1. The attorney or solicitor, who is also counsel in a cause,
has a lien on moneys collected therein for his fees and
disbursements in the cause and in any suit or proceeding brought to
recover other moneys covered by the same retainer.
2. A motion to pay into court the moneys collected will not be
granted, but the parties will be left to their action, if the
attorney is guilty of no bad faith or improper conduct, and has a
fair setoff against his client, which the latter refuses to
allow.
3. A party hits a general right to change his attorney, and a
rule for that purpose will be granted, leaving to the attorney the
advantage of any lien he may have on papers or moneys in his hands
as security for his fees and disbursements.
These were two motions on George W. Paschal, an attorney and
counselor of this Court, and as such lately representing the State
of Texas in suits which it had here. The first motion being in the
case of that state against White, Chiles and others (No. 4 on the
original docket), already largely reported; the second, in the case
of the same complainant against Peabody & Co. (No. 6 on that
same docket), not yet in any way adjudged.
In the first of the cases the motion was for an order on Paschal
to pay to the clerk of this Court, for the benefit of the State of
Texas, the sum of $47,325 in gold, alleged to have been received by
him under the decree in the first of the two cases above mentioned.
In the other (the suit
Page 77 U. S. 484
against Peabody & Co), that the name of the paid Paschal be
stricken from the docket as counsel for the complainant, and that
he be forbidden to interfere with the case. Rules to show cause
having been granted, with leave to either party to file affidavits,
Paschal, at the return of the rules, answered, filing a statement
under oath by way of cause why the motions should not be
granted.
This answer, in the first of the two cases, set forth the
history of the litigation instituted for the recovery of the Texas
indemnity bonds and the part taken by him therein, both in the two
cases in which these motions are made and in other cases and
proceedings. A portion of this history is published in the report
of
Texas v. White & Chiles, [
Footnote 1] and a portion in the case of
Texas v.
Hardenberg. [
Footnote
2]
The answer admitted that the respondent had received the sum
alleged,
viz., $47,325 in gold, paid under the decrees of
this Court, but alleged that his disbursements had been $13,355.98
(of which he gave an account by items), and that his charge for
services was $20,000 in the case of
Texas v. White &
Chiles alone; the reasonableness of which charge was
corroborated by affidavits of highly respectable counsel. The
balance, and much more, he claimed as due to him from the State of
Texas for his services in relation to others of this same lot of
indemnity bonds, for the recovery of which he was originally
retained by the Governor of Texas, as well as for other matters
specified in the answer, into the merits of which the court deemed
it not necessary for it to go, inasmuch as neither party had asked
it to settle or liquidate the accounts between them.
It appeared by the answer that at the breaking out of the
rebellion, there were in the Treasury of Texas seven hundred bonds
of the United States of $1,000 each, belonging to the school fund
of the state, and known as the Texas Indemnity Bonds, being part of
the $5,000,000 of bonds delivered to the state at the time of its
admission into the Union. These bonds by their terms were payable
to the bearer, but
Page 77 U. S. 485
by statute of Texas were required to be endorsed in order to be
available in the hands of the holder. The particular bonds which
were the subject of the respondent's services had not been endorsed
by any governor of the state, but its military board nevertheless
disposed of them for the purpose of aiding in carrying on the war.
Of these bonds, one hundred and thirty-six came into the hands of
White, Chiles, and others, about one hundred and fifty into the
hands of Peabody & Co., and various others into the hands of
other persons. It was contended by these parties that having
received the bonds in good faith, they were entitled to be paid
their full amount by the government of the United States, and many
of them were so paid. But it was set up by the answer to the
present rules that by the indefatigable exertions of the
respondent, payment was stopped on a large number of the bonds, and
suits were instituted against the parties who had received them or
had received the money secured by them.
