Merchants National Bank v. Manning ( 1907 )

Mr. Justice Brown

delivered the opinion of the court.

Although there is before us in this appeal a transcript of a thousand printed and typewritten pages, an abstract of 375 printed pages, and altogether about 200 printed pages of argument, which has been supplemented by able oral arguments before us, the questions at issue lie within a small compass.

There is no doubt that defendant is liable to plaintiff on the four promissory notes which are sued on, and which amount, taking into account a payment made since this suit began, to $900 with interest at 4 per cent per annum from December 26, 1899, to February 14, 1903, on $1,000, and on $900 since that date.

The dispute is whether the plaintiff is indebted to the defendant in a greater sum, as was found by the court below, and this largely at least depends on the meaning and construction to be put on a few words in a release of that same date, December 26, 1899, executed by the defendant to the plaintiff and repeated in the receipt given by plaintiff to defendant for his notes.

The great mass of testimony is principally devoted to putting«a construction on those words by the light of surrounding circumstances and previous and contemporaneous communications. We are unable to agree with the appellee or with the court below on this construction.

The entire basis for the claim of the defendant in set-off is that it was agreed as a part of the release of December 26, 1899, that the defendant should continue to represent the plaintiff bank ih a certain action then pending in the Circuit Court of the United States for the Northern District of Illinois, entitled Chick et al. v. The Northwestern Shoe Company et al. This was set up in the defendant’s amended rejoinder filed to the plaintiff’s second and third replications and was traversed by the defendant’s amended surrejoinder, as the statement prefixed. to this opinion shows in detail. This formed the third issue of fact joined by the pleadings, as is shown also by said statement, but if it should be found for the plaintiff, it must dispose of the others as well. There could then be no reasonable ground to uphold the plaintiff on the first or second of these issues, and the fourth would become immaterial.

The allegations that the plaintiff at the time of the release of December 26, 1899, agreed with the defendant for further employment on a contingent fee, or otherwise, and that this contract was afterward broken or interfered with by the plaintiff without the defendant’s fault, are the very gist of this cause. If the defendant cannot sustain them he cannot and should not recover either strictly on the pleadings or in the larger equitable view which the court below indicated that he took, for it is plain that without these elements the said release of December 26, 1899, must have discharged all indebtedness for previous services, and there is no claim of employment of the defendant by the plaintiff for services to be performed after December 26, 1899, except on that date and contemporaneously with the execution of the release.

The defendant in his amended rejoinder says that it was "evinced on the face of said release that the defendant should continue to represent the plaintiff in the Northwestern Shoe Company case. We cannot see where this agreement is found. The reservation clause in which alone, of course, it would exist, either expressly or impliedly, keeps for defendant the right to present and have allowed to him by the Circuit Court of the United States, out of the proceeds that might be recovered in that case “by the complainants or intervening creditors” such sums, if any, for liis disbursements and solicitor’s fees as said court shall determine have been paid out and rendered for and in behalf of “the complainants, the co-complainants or intervening creditors in said cause.”

We cannot see how, taken by itself, this provision contains any express or implied agreement for future employment of Mr. Manning. It is perfectly consistent with the claim made by the hank that it was entirely understood that the bank might not continue in the case, and if it did, that it was to be represented not by Mr. Manning, but by its usual counsel.

Viewed moreover in the light which the other evidence in the record throws upon it, the language seems to us quite plainly to indicate the purpose of its insertion in the release.

The case had passed from a prosperous and hopeful stage to the complainant and creditors on the master’s report, to a doubtful and discouraging one on the decree of the court dismissing the bill against several of the defendants. Mr. Manning was not convinced that he was wrong, and was determined to press the matter further in behalf of some of the interested parties at least. If he should go to the Court of Appeals and secure the reversal of Judge Jenkins’ decree and the virtual confirmation of the master’s conclusions, a considerable fund would be at hand for distribution. On that fund, according to the usual procedure of the court, there would be an equitable claim in favor of the lawyer’s fees and expenses which had been paid by the prosecuting parties at any previous stage of the proceedings, or for which they were liable either absolutely or contingently. An absolute release for consideration of a claim for several thousand dollars for such fees and disbursements from Manning to the bank on December 26, 1899, would certainly have furnished ground for the bank to claim payment to itself of whatever part of the fund that thus might be recovered, which should be set-off as compensation for the legal fees and expenses, incurred by the bank prior to December 26, 1899, and released to it by Manning on that date.

