In Re Paschal

THESE were two motions on George W. Paschal, an attorney and counsellor of this court, and as such lately representing the State of Texas in suits which it had here. The first motion being in the case of that State against White, Chiles and others (No. 4 on the original docket), already largely reported; the second, in the case of the same complainant against Peabody & Co. (No. 6 on that same docket), not yet in any way adjudged.

In the first of the cases the motion was for an order on Paschal to pay to the clerk of this court, for the benefit of the State of Texas, the sum of $47,325 in gold, alleged to have been received by him under the decree in the first of the two cases above mentioned. In the other (the suit against Peabody & Co.), that the name of the paid Paschal be stricken from the docket as counsel for the complainant, and that he be forbidden to interfere with the case. Rules to show cause having been granted, with leave to either party to file affidavits, Paschal, at the return of the rules, answered, filing a statement under oath by way of cause why the motions should not be granted.

This answer, in the first of the two cases, set forth the history of the litigation instituted for the recovery of the Texas indemnity bonds and the part taken by him therein, both in the two cases in which these motions are made and in other cases and proceedings. A portion of this history is published in the report of Texas v. White, Chiles, et al., and a portion in the case of Texas v. Hardenberg.

The answer admitted that the respondent had received the sum alleged, viz., $47,325 in gold, paid under the decrees of this court, but alleged that his disbursements had been $13,355.98 (of which he gave an account by items), and that his charge for services was $20,000 in the case of Texas v. White, Chiles, et al., alone; the reasonableness of which charge was corroborated by affidavits of highly respectable counsel. The balance, and much more, he claimed as due to him from the State of Texas for his services in relation to others of this same lot of indemnity bonds, for the recovery of which he was originally retained by the governor of Texas, as well as for other matters specified in the answer, into the merits of which the court deemed it not necessary for it to go, inasmuch as neither party had asked it to settle or liquidate the accounts between them.

It appeared by the answer that at the breaking out of the rebellion there were in the treasury of Texas seven hundred bonds of the United States of $1000 each, belonging to the school fund of the State, and known as the Texas Indemnity Bonds, being part of the $5,000,000 of bonds delivered to the State at the time of its admission into the Union. These bonds by their terms were payable to the bearer, but by statute of Texas were required to be indorsed in order to be available in the hands of the holder. The particular bonds which were the subject of the respondent's services, had not been indorsed by any governor of the State, but its military board nevertheless disposed of them for the purpose of aiding in carrying on the war. Of these bonds one hundred and thirty-six came into the hands of White, Chiles, and others, about one hundred and fifty into the hands of Peabody & Co., and various others into the hands of other persons. It was contended by these parties, that having received the bonds in good faith, they were entitled to be paid their full amount by the government of the United States, and many of them were so paid. But it was set up by the answer to the present rules, that, by the indefatigable exertions of the respondent, payment was stopped on a large number of the bonds, and suits were instituted against the parties who had received them, or had received the money secured by them.

The respondent was employed by A. J. Hamilton, the provisional governor of Texas, in 1865, to carry on these prosecutions. He first commenced a suit against White, Chiles, et al., in Texas, but not being able to serve them with process he removed his operations to Washington, and there commenced the suit, now No. 4 on the original docket, in which the money in question was recovered. He also took the proper steps and presented elaborate arguments in the treasury department to prevent a redemption of the bonds and to render the prosecution effectual; being partially successful in this object, as before mentioned. No stipulation was made with Governor Hamilton for any certain fee for these services, but it was understood between them that the respondent should charge such fees as the responsibility, expense, time, skill, and services should render proper. On the faith of this understanding, the respondent left his home in Texas, where his practice was lucrative, and came to the North to attend to this business. For a time, on a change of local administration in Texas, other counsel were employed in the cases, but never, as it appeared, to the entire displacement of the respondent; and in December, 1867, he received the following special engagement from E. M. Pease, then governor of Texas:

'EXECUTIVE OF TEXAS,

'AUSTIN, December 3d, 1867.