The respondent was employed by A. J. Hamilton, the Provisional
Governor of Texas, in 1865, to carry on these prosecutions. He
first commenced a suit against White, Chiles in Texas, but not
being able to serve them with process, he removed his operations to
Washington and there commenced the suit, now No. 4 on the original
docket, in which the money in question was recovered. He also took
the proper steps and presented elaborate arguments in the Treasury
department to prevent a redemption of the bonds and to render the
prosecution effectual being partially successful in this object, as
before mentioned. No stipulation was made with Governor Hamilton
for any certain fee for these services, but it was understood
between them that the respondent should charge such fees as the
responsibility, expense, time, skill, and services should render
proper. On the faith of this understanding, the respondent left his
home in Texas, where his practice was lucrative, and came to the
North to attend to this business. For a time, on a change of local
administration in Texas, other counsel were employed in the cases,
but never, as it appeared, to
Page 77 U. S. 486
the entire displacement of the respondent, and in December,
1867, he received the following special engagement from E. M.
Pease, then Governor of Texas:
"EXECUTIVE OF TEXAS"
"AUSTIN, December 3, 1867"
"GEORGE W. PASCHAL, ESQ."
"DEAR SIR: Your two letters, of the 9th and 14th of November,
came together a day or two since. I had intended to write you
before this, and ask you to make a thorough examination of the suit
at Washington in behalf of the state against Chiles and others, for
certain United States bonds belonging to the school fund of Texas,
but a great press of business has prevented me from doing it. I now
wish you to make such an examination, and make a full report
thereon to this office as early as possible. In the meantime, you
are fully authorized to take charge of and represent the interest
of the state in said suit. Your compensation will be dependent upon
the action of a future legislature, unless a recovery is had in the
suit, in which event I shall feel authorized to let you retain it
out of the amount received."
"Yours, with respect,"
"E. M. PEASE"
The power of the governor to make such an arrangement was not
disputed. The legislature, in October previous, had passed an act
expressly authorizing him to take such steps as he might deem
proper to recover possession of these bonds, and to compromise with
the parties holding them, or through whose hands they had passed.
The respondent accepted these terms and continued to manage and
conduct the subsequent litigation, both in this case of White,
Chiles and other cases. In addition to the above letter, Governor
Pease, on the 13th of November, 1868, executed to him a power of
attorney constituting him his agent and attorney in fact to
represent the State of Texas in any suits then pending, or
thereafter to be instituted in any courts in the District of
Columbia in relation to any of the said bonds, with power to settle
and compromise with any of the parties. Under these various
retainers and engagements, the respondent
Page 77 U. S. 487
gave his attention for several years to the recovery of the
bonds, and finally succeeded in recovering the amount before
mentioned from the defendants in the case of White, Chiles, and
others, and made considerable progress in negotiating a settlement
of those which had come to the hands of Peabody & Co. In June,
1869, Governor Pease visited Washington, and on being made
acquainted with the respondent's proceedings, approved of the same
and entered into a further arrangement with him in relation to 300
of the said bonds, which had been carried to Europe by one Swisher
(of which the Peabody bonds were a part), by which he agreed that
the respondent should be paid for carrying the litigation through,
twenty-five percent on the one hundred and forty-nine bonds
received by Peabody & Co., and twenty percent on the remainder,
being one hundred and fifty-one bonds, in the hands of Droege &
Co. Under this arrangement, the respondent continued his
negotiations with these parties, and was, as he believed, near
effecting a satisfactory arrangement and settlement with them when,
on or about the 27th of January, 1870, he received a telegram from
E. J. Davis, who had been appointed Provisional Governor of Texas
in place of Governor Pease, that his appointment as agent for the
State of Texas was revoked. A letter from the governor was received
shortly after, containing a formal revocation of the respondent's
authority as such agent and of the power to represent the Governor
of Texas given to him by Governor Pease. The respondent alleges
that this interference on the part of Governor Davis put an end to
the negotiations for settlement with Droege & Co. and Dabney,
Morgan & Co. (parties who had received the money on the Peabody
bonds), and was entirely unauthorized by the governor, and entitles
him to receive the contingent fees of twenty-five and twenty
percent, as before mentioned, and to continue as attorney and
counsel in the case until his demand is settled.
