UNITED STATES SUPREME COURT DECISIONS ON-LINE

Decided: that an attorney at law, as such, has authority to submit the cause to arbitration. But an attorney at law, merely as such, has no right, strictly speaking, to make a compromise for his client.

Although an attorney at law has no right to make a compromise, yet a court will be disinclined to disturb one which was not so unreasonable in itself as to be exclaimed against by all, and to create an impression that the judgment of the attorney has been imposed upon, or not fairly exercised. But where the sacrifice is such as to leave it scarcely possible that, with a full knowledge of every circumstance, such a compromise could be fairly made, there can be no hesitation in saying that the compromise, being unauthorized, and being therefore in itself void, ought not to bind the injured party. Though it may assume the form of an award or a judgment at law, the injured party ought to be relieved against it.

This was an appeal from the Circuit Court for the District of Massachusetts in a suit in chancery brought by Holker and others his assignees against Parker to set aside an award made under a rule of court in a suit at law in the same court between Holker and Parker.

The case, as stated by MR. CHIEF JUSTICE MARSHALL in delivering the opinion of the Court, was as follows:

In the year 1782, John Holker, one of the plaintiffs in this cause, Daniel Parker, the defendant, and William Duer, who is dead insolvent, formed a trading company under the name and firm of Daniel Parker & Co., of which Daniel Parker was the acting partner. After receiving large sums of money and contracting debts to a great amount, Parker absconded from the United States without making any settlement of his accounts. In the month of December, 1785, Holker commenced a suit against Parker in the Court of Common Pleas for the County of Philadelphia, where the said Parker had resided and carried on the business of the co-partnership. This suit was commenced by attaching the effects of Parker in the hands of Thomas Fitzsimmons. In June, 1788, a judgment in favor of the said Holker was rendered on the verdict of a jury for the sum of £47.231 12s. 9d. Pennsylvania currency, equal to $125,951.03. The property attached, amounting to $5,000, was sold and paid to the said Holker towards satisfying this judgment.

Other attachments were laid by Holker on the property of Parker, and proceedings were also instituted against him by other persons, creditors of the company. On 31 December, 1788, while these were depending, an indenture of six parts was made and executed between said Parker by Andrew Craigie, his attorney, of the first part, John Holker of the second part, Samuel Rogers of the fourth part, by Andrew clubjuris

Page 11 U. S. 437

Craigie, his attorney, Royal Flint of the fifth part, and sundry creditors of Daniel Parker & Co. of the sixth part. William Duer was named in the said indenture as of the third part, but never executed the deed.

The object of this deed was to convey to Royal Flint in trust for the creditors of Daniel Parker & Co. and for other purposes therein specified, the partnership effects of Geyer, De la Lande, and Fynye, to which Parker represented himself to be entitled, and which he had previously conveyed to the said Samuel Rogers. By this indenture the said Parker covenanted, among other things, that he would, within eight months from the date thereof, repair to Philadelphia personally or by attorney, and then settle all the accounts of the company. It was further agreed that the said Parker & Holker should, within eight months from the date of the first indenture, reciprocally give bonds to each other in the penal sum of £50,000 Pennsylvania currency conditioned for the settlement of their respective accounts within ten months thereafter, and for payment of their several balances to Royal Flint and his successors for the trusts in the said indenture mentioned. The bonds to be assigned to the said Royal Flint or his successors in trust as aforesaid.

In consideration of the premises, the said Holker, and also the said parties of the sixth part, severally covenanted with the said Parker that they would immediately

"vacate, annul, discontinue and withdraw all suits, actions, and proceedings whatever, which they or any or either of them shall or may at any time or times heretofore have commenced, brought or prosecuted against the said Daniel Parker or his estate, goods, chattels, or property in any court or place whatsoever in Europe or America, and shall and will place him, the said Daniel Parker and his property in the same situation as they were before the commencement of such suits or proceedings."

And the said Holker further covenanted not to commence or prosecute any action against him, the said Parker, for any balance that might be due until after eighteen months after the eight months aforesaid should have expired.

The bonds were given, but Parker failed to comply clubjuris

Page 11 U. S. 438

with the covenant for settling the accounts of the co-partnership transactions.

The effects of Geyer, De la Lande, and Fynye, which were assigned to Royal Flint, being insufficient to satisfy previous charges on them, proved totally unproductive.

Debts to a large amount due from Daniel Parker & Co. were recovered from Holker and paid by him.

On 21 July, 1796, Holker made a power of attorney to James Lloyd, of Boston, for the purpose of recovering from the said Parker the monies supposed to be due to him, and at the same time transmitted to the said Lloyd copies of the judgment obtained by him against Parker in June, 1788, and of a judgment obtained against Holker by John Ross for the sum of £12,933 7s. 1d. Pennsylvania currency, equal to $34,488.95. This judgment was for a debt due from Daniel Parker & Co. was rendered subsequent to the indenture of six parts hereinbefore stated, and had been discharged by Holker.

