Lyon v. Hires , 91 Md. 411 ( 1900 )

This is an action in assumpsit brought to recover a sum of money claimed by the appellees to be due them from the appellants on account of certain transactions connected with the purchase of the steamer Edgecombe. It appears that by an agreement in writing, dated the ninth day of April, 1887, the appellants agreed to sell the steamer to the appellees for the sum of forty-five hundred dollars, the title thereof to pass only when the amount was paid. To secure the payment of the purchase-money, the appellees were to assign all their title in and to a reversionary interest held by them under the will of I.D. Clawson, of New Jersey, also a policy of life insurance, and to keep the boat insured for the benefit of the vendors. If the appellees failed to pay the purchase-money, as required by the contract, or if at any time they become in arrears as much as $200, the appellants had the right of cancelling the agreement and resuming possession of the boat, in which event the appellees were to pay as charter-money at the rate of $780 per annum for the use of the boat. The reversionary interest, as well as the policies of insurance, in case of cancellation of the contract, were specifically made liable to the appellants for premiums, repairs on boat and all bills for which the boat would be liable. This agreement, the principal features of which we have thus stated, was followed by a substitutionary agreement on the fifth day of February, 1887. In this it was stated that the appellees were "desirous of having the title of the steamboat transferred to themselves," and that the appellants had agreed to do so "upon the terms hereinafter mentioned." These terms were as follows: In consideration of the transfer of the title of the steamer to the appellees, they agreed to pay the purchase-money with interest, also all sums paid by the appellants, "or which may hereafter be paid by them for account of premiums paid on the" life insurance policy and the insurance on the steamer, "and any other expenses," and upon failure or refusal of the parties (the appellees) "to make said payments or any of them within the time mentioned," then the appellants shall have the right "to sell at public or private sale, the said interest under the will of Isaiah D. Clawson conveyed to them, and execute a deed therefor to the purchaser thereof, and to apply the proceeds, first, to the payment of their said claim of $4,500 and interest, and other payments made by them, and also the costs of said sale, and the balance, if any, to pay over to the said parties of the second part." It was further agreed that the life insurance policy should be renewed from time to time, at the expense of the appellees, until the claim of the other parties shall have been fully paid. The life-tenant of the legacy died in July, 1896, and the appellees having failed to pay any part of their indebtedness, the appellants proceeded to collect from the executors of the estate of Clawson. Of the two executors named in the will, one had died and the other had resigned and the administrator appointed in their place, denied that the appellants or the appellees had any interest in the reversion. The appellants were therefore compelled to institute legal proceedings in the New Jersey Court, which resulted, after protracted litigation, in their recovering the whole fund amounting to $9,322. The amount then due the appellants, as appears from a statement in the record, was $8,997.23. The difference between these two sums, being $324.77, the appellants contend should be applied in partial payment of counsel fees that were necessarily incurred by them in prosecuting the suit.

The theory upon which this contention is made is that having been necessarily incurred in securing the legacy, proper counsel fees should be paid out of the fund. There is no evidence that the appellees employed counsel themselves, nor that there was any agreement between the parties in reference to the matter, other than the agreements already mentioned, and these will be considered in this connection later on. Apart from these agreements, it is difficult to perceive any ground, according to well-established principles, upon which these attorneys' fees can in this case be made a charge upon the common fund. It is true the suit resulted in a common benefit to both appellees and appellants, but that alone is not sufficient. "Before a legal charge can be sustained there must be a contract of employment, either expressly made or superinduced by the law upon the facts of the case." McGraw v. Canton, 74 Md. 559. Unless such contract, express or implied, can be established the party who engages counsel must pay for his services.

In the case of Wilson v. Kelly, 30 S.C. 483, cited approvingly in B. O.R.R. Co. v. Brown, 79 Md. 447, one distributee brought an action for settlement, partition and distribution against her codistributees; and though her attorney defeated a claim asserted by one of the heirs, and reduced a claim presented by a judgment creditor, it was held the attorney was not entitled to a fee out of the fund, although his services were beneficial to all the heirs alike.

So in ex-parte Lynch, c., 25 S.C. 193, a mortgagor was sued by strangers for the recovery of the mortgaged land, and being advised he could not successfully resist, he informed the mortgagee that he proposed to make terms; thereupon the mortgagee, with leave of the Court, did make defense and succeeded in defeating the claim; it was held that the attorneys for the mortgagee were not entitled to payment for their services out of the surplus value of the mortgaged land.

The appellants in this case acted solely for themselves in prosecuting the New Jersey suit. Their object was to recover the legacy for their own benefit; and having done so, without any arrangement, in fact, or to be implied by the circumstances, with the appellees, the latter cannot be called upon to contribute out of their share of the fund to the payment of counsel fees.Carter v. Wake, L.R. 4 Ch. Div. 605.