He also asserts that the State of Texas is indebted to him in a
balance of $17,577 for publishing, binding, and delivering to the
Secretary of State of Texas 400 copies each of
Page 77 U. S. 488
five volumes of reports of the decisions of the Supreme Court of
Texas which he reported under the laws of the state; also that the
state owes him $1,000 for bringing two suits in the District Court
of Travis County and presenting appeals therein to the supreme
court of the state.
On the part of the State of Texas, it was shown not only that
the governor had revoked the respondent's authority, but that he
had appointed Mr. Durant as attorney and agent of the state in his
stead, with authority to receive all moneys due to the state, and
that Mr. Durant had made due demand of the respondent for the
moneys in his hands, and had required him not to intermeddle
further in the suit of
Texas v. Peabody.
Page 77 U. S. 491
MR. JUSTICE BRADLEY, having stated the case, delivered the
opinion of the Court.
The application made on the first of these cases (No. 4) for an
order on the respondent to pay money into court is in the nature of
a proceeding as for a contempt. The application is based upon the
power which the court has over its own officers to prevent them
from, or punish them for, committing acts of dishonesty or
impropriety calculated to bring contempt upon the administration of
justice. For such improper conduct the court may entertain summary
proceedings by attachment against any of its officers, and may, in
its discretion, punish them by fine or imprisonment, or discharge
them from the functions of their offices or require them to perform
their professional or official duty under pain of discharge or
imprisonment. The ground of the jurisdiction thus exercised is the
alleged misconduct of the officer. If an attorney have collected
money for his client, it is
prima facie his duty, after
deducting his own costs and disbursements, to pay it over to such
client, and his refusal to do this without some good excuse is
gross misconduct and dishonesty on his part, calculated to bring
discredit on the court and on the administration of justice. It is
this misconduct on which the court seizes as a ground of
jurisdiction to compel him to pay the money in conformity with his
professional duty. The application against him in such cases is not
equivalent to an action of debt or assumpsit, but is a
quasi-criminal proceeding, in which the question is not
merely whether the attorney has received the money, but whether he
has acted improperly and dishonestly in not paying it over. If no
dishonesty appears, the party will be
Page 77 U. S. 492
left to his action. The attorney may have cross demands against
his client, or there may be disputes between them on the subject
proper for a jury or a court of law or equity to settle. If such
appear to be the case and no professional misconduct be shown to
exist, the court will not exercise its summary jurisdiction. And as
the proceeding is in the nature of an attachment for a contempt,
the respondent ought to be permitted to purge himself by his oath.
"If he clear himself by his answers," says Justice Blackstone, "the
complaint is totally dismissed." [
Footnote 3]
All, then, that we are concerned to ascertain and decide on this
motion is whether the respondent retains the money in his hands in
bad faith, and is therefore guilty of any such misconduct as will
justify the court in interposing its authority in a summary
way.
Upon a consideration of the facts disclosed by the answer and
affidavits, the result to which the Court has come in relation to
the money retained by the respondent is that he has not been guilty
of any misconduct which calls for the exercise of summary
jurisdiction. We see no reason to suppose that he is not acting in
good faith, and whether his claim to the entire amount be valid or
not -- a point which we are not called upon to decide -- it is
clear that the claim is honestly made. The case is one in which the
parties should be left to the usual remedy at law, where the
questions of law and fact which are mooted between them can be more
satisfactorily settled than they can be in a summary
proceeding.
A good deal has been said in the argument on the question
whether the respondent has or has not a lien on the moneys in his
hands. We do not think that the decision of this motion depends
alone on that question. For even if he has not a lien coextensive
with the sum received, yet if he has a fair and honest setoff which
ought in equity to be allowed by the complainant, that fact has a
material bearing on the implied charge of misconduct which
underlies
Page 77 U. S. 493
the motion for an order to pay over the money. And when, as in
this case, there exists a technical barrier to prevent the
respondent from instituting an action against his client (for it is
admitted that he cannot sue the State of Texas for any demand which
he may have against it), it would seem to be against all equity to
compel him to pay over the fund in his hands, and thus strip him of
all means of bringing his claims to an issue. Whilst, on the other
hand, no difficulty exists in the state instituting an action
against him for money had and received, and thus bringing the
legality of his demands to a final determination.
