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LEHIGH VALLEY R. CO. v. PEASLEE

October 8, 1942

LEHIGH VALLEY R. CO.
v.
PEASLEE



The opinion of the court was delivered by: KALODNER

Apart from motions and affidavits in support thereof, the pleadings thus far consist of the following:

(1) Plaintiff's complaint and supplemental complaint;

 (2) Defendant's answer and cross claim;

 (3) Defendant's supplemental answer.

 The complaint alleges the following situation:

 During the first World War, in 1916, an explosion occurred in New York Harbor, resulting in damage to the plaintiff's property. The incident subsequently became known as the "Black Tom Explosion" and was then ascribed to sabotage on the part of agents of the German Government.

 Thereafter, under treaty statutes, a Mixed Claims Commission was established. One of its duties was to determine the amount which Germany should pay to American nationals who had suffered loss through the acts of the German Government or its agents during the period of the first World War.

 In April, 1924, plaintiff employed defendant, an attorney, under written contracts covering the amount of contingent fees and other details, to represent it in prosecuting its claim before the Commission. The defendant discharged his duties and ultimately recovered an award in the amount of some $10,000,000.00 for the plaintiff. The actual award was greater, but the fund available to pay war claims was not sufficient to cover them all.

 The Settlement of War Claims Act of 1928, 45 Stat. 254, provided that upon the request of American claimants, the American Commissioner (the Mixed Claims Commission consisted of an American Commissioner, a German Commissioner and an umpire selected by both) should fix the fees to be paid by such claimants for "services in connection with the proceedings before the * * * Mixed Claims Commission" and the collection of the award, irrespective of the provisions of contracts which might have been made for such services.

 Prior to actual payment of any award, the plaintiff requested the American Commissioner to fix the fee of its attorney, the defendant herein; the American Commissioner thereupon took testimony and fixed the fee. His order reads:

 "The American Commissioner decides and fixes as the total reasonable fee to be paid by the claimant Lehigh Valley Railroad Company to its attorney Amos J. Peaslee for himself and those others who, at his instance as attorney for the claimant, have rendered services to, or made or incurred disbursements, expenses and liabilities for the benefit of, the claimant, Lehigh Valley Railroad Company, with respect to the prosecution of its Black Tom claim from the spring of 1924 to the date hereof, the fee fixed by the contract between the claimant and its attorney, towit, a sum equal to 50 per cent of all amounts received and to be received by the claimant Lehigh Valley Railroad Company in payment of the award, less the sum of $108,621.08 advanced by it in respect of the disbursements of its attorney for costs and expenses; the said sum to be received as full compensation for all such services, disbursements, expenses and liabilities aforesaid rendered, made or incurred by Amos J. Peaslee and the said others in the prosecution and collection of the claim and award, as defined by Section 9 of the Settlement of War Claims Act of 1928, including necessary expenses and disbursements incurred in the presentation of the claim before the Commission and in securing the payments on account of the award entered October 30, 1939."

 The plaintiff's agreement to pay defendant's fee is constituted by three writings, being Exhibits "A", "B" and "C" respectively, attached to the complaint. The writings are dated June 17, 1924, March 1, 1932, and March 9, 1933, respectively.

 In the first writing, the plaintiff agreed, inter alia, to pay defendant for his services 25 per cent of the first $1,000,000.00 recovered from the German Government, plus 20 per cent of any additional recovery. It also agreed to make certain disbursements for necessary expenses.

 The third agreement, apparently in recognition of the fact that still further substantial expenditures would have to be incurred, enhanced the contingent fee to 50 per cent. The relevant portion of the final writing reads as follows:

 "The Lehigh Valley is not prepared to contribute any new cash to the further prosecution of this case, but is willing to turn over an additional 15% of our claim to help finance the task still before you. This will make a total of 50% of the claim ...


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