mer, and the custom was known to Thomas Wil- | the defendant never objected to the account as son at the time he ordered the purchase for the stated, nor to the sale of stock as made. He defendant. never demanded the stock, nor offered to pay for it and take it up, and in fact admits when sworn in his own behalf that he did not at any time intend to pay for it, and take it up in case it declined in price. 3d. That whenever the market value of the stock falls below a price that will fully reimburse the broker for all outlays and expenses, it is the custom between brokers, as well as between brokers and their customers, to sell out the latters' stock at the Stock Exchange without notice, and hold the customer for the loss; this custom being likewise known to Mr. Wilson. 4th. That plaintiffs, by letter dated September 23, 1872, gave notice to defendant to take up by 12 M. next day the stock already pledged by them as collateral, and advise them by telegraph. Again by letter on the 8th October they notified defendant to pay for and take up the stock. No answer was ever sent nor any attention paid by the defendant to either of these letters. 5th. That on the 22d day of September, 1873, the parties to whom the same were pledged sold out two hundred shares of the defendant's stock at the Stock Exchange, Philadelphia, at $48 per share, and on the 18th of October, the remaining one hundred shares at $504, the loss of price being borne by plaintiffs; that the prices received were the market prices of the stock on the respective days of sale, and that between those dates the market price dropped as low as $45; that the highest price attained since the last sale of defendant's stock was $59 per share, 27th of March, 1874, and its market value at time of trial was about $15 per share. 6th. That notwithstanding the sale of the two hundred shares, the plaintiffs at any time up to the 18th of October (ten days after the last notification to defendant to take up his stock) were able and willing to deliver to defendant three hundred shares of Philadelphia and Reading stock on payment of balance due by him. Are the plaintiffs or the use party to whom their claim has been duly assigned, entitled to recover on the facts as found? The stock having actually been bought in for the defendant, and the certificates delivered to the plaintiffs, the transaction was legitimate so far as they were concerned, and was not a gambling transaction, notwithstanding the defendant on his part did not intend to pay for and take up the stock so purchased. (Smith v. Bouvier, 20 P. F. S. 325; Maxton v. Gheen, 25 P. F. S. 166.) Other questions, however, are raised affecting the right of recovery. Ist. Did the defendant have actual previous notice of the sales? Of course the letter of 23d September was not notice of an intended sale on the 22d, for that had already occurred, and the letter of the 8th October, as a mere notice of sale was defective in not naming the time and place. 2d. Are the customs noted in the 2d and 3d conclusions of fact valid and binding upon the defendant? They will be considered separately I can perceive no real objection to the validity of a general usage that a broker may use his customer's stock as collateral to carry it for the customer. Such usage contravenes no statute or principle of public policy. The customer can, of course, avoid all trouble in this respect by paying for his stock in full, but where, as here, he only pays a small percentage of its value, while his agent the broker must provide for the 7th. Notice that the stock had been sold was balance, it would not seem unreasonable, that the promptly sent to and received by the defendant broker should for that purpose pledge it as colto which he paid no attention; and from the lateral. Knowledge of this custom on the part time of purchase in May, 1872, down to the 1st of Mr. Wilson, who ordered plaintiffs to purchase of January, 1874, statements in detail of the ac- the stock for defendant, is to be imputed to the counts between the parties were at regular inter-defendant himself. I, therefore, regard it as vals of about thirty days sent to and received by within the known terms and scope of the broker's defendant. These statements taken together agency, and that they had authority not only to show a purchase of the stock and its price; the purchase the stock, but to deal with it in the charges of interest and commission, and $75 manner they did in order to carry it for the deextra interest as cost of carrying the stock; the fendant. credit of dividends received; the sale of two hundred shares September 22, 1873, at $48 and one hundred shares October 18, at $504, and that the balance claimed by plaintiffs the 1st of January, 1874, was $1389.41. 