INRE HERMAN.
517
have queried whether I ought not .to grant a new trial unless the plaintiff would remit a specified, sum, and thus give her an opportunity, rather than risk another trial) to bring the verdict down to an amount which is more satisfactory to my own mind. But such a result requires the conclusion that there ought to be a new trial, and I am not prepared .to say that the' amount of the verdict, though larger than it ought ta have been, shows to my mind that prejudice had caused the minds of the jury to depart from a true equipoise. The motion is denied.
In re HERMAN. (1)Iitrlct
Court, D.WasMngton, E. D. April 8O,18ll9.)
1.
ATTORNEY-DISMISSAL BY RECEIVER·.
The receiver of an insolvent bank may at any time dismiss an attorney employetl by him, regularly or otherwise, to prosecute claims of the bank, and employanothedn his place, whom the court will, by order, substitute in the place of the dismissed attorney, except as to such cases as the latter may have commenced and finished. A contract having been entered into between the receiver and the attorney that the latter should receive the attorney's fees provided for in the notes he was ployed to collect, the court will Dot direct the substitution of another attorney in uufinis):led cases, until the receiver deposits the amount of the attorney's fees reserved 'in the notes as a security to the dismissed attorney for such services as he may have,rendered.
B.
SA.ME-SUCURITY FOR SERVICES RENDERED.
At Law. Petition by Herman L. Chase, receiver of the Spokane National Ba!lk, to change attorneys. The application was resisted bY' HenrJ'n-L Herman, the original attorney. Granted in part and denied in part. F. T. Poot, for petitioner. H. ,M. HeNnan, 'in pro. per. HANFORD, District Judge. The petitioner, Herman L. Chase,as receiver of the Spokane National Bank, is the plaintiff in a number of actions cpmmenced in this court for the collection of moneys due to said bank, ill all of which cases Henry M. Herman appears as the attorney of record for said plaintiff. The court is now asked to exclude him from further appearing in said cases, and to substitute F. T. Post as the attorney for the plaintiff, and also to require said Herman to surrender to the petitioner all the notes and securities and money which he has obtained possession of by means of his position as an attorney of this court assuming to represent the plaintiff in said cases. In his petition the receiver alleges that Herman has not been employed by him, and that he ,does not desire said attorney to represent him, and sets forth a telegram from Hon. E. S. Lacey, comptroller of the currency of the United States, saying that,he (the comptroller) is not willing to recognize IIerman as an attorneyf0r the receiver, and that he has not been em-
,. vol.
50.
..
a:.. Winstonhas
As an
ithe' business of the bank, and
Winston to i some. titigtttion/'· .It '. is: 'not:pretended that JUdg,6r;l!WIJUtn h:asbeen paill fOl1!his, services in the cases referred to, ()r thli,tpliMrnent has the directions in said telegram w.ell"i As the attitudeof,th",petitipner in this proceeding, evince an intention to contest his right to receive any compensation. It is proposed to deposit in court such reasonable sum as the court may require to-cover his claim, and then to frame issues to be thereafter tried for the purpose of testing his right to receive compensation for the services ¥rom the records in the several cases enumerated in the petition t find that in all of them Judge Herfor the plainman has tiff. In each case there is a complaint signed by him as attorney for the plaintiff,. and verified by Mr. Chase. Some of these cases were cottlfilenced, year, and the others were commenc;led'hiiAugusland .'september.· ' The list includes 34. cases, and in 25 of thetft'1iil.al judgments inftl.vor' of the plaintiff were rendered before ,this proceeding was commenced; one wal:l settledllnd dismissed, Dow»endirig. The receiver shows by his testithis' hearing that he has received the fruits of Judge in these ,In some of those peMit:g, as well as in several whielt' have proceeded to judgment, payments have been made to him by the respective defendl1nts. Considerati9nif'pr the rights of the . parties wh0se interests are represented'bythisreceiver requires me to hold that in all' pending cases in whicQ, fur.ther proceedings or s'!lUe further action ·of the court may be necessary, the receiver has the right to dismiss his attorney at