Opinion
January 31, 1967. —
February 28, 1967.
APPEAL from an order of the circuit court for Milwaukee county: LEO B. HANLEY, Circuit Judge. Affirmed.
For the appellants there was a brief by Silverstein, Warshafsky Rotter, attorneys, and David L. Walther of counsel, all of Milwaukee, and oral argument by Mr. Walther.
For the respondent there was a brief and oral argument by D. J. Regan of Milwaukee.
This is an appeal from an order of the circuit court for Milwaukee county denying the motion of the plaintiffs to direct the Milwaukee Automobile Mutual Insurance Company (hereinafter referred to as Milwaukee Auto) to pay as attorney's fees one third of the amount it had collected from the liquidator of the insolvent Superior Mutual Insurance Company (hereinafter referred to as Superior). Attorney Robert Silverstein claims attorney's fees as the result of a retainer agreement with George J. Morateck, the parent and guardian ad litem of James Morateck, who was injured in an automobile accident that occurred on September 3, 1960. The minor plaintiff, James Morateck, was a passenger in an automobile insured by Superior and operated by Richard William Wilson when it was involved in a collision with an automobile operated by one Charles L. Wojciechowski. Wojciechowski was uninsured. On September 9th the retainer agreement was executed. On July 3, 1962, an action was commenced by James Morateck, by his guardian ad litem, and his father George (hereinafter referred to collectively as the Moratecks) against Milwaukee Auto. Milwaukee Auto was the insurer of George Morateck. He claimed that, under an uninsured motorists clause, Milwaukee Auto was liable for bodily injuries, to his son James, whose injuries were caused, at least in part, by the negligence of Wojciechowski, the uninsured motorist. The defendant Milwaukee Auto demurred to this complaint, claiming that it failed to state a cause of action. Milwaukee Auto argued that the plaintiffs were barred from recovery under their uninsured motorists policy because the "uninsured" provision was applicable only when none of the tort-feasors was insured and, in this case, Wilson was insured. The circuit court overruled this demurrer, and an appeal was taken by Milwaukee Auto to this court by Case No. 3 of the August Term of 1963. We have taken judicial notice of the briefs filed at that time. For reasons not appearing of record, Milwaukee Auto subsequently dismissed its appeal pursuant to a stipulation with the plaintiffs. Thereafter, the parties waived the arbitration procedure contemplated by the insurance policy and agreed that Circuit Judge LEO B. HANLEY act as arbitrator. Following a hearing Judge HANLEY on October 10, 1963, ordered that:
The retainer agreement is as follows:
"The undersigned, as client, hereby retains and employs SILVERSTEIN WARSHAFSKY, as attorneys, to prosecute for said client such actions or other proceedings as they deem proper to enforce the cause which the client asserts against:
". . . defendant, Milwaukee Automobile Insurance Company, succeeds to all of the rights, title and interest in their claim up to $10,000, that the plaintiffs, George J. Morateck and James Morateck have against Superior Mutual Automobile Insurance Company, Richard William Wilson, and Charles L. Wojciechowski."
On October 11, 1963, the judge found that Wojciechowski was uninsured, that the plaintiffs were "insured" under the terms of Morateck's personal automobile insurance policy, entitling them to damages for bodily injury resulting from the conduct of uninsured motorists, and that the coverage under that policy was limited to $10,000 for each person. As conclusions of law, the circuit judge stated that the injuries to the plaintiff James Morateck were proximately caused by the negligence of Wojciechowski and Wilson, that he sustained severe personal injuries, and that the Moratecks were entitled to judgment in the sum of: $9,484 for medical bills, $3,900 for wage losses, $5,000 for pain and suffering, and $10,000 for temporary and permanent disability. Pursuant to this order, judgment was entered on October 11, 1963, on behalf of the plaintiffs George J. Morateck and James Morateck in the amount of $10,000 (the policy limits) together with their taxable costs. Ten thousand dollars was then paid to the plaintiffs, and Attorney Silverstein received one third as a fee. Prior to the entry of this judgment, the parties stipulated that the question of whether or not plaintiffs' counsel would be entitled to a lien for attorney's fees on any amount that Milwaukee Auto might collect under the subrogation agreement would be held in abeyance until further order of the court.
Milwaukee Auto pursued its subrogation claim against Superior, the insurer of the car driven by Wilson. At that time, Superior was insolvent and, in fact, had been in liquidation by the commissioner of insurance during the entire course of these proceedings. Superior agreed that Milwaukee Auto's claim would be settled for $8,000; however, as a result of the proration of the assets of the insolvent corporation, only $4,800 was paid. Superior made its check payable to plaintiffs and to Milwaukee Auto, as well as to the attorneys for the parties, including Attorney Robert Silverstein. The parties thereupon brought the matter before the circuit court again, this time for the determination of whether the plaintiffs' attorney was entitled to one third of the $4,800 as, his fees. On April 27, 1966, Judge HANLEY in a memorandum opinion concluded that plaintiffs' counsel was not entitled to recover any fees out of the $4,800 received from the liquidator of Superior and directed that the check be endorsed and turned over to Milwaukee Auto. It is from an order pursuant thereto denying attorney fees that the plaintiffs appeal.
