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Bounougias v. Peters

APRIL 15, 1964.




Appeal from the Superior Court of Cook County; the Hon. HENRY W. DIERINGER, Judge, presiding. Affirmed in part, reversed in part.


Rehearing denied May 26, 1964.

Plaintiff's suit is for money which he claims was wrongfully withheld as attorneys' fees out of funds collected in satisfaction of a judgment for personal injuries. The order from which this appeal has been taken sustained a motion by defendants for summary judgment.

Plaintiff was injured in the course of his employment and retained defendant Peters to represent him in the matter of his claim before the Industrial Commission. A settlement of $7,400 was effectuated and Peters was paid a fee of 20%. Plaintiff paid all the expenses of the compensation proceedings.

During the pendency of the Industrial Commission case Peters advised plaintiff that he might have a cause of action for the same injuries against a third party, Republic Steel Corporation. Accordingly, plaintiff signed a printed form of retainer agreement authorizing Peters to handle his claim against Republic for a contingent fee of one-third the amount realized. *fn1

Suit was filed by Peters on behalf of plaintiff against Republic in the United States District Court and Republic joined plaintiff's employer, Alavina O'Malley, as a third-party defendant. Peters made arrangements with Phillips, the other defendant in the instant litigation, to try the case for the plaintiff, and after seven days of trial before a jury judgments in the amount of $105,000 were entered in favor of plaintiff against Republic and in favor of Republic against O'Malley.

Both Republic and O'Malley sought review in the Court of Appeals where plaintiff was again represented by Peters and Phillips. The judgments were affirmed and petitions for rehearing were denied.

Soon thereafter, on May 25, 1960, Peters wrote the following letter to the plaintiff:

Dear Mr. Bounougias:

This will confirm my telephone conversation with you, at which time I advised you that the United States Court of Appeals for the 7th Circuit denied the petition for writ of error, which in simple language means that this Court will not allow a new trial. The defendants have advised us that they expect to appeal the case to the United States Supreme Court.

I would like to talk with you about the strategy that we may want to follow in this case and suggest that you be at my office Saturday morning, May 28, at 10 a.m. It is not necessary for you to bring anyone with you, for the reason that what we want to discuss will be a private matter between us.

Very truly yours,


The suggested conference between plaintiff and Peters about the "strategy" to be followed in the case was held at the latter's office on the date indicated, and at this meeting "the contingent fee contract" was "renegotiated and a new contract was entered into." *fn2 Peters prepared and presented to plaintiff two documents for his signature and both were signed by him. *fn3 The first of these, in the style of a letter dated May 28, 1960, reads as follows:

Dear Mr. Peters:

In view of the fact that there was so much more litigation in my case than was anticipated at the time when I first employed you I am willing to supplement my original agreement with you and change the contingent fee from one-third to one-half of.

All of this is in consideration of the fact that since the filing of the original suit, a 3rd party action was instituted, an appeal was filed in the 7th Circuit of the United States Court of Appeals and then a Petition for Rehearing was filed which required additional briefs. And, even though all these matters were resolved in our favor, there is a possibility that the defendants will take the matter to the Supreme Court.

For this reason I am willing to sign a new agreement to cover the extra services which you are rendering, and hereby request that you use your best efforts to negotiate a settlement if possible. If you have an offer I will be pleased to cooperate with you to dispose of the matter amicably.

Very truly yours,


At the bottom of this paper Peters added in longhand:

We agree to pay the expenses —

Norman Peters 5/28/60

The other document, also dated May 28, 1960, was a printed form of retainer agreement identical to that executed in 1956 (as set forth above in a footnote to this opinion) except that O'Malley's name was inserted along with that of Republic, and the contingent fee was fixed at one-half instead of one-third.

The "appeal" to the United States Supreme Court referred to in the letters of May 25th and 28th did not materialize. On June 29, 1960, however, O'Malley brought an action in the District Court to set off $10,749.65 (apparently the total amount paid to or for the benefit of plaintiff under the Workmen's Compensation Act) on the principle of an equitable credit rather than legal subrogation. Peters and Phillips defended plaintiff against this effort to reduce the collectible amount of plaintiff's judgment, and were again successful.

Thereafter, in September, 1960 the judgment was paid in the amount of $111,556.53, including interest and costs. For a reason not explained $5,000 of this sum was not paid with the balance, the first check being for $106,556.53, payable to plaintiff, Peters and Phillips. Plaintiff endorsed the check and Peters gave plaintiff his personal checks for $55,728.26, being half of the total received and to be received. At the same time plaintiff executed a document prepared by Peters authorizing the latter to sign plaintiff's name to the subsequent check for $5,000 and keep the proceeds, "[s]ince I have this day received my share."

Plaintiff's complaint is that the second fee contract for one-half of the amount recovered was void, under the circumstances recited above, and that defendants were, therefore, entitled to a fee of one-third only; that the difference between these two figures — $18,563.81 — has been wrongfully withheld. The theory of the complaint is that there was no consideration to support the second agreement, and that it represented an unconscionable overreaching on the part of the defendants in view of the fiduciary attorney-client relationship existing between plaintiff and defendants at the time.

For all purposes pertinent here the answer of the defendant Phillips denies all the allegations of the complaint.

The answer of defendant Peters relies on the premise that the second contract superseded the original; recognizes the fiduciary nature of his relationship with plaintiff at the time of the second contract, but denies that it was breached; and states that consideration therefor is found in the extensive prior services rendered, and in his undertaking to pay the costs and expenses of the litigation, which were in excess of $7,500. Peters' answer also avers that until the filing of this suit plaintiff had not demanded the payment to him of any additional money, but rather had expressed satisfaction with the amount he had received. In this regard Peters claims accord and satisfaction, relying on the document plaintiff signed in September, 1960, to the effect that Peters could keep the forthcoming $5,000 since plaintiff had received his share.

In support of defendants' motion for summary judgment they filed a discovery deposition of the plaintiff taken in June, 1963, and in opposition to the motion an affidavit of plaintiff was filed on his own behalf. In this affidavit it is stated that plaintiff has meager education and only a rudimentary knowledge of the English language; that on this account plaintiff had usually taken his daughter or other relative with him to defendants' office to help him understand what was said; that he had not done so on May 28, 1960, because the letter from Peters setting up the appointment had, in effect, told him not to bring anyone with him. *fn4

Plaintiff's affidavit also states that he was unable to read the documents he was given to sign on May 28; that he had not known the conference was to involve a change in Peters' employment contract; that for these reasons he sought to defer signing the documents so that he might discuss them with his daughter and wife; that Peters refused him this opportunity, stating, as he had in the letter, that this was a matter between the two of them, and that if plaintiff left without signing the case would be lost.

Plaintiff's affidavit further states that in September, 1960, when he acknowledged receipt of his share of the money he was unaware of any basis for challenge of the second contract, and, being unable to read, had no knowledge of the contents of ...

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