Without special authority, attorneys cannot receive anything in discharge of a client's claim but the full amount in cash.
(Orig. Code 1863, § 383; Code 1868, § 444; Code 1873, § 409; Code 1882, § 409; Civil Code 1895, § 4418; Civil Code 1910, § 4956; Code 1933, § 9-606.)
Law reviews.- For article on the law concerning settlements negotiated by attorneys, see 29 Ga. St. B.J. 10 (1992).
JUDICIAL DECISIONSANALYSIS
General Consideration
Applicability.
- General application of O.C.G.A. § 15-19-6 is in regulation of the relationship between attorney and client and in matters in which the claim in question is for a sum certain. Brumbelow v. Northern Propane Gas Co., 251 Ga. 674, 308 S.E.2d 544 (1983).
Attorney does not have absolute authority in fact.
- Although Brumbelow v. Northern Propane Gas Co., 251 Ga. 674, 308 S.E.2d 544 (1983) held an attorney's authority to settle may be considered to be plenary, the case did not hold the attorney has such authority in fact for the attorney does not. Lewis v. Uselton, 202 Ga. App. 875, 416 S.E.2d 94, cert. denied, 202 Ga. App. 905, 416 S.E.2d 94 (1992).
When a client employs an attorney, the client does not lose the client's power to say whether the client will compromise, and the attorney does not become owner of the litigation so as to be able to sell or give away the client's rights. Accordingly, without special authority, defamation plaintiff's attorney could not agree to a general release and the check-cashing business remained liable to the plaintiff. Lord v. Money Masters, Inc., 210 Ga. App. 21, 435 S.E.2d 247 (1993).
Defining special authority.
- "Special authority" is authority other and greater than an attorney commonly has by virtue of the general retainer and refers to the client's special approval of the specific terms and amount proposed. The attorney can obtain this "special authority" only when and as a settlement is proposed. Lewis v. Uselton, 202 Ga. App. 875, 416 S.E.2d 94, cert. denied, 202 Ga. App. 905, 416 S.E.2d 94 (1992).
Attorney's authority need not be expressly delegated.
- Authority of attorney as agent in particular instance need not be proved by express contract; authority may be established by the principal's conduct and course of dealing, and if one holds out another as one's agent, and by one's course of dealing indicates that the agent has certain authority and thus induces another to deal with the agent as such, one is estopped to deny that the agent has any authority which, as reasonably deducible from the conduct of the parties, the agent apparently has. Patterson v. Southern Ry., 41 Ga. App. 94, 151 S.E. 818 (1930).
No presumption of apparent authority.
- When an attorney asserts reliance on another attorney's "apparent" authority, the attorney does so at that attorney's peril; there is no presumption of such authority and the burden of proof is on the attorney seeking to enforce a settlement. Lewis v. Uselton, 202 Ga. App. 875, 416 S.E.2d 94, cert. denied, 202 Ga. App. 905, 416 S.E.2d 94 (1992).
Attorney may not compromise client's claim.
- Attorney may not compromise the client's claim or defense unless the compromise is specially authorized in writing or ratified, or unless the doctrine of estoppel, or some other special equity intervenes. Equitable Gen. Ins. Co. v. Johnson, 166 Ga. App. 215, 303 S.E.2d 757 (1983).
Attorney cannot settle absent consulting client.
- Attorney may not settle or compromise on client's claim, defense, or property without obtaining "special authority," that is, without consulting the client as to a specific offer of settlement when the offer is made. Lewis v. Uselton, 202 Ga. App. 875, 416 S.E.2d 94, cert. denied, 202 Ga. App. 905, 416 S.E.2d 94 (1992).
Authority to receive lesser sum not presumed.
