In re Shoe Mfrs. Protective Ass'n, Inc.

• Decision Date: 11 September 1936
• Citation: In re Shoe Mfrs. Protective Ass'n, Inc., 295 Mass. 369, 3 N.E.2d 746 (Mass. 1936)
• Parties: In re SHOE MFRS. PROTECTIVE ASS'N, Inc.
• Court: Supreme Judicial Court of Massachusetts

295 Mass. 369

3 N.E.2d 746

In re SHOE MFRS. PROTECTIVE ASS'N, Inc.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 11, 1936.

Report from Supreme Judicial Court, Suffolk County.

Proceeding by the Attorney General against the Shoe Manufacturers Protective Association, Incorporated.

Decree in accordance with opinion.M. M. Goldman, Asst. Atty. Gen., for the Attorney General.

H. C. Thompson and J. M. Langan, both of Boston, for respondent.

QUA, Justice.

This is a petition brought by the Attorney General setting forth certain activities of the respondent corporation which it is contended constitute the practice of law and violate the provisions of G.L.(Ter.Ed.) c. 221, § 46, as amended by St.1935, c. 346, § 1. The petition prays that this court make such order as it may deem expedient prohibiting the respondent from continuing such activities. G.L.(Ter.Ed.) c. 221, § 46B, inserted by St.1935, c. 346, § 2.

A corporation cannot lawfully practice law. Opinion of the Justices (Mass.) 194 N.E. 313;Matter of Maclub of America, Inc. (Mass.) 3 N.E.(2d) 272. All practice of law by corporations is now expressly forbidden by statute. G.L.(Ter.Ed.) c. 221, § 46, as amended by St.1935, c. 346, § 1. In addition to this sweeping prohibition against the practice of law the statute also expressly forbids the doing by corporations of certain specified acts comprised in or related to such practice. Material portions of said section 46 as amended read as follows: ‘No corporation or association shall practice or appear as an attorney for any person other than itself in any court in the commonwealth or before any judicial body or hold itself out to the public or advertise as being entitled to practice law, and no corporation or association shall draw agreements, or other legal documents not relating to its lawful business, or draw wills, or give legal advice in matters not relating to its lawful business, or practice law, or hold itself out in any manner as being entitled to do any of the foregoing acts, by or through any person orally or by advertisement, letter or circular.’ The questions here presented are whether and in what respects the respondent is practicing law or otherwise violating the statute.

The master's report discloses these facts: The respondent does a large business in the collection and adjustment of commercial accounts for goods sold, mainly in behalf of wholesale merchants and manufacturers in the shoe business. See G.L.(Ter.Ed.) c. 93, § 24. Its method of procedure has been to demand payment of the debtor by letter and by personal interview, telling him ‘of legal liability’ and including threats to ‘take action,’ to ‘forward to attorney for attention’ and the like. It is generally understood with the ‘client’ or customer that if these methods fail, the respondent shall have the right to forward the claim to some attorney to be selected by the respondent. The practice has been to explain to the customer that no claim would be referred to an attorney without his permission, and upon receiving permission, the respondent would send the matter to an attorney for legal action. The respondent advises and recommends suit by attachment or otherwise. In almost every case the respondent has selected the attorney, the customer leaving the selection to the respondent. The attorney and the creditor seldom correspond directly with each other. In almost every case the ‘client’ never knows who his attorney is. The respondent instructs the attorney to commence suit against the debtor. It advances costs to the attorney and transmits to him the necessary papers and information. In these cases, except for a small ‘suit fee,’ the attorney retains sixty per cent of the collection charges and pays the respondent forty per cent. The money is forwarded to the ‘client’ through the respondent. The respondent fixes the attorney's charges. It advises the attorney ‘as to the method of suit and the steps to pursue.’ It imposes conditions upon him. It supervises the conduct of the transaction. It ‘constantly acts between the creditor and the selected attorney.’ ‘A large number of the respondent's clients allow the respondent to have full discretion as to settlement, compromise, or suits at law.’ An important part of the business of the respondent has involved the giving of advice to debtors to make assignments for the benefit of creditors and as to the advantages and disadvantages of such assignments and of bankruptcy and credit extension agreements. It draws or copies forms of assignments and agreements. Proofs of claim and powers of attorney in bankruptcy and assignments for the benefit of creditors are signed by the ‘client’ with the name of the attorney blank. The respondent fills in the name of the selected attorney or sends the forms to the attorney, who inserts his name. Counsel have been engaged to give legal opinions as to the validity of agreements. The respondent has given no opinions as to the legal aspect of claims, ‘except after advice from counsel.’

We believe it is impossible to frame any comprehensive and satisfactory definition of what constitutes the practice of law. To a large extent each case must be decided upon its own particular facts. But at least it may be said that in general the practice of directing and managing the enforcement of legal claims and the establishment of the legal rights of others, where...