Brown v. Watkins Motor Lines, Inc.

CHARLES CLARK, Circuit Judge:

This appeal questions the power of a federal trial court on its own motion to adopt as the court’s ward a minor represented by a duly qualified guardian, fix the compensation of the guardian’s attorney, and direct his payment out of a tort judgment previously rendered by the court. We hold that, absent the presentation of some dispute, no case or controversy exists which will support such a sua sponte post-judgment assumption of power.

William Gary Brown, Jr., the four-year-old plaintiff, was severely injured in an automobile accident with a truck owned and operated by defendant Watkins Motor Lines, Inc., near Pascagoula, Mississippi. His parents retained an attorney, C. R. McRae, on a one-third contingent fee contract to represent Brown in a suit against Watkins. The Probate Court of Alabama, Brown’s home state, appointed Thomas E. Bryant, Jr., to act as guardian of Brown’s estate in Alabama. Bryant, through McRae as counsel, instituted a diversity action in the district court and won for Brown a $500,000 jury award. This award was embodied in a final judgment of the district court on September 17, 1976. Watkins moved for the entry of an order of remitti-tur, or correction, or in the alternative for a new trial. By order entered October 14, 1976, the court overruled this motion and sua sponte directed the payment of the judgment proceeds into the registry of the court. The order further provided: “[Tjhis Court shall pass upon all claims against the guardianship estate and shall retain full jurisdiction of the administration and supervision of this estate until otherwise ordered by this Court.” Watkins deposited the $500,000 plus interest with the district court in full payment and satisfaction of the judgment and did not participate further in the cause.

On November 18,1976, Bryant moved the district court to disburse the registry funds to him in his guardianship capacity. The trial judge refused to order distribution of the judgment proceeds until an ancillary guardianship was set up in Mississippi as required by the law of that state. Miss. Code Ann. §§ 93-13-181 through 185 (1972). After that was done and a hearing had been held, the court, by order entered December 14, 1976, denied the relief requested. Instead, over the objections of both Bryant and McRae, it fixed McRae’s attorney fees and expenses at $93,692.67, then ordered those funds paid to McRae and the balance paid into the Chancery Court of Hinds County, Mississippi, where the ancillary guardianship had been established. In the course of an oral opinion delivered at the conclusion of the hearing, the district court stated that it was “precluding” any question as to attorney’s fees to the Chancery Court of Hinds County and was only ordering paid to that court the net amount of the judgment proceeds, ex attorney’s fees. On December 30, 1976, the guardian withdrew a registry check for $411,753.68. On January 3, 1977, McRae withdrew a registry check for $93,692.67.

On this appeal, McRae contends that the district court lacked jurisdiction to fix the portion of the judgment which should be awarded as attorney’s fees and expenses. Alternatively McRae argues that it was an abuse of discretion to ignore his one-third contingent fee contract and grant a totally inadequate allowance of 15 percent of the judgment. Because we find that the district court had no jurisdiction to allocate the final judgment, we can not address the issue of adequacy.

It cannot seriously be doubted that prior to distributing a judgment award a court has the power to decide a contest between the judgment creditor and his attorney over the appropriate amount of the attorney’s fee lien on the judgment. Sprague v. Ticonic National Bank, 307 U.S. 161, 59 S.Ct. 777, 83 L.Ed. 1184 (1939); United States v. Equitable Trust Co., 283 U.S. 738, 51 S.Ct. 639, 75 L.Ed. 1379 (1931); Garrett v. McRee, 201 F.2d 250 (10th Cir. 1953).¹ However, in the present action there was no request for such relief. The parents of the injured minor had entered into a contingent fee contract with McRae before litigation commenced. Neither the Browns nor Bryant has expressed dissatisfaction with that contract, nor has its validity been questioned. According to comment of counsel, the contract has been approved by the original guardianship court in Alabama.

