Morgan v. Hutcheson

In order for a widow of a veteran to recover from one to whom she paid a sum in excess of ten dollars for assistance rendered by the defendant as required in the preparation and execution of the necessary papers in an application to the bureau in the effort to collect on her deceased husband's war-risk insurance policy, it was not necessary that the sum sued for should have been paid in pursuance of an agreement such as is forbidden by the act of Congress found in U.S. Code Ann., title 38, § 551; but the same may be recovered by her if received by the defendant as compensation for the assistance rendered to her by him which is referred to in the above recited act, although the payment be at the time designated as a gift.

No. 14339. DECEMBER 2, 1942. This case was twice before the Court of Appeals. Morgan v.Hutcheson, 61 Ga. App. 763 (7 S.E.2d 691); 67 Ga. App. 802 (21 S.E.2d 234). A reference to the reports of those cases obviates the necessity of presenting here a full summary of the issues. The suit is by Mrs. Morgan to recover $1537.50, besides interest, alleged to have been paid by her to Hutcheson as a percentage of the sum received by her from the Government of the United States under her deceased husband's war-risk insurance policy, in violation of the Federal statute cited above, which declares: "That payment to any attorney or agent for such assistance as may be required in the preparation and execution of the necessary papers in any application to the bureau shall not exceed $10 (ten dollars) in any one case. Any person who shall, directly or indirectly, solicit, contract for, charge, or receive . . any fee or compensation, except as herein provided, shall be guilty of a misdemeanor, and for each and every offense shall be punishable by a fine of not more than $500 or by imprisonment at hard labor for not more than two years, or by both such fine and imprisonment: Provided, that the provisions of this section shall not apply to professional services required in the prosecution of any action in any court of law." The answer of the defendant was to the effect that the money which Mrs. Morgan paid him, in excess of the amount advanced by him for her as expenses, was a gift from her to him, and was not compensation for services rendered by him in the preparation and execution of papers filed by her, such as were referred to in the statute above quoted. The judge charged the jury that if the money was paid to the defendant as a gift, and not under the obligations of a contract originally entered into between the parties touching this matter, he should prevail.

The following facts appear, either by stipulation of counsel, or from undisputed evidence:

Hutcheson was service officer for the Ross-Graham Post 87 of the American Legion. The plaintiff was the widow of a deceased veteran, Charles B. Moore, and as such was entitled, under the rules and regulations of the Veterans Administration, to the proceeds of the policy of insurance on the life of the latter. She wrote to Hutcheson that she had tried to see him in connection with her government claim, and later in response to a letter he wrote her she came to see him. She asked Hutcheson's assistance; and answering her inquiry as to what charge he would make for handling the claim, he said that he could not make any charge at all. In a few days she sent him the file. He took the matter up with the Veteran's Administration in Washington and received notice, about October 25, 1934 that it had been allowed. On December 7, 1934, he entered with her into a writing in which it was agreed that she would pay him fifteen per cent. of a sum not to exceed $12,500, for services rendered and to be rendered in the collection of insurance due to the estate of Charles B. Moore, deceased, or that proportion which she received as her part of the estate. Hutcheson was not to receive any per cent. on excess of $12,500. And it was further agreed that in the event of a lawsuit over this estate, Hutcheson was not to receive in excess of 12 1/2 per cent. Hutcheson testified that he knew at the time she was going to get the money, i. e., that her claim had been allowed and approved. On December 24, 1934, he wrote to her the following letter:

"Mrs. Gladys M. Morgan, Rossville, Georgia.

In Re: Moore Case. "Dear Mrs. Morgan: I wish to say that I am writing you for the purpose of stating that I will try to be ready to go to Indianapolis with you and your husband on the morning of the 1st, if you still insist on me going while I am still of the opinion that I can not do a great deal for you by going, but if you think I should go I will try to be ready, and if I do not see you before that time I will let you know where to meet me in Rossville on the first. I also wish to call your attention to the fact that I cannot make a charge against you for my services, and that for me to make you a charge would subject me to a heavy sentence and fine, as the Federal law specifically provides that to make a charge of more than ten ($10) dollars one is subject to a heavy penalty; and since I have never charged any one for services of this nature I make no charge against you, and therefore wish to say, as Mr. Rink advised you when you were last down here, that the contract or attempted contract or agreement that we made is a nullity by Federal statute, and you need not consider that you owe me, for the reason that no contract you might make to pay money out of this fund could be collected except that you just voluntarily live up to the contract or your agreement, and therefore I make no charge as a fee for services rendered; but you may rest assured that I shall do everything for you that I can, the same as if you were paying me as much as half you recover.

