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EDWARDS v. JOHNSON ET AL. (11/14/69)

decided: November 14, 1969.


Appeal from orders of Court of Common Pleas of Allegheny County, July T., 1967, No. 1040, in case of Mary Louise Edwards et al. v. Metropolitan Life Insurance Company.


Justin M. Johnson, with him Johnson, Johnson & Johnson, for appellants.

Alexander Black, with him K. Sidney Neuman, and Buchanan, Ingersoll, Rodewald, Kyle & Buerger, for appellee.

Lisle A. Zehner, for appellee.

Wright, P. J., Watkins, Montgomery, Jacobs, Hoffman, Spaulding, and Cercone, JJ. Opinion by Cercone, J. Concurring Opinion by Spaulding, J.

Author: Cercone

[ 215 Pa. Super. Page 393]

Mary Louise Edwards, claimant, employed the law firm of Johnson, Johnson & Johnson of Pittsburgh, to represent her in her claim against the Metropolitan Life Insurance Company as beneficiary under a family policy issued on the life of one Joseph Rumble, who died July 10, 1959, just four months after purchasing the policy. A written agreement between the Johnson firm and claimant provided that the attorneys were to receive forty (40%) per cent of any recovery, whether by settlement or trial. The insurance company at first refused payment on the ground that despite her designation in the policy as "wife", claimant was not legally married to decedent and that she and the deceased had defrauded the company in so misrepresenting a material fact in a family policy of the kind issued to the deceased, Joseph Rumble. Upon learning of the company's refusal and position in the matter, the Johnson firm upon request of the claimant filed a complaint in her behalf against Metropolitan. Metropolitan filed an answer formally denying liability on the ground that fraud had been practiced upon it by both the decedent and the claimant.

Nothing happened in the case until November, 1965, when Metropolitan advised Johnson that it was prepared to amicably settle the suit for the commuted value of the policy, and on December 2, 1965, claimant authorized Johnsons, her lawyers, to accept one of the optional modes of settlement made available to her under the policy and this acceptance was communicated to Metropolitan which in turn replied

[ 215 Pa. Super. Page 394]

    that a release would issue as soon as birth certificates of the children and of the claimant's intervening marriage to a Mr. Edwards were forwarded. The total proposed settlement amounted to $20,091.92 consisting of $17,323.99 cash and policies valued at $2,767.93. The attorney's fee of forty (40%) per cent under the written agreement with claimant amounted to $8,036.77.

However, after receipt of the birth and the marriage certificates, Metropolitan refused to send a check for the total settlement amount which check they had already prepared as payable to claimant and Johnsons because the Company had received word from a member of the Allegheny County Bar Association, with whom claimant, without Johnsons' knowledge, had conferred, that the forty (40%) per cent fee was being contested.*fn1

Claimant then brought the matter before the Allegheny County Bar Association and Attorney William Jacob, Vice President of the Committee on Offenses of the Common Pleas Court of Allegheny County, made an investigation of the case studying the Johnson files and submitting a report to the Committee in which he concluded that there was no impropriety in the case on the part of the Johnson firm and that the attorneys had earned their fees. Metropolitan nevertheless did not release the settlement. The Johnson firm in order to further expedite the settlement, and by agreement with Metropolitan, secured from claimant an express assignment to the Johnsons of the forty (40%) per cent of the recovery amount, the assignment having

[ 215 Pa. Super. Page 395]

    been prepared by Mr. Jacob of the Committee on Offenses. The assignment was then forwarded to Metropolitan. Despite the assignment which would have entitled the Johnson firm to receive a check for the forty (40%) per cent fee in their name alone, they were agreeable to having the Company issue one check to claimant for her portion of the cash settlement and one check jointly to claimant and themselves for their forty (40%) per cent fee. Claimant thereafter, without any knowledge or notice of Johnsons, notified Metropolitan not to honor the assignment claiming she was coerced into signing the same. Metropolitan never advised Johnsons of the communication from claimant and yet permitted Johnsons to secure court approval of the settlement, to mark the case settled and discontinued, and to forward a certificate of satisfaction to Metropolitan.

Despite knowledge that claimant would not honor or endorse the check for the attorneys' forty (40%) per cent fee, Metropolitan, nevertheless, sent to claimant the check for her portion of the settlement. Johnsons, because of claimant's refusal to sign the check jointly payable to her and the Johnsons, did not receive their fee and Metropolitan refused to pay them directly because of the revocation of the assignment by claimant. At this point in the case, Metropolitan asked that one of the parties bring suit against it in order that it could interplead the funds.

Claimant thereupon instituted an action in assumpsit against Metropolitan for the amount still unpaid to her, that is, of the attorneys' fee, plus interest. Metropolitan then interpleaded, joining Johnsons as adverse claimants to the fund, and paying into court the $8,036.77 plus interest. The Johnsons petitioned for a rule to show cause why the order granting the interpleader should not be vacated and the interpleader stricken, which petition was denied

[ 215 Pa. Super. Page 396]

    and from which no appeal was taken by Johnsons. Upon rejection of their petition to strike the interpleader, Johnsons filed their claim in the interpleader proceedings setting forth the history of the case, the contingent fee agreement and the assignment. They claimed that by virtue of agreement and assignment, the $8,036.77 should be paid to them. Claimant filed no answer to this complaint and as a result, after due notice to her, and after hearing, the Honorable Albert A. Fiok entered judgment against her and in favor of Johnsons. Claimant filed a petition to open, vacate or modify that judgment, but the petition was denied by Judge Aldisert. The said orders of Judge Fiok, granting judgment in favor of the Johnsons, and of Judge Aldisert, refusing to open, vacate or modify that judgment, were appealed by claimant to this Court as Nos. 27 and 28 April Term, 1968, and we affirmed per curiam the lower court in both instances (Edwards v. Metropolitan Life Insurance Company, 212 Pa. Superior Ct. 751). Claimant filed with the Supreme Court of Pennsylvania a Petition for allowance of appeal to that Court, which petition was denied at Miscellaneous Docket No. 3042-A on August 13, 1968.

Metropolitan then petitioned for discharge from liability and for allowance of costs and attorneys' fees from the interpleader fund. Johnsons added their petition for payment of the entire fund to them. Hearing was held on said petitions before His Honor Judge Wessel, in which Metropolitan sought to acquit itself of the charges that it had unlawfully interfered with Johnson's contingent fee agreement and that it was not an impartial stakeholder. Claimant ...

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