In re Lyon

• Decision Date: 30 June 1938
• Citation: 301 Mass. 30,16 N.E.2d 74
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: IN THE MATTER OF ARTHUR S. LYON & others.

301 Mass. 30

16 N.E.2d 74

IN THE MATTER OF ARTHUR S. LYON & others.

Supreme Judicial Court of Massachusetts, Suffolk.

June 30, 1938

December 6, 1937.

Present: FIELD LUMMUS, QUA, & COX, JJ.

Attorney at Law. Collection Agency. Jurisdiction, Federal question, Control of practice of law.

Threats by laymen members of a collection agency, to a debtor that his creditor would bring legal proceedings would not be a violation of

Sections 46 or Section 46A of G. L. (Ter. Ed.) c. 221, as they appear in

St. 1935, c.

346, if in so doing they act solely as the agents of the creditor and at his express direction without making any decision of their own and in a manner lawful in other respects; but such a threat on their own initiative, or advice by them to the creditor to make such a threat, would violate the statute.

In proceedings against laymen, members of a collection agency, for violation of Sections 46 and 46A of G. L. (Ter. Ed.) c. 221 as they appear in St.

1935, c. 346, it would be proper to order the defendants to "desist or refrain from . . . representing creditors in proceedings in bankruptcy or in matters pertaining to assignments for the benefit of creditors," and from "charging or collecting any fees or commissions in and for any action claim or suit hereafter brought, or for any judgment hereafter to be obtained in any court in this Commonwealth or in the United States

District Court," with a proviso that the respondents might however, exercise any privilege they have or may acquire under any statute, rule, order, or established practice of the Federal government or its courts controlling methods of practice in respect to matters within Federal jurisdiction. A direction in a decree in proceedings under Sections 46, 46A, and 46B of

G. L. (Ter.

Ed.) c. 221, as they appear in St. 1935, c. 346, that laymen, members of a collection agency, should "desist and refrain from . . . receiving and referring and forwarding claims for collection to an attorney, anywhere, whether or not the said respondents will receive either a fee therefrom immediately or a portion of the proceeds upon collection of the same, whatever term may be applied to such portion, and whether acting therein as an agent, principal, or otherwise," was ordered modified so as not to restrain the respondents from forwarding claims for collection, at the request and as the mere agents of creditors to attorneys at law selected by the creditors, between whom and the creditors the full and direct relation of attorney and client should exist. It was not necessary to express in a decree in proceedings under Sections

46, 46A, and 46B of G. L. (Ter. Ed.) c. 221, as they appear in St. 1935, c. 346, a limitation of acts therein prohibited to such as should be committed within the Commonwealth.

PETITION, filed in the Supreme Judicial Court for the county of Suffolk by the Attorney General on October 16, 1935, under G. L. (Ter. Ed.) c. 221, Section 46, as amended by St. 1935, c. 346, Section 1; and Sections 46A and 46B as inserted by Section 2 of said c. 346, against eight individuals, all nonresidents of the Commonwealth except one, doing business under the name and style, Lyon Furniture Mercantile Agency.

After a hearing by Pierce, J., an "order for judgment" was entered directing the respondents "to desist and refrain from:

"1. Representing by advertisement or by any means whatsoever as having the right to give legal advice or to render any services involving legal knowledge or skill.

"2. Practicing law in any form, either directly or indirectly, through the medium of agents or otherwise, for or in behalf of any patrons.

"3. Advertising or holding themselves out as maintaining for the benefit of their patrons a department for the furnishing of legal services of any kind.

"4. Entering into agreements or contracts whereby said respondents agree to furnish or render legal services, directly or indirectly, through the medium of agents or otherwise, either in court or out of court, on behalf of any person, firm or corporation.

"5. Filing, prosecuting, managing or defending, directly or indirectly, through the medium of agents or otherwise, any actions or suits in behalf of another in any court within the Commonwealth of Massachusetts.

