APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgment reversed and cause remanded with directions to dismiss the action.
Messrs. Struckmeyer & Struckmeyer, for Appellant.
Messrs. Moore, Romley & Roca, for Appellees.
[60 Ariz. 545] ROSS, J.
George A. and Edith Damron, on June 4, 1941, employed Moore & Romley, a local firm of lawyers, to bring an action against Thomas E. Hudson, a resident of California, on account of personal injuries sustained by them by reason of the negligent operation of an automobile by said Hudson. The contract of employment was in writing and under it the Damrons agreed to pay said attorneys for their services "an amount equal to thirty three and one-third per cent (33 1/3%) of all sums recovered, whether by suit or compromise." In the contract was this stipulation:
"This retainer shall operate as an assignment pro tanto to said Second Parties of any claim or right of recovery, insofar as such assignment may be lawful, arising out of, or incident to, the matter or matters in which Second Parties are retained to perform said services, and of anything received or collected thereon or of judgment obtained thereon."
The Damrons agreed to pay all costs of the litigation.
Pursuant to this contract attorneys, Moore & Romley, on June 21, 1941, brought an action in Maricopa County, Arizona, where the cause of action originated, [60 Ariz. 546] against Hudson for the Damrons, alleging damages for injuries in the sum of $15,228. After the action was filed against Hudson, the Damrons, who resided in San Diego,
California, without consulting their attorneys, accepted $1,1900 as a compromise and settlement of their claims for damages.
The present action was brought by Moore & Romley against the Employers Casualty Company. Hudson's insurer, to recover a fee for their legal services rendered the Damrons. As a basis of the right to recover from the company, it is alleged, in substance: That the latter, the Damrons, induced the Damrons to settle and compromise their claim for an inadequate sum, and a sum much smaller than the plaintiffs could have obtained; that the settlement was fraudulent as to the plaintiffs, and a wrongful interference with their contractual relations with their clients.
Upon the theory that the $1,900 paid the Damrons under the compromise was two-thirds of the Employers Casualty Company's admitted liability as surety on Hudson's bond, the plaintiffs alleged that they "are entitled to one-third" of $2,850, or $950, for which they prayed judgment. The court, after hearing the case, gave plaintiffs judgment for one-third of $1,900, or for $633.33. The company perfected an appeal to this court and assigns three errors, as follows:
"I. The court erred in holding that the contract of employment operated as an equitable assignment pro tanto to the appellees, for the reason that rights in actions for personal injuries are not assignable.
"II. The court erred in holding that the appellant did not have the legal right to negotiate for and effect a settlement, and that such settlement was fraudulent as to the appellees, for the reason that settlements between parties are favored in and encouraged by the law, and for the reason that the appellant, acting for [60 Ariz. 547] and on behalf of ...