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plied with, the sale must be set aside. The referee in reaching the opposite conclusion dealt with the case as though it involved merely a question of the inadequacy or illegality of the consideration. But this is beside the mark. He also seems to have been impressed with the idea that to invalidate the bonds would be to discredit numerous ther similar transactions countenanced by the business world. But this is a consideration which cannot obtain. Whatever the result, the law must be declared as it is. I venture, however, to observe that the sooner people are brought to realize and accept that neither in law nor in legitimate finance can nothing be made to stand for something the better we shall all be off.

The referee is reversed, the exceptions to the return of sale are sustained, and the sale set aside and the property directed to be resold unless the purchaser shall pay to the trustee within 10 days the sum of 338,350 remaining unpaid upon his bid. Act April 20, 1846, § 2 (P. L. 411); Bedell's Appeal, 87 Pa. 510; Fry v. Specht (Pa.) 1 Atl. 441.

PHILLIPS v. LOUISVILLE & N. R. CO.

(Circuit Court, N. D. Alabama, E. D. May 18, 1907.)

1 COSTS-SUITS IN FORMA PAUPERIS-INTEREST OF ATTORNEY.

Where plaintiff's attorney was financially interested in the result of an action brought in the federal court, plaintiff could not obtain an order permitting him to sue in forma pauperis, as authorized by Act Cong. July 20, 1892, c. 209, § 1, 27 Stat. 252 [U. S Comp. St. 1901, p. 706], without a showing that plaintiff's attorney was also unable because of poverty to give security.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 13, Costs, §§ 502, 508.]

2 ATTORNEY AND Client-ContRACT FOR SERVICES-CONSTRUCTION.

A contract between plaintiff and his attorney provided that plaintiff agreed to pay the attorney in full settlement of his fee an amount of money equal to one-third of any amount recovered in the cause by settlement or otherwise. The contract also stipulated that the attorney should not settle the suit without plaintiff's consent for less than the total amount sued for, and that the attorney should have full authority to do all such arts as he might deem necessary and proper in the premises, with power to associate or substitute other attorneys with him at his option. Held, that the contract provided for a contingent fee, and vested in the attorney a pecuniary interest in the suit.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 5, Attorney and Client, 353.]

& COSTS-SUITS IN FORMA PAUPERIS-APPOINTMENT OF ATTORNEY.

Act Cong. July 20, 1892, c. 209, § 1, 27 Stat. 252 [U. S. Comp. St. 1901, p. 706], authorizes impecunious persons to prosecute suits in the federal courts without giving security for costs, and section 4 authorizes the Court to assign counsel to prosecute the suit on behalf of such plaintiff. Held, that where plaintiff had secured counsel under a contract for a contingent fee, who had commenced the suit, filed pleadings, and prosecuted the case through two mistrials, plaintiff was not thereafter entitled, on the making of an application for security for costs, to an order reseinding his contract with his attorney and permitting him to sue in forma pauperis and to the assignment of counsel by the court.

Petition and Motion to Vacate Order Requiring Security for Costs.

Stallings & Drennen, for petitioner.

Knox, Acker & Blackmon, for defendant.

HUNDLEY, District Judge (orally). This is a petition filed by the plaintiff in this cause praying this court to vacate and set aside a former order requiring the plaintiff to give security for costs, and is predicated upon the following statement of facts, which are not ques tioned:

The plaintiff filed a suit in this court against the Louisville & Nashville Railroad Company, and at the time of filing said suit filed an affidavit, as required by Act Cong. July 20, 1892, c. 209, § 1, 27 Stat. 252 [U. S. Comp. St. 1901, p. 706], stating his inability to pay the costs or secure the same. After the filing of this affidavit, and before the trial of this cause, the defendant, Louisville & Nashville Railroad Company, filed a motion at a prior term of this court to require the plaintiff to give security for costs upon the following grounds, to wit: First. That it does not appear from the affidavit filed by the plaintiff in this cause that no other person having interest in the result of this suit is unable to give security for costs. Second. That it does not appear that those pecuniarly interested in the result of this suit are by reason of their poverty unable to secure the costs of this proceeding. Third. Because such affidavit fails to aver that the distributees or those having pecuniary and contingent interest in the result of this suit are, by reason of their poverty, unable to give security for the costs of this suit.

At the prior term of this court, at which said motion was heard, the facts stated in the motion being confessed, and it further being admitted in open court that the attorneys for the plaintiff were interested to the extent of one-third of any amount that the plaintiff might recover, Judge Harry T. Toulmin, of the Southern district of Alabama. sitting by assignment as judge of this court, granted the motion ei the defendant railroad company and required the plaintiff to give security for costs.