If anything more than a protection against such a claim of the bank and a reservation to himself of such an allowance, if made, was intended in favor of Mr. Manning by the clause in question, it is strange that it was not expressly stated in terms which could not be mistaken.

It is claimed by the appellant that the decision of the court below in this case was presumably made wholly on the construction of the reservation clause in the release and receipts of December 26, 1899, and this position finds color in the rulings of the court in the fourth proposition of law submitted by the plaintiff and rejected by the court, and the first proposition of law submitted by the defendant and held by' the court. These propositions are as follows:

Plaintiff’s fourth proposition, rejected by the court:

“If it appears from the evidence that at the time of the execution of the release of December 26, 1899, and prior thereto, the defendant represented certain of the complaining creditors in the suit of Chick v. The Northwestern Shoe Company in the Circuit Court of the United States for the Northern District of Illinois, and that the defendant had taken an active part in the prosecution of such suit such as might entitle him to an allowance of solicitor’s fees out of the fund recovered, if any, and if it further appears that the plaintiff was not a party complainant in said suit, and had not appeared in the same except to prove up its claim before the master in accordance with an order of court, in such case the Court holds that no obligation was imposed upon the plaintiff by the reservation in said release in regard to solicitor’s fees and disbursements to take any part in subsequent proceedings in said case or to allow the defendant to take any proceedings in its name or to incur financial obligations on its behalf, and the burden of proof is on the defendant to show by a preponderance of evidence that such an agreement was made.”

Defendant’s first proposition, held by the court:

“The agreement exchanged between the plaintiff and defendant on December 26, 1899, together with the stipulation withdrawing the plea of set-off in the case then pending between the parties in the Circuit Court of Cook county, were effective for two purposes:

First: To settle all matters of difference between the parties to that date, both with respect to the Columbia Harness Company and the claim of defendant for services in the Chick case on the part of the plaintiff.

Second: To establish the right of the defendant, Manning, to go forward in the Chick case and receive pay for his services from any fund realized. This right to go forward with the litigation is as much a part of the agreement as the settlement.”

We have made it clear that if the construction placed on the reservation by the court made that reservation by itself sufficient to prove the further employment of defendant by the plaintiff, we do not agree with that construction.

On the contrary we see no reason why the fourth proposition of the plaintiff above quoted does not state the law accurately. If the agreement in the release and receipts did not by themselves show the further employment of Manning, that employment becomes a question to be decided by parol evidence, and the burden must have been on the defendant who introduced it as new matter in his rejoinder to prove it.

There is a conflict of evidence, of parol evidence, on this point; but we cannot hold otherwise than that the defendant signally failed to establish by a preponderance of evidence his contention. The appellee himself testified concerning this matter as follows:

The question was asked him: “Mr. Manning, what was said, if anything, at the time these so-called releases were executed on December 26, 1899, about the further prosecution of the Chick case?”

lie answered: “It was said I should proceed with the prosecution of the suit in the same manner that I had been, prosecuting it for the creditors whose claims represented $28,272.32, of which the bank’s claim was $5,726, and the principal prosecuting creditor, and that the case was to be prosecuted; and the only question between Judge Otis and myself was, he told me at that time he hadn’t even read the record, that he was going to look the record over, and he might possibly want to come in to assist me, and I said I had no objection.”

