Opinion
17539, 17540.
SUBMITTED JULY 10, 1951.
DECIDED SEPTEMBER 12, 1951. REHEARING DENIED OCTOBER 11, 1951.
Petition for injunction. Before Judge McClure. Chattooga Superior Court. April 3, 1951.
Horace T. Clary, Jesse M. Sellers, and Jesse M. Sellers Jr., for plaintiff.
Wright, Rogers, Magruder Hoyt, for defendant.
An attorney at law cannot recover the whole or any part of a contingent fee based upon an express contract of employment, where the contingencies provided for by the contract have not been brought about, although the entire service of the attorney has been performed. The happening of the contingency is a condition precedent to the right of the attorney to recover for his services, and the precise event which was contemplated in the contract of employment must occur.
Nos. 17539, 17540. SUBMITTED JULY 10, 1951 — DECIDED SEPTEMBER 12, 1951 — REHEARING DENIED OCTOBER 11, 1951.
Jesse M. Sellers filed suit in Chattooga Superior Court against the City of Summerville, a municipal corporation, to recover damages for the alleged breach of a contract of employment of the plaintiff as an attorney. Certain general demurrers of the defendant were sustained and the petition was dismissed. The case is here on exceptions to such order, and also upon a cross-bill of exceptions complaining that the court erred in overruling certain general and special demurrers of the defendant.
The petition alleged in substance as follows: On March 16, 1946, the plaintiff entered into a contract of employment with the defendant to represent it as an attorney at law, in testing the legality of the claim of Georgia Power Company that it had a valid and binding franchise with said city for the use of its streets. Attached to the petition as an exhibit was an extract from the minutes of the mayor and council, dated March 11, 1946, which in substance authorized the mayor of the city to contract with the plaintiff "respecting the franchise of the Georgia Power Company for the furnishing of electricity for the City of Summerville, the fee basis to be entirely a contingent one, that is to say, is [if?] results are not obtained in sustaining his contention that the franchise of the Georgia Power Company is not a legal and binding one upon the City of Summerville, then he is to receive no compensation for his services respecting said franchise. If his efforts are successful, and the franchise of the Georgia Power Company is held or agreed to be not binding upon the City of Summerville, then and in that event he is to be paid 20% of the value of any new franchise or whatever value the operation by the city of the selling of power or electricity for power is worth to the City of Summerville, the decision to be arrived at by the Mayor and Council of the City of Summerville and Jesse M. Sellers." Also attached to the petition was a copy of the alleged contract between the city and the plaintiff, wherein it is recited that the city employed the plaintiff "for the purpose of testing the legality and/or binding effect of a certain franchise purporting to have been granted by the City of Summerville on the 13th day of June, 1924, to the Georgia Railway Power Company, and to do all things necessary on behalf of the City of Summerville in the procurement of a new franchise necessary and proper for the erection and maintenance of poles, towers, lines, and/or to the appliances and connections for the business and purpose of transmitting, conveying, conducting, using, supplying, and distributing electricity for light, heat, power, and other purposes for which electric current may be useful or practical with whomsoever the City of Summerville may desire to grant or contract, a franchise, if it be desirable and practical to contract such a franchise. In the event the efforts of the said Jesse M. Sellers in having declared the franchise heretofore granted to the Georgia Railway and Power Co. and its successors and assigns, to be of no binding effect upon the City of Summerville and his efforts in the procurement of another franchise, if the Mayor and Council of the City of Summerville consider another franchise the most practical way to handle the power distribution, the Jesse M. Sellers is to receive as his compensation for his skill and work 20% of whatever sum and amount the City of Summerville may contract a new franchise, if one is contracted." The contract further provides that the mayor and council agree to co-operate with the plaintiff in his efforts to have the franchise heretofore granted to Georgia Railway and Power Company held of no binding effect upon the City of Summerville. To that end, it was agreed that the city should pass such ordinance or ordinances as the plaintiff may draft for the purpose of having the franchise repealed, and to do any act toward repealing the franchise heretofore granted or granting a new franchise or granting a new contract providing for municipal distribution of electricity.
