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ZURICH GENERAL ACCIDENT LIABILITY INS CO v. KINSLER

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District Court of Appeal, Third District, California.

ZURICH GENERAL ACCIDENT & LIABILITY INS. CO., Limited, v. KINSLER et al.*

EVERSOLE v. KINSLER et al.

Civ. 5848.

Decided: January 11, 1938

W. H. Brunner, of Ukiah, for appellant. Phillips & Munck, of Oakland, for respondents.

This is an appeal from a judgment rendered in an action in interpleader instituted under section 386 of the Code of Civil Procedure, involving the right of a discharged attorney to collect contingent fees under a contract therefor.

The appellant, Keith C. Eversole, was an attorney at law residing at Ukiah. Anna Kinsler was injured in an automobile casualty through the negligence of L. P. Anker. She employed this appellant to bring suit for damages against Anker. She signed a contract with Eversole, agreeing to pay him one–third of the amount of whatever judgment might be recovered as compensation for his services. The fees were made payable “upon the receipt by * * * (Kinsler) of any sum or sums therein.” It was provided that the contract was irrevocable, and that it should “operate as an assignment pro tanto” of the attorney's share of the judgment. It also contained a clause agreeing to pay appellant “reasonable attorney's fees” in the event of the necessity of instituting suit to collect the contingent compensation. Eversole prepared and filed in Mendocino county a complaint for damages against Anker.

Differences arose between the attorney and client. June 30, 1935, Mrs. Kinsler notified her attorney in writing that he was discharged. July 2, 1935, Eversole consented in writing to a substitution of the law firm of Phillips & Munck, as attorneys, but then informed her that he would insist upon payment to him of the full one–third of whatever judgment she might recover in that suit. The case was tried by the firm of Phillips & Munck, and a judgment for the sum of $2,000 and costs was rendered. December 10, 1935, Zurich General Accident & Liability Company, Limited, which was the insurer of the defendant, Anker, in that suit, then filed this suit in interpleader under the provisions of section 386 of the Code of Civil Procedure against the parties to the damage suit and Keith C. Eversole, and paid into court the full amount of the judgment in the sum of $2,000 and costs, asking that the court distribute the funds to the parties entitled thereto, and that it be exonerated from further liability. To that complaint the respective parties answered, and Eversole also filed a cross–complaint, setting up his contract with Anna Kinsler for contingent fees, and alleging he is entitled to one–third of the judgment of $2,000 which she recovered. To this cross–complaint Anna Kinsler filed an answer, alleging a breach of the contract on the part of Eversole by conduct which rendered it “impossible” for him to continue the litigation as her attorney or to properly represent her interests therein. The answer to the cross–complaint alleges in detail the specific inimical acts of her former attorney which she asserts required a substitution of counsel. This cause was tried by the court sitting without a jury. Findings were adopted favorable to the respondent Kinsler.

The court determined that the conduct of the attorney, Eversole, made it impossible for him to properly perform the services of an attorney in the damage suit or to conserve the interests of his client, Kinsler, and that she was authorized to and did formally discharge him as her attorney and did substitute in his place the firm of Phillips & Munck, which substitution was accepted by Eversole; that the purported assignment of one–third of the judgment recovered was rendered void; that Eversole was not entitled to recover the contingent fee specified in the contract, but that his services were reasonably worth the sum of $75. Judgment was thereupon rendered awarding the appellant the sum of $75 for services performed, and the balance of the fund was directed to be paid to Anna Kinsler. From that judgment this appeal was perfected.

The respondent Anna Kinsler was authorized to discharge her former attorney in the damage suit, with or without cause, for the reason that he had no interest in the subject–matter of that suit except his contingent fees to be paid in the event of recovering a judgment therein. It is now settled law in California that a client may discharge her attorney at any time, except when he has an interest in the subject–matter of the suit other than that which is incident to his employment, even though a contingent fee has been agreed upon and she is indebted to him for services performed or money advanced. Section 284, Code Civ.Proc.; 3 Cal.Jur. 628, § 38; Scott v. Superior Court, 205 Cal. 525, 271 P. 906; O'Connell v. Superior Court, 2 Cal.2d 418, 41 P.2d 334, 335, 97 A.L.R. 923, note; Hamlin v. Case & Case, 188 Wash. 150, 61 P.2d 1287, 1288; Cavers v. Old Nat. Bank & Union Trust Co., 166 Wash. 449, 7 P.2d 23; Martin v. Camp, 219 N.Y. 170, 114 N.E. 46, L.R.A. 1917F, 402; Crosby & Fordyce v. Hatch, 155 Iowa 312, 135 N.W. 1079; 6 C.J. 676, § 193.