Today’s appeal grew out of the district court’s apparent doubt that Bryant or the state guardianship courts would protect the interests of the four-year-old Brown. In a companion case earlier instituted by Bryant in the name of William Brown’s brother for injuries from the same accident, McRae had received $266,666.66 in attorney’s fees on a one-third contingent fee contract similar to the one asserted here. Obviously troubled by the aggregate fees McRae was taking from the children’s estate, the district judge commented:

Well, let’s just make this perfectly clear, that in a case where a guardian is appointed, and of course this is an unusual case because this little boy had two living parents. . . . [B]ut you came over here and got a statutory guardian from Mobile County, complete stranger to this child. He couldn’t possibly have any interest or knowledge in that little boy, and to have that complete rank stranger appointed as his guardian and have him decide with you about what your attorney’s fee is going to be, I would say he would have a stacked jury to start off with, and I’m not even about to do that. Matter of fact, I want to hear from you how much money you took out of this $800,000 verdict, Mr. Counsel. You want to tell me about that?

Assuming someone may wish to raise a controversy over McRae’s fees, our resolution of the present appeal would not affect its presentation at a later time to a court having jurisdiction. However, no adverse claims to the judgment funds have been asserted in the district court. When Bryant petitioned the court to transfer the entire judgment to the Hinds County Chancery Court, the district court adopted the position that Brown was “the ward of this court to the extent of the fixation of attorney’s fees,” and of its own motion proceeded to allocate the judgment. This it could not do. The absence of a live controversy before the district court mandates that we vacate for lack of jurisdiction its decision to apportion the award.

Article III of the United States Constitution limits the power of federal courts to deciding only those questions arising in a “case” or “controversy.” Those terms are not amenable to precise definitions or easy application. See Flast v. Cohen, 392 U.S. 83, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968). The judicial power conferred by the Constitution has been defined as “ ‘the power of a court to decide and pronounce a judgment and carry it into effect between persons and parties who bring a case before it for decision.’ ” Muskrat v. United States, 219 U.S. 346, 31 S.Ct. 250, 55 L.Ed. 246 (1911) (emphasis added), quoting, Miller, Const. 314. If no party before a court makes or suggests any contest, but rather all litigants desire precisely the same result, there can be no case or controversy within the meaning of Article III. Moore v. Charlotte-Mecklenburg Board of Education, 402 U.S. 47, 91 S.Ct. 1292, 28 L.Ed.2d 590 (1971).

Although the district court’s attempt to protect what it considered to be the best interests of the minor is laudable, it had no authority to force upon the parties a remedy that they did not seek. The case or controversy in the federal forum ended with payment of the judgment into the registry of the court. The unopposed petition to transfer the judgment intact to the Hinds County Chancery Court was a ministerial request which should have been granted. The court’s refusal to do so, followed by a sua sponte invocation of its equity power in an effort to protect the minor as its ward, was the assumption of a jurisdiction it lacked.

By asserting that it was precluding the state court from exercising its authority to distribute Brown’s estate, the district court’s order has effectively stayed the Hinds County Chancery Court’s actions in administering the guardianship to the detriment of the litigants there. In the interests of justice, that portion of the district court’s order adjudicating the amount to be paid C. R. McRae as attorney’s fees and expenses is found to be beyond the district court’s jurisdiction and is vacated. 28 U.S. C.A. § 2106. Since vacating the extra-jurisdictional allocation eliminates the conflict between the district court and the state guardianship courts, and since we are advised that McRae has transferred the funds paid to Mm over to the Hinds County Chancery Court, we dismiss this appeal.

ORDER VACATED IN PART and APPEAL DISMISSED.

1 . Cappel v. Adams, 434 F.2d 1278 (5th Cir. 1970), is distinguishable. There, as in Garrett v. McRee, supra, the court having judgment proceeds in its coffers was petitioned to fix attorney’s fees. In Cappel, we held that the court had the power to award an amount different from the terms of a contract. In the case at bar, however, no party petitioned the district court to fix such fees.