The cases cited by the appellant's counsel to sustain his position, may all be distinguished from the case at bar. In those cases the facts were such as in equity and fair dealing were sufficient to raise an assent upon the part of those who received the benefit of the litigation. In this case we have nothing more than the efforts of a creditor to secure his claim.

We come now to the consideration of the agreement between the parties and its effect upon the question involved in this case. The original agreement did not contemplate a change in the title to the boat until the purchase-money was fully paid. Upon certain contingencies the appellants were given the option of cancelling the agreement and in that event the appellees were to pay a certain sum per annum as "charter-money," and the reversionary interest and the policy of insurance were made liable for all such premiums and repairs on the boat as the appellants were obliged to pay and also for "all bills contracted by the appellees for which the boat shall become liable." But at the time of the final agreement, there was a different condition of things existing. The title to the boat was to be transferred to the appellees, and the condition of the transfer was that the reversionary interest should be liable for the purchase-money and interest, for "all sums heretofore paid and thereafter to be paid by the appellants on account of premiums on the policies of insurance and any other expenses." On failure of the appellees to make such payments, or any of them, the appellants were to have the right to sell at public or private sale the reversionary interest and apply the proceeds to the payment of the purchase-money and interest; to "other payments" made by the appellants, and to the costs of sale, and the residue, if any, to the appellees. The appellants, by this agreement and the transfer of the title to the fund, were placed in the attitude of mortgagees, with power to make sale of the appellees' interest, upon failure of the latter to make the payments just recited. To what, then did the parties refer when they agreed that the security of the property pledged should extend to "any other expenses." Not to the money which the appellants should have to pay on account of the boat (for the title was to pass to the appellees), nor to insurance premiums, nor on account of the costs of making the sale, for the reason that those matters were provided for in specific terms in the contract. The title to the boat having passed to the appellees, the appellants stood in no danger of being charged with or having to pay for expenditures for repairs or other expenses upon it. What expenses, other than those just mentioned and specifically provided for in the agreement, could there be, except such as were necessary or might become necessary to enable the appellants to exercise their power of sale whenever it was proper to do so. At the time the reversionary interest was transferred the life-tenant was still alive and it might be years before the reversion fell in. What changes might occur, or what steps might thereafter be needed to preserve the right, it was impossible to foresee. In fact, thirteen years did elapse after the sale of the boat before the death of the life-tenant, and then the appellants found the claim of themselves and of the appellees denied. They were forced to the necessity of a long and expensive law suit. We think it a reasonable construction, therefore, to impute to the parties the intent to provide by the use of these words for such "expenses" as might become necessary to enable the appellants to take the proper steps to preserve and keep alive the property that had been committed to their keeping. If any other construction were placed on the words, as used in this agreement, it will be difficult to determine to what they could possibly be made to refer. The directions as to the disposition of the proceeds of the sale are equally clear; they are to apply them first to the payment of the purchase-money, and then "to any other payments made by them," and the costs of said sale.

It follows from what we have said that the two prayers offered by the defendants should have been granted.

The only other exception in the case was taken to the admission in evidence of a letter of W.T. Hilliard, the appellants' solicitor in the proceeding in New Jersey to recover the legacy. It is insisted that it contains an admission adverse to the interest of the appellants in this case. But we are of opinion there is no such admission. The letter was written in reply to one to him from the counsel of the appellees. After stating thestatus of the case over which he had control and that he had received a statement of the account of the appellants against the appellees, the writer proceeds: "The amount due Mr. Lyon, as I recollect it, is considerably in excess of the interest of your clients in the legacy, and I think it very doubtful if there will be anything coming to them. When the final order is made in the case, I will ascertain the exact amount due Mr. Lyon, and if it should prove to be less than two-thirds of the legacy and accrued interest, I will so draw the order that the balance shall be paid to your clients." He makes no admission here as to the manner in which the "exact amount due Mr. Lyon" is to be ascertained or how the counsel fees are to be treated. It amounts to no more than a statement that when he has determined how much will be due the appellees, he will have the order so drawn as that it shall be paid to them. The letter therefore had no relevancy whatever to the issue in this case, which is, whether the appellants have the right to deduct from the amount recovered proper and necessary attorney's fees, before applying the fund to their own claim.

But, apart from this, we do not think Hilliard had power to bind his clients by an admission in respect to matters not in his control. There is no proof that he was directly or indirectly so authorized, or that the appellant ever acquiesced in or ratified any admission he may have so made or that any of the parties have acted upon it. His authority was merely to conduct the proceedings for the recovery of the legacy, and that conferred upon him such powers only as were necessary to its proper accomplishment. The powers of an attorney have been so fully discussed by this Court in previous cases, that it is not deemed necessary to pursue the subject any further. Maddox v. Bevan,39 Md. 485; Fritchey v. Bosley, 56 Md. 97; Horsey, Miller Co. v. Chew, Trustee, 65 Md. 558.

We are of opinion therefore that the letter should have been rejected.

Judgment reversed with costs.

(Decided June 14th, 1900.)