In contradiction of this Mr. Otis testified: “My first interview with Mr. Manning leading up to the settlement of December 26, 1899, was on December 15, 1899. * * The next conversation took place December 23rd at my office. * * We met again on the 26th of December, 1899. * * In one of these three conferences, either December 15th, 23rd or 26th, the question came up as to what the bank was going to do. I was attorney for the bank at that time in the Chick case. Its claim had been proved up for about $5,600, and the question was asked by Mr. Manning, What does the bank propose to do with its claim?’ * "" I told Mr. Manning that this was the position of the bank, that I was acting as its attorney and would examine the record, and if in my judgment I thought there was a fair chance of success in the-case, and it was determined to appeal, I would advise the bank to join in that appeal” (Mr. Manning represented other parties in the case), “and would myself appear as the attorney of the bank and represent it and take part in the argument of the case. On that occasion Mr. Manning did not say literally or in substance that this settlement was not to prevent him from continuing in the Chick case as attorney for the Merchants’ National Bank. He made no such statement of that kind on that occasion. * * * Never on any occasion after I began our conferences about the settlement of December 26, 1899, did he say that he made it a condition of the settlement that he should continue to represent the bank in the Chick case after the settlement. I am not sure whether I met him once after the settlement in regard to the subject. He referred me to his associate, Mr. Bulkley, who was more familiar with the details, and I did see Mr. Bulkley. In the meantime I had looked over Mr. Aldrich’s brief and examined the record in the Chick case, and I told Mr. Manning that the bank had decided not to appeal. Mr. Manning did not state to me that he was going on to represent the bank in the appeal any way. He made no such statement to me. He never at any time said he was going to represent the bank, except as he says it in his letters after the maturity of the first note. * * * When I was proceeding to make the settlement with Mr. Manning in the Fall of 1899, the officers of the Merchants’ National Bank, Mr. Blair and Mr. Crosby, both told me to settle with Mr. Manning for all claims he had against them and they against him, and to get rid of him.” * * *

The Court: “ In this connection I would like to -ask, did you communicate to Mr. Manning your instructions from the bank officials in any way ?”

Answer: “Yes, sir. I said we were there to settle all claims lie had against the hank and all claims the bank had against him.”

Both these witnesses stand unimpeached before us, but the burden of proof is upon Hr. Hanning, as we hold. On our assumption that both witnesses are intending to be truthful, it is evident that there was a very serious misunderstanding of what the situation between the bank and Hanning, outside of the release of claims to that date, was to be. But such misunderstanding, if it existed, does not sustain or relieve the burden which falls on Hr. Hanning under his pleadings to prove his employment.

There is a question raised by the appellant as to the power of Hr. Otis, who was, it would appear from his testimony, the’ representative of the bank in this settlement for the purpose of finally severing its relations with Hr. Hanning, to re-employ him, but apart from this altogether we find that there is no sufficient proof in the written instruments involved or in these conflicting statements recited that any attempt was made to do so.

The defendant, however, claims justification for his construction of the instruments and corroboration of his version of the negotiations and contract between him and the bank in the surrounding circumstances shown by the documentary evidence put in evidence by him and by his testimony in connection therewith. It is not to be expected that we should go over in detail this testimony and this correspondence in this opinion. It is sufficient to say that we have conscientiously considered it and find no such inference to be derived from it.

Rather we should say that the plaintiff was justified in the contention it makes that “Mr. Manning was discharged as attorney for the bank on June 4, 1898 (which discharge was acquiesced in by his letter of June 4, 1898), and never afterwards re-employed, and that any claim he had for services was. settled December 26, 1899.”

As we thus interpret the record it is plain that we must hold that the first three of the four issues of fact raised by the pleadings must be decided by us for the plaintiff, and that this makes the fourth immaterial.

