Escanaba Traction Co. v. Burns

• Decision Date: 06 May 1919
• Docket Number: 3214.,3213
• Court: U.S. Court of Appeals — Sixth Circuit
• Parties: ESCANABA TRACTION CO. v. BURNS et al. BURNS v. ESCANABA TRACTION CO. et al.

257 F. 898

ESCANABA TRACTION CO. v. BURNS et al.

BURNS v. ESCANABA TRACTION CO. et al.

Nos. 3213, 3214.

United States Court of Appeals, Sixth Circuit.

May 6, 1919

Eben R Minahan, of Green Bay, Wis., for appellant Burns.

Thomas J. Riley, of Escanaba, Mich., and G. F. Clifford, of Green Bay, Wis., for appellant Escanaba Traction Co.

Thomas Clancey, of Ishpeming, Mich., for appellee Escanaba Nat Bank.

Charles M. Owen, of Grand Rapids, Mich., for appellees Burns and others.

Before WARRINGTON and KNAPPEN, Circuit Judges.

KNAPPEN Circuit Judge.

John Brogan and one Rich, copartners as Brogan & Rich, had a contract with the Escanaba Traction Company for certain construction work. In a suit on the law side of the court below, for breach of this contract, Brogan & Rich obtained verdict against the traction company on April 17, 1914, for $15,759.16 damages. Judgment was rendered on the verdict December 17th following, and from that judgment writ of error was taken from this court. In the performance of the construction contract, Brogan & Rich borrowed from the Escanaba National Bank $7,000, giving the bank therefor an order on the traction company April 6, 1912, which was accepted by the latter two days later. Brogan had borrowed from four of his relatives sums amounting to $16,000, as follows: From Joseph Burns $7,000, from Ellen Burns $3,000 from Catherine Kane $3,500, and from James Brogan $2,500. Part, at least, of these sums was used in performing the construction work in question. After verdict, and before judgment, Brogan & Rich, by Brogan, gave to each of the latter's four relatives a formal written assignment of their entire claim against the traction company, reciting the pendency of suit thereon in the United States court, each assignment stating that it was 'given to secure' the person named 'for a loan of money' made to the firm in the specific sum stated, which was in each case the principal of the loan. No question is made of Brogan's complete authority to so act for the firm. The assignment to Ellen Burns was in terms made 'subject to a previous assignment of the same funds in favor of Joseph Burns,' the assignment to Catherine Kane subject to the assignments to both Joseph and Ellen Burns, and that to James Brogan to the assignments to each of the other three. The traction company was fully informed of these assignments, being served with a copy of each.

On March 16, 1915, Brogan & Rich, through Brogan, and with the participation of the attorneys who had represented them in securing the judgment, effected a settlement with the traction company, whereby the latter paid $12,500, of which $7,700 was paid by the traction company to the bank in payment of its claim, with interest thereon, the remaining $4,800 being paid by the traction company to Messrs. Martin, Martin & Martin, attorneys for Brogan & Rich. The judgment against the traction company was thereupon formally discharged, and under stipulation of counsel the writ of error from this court was dismissed. No question of Brogan's authority to represent Brogan & Rich in making this settlement is involved. Martin thereupon paid Ryall $400 for his services as attorney for Brogan & Rich in the suit against the traction company, paid Calnan & Riley $723.38 in settlement of a claim presented by them as members of the firm of John Brogan & Co., for work done and materials furnished under a subcontract for the construction work in question, retained for themselves $1,835, partly for services rendered and expenses incurred in the suit against the traction company and partly for services and expenses in connection with other suits in which John Brogan and others were interested, and tendered to Joseph Burns the remaining $1,831.72, which Burns refused to accept.

