Appellants, Dickinson Econo-Storage, a general partnership consisting of Roger J. Pelton, Raymond Pelton and Duane U. Brekke (Econo-Storage), appeal from a summary judgment granted to Midwest Federal Savings Bank (Midwest Federal). We reverse and remand.
Econo-Storage was the fee owner of Lots 3 and 4, Block 2A, Kilweins 2nd Subdivision, Stark County, North Dakota. Econo-Storage granted to Midwest Federal a mortgage on the western part of the aforementioned properties hereinafter described as the west 80 feet of lot 3. After Econo-Storage defaulted on the note and mortgage, Midwest Federal entered into possession of the west 80 feet of lot 3. The west 80 feet of lot 3 was separate from the remaining portion of lot 3 and from lot 4 and Econo-Storage had separate mortgages with different mortgagees on the remaining property of lots 3 and 4. However, the properties were not partitioned for tax purposes with the Treasurer of Stark County, North Dakota, and there were no arrangements made for the apportionment of taxes between the interests held by Econo-Storage and Midwest Federal.
In August of 1986, Midwest Federal paid Stark County $30,703.55 for delinquent real estate taxes for lots 3 and 4 for the years of 1983 through 1986. Subsequently, Midwest Federal learned that of that amount, $25,191.08 should have been apportioned to the remaining portions of lots 3 and 4 owned by Econo-Storage. Consequently, Midwest Federal commenced an action against Econo-Storage for the $25,191.09 that Midwest Federal mistakenly paid.
Prior to the scheduled trial date of January 24, 1989, counsel for Midwest Federal, James Geyer, and counsel for Econo-Stor-age, Robert Lamont, reached an oral settlement of the dispute. Econo-Storage was to pay Midwest Federal $18,500 over a period of time and upon default, to confess judgment for $23,000. This agreement was reduced to writing by Geyer and was sent to Lamont for the parties’ signatures. However, on February 7, 1989, Lamont informed the court that a trial date needed to be rescheduled as the partners of Econo-Storage refused to execute the proposed agreement that he had negotiated on their behalf. Subsequently, Lamont withdrew from the case.
Thereafter, Midwest Federal moved for summary judgment contending that Lamont had the authority, whether ostensible or actual, to bind the partners of Econo-Storage to the negotiated settlement. The
The sole issue to be decided on this appeal is whether Econo-Storage’s attorney, Lamont, had sufficient authority to bind Econo-Storage to the settlement agreement he negotiated with Midwest Federal’s attorney, Geyer.
Under Rule 56, N.D.R.Civ.P., a summary judgment should be granted if it appears that there are no genuine issues of material fact or any conflicting inferences which may bé drawn from those facts. Rule 56(c), N.D.R.Civ.P.;
Miller Enterprises v. Dog N’ Cat,
In the instant case, Midwest Federal argues that Lamont had sufficient authority to bind Econo-Storage to the settlement agreement. Specifically, Midwest Federal argues that Lamont stated to a colleague of Geyer that he felt that he had authority to enter into the agreement on behalf of the Econo-Storage partnership and its partners. Further, Midwest Federal contends that a letter that Lamont wrote to the partners of Econo-Storage indicates that he entered the settlement negotiations believing that he had the authority to bind Econo-Storage to the settlement. The letter stated in pertinent part: “I have enclosed a copy of the Confession of Judgment and Stipulation and Agreement by attorney James D. Geyer which accurately reflects the settlement agreement which I approved on your behalf.”
Econo-Storage responds that there was an actual dispute concerning whether or not Lamont had authority to enter into the settlement agreement. To support this position, Raymond Pelton, a partner of Econo-Storage, filed an affidavit which stated that "at no time was our former attorney of record, Robert Lamont, authorized to enter into a settlement agreement on our [Econo-Storage and its partners’] behalf under the terms and conditions as outlined in the proposed agreement.”
We believe it seems clear that a material issue exists with regard to whether or not Lamont had the authority from his clients to enter into the settlement agreement. Therefore, we must decide whether such an issue is a legal issue or a factual issue so as to determine if the district court erred in granting summary judgment under these circumstances. Our research indicates that this Court has not addressed the question of whether the existence of an attorney’s authority to bind a client to a settlement agreement involves a question of fact or a question of law.
After a review of legal precedent from other jurisdictions, it appears to be well settled that “whether an attorney has been given express authority to settle a claim is normally a question of fact to be resolved by the trial court.”
Austin Farm Center v. Austin Grain Co.,
We agree with the rationale of the above cited cases that the determination of Lamont’s authority to bind Econo-Storage to the settlement agreement involved a question of fact and, therefore, we find that summary judgment was erroneously granted by the district court. Accordingly, we reverse the district court’s summary judgment and remand for further proceedings consistent with this opinion. However, notwithstanding the aforementioned grounds for reversing the district court’s summary judgment, we find it necessary to briefly discuss the current state of law regarding the scope of an attorney’s authority to settle or compromise his or her client’s claim or cause of action.
This Court has held in the past that ordinarily an attorney employed to represent a client with respect to litigation has no power to compromise the rights of his client.
Robinson v. State,
At first blush, Section 27-13-02(2) of the North Dakota Century Code may appear to authorize an attorney to bind his or her client to their settlement agreements. This section provides in pertinent part that an attorney and counselor at law may “[b]ind his client to any agreement in respect to any proceeding within the scope of his proper duties and powers, ...” However, in
Gasior v. Wentz,
Our brief review of other jurisdictions indicates similar law. In
Szabo v. City of New York,
“an attorney may act only insofar as his client authorized him to do so. Except when it is manifestly clear that a client has granted her attorney the power to irrevocably bind her, or when she tacitly ratifies the agreement by her conduct, a settlement entered into by the attorney on behalf of the client without her express consent will not bind her and she may disavow it.”
The Minnesota Court of Appeals recently stated that, except in an emergency, “an attorney has no authority to settle a case in the absence of his client’s knowledge.”
Rosenberg, supra,
Likewise, the legal encyclopedias generally recognize that in the absence of an emergency, “either precedent special authorization or subsequent ratification by the client is essential before a compromise or settlement by the attorney will be binding on the client.” 7 Am.Jur.2d Attorneys At Law § 156 (1980). The ordinary employment of an attorney to represent a client does not of itself give the attorney the implied or apparent authority to bind his or her client by a settlement or compromise of the cause of action or claim. In the absence of express authority, knowledge or consent, the attorney cannot bind his or her client. 7A C.J.S. Attorney & Client § 214 (1980). Finally, other secondary legal
Therefore, for the foregoing reasons, we reverse the district court’s summary judgment and remand for further proceedings consistent with this opinion.
Notes
. We are cognizant of the fact that in New York’s judicial system the Supreme Court is a trial court while the Court of Appeals is the highest appellate level court. Nevertheless, we believe that the Szabo trial court decision succinctly and accurately states the rule of law regarding the scope of an attorney’s authority to bind his or her client to a settlement agreement.