When an attorney's only interest in the subject–matter in litigation which he is conducting in behalf of his client is the payment of a contingent fee to compensate him for his professional services, it may not be said his employment is “coupled with such an interest” as will preclude the client from discharging him and substituting another attorney in his stead. O'Connell v. Superior Court, supra. In the case last cited a writ of mandamus was issued to compel the court to recognize the right of substitution of attorneys under circumstances similar to the facts in this case, notwithstanding the fact that the client had executed a written agreement with his attorney to pay him as compensation for his services one–half of whatever sum he succeeded in collecting “by suit or compromise” of a claim to property affected by an alleged invalid assignment thereof. Speaking of the “power coupled with an interest” on the part of an attorney in the subject–matter in litigation, which will preclude the client from discharging his attorney without cause, the California court quoted with approval from the opinion of the late Chief Justice Marshall in the case of Hunt v. Rousmanier's Adm'rs, 8 Wheat. 174, 21 U.S. 174, 204, 5 L.Ed. 589, as follows:

“The power must be engrafted on an estate in the thing. The words themselves would seem to import this meaning. ‘A power coupled with an interest,’ is a power which accompanies, or is connected with, an interest. The power and the interest are united in the same person. But if we are to understand by the word ‘interest,’ an interest in that which is to be produced by the exercise of the power, then they are never united. The power, to produce the interest, must be exercised, and by its exercise, is extinguished. The power ceases, when the interest commences, and therefore, cannot, in accurate law language, be said to be ‘coupled’ with it.”

In the O'Connell Case the California court further said: “This definition has been generally recognized and accepted and has received the unqualified approval of this court. McColgan v. Bank of California Ass'n, 208 Cal. 329, 335, 281 P. 381, 65 A.L.R. 1075; Kunz v. Anglo & L. P. Nat. Bank, 214 Cal. 341, 344, 5 P.2d 417; Capital Nat. Bank v. Stoll, 220 Cal. 260, 264, 30 P.2d 411.

“The decisions agree that for a power to be coupled with an interest, so as to be irrevocable, there must be a specific, present, and co–existing interest in the subject of the power or agency. * * *

“‘It is plain from the foregoing authorities that the interest which the attorney in fact must have in the subject of the power in order to render the power irrevocable is such a beneficial interest in the thing itself, apart from the proceeds, that if the power were revoked he would be deprived of a substantial right. In other words, the relation of the attorney in fact to the subject–matter must be such that a revocation of the power would be inequitable. Such is not the case here. The interest in the proceeds of what may be collected is not, strictly speaking, a beneficial interest in the legacies. The interest is nothing more than an assurance that the attorney in fact will be reimbursed and compensated out of the legacies when collected.”’

The preceding language is peculiarly applicable to the facts of this case. The contract for contingent fees which was executed with Mr. Eversole, and the purported assignment of one–third interest in whatever, judgment might be recovered in that litigation, gave him no actual interest in the subject of litigation apart from his authority to prosecute the case of his client, with the assurance that his contingent fee would be paid if he rendered the service and collected a judgment for damages for the injuries sustained in the automobile casualty. His employment or power to act as an attorney in that litigation is not thereby coupled with such an interest as will preclude his discharge.

In accordance with the preceding rule of law, under circumstances almost exactly like the facts of this case, the Supreme Court of Washington, in the case of Hamlin v. Case & Case, supra, held that a client had the right to discharge her attorney, in spite of the existence of a written contract to pay him one–third of whatever sum he succeeded in collecting from a debtor by suit or compromise. In the contract which was involved in that case it was specified that the appointment of the attorney was irrevocable, and that the employment was “coupled with an interest in the subject–matter.” By the terms of that agreement an undivided one–third interest in the judgment to be procured was assigned to the attorney. That case quotes with approval from the California cases regarding the announced doctrine of the interest of an attorney in the subject–matter by virtue of a mere contract for contingent fees.

