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Rhoades v. Norfolk & Western Ry. Co.





Appeal from the Appellate Court for the Fifth District; heard in that court on appeal from the Circuit Court of Madison County, the Hon. Horace Calvo, Judge, presiding.


This appeal involves an action to recover attorney's fees allegedly due under a contingent-fee contract entered into between Chapman and Chapman, a law firm in Granite City, and William D. Rhoades, an employee of the Norfolk and Western Railway Company. The Norfolk and Western was named a party defendant because it paid a personal injury settlement to Rhoades against which the Chapman firm asserted an attorney's lien under section 1 of "An Act creating attorney's lien and for enforcement of same" (Ill. Rev. Stat. 1975, ch. 13, par. 14).

On January 11, 1976, Rhoades sustained a knee injury while in the employ of the Norfolk and Western Railway Company. On February 12, 1976, Rhoades telephoned the law offices of Chapman and Chapman, explained that he was considering filing suit against the railroad, and requested that someone from the law firm come to his home to discuss his claim.

Robert Chapman, an investigator used by the law firm, went out to the Rhoades home. Chapman was a self-employed legal investigator who had his office in the offices of the Chapman firm; he was not an attorney. On his way into the Rhoades home, Chapman met and exchanged greetings with Stanley Horton, the claim agent for the railroad assigned to the Rhoades case. Horton had dropped off a $200 advancement for Rhoades and was leaving the house when Chapman arrived. Rhoades' and Horton's testimony indicated that Horton did not know that Rhoades had contacted a law firm. Horton left for a two-week vacation to Florida the following day.

Robert Chapman discussed the circumstances of the injury with Rhoades and his wife. In response to questions, Chapman voiced his opinion that the Rhoades' claim was valid and worth a fairly large amount of money. Despite Rhoades' urging, Chapman refused to place a dollar value on the claim. After this discussion, Chapman produced a form retainer contract of the Chapman law firm and filled in the blanks in the form. The contract authorized the firm to represent Rhoades in his personal injury claim against the railroad and provided for a 25% contingent fee.

Rhoades reviewed the retainer agreement, asked no questions about it, and signed it. Robert Chapman initialed the contract "MBC" in the blank provided for the law firm's acceptance of the retainer agreement. These initials were apparently intended to be those of the senior member of the law firm, Morris B. Chapman. At the time the retainer agreement was executed, Rhoades orally specified that suit was not to be filed until after he returned to work since his ultimate level of disability was not yet determined. Arrangements were also made for Chapman to take photographs of the area where the accident causing Rhoades' injury had occurred. Robert Chapman returned to the offices of the law firm and delivered the executed retainer to them.

The same evening the retainer was signed, Mr. and Mrs. Rhoades changed their minds and decided against suing the railroad. Rhoades testified that he had no specific reason for changing his mind. The next morning, February 13, 1976, Mrs. Rhoades called the firm to tell them of the decision not to go ahead with the suit. She spoke with Robert Chapman, who communicated that message to the Chapman firm that same day or, in any event, not later than February 14, 1976.

On February 17, 1976, the Chapman firm filed a complaint in the circuit court of Madison County in the name of William Rhoades against the railroad. On the same date, the law firm asserted an attorney's lien by delivering a declaration of lien to the railroad (Ill. Rev. Stat. 1975, ch. 13, par. 14). Also on February 17, 1976, the firm filed a motion for a temporary injunction asking the court to enjoin the railroad from interfering with the contract rights between Rhoades and his attorneys and from interfering with Rhoades' right to pursue the personal injury action. Specifically, the motion asked that the railroad and its agents be restrained from going to Rhoades' home and from communicating with him without the firm's prior written consent. The trial court issued the temporary injunction the same day.

When Mr. and Mrs. Rhoades learned that the suit had been filed, Mrs. Rhoades called the law firm to inquire why the action had been brought contrary to their instructions. No explanation was given. Mrs. Rhoades also failed in several subsequent telephone calls to speak with Morris Chapman. On March 1, 1976, Rhoades sent a certified letter to the law firm ordering that the litigation be dismissed.

On March 4, 1976, the trial court granted the Chapman firm's motion to dismiss the suit. The dismissal specifically reserved jurisdiction to enforce any claim for attorney's lien on behalf of Chapman and Chapman.

In the early part of March 1976 Rhoades contacted Horton, the claim agent for the railroad. Horton advised Rhoades that he could not speak with him because Horton believed that Rhoades was represented by a lawyer and that the injunction was still in effect. Subsequently, Horton learned that the suit had been dismissed. Thereafter, Rhoades and the railroad agreed to a settlement of the claim for $15,000.

On February 21, 1977, Chapman and Chapman filed a petition to adjudicate attorney's fees. On July 8, 1977, the circuit court of Madison County entered a judgment for the law firm against the railroad and Rhoades in the amount of $3,750, 25% of the settlement. The railroad had agreed to indemnify Rhoades for any attorney's fees.

The appellate court reversed (67 Ill. App.3d 1037), with one justice dissenting, on the ground that the retainer contract was the product of unlawful solicitation by a non-lawyer in violation of section 1 of "An Act to prohibit the solicitation of legal business for remuneration and to provide a penalty therefor" (Ill. Rev. Stat. 1975, ch. 13, par. 15) and was therefore void and unenforceable ...

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