8th. That each statement of the account received by defendant contained the request, "Please examine and report on this account as soon as convenient," but down to the time of trial As to the custom to sell without notice, under the circumstances mentioned in the 3d finding of fact, I assume that if good against the plaintiffs, it was binding upon the defendant their principal. I am not unmindful of the general rule of law that a sale of collateral should be upon notice of time and place of sale, but, as said by Judge MITCHELL in Colket v. Ellis (32 Legal Intelligencer, 82), this is a privilege that The financial panic of 1873 was almost unprecedented, and parties were bound to act without unnecessary delay. For nearly a month after the sale of the two hundred shares, the plaintiffs were still in a position to furnish the defendant the whole number of shares. may be waived, and the waiver be evidenced as well by a custom known to and acquiesced in by the parties as by express contract. The custom was known both to Mr. Wilson and the plaintiffs. There was then at least constructive notice of sale to them, and constructive notice to a servant is held to be notice to his principal. (Whitesall v. Crane, 8 W. & S. 373.) As between the The propriety and necessity of his acting with plaintiffs and the actual holders of the pledge, reasonable promptness if he objected to the sale the sale was undoubtedly sanctioned by the cus- as made is obvious, for there was still time for tom. It bound the plaintiffs (themselves brokers) the plaintiffs to correct the error, if one had been and through them, as I believe, their principal, committed. From the failure of the defendant this defendant; for if correct in the view already to object to what had been done, the plaintiffs expressed that they had authority under the cir- might reasonably infer that he acquiesced, and cumstances to make the pledge, the latter was sub-after the lapse of years it is altogether too late to ject to the incident of sale in pursuance of the make the objection at the trial. Treating the custom. I, therefore, hold both customs valid account rendered 1st January, 1874, as an acand lawful and binding on both parties. count stated, I am of the opinion that the plain3d. Aside from these customs, however, and tiffs' use party is entitled to recover the amount even conceding that they do not vary the gene-shown due by said account, notwithstanding it ral rule already stated so as to affect the defend- includes a charge of $75 extra interest, such exant, I am of the opinion that, since the defend-tra interest as well as the other charges being for ant by his own admission never intended to pay actual disbursements on part of plaintiffs in defor and take up the stock, he did not act in good fendant's behalf. faith, and is estopped from complaining of want of notice of sale or any other formality in connection with it. The very object of notice is to enable a party to come forward, pay up and prevent the sacrifice of the pledge, but when he says he would not have availed himself of such notice, nor have interfered to protect the stock by paying the amount he still owed upon it, of what advantage would it have been to him to have had notice, or how has he been harmed by the want of it? The stock was not sold below the market price, and under no circumstances could it be expected to bring more, if he himself was unwilling to interfere. The result to the defendant was, therefore, as favorable as if he had had the fullest notice of the intended sale. 4th. Independently of any of the foregoing considerations, there are further reasons sufficient in my judgment to entitle the plaintiffs to recover in this action. Judgment should therefore be entered at this time against defendant for the sum of seventeen hundred and fifty-nine dollars ($1759.00), being the amount due 1st January, 1874, with interest to this date. The defendant filed numerous exceptions to the findings of the referee, which were dismissed by the Court, and the report confirmed. The defendant thereupon took this writ, assigning for error the dismissal of his exceptions. William L. McLean, for the plaintiff in error. The carrying of stock by a broker for a customer upon a margin creates the relation of pledgor and pledgee between the parties. Gilpin v. Howell, 5 B. 41. McNeil v. 10 Nat. Bank, 55 Barb. N. Y. 59. Corporate bonds and stocks held as collateral securities may be sold like ordinary pledges, after the debt secured becomes due, without judicial The failure of the defendant to object to the process and decree of foreclosure, upon giving sale, within a reasonable time after receiving no-reasonable notice, but the sale must be by public tice, I believe amounts to an implied ratification auction, and the notice must specify the time and (see Kelsey v. Bank of Crawford Co., 19 P. place of it. F. S. 426). And the statements in evidence giving an account of sales, and particularly the balance claimed as due the plaintiffs 1st January, 1874, not