When an attorney is discharged without fulfilling the services which he contracts to perform for a contingent fee, he may recover as damages under proper circumstances the reasonable value of the services which he actually renders. Under such circumstances he is not necessarily entitled to recover the entire contingent fee. Ordinarily the measure of his damages is not the amount of contingent fees stipulated in the contract, but it is the reasonable value of the services performed. Section 284, Code Civ.Proc. The Hamlin Case, supra, says in that regard:

“The rule is general here, and elsewhere, that where the compensation of an attorney is to be paid to him contingently on the successful prosecution of a suit and he is discharged or prevented from performing the service, the measure of damages is not the contingent fee agreed upon, but reasonable compensation for the services rendered, and ‘If the compensation agreed upon is contingent on the successful result of the suit, the measure of damages is not the contingent fee, but the reasonable value of the services rendered.”’

The purported assignment to Eversole of one–third of the judgment as a contingent fee for services does not have the effect of creating an employment “coupled with an interest” so as to preclude the discharge of the attorney. In re Estate of Cazaurang, 1 Cal.2d 712, 36 P.2d 1069; Kunz v. Anglo & London Paris Nat. Bank, 214 Cal. 341, 5 P.2d 417; Hamlin v. Case & Case, supra.

Section 284 of the Code of Civil Procedure was amended and became effective September 15, 1935, St.1935, p. 1647, to authorize the court upon application of either a client or his attorney to discharge an attorney pending litigation, for which it is agreed he shall receive a contingent fee to “determine the amount and terms of payment of the fee.” That section now reads in part:

“The attorney in an action or special proceeding may be changed at any time before or after judgment or final determination, as follows: * * *

“2. Upon the order of the court, upon the application of either client or attorney, after notice from one to the other except that in all civil cases in which the fee or compensation of the attorney is contingent upon the recovery of money, in which case the court shall determine the amount and terms of payment of the fee or compensation to be paid by the party.”

Without the preceding amendment, when an attorney is properly discharged, his fees may be fixed by the court in a proceeding therefor, independently of a contract for contingent fees, based upon reasonable compensation for services actually performed. But we are of the opinion the preceding amendment is applicable to this case for the reason that under the terms of the contract Eversole had no right of action under any circumstance to recover his contingent fee until judgment in the damage suit was first rendered. His claim under the contract did not accrue until December 10, 1935, when that judgment was entered. The amendment was in effect before that date. The question as to whether the amendment may be deemed to take effect retroactively is not involved in this suit.

In the present case the attorney was discharged for adequate cause. The court so determined. The evidence shows that, in preparation for the trial and in the taking of a deposition of Anna Kinsler, the attorney was facetious and insulting toward his client so that she lost confidence in him and his ability to properly represent her interests in the litigation with which he was intrusted. He refused to inform her regarding the probable questions she would be asked in taking her deposition. He instructed her in securing her evidence for the trial to “go out and dig up all the dirt * * * about Lou Anker and bring it in here, we will produce it in court, the judge may not allow it, but it will have its effect upon the jury.” In the taking of Mrs. Kinsler's deposition, when she was asked by adverse counsel if she was married, her attorney replied, “Oh, that's going to be my next case for Mrs. Kinsler, her divorce.” As a matter of fact she was living in perfect harmony with her husband and no divorce proceeding was ever contemplated. This conduct greatly embarrassed and humiliated her. Finally, he demanded that his client should pay him $200 to secure a jury, in spite of the fact that she told him her farm was mortgaged and she was unable to advance the necessary jury fees, and wanted to try the case without a jury. The attorney then told her that he would not proceed with the case unless she raised the money for a jury trial. This conduct was sufficient to support the findings of the court to the effect that the client was justified in her loss of confidence in her attorney's ability or inclination to properly represent her in the suit, and that she was warranted in discharging him as her attorney. The findings in that regard were unnecessary under the circumstances of this case, but they are adequately supported by the evidence.

The judgment is affirmed.

Mr. Justice THOMPSON delivered the opinion of the court.

We concur: PULLEN, P. J.; PLUMMER, J.

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