"Wishing for you and Mr. Morgan a big 35, I am

"Your friend, John M. Hutcheson."

"P. S. If I do not see you before the first I will drop you a card where and what time to meet me. J.M.H."

On January 1, 1935, the two went to Indiana for the purpose of having appointed an administrator of the estate of Charles B. Moore, the expenses of Mrs. Morgan and her present husband, and of Hutcheson, totaling $60, being paid by Hutcheson. In Indiana he looked after the appointment of an administrator, and the giving of the bond. Later he furnished $30 to make a necessary trip to Knoxville. In a stipulation by counsel: "It is admitted that the administrator of the Charles B. Moore estate received from the Government eleven thousand six hundred and sixty-one dollars and fifty cents, and that it was paid to the administrator of the Charles B. Moore estate, as war-risk insurance, as alleged in plaintiff's petition. The defendant admits that he received a check, the check referred to in plaintiff's petition, in the amount of fifteen hundred thirty-seven dollars and fifty cents." The check received by Hutcheson was 12 1/2 per cent. of the amount paid to Mrs. Morgan as the beneficiary, less $80. This was paid him by her on the day following the collection of the money. As to the conversation between Mrs. Morgan and Hutcheson at the time she handed him the check for the money sued for, he testified as follows: "I was in her office in Chattanooga when she gave me the check. Jack Millard was there with us. I did not ask her for any check. As to what she said when she gave me the check, well, she said, ``How much do I owe you?' And I said, ``Mrs. Morgan, you know how much money I have advanced you.' I said, 'I can't charge you anything for any service that I have rendered you, but I do expect you to pay back the money that I have advanced to you for expenses in making these trips.' I told her that I had assisted veterans and veterans' families in the collection of a hundred and sixty thousand dollars on various claims, and that I had never charged a dime, but I did expect her to refund the money that I had advanced to her for the making of these trips. And she said, ``I would not think of letting you do all this work for me and not pay you for it.' And so she gave me a check for fifteen hundred and thirty-seven dollars and fifty cents. When we first got to Chattanooga she went down to the bank, and as I recall it the bank was closed, and then she came back up, and Mr. Keys came in right behind her, and she wrote the check out and then asked how much she owed me, and I said, 'You owe me exactly what I have advanced you.' And she said, 'I would not think of letting you do this work for me for nothing.' And then she wrote the check out and folded it up and handed it to me. She said, ``You may think this is hard for me to do, but I never enjoyed giving any one anything as much as I enjoy giving this to you, and I want you to receive it as a gift.' The check that I received from Mrs. Morgan was not paid to me under the terms of the contract. She said she was making me a gift."

Julius Rink a witness for the defendant, testified as to a conversation between himself, the plaintiff, and the defendant, in which he advised them that to enter into a contract for services of this kind would be illegal; and that Mrs. Morgan then said: "This is my money, and I can do with it as I please." "I said, ``Yes, ma'am, you certainly can do as you please with it.' I told her she could go down to the creek and throw the money into the creek if she felt like it. She then said, ``Well, if we can't make a contract, I will have to use my own judgment about what is right and fair.' The contract that she was talking about is the contract that is being discussed in this case."

The answer of the defendant contains the following: "He says further that he has not at any time made any demand on the plaintiff for any sum, as he relied solely and completely on the liberality of the plaintiff, upon her promise to make to him a gift sufficient to satisfy this defendant for the service rendered by him." The context shows that the services contemplated were to be rendered in connection with the widow's application for payment of her husband's insurance.

The jury found for the defendant, and the Court of Appeals affirmed the refusal to grant a new trial. In Mrs. Morgan's application for certiorari error is assigned in that the Court of Appeals misinterpreted and misconstrued the provisions of the statute, and practically nullified the effect thereof. In view of what the defendant pleaded, it can not be urged by him or his counsel that the money received by him was for services rendered in connection with obtaining administration on the estate of the husband of the plaintiff. He is bound by his pleadings, which averred that he received it as a gift.Kirkpatrick v. Faw, 184 Ga. 170, 177-178 (190 S.E. 566), and cit.: Fowler v. Johnson, 151 Ga. 122 (106 S.E. 90).

