Thomas v. Scougale, 90 Wash. 162, 155 Pac. 847 (1916).

           [No. 12961. Department Two. March 7, 1916.]
      JESSE THOMAS, Appellant, v. FRANK J. SCOUGALE et al.,
                     Respondents. 1

EVIDENCE - SUFFICIENCY. The dismissal of an action to recover an
attorney's fee of 25 per cent of the amount recovered by any suit
or compromise of the client's claims is unwarranted, where the
evidence is undisputed that the attorney, after having commenced
an action which was abandoned, joined in another action respecting
a mortgage and an accounting due from his client, and by joining
in opposing the adverse interests, accomplished the same result as
by a direct suit, recovering $5,644.45 in cash and a third
interest in certain lands; and it is immaterial that such cash was
all consumed in paying an indebtedness of the client which was an
entirely independent transaction.

Where the actual interest of a mortgagee was fully satisfied after
foreclosure, he could obtain no title by the foreclosure sale, and
could convey none by assignment of the sheriff's certificate of

TITLE. The doctrine protecting bona fide purchasers of land
without notice applies solely to purchasers of the legal title,
and the

1 Reported in 155 Pac. 847.

                     THOMAS v. SCOUGALE.                163
 Mar. 1916               Opinion Per HOLCOMB, J.

purchaser of an equitable interest, especially at judicial sale,
acquires the property burdened with every prior equity charged
upon it.

husband's contract employing an attorney on behalf of the marital
community to establish a trust in community lands and recover a
share in a joint venture relating to the same cannot be avoided by
the wife, as not authorized by her, where she was a party to all
the suits brought relating to the matter, was represented by the
attorney therein, showed considerable interest and concern in the
litigation, and was consulted in regard to it, and the litigation
was brought for the benefit of the community and resulted in
benefit to it.

Appeal from a judgment of the superior court for Pierce
county, Clifford, J., entered February 10, 1915, dismissing
an action for equitable relief, tried to the court. Reversed.

Fogg & Fogg, for appellant.


HOLCOMB, J. - Frank J. Scougale, one of the respondents
and husband of respondent Cora Scougale, on August 9,
1909, employed appellant as attorney and gave to him the
following memorandum in writing:
                     "Tacoma, Wash.,      Aug. 9, 1909.

"I hereby retain Jesse Thomas as my attorney to commence
an action for me and my wife against Dominic Cavalero
and Norval McGhie and their wives to establish my interest
in the lands and timber in secs. 20, 29, 19, 30 and
twp. 22, N. R. 2 east, and to realize the value thereof,
together with damages for breach of the agreement between me
and said Cavalero and McGhie when we entered upon the
joint adventure for the acquisition of said lands and timber,
which were taken in the name of the Gig Harbor Timber (or
Lumber) Co., and authorize him to associate with him Fred S.
Fogg, and agree to pay my said attorney for his services
twenty-five (25) per cent of whatever may be realized by
suit, settlement or compromise of my claim in and to said
property or damages.                Frank J. Scougale."

Pursuant to the employment, appellant at once commenced
an action for his clients as a marital community, for the
purposes designated in the employment. Afterwards the action

                     Opinion Per HOLCOMB, J.           90 Wash.

so instituted came before this court on an appeal from an
order granting a change of venue, and was reported in State
ex rel. Scougale v. Superior Court,
55 Wash. 328, 104 Pac.
607. The substance of the cause of action stated in the
complaint was there succinctly set forth, and it was
determined that, on the facts alleged, the cause of action was one
to establish a trust in real and personal property, and for
damages for alleged breach thereof. The cause was
transferred to Snohomish county, but it does not appear to have
been tried and adjudicated, but was abandoned. Shortly
thereafter, one Sandberg, to whom Scougale and wife had,
about a year previously, given a mortgage for a large sum,
began an action to foreclose this mortgage. The defendants
defaulted, and Sandberg took judgment in the foreclosure
proceedings for the sum of $13,255.60, principal, interest,
attorney's fees, and costs. At the time this suit was
commenced, another memorandum was made on the back of the
former memorandum between appellant and Scougale, signed
by Scougale on May 26, 1910, as follows:

"The within retainer is hereby extended to the foreclosure
suit brought by Peter Sandberg a few days ago against
myself and wife and Cavalero and McGhie et al. upon the same
terms and rate of compensation."