The petition alleged that, pursuant to this employment, the plaintiff proceeded to have several conferences with officials of Georgia Power Company, without obtaining results; that the power company would not make any proposition respecting compensation to the city for the use of its streets in the distribution of electricity. On October 10, 1946, the mayor and council of the city authorized the plaintiff to institute suit in the Superior Court of Chattooga County against Georgia Power Company relative to its franchise, which suit was subsequently dismissed on demurrer on the ground that that court did not have jurisdiction of Georgia Power Company. Pending that litigation, the company offered to pay the city annually 3% of the gross income derived from residential and commercial users of electricity within the city limits, for an advertised and indeterminate franchise, which offer the city refused to accept. When the city refused the offer, it prevented the plaintiff from performing the contract of employment. Subsequently, an identical suit was filed against Georgia Power Company in the Superior Court of Fulton County. While that suit was pending, the company made substantially the same offer as made heretofore, but the city declined and refused to accept the offer. At the time the last offer was refused, the city advanced to the plaintiff $500 on his fee in the case. Also, subsequently to the refusal of this offer, the defendant paid the plaintiff $1000 on his fee. The plaintiff as attorney for the City of Summerville prosecuted a declaratory judgment suit in Fulton Superior court, the purpose of which was to have the court declare that Georgia Power Company did not have a lawful franchise to use the streets of the City of Summerville; and the decision of the trial court being unfavorable to the city, an appeal was taken to the Supreme Court of Georgia, which affirmed the action of the trial court dismissing the case on demurrer. The Supreme Court held that the franchise of Georgia Power Company was neither an exclusive franchise, nor a perpetual one, as contended by the City of Summerville. This litigation ended October 13, 1949. On October 28, 1949, the plaintiff received a letter from the Mayor of the City of Summerville stating that the city council had on October 26, 1949, passed a resolution which terminated the ordinance employing the plaintiff in the franchise matter. Prior to the plaintiff's employment, Georgia Power Company had never paid or offered to pay the defendant anything for the use of its streets for the distribution of electricity, although it had occupied them since 1924; and by reason of the plaintiff's labor and skill Georgia Power Company made the offers stated above. The plaintiff was prevented from fully performing his contractual obligations when the defendant refused to accept the 3% offers to grant Georgia Power Company an advertised and indeterminate franchise. Such action refusing the offers excused the plaintiff from further performance, and he is entitled to his fee of 20% of the value of the franchise granted December 15, 1949. Attached to the petition as an exhibit is a copy of the alleged agreement between Georgia Power Company and the City of Summerville, dated December 15, 1949, which provides that — "Whereas, the Georgia Power Company has and holds a franchise or franchises from the City of Summerville to distribute electric energy for sale in the said City" by reason of a franchise ordinance of June 13, 1924, and "Whereas, the City of Summerville has under its charter the right, notwithstanding the ordinance granting said franchise, to erect a municipal plant for the sale and distribution of electric energy, and furthermore has the right to grant franchises for the sale and distribution of electric energy, and furthermore has the right to grant franchises for the sale and distribution of electric energy to other persons or corporations" — it was agreed by the power company that, so long as the city shall not engage in the distribution of electric energy, nor permit any other person or corporation to engage in such sale within the limits of the city, the power company would pay the city annually 3% of the gross receipts of the sale of electric energy for domestic and commercial purposes (but not for industrial purposes), delivered within the corporate limits of the city; but whatever taxes were paid by the power company to the city were to be credited against the 3% payment; and that, in the event the city engaged in the distribution of electric energy or granted a franchise to any other person or corporation so engaged, payment of the 3% should abate, with the option of the power company, in the event of the aggregate of the taxes assessed exceeding the amount of payments due or to become due, to terminate the contract.