"RICHARD WILSON CHARLES WOJCIECHOWSKI
and whoever else is responsible therefore for the following matter: personal injuries and property damage to my son James arising out of an accident which occurred on 9/3/60."Said attorneys accept said employment, and the terms are:
"The attorneys are to receive for their services all of the taxable costs and 33 1/3% of whatever sum is collected. If nothing is collected and recovered, the client owes the attorneys nothing for said services.
"The attorneys have a lien upon said cause of action and what is recovered, which is given by law or statute, and besides that, by this instrument, the client gives as security to the attorneys a lien on said cause of action and all monies and property recovered.
"Dated at Milwaukee, Wisconsin, this 9th day of Sept., 1960. "Caroline Morateck "George J. Morateck "Parent and guardian of James Morateck -------------------------------------- Client "Robert Silverstein -------------------------------------- Attorney "If $2,000.00 or less is recovered the atty. is to receive whatsoever no fees whatsoever.
Robert Silverstein"
The respondent Milwaukee Auto argues that it is entitled to full subrogation by virtue of the provisions in the insurance policy. We conclude, however, that the terms of that policy are irrelevant to this appeal. The 1963 case, which was appealed to this court and which would have resulted in this court's construction of the provisions of Milwaukee Auto's uninsured motorists policy, was abandoned by the parties and the policy provisions are not before us. We are limited in this appeal to construing the order of October 10, 1963, following the arbitration hearing, which provided that Milwaukee Auto:
". . . succeeds to all of the rights, title and interest J. their claim up to $10,000, that the plaintiffs, George Morateck and James Morateck, have against Superior Mutual Automobile Insurance Company, Richard William Wilson, and Charles L. Wojciechowski."
By that order, the plaintiffs, in exchange for a judgment of $10,000 against Milwaukee Auto, lost any rights to damages they might have had up to that amount against either of the tort-feasors causing the injuries to James Morateck. The plaintiffs, as the result of the arbitration order, were required to assign to Milwaukee Auto the claim against Superior, Wilson, and Wojciechowski up to $10,000, and in exchange Milwaukee Auto abandoned its position that the uninsured automobile coverage was not applicable and paid Morateck to the full extent of its policy. Thereafter Superior paid the sum of $4,800 to Milwaukee Auto. Milwaukee Auto's collection of this sum from Superior was not an additional amount collected on behalf of the plaintiffs, but was collected solely as partial recoupment and reimbursement of the $10,000 it had already paid to the plaintiffs. The plaintiffs' settlement was $10,000 and not $14,800. It is conceded by plaintiffs' attorney that the plaintiffs are foreclosed, by virtue of the judgment following arbitration, from receiving any portion of this $4,800, and it is difficult to see why their attorney is not also barred from any claim that arises by virtue of the subrogation payment to Milwaukee Auto. The attorney received out of the $10,000 paid by Milwaukee Auto, the fee that his retainer contract provided. It seems clear that that is all he was entitled to out of that $10,000 or out of any sums that might be received by Milwaukee Auto from Superior, Wilson, or Wojciechowski in recoupment or reimbursement of the $10,000 paid pursuant to the judgment. The plain meaning of the assignment contained in the order of the circuit judge makes it obvious that the Moratecks could receive no further sum as damages (and Silverstein could receive no more fees) unless Milwaukee Auto was first reimbursed to the extent of the $10,000 to which it was entitled as subrogation. Any amount that it collected up to $10,000 belonged to it alone. It is equally true that if there were a recovery in excess of that amount, the Moratecks would be entitled to that excess and Silverstein would be entitled to one third thereof. The attorney was to receive only one third of whatever sum was collected by his clients; and while he also was given a lien on the cause of action, that lien was enforceable only in the amount collected — in this case $10,000 — that is all that was paid on the plaintiffs' claim. No doubt, the attorney continues to have a lien on that portion of the cause of action in excess. of $10,000 that was not assigned. That lien, however, appears to be valueless inasmuch as it has thus far proved to be uncollectible. Moreover, the record does not show the terms under which the liquidator of Superior paid the claim, and we do not know whether consideration for that payment was the complete release of Wilson, Superior's insured.
Proceedings which resulted in the assignment of October 10th were initiated by Silverstein, and the settlement with Superior had his express approval. Prior to the arbitration various courses were open to the Moratecks and their attorney. They might have elected to sue Robert Wilson and his insurer and, in addition, Wojciechowski, alleging that Milwaukee Auto was obliged to act as his insurer up to the extent of $10,000 and that Superior was responsible to the extent of its policy for any negligent injuries caused by Wilson. This path, however, was beset with severe obstacles. Superior was insolvent and Milwaukee Auto was. stoutly asserting the defense that its "uninsured" clause was not applicable. The course selected, to pursue only the claim against the solvent Milwaukee Auto, appears to have been wise and reasonable at that time. There was no assurance that Superior would ever pay anything on behalf of Wilson. The decision to secure a sure $10,000 in exchange for an uncertain and possibly uncollectible judgment of $28,000, had much to recommend it. Only by hindsight can this decision be questioned. Both the Moratecks and their attorney benefited by the agreement reached and, though it now appears that it might not have resulted in the optimum settlement, it was a choice deliberately made, and under the circumstances no additional attorney's fees are collectible.
By the Court. — Judgment affirmed.
HANLEY, J., took no part.