Nichols v. Orr

• Decision Date: 02 July 1917
• Docket Number: 8631.
• Citation: 63 Colo. 333,166 P. 561
• Parties: NICHOLS v. ORR et al.
• Court: Colorado Supreme Court

166 P. 561

63 Colo. 333

NICHOLS v. ORR et al.

No. 8631.

Supreme Court of Colorado

July 2, 1917

Error to District Court, El Paso County; John W. Sheafor, Judge.

Action by James A. Orr and others against Charles Hersey Nichols. From judgment for plaintiffs, defendant brings error. Judgment modified and affirmed.

See also, 57 Colo. 471, 140 P. 792.

W. E. Clark, of Denver, for plaintiff in error.

Orr Robinett & Mason, of Colorado Springs, for defendants in error.

TELLER J.

The defendants in error were attorneys for one Katres in an action in which they obtained a judgment against the plaintiff in error in the sum of $4,250. They served upon the defendant in that suit, and upon his attorney, notice of an attorney's lien claim, including a statement that their services were rendered under a written contract by which they were to receive one-half of the amount of claim obtained by suit, or compromise. The defendant brought the case to this court on error, and an application was made for a supersedeas and a brief filed in support thereof. In the meantime there was some correspondence between the attorneys in which the attorneys for the plaintiff were informed that the defendant would pay $1,500, and no more, to plaintiff in settlement of the case. This offer was rejected by the attorneys. A few days after the docketing of the case in this court, Katres the plaintiff, appeared at the office of the attorney for defendant Nichols, and the case was settled. Thereupon a release was prepared, which plaintiff executed, by which he received $25, the amount of costs paid by him, doctor's bills and hospital bills to the amount of $250 were paid, and he received in addition the sum of $500. The release further provided that $750, one-half of the agreed sum to be paid in settlement of the suit, should be paid to the attorneys for plaintiff.

Defendants in error refused to accept said sum. Later they caused the writ of error to be dismissed, upon the ground that the judgment had been settled. 57 Colo. 471, 140 P. 792. They then began an action against Nichols to recover one-half of the amount of said judgment. Judgment was entered in their favor for $2,125; the court finding that the plaintiffs had by virtue of said contract of employment, become equitable assignees of one-half of the judgment as soon as it was rendered, and further that the act of settlement by defendant, who had knowledge of said contract, 'constituted collusion and fraud in law on the part of defendant as against the rights of the plaintiffs to a lien upon said judgment.'

Error is alleged in said findings and judgment. The grounds urged for reversal are that, it being still uncertain what the result of the litigation would be, Katres had the right to settle the case, whether or not the attorneys consented to such action; that he did so settle it; and that the amount due to the attorneys under their contract with him was tendered to them.

The law favors the settlement of litigation, and any agreement which deprives a litigant of the right to control his case, before it is finally determined, is void as against public policy. 6 C.J. 789, and cases cited. This right is not subject to the statutory lien of attorneys for their fees, so as to defeat the exercise of it. The most that an attorney can claim is to share in the proceeds of the settlement. Standidge v. Chicago Rys. Co., 254 Ill. 524, 98 N.E. 963, 40 L.R.A. (N. S.) 529, Ann.Cas. 1913C, 65.

For the defendants in error it is contended that their contract of employment gave them an equitable interest in the judgment, as the trial court held.

The contract provided that they should receive for their services '50 per cent. of the amount of said claim, whether the same be obtained by suit or compromise.' It further provided that they might 'compromise said claim for such an amount as shall be satisfactory to both parties hereto.'

It will be observed that no attempt was made to limit a settlement to such an amount as might be satisfactory to the attorneys. In other words, the attorneys could not compromise the case without the consent of the client, but there was no such restriction on him in the attorney's favor.

In support of the proposition that they were equitable assignees of a portion of the judgment, defendants in error cite several cases, only one of which, for reasons hereinafter appearing, need be considered. That one is Bell v. Lake County, 26 Colo.App. 192, 141 P. 861. That case involved the fee which the holder of a judgment had agreed to pay for its collection. The judgment debtor had notice of the contract by which the attorney was to have 20 per cent. of the judgment for his services in collecting it. The judgment had been affirmed in this court. The parties were therefore dealing with a specific fund, a liquidated sum; and a contract to give a percentage of it might, if such were the fair import of its meaning, properly be held to constitute an equitable assignment of that percentage. We must assume that the contract there under consideration was of that character; but the statement in the opinion that a contract between client and attorney for payment out of a judgment 'recovered or to be recovered' operates as a binding equitable assignment is too general and cannot be accepted. It is said in the opinion that such a contract creates a lien upon the specific fund, which contradicts the statement that it amounts to an assignment. A lien is a 'charge upon' property; while an assignment creates an 'interest in' property. In the one case, the property can be conveyed subject to the lien; in the other case, the portion assigned can be conveyed only by the assignee, who is a co-owner with the assignor.

Until there is a final determination of the litigation, the client is, as we have seen, able to control the suit and settle the case. That being so, his agreement that the attorney shall have a share of the fruits of the action cannot be held to amount to an assignment of such share. Thus to hold is to deprive the client of a right, which, on grounds of public policy, he is not allowed to contract away. The law gives a lien 'on' and not an interest 'in' the demand in suit, or the judgment rendered therein. In Fillmore v. Wells, 10 Colo. 228, 15 P. 343, 3 Am.St.Rep. 567, this court said:

'The attorney's lien, whether under the statute or at common law, is equitable in its nature. * * * It is not property in the thing, which gives a right of action at law. It is a charge upon the thing, which is protected in equity.'

In B. & C. S. Co. v. Pless, 9 Colo. 112, 10 P. 652, this court said:

'The statutory lien is a security of the benefit of which the attorney may or may not avail himself.'

This is the holding in other jurisdictions. In Fischer-Hansen v. Bklyn. Heights R. Co., 173 N.Y. 492, 66 N.E. 395, in discussing the attorney's lien law, the court said:

'But did the Legislature, in its effort to protect attorneys, intend to sacrifice the client by preventing him from making an honest settlement of his own cause of action? Did it mean to overturn the ancient and honored rule of law that settlements are to be encouraged, by giving the attorney power to insist that the litigation must continue until he consents that it should stop? Did it intend to so tie the hands of the client that he could not settle his own controversy without the permission of his attorney? A cause of action is not the property of the attorney, but of the client. The attorney owns no part of it, for a lien does not give a right to property, but a charge upon it. As it is merely incidental and for the purpose of security

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