Mr. Lloyd placed these papers in the hands of Mr. Lowell an attorney at law of Boston, who instituted an action of debt on the judgment obtained by Holker against Parker. This suit was brought by way of attachment. At the June term, 1797, Daniel Parker appeared by his attorney, and filed four several pleas in bar of the action, in all of which the indenture of six parts hereinbefore stated was pleaded as a release of the judgment on which the suit was instituted.

The plaintiff's attorney prayed oyer of the instrument of which the defendant had made a profert in his pleas, and, in the October term, 1797, not having replied or demurred to the said pleas, entered into a rule of court, by which the said action and all demands were referred to Nathan Goodale, George Deblois, and Fisher Ames, Esqs., with liberty reserved to Holker of disagreeing to the rule thirty days after he should receive notice of it.

Notice of this rule was received by Holker in August, 1798, but he does not appear to have been informed clubjuris

Page 11 U. S. 439

that any liberty of dissenting from it was reserved to him. It would seem that he submitted to it with some repugnance and under the idea that it was unavoidable.

On 8 September, 1798, Holker made an affidavit, which he transmitted to his attorney, stating many reasons why the referees should not immediately proceed to make up their award in the case and showing that in the settlement of the complex accounts between Parker and himself, much testimony would be required respecting transactions both in Europe and America, and that so much depended on the entries in the books of the bank at Philadelphia that the settlement ought to take place there. He declared, however, that he would endeavor to be prepared to appear before the arbitrators in the succeeding months of November or December, or sooner if practicable.

In October, 1798, the rule of reference was made absolute. Mr. Holker had assigned this claim to Mr. Lowell, the father of his attorney at law, the administrator of Mr. Russel, so far as would be necessary to satisfy a debt due to Russel's estate. On 6 November, 1798, Mr. Lloyd wrote a letter to Mr. Holker informing him that his affidavit had been laid before the court, in consequence of which his cause had been continued until the succeeding June term. On the 23d of the same month, Mr. Lloyd addressed another letter to Mr. Holker, informing him that the "referees would attend to his business whenever it might be convenient for him to appear before them."

Suits had been instituted against Holker in Philadelphia in which he had been compelled to give bail in large sums. He then resided in Virginia, and was arrested in Baltimore by his bail in April, 1799, and carried to Philadelphia, where he was enabled to obtain other bail on no other condition than the express stipulation of not proceeding to Boston. On 18 May, he made an affidavit before the Mayor of Philadelphia, stating that he was prevented by this detention from proceeding to Boston in order to attend the referees in person as he proposed to do. That he was about petitioning the Supreme Court of Pennsylvania for a special court, which he had reason to believe he clubjuris

Page 11 U. S. 440

should obtain in the course of the succeeding July of August, but that in the meantime it was utterly out of his power to go to Boston. This affidavit was transmitted to his attorney in Boston. On 24 June, Mr. Lowell addressed the following letter to Mr. Holker:

"I received your affidavit through my friend Mr. Lloyd, and with much difficulty obtained a delay. The referees adjourned to the first of September next, when the cause will go on at all events, whether you are here or not. As to success without your aid it is out of the question, as we know nothing of the cause, and as your subsequent covenants with Parker will appear to annihilate your claims under the judgment. Whether you will eventually succeed in getting a nominal judgment against Parker if you do attend you alone can judge. I am rather inclined to think I could persuade the adverse counsel to give us a judgment for the whole or part of the property attached ($7,200). They appear to be heartily sick of defending Parker, as they know him to be immersed beyond hope of recovery, and are doubtful whether they will be compensated for their trouble. Whether some arrangement of this sort would not be advantageous to you if it can be effected, considering your doubt of recovery, and the certainty of Parker's inability to pay what may be decreed, you best can judge."

"Whatever you do on this point, let it be explicit, as Mr. Lloyd and myself mean to avoid all responsibility and every hazard of future blame. I beg you will inform me speedily what we shall do about your action, as the referees will meet in sixty days or thereabouts."

This letter was transmitted to Mr. Holker by Mr. Lloyd, who subjoined thereto the following letter:

"Immediately on the receipt of your favor covering a memorial to the circuit court, I delivered them both to Mr. Lowell who duly attended thereto: the result is communicated in the foregoing letter from that gentleman. His obtaining the delay is what could not have been calculated on. The court would

Page 11 U. S. 441

not have granted it. To avoid expense in feeing counselors, it was acceded to by the other party."

"The period now fixed can no longer be protracted on any account whatsoever. From what I can learn of the disposition of the defendants, it is truly depicted to you in Mr. Lowell's letter: they would, as he observes, probably confess judgment for the greater part if not the whole of the property attached. It must be understood that they would do this only on the condition that they should receive a full discharge from you on account of Daniel Parker. You will please to let me receive your determination as soon as may be convenient."