being objected to within a reasonable time, constitute an account stated between the parties. (Bevan v. Cullen, 7 Barr, 281; Porter v. Patterson, 3 H. 229.) Diller v. Brubaker, 52 Pa. 498. Markham v. Jaudon, 41 N. Y. 235. Evidence of usage that stocks, held as collateral, might be sold without notice is inadmis What is reasonable time can only be deter-sible. mined upon the special circumstances of each case, as is well illustrated in the opinion delivered in Colket v. Ellis, already cited. Markham v. Sandon, 41 N. Y. 235. But there is no evidence of such usage, or that the plaintiff in error had knowledge of it. March 22, 1881. Chester County v. Barber et al. Attorney and client-Contingent fees-County Commissioners-Power of, to contract with counsel for their fees-Limits of power. If the customer's stock was unlawfully sold, it | Jan. '81, 39. was the duty of the brokers within a reasonable time to make him whole by a tender of an equal number of shares, and any advance upon same between the sale and tender. This was not done. The plaintiff in error had, therefore, the right to set off against the claim of the defendants in error the highest value of the stock between the sale and the tender, which was claimed, but not allowed by the referee. Esser v. Linderman, 71 Pa. 76. Sitgreaves v. Mechanics' Bank, 49 Id. 359. Bank of Montgomery v. Reese, 26 Id. 143. error. A pledge to raise money to carry the stock pledged is a lawful custom; that it was a custom, If was established by the finding of the referee. the broker could not thus hypothecate, the customer could reclaim it from a third party. The notice could be waived by express consent, or by custom. Colket v. Ellis, 32 Leg. Int. 82. The presumption is that the parties dealt under the established custom. Sutton v. Tatham, 37 E. C. L. R. 25. Gilpin v. Howell, 5 B. 42. The defendant is estopped by his intention not to pay for the stock; notice to him would not have served him. His silence was acquiescence. Cairnes v. Bleecker, 12 Johns. 300. Foster v. Rockwell, 104 Mass. 172. The power of County Commissioners to contract with counsel for professional services is limited to binding the county to a reasonable compensation. Inasmuch as County Commissioners act in a fiduciary character, any agreement to return more than a fair compensation is against public policy, ultra vires, and void. Whether or not the English statutes against champerty are in force in Pennsylvania, not decided. MERCUR, GORDON, and GREEN, JJ., dissent. Error to the Common Pleas of Delaware County. Debt, by William E. Barber, Joseph Hemphill, and James W. M. Newlin against the county of Chester, to recover $10,699.17, counsel fees. Pleas, "nil debet, payment with leave, etc." A charge of venue having been granted from Chester to Delaware County, the cause was tried before CLAYTON, P. J. The following facts appeared: The suit was brought on an agreement, entered into between the plaintiffs, the two former of whom were members of the bar of Chester County, and the latter a member of the Philadelphia bar, and John Hey, David Ramsay, and John McWilliams who were at the time Commissioners of Chester County, and signed as such. The agreement was dated March, 1877, was witnessed, and the county seal was affixed by the clerk; its material clause was as follows: Said Commissioners having retained the parties of the second part to represent Chester County upon an appli cation, and for the proceedings to secure a rebate to said county, for the amount of taxes added by the State The rendering of accounts and the silence Revenue Board, for the years 1875, 1876, and 1877, to made an account stated. Smedley v. Williams, 1 Pars. Eq. Cas. 359. Ruffner v. Hewitt, 7 W. Va. 585. Lockwood v. Thorne, 11 N. Y. 170. Smith v. Marvin, 27 Id. 137. McClelland v. West, 20 Sm. 187. March 21, 1881. THE COURT. Upon the facts, as found by the referee in the Court below, we think the conclusion at which he arrived was entirely right. We cannot review his findings of fact. PER CURIAM. Judgment affirmed. [See Act of June 10, 1881, P. L. 107.] the return of said county: It is hereby understood and agreed by the parties hereto, that the parties of the second part shall be paid a sum equal to fifty per centum of the amount which shall be finally adjudged to have been illegally charged to the said county of Chester as aforesaid, and in the event of the said suit being decided against the said county of Chester, then the parties of the second part are to make no charge for their services, and are further to relieve the parties of the first part from all costs and expenses in the premises." It appeared that in 1877 the attention of the County Commissioners was directed to the action of the State Board of Revenue Commissioners in their tri-annual assessments relating to the returns of moneys at interest in Chester County; that the plaintiffs