Equitable Life Assur. Soc. of U.S. v. Poe

• Decision Date: 28 January 1880
• Citation: 53 Md. 28
• Parties: THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES v. CHARLES POE.
• Court: Maryland Court of Appeals

53 Md. 28

THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES v. CHARLES POE.

Court of Appeals of Maryland

January 28, 1880

Appeal from the Baltimore City Court.

On the 26th of April, 1877, the appellant obtained judgment for the sum of $943.33, in the Superior Court of Baltimore City against John M. Miller, of that city, as surety on the bond of John A. Busk, a former agent of the appellant. In the procuring of that judgment, Mr. E. J. D. Cross, who had been for some time the regular counsel, in Baltimore, of the appellant, acted as its attorney. In September, 1878, the judgment against Miller had not been satisfied, though three attachments (two of which were then pending) and one fieri facias had been issued.

In January, 1876, John M. Miller had executed to Robert Moore a deed upon certain trusts, therein specified, of property in which he had an interest under his father's will. In the latter part of September, 1878, Richard H. Mitchell, who was a special agent, in Baltimore, of the appellant to effect insurances on lives for that society, and who owned one-third of the judgment against Miller, called on the appellee, an attorney at law in Baltimore, and showed him an extract from the deed mentioned, and further explained what the deed contained. The appellee said, if the deed was so it was, in his opinion, void, and that he thought the judgment against Miller could be made; whereupon Mitchell asked the appellee whether he would undertake to collect the judgment for a contingent fee of 40 per cent.; and he further informed the appellee, on inquiry to that effect, that the connection of Mr. Cross with the case had ceased and that his fees had been paid. The appellee, however, being doubtful of Mitchell's authority to employ him as attorney, requested him to write and get authority to employ him direct from the society. The letters which passed between Mitchell and the society are stated in the opinion of the court. The appellant having decided that its agent, Mitchell, had exceeded his instructions, and that Mr. Cross should continue to represent the society in the matter in question, Mr. Poe, who, acting upon the supposition that Mitchell had got the requisite authority, had already begun proceedings in equity on behalf of the society, to have the deed afore-mentioned set aside brought suit against the appellant for breach of contract, to recover the contingent fee of 40 per cent.

Exception.--At the trial, the plaintiff prayed the court to instruct the jury:

That the deed executed by John M. Miller to Robert Moore, in trust, bearing date the 4th of January, 1876, and read in evidence, was fraudulent and void on its face as against creditors of said Miller, existing at the time of its execution.

The defendant offered thirteen prayers, of which it is necessary to set out only the fifth:

That the only authority of R. H. Mitchell to employ the plaintiff was that given by the letters of the 15th and 18th of October, 1878, offered in evidence, and the said Mitchell was only authorized to employ the plaintiff on the terms therein stated, and that the plaintiff has offered no evidence that he was employed by said Mitchell in accordance with said terms, and that, therefore, the plaintiff is not entitled to recover.

The court, (Garey, J.,) granted the plaintiff's prayer, and rejected all the prayers of the defendant. The verdict and judgment, for $264.00 and costs, being for the plaintiff, the defendant appealed.

The cause was argued before BARTOL, C.J., MILLER, ALVEY, ROBINSON and IRVING, JJ.

W Irvine Cross and John K. Cowen, for the appellant.

The appellee's dealing with Mitchell should have been governed by the rule, that he who deals with a special agent must know what his authority is, and is charged with that knowledge. Wharton on Agency, 121, 227, 137-139; Story on Agency, 126, 132-3; Chitty on Contracts, 200; Paley on Agency, 201, 202; Baltimore v. Reynolds, 20 Md. 1.

And by a corollary to this rule, when the appointment is by a written instrument, any one dealing with the agent must examine that paper, and will be charged with knowledge of all it contains. Story on Agency, secs. 72, 74, 75; Wharton on Agency, 227, 247; Towle v. Leavitt, 3 Foster, 360; Wharton on Negligence, 300; Schimmelpennich v. Bayard, 1 Pet. 264, 290; White v. Davidson, 8 Md. 187; Brown v. McGraw, 14 Pet. 479, 473, 474.