pleasure after payment of lawful charges for services rendered, and to employ a new attorney to conduct such further proceedings wi'thout assigning any reason for his action; and I hold that whether Judge Herman was or WIl8Dot emp}oyedas'tbllaltorhey for the receiver, he can be excluded fro1I\,further appearing, in the several cases, mentioned which are unfinished, including thOlle .in: 'Which judgments; have been rendered which }lave: satisfied, Upon payment being made to him for his security given :therefor. But as to the cases which are entirelyf.iAis4e!l, or in whichnbthiI)gremains to be'done except to settle the question between::hilUand the receivel.'as to his compensation, there f<;>,rthefurther appearance of an attorney, and as to those the ordel'Jor tbestlbstitutionofattorneys prayed for by the petition will be denied. In deciding to grant or deny the prayer of the petitioner as to pending. it is necessary. fOJ! n?e to pass upon the 'question whether security forcompenl:Jation to Judge' Herman for his services as an attorney in said cases by a deposit in the registry of the court, as suggested in the telegram from the comptroller, ought to bl;lexacted. As to this
519 questio/l' 1 hold the attorney to. compensation, he. is also entitJed, to rightthllreto fully protected by the court before he .canpeJ>y a ,pompulsqry order dh;ffited of Ilpthority to control in which:90mpensationhas been earned. Judge the PC/AduGt of the Herml!lIl, .is attqrI).ey of this court in .good. standing. He is well kl}OWn the United States as aP eminept lawyer and as a writer OPllw text-books. It.is'l1ot allegedlls a.reRflQn for dismissing hi ID .tqat·hei i&1. incompetentordishonest"Q\' that he has guilty of negligepce,lack ofc9urtesy towar4a his client, or any kind of hayior.' Be has reJ:1dered valuable services in .thes.e cases, and the crediton,; andstockbolp.erf? of theiJ1l801vent ban.k have received the benefits thereof,. UI)lesshe cap. be regarded as It. mere volunteer or intruder into the business of the receivership, or as. an under an express contract to .W9rk without, pompensaHon, he is entitled to be paid for, the work which he has..done. Was he.eD;lployedby .the plaintiff? The upon, which. the deQision oUhis question depends may be /llUm01ep up in .Judge Herman basinot only:appeared as the attorney for the plaintiff in this court in the$evei'al, cases above referred to, ,but has also ,appeared as anUmberofcaaes in the United States circuitco:urt of thia district, and in the courts o{ the stateQf Idaho, and in the 'United circuit court for the distI:ic,t of Oregon; the. whole number ofc8,ses in ,which he has so appeared being oyer40 in n'llmber, and the,aggregatel1mount involved being. £\]lly a quarter of a willion dollars.. All of said litigation has practicallyterminateci without loss tO,or sacrifice on the part of,tbe bank. The receiver has, frqmtime to time, recognizedJudge Herm.an as the attorney having actuJllmanagement of the, cases mentioned, by placing in hjs, hands the promissory n()tes and securities upon which 8uits werefounded,and by going to his office to verify pleadings in anumber of instances, anti has .frequently counseled with him, and received advice con<Jerning mlttters involved in the pending litigation. If in fact the attorney by whom these 'cases have been commenced and conducted thus far, and :",bo has been thus recognized and counseled with, was not employed by the receiver, the question, why has not the fact to the attention of thed,ifferent courts in which he has SO been appeared.befol'f,l the termination of the litigation? is very pertinent. .And it is ll9tsatisfactorily answered by the pretense that his relationShip us ana,ttorney for the plaintiff in the several cases was unknown to the receive:r:, or unknown to the Comptroller ofthe currency, for it is impossible that the of these officers alleged in the petition could have cOI:1tinued while tl;le receiver was acting in concert with him. I regard tve receiver's testimony on this point and the statements in the comptroller's telegram as simply incredib.le. Tbe receiver claims, however. to !Jave understood that JUdge Hermnnwas simply acting in place of 001. Winston, who w/l®ularly employed as the receiver's at,. torney, and"that, under a contract between the comptroller of the currency and Winston, the latter is obligated for the compensation to be paid him .t9 'perform fill,tpe duties of an attorney himself, or procure
520
FEDERkt.'