That suit was permitted to go to judgment by default on
the part of defendants Scougale, appellant representing
Scougale in transactions had with the mortgagee and his
attorneys; and it appears that, previous to the giving of the
mortgage, Scougale had borrowed $2,600 from the Pacific
National Bank of Tacoma, and Sandberg had gone upon his
note with him, and a mortgage was given to indemnify
Sandberg against loss by reason of this note or any future
advancements. During the pendency of the action, Sandberg
stated to appellant and to Scougale that all he wanted was
to be made whole on that note at the bank and saved
harmless; that he did not want the property, and that, when he
was paid off out of the proceeds received from Cavalero, he

                     THOMAS v. SCOUGALE.                165
 Mar. 1916               Opinion Per HOLCOMB, J.

had no further interest in the property. There were about
six years' accrued interest on the note and it aggregated
$3,936.94. Although an attorney's fee of $1,000 had been
allowed in the foreclosure, this was settled with Bates, Peer
& Peterson, Sandberg's attorneys, for the sum of $100.
These sums, together with $41.30 costs in foreclosure suit,
were paid to and received by Bates, Peer & Peterson,
attorneys for Sandberg, in satisfaction of his judgment and
foreclosure. The interests of Scougale and wife were sold,
however, under the foreclosure on January 14, 1911, and bid in
by Sandberg for the total amount of the judgment and costs,
and afterwards Sandberg assigned his certificate of sale,
issued to him by the sheriff of Pierce county, to defendant
Schliemann, which appellant says he believes was at the
request of Scougale. Schliemann held his certificate of sale
during the period of redemption, and on March 21, 1914,
the sheriff of Pierce county made, executed, and delivered his
sheriff's deed to Schliemann for all the right, title, and
interest of the Scougales in and to the premises.

After the adjudication in the foreclosure suit, Sandberg
filed a suit against Scougale, Cavalero, and McGhie, and
their wives, for an accounting and winding up of the Gig
Harbor venture and a division of the property or its
proceeds. Appellant's contract of retainer was extended to this
action upon the same terms, and appellant, on behalf of
Scougale and wife, filed an answer and cross-complaint
setting up their one-third interest in the land and timber not
covered, as well as that covered, by the Sandberg mortgage.
Sandberg's complaint and Scougale's cross-complaint
covered substantially the same field as Scougale's first action
hereinbefore referred to. The case was tried in Snohomish
county, and Sandberg was represented by Messrs. Bates,
Peer & Peterson. No effort was made to segregate the
interests of Sandberg and Scougale in that action, their
combined interests being referred to as "the Scougale interest"
or "the Scougale third," and they prosecuted a joint appeal

                    Opinion Per HOLCOMB, J.           90 Wash.

from the judgment of the superior court to this court
(Sandberg v. Scougale,
75 Wash. 313, 134 Pac. 1051), and
obtained a somewhat more favorable judgment. When the
remittitur went down in that case, appellant and Mr. Peer
went to Everett and, in conjunction with Mr. Coleman, one
of the attorneys for Cavalero, prepared a final decree.
Pending the appeal, Cavalero had sold the logging equipment,
logs, and piles, and had received a large sum of money
subsequent to the time the original decree was entered, and this
was taken into account.

The decree after appeal, as prepared and agreed to by the
attorneys, awarded to Sandberg and Scougale one-third of
the net funds in Cavalero's hands, after being reimbursed for
advancing Scougale's third of the original cost of land and
timber, with legal interest thereon, one-third of about
in bills receivable, which were then of doubtful value and of
which nothing has been collected, and one-third of the three
hundred and sixty acres of logged-off land. Appellant and
the attorneys for Sandberg received from Cavalero the sum
of $5,644.45 in cash. With this sum they paid Scougale's
obligations to Sandberg on account of the note to the bank,
with the six years' interest, and the court costs and
attorney's fees which Sandberg actually paid out in the
foreclosure suit and in the suit for accounting, which took all
of the above sum of cash except $388.55, which appellant
received and applied as part payment of his fee. He has
received no other compensation. The' money above mentioned
was received from Cavalero and the Sandberg claim paid off
in December, 1913. This action by appellant is for his
stipulated share of the property, under the terms of his
employment, recovered for his clients, and to establish a trust to
the extent of his interest in the interest recovered for his
clients, and to compel a partition of his interests from all
the other interests therein.

