Keyworth v. Israelson

• Decision Date: 08 November 1965
• Docket Number: No. 404,404
• Citation: 214 A.2d 168,240 Md. 289
• Parties: Charles E. KEYWORTH v. Max R. ISRAELSON et al.
• Court: Maryland Court of Appeals

Page 289

240 Md. 289

214 A.2d 168

Charles E. KEYWORTH v. Max R. ISRAELSON et al.

No. 404.

Court of Appeals of Maryland.

Nov. 8, 1965.

Paul Berman, Baltimore (Bayard Z. Hochberg, Baltimore, on the brief), for appellant.

J. Cookman Boyd, Jr., Baltimore (Walter S. Levin, Baltimore, on the brief), for Max R. Israelson and Stafford H. Plimack, appellees.

Delverne A. Dressel, Baltimore (Emanuel H. Horn, Baltimore, on the brief), for Industrial Sales Co., Inc., appellee.

Before PRESCOTT, C. J., and HORNEY, MARBURY, OPPENHEIMER and BARNES, JJ.

OPPENHEIMER, Judge.

This appeal involves the rights of attorneys and client in a settlement fund under a fee agreement and the right of a creditor of the client to an equitable lien against the fund. The client, Charles E. Keyworth (Keyworth) has appealed from an order of the Circuit Court No. 2 of Baltimore City directing that one-third of the fund (after expenses and costs) be paid to the attorneys, Max R. Israelson (Israelson) and Stafford H. Plimack (Plimack) and from a decree of that court ordering the amount advanced to Keyworth by his employer, Industrial Sales Co., Inc. (the Employer) retained from the proceeds of the fund pending the final determination of a lawsuit between the Employer and Keyworth.

On September 29, 1959, Keyworth, while in the employ of the Employer, sustained serious injuries when an automobile which he was operating in the course and scope of his employment was struck by a truck operated by Stephen Brown while on business of Brown's employer, Fleet Transfer Company. Some three days after the collision, Plimack who, it is claimed, was the attorney for the Employer, came to see Keyworth and was employed by him, under circumstances to which reference will be made hereafter. Keyworth and his wife signed an agreement under which Plimack undertook to represent the Keyworths in connection with their claim against Brown and Fleet Transfer Company. This agreement provided for a fee to Plimack of twenty-five per cent. of any amount received, if the case were to be settled out of court, and one-third of any recovery in litigation. On October 10, 1959, Keyworth executed a claim for compensation, which was filed for him by Plimack with the Maryland Workmen's Compensation Commission on October 16, 1959. On November 9, 1959, the Commission ordered that Keyworth receive temporary total disability benefits of $40 a week, which he received from the date of the injury through June 19, 1960. He also received temporary partial disability benefits from June 20, 1961 through September 24, 1961, and medical and hospital expenses under the Employer's compensation insurance. The temporary total and temporary partial disability benefits amounted to $3201.43, and the medical and hospital expenses totaled $1030. While Plimack had requested a hearing on behalf of Keyworth to determine the nature and extent of permanent disability, no hearing was held on this issue until April 21, 1964, after Keyworth's present counsel had entered the case and Plimack's name, at Keyworth's request, had been removed as Keyworth's attorney from the compensation proceedings. On April 27, 1964, the Commission found that Keyworth had sustained a permanent partial disability under 'Other Cases' amounting to fifty per cent. industrial loss of the use of his body and ordered compensation at the rate of $25 a week beginning September 25, 1960, not to exceed the sum of $6250. The Employer and its insurer, in another case, have appealed this order of the Commission.

On March 8, 1960, Plimack filed suit on behalf of Keyworth against Brown and Fleet Transfer Company as third-party tort-feasors. On May 28, 1962, on Plimack's recommendation, Keyworth agreed to employ both Plimack and Israelson as his attorneys to try this case. This agreement expressly provided that it superseded the original fee agreement between Keyworth and Plimack. Under the 1962 agreement, Keyworth authorized Plimack and Israelson to carry on the suit or compromise it and agreed to pay them one-third of the amount recovered; he also authorized the attorneys to pay the necessary medical and hospital and other expenses out of his share of any recovery.

The trial of the third-party case concluded on December 3, 1962 and resulted in a jury verdict in Keyworth's favor for $15,0000, an amount which was disappointingly low to Keyworth and his attorneys. It is agreed that the main reason for what is claimed to be the relatively small judgment was that the defendants produced and showed motion picture films depicting Keyworth's movements prior to the trial, which contradicted Keyworth's claims of disability resulting from the collision.

