Summary
In Scott and Horne the plaintiffs were lawyers who sued to recover attorney fees for their services in actions in which they, as professional men, had represented the insured, recovered, and then brought suit for attorney fees against insurers who had interests in the prior judgments.
Summary of this case from Bergen v. Travelers Ins. Co.Opinion
43145.
ARGUED OCTOBER 3, 1967.
DECIDED OCTOBER 25, 1967. REHEARING DENIED NOVEMBER 14, 1967.
Action for attorney's fee. Clarke Superior Court. Before Judge Barrow.
Erwin, Birchmore Epting, Denny C. Galis, for appellant.
Hudson Stula, Jim Hudson, Guy B. Scott, Jr., for appellee.
Under the evidence in this case the court erred in rendering judgment in favor of the plaintiff.
ARGUED OCTOBER 3, 1967 — DECIDED OCTOBER 25, 1967 — REHEARING DENIED NOVEMBER 14, 1967 — CERT. APPLIED FOR.
Guy B. Scott, Jr. brought an action, designated by the summons as a "suit for money had and received, in the amount of $258.48," against Commercial Union Insurance Co. In the Magistrate's Court of Clarke County. The case was tried by the court without a jury, resulting in a judgment in favor of the defendant. The plaintiff appealed from said judgment to the Superior Court of Clarke County.
In the nonjury de novo hearing, evidence was adduced substantially as follows: The plaintiff testified that he was an attorney at law and had represented Mr. Thomas M. Lowery in a personal injury action filed in the Superior Court of Clarke County against the City of Athens following the giving of the statutory notice; that, meanwhile, Mr. Lowery received workmen's compensation in the amount of $775.47 (sic) from his employer's insurance carrier, the defendant; that defendant's adjuster told him that defendant never gave the City of Athens any statutory notice of claim; that he had not discussed handling the case for the defendant insurer prior to representing Mr. Lowery; that his contract with Mr. Lowery provided that plaintiff was to receive one-third of any settlement or recovery; that he settled the case against the city for $3,750; that the city's insurance carrier remitted the settlement to plaintiff in two checks, one payable to Mr. Lowery and the defendant, in the amount of $775.45 (sic) (as appears from the copy of the check in evidence) and the other payable to plaintiff and Mr. and Mrs. Lowery, for the balance; that he deducted his one-third of the larger check and remitted the balance thereof to the Lowerys; that he sent the smaller ($775.45) check to the defendant, in care of its adjuster, along with a bill (plaintiff's Exhibit 1) for "Attorney fees in connection with Thomas Lowery and Mrs. Thomas Lowery, claim No. L67517-20," in the amount of $258.49; that the claim manager of the city's (defendant's?) insurer returned the bill to him, denying liability therefor; that his clients were the Lowerys; that he had never had any communication with the defendant before billing it for one-third of the amount of the check sent to it; that the basis of his claim is that he had collected the money, and the defendant, which would not have recovered at all except for his efforts, had been unjustly enriched. The attorney for the insurance carrier of the City of Athens testified that his file contained the defendant's notice of its subrogation claim (as provided by Code Ann. § 114-403, as amended by Ga. L. 1963, pp. 141, 145); that he had refused to make the settlement payable in any manner which might have circumvented defendant's lien; and that the $775.45 check was endorsed for deposit by defendant. The plaintiff verified that his client had not received any part of said check.
The court rendered judgment in favor of the plaintiff in the amount of $258.49, from which judgment defendant appeals.
Although the plaintiff designated his action as one for "money had and received," testified that the basis of his action was unjust enrichment, and objected to the defendant's referring to the action as a "suit for attorney's fees," admitting that he was never the attorney for the defendant, the evidence as a whole shows that the amount sought was, indeed, an attorney's fee. The plaintiff himself must have realized this, since he not only acknowledged the money as his attorney's fee several times in his testimony, but also specifically designated it as such in the bill he sent to the defendant. According to the plaintiff's own testimony, the portion of the $775.45 recovery he claimed (one-third) was that stipulated in his contract for attorney's fee with his client, Mr. Lowery.