'GEORGE W. PASCHAL, ESQ.

'DEAR SIR: Your two letters, of the 9th and 14th of November, came together a day or two since. I had intended to write you before this, and ask you to make a thorough examination of the suit at Washington in behalf of the State against Chiles and others, for certain United States bonds belonging to the school fund of Texas, but a great press of business has prevented me from doing it. I now wish you to make such an examination, and make a full report thereon to this office as early as possible. In the meantime you are fully authorized to take charge of and represent the interest of the State in said suit. Your compensation will be dependent upon the action of a future legislature, unless a recovery is had in the suit, in which event I shall feel authorized to let you retain it out of the amount received.

'Yours, with respect,

'E. M. PEASE.'

The power of the governor to make such an arrangement was not disputed. The legislature, in October previous, had passed an act expressly authorizing him to take such steps as he might deem proper to recover possession of these bonds, and to compromise with the parties holding them, or through whose hands they had passed. The respondent accepted these terms and continued to manage and conduct the subsequent litigation, both in this case of White, Chiles, et al., and other cases. In addition to the above letter, Governor Pease, on the 13th of November, 1868, executed to him a power of attorney, constituting him his agent and attorney in fact, to represent the State of Texas in any suits then pending, or thereafter to be instituted, in any courts in the District of Columbia, in relation to any of the said bonds, with power to settle and compromise with any of the parties. Under these various retainers and engagements, the respondent gave his attention for several years to the recovery of the bonds, and finally succeeded in recovering the amount before mentioned from the defendants in the case of White, Chiles, and others, and made considerable progress in negotiating a settlement of those which had come to the hands of Peabody & Co. In June, 1869, Governor Pease visited Washington, and on being made acquainted with the respondent's proceedings, approved of the same, and entered into a further arrangement with him in relation to 300 of the said bonds, which had been carried to Europe by one Swisher (of which the Peabody bonds were a part), by which he agreed that the respondent should be paid for carrying the litigation through, twenty-five per cent. on the one hundred and forty-nine bonds received by Peabody & Co., and twenty per cent. on the remainder, being one hundred and fifty-one bonds, in the hands of Droege & Co. Under this arrangement the respondent continued his negotiations with these parties, and was, as he believed, near effecting a satisfactory arrangement and settlement with them, when, on or about the 27th of January, 1870, he received a telegram from E. J. Davis, who had been appointed provisional governor of Texas, in place of Governor Pease, that his appointment as agent for the State of Texas was revoked. A letter from the governor was received shortly after, containing a formal revocation of the respondent's authority as such agent, and of the power to represent the governor of Texas, given to him by Governor Pease. The respondent alleges that this interference on the part of Governor Davis put an end to the negotiations for settlement with Droege & Co., and Dabney, Morgan & Co. (parties who had received the money on the Peabody bonds), and was entirely unauthorized by the governor, and entitles him to receive the contingent fees of twenty-five and twenty per cent., as before mentioned, and to continue as attorney and counsel in the case until his demand is settled.

He also asserts that the State of Texas is indebted to him in a balance of $17,577 for publishing, binding, and delivering to the secretary of state of Texas, 400 copies each of five volumes of reports of the decisions of the Supreme Court of Texas, which he reported under the laws of the State; also that the State owes him $1000 for bringing two suits in the District Court of Travis County, and presenting appeals therein to the Supreme Court of the State.

On the part of the State of Texas it was shown, not only that the governor had revoked the respondent's authority, but that he had appointed Mr. Durant as attorney and agent of the State in his stead, with authority to receive all moneys due to the State; and that Mr. Durant had made due demand of the respondent for the moneys in his hands, and had required him not to intermeddle further in the suit of Texas v. Peabody et al.

