Romero v. Wilcox

11 P.R. Fed. 139

• Court: District Court, D. Puerto Rico
• Decided: December 31, 1918
• Docket: No. 996
• Status: Published

Opinion

Hamilton, Judge,

delivered the following opinion:

1. The case at bar relates to a transaction between attorney •'and client in which the client alleges that he was overreached by the attorney,, and asks that the transaction be set aside. The evidence convinces the court that in substitution of an arrangement previously made with other attorneys, the plaintiff, Romero, contracted with defendant, E. B. Wilcox, in July, 1916, for the prosecution of a certain suit in this court, whereby the lawyer and client were to share the recovery and expenses. On January 13, 1917, after the ease had been won but an appeal was threatened, there was a ‘settlement between them, providing for a different basis as to expenses, under which the attorney was to receive $13,370 absolute. To.secure this the client assigned him one-half interest in the judgment recovered. It is this latter liquidation and assignment which is sought to be set aside, with the result that the prior contract of 1916 would pre-’ vail.

There is no doubt that contracts between persons in confidential relations are closely scanned. Holt v. Agnew, 67 Ala. 361. This applies to husband and wife, principal and agent, attorney and client, and all in trust relations; but .there are-eases in which strangers are protected against the principal. Noble v. Moses Bros. 74 Ala. 604. Transactions between attorney and client are not void, but are regarded with the closest scrutiny, even more than those between guardian and ward. Dickinson v. Bradford, 59 Ala. 581, 31 Am. Rep. 23; Ware v. Russell, 70 Ala. 174, 45 Am. Rep. 82. A gift from a client is absolutely void. Bispham, Eq. 296. After employment a variation of the contract is as a general rule invalid. Lecatt v. Sallee, 3 Port. (Ala.) 115, 29 Am. Dec. 249.

The relation of attorney and client is, therefore, an important and confidential one, and so far as it comes before a court will be controlled in the interest of justice. At the same time it cannot be held that the attorney, who' is a sworn officer of the court, and supposedly dependent upon the honorarium he receives from the client, is to get no consideration from the court of which he is a member. The extent of the rule of scrutiny should ordinarily be to cast the burden of proving fairness on the attorney. Lecatt v. Sallee, supra. He is not to be allowed to take advantage of the client, but, on the other haiid, the client is not allowed to take advantage of the attorney. Like other equities the principle is to be regarded as a shield, and not as a sword. If the attorney’s efforts win the case, it is not equity for the court to disregard the contract between them governing-the transaction, provided the contract is fair, and not against, public policy. The “question ‘at bar is as to the second contract. The facts will be scanned closely, and in this case have been scanned closely; but the court is not at all satisfied that there was anything unfair to plaintiff in the liquidation of January IB, 1917, now complained of. The evidenee seems to show that it was brought about by the fact that the client felt himself unable to provide the different expenses needed in the prosecution of the suit, and it was to meet this situation and the prospect of appeal that léd to the modification in question. The correspondence and papers in the case seem to show this, as well as the fact that the elimination of the other attorney, while resulting to the advantage of defendant, E. B. Wilcox, was prompted and carried out by the client himself.

2. Champerty and maintenance are prohibited by law as against public policy, and are even more offensive in equity. 4 Bl. Com. 97, note. The gist is the encouragement of litigation and stirring up strife. The Spanish Civil Code, § 1459, is based upon the same principle, and the Porto Rico Civil Code, § 1362, goes into greater detail. 10 Manresa, Comentarios, p. 110, § 1459. It has even been held that where the point has' been acquiesced in during a suit for seven years, it could be raised after judgment by a stranger to the record. Jones v. Pettingill, 157 C. C. A. 461, 245 Fed. 269.

It may be doubted, however, whether the point arises in this case, inasmuch as the result of applying it would’ be that the plaintiff would secure the services of an attorney to win a suit and then take advantage of a technicality to obtain all the proceeds for himself. This will not be permitted in equity. Moreover, whatever claims of the kind the plaintiff had are waived by the form of his bill; for the defect, if it exists, is in the original contract of July, 1916, if not of 1912, which the bill in this Suit seeks to enforce. The modification made by the liquidation on January 13, 1917, amounts only to a modification of the details of a contract which in its essentials is not disputed by the plaintiff himself. If there is champerty or maintenance in the transaction set out in the bill, it exists equally in the prior contract which the plaintiff is seeking to enforce, and if it is to he considered ex moro motu by the court, as in Jones v. Pettingill, it would be the duty of a court of equity to enforce no part of it at all, and to leave the parties where it finds them, in pari delic-to ; that is to say, with the settlement of 1917 in force. It is not conceded, however, that the court should stop so short, inasmuch as the fund is in court and must be disposed of in some way by the court. It was properly recovered from the defendants in the law case and could not now be paid back to them. The parties to the equity case at bar all stand upon the original contract of 1916, in which the supposed defect inheres. It does not seem to be a case in which the court is called upon to apply the doctrine, all parties standing in the same condition.