If Poe acted before Mitchell had any authority, he took the risk of any conditions that might be imposed upon him. And if, after Mitchell told him that he had a written authority, he acted without first examining it, he is charged with full knowledge of all that it contains.

A contract to try a case for a part of the amount recovered, is in itself illegal, and there is an additional illegal element in a contract in which a client stipulates that his costs shall be paid for him. Lathrop v. Bank, 9 Met. 489; Thurston v. Percival, 1 Pick. 415; Martin v. Clarke, 8 R.I. 389; Arden v. Patterson, 5 John. Ch. 44, 48, 50; Berrien v. McLane, 1 Hoffman Ch. 421; Rust v. La Rue, 4 Litt. (Ky.) 412, 425, 427; Gregerson v. Imlay, 4 Blatch. 503; 13 Ohio, 167; Holloway v. Lowe, 7 Porter, (Ala.) 488; Elliott v. McClelland, 17 Ala. 206; Small v. Mott, 23 Wend. 403; 10 Paige, 352; 3 Rev. Stat. N.Y. 449.

John P. Poe, for the appellee.

The plaintiff's prayer was properly granted, and the appellant's prayers were all properly rejected. Bump on Fraud. Conveyances, 318; May on Fraud. Alienation, 65, 93, 520; Brinton v. Hook, 3 Md. Ch. 477.

The validity of bargains for contingent fees is too well settled now to be seriously questioned. Howard v. Carpenter, 22 Md. 26; Schaferman v. O'Brien, 28 Md. 573-4; Cain v. Warford, 33 Md. 35-36; Marshall v. Cooper, 43 Md. 46; Wylie v. Cox, 15 How. 415-420; In re Paschal, 10 Wall. 488-496; Wright v. Tebbetts, 1 Otto, 252; Stanton v. Embrey, 3 Otto, 556; Trist v. Child, 21 Wall. 441.

The appellee instituted proceedings before the letter of the 18th of October was received by Mitchell, but upon the assurance of the latter that he had authority. The letter, if our construction of it be correct, ratified Mitchell's act, and thus rendered binding on the appellant the contract previously made by him with the appellee. Maddox v. Bevan, 39 Md. 493, 497; Roberts v. Graham, 6 Wall. 578.

Alvey J., delivered the opinion of the court.

Assuming without deciding the contract sued on to be one that could be enforced, if made upon competent authority, the case turns upon the question whether the agent with whom the plaintiff dealt had authority from the defendants to employ the plaintiff upon the terms alleged, and as disclosed in proof.

It is clearly shown by the plaintiff himself that R. H. Mitchell possessed no general power as agent of the defendants to employ counsel to prosecute legal proceedings for them. Mitchell was, at the time of the alleged employment of the plaintiff, only a special agent of the defendants to effect insurance on lives; and when the subject of the employment was first broached to the plaintiff by Mitchell, the former appears to have understood the necessity of first having special authority from the defendants, for he expressly says he was doubtful of Mitchell's authority, and he therefore requested him to write and get authority from the defendants for the proposed employment. Some time thereafter Mitchell did write, and the whole evidence of authority from the defendants for the employment of the plaintiff to take legal proceedings in their name, is contained in the letter of Mitchell to the Vice-President of the defendants, dated the 15th of October, 1878, and the reply thereto of Halsted, the auditor of the defendants, of the 18th of October, 1878. In the first of these letters, after referring to the judgment against Miller and the failure of previous efforts to realize the money on it, Mitchell says: "Now, if you will allow me to manage the matter for you, I will employ a young lawyer, who is energetic and smart, who will undertake to make the money for you on a contingent of 40 per cent., and he will at the same time take a policy on his life in our company for ten thousand dollars. Give me the authority to employ him, and you will get sixty cents on the dollar, with interest, and a policy for $10,000 at the same time." In reply...