It was further alleged that, on or about March 3, 1951, the power company paid to the defendant $2925 as provided in the franchise agreement; that the defendant has failed and refused to pay to the plaintiff, on written demand, his fee according to the terms of his employment; and that "the defendant has breached the contract of employment by not paying plaintiff according to its terms when said power company paid defendant, as stated in paragraph eighteen of this petition." It was alleged that the value of the new franchise and contract to the city was at least $120,000, and that he is entitled to recover 20% of such value, or the sum of $24,000, and by crediting the defendant with advance payments of $1500, he had been injured and damaged in the sum of $22,500, for which sum he prayed judgment. It was alleged that the defendant is a municipal corporation and its property is not subject to levy and sale; and that, he being entitled to the first fruits of his labor, the defendant should be enjoined from disbursing the money paid to it by the power company or from mingling it with other moneys pending termination of the action. He prayed that the defendant be so enjoined.
The grounds of the defendant's general demurrer, sustained by the court, were: (a) the petition did not set forth a cause of action either at law or in equity; (b) the so-called contract, if valid, shows that the plaintiff was only entitled to a fee contingent upon securing a decision that the franchise of 1924 was invalid and not binding on the city, or upon securing an agreement of Georgia Power Company that said franchise was not binding, and that, since neither of these contingencies was alleged to have occurred, the plaintiff was not entitled to recover any fee against the defendant; and (c) the petition failed to show that the defendant had incurred any liability to the plaintiff.
Where the performance of one party to a contract is conditioned upon the performance of certain acts on the part of the other party before the contract becomes absolutely obligatory, such condition must be performed. Code, § 20-110. So, when a plaintiff's right to recover on a contract depends upon a condition precedent to be performed by him, he must allege and prove the performance of such condition or allege sufficient legal cause for its non-performance. Griswold v. Scott, 13 Ga. 210 (2); Baker v. Tillman, 84 Ga. 401 ( 11 S.E. 355); Herrington v. Jones, 132 Ga. 209 ( 63 S.E. 832). See also Janes v. Horton, 32 Ga. 245 (79 Am. D. 300).
A contract between an attorney and client, where it is stipulated that the attorney shall receive a certain per centum of the amount recovered for services rendered, the same not being champertous, is valid and binding upon both the attorney and the client. Kimball v. Casey, 169 Ga. 631 (1b) ( 151 S.E. 372). However, an attorney cannot recover the whole or any part of a contingent fee upon an express contract of employment, "where the contingency provided for by the contract has not been brought about, although the entire work or service of the attorney has been duly performed." Stephens v. Fulford, 153 Ga. 637 (1, 2) ( 112 S.E. 894). So, where an attorney agrees to collect money for a certain per centum of the amount collected, he is not entitled to a fee for suing the case to judgment; but, to entitle him to fees under his contract, the money must be collected, in that, the agreement as to payment of attorney's fees being contingent, the happening of the contingency is a condition precedent to the right of the attorney to recover for his service, and the precise event which was contemplated must happen. Byrd v. Clark, 170 Ga. 669 (2, 3) ( 153 S.E. 737). Where a plaintiff bases his right to recover upon an express contract entire and indivisible, he can not recover unless he has performed all the obligations. Maner v. Clark-Stewart Co., 33 Ga. App. 424 (2) ( 126 S.E. 871).
Reference to the contract between the plaintiff and the defendant shows that the plaintiff was employed by the defendant for obtaining two results: (a) that, in representing the city for the purpose of testing the legality and binding effect of a certain franchise granted by the city to Georgia Railway Power Company, he was to obtain a finding that the franchise granted to that company in 1924 was not a legal and binding franchise on the city; and (b) to do all things necessary to obtain a new franchise. If the contention of the city that the franchise was not binding on it was upheld, the plaintiff would be paid 20% of the value of any new franchise, or whatever value the operation of the city selling electric power was to the city, the decision to be arrived at by the mayor and council of the city and the plaintiff. The plaintiff says that he has performed his agreement, and that the city has breached its agreement by refusing to pay him 20% of the value of the new franchise the city has granted Georgia Power Company, and that such refusal amounts to a breach of the contract of employment, and he is entitled to 20% of the value of such franchise, less the $1500 already paid him, as damages.