These letters were never answered by Mr. Holker. A petition had been presented by Holker to the Supreme Court of Pennsylvania to have his person liberated on delivering up all his property for the use of his creditors in pursuance of a law of that state. This petition came on to be heard on 13 September, 1799, but was continued from time to time until 14 April, 1800, when by the judgment of that court he was discharged from custody.

The referees made the following report to the circuit court during the October term, 1799.

"The subscribers, pursuant to the annexed rule, met at the office of Nathan Goodale on 8 June, 1799, after notifying John Lowell Jr. Esq., attorney for the plaintiff, John Holker, and William Hull, Esq., attorney for said Daniel Parker, the said attorneys attending our meeting and John Lowell Jr., Esq., in behalf of said Holker, having asked a delay or adjournment until the first day of September then next, now last past, and on the said first day of September, the referees having again met, and the said parties appearing by their attorneys, and having been fully heard, the said meeting was again adjourned at the request of the said Lowell until this day, being 23 October, 1799, when the said attorneys having again appeared, and nothing further being offered in support of their several allegations we do award that the said John Holker, the plaintiff,

Page 11 U. S. 442

recover against the said Daniel Parker the sum of $5,000 in full satisfaction and discharge of all debts, costs, judgments, executions, accounts, controversies, claims or demands, subsisting between them, of what name or nature soever."

The award was read and accepted, and judgment immediately rendered for $5,000 without costs, which sum was received by the attorney of Mr. Holker, and the balance, after deducting costs and commissions, was paid to the administrator of Russel, to whom Holker was indebted and to whom he had made an assignment of his claims against Parker, so far as it should be necessary to satisfy the said debt.

It appears that the evidences in support of Holker's claims, other than the two judgments which have been mentioned, were never in the hands of his counsel, and were consequently never laid before the referees, that the counsel for Holker never controverted the allegation made on the part of Parker, that the judgment obtained by Holker in the Court for the County of Philadelphia was released by the indenture of six parts, nor ever insisted that it was to be considered as prima facie evidence subject to such objections, or to such discounts as Parker might make. The accounts between the parties do not appear to have been examined, nor the judgment of the arbitrators exercised on any part of the case. The award for $5,000 was made with the consent of Parker's attorney, and without objection on the part of Holker's attorney. That transaction is thus stated by Mr. Lowell:

"Sometime before the trial, the counsel for Parker did lead this deponent to understand that as they were desirous of closing the affair, they should not object to our taking judgment for the amount attached, but the deponent wholly and absolutely did reject the said proposal. He however stated it to said Holker and begged his instructions thereon, but said Holker never replied to said letter; when the referees met and this deponent found they would proceed to final judgment against his client for defect of evidence he, this deponent, stated the former offer, but the adverse counsel refused to agree to it but said that they had no objection to our taking judgment if the referees saw fit for $5,000 instead of

Page 11 U. S. 443

$7,200 or thereabouts, the amount attached, though they declared they had doubts whether on a final liquidation there would be so much due. The referees, taking their admission against them, awarded that sum. But it was never agreed by this deponent that such a sum should be taken in full of the said Holker's demands. It was no compromise, nor was there any secret understanding; but he deemed it his duty to obtain even this sum rather than an award, which would have been otherwise made, that the said Parker owed the said Holker nothing."

The attorney for Mr. Parker whose deposition is also in the record states the transaction thus:

"After a considerable examination of the accounts by the arbitrators without coming to a decision, Mr. Lowell agreed that they should award to Mr. Holker $5,000 in full of all demands, provided I would agree to give security for the payment of the money to Mr. Holker or to his attorney, Mr. Parker being abroad. I agreed to it. We both agreed to it. It was done. When Mr. Lowell and myself had agreed, we stated our agreement to the arbitrators."

To another interrogatory the same witness answers: "I did not recommend to the arbitrators any award until the parties had agreed upon a sum; myself and Mr. Lowell."

Two of the arbitrators are dead. The deposition of the third has been taken. He says that the award was founded entirely on the admission of Mr. Parker's attorney.

The correspondence of Mr. Holker with his attorneys showed his confident reliance on the judgments placed in their hands as amounting to prima facie evidence, and that his claims considerably exceeded those judgments. The evidence now taken in the cause swells them to a very great amount.

There is evidence that Daniel Parker was at the time much embarrassed in consequence of deep speculation in the national debt of France, and that he was certainly believed by the attorney of Mr. Holker to be insolvent. This was at that time the general impression. It was afterwards known to be erroneous. clubjuris

Page 11 U. S. 444

Mr. Holker instituted a suit against Mr. Parker in France, where it was determined that he was barred by the judgment rendered against him in the circuit court of the United States on the award.

Holker and his trustees have now brought this suit in the circuit court of the United States setting in chancery praying that the award may be set aside in whole or in part, that the accounts between Holker and Parker may be settled, and that Parker may be decreed to pay the sum which shall appear to be due. Parker has pleaded the award and judgment thereon in bar of these claims and of any account.

On a hearing, the bill of the plaintiffs was dismissed, and from that decree an appeal was made to this Court. clubjuris

Page 11 U. S. 449