One of the allegations of the complaint is that the
defendants Prochaska and wife have a right to purchase a certain

                     THOMAS v. SCOUGALE.                167
 Mar. 1916               Opinion Per HOLCOMB, J.

described tract of twenty acres, at the price of $60, from
the other defendants in the action, and it is conceded that
this right is prior to any right of appellant. Another
allegation of the complaint is that the interest of the
defendants Scougale and wife is an undivided one-third interest in
all of the property, subject to the right of Prochaska and
wife to purchase the above twenty acres, and subject to the
right of appellant to a one-fourth thereof under his contract.
Another allegation of the complaint is that the interest of
the defendants Schliemann and wife, if any, is simply as
trustee for the defendants Scougale and wife. Defendants
Cavalero and wife appeared by their attorneys, but expressly
disclaimed any interest in the interest claimed by appellant
adverse to him. Scougale and wife and Schliemann and wife
appeared by the same attorneys, but made separate answers.
Schliemann and wife put in issue all the allegations of the
complaint, and further affirmatively alleged the foreclosure
proceedings hereinbefore referred to, the sale under
foreclosure to Sandberg, the assignment of the certificate of sale
to Schliemann, which they alleged was in good faith and for
value, and without any knowledge or notice of any claim of
right, title, interest, or estate in the premises on the part
of appellant, and that they were innocent purchasers for
value; that the period of redemption expired and the
premises were unredeemed. Scougale and wife put in issue all the
material allegations of the complaint, and further answered
affirmatively that, at all times mentioned, they were husband
and wife, and any right, title, interest, or estate which might
rightfully be claimed by them, or either of them, was their
community property; that the contract made between
Frank F. Scougale and appellant was not made by
defendant Cora Scougale; that she was not a party thereto nor
bound by any of the terms and conditions thereof, and that
the contract was ineffectual to create any lien or incumbrance
upon the community interest or property owned by the
answering defendants.

                     Opinion Per HOLCOMB, J.           90 Wash.

Appellant's reply to the answer of Schliemann and wife
put in issue the affirmative allegations of their answer, and
denied that the assignment of the sheriff's certificate to them
was for value, or that the assignment if made was for or on
behalf of the Scougale community. The answer of
defendants Scougale was also replied to, and the affirmative
allegations therein contained were denied, except that it was
admitted that defendant Cora Scougale did not sign the
contract, but alleged that she had knowledge thereof and
acquiesced in it. There is no evidence on the part of
Schliemann and wife in support of their affirmative allegation of
the purchase of the assignment from Sandberg of the certificate of
sale under foreclosure for value, in good faith, and
without notice. There is no evidence on behalf of Scougale
and wife to sustain their affirmative allegations.

Upon the conclusion of the testimony, defendants Scougale
and wife and Schliemann and wife moved the court to
dismiss the action with judgment in their favor, for the reason
that appellant had not made a case sufficient to entitle him
to a decree. The motion was granted, the court remarking:

"It seems to me that the plaintiff entered into a contract
to take part of the proceeds of suit if he won anything and
if he did not he did not get anything, and on the record here
he did not. The suit took every bit of the property. I
understand the plaintiff's client got nothing out of it."

Appellant then inquired of the court if it interpreted the
contract that appellant was not to get anything under it
until not only Cavalero's claim but Sandberg's claim was all
cleared off, to which the court replied:

"They do not appear to be cleared off. You can probably
bring another suit and we will try to arrange the decree so
that you will not be prevented from that. You cannot fasten
any claim on the real estate. That is all that I am deciding

We think the court was in error when it concluded, at the
close of the evidence, that appellant's clients got nothing out

                     THOMAS v. SCOUGALE.                169
 Mar. 1916               Opinion Per HOLCOMB, J.