But in the judgment of the Court, the respondent has a lien upon
the fund in his hands for at least the amount of his fees and
disbursements in relation to these indemnity bonds. His original
retainer by Governor Hamilton related to all the bonds
indiscriminately, and much of the service rendered by him has been
rendered indiscriminately in relation to them all. With regard to
the White and Chiles bonds, the agreement of Governor Pease was
express that in case of recovery, the respondent might retain his
compensation out of the amount received. In England and in several
of the states it is held that an attorney or solicitor's lien on
papers or money of his client in possession extends to the whole
balance of his account for professional services. But whether that
be or be not the better rule, it can hardly be contended that in
this case it does not extend to all the fees and disbursements
incurred in relation to all of these indemnity bonds. And in this
country the distinction between attorney or solicitor and counsel
is practically abolished in nearly all the states. The lawyer in
charge of a case acts both as solicitor and counsel. His services
in the one capacity and the other cannot be well distinguished. And
as a general rule counsel fees, as well as those of attorney or
solicitor, constitute a legal demand for which an action will lie.
And whilst, as between party and party in a cause, the statutory
fee bill fixes the amount of costs to be recovered, as between
attorney or solicitor and client a different rule obtains. The
claim of the attorney or solicitor
Page 77 U. S. 494
in the latter case, even in England, extends to all proper
disbursements made in the litigation and to the customary and usual
fees for the services rendered.
The fee bill adopted by Congress in 1853 recognizes this general
rule and in fact adopts it. By the first section of that act it is
expressly declared that nothing therein shall be construed to
prohibit attorneys, solicitors, and proctors from charging to, and
receiving from, their clients, other than the government, such
reasonable compensation for their services, in addition to the
taxable costs, as may be in accordance with general usage in their
respective states, or may be agreed upon between the parties.
The change in the rule relative to fees and costs has been
gradually going on for a long period. In Pennsylvania, counsel fees
could not be recovered in an action so late as 1819, when the case
of
Mooney v. Lloyd [
Footnote 4] was decided. But in the subsequent case of
Foster v. Jack, decided in 1835, [
Footnote 5] the contrary was held in a very able
opinion delivered by Chief Justice Gibson. And in
Balsbaugh v.
Frazer, [
Footnote 6] Chief
Justice Black delivered the opinion of the court in a series of
propositions which strongly commend themselves for their good sense
and just discrimination. The court there held that in Pennsylvania
an attorney or counselor may recover whatever his services are
reasonably worth; that such claim, like any other which arises out
of a contract, express or implied, may be defalked against an
adverse demand; that an attorney who has money in his hands which
he has recovered for his client may deduct his fees from the
amount; that if he retain the money with a fraudulent intent, the
court will inflict summary punishment upon him; but if his answer
to a rule against him convinces the court that it was held back in
good faith and believed not to be more than an honest compensation,
the rule will be dismissed, and the client remitted to a jury
trial.
In New York, counsel fees have always been recoverable on a
quantum meruit. In the case of
Stevens & Cagger
v.
Page 77 U. S. 495
Adams, [
Footnote 7]
Stevens recovered $300 for counsel fees and $50 for maps made to be
used in a cause. It was held by the court that the fee bill, which
declares it unlawful to demand or charge more than therein limited,
has reference only to the question of costs as between party and
party, and not as between counsel and client. The arguments of
Chancellor Walworth and Senators Lee and Verplank in the Court of
Errors on the general subject were exceedingly lucid and able,
going to show that in this country, the counselor is regarded as
entitled to a fair remuneration for his services and to recover the
same in an action either upon an express or implied contract. The
code has since abolished the fee bill and left attorneys and
solicitors to make their own bargains with their clients. But the
courts have held that this change has not affected the attorney's
lien, even on the judgment recovered, for the amount which it has
been agreed he shall receive. In one case he was to receive
one-half the amount to be recovered. Judgment was obtained for
$1,179, and the court held that the attorney had a lien on this
judgment for his half of it, and that the defendant could not
safely settle with the plaintiff without paying him. [
Footnote 8]
In Texas, the law has been held substantially the same. In the
case of
Casey v. March, [
Footnote 9] it was decided that an attorney has a lien on
the papers and documents received from his client and on money
collected by him in the course of his profession for the fees and
disbursements on account of such claims and for his compensation
for his services in the collection of the money. If, as the
respondent contends, this case is to be governed by the law of
Texas, it is decidedly in favor of his lien, at least to the extent
of his services and disbursements in relation to the indemnity
bonds. [
Footnote 10] As the
original retainer was made in Texas, we are inclined to the opinion
that the rights of the parties are to be regulated
Page 77 U. S. 496
by the laws of that state. But if this be not the case, this
Court would be guided by what it deems to be the prevailing rule in
this country, and according to this rule we are of opinion that the
respondent has a lien on the fund in his hands for his
disbursements and professional fees in relation to the indemnity
bonds, and that in retaining the said fund for the purpose of
procuring a settlement of his claim, he has done nothing to call
for the summary interposition of this Court.