The Court of Appeals ruled that the jury was authorized to find the money was not paid under the contract, "and the verdict was authorized on the theory on which the case was tried." Elsewhere that court found no error in a charge to the effect that if the defendant sustained his contentions, he was entitled to a verdict. As to what his contentions were, one must look to his answer. Translated in the light of his answer, this was a ruling that if it was received by him from the plaintiff, who paid the same to him voluntarily "upon her promise to make him a gift sufficient to satisfy this defendant for the service rendered by him," it was not a violation of the law. In our opinion this was a misinterpretation of the law, and so to construe it in effect nullified the statute. The statute here involved not only prohibits the contracting for, but makes unlawful the receiving of any sum in excess of ten dollars, directly or indirectly. The illegality of the transaction is not dependent upon whether it was paid under a contract, but whether it was received, with or without a contract, as compensation for services rendered. If, as pleaded by the defendant, the sum so received was "to satisfy" him for services rendered, then this was to compensate him, and therefore received by him as compensation for services rendered, contrary to the provisions of the statute. His testimony as to the conversation between him and the donor at the time he received from her the check makes it clear as to what this payment to him really was. She was doing that which he had suggested to her in his letter wherein he stated to her that their contract as to fees was a nullity, and that she need not consider that she owes him anything "except that you just voluntarily live up to the contract or your agreement." This is in line with another portion of his answer in which he averred that the award to her was made after he had written his cancellation of the contract, and after he had notified her that he could not go on with the contract, but that he had told her he would continue his efforts in the matter, and that "aside from the contract, that this plaintiff advised him that she would make him a present of a sufficient sum that would satisfy him for the services he had rendered, if he would continue to aid her until she received the money."

It was a misinterpretation of the statute to hold that the plaintiff could not recover unless the money sued for was paid under the contract. The law not only forbids any person from contracting for compensation in excess of ten dollars for such assistance as may be required in the preparation and execution of the necessary papers in any application to the bureau for the collection of money due on a war risk-insurance policy, but the law prohibits the receiving of any sum in excess of ten dollars, directly or indirectly, as compensation. The test is not whether it was paid under the contract, or whether it was received as a gift. That it was to be regarded as a gift can not save it from the taint which the law casts upon it if it was received as compensation. There is no difference between receiving it as compensation and receiving it in satisfaction of services rendered by him. The law looks beyond the shadow and into the substance of things. According to Hutcheson's pleadings and his testimony, there could have been but one purpose in view, and that was a purpose forbidden by the law. "If a gift shall be made for a specific purpose expressed or secretly understood, and such purpose is illegal, or from other cause fails or cannot be accomplished, the donee shall hold as trustee for the donor or his next of kin." Code, § 48-108. It is impossible to treat this so-called gift as detached from the main transaction, or as a spontaneous expression of the donor's bounty to one who had done her a kindness, even though it be permissible (as to which we are not called on under this record to express an opinion), for parties placed as this plaintiff and this defendant are, for the one to make to the other a gift. The time and place of the payment, the odd amount, the absence of any other reason why, upon the receipt of the proceeds by her of this insurance money, she rewarded him so handsomely in an amount which apparently was designed to be the equivalent of the exact sum he was to have received under the original agreement with him, can mean nothing else than that he received it in compliance with her promise to "satisfy" him for services for which the law says he shall receive no compensation in excess of ten dollars.

There seems to be a dearth of direct authority on the exact issue here presented. On the general subject, however, see Owen v. Galt, 57 Ga. App. 259 (195 S.E. 233); Welty v. United States, 2 F.2d 562; Purvis v. United States, 61 F.2d 992; United States v. Hall, 98 U.S. 343 (25 L. ed. 180); Calhoun v. Massie, 253 U.S. 170 (40 Sup. Ct. 474,64 L. ed. 843); Spicer v. Smith, 288 U.S. 430 (53 Sup. Ct. 415,77 L.ed. 875, 84 A.L.R. 1525); Margolin v. United States, 269 U.S. 93 (46 Sup. Ct. 64, 70 L. ed. 176); Hines v. Stein, 298 U.S. 94 (56 Sup. Ct. 699, 80 L. ed. 1063).

Judgment reversed. All the Justices concur.