally the defendant excepted to a refusal to order a verdict in his favor. He has asserted in his brief that such an order should have been given but has not supported it by any argument. There was a count upon a promise to pay the order at all events and evidence in support of such a promise, and of a consideration therefor moving from Merrow. For this and other reasons such a direction could not have been given.

.Exceptions overruled.