This in itself disposes of this case, for it is on the issues raised by the pleadings, and not on some other view of the case, that the cause must be decided by us. The cases cited by defendant are either on the proposition, not denied by the plaintiff, that evidence was properly received to throw light on what was included in the release, or upon the proposition, which becomes immaterial if our holding as to the re-employment of Mr. Manning be correct, that a lawyer employed on a contingent basis is entitled to carry on the litigation to a final conclusion, and if the client interfere by dismissing either the suit or the lawyer, he makes himself liable for services rendered on a quantum meruit basis. But the possible applicability of these cases rests on the point first set forth in appellee’s brief, which was the proposition on which the court below also founded his judgment, that the agreement of December 26, 1899, placed the appellee in the position of an attorney employed on a contingent basis. As we do not concur in this view of the matter, it is needless for us to discuss the cases.

But as the learned judge below, in his opinion on the motion to set aside his finding, which is inserted in the record, declared that while it might be true that “under the technicalities of the law the defendant’s pleadings might not be in proper shape,” he regarded the action as a purely equitable one, and had decided it on that basis, and as the suggestion was pressed in oral argument before us, that we should look at the matter here in the same light, unhampered by any narrow view of the pleadings and strict rules concerning the burden of proof thereunder, it seems to us proper to say that on an equitable view of the matter— such a view as a court of equity might take—the position of the defendant does not commend itself to us.

It is that, despite the fact that a settlement was made on December 26, 1899, which purported and is conceded was intended at least to release the plaintiff from any personal liability for services rendered before that date and for any unsuccessful services rendered after it, and despite the fact that, all the proceedings which the defendant could have taken in this case, had plaintiff given him the fullest leave to do so in its name, were taken by him (the appeal to the Circuit Court of Appeals not requiring, as Mr. Manning himself testifies, the use of its name, and the certiorari proceedings in the Supreme Court containing it), and despite the fact that these proceedings were all unsuccessful and futile, yet the release should be held for naught, because the bank wrongfully, but without actual damage to the defendant, refused its consent to the use of its name in the prosecution of the suit by appeal and certiorari proceedings, and that this practical cancellation of the release should be without the restoration of the status quo before it was given, and without any offer of the defendant to return in any form the considerable moving consideration for which it was given. This certainly is not “equitable”; it is rather the enforcement of a penalty in favor of the defendant for a wrongful action, which resulted in no damage to him.

Whether or not the ease of Swinnerton v. Monterey County, 76 Cal., 113, is correct in holding that in no case could a lawyer wrongfully discharged when serving under a contingent fee agreement recover damages if he could not have won the suit, we do not think that the application of “equitable” rules to mitigate “the technicalities” of the law can properly be made to effect such a result as the judgment below in this case.

It is true that this view of the matter does not take into account the alleged interference of the plaintiff with the desire of the defendant to file in the plaintiffs’ names a creditors’ or auxiliary bill against Frank Harris, John Hannah and the two Graffs, but the court below, although this is the only breach of the alleged contract of employment actually set up in the defendant’s amended rejoinder, expressly disavowed any holding that the filing of such a bill was within the authority which he considered Mr. Manning had given or left to him at the time of the release, saying that the matter of that proposed bill should be left out of the ease entirely.

He could not reasonably have held otherwise, for the release and the receipts speak only of the suit of “Chick et al. v. The Northwestern Shoe Company et al. now pending in the Circuit Court of the United States,” and the proceeds that might be recovered ie therein” and the amended rejoinder of the defendant says that it was a part .of the reléase that the defendant should continue to represent the said plaintiff in said cause therein referred to. A creditor’s bill upon a decree or judgment is a distinct suit, and an auxiliary bill does not substantially differ therefrom.

Moreover it appears from the appellee’s own testimony that the question of such a creditor’s bill was not mentioned at the time of the settlement of December 26, 1899.

Our conclusion is that the judgment of the Circuit Court must be reversed and judgment entered here in favor of -the appellant, against the appellee for $900, with interest on $1,000 at 4 per cent per annum from December 26, 1899, to February 14, 1903, when $100 wras paid on one of the notes, and interest on $900 at the same rate from February 14, 1903, and it. is so ordered.

Reversed and judgment here.