Whether the plaintiff's contention that he has performed his duty under the contract of employment, by obtaining a new franchise, be well founded, depends upon the nature and terms of the contract of Georgia Power Company with the city, dated December 15, 1949. A reference to that contract discloses that it is not one in which the city granted to Georgia Power Company a new franchise, for the reason that the contract itself recognizes that the company holds a franchise with the city by virtue of an ordinance of June 23, 1924. As ordinarily understood, a franchise is a particular privilege or right granted by a sovereign to an individual or corporation, and an exemption from a burden or duty which others are subject to. Central Railroad Banking Co. v. State of Georgia, 54 Ga. 401, 409. It is clear that the purpose of this contract was that, in consideration of the city agreeing not to erect a municipal plant, or engage in the sale and distribution of electric energy within the city limits, and not to grant a franchise for such sale or distribution to any one else, Georgia Power Company would pay to the city 3% of the gross receipts of certain sales of electric energy, less credit for the payment of certain taxes; and, in the event in the city erected its own plant, or granted a franchise to another, the agreement would be at an end. It appears from the allegations of the petition that the plaintiff was entitled to recover his contingent fee from the city only in the event that his services were successful in getting the existing franchise declared invalid; and that, thereafter, the plaintiff would be entitled to receive 20% of the value if and when a new franchise was granted; and it further appears that, in the litigation prosecuted by the plaintiff, the contention of the City of Summerville was not substained by the courts, but on the contrary, it was held that Georgia Power Company did have a valid franchise ( City of Summerville v. Georgia Power Co., 205 Ga. 843, 55 S.E.2d 540), and it does not appear that the company has been granted a new franchise. It appears, on the contrary, that the city and the company have recognized the validity of the 1924 franchise ordinance, and made a contract in regard to the same.
It is insisted, however, that, when the plaintiff obtained the offers from Georgia Power Company to pay the city 3% of the gross revenue from residential and commercial users of electricity in the City of Summerville, and such offers were substantially the same as Georgia Power Company agreed to pay under its contract of December 15, 1949, the refusal of the city to accept the prior offers relieved the plaintiff from any further duties and prevented him from receiving the compensation to which be was entitled, and "so far as his obligations under the contract of employment are concerned, date from the time the offer of 3% for an advertised franchise was made and refused."
The allegations of the petition do not support this contention. The plaintiff does not base his right of action on the ground that he was entitled to his compensation at the time the city refused to accept the offers of Georgia Power Company; but he rests his action upon an express written contract with the city, and says that the breach occurred when the city, after making the new contract with the power company, and after demand was made for 20% of the first payment, refused to pay. The plaintiff, after the city had for the second time refused the offer of Georgia Power Company, on December 12, 1948, apparently recognized that such refusal did not justify him in claiming that he had performed all his obligations under the written contract of employment on the basis that the offers met the contingencies of his employment, because at the meeting of the mayor and council he asked for advances on his fees under his written contract of employment, and he thereafter continued to handle the suit of the city against Georgia Power Company, attacking the validity of the company's franchise, which proceeding culminated adversely to the claim of the city by a judgment of the Supreme Court of September 14, 1949 ( 205 Ga. 843).
The plaintiff contends that, under the ruling in Candler v. Bryan, 189 Ga. 851 ( 8 S.E.2d 81), the city under its contract of employment made an equitable assignment as to "20% of the value of any new franchise," and the new franchise is impressed with a trust to pay his fee. There is no basis for this contention, for the reason that the sums the city is receiving from Georgia Power Company are not by virtue of a new franchise, but under a contract.
The allegations of the petition showing that the contingency upon which the plaintiff was entitled to compensation has never occurred, there was no error in sustaining grounds 1, 4, and 5 of the defendant's general demurrer and in dismissing the action.
In view of the foregoing ruling, it is unnecessary to pass upon the assignments of error in the cross-bill of exceptions.
Judgment affirmed on the main bill of exceptions; cross-bill dismissed. All the Justices concur.