Cowley v. Northern Pacific Railroad Company

This was a proceeding originally instituted in the district court of the Fourth judicial district of Washington Territory, under a territorial statute, to set aside a certain judgment rendered in a case brought by the railroad company against the appellant, Cowley, in the same court.

The facts of the case were substantially as follows: In 1886 the railroad company began an action against the appellant to recover possession of 120 acres of land within the limits of Spokane Falls. In answer to the complaint in that action, Cowley set up a contract of purchase of the land between himself and the railroad company, alleging that he had complied, or was ready to comply, with the terms of his contract, had gone into possession of the land pursuant thereto, and had made valuable improvements thereon to the amount of $1,500, and demanded a specific performance. This answer or counterclaim was denied by the railroad company in its reply, and the case, being thus at issue, was referred to a referee to take testimony. The case was set for hearing by the referee on May 10, 1888, and was afterwards adjourned to May 11th.

On the day originally set for the hearing, the land agent of the railroad company made an oral offer to appellant's attorneys, who were to receive one-quarter of the proceeds of the action, to compromise the suit by the payment to appellant of $8,000 in cash, and the conveyance of 7 1/2 acres of the land in question, the company to retain the remainder of the land. This offer the appellant's attorneys, Messrs. Ganahl & Hagan, advised him to accept. There was some dispute as to whether it was actually accepted or not, but the court found that it was. The allegation of the petition in this connection is 'that, after full and mature consideration of said proposition, said Cowley decided to reject the same, and so notified his attorneys, Messrs. Ganahl & Hagan; and being very anxious about having said cause prosecuted to a final and successful issue in the courts, and being desirous of having his case tried by attorneys having confidence in the merits thereof, he determined to associate other counsel with said Ganahl & Hagan in the defense of said cause, and so notified them, asking that such other counsel should take an equal share with said Ganahl & Hagan in the conduct and defense of said cause.'

If the proposition was accepted, as claimed by the railroad company and found by the court, there is no doubt that it was subsequently repudiated by Cowley, who informed his attorneys that he was dissatisfied with it, and desired to employ other counsel with them, to which they refused to consent, except upon payment of their fees. There is no doubt that appellant also telegraphed the general land agent of the railroad company that he must have additional time to consider the proposition of compromise, to which the land agent replied that there was nothing to consider, the settlement having been made, and the papers and money sent. The president of the First National Bank of Spokane Falls, to whom the money and papers were sent by the railroad company on May 16th, took them to the office of appellant's attorneys, and informed them that, on the execution of a quitclaim deed by appellant and his wife, the money would be paid over. But it seems the appellant refused to execute the deed, and has ever since refused, and the money has ever since been in the hands of the president of the bank, ready to be turned over.

On the following day, May 17th, appellant wrote to the attorney of the railroad company, and to its general land agent, that the offer was not accepted; that Ganahl & Hagan were no longer his attorneys; and that all further communication should be made through his attorneys, Messrs. Blake & Ridpah. These letters were received about May 18th, and were answered to the effect that, until other attorneys were regularly substituted by an order of court, Messrs. Ganahl & Hagan would still be recognized by the company as appellant's attorneys. On the same day on which appellant wrote these letters, he also wrote Ganahl & Hagan stating that he discharged them as his attorneys, and that he had employed other counsel, to which they made reply that they demanded $4,000 for their fee, and would take nothing less, and that they had, on motion, set the case down to take testimony on Monday, May 21st. On May 18th the referee set down the case to take testimony on May 21st, and notified the attorneys for the respective parties. Appellant telegraphed the attorney of the railroad company that he could not go on upon that day, as he had employed new counsel, to which the attorney replied that he had made no arrangements for taking testimony, having supposed it would be unnecessary, and that, at any rate, he could not go on until the general land agent of the company was able to attend.

On May 31st, which was the first day of the May term of the court, the attorney for the railroad company and Ganahl & Hagan, as attorneys for Cowley, entered into a stipulaation to the effect that the case had been settled and compromised on the terms above mentioned, and that judgment should be entered for the plaintiff, the said railroad company, for the restitution of the premises demanded in the complaint, denying the relief prayed in defendant's answer, with costs against the plaintiff. Ganahl & Hagan also executed a receipt for the papers and money then in the First National Bank, though, in fact, they never received the money, which is still in the bank on deposit. Upon this stipulation and receipt, judgment was accordingly entered that the plaintiff railroad company recover of the defendant the possession of the premises described in the complaint; that a writ of restitution issue; that the relief prayed in defendant's answer be denied; and that plaintiff pay the costs. Defendant did not know that the stipulation had been made, or the receipt given, or judgment entered, until it had been done, and, upon hearing of it, he protested against it.

Thereafter, and without taking any further proceeding in the original suit, appellant instituted this proceeding to set aside the judgment in the former case, upon the ground of fraud and collusion between Ganahl & Hagan and the attorney for the railroad company, and as being entered without authority. The proceeding was begun in the district court of the territory, and was afterwards proceeded with in the superior court of Spokane county, in the state of Washington. It was then removed into the circuit court of the United States, which rendered a decree dismissing the bill, from which decree Cowley took this appeal. The opinion of the circuit court is reported in 46 Fed. 325.

R. B. Blake, for appellant.

W. J. Curtis and A. H. Garland, for appellee.

[Argument of Counsel from pages 573-575 intentionally omitted]

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.