Hadlock v. Brooks

• Decision Date: 03 April 1901
• Citation: 59 N.E. 1009,178 Mass. 425
• Parties: HADLOCK v. BROOKS; MERROW v. BROOKS.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

178 Mass. 425

59 N.E. 1009

HADLOCK

v.BROOKS;

MERROW

v.BROOKS.

Supreme Judicial Court of Massachusetts, Suffolk.

April 3, 1901.

Exceptions from superior court, Suffolk county.

Consolidated actions by one Hadlock's administrator and by one Merrow against William Gray Brooks to recover certain attorney's fees due the said estate, and on an order for a portion thereof drawn in favor of said Merrow. From a judgment in favor of plaintiffs, defendant brings exceptions. Exceptions overruled.C. P. Sampson, for plaintiffs.

John S. Patton, for defendant.

BARKER, J.

In each of these cases, tried together before the superior court with a jury, there was a question whether Hadlock, who acted as senior counsel for the children of Henry Gray in the case of Codman v. Brooks, 159 Mass. 477, 34 N. E. 689, and Id., 167 Mass. 499, 46 N. E. 102, was employed under a champertous agreement. The defendant's evidence tended to show that by the terms of Hadlock's employment his compensation was to be a percentage of whatever sum should be recovered by his clients in the litigation, and also that it was to be contingent upon their success in securing such a recovery in the action. In the case brought by Hadlock's administratrix the defendant, Brooks, in substance asked the court to rule that, if he employed Hadlock as counsel in the case of Codman v. Brooks under an agreement by the terms of which Hadlock's fees and compensation were contingent upon the recovery of some part of the money held by Codman, and were to be paid out of the fund so recovered, the agreement was illegal, and that Hadlock was not entitled to any compensation for any services rendered thereunder. In the case brought by Merrow the defendant, Brooks, asked the court to rule that, if Hadlock made an agreement with the defendant, Brooks, or those he represented, to render legal services in the case named on condition that his compensation was to be paid out of the fund recovered, the agreement was illegal and void, and that if Merrow knew the nature of the agreement, and the order sued on was given and accepted for the purpose of securing to Merrow payment of such compensation, or a part thereof, Merrow could not recover. The court declined to give these requests, and gave the following as an instruction applicable to both cases: ‘He [the defendant] says that the contract which took place was champertous, and therefore illegal, and therefore a void contract, and no contract at all. What is the meaning of a champertous contract? It is this: If, in the assumed case of you going to a lawyer to hire him to take a certain case, you said to him: ‘I haven't any money, and unless I win this case I shan't have any money to pay you. Will you take this case, charge me either a certain percentage, or such amount as you think best, if you win the case, and, if you lose the case, charge me nothing?’-that is a champertous contract; that is an illegal contract, and is a void contract. There are contracts that look a great deal like it upon the face of it that are not void; that is, are not champertous. It is competent for the parties to say, ‘I have no money, and I can't pay you until I get the verdict.’ If they stop there, if they simply make it a question of the time of payment, it is perfectly competent. It is perfectly competent for the client to say, and the lawyer to agree to it, ‘I will pay you, if you are successful, a quarter of what you recover;’ if they don't add the further condition, ‘nothing if you don't recover.’ Or, in other words, to put it in brief, if they make the payment of any fee at all contingent on the success, that is a champertous contract; but any other kind of a contract they may make,-and there are infinite varieties of it, and there are infinite ways in which they may make the size of the fee depend upon the result, and they may make the time of payment dependant upon the result,' etc. In the Merrow case the jury was further instructed as follows: ‘The defendant says that the original contract upon which this was based was a champertous, illegal, and void contract, and that, therefore, this contract, being made by the parties, and by a man who knew that the contract was champertous, illegal, and void, is in itself void. To put it in another way: that this contract, being based upon a void contract, is in itself void; and that I instruct you is true. If you find that the contract, in the first place, was champertous, as I have described it,-that is to say, if you find that it was a contract such as I have described as champertous,-and you find that Mr. Merrow knew the facts about the contract, then this contract is itself void. But bear in mind this thought: That Mr. Merrow may not have ever heard the word ‘champertous.’ Mr. Merrow very likely never did. Mr. Merrow may not have known that it was illegal. The point is, was the contract a contract whereby Mr. Hadlock was to receive nothing if unsuccessful, and receive a considerable fee if successful, and did Mr. Merrow know of these facts?' As between an attorney at law and his client, it is of the essence of champerty that the attorney, having no previous interest to justify him, upon recovery is to have as his own some part of the thing recovered, or some profit out of it. Thurston v. Percival, 1 Pick. 415;Lathrop v. Bank, 9 Metc. 489;Lancy v. Havender, 146 Mass. 615, 16 N. E. 464. But an agreement that one not previously interested, and who agrees to prosecute a suit, upon recovery shall have a share of the thing recovered, is not, for that reason alone, champertous. The bargain, to be illegal, must have the further element that the attorney's services shall not constitute a debt due him from the client, and that his prospective share is to be the only compensation which the attorney shall receive. If, in effect, he ‘agreed to look for his compensation to that alone which might be recovered, and thus to make his pay depend upon his success,’ the bargain is champertous and void. Ackert v. Barker, 131 Mass. 436, 438. ‘Where the right to compensation is not confined to an interest in the thing recovered, but gives a right of actio against the party,’ the agreement is not champertous. Blaisdell v. Ahern, 144 Mass. 393, 395, 11 N. E. 681, 684. See Scott v. Harmon, 109 Mass. 237. But the contract may be illegal without stipulating in terms that compensation is to be solely by way of an interest in the thing to be recovered.' That element of illegality may be inferred from an agreement to prosecute at one's own expense and risk unless successful. Belding v. Smythe, 138 Mass. 530. See Williams v. Fowle, 132 Mass. 385, 388. As was held in Blaisdell v. Ahern, there may be circumstances in which the attorney may lawfully agree to give his services without charge if the suit should not be successful; and if, in case of success, and not otherwise, the attorney's fees are to constitute a debt due from the client, and give a right of action against him to recover them, so that the attorney's right is not confined to an interest in the thing recovered, it is immaterial that the avails of the suit, or a part of them, are pledged as security, or that such avails are the means and the security on which the attorney relies for payment. And, as was also said in Blaisdell v. Ahern, there may be circumstances in which an agreement by an attorney to give his servicesin the prosecution of a suit with the understanding that they are to be free unless the suit is successful may partake of the worst evils of maintenance. In view of this statement of the law of champerty as it has been held by this court, the instructions requested by the defendant were erroneous. The request in the case brought by the administratrix would require the jury to find champerty at all events if Hadlock's fees were to be contingent upon success, and to be paid out of the fund recovered, whereas both of those things might concur, and yet, if there was a personal obligation upon his employer to pay his compensation, his employment would be legal. The request in the other case would require the jury to find champerty at all events if Hadlock agreed to render his services on condition that his compensation was to be paid out of the fund recovered, whereas under many circumstances such a stipulation alone does not constitute champerty. The exceptions to the refusal to give these requests must, therefore, be overruled.

The instructions given were colloquial in style, and evidently intended to enable the jury to decide correctly as to the precise controversy as it stood upon the evidence before them, rather than as a full exposition of the law of champerty as between an attorney and his employer. The plaintiff had introduced evidence tending to show that the defendant was acting as solicitor for the children of Henry Gray in the suit of Codman v. Brooks, and that upon the death of senior counsel while the litigation was pending the defendant had employed Hadlock as his senior counsel; that Hadlock had rendered professional services in the cause, and that, after a determination in favor of his clients in it by the supreme court of the United States, it had been agreed between the defendant and Hadlock that the compensation of the latter should be the sum of $8,000. On the other hand, the defendant had himself testified that at the time of engaging Hadlock the defendant told him that he (the defendant) had no money and the heirs had no money to pay lawyers, and that, if Hadlock was contented to go into the case contingent upon its success, and to be paid out of the sums recovered, the defendant would like to have him; that Hadlock said he would do so, and that the defendant said to Hadlock, ‘If I am successful in getting my claim, in getting my fees, you shall be paid what your services are worth.’ The defendant had testified further that afterwards Hadlock made claim to 25 per centum, to which the defendant did not agree; also that both...