Newman v. Moyers

Background

A woman, Ursula Ragland Erskine, was entitled to $1,836.66 under a federal law called the Omnibus Claims Act. Before she collected, she had hired two lawyers who contracted to receive fifty percent of any money recovered. Treasury officials planned to pay the lawyers twenty percent and the rest to her, because §4 of the Act limited attorney fees to twenty percent. The lawyers sued the claimant, the Secretary of the Treasury, and the Treasurer to enforce the fifty-percent contract. The lower courts ordered the money paid into court and awarded the lawyers fifty percent.

Reasoning

The central question was whether Congress could limit the fees lawyers may collect from these federal claims. The Court explained that §4 lawfully capped compensation at twenty percent and that the lawyers were asking the courts to help them obtain money Congress had forbidden. Because the suit sought to achieve an illegal result, the courts below should not have aided the lawyers. The Supreme Court reversed the judgment as to the Treasury officials and the Treasurer and directed dismissal of the suit against them. The appeal by the claimant’s estate was dismissed for want of prosecution.

Real world impact

The decision enforces the statutory twenty-percent cap and prevents lawyers from using the courts to recover higher contract fees against government claimants. Treasury officers and the government will not be required to pay more than the capped amount. The case returns matters to the lower court for further steps consistent with this ruling.