455 Pa. 132 | Pa. | 1974
Opinion by
This appeal arises from a decree in equity which denied appellant, Anna C. Meara, Administratrix d.b.n.c.t.a. of the Estate of William G. Meara, Deceased, the relief she sought against appellees, Robert A. Hewitt and Mary I. Hewitt, his wife, Prince George
On April 1, 1968, the deceased, an employee of the corporation and a legal client of Houpt, a former attorney, executed a mortgage on the real estate he owned in Horsham Township, Montgomery County, to the corporation, as mortgagee, in the face amount of $50,000. The mortgage was given in exchange for a $50,000 judgment note of the corporation which was subsequently to be exchanged for stock representing a twenty-five percent interest in the corporation.
The decedent died on April 17,1968, and Houpt was appointed executor of the decedent’s estate, pursuant to the provisions of decedent’s will.
Since the corporation was wholly owned by Houpt, the chancellor found that the decedent was, in fact dealing with Houpt, not the corporate entity, and that the attorney-client relationship of the decedent and Houpt constituted a confidential relationship, but went on to find no abuse of that relationship in the facts of this case.
In Kribbs v. Jackson, 387 Pa. 611, 129 A. 2d 490 (1957), we laid out the standard of conduct that must prevail between an attorney and client regarding business transactions between the two. We stated: “That relation [attorney and client] is so confidential in its nature that it calls for the exercise of the most perfect good faith. In transactions between counsel and client, no shadow of anything like deception or unfair dealing upon part of an attorney can be countenanced. In every case in which complaint is made, the courts will scrutinize the transaction with jealous care to see that there is no relaxation of the rule. Owing to confidence bestowed upon him, the attorney is presumed to be able to strongly influence his client; hence, the law often declares transactions between them void which between other persons would be unobjectionable. Unless the transaction is fair and conscionable, it is deemed a constructive fraud.” At pages 621-22.
In Points v. Gibboney, 340 Pa. 522, 17 A. 2d 365 (1941), we stated: “The burden is upon him, as attorney, to show that he did not gain a personal advantage by misrepresenting the legal situation or by failing to
The chancellor, by his adjudication, seemed to take the view that the burden was upon appellant to show an abuse of the confidential relationship. However, as we have explained, the burden should have been placed upon Houpt to prove that he did not abuse that relationship, that he fully disclosed the facts of the transaction to his client, and that the transaction was fair and conscionable. We must thus remand for a reconsideration by the chancellor of whether Houpt met his burden. If it is found that Houpt did not sustain his burden, then, contrary to the contentions of the Hewitts, the mortgagor’s defenses will be good against them. See Harrison v. Galilee Bapt. Church, 427 Pa. 247, 234 A. 2d 314 (1967).
Decree vacated and case remanded to the Court of Common Pleas, Civil Trial Division, of Montgomery County, for proceedings consistent with this opinion. Costs to be borne by appellees.
Houpt subsequently resigned and the decedent’s widow, appellant, was appointed in his place.