The plaintiff now files his petition, setting forth the facts as herein stated, and moves the court to vacate and set aside the order heretofore granted as being improvidently made, and asks that he be entitled to the process of this court in his said cause without any security cr deposit for costs, and that his attorneys be relieved from further pay ment of said costs in court. As an exhibit to said petition, and as a part thereof, there is attached the written contract of employment the plaintiff has with his attorneys in this cause; said contract being in words and figures as follows, to wit:

"State of Alabama, Jefferson County.

"Know all Men by These Presents, that I, Joe Phillips, have and dỏ hereby employ J. F. Stallings, to represent me and to bring suit against the Louis ville & Nashville Railroad Company, for personal injuries received by me, De cember 22, 1905, while a passenger, giving and granting unto him, full powe and authority to do all such acts as he may deem necessary and proper in the premises, and to that end, with full power to associate or substitute other at torneys with him, at his option. In consideration of said attorney acceptin said employment I hereby agree to pay to him in full settlement of his fee a amount of money equal to one-third of any amount recovered by him in sai

case, by settlement or otherwise. Said attorney not to settle said suit, without my consent, for less than the amount sued for.

"[Signed]

"Witness: Jim Phillips."

Joe Phillips.

The plaintiff further prayed, in his petition, that, in the event this court should decide and determine that he is not entitled to proceed in said cause without deposit or security of costs of further proceedings in said cause, so long as the employment of his attorneys is based upon this agreement, then, in that event, this court will appoint said attorneys who are familiar with the cause to represent him in the trial of said cause, and that said attorneys have such compensation for their services in this matter as may be fixed or determined as reasonable by this court. The petition concluded with the usual general prayer for relief.

The first question to be considered in this matter is: Was the order made by Judge Toulmin correct as a matter of law, based upon the admission made by the attorneys for the plaintiff that they were interested to the extent of one-third of any amount that might be recovered?

By the Act of Congress approved July 20, 1892, any citizen of the United States entitled to commence any suit or action in any court of the United States, who is unable, by reason of poverty, to prepay fees or give security for costs, may have process and all the rights of other litigants and may have counsel assigned to represent him free of charge, by making a sworn statement in writing showing the above facts, and that he believes himself to be entitled to redress by such suit or action. 27 Stat. 252, c. 209. This statute is of a charitable and beneficent nature. Its sole purpose is to enable persons, ho, in good faith, are unable, on account of poverty, to prosecute any suit or action in the courts of the United States, to obtain a fair chance to have their rights adjudicated. It is not intended that the statute should be used directly or indirectly to benefit those who are able to prosecute their suits. The citizen seeking the benefit of the statute, and making the affidavit of poverty required thereby, must of necessity be the only person benefited by his cause of action. It surely was never intended by the statute that two or more persons should be interested financially in the result of a suit or action brought, and that, if one of them happens to be without means, this one can be permitted to make an affidavit of poverty and secure the benefits of the statute for the other parties to the suit who are able to prosecute same, even though they may not appear by name as parties. The admission by the attorneys for the plaintiff that they were interested to the extent of one-third of any amount that might be recovered made them financially interested in the result of the lawsuit, and, unless they too could make and file an affidavit as to their poverty, the plaintiff in this cause could not obtain the benefit of the statute.

As was said in the case of Boyle v. Great Northern Railway et al. C. C.) 63 Fed. 539:

There is no question but what a poor person can prosecute his cause and obtain a full hearing, but at the same time litigation is not to be fostered and encouraged by allowing the plaintiff to evade any expense which he makes.

This is a duty of any party having sufficient means, and is not to be evaded. If he is not able to pay costs or give security for them, he can have justice. without it. But a person who acquires by contract an interest in any liti gation, and a right to share in the fruits of a recovery, and who is not entitled to sue in forma pauperis, cannot be permitted, under cover of the name of al party who is a poor person, to use judicial process and litigate at the expense of other people. I think it does make a difference whether the plaintiff hash made a contract with his counsel for their compensation. It makes this dif ference That, after a contract has been made with counsel for a pecuniary interest in a lawsuit, the case is carried on partially for their benefit; and if they are able to pay the expenses of the litigation, it is unjust for the court to allow the litigation to go on for their benefit without expense, on the pretense that the plaintiff is unable to pay. I shall require a showing that the plaintiff is unable to pay or secure the costs, and that there is no person interested, by contract or otherwise, in the cause of action, or entitled to share in the recovery, who is able to pay or secure costs. I think that such a rule is in keeping with the meaning and spirit of this law, and it is founded in reason."

