Barnes v. Alexander

Background

Mrs. Barnes sued for an accounting and recovery of one‑fourth of property received in settlement of mining suits. The original defendants had hired the firm Barnes and Martin and O’Connell to receive a one‑fourth contingent fee. Another law firm, Street and Alexander, intervened saying Barnes orally promised them one‑third of his contingent fee if they handled parts of the work. Street and Alexander performed the work. When the fund was paid to O’Connell, he paid Barnes $10,625, retained $6,250, and paid Martin $1,875. A territorial court held Barnes liable to pay $6,250 to Street and Alexander, and that judgment was affirmed.

Reasoning

The central question was whether an informal promise to share a contingent fee created a specific claim against the settlement fund. The Court concluded the agreement was aimed at the fund, not merely a personal promise, and that when the identified fund was received the contract attached to it. Applying equitable rules that contracts to convey a specific object become enforceable when title is acquired, the Court found a lien in favor of Street and Alexander and allowed them to follow the fund into Barnes’s hands.

Real world impact

The ruling confirms that informal fee‑sharing promises can create enforceable claims on identified settlement funds. Law firms that perform work under such agreements can intervene and secure their agreed share once the fund is identified. Courts may require initial recipients of contingency payments to turn over the agreed portions to other firms entitled to them.