Mr. A. G. Riddle, for the respondent:

1. As to the rule in the first case. Attorneys at law and solicitors in equity have, undoubtedly, by the English rule, a general lien, not only upon all the papers and documents of their clients in their possession, not only for all the costs and charges due to them in the particular cause in which the papers and documents come to their possession, but also for the costs and charges due to them for other professional business and employment in other cases; and this lien extends to all moneys received and judgments recovered. The rule is applied in the United States, for the protection of the bar generally. The whole subject is presented in a learned and able note by Mr. T. W. Dwight, in the American Law Register.

The fact that the fee is a contingent fee, does not affect the case. Such fees are lawful in Texas, and have been recognized by this court in Wylie v. Coxe.

Finally, the respondent shows that he retains the fund in good faith. This being so, the rule must fall.

2. As to the rule in the second case. It is not pretended that any cause exists for Mr. Paschal's removal, except the wish of the present governor of Texas. But a contract for a contingent fee having been made, and Mr. Paschal having entered upon his work, and spent much time, labor, and thought upon it, and incurred heavy expenses, he is not dischargeable at all, or, if so, dischargeable only on payment of his full fee. He has neglected other business to devote himself to this great claim; he has made arrangements affecting his whole course of life. He is interested pecuniarily and by contract in a recovery, as actually as the State of Texas is. He cannot sue that State for the balance remaining above the sum which he can get from the fund in his hand. His only chance, since a disturbance has arisen between him and the governor of Texas, is success in the case, and a recovery from Peabody & Co. Our argument rests on the fact that the fee was to be contingent on recovery. That class of fees has been decided to be lawful, and the court cannot apply the ancient chivalric rules which govern counsellor and client in countries or states where the relation is purely honorary, and where no action will lie for even the quantum meruit to the new class of cases. The matter is, in them, one of business and contract; not of mere confidence and honor. In Wylie v. Coxe, Mr. Coxe had been employed by one Baldwin, upon a contract for a contingent fee. Baldwin died, and his administrator sought to revoke the powers of Coxe. But this court said that it could not be done, except upon payment of the fees. And the reason is obvious. It is because such an attorney has a power, coupled with an interest.

Mr. Durant, contra:

As to the motion in the first case. The defence presents the remarkable case of a lawyer recovering a large sum of money for his client, and then not only keeping the whole of it, but claiming an enormous sum beside. The percentage claimed is excessive. In Wylie v. Coxe, the contingent fee was but 5 per cent., and the money had been all recovered by Mr. Coxe, leaving the remaining 95 clear to the client's hand. The fruitlessness of the recovery to the client in this case, owing to the percentages claimed for Mr. Paschal, and the sums paid out for other counsel, is itself a sufficient argument in favor of the rule asked for.

By the settled laws of England a barrister cannot sue for his fees. This court has never decided that he could. Coxe v. Wylie does not decide this, nor anything pertinent to our case; for the services rendered by Mr. Coxe were not rendered in any court, nor as a barrister, but were in obtaining an act of Congress and in proving the case before a board of commissioners. Probably any intelligent man, acquainted with business and politics, could have done the same service as Mr. Coxe did.

If counsel can sue for fees he has no lien for money in his hands, and must deposit it in court. The privilege of lien is one given to attorneys only. At all events he cannot set up a lien on moneys not the specific product of his effort in the case. 'The lien,' says Lord Cottenham, 'upon the fund realized in the suit is confined to the costs of that suit.' Here Mr. Paschal seeks to retain a large balance obtained in one case for services (as he conceives) in another; services which were to be paid for only in case of his getting certain moneys; moneys which he has failed to get.

Those who contract with the State, must rely on the discretion and good faith of the legislative body. It is a presumption of law that the sovereign power will do justice.

As to the rule in the second case. The governor had the legal right to discharge Mr. Paschal. Even in cases of contracts for personal service for a fixed period, the employer may discharge the servant. The fact that the fee was contingent don't affect the case.

Mr. Justice BRADLEY, having stated the case, delivered the opinion of the court.