R1!lroRTl!llt. vol. 50.
ain<rt1her attorney to do ab, :and tGbear:the entire expense occasioned by ofa substitute.. That contract, however, is before me llpart:of'the :evidcnce introdMed' upon this hearing, and upon its [Me $hows that it will not bearflluoh a construction.. It provides for a j)er'diem as compensation for· services -Which Col. Winston should ren.lerin counseling with the receiver. and in the conduct of suits and actions.and that he should at his own expense engage an attorney to act in his place when absent for the purpose of counseling with the reeehrerj Part of the contract between Col. Winston and the comptroller is to' found in the correspondence between them, from which it affirrtlutively' appears that the written instrument was signed with the liIistinct understanding that the same was made subject to future modifications. And from the iUtl;disputed testimony it appears that, after theaffuirsoHhis receivership had progressed for a few months, litigation in'which the bank beclime invohred was of such magnitude that<Winston unable to car1'tit through alone, and it became absoemploy another attorney. This was well known to lutely, the receiver, a.nd was also communicated directly to the comptroller, and a propoSition to employ additional counsel was made to him and assented to. He authorized the' enlployment of a firm chosen by Col. Winston. but for some reason no arrangement was concluded with said firrn. Thereafter a definite' proposition to employ Judge Herman in certain cases which were mentioned, and to pay him a specified compensation. was 'made. Owing' to delay' in receiving a response from the comptroller to this last proposition, which was made by Col. Winston in aletter to the comptroller, ahd the necessity for prompt action in said cases, Judge Herman, at the request of Col. Winston, undertook these cases, and prosecuted them with the full knowledge and co-operation of the receiver. According to the' testimony of both Col. Winston and Judge Herman. it was distinctly understood and agreed to between them and .the l,ooeiver that the compensation which( Judge Herman would claim in the collection clls6sbrought in this court was to be the percentage provided for in the several notes$ued upon which the makers promi'sed' to pay uS attorney fees in' case action brought, in addition to principal and interest. It was distinctly understood that the receiver should have the fuB amount ,of: 1Hl moneys collected as principal and interest, and that the attorney's compensation should be the amount provided ·for in the notes to becolleeted in each casa from the debtor. The testimony of these two witnesses is opposed only by that of Mr. Chase, who denies thathe ever assented to such an arrangement, and he claims that he has always insisted that the attorneys' fees stipulated for in the notes should be collected for the benefit of the bank, the same as the principal and interest. He bas, however, participated in the prosecution of suits in this court upon said notes to collect the principal and interest and attorney's fee. .His duty as an officer of the government appOinted to transact the business of an insolvent bank required of him not only diligence to prevent 108sto creditors and stockholders of the banK\ btHalso filu treatment of its otherhustomers, and he could not
was
of
.IN RE HERMAN.
521
consistently with his duty represent to the court that an expense had been incurred for attorneys' fees in proceedings to collect the notes, and thereby induce the court to award him judgments including such expenses, if the same were not actually incurred. This court certainly would not knowingly have allowed the receiver to oppress the debtors of the bank to the extent of making them pay the principal and interest of thpir notes, and any sum for expenses of collection in addition to the amount of the actual expenses in each case. The amounts awarded for attorney fees in the several judgments rendered belong to the attorney, and if by any arrimgement he has precluded himself from lawfully claiming the same the amount should be refunded to the debtors if collected, or shou]d be. given for the same upon the judgments if remaining uncollected. The testimony of Mr. Chase in this particular is not only contradicted by two witnesses, but it shows that he is endeavoring to act unfairly towards his attorney, or towards the defendants in the several cases mentioned, and because of such attempted unfairness on his part, as well as the number of witnesses against him, I feel strained to reject his statements, andtd find as a fact that the agreement was made as sworn to by the other witnesses. Upon consideration of all the evidence, I find that Mr. Chase has from the beginning of each of the actions had definite and accurate information as to the relationship of Judge Herman as his attorney in said cases; arid, whetner there was' anydefihite contract of edlploymeht in wordeor not, the services were rendered under such circumstances as to raise 'aZ:l'impliedpromise to pay reasonable compensation therefor. I cannotin'this proceeding adjudge as to the amount due Judge Herman for his· services as the plaintiff's attorney, but he is at ieast entitled to all attorney fees collected or to be collected from the debtors in these lectioncases. I will therefore order that as to cases which are still pending Judge Herman surrender to the petitioner the notes. and all securities which he has, as soon as the receiver shall deposit 'in the registry of this conrt, to await the further action and determination of the court, an amount equal to the attorney fees stipulated forin such notes. As to the money in his hahds which he has collected frotn the bank I will make no order, but will let it remain until a final accounting and settlement between him and his client can be had. The question as to the amount due from either as compensation for services rendered for which the receiver is liabie,.or on account of moneys collected by the attorney'and due to his client, can only be determined by the court'in a case regularly commenced and prosecuted by one party against the other, so that an issue can be framed and a judgment rendered in the usual way. I will deny the receiver's application as to all finished cases,"'"'-that is to say, those cases in which the record shows the judgments rendered to have been fully paid,-and grant the petition as tG the pendingcauses upon compliance upon the part of the receiver with the conditions imposed as to the deposit into court as above specified.