Joseph and Ellen Burns, Catherine Kane, and James Brogan thereupon brought the instant suit, to set aside the satisfaction of the judgment against the traction company and for an accounting with the several defendants. The traction company and the bank appeared and answered on the merits. Upon hearing on pleadings and proofs, the court below found, first, that the settlement was authorized by and is binding upon Joseph Burns, as a release of the security of his assignment of the judgment, entitling him to the remaining $1,831.72, and without prejudice to his right to recover, by suit or otherwise, from defendant Martin and defendants Calnan & Riley (who, being nonresidents and without the jurisdiction, were not served with process and did not appear), 'any moneys which may have been unlawfully retained by the one or paid to the other out of the balance of $4,800 received from said defendant company'; second, that the settlement was without authority or consent of the plaintiffs Ellen Burns, Catherine Kane, and James Brogan, and that these three plaintiffs are entitled to have the settlement set aside as to the balance of the judgment, including costs and interest, after the application of the $12,500 actually paid thereon, and to receive such balance in the priorities before stated; and, third, that the national bank was authorized to receive the $7,700 in question out of the settlement, and was so authorized by plaintiff Joseph Burns. Decree was entered accordingly. The traction company appeals (No. 3213) from so much of the decree as requires it to pay the balance of the judgment against it. Joseph Burns appeals (No. 3214) from the refusal to allow him further relief than stated.

1. Joseph Burns' Appeal. Previous to the settlement Burns' claim had been reduced by payment of $2,000 on the principal. Complete relief was denied him on the ground that he authorized the settlement at $12,500. He was present at a conference between Brogan and his counsel, at Martin's home in Green Bay, Wis., for the purpose of considering the question of settlement, which was accomplished two days later. Burns' express assent to a settlement at $12,500 is claimed to have been given at this conference. On this question of fact the trial court said:

'Did Joseph Burns authorize or consent to the settlement? Upon this question the testimony is in sharp conflict. Burns not only denies that he gave his consent to the settlement, but asserts that he refused to consent thereto. His testimony is corroborated to some extent by that of John Brogan and one other witness and by the fact that he refused to sign a power of attorney authorizing Brogan to act for him in the settlement. On the other hand, the two attorneys who negotiated the settlement are equally positive in their statements that Burns authorized them to act for him. These attorneys are men of integrity and high standing in their profession. That they believed themselves to be clothed with full power to act cannot be doubted. Burns knew approximately the amount of money which could be obtained; he did not openly object to the settlement until after it had been made and he had discovered the small amount he was to receive. From the whole record it fairly appears that the attorneys were authorized by Burns to settle the judgment for the sum of $12,500.'

The entire testimony in the case, except that of Rich, who did not attend the conference, was taken in open court. There was express testimony supporting the court's conclusion; and this conclusion we are bound to accept, unless the evidence decidedly preponderates against it. Cleveland v. Chisholm (C.C.A. 6) 90 F. 431, 33 C.C.A. 157; Pugh v. Snodgrass (C.C.A. 6) 209 F. 325, 126 C.C.A. 251. There is no such preponderance.

It seems reasonably clear that both Martin and Ryall understood Burns to give them the claimed authority. They say that both Brogan and Burns understood that $12,500 might prove to be all the traction company would pay; that Burns told them to 'do the best you can, get $13,000 if you can, but do the best you can'; and that the settlement was made in reliance upon this authorization from Burns and a similar one from Brogan. While there is evidence of assertion by the attorneys that they would exercise the right to settle, even if the consent in question was not given, we think the testimony falls short of proving duress.

Burns was naturally disappointed with the amount left for him. The interest on the bank's claim made it $200 greater than treated at the conference; but the trial court was clearly right in recognizing the bank's lien at $7,700 and as prior to plaintiffs' liens. The claim of Calnan & Riley, however, was not mentioned at the conference. They had in fact no lien upon the judgment. Its payment is defended largely on the ground that the services it represented entered into the amount of the recovery against the traction company; and Martin, who represented Calnan & Riley also, had agreed to see to its payment. Brogan, however, had given what he asserts to be adequate security for the claim and was unwilling to have the deduction made. The services and disbursements of Martin's firm, for which he retained $1,835.00, included items amounting to several hundred dollars rendered in other matters, for which no lien could be claimed. The right to retain or disburse these items was open to controversy. But the traction company, having in good faith paid the money to Martin, under authority therefor by Joseph Burns, was not liable to him for Martin's claimed misapplication in part; and the proper course was taken in not passing upon those items, and in making the award to Burns without prejudice to future recovery on account of them.

We see no merit in the contention that the fact that Burns' consent was given on Sunday is enough to invalidate the settlement. True, the statutes of both Wisconsin and Michigan make Sunday contracts invalid; although in Wisconsin the case would seem to fall...