This same question is also decided in the case of Feil v. Wabash Railroad Company (C. C.) 119 Fed. 490. That case was decided upon a motion to secure costs, based upon the same facts as the case at bar. In that case the court says:

"In such cases a plaintiff represents not only her own interest, but also that of attorneys in the case. She sues for herself and as trustee for others. She may be poor, and, standing alone, might be entitled to the beneficient provisions of the act of 1892: but in her representative capacity she cannot be poor within the meaning of that act, unless the beneficiaries whom she represents are also. In my opinion, no petition to sue as a poor person can avail unless it discloses that all the beneficiaries, as well as the nominal plaintiff, come within the purview of the act."

In the case of The Bella (D. C.) 91 Fed. 540, it was stated by the court, in rendering the opinion, that:

"Permission to prosecute this suit in forma pauperis, in behalf of the intervener, would not have been granted if the court had been informed that the attorneys claimed any interest in the suit or a right to share in the proceeds of a recovery."

The case of Reed v. Pennsylvania Company, 111 Fed. 714, 49 C. C. A. 572, was an action by the widow and administratrix of a deceased person to recover for the tortious killing of her intestate and husband. In that case Judge Lurton, in delivering the opinion of the court, quoted approvingly the case of Boyle v. Railroad Com pany (C. C.) 63 Fed. 539, and held that, under the Ohio statute authorizing such an action in the name of the widow and administra trix, wherein damages recoverable are for the benefit of the widow and children of the deceased, they are the real parties in interest, and that, although the affidavit showed sufficiently the poverty of the widow, it was defective in not making a like showing in behalf of the children of the deceased.

Now we come to the consideration of another question presented by the petition. It is insisted that the written contract between counse and the plaintiff in this cause in reference to the payment of thei fees, which written contract is made a part of petition, shows upo its face that the fee provided therein is not in fact a contingent fee but merely a contract setting forth the basis upon which the amount o

the fee to be paid is to be determined, and it is insisted that therefore the security of costs should not be required of the plaintiff. I confess that I am unable to discover a material distinction between the written contract and the admission made in open court. It will be noted that the agreement stating the payment of the fee is in the following words:

"I hereby agree to pay him in full settlement of his fee an amount of money equal to one-third of any amount recovered by him in said cause by settlement or otherwise."

Now, does the mere statement in writing that the fee to be paid is an amount of money equal to one-third of any amount recovered change in fact the contingent nature of the contract? Clearly not. To hold otherwise would be but a mere juggle of words. It will be noted in the written contract that there is no provision whatever for the payment of the fee in case nothing is recovered of the defendant in the suit. The plaintiff is admitted to be a pauper and unable to pay any fee in any event, save alone in the happening of the event of his recovery in this suit. Then from what source is the fee to be recovered? The conclusion is inevitable, from the amount of the recovery alone.

Again, the basis of the fee charged is not gaged, nor attempted be gaged, by the amount of skill, time, or trouble required of counsel in the case, but is gaged and fixed alone upon the basis of the amount of recovery. To show further that the written contract is clearly contingent in its nature, it contains the further stipulation that the attorney is not to settle the suit without the consent of the plaintiff for less than the total amount sued for. This is an unusual and extraordinary provision in a contract of employment and was evidently inserted for the purpose of protecting both the attorney in securing his fee, as well as the plaintiff in securing the largest amount possible under the action.

Furthermore, it must be noted that no effort is made to protect ither the attorney or the plaintiff, except in the case of recovery from the defendant. There is also another extraordinary provision in this contract not usual or customary between attorney and client n this. Full power and authority is given to counsel to "do all such acts as he may deem necessary and proper in the premises, and to that end, with full power to associate or substitute other attorneys with him at his option." The relation of attorney and client is an intimate and confidential relation. If the fee of one-third of the amount of the recovery was not in fact the chief desideratum in the contract nder consideration, then what in fact was the moving cause, which duced the plaintiff to agree that other attorneys, mere strangers to the plaintiff for aught he knows, might be "substituted" or associated the case? What compensation is provided for these other attorneys. ho are to be substituted for the attorney who is a party to the conact? Is that a usual or reasonable provision in a contract of employment between counsel and client? And, even if it is a usual and customary provision, it is clear from the reading of the whole contract that any and all attorneys who may be employed in the case are to obtain their fees wholly and solely from the amount that may be re

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