"Ordinarily, the services of an attorney must be paid by the client who employs him. Hill v. Bush, 206 Ga. 543 (1) ( 57 S.E.2d 670)." Builders Supply Co. v. Pilgrim, 115 Ga. App. 85, 89 ( 153 S.E.2d 657). "The relation of attorney and client is created by contract; and litigants who have not thus assumed liability for attorney's fees can not generally be held liable therefor, although they have been benefited, directly or indirectly, by the attorney's services." Eckford v. Borough of Atlanta, 173 Ga. 650, 652 ( 160 S.E. 773); Christian Women's Benev. Assn. v. Atlanta Trust Co., 181 Ga. 576, 581 ( 183 S.E. 551). See also 7 AmJur2d 166, Attorneys at Law, § 205; 7 CJS 1041, Attorney and Client, § 175. The fact that the defendant was benefited by the plaintiff's services in obtaining a settlement with the third party tortfeasor, out of which fund the defendant received reimbursement for the workmen's compensation payment made to its insured's employee, Mr. Lowery, does not make it liable to the plaintiff for such incidental benefit. Plaintiff's motive for suing the third party tortfeasor, it must be assumed, was to obtain an adequate recovery for his own client and, thereby, an attorney's fee for himself, rather than to obtain reimbursement for the defendant. Even if it had been possible for the defendant to proceed directly against the city for such reimbursement, this would not have been necessary, since it could, and did, obtain a statutory lien against the injured employee's net recovery under the provisions of Code Ann. § 114-403 (Ga. L. 1963, pp. 141, 145).
While the statutory provision that this lien is against the net recovery, means that attorney's fees and expenses are deducted in priority to the employer's lien and before there is any excess for the employee, "[i]f the sum recovered by the employee is more than enough to pay attorney's fee and reimburse the carrier, the carrier is reimbursed in full, and is not required to share the legal expenses involved in obtaining the recovery." Larson, The Law of Workmen's Compensation, Vol. 2, p. 210, § 74.32, Fees, Expenses Interest. The plaintiff testified that his fee, under his contract with his client, was to be "one-third of any settlement or recovery." The total amount of his client's recovery from the city was $3,750. The fact that $775.45 of this was paid to the defendant rather than to his client, does not make the defendant liable for the attorney's fee on that portion of the recovery. The check for $775.45 from the city's insurance carrier to the defendant merely reimbursed the defendant for its previous payment to the client, therefore, and did not decrease by that amount the client's total recovery, upon which he owed the one-third as attorney's fee. The plaintiff's fee, then, was one-third of the client's total recovery of $3,750, or $1,250. Even though it was not done, the larger check from the city's insurance carrier, made payable to the plaintiff, his client and his client's wife, was adequate for the plaintiff to have deducted his entire $1,250 fee therefrom, leaving the balance thereof as a net recovery. There is no evidence of any fixed amount to be received by the wife in the settlement as would render the amount of the subrogation payment less than $775.45. The burden to prove such a situation would have been on the plaintiff. The smaller check could have been used simply to facilitate the reimbursement of the defendant, the purpose for which it was apparently issued, as is indicated by the facts that the amount was the same as the workmen's compensation payment and that the defendant was made a payee thereon. The stipulation covering the disbursement of the money received from the City of Athens necessarily shows that there was sufficient recovery by Mr. Lowery to show that there was an excess sufficient to cover the subrogation check.
Regarding the so-called "conditions" which the plaintiff testified that he imposed upon the defendant in transmitting the check to it, there appears in the record no oral or written evidence embodying such purported conditions, on the reverse side of the check or elsewhere, which might have made the defendant legally liable for the payment of a sum for which the plaintiff's client was otherwise contractually liable. Nothing said hereinabove shall be construed as expressing an opinion as to the liability of the plaintiff's client for attorney's fees at the time of the bringing of this action.
It follows that the court erred in rendering judgment in favor of the plaintiff.
Judgment reversed. Hall and Eberhardt, JJ., concur.