Waychoff v. Waychoff
| Decision Date | 28 November 1932 |
| Docket Number | 172 |
| Citation | 163 A. 670,309 Pa. 300 |
| Parties | Waychoff et al. v. Waychoff, Appellant |
| Court | Pennsylvania Supreme Court |
Argued October 3, 1932
Appeal, No. 172, March T., 1932, by defendant, from decree of C.P. Greene Co., No. 347, in equity, in case of Glenn A Waychoff et al. v. Andrew J. Waychoff, Jr. Reversed without prejudice.
Bill in equity for injunction and appointment of receiver. Before SAYERS, P.J.
The opinion of the Supreme Court states the facts.
Decree for plaintiffs. Defendant appealed.
Error assigned, inter alia, was decree, quoting it.
The bill in equity filed in this case is dismissed at the cost of appellees, and all proceedings had thereunder are reversed and set aside, without prejudice, however, to the duty of the receiver to account for any moneys received by him under and by virtue of his appointment.
James J. Purman, with him J. I. Hook, of Scott & Hook, for appellant. -- Plaintiffs were not entitled to an injunction Mamoth Vein C. Coal Co.'s App., 54 Pa. 183.
A temporary or interlocutory injunction will not be ordered except upon a clear showing that the plaintiff is entitled to the same and that he will beyond reasonable doubt be entitled to relief on the final hearing of the cause on its merits: Minnig's App., 82 Pa. 373.
If a contract binds the maker to do something opposed to the public policy of the state or nation or conflicts with the wants, interests, or prevailing sentiment of the people, or our obligations to the world, or is repugnant to the morals of the times, it is void, however solemnly the same may be made: Goodyear v. Brown, 155 Pa. 514; Morgan v. Doe, 16 Pa. D. & C. 314.
A contract by an attorney to divide fees with a third person if the latter will procure employment for the former, is contrary to public policy and void: Meguire v. Corwine, 101 U.S. 108; Ormerod v. Hunt, 100 Pa. 561.
An attorney at law cannot create a partnership with a layman: Pittsburgh v. Goshorn, 230 Pa. 212; Kuhn v. Buhl, 251 Pa. 348.
W. C. Montgomery, for appellees. -- The Philadelphia case was a clear case of a member of the bar employing a runner or agent to procure business for him, a most reprehensible practice.
The present case is one of laymen who have either on their own part, or even in conjunction with a member of the bar, acquired for themselves a legitimate business which has been turned over under a perfectly proper arrangement and understanding to the lawyer member of the group to perform the necessary legal services in connection therewith. There is a clearly defined distinction between the cases.
The subject-matter of the contract has the sanction of the law.
The contract is not champertous: Wright v. Tebbitts, 91 U.S. 252.
Appellees had a right to an injunction: Mammoth Vein C. Coal Co.'s App., 54 Pa. 183; Com. v. Ry., 24 Pa. 159; Kittanning Brewing Co. v. Gas Co., 224 Pa. 129; Minnig's App., 82 Pa. 373.
Before FRAZER, C.J., SIMPSON, SCHAFFER, MAXEY, DREW and LINN, JJ.
By their bill in equity in this case, the two plaintiffs, who are laymen, seek a preliminary injunction against their brother, who is a lawyer, to prevent him from further handling the assets of a partnership entered into between them and him, and for the appointment of a receiver for those assets. The court below, without notice to the defendant, whose office is at the county seat, entered decrees granting these prayers. On this appeal by defendant, a number of questions, supposed to be involved, have been presented with marked ability by counsel on both sides of the controversy. Inasmuch, however, as the partnership agreement, which is the basis of the suit, cannot be sustained because of the unbending legal rule that all agreements which provide that laymen are to receive from lawyers a portion of their fees, in consideration of procuring the litigation for them, or for assisting in its prosecution, are void because contrary to public policy, we shall limit ourselves to pointing out why we think the rule applies here. That nothing else is needed on this appeal, is frankly stated in plaintiffs' brief as follows: "It is conceded, however, that the contract upon which the bill is founded, must be a lawful contract, if plaintiffs are to prevail."
The relevant provisions of the partnership agreement may be epitomized as follows: It states that defendant "has accepted a number of cases of world war veterans or United States army veterans against the United States of America to recover on their war risk insurance policies or later issued policies, on the ground of total permanent disability," some of which cases are "in the hands of trial attorneys in other districts and states, for purposes of preparation and trial and reducing to judgment and receipt of attorney's fees allowed by law, and [defendant] intends to so place many of such additional cases hereafter," he holding all "said agreements with those attorneys, and the moneys to be received or due, or to become due to him," as well as the fees in the suits which he personally prosecutes, in trust as to 50 per cent thereof for Glenn A. Waychoff, one of plaintiffs, and 25 per cent for the other plaintiff and 25 per cent for himself. It further provides that defendant sells, assigns and sets over to plaintiffs to the extent stated, all fees received by him, and authorizes, desires and directs the attorneys in other districts and states, receiving such cases for prosecution, to pay to plaintiffs their percentages as above set forth, "and [defendant also] agrees to $5,000 as liquidated damages at the suit of any interested party who has just cause to be aggrieved by any act or omission with respect to the above."
It will be noticed that the agreement does not state when or how the claims to be collected came to be placed in defendant's hands. Upon this point plaintiffs say in their brief, however: That is to say, Glenn A. Waychoff, a layman, gathered together these claims, knowing they would have to be prosecuted by a lawyer, and now seeks to farm them out to a lawyer, in consideration of one-half the lawyer's fees. This fact alone, under the principle above set forth, would defeat the right to maintain this bill; for as stated in Kuhn v. Buhl, 251 Pa. 348, "Where a written contract is attacked upon the ground that it is offensive to law and violative of public policy, the substance, not the form, is looked at; the court will not confine its attention to the mere words in which it is expressed, but evidence aliunde the contract is admissible to prove the consideration"; a conclusion stated also in New York & Penna. Co. v. Cunard Coal Co., 286 Pa. 72, 84. If thus considered, a contract is found to violate public policy, no matter what has previously been done regarding the subject-matter specified in it, "the law when appealed to will have nothing to do with it; . . . [so far as it is] executory, [the law] refuses to enforce it:" Pittsburgh v. Goshorn, 230 Pa. 212, 227. Moreover, if plaintiffs were not the gatherers of these cases of the veterans against the government, presumptively, at least, they would have no claim, since the agreement to pay them would be without consideration.
It must be admitted that the public policy above set forth is not approved in all of our sister states. In Dunne v. Herrick, 37 Ill.App. 180, Vocke v. Peters, 58 Ill.App. 338, Irwin v. Curie, 171 N.Y. 409, and Kelerher v. Henderson, 203 Mo. 498, it is said that such an agreement is void so far as relates to the attorney entering into it, but is valid and enforceable so far as the laymen partners are concerned. If the only question involved was as to the rights of the parties against each other, it would be possible to understand that conclusion, although, as stated in Holland v. Sheehan, 108 Minn. 362, 367, it wholly overlooks the rule that lawyers...
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