Voell v. Kelly

Cole, C. J. The attorney for the plaintiff insists that the order denying the motion to set aside the satisfaction of the judgment herein, and for leave to issue an execution for the amount remaining unpaid on the same, should be reversed [505] for three reasons: (1) Because tbe plaintiff’s attorney bad a lien upon tbe judgment for bis fees in tbe case, and tbe satisfaction was in fraud of bis rights; (2) because tbe satisfaction was without consideration and not binding upon tbe plaintiff; and (3) because tbe satisfaction was obtained through collusion and fraud with intent to cheat tbe plaintiff out of a part of her judgment and her attorney out of bis fees. Tbe action was for damages for a personal injury to tbe plaintiff, caused by tbe negligence of tbe defendant. Tbe amount recovered in tbe circuit court was $100 damages and $45.81 costs. It appears from tbe affidavit of Mr. Blair (plaintiff’s attorney) that be bad tbe sole management of tbe action from its commencement; that tbe plaintiff is poor, destitute of means to carry on tbe suit, and before it was commenced it was mutually agreed between tbe plaintiff and him that he should trust her for bis fees for bis services until tbe action was determined, and take bis pay out of tbe judgment recovered, if any, and have a lien thereon for tbe same; that be has never been paid nor received anything for bis services. It is admitted that no notice of this lien was given to tbe defendant or bis attorneys. Tbe affidavits used on tbe motion show that tbe plaintiff, without any consultation with her attorney, without bis knowledge even, made an agreement with tbe attorney of tbe defendant to accept in satisfaction of this judgment $68 and tbe costs. The judgment was satisfied of record upon tbe payment of this sum, less by $32 than tbe amount due thereon. This application to vacate tbe satisfaction is made as well on behalf of tbe plaintiff as her attorney. As to tbe first ground relied on for setting aside tbe satisfaction, it is doubtful if tbe attorney has any lien upon tbe judgment for bis fees which would prevent bis client from settling and discharging it. In Kusterer v. Beaver Dam, 56 Wis. 471, it was held that “ a party having a cause of ac [506] tion, in its nature not assignable, cannot, by an agreement before judgment or verdict thereon, give his attorney any interest therein, or in the costs which would be incident to a recovery, which will survive the settlement of the cause of action.” Whether a different rule should obtain where the action has gone to judgment is a point not necessarily involved in that decision. There are cases which hold “after judgment the attorney who has procured it has a lien upon it for his costs. This lien is upheld upon the theory that the services and the skill of the attorney have procured the judgment. There is then something upon which a lien can attach, and the courts uphold the lien by an extension to such cases of the principle which gives a mechanic a lien upon a valuable thing which, by his skill and labor, he has produced.” Coughlin v. N. Y. C. & H. R. R. Co. 71 N. Y. 443, 448. We shall not stop to inquire whether this doctrine of giving the attorney a lien after judgment, but denying it before judgment, rests upon solid grounds or not; for, as we understand, it is necessary in either case in order to preserve the right against a settlement made in good faith that notice should be given, which was not done in the present case. Courtney v. McGavock, 23 Wis. 620. So it is doubtful if those authorities which have gone the furthest in protecting the attorney’s hen would hold that it attached here. Be that as it may, upon the other grounds we think the satisfaction should be set aside, because under the circumstances it is fraudulent as to the plaintiff. Such settlements effected by an attorney on the one side with the opposing party on the other should be closely scrutinized, and should never be sanctioned where there is any appearance that undue influence was used in effecting them. In this case the plaintiff’s husband acted for or with her in making the settlement. But the affidavits conclusively show that the settlement was made by the defendant’s at507 tomey with. them, without the knowledge of her attorney, though he was near at hand and might and should have been consulted in the matter. The plaintiff says in her affidavit, in substance, that her husband informed her that one of defendant’s attorneys had talked with him about settling up the matter, and said to her husband he thought the defendant would take the case to the supreme court, and .if he did the plaintiff would never realize anything from the judgment, as it would take all to pay her lawyer and costs; that she would have to pay $18 to get the printing done in the case on her side before it could be heard; that this was said to induce her and her husband to believe it best for her to take what was offered by the defendant; that she was wholly unacquainted with business matters of all kinds, had not seen her attorney since the cause was tried, and did not know what to do; that defendant’s attorney did not want her to say anything to her attorney about the settlement; that the matter must be attended to at once or it would be too late; that from the statements communicated to her she was led to believe, and did believe, that unless a settlement was made as proposed she would never receive anything, and she told her husband that she did not know anything about the business, and he could do what he had a mind to, but that if she had fully understood the matter, and what her rights were, she would never have consented to the settlement which was made. On all material points the statements of the plaintiff are corroborated in the affidavit of her husband. The counter-affidavit of the attorney who acted for the defendant in making the settlement denies some of these statements. Among other things, he says he did not request that nothing should be said to plaintiff’s attorney about the matter, or to any one else, how it had been settled, or as to what was going on about it during the negotiations ; but, on the contrary, that the plaintiff’s husband [508] enjoined upon him not to say anything about what the plaintiff had agreed to take to any one. Still the important fact remains admitted that the attorney made the settlement with the plaintiff, who very imperfectly understood her rights, in the absence of her attorney and without his knowledge. The plaintiff certainly had no one to advise her as to the probable fate of the suit if taken to the supreme court, or what expense she would incur by that litigation. Under the circumstances, it was the plain, professional duty of defendant’s attorney to have told both her husband and plaintiff to consult her attorney in regard to the settlement. In the language of the chief' justice in Watkins v. Brant, 46 Wis. 419, no such transaction should ever be consummated as it were ax parta in a lawyer’s office. The defendant’s attorney presumably acted 'without conscious bad faith in the matter; but the effect was the same, — -an undue advantage was obtained over the plaintiff. And we hold that a settlement brought about in the way this was is in the nature of a fraud upon the plaintiff, and does not bind her. The remarks made by the chief justice in the case just cited, and by Mr. Justice Taylor in Bussian v. M., L. S. & W. R. Co. 56 Wis. 326, as to what professional ethics require under such circumstances, are exceedingly appropriate to guide the conduct of attorneys in such a case. The order of the circuit court is reversed, and the cause is remanded with directions to set aside the satisfaction of the judgment, and to grant leave to issue an execution thereon for the amount remaining unpaid. By the Cov/rt.— It is so ordered.