An appeal was immediately discussed, a motion for a new trial was made and denied, and Israelson ordered the transcript written up. In February, 1963, Keyworth raised and gave to Israelson the necessary monies to perfect the appeal. Israelson was pessimistic as to the chances on appeal. Keyworth was convinced there was something wrong with the films. Israelson obtained an offer of an additional $1600 to settle the appeal. Israelson contends, and Keyworth denies, that Keyworth authorized the dismissal of the appeal in view of the offer totalling $16,600.

Keyworth refused to sign the settlement papers and Israelson filed an order with the court clerk to have the judgment entered to his and Plimack's use to the extent of the agreed fee, in accordance with the express authorization contained in the fee agreement of May 28, 1962, and a judgment was entered to their use to the extent of their one-third attorney's fees. Thereafter, Israelson and Plimack petitioned for the appointment of a trustee to execute settlement papers and to hold and disburse the funds and, after an answer had been filed by Keyworth, the case was transferred by consent to the Circuit Court No. 2 of Baltimore City and an order signed appointing the clerk of that court trustee to hold the settlement fund subject to further order.

On December 31, 1959, the Employer and Keyworth entered into an agreement which recited that while Keyworth was then receiving $40 a week under the Commission's order of November 9, 1959 as compensation for temporary total disability, he had been earning approximately $100 a week takehome pay and wished to receive weekly advances from the Employer in the amount of $100. The agreement, which was prepared by Plimack, provided that the Employer would pay Keyworth $100 a week from the time of the accident until he returned to work on a full-time basis; that Keyworth would maintain his suit against Brown and the Fleet Transfer Company through his attorney, Plimack, and that, upon the successful conclusion of the case, he authorized Plimack to issue a check to the Employer for the amount to be advanced by the Employer, excluding any bonuses or presents. The Employer made advances to Keyworth under this agreement in the total amount of $7200. After the court below had appointed the clerk as trustee of the sum of $16,600, the Employer filed a petition in the proceedings alleging that the sum on deposit was subject to an assignment-lien in its favor in the amount of $7200 under its agreement with Keyworth and asking that the court order payment of this sum to the Employer out of the fund. Keyworth answered this petition denying that the Employer was entitled to the relief it prayed; the Employer thereupon filed a petition to intervene and was authorized to do so on September 23, 1964. On September 11, 1964, the date the Employer filed its petition to intervene in the proceedings in the Circuit Court No. 2, it filed a lawsuit against Keyworth in the Baltimore City Court for the sum of $7200 under its agreement, asking for summary judgment.

After the taking of testimony and the filing of an opinion, Judge Harris, in the court below, entered an order, on October 14, 1964, awarding to Israelson and Plimack a one-third fee of the $16,600, less the cost of the transcript and the cost of the appeal, in the net amount of $5292.12. The order also awarded to the Employer's compensation carrier the sum of $2697.41, representing its lien of $4231.43 less its proportionate share of approximately twenty-five per cent. chargeable under Code (1957), Article 101, Section 58, and ordered $7200 held in escrow pending the outcome of the civil action brought by the Employer against Keyworth in the Baltimore City Court. The order awarded Keyworth $723.65 as reimbursement for costs advanced and provided that the balance of the fund, $668.82, be held in escrow pending the outcome of the compensation appeal with respect to the award of permanent partial disability. Judge Harris had also provided for the retention of the sum of $7200 pending the final determination of the suit of the Employer against Keyworth in his decree dated October 9, 1964.

Keyworth's first contention is, that the lower court erred in awarding any counsel fee to Plimack and Israelson because they had dismissed the appeal in the third-party case without Keyworth's consent. He contends, second, that, in any event, the fee should be substantially reduced because Keyworth's compensation remedies had not been prosecuted to conclusion before the third-party action was tried and that, if he had received his award for permanent partial disability before the trial, there would have been a substantial benefit to him as to the amount of fees to be charged against him out of the fund. Third, Keyworth contends that the lower court erred in retaining the $7200 from the proceeds of recovery pending final determination of the law action brought by the Employer against Keyworth, because there was no equitable lien.

I

In this appeal from the order of the Chancellor, Keyworth first contends that Plimack and Israelson should have been allowed no counsel fee whatsoever because they dismissed the appeal from the judgment in the third-party case against Brown and Fleet Transfer...