- Presumption that the client authorized the acceptance of a lesser amount must be proved by the defendant after a prima facie case of the amount due has been established. Kaiser & Bro. v. Hancock, 106 Ga. 217, 32 S.E. 123 (1898); United Glass Co. v. Chamlee, 135 Ga. 152, 68 S.E. 796 (1910); Evans v. Atlantic Nat'l Bank, 147 Ga. 621, 95 S.E. 219 (1918).
Authority of attorney to receive a lesser sum in payment will not be presumed. Johnson v. Starr Piano Co., 27 Ga. App. 425, 108 S.E. 811 (1921).
Mere acceptance by attorney for plaintiff in pending action of a sum less than the amount sued for would not raise a presumption that such a settlement was authorized by the plaintiff, although the settlement might be good pro tanto; and, in default of any proof going to show that the settlement was authorized by the attorney's client, the settlement would not be binding. Burnett v. Johnston, 45 Ga. App. 667, 165 S.E. 857 (1932).
Attorney has implied authority to make collection in cash.
- If there is no apparent limitation on the attorney's authority, attorney at law who has had placed with the attorney an account for collection cannot accept from the debtor, in full accord and satisfaction, anything less than the full amount of the claim, and that in cash; nevertheless, authority to effectuate the collection gives to the attorney implied authority to do everything usual and immediately necessary to accomplish the main purpose of the agency, that of making the collection in cash. John Bean Mfg. Co. v. Citizens Bank, 60 Ga. App. 615, 4 S.E.2d 924 (1939), overruled on other grounds, Tifton Bank & Trust Co. v. Knight's Furn. Co., 215 Ga. App. 471, 452 S.E.2d 219 (1994).
Attorney as "special agent."
- Attorney is not a general agent for all purposes, but the attorney's authority is limited to the particular purpose for which the attorney was retained and the attorney's authority to do other things must be inquired into; as a special agent, the attorney has no inherent power to dispose of the client's property or legal right, but must obtain special authority. Addley v. Beizer, 205 Ga. App. 714, 423 S.E.2d 398, cert. denied, 205 Ga. App. 899, 423 S.E.2d 398 (1992).
Attorney may only accept money for payment absent authorization.
- Attorney who holds claim for collection has no authority to receive anything in payment of such claim except lawful and generally accepted money or currency, unless especially authorized to do so by the principal, and hence cannot ordinarily take promissory notes, drafts, warrants, deeds of trust, or land in satisfaction of the claim. John Bean Mfg. Co. v. Citizens Bank, 60 Ga. App. 615, 4 S.E.2d 924 (1939), overruled on other grounds, Tifton Bank & Trust Co. v. Knight's Furn. Co., 215 Ga. App. 471, 452 S.E.2d 219 (1994).
Full power and authority to settle.
- Clients plainly instructed their attorney that the clients would settle for no less than $50,000; thus, the attorney had "full" authority to enter a settlement for the amount of $50,000. This "full power and authority" to settle accrued only after the amount of the settlement had been approved by the client. Lewis v. Uselton, 202 Ga. App. 875, 416 S.E.2d 94, cert. denied, 202 Ga. App. 905, 416 S.E.2d 94 (1992).
Sum accepted by attorney pursuant to settlement agreement is good.
- If attorney agreed upon a settlement for less than the full amount and received from the defendant a check for the amount agreed upon, payable jointly to the client and the attorney, and endorsed the name of the client thereon and actually converted the check into cash, regardless of whether the attorney did or did not have authority to so endorse the check, the transaction amounted to payment to the attorney of the amount of cash represented by the check and actually received thereon, and was a payment pro tanto of the client's claim, whether or not such attorney was authorized to accept in settlement a lesser amount than the full sum claimed. Patterson v. Southern Ry., 41 Ga. App. 94, 151 S.E. 818 (1930).
While an attorney at law cannot, without special authority, receive anything in discharge of a client's claim but the full amount in cash, yet if the attorney actually enters upon an agreement for the compromise of the client's claim and actually receives, pursuant to such agreement, the sum agreed to be accepted in compromise, the settlement is good pro tanto. Crouch v. Fisher, 43 Ga. App. 484, 159 S.E. 746 (1931).