expressed the opinion that said action was illegal and might be avoided; and that after several interviews running over a period of about a year, the above agreement was entered into. The testimony was uncertain and conflicting as to whom the suggestion, finally adopted, first came from. The plaintiffs made | tiffs, was at the time of the making of the alleged application to the Auditor-General in pursuance contract, counsel for the defendant, he cannot of the agreement, but were refused. A petition recover in the present action. Answer. To to the Supreme Court for a mandamus was re- this point I give the same answer as that given fused; and finally an appeal was brought in the to the third point. Common Pleas of Dauphin County, which resulted in success, and a credit settlement to the county for $21,398.34, for the tax charges of 1875, 1876, and 1877. It appeared that Barber was at the time the standing and salaried counsel of the County Commissioners, and that Newlin had entered into substantially similar agreements with a number of other counties similarly involved. This suit was thereupon brought under the agreement to recover fifty per cent. of the amount for which the county obtained credit with the State. The defendant presented the following points: 1. The alleged contract between the plaintiffs and defendant, put in evidence in this case, providing that they should receive one-half part of the results of their efforts, is against the policy of the law, and is incapable of enforcement by action. The jury is therefore instructed to disregard it. Answer. The contract, if fair and free from fraud, is not against the policy of the law, and, if the plaintiffs have faithfully performed their part, the defendant must keep the other part. 2. There is no evidence in this cause which entitles the plaintiffs to anything more than a just and reasonable compensation for the professional services rendered by them to the defendant. Answer. The plaintiffs are entitled to a verdict for the sum stipulated to be paid by the written agreement, provided the jury find that there was no fraud, false representation, or over-reaching on the part of the plaintiffs in the making of the agreement. If the jury find that the agreement was fairly made, and that it is free from any taint of fraud, then the "just and reasonable sum" to which the plaintiffs are entitled, is the amount named in the agreement, with interest thereon. 5. As this is a joint action, and as Mr. Barber is not entitled to recover, the verdict must be for the defendant. Answer. I do not say that Mr. Barber is not entitled to recover; as before stated, unless the jury find some fraud, false representation or undue advantage on his part, he is entitled to recover the sum agreed upon. But if the jury should find that he is not entitled because of fraud or deception practised by him, or because he has improperly exerted his influence as attorney for the Commissioners, then the other plaintiffs cannot recover, as they would be bound by his acts. I say to the jury that the salary of $150 a year, paid to Mr. Barber, did not include his compensation for the services here claimed. 6. The Commissioners of Chester County had no lawful authority to contract with the plaintiffs that the county would pay them one-half part of any abatement which they might secure, upon any claim made by the Commonwealth against said county, and the alleged contract was therefore not binding upon the defendant. Answer. If the Commissioners were not deceived, defrauded or improperly influenced, they had the right to make the contract, it apparently being for the benefit of the county. Verdict for plaintiffs for $11.540.16, and judgment thereon, whereupon the defendant took this writ, assigning for error the answers to its points. Wayne Mac Veagh (with whom was H. T Fairlamb), for the plaintiff in error. Fifty per cent. of the claim was largely in excess of a fair professional compensation; especially from a perfectly solvent client. Whether .contracts for contingent fees be incapable of enforcement or not, they are to be narrowly scrutinized. Ex parte Plitt, 2 Wallace, Jr., 454. But this contract is tainted with champerty, and while the question has never arisen in this State, such bargains have frequently been condemned in others. Elliott v. McClelland, 17 Ala. 206. 