, r
:W'.,\KELEE '. !-1,'.:,
v.
DAVIS " ,
et al.·
:;' <f''lI;CUf.t
8. i'
L
An :lll"9hll:litiiil defendant,Jua.n action to enforce a judgn1ent, from maintaining t4!i1t the dwas not duly Riven. madejor,enteredby, a court having competent J'Uiisaicti/lii ''thereof, is not valid. and does' not still stand of record in said court,aud.! filJ![ot' in fUll force against said defend,ant, " is not riolBted by a gendenial of ap, .that such judgment was recQvered in a named court, the e1fect of the denial peUlgmerely to compel plaintitrto produce legal evidence Of ,the jUdgmSl:l.t'. :.: . ,,,,: '. " .. . . But the order by a general denia.l of allegations that tbe judgment, which was aglairiBtl a nODl'!JlIident, was duly enteted, and that it stillstbad of record in t4e '. : , ·
1l.SAME-EvtD.N91l·, '
:··i,·, .
' .: ..: .
';.' ,
'.
.
, InEquity.' r by. Allgljllica against Erwin Dav:is. Plaintiff moves defepdant andbia attorney, T. D. Kenneson, ..:Motion For 4:8 Fed. Rep. ()1,2; 44 Fed. nep.532"'533; and 37 Fed. Rep. 280-282. , ,Amon MqMU, ,furp41iQti,ff. . defendant. .",t.l " · . f' ; ,This is. a .motion for attachment .for conofthe alleged violation of an injunctionrorder of Davis and his Mtorney frQm olaiming orlilettingllP, lPyuans\Y,.eJ.' or ill any other manner, in action or suit, an<,l. from. the .plaintiff, th8,t a specified judgment agaiIljlt 'lIaid; rendet:ed by a district court in the state of not quly by a.court having competentj.llllis4iction is does not $till stand of r8?ordin £<lllllrt, aoc:Hs:not infulHoroe against said defendant." The in in which the defendant, by his alleged attorney, Mr.· [ the complainant1s amended comat 4tw, upon in which complaint the juq.gment is .d'lchued1-lJ;l(m ill four.cc:HlDt$ or separate causes of action. The defend""nt his. answertWQ classes of defenses, one Consistingof of the complainant's allegations, and the other mainly relyiqg ,UpOl1llA alleged dischargl;l in bankruptcy. The general denials are .in the formwbich denies that thl'l defendant has any knowledge or informatioDsufficient ·to form a belief as to all the allegations contained in specified paragraphs of the complaint. It is not doubted that this statutory: form ofplaading putsin issue the allegations which are referred to, ang .qreates a material ililSue which compels the complainant to proye trial. Livingston v. .Hammer, 7 Bosw. 674, FioQd v. .Reynolds, 13 :ao,iy. Pr.. 112; .Wayland v. Ty8lJ1't., 45 N. Y.281. The question upon this or the Hng up or'these issues by the denials is in violation of the terms of the injunction. The fourth and tenth paragraphs of the complaint