Attorney cannot unilaterally agree to place credits on client's claim.
- Attorney holding a client's claim for collection cannot, without special authority from the client, bind the client by an agreement to credit on the claim an amount due by the attorney, or to assume and credit thereon the debt of another to the client's debtor. John Bean Mfg. Co. v. Citizens Bank, 60 Ga. App. 615, 4 S.E.2d 924 (1939), overruled on other grounds, Tifton Bank & Trust Co. v. Knight's Furn. Co., 215 Ga. App. 471, 452 S.E.2d 219 (1994).
Attorney may not bind principal as payment of claim.
- Attorney may not accept property to be used by the attorney and bind the attorney's principal as payment of claim placed with the attorney for collection, nor may the attorney receive property other than money, nor receive the drafts of third persons payable to the debtor and endorsed by the debtor for payment of the client's claim. John Bean Mfg. Co. v. Citizens Bank, 60 Ga. App. 615, 4 S.E.2d 924 (1939), overruled on other grounds, Tifton Bank & Trust Co. v. Knight's Furn. Co., 215 Ga. App. 471, 452 S.E.2d 219 (1994).
Ratification by client of payment.
- Client may ratify the acceptance of a note in payment of a claim. Jeter & Forbes v. Haviland, Keese & Co., 24 Ga. 252 (1858).
Client may ratify a part payment of money in full satisfaction of the debt. Johnson v. Starr Piano Co., 27 Ga. App. 425, 108 S.E. 811 (1921).
Settlement of tax executions by Attorney General.
- Attorney General has no authority to settle tax executions at less than full amount; such authority must come from the state in order to bind the statute. State v. Southwestern R.R., 66 Ga. 403 (1881); State v. Southwestern R.R., 70 Ga. 11 (1883).
Enforcement of settlement not determinative of rules violation.
- Although a third party may enforce a settlement agreement that an attorney made without proper authority, that enforcement does not determine whether the attorney has violated disciplinary rules of the State Bar. In re Lewis, 266 Ga. 61, 463 S.E.2d 862 (1995).
Cited in Sciple v. Northcutt, 62 Ga. 42 (1878); Bell & Harrell v. Kwilecki, 11 Ga. App. 9, 74 S.E. 444 (1912); Rawls v. Heath, 36 Ga. App. 372, 136 S.E. 822 (1927); Commins v. Ross, 44 Ga. App. 182, 160 S.E. 679 (1931); Whatley v. Carpenter, 198 Ga. 408, 31 S.E.2d 659 (1944); Hasty v. Grimes, 96 Ga. App. 145, 99 S.E.2d 450 (1957); Pembroke State Bank v. Warnell, 218 Ga. App. 98, 461 S.E.2d 231 (1995); Wilson & Assocs., Attys., P.C. v. Parker (In re Parker), Bankr. (Bankr. N.D. Ga. Aug. 19, 2005).
Handling of Client's Funds by Attorney
Attorney may deduct commission fees before remitting collection to client.
- Attorney having an interest in a collection in the nature of a commission for services for effectuating the collection has authority to endorse the name of the client to whom the check is made payable, personally as attorney, in order that the attorney may deduct the commission fees before remittance of the collection to the client. John Bean Mfg. Co. v. Citizens Bank, 60 Ga. App. 615, 4 S.E.2d 924 (1939), overruled on other grounds, Tifton Bank & Trust Co. v. Knight's Furn. Co., 215 Ga. App. 471, 452 S.E.2d 219 (1994).
Attorney may deposit proceeds in individual or professional account.
- If attorney has authority to endorse a check payable to the client, the attorney has apparent authority to deposit the proceeds thereof either in the attorney's individual account or the attorney's account as attorney. John Bean Mfg. Co. v. Citizens Bank, 60 Ga. App. 615, 4 S.E.2d 924 (1939), overruled on other grounds, Tifton Bank & Trust Co. v. Knight's Furn. Co., 215 Ga. App. 471, 452 S.E.2d 219 (1994).