"6. Soliciting patrons under any agreement or contract whereby the said respondents agree to furnish legal services, directly or indirectly, through the medium of agents or otherwise, to any person, firm or corporation.

"7. Prosecuting or defending suits now pending for or on behalf of any of their patrons.

"8. Using any language, oral or written, which threatens expressly or by implication legal action by the respondents or respondents' patrons against debtors of patrons.

"9. Representing creditors in proceedings in bankruptcy or in matters pertaining to assignments for the benefit of creditors.

"10. Soliciting or accepting claims for collection with an understanding, condition or agreement contemplating the use of legal process by the respondents in any manner whatsoever through the medium of agents or otherwise.

"11. Collecting and appropriating for their own use any attorneys' fees, earnings of attorneys, or any part thereof.

"12. Charging or collecting any fees or commissions in and for any action, claim or suit hereafter brought, or for any judgment hereafter to be obtained in any court in this Commonwealth or in the United States District Court.

"13. Receiving and referring and forwarding claims for collection to an attorney, anywhere, whether or not the said respondents will receive either a fee therefrom immediately or a portion of the proceeds upon collection of the same, whatever term may be applied to such portion, and whether acting therein as an agent, principal, or otherwise.

"14. Engaging in the business of soliciting or making contracts by the terms of which services requiring legal knowledge and skill will be supplied or furnished, whether such legal services are to be performed by the said respondents or by others at their expense."

The respondents "appealed from said order and alleged exceptions thereto," and the single justice reserved and reported the case.

J. J. Kaplan, (L.

McClennen with him,) for the respondents.

M. M. Goldman, Assistant Attorney General, for the Attorney General.

QUA, J. The single justice has reported for determination by the full court the questions whether an order made by him for final disposition of the cause is "too broad" as to the relief granted in certain respects hereinafter discussed.

By G. L. (Ter. Ed.) c. 221, Section 46B, inserted by St. 1935, c. 346, Section 2 jurisdiction is expressly conferred upon this court upon petition of the Attorney General to restrain the practice of law by corporations or associations or by individuals who are not members of the bar in good standing.

See also Sections 46 and 46A, as inserted by St. 1935, c. 346, Sections 1, 2; Opinion of the Justices, 279 Mass. 607; and Opinion of the Justices, 289 Mass. 607. The respondents are not attorneys at law. They maintain a collection agency. They employ persons to solicit accounts from business houses and individuals. The single justice found, solely for the purpose of enabling the court to enter such order or judgment as might be warranted as matter of law, that the respondents maintain a legal department and furnish and render services requiring legal knowledge and skill. It is unnecessary to recite their activities in further detail, as for the purposes of this case it is plain that they must be taken to have been practising law unlawfully. Matter of Shoe Manufacturers Protective Association, Inc. 295 Mass. 369. By the terms of the order of the single justice the respondents are to be restrained from practising law in any form, directly or indirectly, through agents or otherwise, from representing themselves as having the right to practise, from supplying legal services, and from collecting any attorneys' fees for their own use. There are further more specific prohibitions in connection with some of which the questions reported arise.

By paragraph 8 of the order the respondents are to be restrained from threatening, expressly or by implication, legal action against debtors, to be brought either by themselves or by their patrons. They concede that they cannot threaten that they themselves will bring suit, but insist that they should not be prevented from threatening that their patron, the creditor, will do so.

To determine whether a lawsuit may properly be commenced, and therefore whether it is justifiable to threaten to commence it, requires special knowledge of the legal elements constituting a cause of action. To make a business of acting for or advising others in these matters partakes of the practice of law. On the other hand, a creditor may bring an action himself without the intervention of a member of the bar, G. L. (Ter. Ed.) c. 221, Section 48, and of course may decide whether or not he will do so or threaten to do so. And an individual may act through agents. See

Section 49. We think, therefore, that the respondents cannot on their own initiative threaten that one of their patrons will bring suit, nor can they advise him to make such threat. But we think they may at his express direction and acting solely as his agents or mouthpiece, without...