of the litigation; and that it was also in error when it
concluded that it does not appear that the Cavalero claim and
the Sandberg claim had been paid off. There is no dispute
of the evidence of appellant that, as a result of the litigation
over the property with Cavalero and McGhie, the net sum
of $5,644.45 in cash and an undivided one-third interest in
certain described lands in sections nineteen and thirty of the
lands heretofore mentioned were acquired by the Scougales.
It is immaterial whether appellant accomplished this by a
direct suit, as at first attempted, or by joining in litigation
with Sandberg against the other parties in interest, which
accomplished the same result. Appellant's original
employment was to establish Scougale and wife's one-third interest
in the property in question. Scougale's indebtedness to the
bank, for which the mortgage was given to Sandberg to
indemnify him as surety, was a totally independent transaction.
It did not, and could not, interfere in any way with the
establishment of the trust in favor of the Scougales in all the
property in controversy between them and Cavalero, McGhie,
and the Gig Harbor Timber Company. Sandberg, however,
having a prior lien against the interest of Scougale and wife,
had a perfect legal right to take action against Cavalero
and McGhie and the timber company to establish his lien
thereon. Appellant, by joining with Sandberg in that
proceeding, accomplished for the Scougales all that it could
have accomplished by the original suit. He secured in that
action the interests of the Scougales subject to the lien of
Sandberg. The lien of Sandberg, although nominally for a
much larger sum, was in fact no greater than his actual
financial interest. This, as shown by the undisputed evidence
on behalf of appellant, was, as heretofore stated, a total of
$5,255.90, after allowing for the total amount of Sandberg's
actual mortgage, interest, costs, and attorney's fees, and the
costs and attorney's fees expended by him in the litigation
between him and Scougale, Cavalero, McGhie, and the Gig
Harbor Timber Company. This was all satisfied out of the

                     Opinion Per HOLCOMB, J.           90 Wash.

cash received and Sandberg had no further interest. Having
received his money, he had no title under his foreclosure sale
and could convey none to the defendants Schliemann. The
contention of the defendants Schliemann, therefore, that they
stand in a position of bona fide incumbrancers without notice
is not tenable. The assignment by Sandberg to Schliemann
was probably an evasion and a mere subterfuge. The most
which the mortgage could incumber was the equitable estate
asserted and thereafter determined to be in the Scougales.
The doctrine which protects bona fide purchasers without
notice is applicable solely to purchasers of the legal title; and
the purchaser of an equitable interest purchases at his peril
and acquires the property burdened with every prior equity
charged upon it. Shoufe v. Griffiths,
4 Wash. 161, 30 Pac.
93, 31 Am. St. 910; Norgren v. Jordan, 46 Wash. 437, 90
Pac. 597. Especially is this true where they purchased
merely under judicial sale.

There is a further reason why the action should not have
been dismissed, in that twenty acres of land in controversy
was not covered by Sandberg's mortgage nor by the sheriff's
deed. It had never been mortgaged or sold, and is part of
the three hundred and sixty acres covered by the final decree
of the superior court of Snohomish county wherein it was
adjudged to belong, two-thirds to Cavalero and one-third to
Sandberg and Scougale as their interests might appear.
Sandberg's mortgage never having included this twenty-acre
tract, the one-third interest therein belongs to Scougale at
this time. It is clear that the Scougales got this interest as
the result of the litigation conducted for them by appellant.

As to the contention that Mrs. Scougale is not bound by
the contract made by her husband with appellant, we think
there is no merit in it. The testimony of appellant is not
contradicted that Mrs. Scougale showed considerable interest
and concern in the litigation, that he saw her one or more
times at her house, and that she called him up by telephone
one or more times inquiring as to the progress of matters;

                          THOMAS v. SCOUGALE.                171
 Mar. 1916                   Opinion Per HOLCOMB, J.

and the litigation was certainly brought and conducted for
the benefit of the community and resulted in the benefit of
the community. She was a party plaintiff or defendant to
every suit concerning the matters. She was represented by
appellant in all of them. She cannot, under the facts, deny
that appellant was her attorney and was representing her
under the contract. Pearl Oyster Co. v. Seattle & M. R.
53 Wash. 101, 101 Pac. 503; Jones v. Jones,
72 Wash. 517, 130 Pac. 1125.

Appellant very substantially performed his agreement with
Scougale to the very great advantage of both him and his
wife. "The laborer is worthy of his hire," even if he is only
an attorney, and a contract of a business man with an
attorney, fully performed by the attorney, ought to be as good,
in morals and in law, as any other contract.

The judgment will be reversed, and the cause remanded
to the court below with instructions to grant judgment in
favor of appellant for the one-fourth of the $5,644.45
recovered in money, less the $388.55 received by him, and
establishing his undivided one-fourth interest in the one-third
interest of Scougale and wife in the lands described in the
complaint, subject to the right of the defendants Prochaska
to purchase twenty acres under their purchase option; and
that appellant have the amount of his one-fourth interest in
the cash money recovered added to his one-fourth interest in
the one-third of the land, and that he have partition as
prayed. 30 Cyc. 194.