Jackson v. Stearns

• Decision Date: 20 March 1906
• Citation: 48 Or. 25,84 P. 798
• Parties: JACKSON v. STEARNS et al.
• Court: Oregon Supreme Court

84 P. 798

48 Or. 25

JACKSON v. STEARNS et al.

Supreme Court of Oregon

March 20, 1906

Appeal from Circuit Court, Douglas County; J.W. Hamilton, Judge.

Action by C.S. Jackson against A.W. Stearns and others. From a judgment for defendants, plaintiff appeals. Affirmed.

This is a suit by C.S. Jackson against A.W. Stearns and H.J. Wilson to enjoin the dismissal of another suit and to set aside a deed to real property. The complaint alleges, in effect, that the defendant Stearns, on September 22, 1904, was the owner and in the possession of 320 acres of land in Douglas county particularly describing it, but that the defendant Wilson claimed to have some interest therein which constituted a cloud on the title; that Stearns employed plaintiff, who is an attorney, to bring a suit to remove the outstanding claim representing that he had a meritorious cause, and could furnish the necessary evidence to substantiate his right agreeing to give one-half the real property if a favorable decree was secured, otherwise no compensation was to be paid, and also stipulating that he would not enter into any other agreement which would defeat the relief sought, or settle the suit to be instituted without plaintiff's consent; that, relying upon such representations and contract, plaintiff immediately began the suit, and while it was pending the parties thereto fraudulently and collusively settled their difficulties, and Stearns, for a nominal consideration, executed a deed to Wilson of the entire real property which is of the value of $3,000; that Stearns, who is insolvent, is attempting to dismiss such suit, and, unless he is restrained from executing his endeavor, plaintiff, who is able, ready, and willing to prosecute the cause to a successful termination, will suffer irreparable loss, to prevent which he has no plain, speedy or adequate remedy at law. A demurrer to the complaint herein, on the ground that it did not state facts sufficient to constitute a cause of suit was sustained, and the plaintiff at that time declining further to plead this suit was dismissed. He thereafter moved, however, to set aside the dismissal, and for leave to file an amended complaint which was tendered; but the motion was denied and he appeals from the decree dismissing the suit, and from the order refusing to permit an amended complaint to be filed.

A.M. Crawford, for appellant.

J.C. Fullerton and A.N. Orcutt, for respondents.

MOORE J. (after stating the facts).

The question presented for consideration is whether or not the complaint states facts sufficient to constitute a cause of suit. No decree had been rendered in the suit brought to remove the cloud from the title when Stearns executed to Wilson a deed to the premises, and at that stage of the case the statute raised no lien as security for attorney fees. B. & C. Comp. § 1063. In the absence of a legislative enactment regulating the matter, the rule is quite general that prior to securing a judgment or a decree in his favor a party to a suit or an action may, without the knowledge or consent of his attorney, compromise the dispute involved, thereby preventing an attorney's lien from attaching to the money or property received by the client in settlement. 3 Am. & Eng.Enc.Law (2d Ed.) 465; 4 Cyc. 990. Thus, as was said by Mr. Justice Andrews, in Randall v. Van Wagenen, 115 N.Y. 527, 22 N.E. 361, 12 Am.St.Rep. 828: "From the principle that there is no lien until judgment, it follows that it is competent for the parties acting bona fide to settle and discontinue a suit before judgment, without the consent of the attorney, and he is remitted to his remedy against his client for his compensation." A clause in a contract stipulating for the payment of compensation to an attorney for the performance of service in prosecuting a suit or action, and providing that the client shall not settle or dismiss the proceedings prior to the rendition of a judgment or a decree therein, when the attorney's lien would attach by giving the proper notice, is against public policy, and therefore void. North Chicago Street Ry. Co. v. Ackley (Ill.) 49 N.E. 222, 44 L.R.A. 177, Davis v. Webber (Ark.) 49 S.W. 822, 45 L.R.A. 196. 74 Am.St.Rep. 81; Key v. Vattier, 1 Ohio, 132. The reason assigned for this rule is based on the theory that the interest of society in maintaining peace, demands the speedy settlement of controversies and advocates the amicable adjustment thereof, and as the desired harmony would not be promoted by denying to a party the right to dismiss a suit or action without the consent of his attorney, an agreement by the terms of which a client attempts to waive such right is violative of public policy, and therefore unenforceable. Ellwood v. Wilson, 21 Iowa, 523.

The averment in the complaint of the agreement not to settle the controversy without plaintiff's consent is not a sufficient statement of facts to constitute a cause of suit on this branch of the case. The demurrer interposed in the case at bar was general, and if any part of the complaint herein states facts entitling the plaintiff to equitable relief, the challenge submitted to his primary pleading for insufficiency should have been overruled, and, this being so that part of the complaint to which attention has been called may be eliminated, and the remainder thereof considered, to determine whether or not an error was committed in sustaining the demurrer. Bliss, Code Pl. (3d Ed.) § 417; 6 Ency.Pl. & Pr. 346; Waggy v. Scott, 29 Or. 386, 45 P. 774. Though a party may, without the consent of his attorney, make a bona fide adjustment with the adverse party and dismiss an action or a suit before a judgment or a decree has been rendered therein, if it appears, however, that such settlement was collusive and consummated pursuant to the intent of both parties to defraud the attorney, the court in which the action or suit was pending may interfere to protect him, as one of its officers, by setting aside the order of dismissal, and permitting him to proceed in the cause in the name of his client as plaintiff to final determination to ascertain what sum of money or interest in the subject-matter, if any, is due him for his services when fully performed. Jones v. Morgan, 99 Am.Dec. 458; Randall v. Van Wagenen (N.Y.) 22 N.E. 361, 12 Am.St.Rep. 828. See, also, the notes to Hanna v. Island Coal Co., 51 Am.St.Rep. 246, where it is said: "Sometimes a collusive settlement is made between the parties for the purpose of defrauding the attorney of his fee before any judgment or decree has been obtained. When there is an evident intention thus to cheat the attorney, and to defraud him of his rights, the proper course for the attorney to pursue is to proceed with the suit in the name of his client, notwithstanding the collusive settlement for the purpose of collecting his costs." See, also, on the same subject the notes to Cameron v. Boeger, 93 Am.St.Rep. 165. Mr. Justice Earl, in Coughlin v. New York, etc., Ry. Co., 27 Am.Rep. 75, illustrating this principle, says: "It is certainly a general rule that parties to an action may settle the same without the intervention of the attorneys. Generally, a plaintiff who has a cause of action against a defendant may release and discharge it upon such terms as are agreeable to him. This he may do while the action is pending, and after judgment he may cancel and discharge the judgment. In all this generally he infringes upon no privilege, and violates no right of his attorney. But since the time of Lord Mansfield, it has been the practice of courts to intervene to protect attorneys against settlements made to cheat them out of their costs. If an attorney has commenced an action, and his client settles it with the opposite party before judgment, collusively, to deprive him of his costs, the court will permit the attorney to go on with the suit for the purpose of collecting his costs." To the same effect is the case of Falconio v....