Fabricius v. Freeman

• Decision Date: 08 August 1972
• Docket Number: No. 71-1362.,71-1362.
• Citation: 466 F.2d 689
• Parties: Valentine Sharpe FABRICIUS, Plaintiff-Appellant, v. Lee A. FREEMAN and Radiant Burners, Inc., an Illinois corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

466 F.2d 689 (1972)

Valentine Sharpe FABRICIUS, Plaintiff-Appellant, v. Lee A. FREEMAN and Radiant Burners, Inc., an Illinois corporation, Defendants-Appellees.

No. 71-1362.

United States Court of Appeals, Seventh Circuit.

Argued December 1, 1971.

Decided August 8, 1972.

Edward G. Levinson, Chicago, Ill., for plaintiff-appellant.

Howard A. Tullman, Richard F. Levy, Lee A. Freeman, Sr., Chicago, Ill., for defendants-appellees; Levy & Erens, Chicago, Ill., of counsel.

Before HASTINGS, Senior Circuit Judge, and FAIRCHILD and CUMMINGS, Circuit Judges.¹

FAIRCHILD, Circuit Judge.

This is an appeal from dismissal of plaintiff's complaint seeking recovery of a portion of attorney's fees assigned to plaintiff and flowing from an antitrust action brought by Radiant Burners, Inc. against American Gas Association, Inc., and others, 320 F.2d 314 (7th Cir., 1963), and Radiant Burners, Inc. v. Peoples Gas, Light & Coke Co., 273 F.2d 196 (7th Cir., 1959), rev'd 364 U.S. 656, 81 S.Ct. 365, 5 L.Ed.2d 358 (1961). We have previously considered other facets of attorney's fees in that case.²

The background of the dispute over fees was set out in this court's unreported order in No. 71-1301, as follows:

"The original attorneys in the case were Joseph Keig, Sr. and Victor Neumark. Keig engaged John O\'C. Fitzgerald, and Charles F. Marino became involved as an attorney working in Fitzgerald\'s office. . . . . The original action proceeded to the Supreme Court at which time Neumark brought in two more attorneys, Lee A. Freeman and Richard F. Levy, to take over all responsibility. On December 20, 1960 Radiant Burners entered into an agreement with Keig, Neumark, and Fitzgerald (which binds Marino since he was an employee of Fitzgerald) to fix amounts owed to them for work already done on the case. On April 19, 1961 Fitzgerald, Marino, and Keig contracted to divide amongst themselves the Keig-Fitzgerald share of the December 20 agreement: Keig and Fitzgerald were each to receive 45% of that share, and Marino was to receive 10%. Keig then executed an assignment to Freeman of any interest he had in professional fees from this case.

"On October 20, 1965 Fitzgerald and Marino filed a petition to enforce an attorney\'s lien claiming their share of the recovery under the December 20 agreement. The district court ordered (1) that the December 20 agreement be disregarded as inconsistent with the canons of professional ethics (ABA Canons of Professional Ethics Nos. 34, `Division of Fees\', and 13, `Contingent Fees\'), (2) that Fitzgerald be awarded on a quantum meruit basis $17,500 without interest, (3) that Marino be compensated by Fitzgerald in accordance with the terms of their agreement, and (4) that the $17,500 be paid by attorneys Freeman, Levy, and Neumark, who had already received compensation, in proportion to the amounts each received."

Plaintiff brought this action in an Illinois court on October 1, 1970. Defendants were Radiant Burners and Attorney Freeman, and she sought recovery of 30% of the amounts due Keig under the December 20 agreement, pursuant to assignments to plaintiff by Keig. Mr. Freeman had signed an "assent" at the foot of the December 20 agreement and apparently ultimately received whatever fee was due to Keig. Defendants removed the action to the district court, alleging that it had assumed jurisdiction over the December 20 agreement and that the matter of the Fitzgerald-Marino petition was pending there.

Plaintiff alleged that she was legal secretary to Joseph Keig, Sr. from 1957 to about July 15, 1961; that in the course of her employment she performed secretarial and paralegal services for which she was not paid and in addition advanced approximately $2,500 to her employer; that in payment of salary and repayment of the $2,500, Keig executed two assignments of his interest in attorney's fees to come due under the December 20 agreement; that the first assignment, executed January 11, 1961, assigned to plaintiff 20% of any monies to be received by Keig under the December 20 agreement, and the second assignment, executed July 5, 1961, assigned an additional 10% of the same monies; that on January 16, 1961 defendant Radiant Burners acknowledged its notice of the first assignment and promised to honor it; that on February 6, 1962, Keig assigned to defendant Freeman for $1,000 his interest under the December 20 agreement, with the express representation that Keig had already assigned 30% of his interest to plaintiff; and that on the basis of the December 20 agreement and the assignments to her from Keig, she is entitled to $14,428.08 which defendants have refused to pay.

The basis of computation of the sum demanded by plaintiff is not clear, but need not be decided here. The December 20 agreement provided that Keig and Fitzgerald were to receive, collectively, an amount equal to 11 1/4% of all monies, property, and other things of value recovered or obtained by judgment, settlement, compromise or otherwise. Without foreclosing plaintiff from proving otherwise, if she can, it would appear that the total recovery by settlement was $450,000, 11 1/4% thereof $50,625, Keig's 45% of the latter $22,781.25, and plaintiff's 30% of the last $6,834.38.

Defendants filed a motion to dismiss asserting that plaintiff failed to state a claim upon which relief can be granted because (1) assigning to plaintiff, Keig was splitting fees with a layman in violation of Canon 34 of the canons of professional ethics³ and that the assignment is therefore unenforceable, and (2) her action is barred by the prior adjudication of the attorneys' interests as described above. The district court dismissed the complaint without opinion.

Concluding that neither ground of defendants' motion to dismiss was valid, we reverse. In our view, assuming the facts alleged in the complaint, plaintiff is entitled to recover 30% of the amount Keig would have been entitled to recover. That amount has never been liquidated by adjudication or agreement, at least in any manner that binds plaintiff. It appears that Keig's assignment to Freeman, with notice of plaintiff's interest, transferred only the balance of Keig's interest. The propriety of the ruling of the district court in the Fitzgerald and Marino proceeding that the December 20, 1960 agreement must be disregarded as unethical has not been argued on this appeal, and we express no opinion thereon. Depending upon how that issue is decided upon remand, the amount of Keig's claim, 30% of which plaintiff claims, will be determined by application of the December 20 agreement or on quantum meruit.

Argument based on professional ethics: There has been no claim that plaintiff's services to Mr. Keig constituted the practice of law so as to be unlawful in themselves. Although the amount of his fee was thought under the December 20 agreement to be contingent upon ultimate recovery, and, even upon quantum meruit, would reflect to some extent the degree of success, his right to a fee was an asset, part of which was assigned to plaintiff in discharge of his indebtedness to her.

We must assume at this stage that plaintiff rendered valuable and lawful services to Keig and advanced funds to him, and accepted a partial assignment of his claim for fees, with notice to all interested parties, as a means of getting paid. Whatever Keig's services were worth, they...