Osterling v. Rose , 286 Pa. 263 ( 1926 )

In 1913, the plaintiff, F. J. Osterling, of Pittsburgh, brought suit against Luzerne County to recover for his services as architect of the new courthouse in that county. The case was transferred to Lackawanna County, where the law firm of O'Brien Kelly appeared for the plaintiff, but for some reason it was not promptly brought to trial and in 1920 Osterling employed the Pittsburgh law firm of Watson Freeman to take charge of the case. The total amount claimed by plaintiff approximated $175,000, and he seems to have agreed to pay the last-named attorneys a fee of $10,000 and twelve and one-half per cent of the amount recovered, paying in advance thereon $2,500. Near the end of 1922, plaintiff employed Percy Allen Rose, Esq., an attorney at Johnstown and the defendant herein, to supersede Watson Freeman as counsel in the suit. Rose visited Scranton and got the case on for trial before the court without a jury, but prior to its conclusion a settlement was effected for $77,500, of which $7,000 was deposited with Judge MAXEY, of Scranton, to cover the fees of O'Brien Kelly and the balance, $70,500, was paid to Rose as attorney for plaintiff. Prior thereto, the claim had been assigned to the Colonial Trust Company of Pittsburgh, who in fact held it as trustee for plaintiff. Rose received the $70,500 and deposited it in his bank account at Johnstown on January 30, 1923. At first plaintiff, it is alleged, requested Rose to pay him the money, but later said to make the check to the Trust Company, and, on March 1st next, it was so drawn for $55,500, the check on its face stating, "In full amount F. J. Osterling v. County of Luzerne less fees." Because of that condition, the check was returned to Rose with a statement of the cause of its refusal; this made no deduction for $6,500 which Watson Freeman claimed as balance of their fees and which under the terms of settlement was included in the $70,500 check to Rose, Osterling having disputed their claim and given Rose an indemnity bond on account thereof. Later, on May 15, 1923, Rose sent another check of $49,000 to the Trust Company deducting his own fee of $15,000 and the $6,500 for Watson Freeman (the indemnity bond having been returned to Osterling). This check had written on its face: "In full settlement In re: The Colonial Trust Company v. County of Luzerne, less fees and amount to be retained by me [Rose] under paper of settlement filed in above case." Osterling disputed the right of Rose to $15,000 and the trust company's attorney requested him to withdraw the above-quoted writing on the check so that it might be accepted without prejudice, but the request was ignored. Meantime, on May 23, 1923, the claim was reassigned to Osterling, whose counsel, on June 23d next, wrote Rose calling attention to the fact that he still had the $70,500 and requested the prompt sending of a check without conditions. This letter was received at Rose's office, but ignored, and, on July 5th next, plaintiff presented a petition to the Court of Common Pleas of Cambria County and a rule was obtained under the Act of June 16, 1836, P. L. 793, requiring Rose to show cause why he should not pay over the amount in his hands. To this an answer was filed and depositions taken and after a contest lasting nine months, that court filed an opinion and ordered Rose to pay Osterling the $49,000, with interest thereon from March 1, 1923, and to pay the $6,500 to Watson Freeman, who had intervened. The order was made without prejudice to Osterling's right to recover the $15,000. No appeal was taken therefrom and, on May 9th next, the $49,000 and interest was paid accordingly. Thus, what should have been paid promptly was delayed fifteen months without excuse and then paid pursuant to an order of the court and after plaintiff had been compelled to employ counsel and incur much expense and trouble. Thereupon plaintiff brought this suit for the $15,000, contending that by neglecting and refusing to pay over the money admittedly due the client, the defendant had forfeited his right to compensation for the services rendered. The trial court sustained this contention and, there being no dispute as to the controlling facts, entered judgment for plaintiff for want of a sufficient affidavit of defense; therefrom defendant has appealed.

The judgment was properly entered and the record presents no doubtful question of law or fact. An attorney who refuses or neglects to pay over his client's money on demand and thereby subjects the latter to added expense, forfeits his right to compensation for the services rendered in collecting the money in question. The opinion by Mr. Justice POTTER, for the court, in Martin's Petition, 237 Pa. 159, 161, states the rule that: "Anything which savors of lack of good faith upon the part of an attorney, such as the receipt of money without giving notice to the client within a reasonable time, or the refusal or neglect to pay over promptly upon demand, calls for forfeiture of all claim to compensation." In Large v. Coyle, 9 Sadler 206, the principle, as stated by Judge STOWE, and affirmed by this court, is summarized as follows: "Where an attorney-at-law, who has made a special contract with his client for fees for collecting a claim, has refused or neglected to pay over the money collected, has been unreasonable in his conduct, subjecting his client to annoyance and expense, and compelled him to bring suit for the recovery of the money, he forfeits his fees and is bound to pay over the moneys received, without reference to his fees at all." To the same import are Wills v. Kane, 2 Grant 59; Bredin v. Kingland, 4 Watts 420; 3 Am. Eng. Enc. of Law (2 ed.) p. 444; 6 C.J. 723; see also Balogh v. Jackson, 272 Pa. 482. Murphy's Est., 258 Pa. 38, does not help the defendant, for there the attorney had paid over to the client all except that retained as fees, the amount of which, we held should be settled by jury trial.

The $49,000 admittedly was plaintiff's money to which he was entitled without accepting a check written in full so as to prejudice his right to contest the amount of fee retained by the attorney. It is not a question whether the acceptance of the check so written would preclude such contest; that it would damage plaintiff's case at the trial is sufficient. The contention that it would not amount to an accord and satisfaction, while probably sound, is an afterthought, otherwise defendant would not have insisted on giving that form of a check and even asserting his right to do so in the affidavit of defense. A check tendered in payment of an indebtedness, to be effective, must be like the old rule as to a negotiable note, "a courier without luggage."

The Cambria County court's order requiring Rose to pay interest on the $49,000 was necessarily based on a wrongful withholding (see DeWitt v. Keystone Nat. Bank, 243 Pa. 534; 33 C.J. 202); we need not, however, treat that here as res judicata, for the pleadings in this case lead to a like conclusion. Paragraph 13 of plaintiff's statement sets out the reassignment of the claim to Osterling on May 23, 1923, the prompt notice thereof to defendant and counsel's request of him to release the $49,000 check from the receipt in full written thereon, so as not to prejudice plaintiff's right to question the amount of the $15,000 fee retained and that the check was returned to Rose because of failure to secure such release, etc. As to this paragraph the affidavit of defense says: "That the defendant admits the averments contained in paragraph '13' of the plaintiff's statement, and avers that his reasons for refusing to release the said Colonial Trust Company from the receipt in full written upon the face of the said check of May 15, 1923, was that he intended that the same should be in full and that the amount of said check was actually in full of the amount due the said Colonial Trust Company." The doubtful character of plaintiff's claim against Luzerne County and the advantageous settlement secured, averred in the affidavit of defense, are beside the question. Defendant admittedly had the $49,000 belonging to his client and his failure to turn it over for fifteen months, although repeatedly demanded, being without any legal excuse, was such professional misconduct as to deprive him of compensation for services in securing the fund in question, and the trial court properly so held. Rose's repeated attempts to force the client, in order to secure his own money, to give such an acquittance as might forestall the question of the justness of the $15,000 fee, or at least prejudice plaintiff in reference thereto, made that court's duty more imperative.

The judgment is affirmed.