3. It would seem, therefore, that the proof does not substantiate the bill as framed. The argument, however, is in the alternative, and asks that if the settlement be not set aside for fraud, at least two items in it be readjusted; to wit, $1,250 charged for attorney’s fees and not so applied, and $2,643 paid to one Olmedo under a judgment of this court. As to the first, it should be said that the proof satisfied the court the charge was properly made; for while Pettingill claimed and obtained only $2,000 of the $3,250 mentioned, the remainder, that is to say, $1,250, is claimed by Ben A. Matthews, who is shown to have done work also on the appeal. Calaf v. Fernandez, 152 C. C. A. 581, 239 Fed. 795. It may be doubtful under the pleadings whether the proof made of this in another case between the same parties can be used in tbe present suit; but at least tbe plaintiff bas not proved tbe impropriety of tbe charge in tliis suit.

As to the item of $2,643 tbe case is different. This sum was paid Olmedo after litigation in this court, to which both tbe plaintiff herein and Wilcox were parties, and was based upon services rendered by Olmedo under tbe original contract between plaintiffs Olmedo and Wilcox. It may therefore be considered as res judicata between the parties to that contract that Olmedo was entitled to $2,500 and costs to recover it, and no reason appears why this should be charged up to the plaintiff herein alone* The contract under which the recovery was had was the one under which Wilcox was acting as well as Olmedo, and under which Wilcox ivas to recover equally with Olmedo. It does not appear equitable that Wilcox should carry on the litigation and succeed to the compensation, one half of which would otherwise have gone to Olmedo, without taking into account the fact that it has been determined Olmedo should recover in part.

The difficulty in this regard is not so much in the proof as the allegations of the bill. The bill is framed upon fraud, and fraud has not been proved. It is true the bill has a general prayer for relief and asks for “further relief/’ but this can hardly be extended to a relief predicated upon a different state of facts from that set out in the bill. It may be that the plaintiff is entitled to a correction of the account on the ground of mistake. The account was had three days before Olmedo’s suit -was filed, and there is nothing to show that Wilcox knew that the suit was about to be filed. There can be no recovery for money paid under a mistake of law, but the question whether Olmedo had rendered services sufficient to entitle him to a recovery was one of fact, as to which there might be a difference of opinion, and was a difference of opinion until tlie verdict of the jury. Whether an amendment could have been made in this suit need not he determined, because an amendment was not applied for in this suit.

4. Different assignments by .Wilcox to creditors have been filed in the suit, but it is difficult to pass upon them when the main object of the suit itself is determined adversely to the plaintiff. The most important one was for $9,620 dated January 14, 1917, and therefore the day after the liquidation above discussed. This was made to his brother E. W. Wilcox and was filed in this case Marcli 21 of the same year. There are similarly claims of the Bayamon Fruit Company for $1,0Q0, the Parkhurst Fruit Company for $2,000, and Matthews for $1200. It is set up in their behalf that whatever be the decision as between plaintiff and defendant, E. B. Wilcox, the in-terveners as bona fide purchasers for value should be protected. Eo particular form of assignment is necessary in equity, and in a proper case it need not even be written. Lowery v. Peterson, 75 Ala. 110. Equitable assignment must be of a particular fund, but may be in any form. National Exch. Bank v. McLoon, 73 Me. 511, 40 Am. Rep. 388; Brill v. Tuttle, 81 N. Y. 454, 37 Am. Rep. 515. In the case of a trust, notice to tho trustee is not now regarded as necessary. Bispham, Eq. 106. Assignment of a future interest makes the assignor a trustee to convey when the interest arises. In England, contrary to the American practice, even a promise to assign is held to be equivalent to an assignment itself. Bispham, Eq. 221. In the case of assignment of a debt the creditor must give notice to the debtor in order to protect himself from subsequent assignees who give such notice. Bispham, Eq. 222, There may even be an assignment- of future earnings under an existing contract. Weed v. Jewett, 2 Met. 608, 37 Am. Dec. 115. An equitable assignment differs from a legal assignment in that, as all in interest may in equity be made parties, tbe assignment may be of part of a debt only. National Exch. Bank v. McLoon, 73 Me. 505, 510, 40 Am. Rep. 388; Bush v. Foote, 58 Miss. 5, 38 Am. Rep. 310. If tbe intention of tbe assignor to relinquish all control is shown, no particular form is necessary. Dickenson v. Phillips, 1 Barb. 454.

Under these principles it would seem that tbe interveners are at least subrogated in E. B. Wilcox’s place, and in fact he does .not -contest the validity of the alleged assignments. The contract of 1917 between Hornero and E. B. Wilcox, upon which the assignments were based, was outstanding and undisputed when these assignments were made. Notice.to the debtor does not seem to. be necessary, provided only the assignments are valid, which seems to be the case. The filing in court, while .notice from its date, was not essential. There is no pleading as between the assignments themselves, and therefore no issues.

It follows, therefore, that the bill must be dismissed unless .the plaintiff within ten days files such further pleadings as will entitle him to a reaccounting so as‘to take advantage-of any error previously had in regard to judgment paid to Olmedo. No decree can be rendered upon the intervening claims inasmuch as they are dependent upon the result of the main case.

It is so ordered.