The motion for an order in case No. 4 to compel the respondent,
George W. Paschal, to pay to the clerk of this Court the money
received by him is therefore DENIED.
The other motion, we think, should be granted. The respondent,
as appears from his answer, was employed by Governor Pease to
proceed with and carry through the litigation relating to the 300
bonds in the hands of Peabody & Co. and Droege & Co., with
a stipulation to receiver 25 percent of the amount that might be
recovered on 149 of the bonds, and 20 percent of the amount to be
recovered on the remainder. Granting it to be true that this
contract was definitely concluded (although there seems to have
been some uncertainty as to one part of it), it cannot be seriously
claimed that the complainant is so fixed and tied up by the
arrangement that it cannot change its attorney and employ such
other counsel as it may see fit, always being responsible, of
course, for the consequences of breaking its contract with the
respondent. Whether in discharging him the state has made itself
liable for the whole contingent fee agreed upon, or only for so
much as the respondent's actual disbursements and services were
worth up to the time of his discharge, or for nothing whatever, it
is not necessary for us to decide. That question can be more
properly determined in some other proceeding instituted for the
purpose. The relations between counsel and client are of a very
delicate and confidential character, and unless the utmost
confidence prevails between them the client's interests must
necessarily suffer. Whether in any case, in virtue of an
agreement
Page 77 U. S. 497
made, an attorney may successfully resist an application of his
client to substitute another in his place we need not stop to
inquire. In this case, one of the states of this Union is the
litigant, and moves to change its attorney for reasons which are
deemed sufficient by its responsible officers. It is abundantly
able, and it must be presumed will be willing, to compensate the
respondent for any loss he may sustain in not being continued in
the management of the cause. The Court cannot hesitate in
permitting the state to appear and conduct its causes by such
counsel as it shall choose to represent it, leaving the respondent
to such remedies for the redress of any injury he may sustain as
may be within his power. Under the decision which we have just made
in relation to the money in his hands, he will be able to retain
that fund and any papers and documents belonging to his client
until his claims shall be adjudicated in such action as the state
may see fit to institute therefor.
An order to discharge the respondent, George W. Paschal, as
solicitor and counsel for the complainant in the second case, No.
6, will be GRANTED.
NO COSTS will be allowed to either party on these motions.
Orders accordingly.
[
Footnote 1]
74 U. S. 7 Wall.
700.
[
Footnote 2]
Supra, 77 U. S. 68.
[
Footnote 3]
4 Commentaries 288.
[
Footnote 4]
5 Sergeant & Rawle 411.
[
Footnote 5]
4 Watts 334.
[
Footnote 6]
19 Pa.St. 95.
[
Footnote 7]
23 Wendell 57;
S.C., 26
id. 451.
[
Footnote 8]
Rooney v. Second Avenue Railroad Company, 18 N.Y.
368.
[
Footnote 9]
30 Tex. 180.
[
Footnote 10]
See the cases of
Kinsey v. Stewart, 14 Tex.
457;
Myers v. Crockett, ib., 257;
Ratcliff v. Baird,
ib., 43;
Hill v. Cunningham, 25
id. 25.