3. Inasmuch as Mr. Barber, one of the plaintiffs, was at the time of the making of the alleged contract, counsel for the defendant, and this fact was within the knowledge of the other plaintiffs, no recovery can be had upon the contract in question. Answer. If the jury find that Mr. Barber actually took advantage of the Commissioners, and caused them by reason of his influence with them as their counsel, to enter into The contract is also void because (1) it was an unreasonable agreement, and that the agree- shared in by the standing counsel of the County ment would not have been signed except through Commissioners, and (2) it was against public his counsel and advice, for his own benefit, then | policy. Under it the plaintiffs became part the plaintiff cannot recover. owners with the County Commissioners of the 4. Inasmuch as Mr. Barber, one of the plain- claim. Darlington's Appeal, 5 N. 512. The plaintiffs are entitled to full compensation, but not for that provided in the contract. W. B. Waddell and D. W. Sellers, for the defendants in error. The jury have determined that there was no fraud, over-reaching, or false representation on the part of the counsel. The contract was within the powers of the Cooper v. Lampeter Township, 8 W. 127. Schwamble v. Sheriff, 10 H. 18. for the amount of taxes added by the State Revenue Board for the years 1875, 1876, and 1877, and a return thereof to the county, that the attorneys should be paid for their services fifty per centum of the amount which should be recovered or allowed to the county on settlement; and if unsuccessful, no charge was to be made for services, and the county was to be relieved from all costs and expenses in the pre mises. In pursuance of this agreement, the plaintiffs entered upon their employment and succeeded in obtaining a credit from the State in favor of the county of the sum of $21,398.34. They then brought suit upon the said agreement for County of Allegheny v. Western Pa. Hospital, 12 their fees and recovered a verdict in the Court Wr. 126. Jefferson Co. v. Slagle, 16 Sm. 202. The Commissioners, having acted within their powers, are to be presumed to have contracted for a proper compensation. Kennedy's Appeal, 4 B. 149. Stroecker v. Hoffman, 7 H. 227. Rooney v. Second Ave. R. R. Co., 18 N. Y. 368. An agreement for a contingent fee is valid and enforceable. Porter v. Parmly, 39 N. Y. 219. Stanton et al. v. Embrey, Admr., 3 Otto, 556-7. That Barber was solicitor for the County Commissioners is immaterial, for his salary was not to compensate him for services rendered as an advocate. below for $11,540.16. It is proper to state that one of the plaintiffs was the regular solicitor of the County Commissioners at the time the agreement was made. The whole case turns upon the single question of the power of the Commissioners to bind the county by such an agreement. Nor The power of counsel to contract with their clients for contingent fees is not necessarily involved, and we shall not therefore discuss the legality or the ethics of such transactions. need we stop to consider whether the agreement as set out in the narr. is champertous, nor whether the English statutes in regard to this offence are in force in this State. We rest our decision upon the broad ground, that the Commissioners had no power to bind the county by such a contract; that it was against public policy, and therefore null and void. The statute of 33 Edward I., chapter 3, relat-The learning and industry of the plaintiffs have ing to champerty, is not in force in Pennsyl vania. Robert's Digest of the British Statutes, 96, note. Patten v. Wilson, 10 C. 299. 6 Pennsylvania Law Journal, 309. Maus v. Montgomery, 11 S. & R. 329. failed to call our attention to any case which sustains such a contract, nor have I been able to find one. Wylie v. Coxe (15 Howard, 415); Trist v. Child (21 Wallace, 441); Wright v. Tebbitts (1 Otto, 252); Stanton v. Embrey (3 Otto, 556), and McPherson v. Cox (6 Ibid. 404) are not in point. It is true these cases rule that a contract for a contingent fee in the prosecution of a claim against the government, when fairly made, may be enforced. They are all cases, May 2, 1881. THE COURT. This was an however, in which the contract was made with a action of debt brought in the Court below against private claimant. That an attorney may make the county of Chester by three members of the any contract he sees proper with his client in bar, two of whom reside in said county and the regard to his compensation, where the client is a other in the city of Philadelphia. The action private citizen, and acting in his own behalf and was founded upon an agreement under seal, pro- with reference to his own property, is not deperly executed by the three plaintiffs and the nied. All that the law will do in such case is to three gentlemen who were at the time the Com-scrutinize the transaction and see that it is fair and missioners of said county. The seal of the that no unconscionable advantage has been taken county is affixed and attested by the clerk of either of the necessities or the ignorance of the said Commissioners. The agreement provides that the Commissioners have retained the plaintiffs to represent Chester County in proceedings to secure a rebate to the county from the State client. How stand the facts here? There was a large fund in the treasury of the State, which belonged either to the latter or to the county of Chester. |