Attorney has authority to endorse client's name on check for full amount.
- Attorney with whom has been placed an account for collection, with no limitation on the attorney's authority as to the manner of collection, on receipt from the debtor of a check in the full amount of the claim and payable to the order of the client, has, without any authority from the client, authority to endorse the name of the client personally as attorney in order to liquidate the collection; nor is the rule modified should the attorney, in lieu of taking manual possession of the money, deposit the check either to the attorney's individual account or to the attorney's account as attorney. John Bean Mfg. Co. v. Citizens Bank, 60 Ga. App. 615, 4 S.E.2d 924 (1939), overruled on other grounds, Tifton Bank & Trust Co. v. Knight's Furn. Co., 215 Ga. App. 471, 452 S.E.2d 219 (1994).
Bank not liable to client if attorneys defaulted.
- Action of attorneys with whom a claim was placed for collection in endorsing client's name on check in settlement thereof, by themselves as attorneys, and depositing check to their credit, did not constitute the crime of forgery as the attorneys had authority to so endorse the check; hence, the bank was within the bank's right and authority when the bank cashed or paid the check by deposit to the credit of the attorneys making the collection, and would not, under the facts, be liable to the client of the attorneys, to whom the attorneys may have defaulted in remittance of the proceeds arising from the collection. John Bean Mfg. Co. v. Citizens Bank, 60 Ga. App. 615, 4 S.E.2d 924 (1939), overruled on other grounds, Tifton Bank & Trust Co. v. Knight's Furn. Co., 215 Ga. App. 471, 452 S.E.2d 219 (1994).
Practice and Procedure
Collection of bill of sale by attorney.
- Attorney employed to handle collection of bill of sale is not empowered to surrender the client's right or title to the property described in the bill of sale. Rogers v. Citizens Bank, 92 Ga. App. 399, 88 S.E.2d 548 (1955).
Client's ratification of attorney's acceptance of lesser amount.
- If the client, upon being informed of the receipt of funds as settlement by the attorney, demanded payment thereof from the attorney, and in correspondence with defendant disclaimed the authority of the attorney to endorse the client's name upon the check and called upon defendant to pay the amount of the check because the check had been paid without the client's endorsement, and referring to its claim as one for the amount for which the check was issued, and in no way repudiating the authority of the attorney to actually settle the claim for less than the full amount thereof, the jury would be authorized to find that the client had ratified the action of the attorney, not in illegally endorsing the check, but in settling the claim for less than the full amount. Patterson v. Southern Ry., 41 Ga. App. 94, 151 S.E. 818 (1930).
Burden on defendant to show plaintiff 's attorney authorized to settle for lesser amount.
- If the defendant contends that the defendant settled the claim by paying the plaintiff 's attorney less than the full amount thereof, the burden is upon the defendant to show affirmatively that the plaintiff 's attorney had special authority from the client to make the settlement. High v. Hollis, 35 Ga. App. 195, 132 S.E. 260 (1926).
RESEARCH REFERENCES
C.J.S.
- 7A C.J.S., Attorney and Client, § 198.
ALR.
- Attorney's liability for failure to follow client's instructions, 56 A.L.R. 962.
Authority of attorney to bind client by extrinsic agreement to alter or vary terms of a written instrument, 76 A.L.R. 1461.
Validity of stipulation, in contract between attorney and client, prohibiting or restricting right of latter to compromise without former's consent, and effect of invalid stipulation in that regard upon rest of contract, 121 A.L.R. 1122.
Discharge of debtor who makes payment by delivering checks payable to creditor to latter's agent, where agent forges creditor's signature and absconds with proceeds, 49 A.L.R.3d 843.
Authority of attorney to compromise action - modern cases, 90 A.L.R.4th 326.