87 Va. 1 | Va. | 1890
Lead Opinion
(after stating the case), delivered the opinion of the court.
Tested by the equitable and wisely-established-rule which applies to such cases, it is very clear that the decree upholding the transaction in question is erroneous. According to that rule all dealings between attorney and client for the benefit of the former, are not only regarded with jealousy and closely scrutinized, but they are presumptively invalid, on the ground of constructive fraud; and that presumption can be overcome only by the clearest and most satisfactory evidence.- The rule is founded in public policy, and operates independently of any ingredient of actual fraud, or of the age or capacity of the client, being intended as a protection to the client against the strong influence to which the confidential relation naturally gives rise.
■ It is the duty of an attorney to give to his client the benefit
Before entering on the business of his client, an attorney may contract for the measure of his compensation, and a contract then made will stand on the same footing as any contract between other persons competent to contract. This is now settled by the statute. Code, sec. 3201. But a contract for compensation made after the fiduciary relation has commenced, and while it continues, will not be upheld in equity, unless it be shown not only to be reasonable, but that it was entered into under the'circumstances just mentioned. Indeed, the established rule, broadly stated, is, that an attorney who occupies a security or other benefit from his client, must show that the client had the information and advice which he presumably would have received, and that he is not worse off than he
In Brock v. Barnes, where a security was taken by the attorney from his client, the court used this language: “ If the instrument be deemed to provide a remuneration for past services, then the services must be proved; and further, that there existed at the time of giving it, if not a legal, binding indebtedness, at least a just and moral obligátion to pay; and still further, that the instrument was fully understood by the client, and was made in pursuance of, and in accordance with, a well-considered, definite, and settled purpose. The paper itself, having been executed by a client to his attorney, affords no presumption on these points.”
This may sometimes bear hardly on the attorney, but the hardship is one to which he exposes himself by dealing for his own advantage with one whose interests intrusted to his care he is bound to protect, and over whom he presumably has an influence that may be abused.
The rule is well expressed by Mr. Justice Story, who says: “ The situation of an attorney or solicitor puts it in his power to avail himself, not only of the necessities of his client, but of his good nature, liberality, and credulity, to obtain undue advantages, bargains, and gratuities., Hence, the law, with a • wise providence, not only watches over the transactions of par
Nor is the rule confined to the case of attorney and client, but applies as well to that of administrator and legatee, guardian and ward, trustee and cestui que trust, and, indeed, to all the variety of relations in which influence or dominion may be exercised by one person over another. Davis v. Strange's Ex’or, 86 Va., 793; Fishburne v. Ferguson, 84 Va., 87, 113; In the often cited case of Gibson v. Jeyes, 6 Ves., 266, the Lord Chancellor, in delivering judgment, said: “It is asked, where is that rule to be found? I answer, in that great rule of the court, that he, who bargains in matter of advantage with a person placing confidence in him, is bound to show that a reasonable' use has been made of that confidence; a rule applying to trustees, attorneys, or any one else.”- Nor is this rule affected by the statute above mentioned, the object of which was, simply, to make the fees of an attorney a lawful subject-matter of contract. And as the rule is founded on the influence which the relation originates, it will ■operate as long as the influence continues, although the relation itself has ceased. Wood v. Downes, 18 Ves., 120; Henry v. Raimen, 25 Pa. St., 354; Sedgwick v. Taylor, 84 Va., 820; Weeks, Attorneys, sec. 268, note.
These principles are well illustrated by the case of Statham v. Ferguson, 25 Gratt., 28. In that case the widow of a decedent and his administrators and a number of the heirs-at-law and next of kin, united in a deed whereby the widow agreed to accept, in lieu of her interest in the estate, the provision made
“It was the duty of the administrators,” said the court, “ invested as they were by law with the title to the whole personal estate, and standing as they did in the confidential relation in which they stood towards her, to take care that before she made a donation of her estate, or a large portion of it, to themselves, as she did, she should be fully informed of her rights on. the subject, and the effect of her act, or at least should have ample time and opportunity to consult counsel and advise with disinterested friends; and they should have advised her to avail herself of those advantages. That uberrima fides, which the law expects and exacts of persons standing in such a confidential relation to another, required them to do so. Instead of doing so, if they did not advise and encourage, they, at least by their acts, facilitated the preparation and execution of the deed, when they must have known that she had not the necessary information and proper advice to enable her to act wisely and discreetly in so important a transaction.”
These remarks apply with peculiar force to the present case, not only because the case in its facts resembles the present, but because here, when the contract was executed, the appellee held to the appellant a relation that was doubly confidential;
Then, was the contract made voluntarily? Did the appellee fully and candidly explain to the appellant the nature and extent of her rights? And did she thoroughly comprehend the scope and effect of her act? All of these questions we are constrained to answer in the negative. Indeed, the case seems to have been treated in the circuit court as though the onus was on her to prove actual fraud, which, as we have seen, is exactly the reverse of the true rule relating to such transactions.
There is no proof of any contract for a fee, or of any suggestion of an assignment, or other security, prior to her appearance before the appellee, in obedience to his summons, when the contract, which he had previously prepared, was produced and read to her. At that time she had just emerged from a litigation which had threatened her all, and which had been successfully conducted for her by the appellee. She was, moreover, an ignorant woman, unused to the transaction of legal business. Nothing, therefore, was more natural than that there should have been the fullest confidence reposed, on the one side, and the strongest influence, on the other, which was no doubt heightened or intensified by a sense of relief and gratitude which the result produced.
To the same purport is the evidence of W. C. Fitzpatrick, the appellee’s son, who says he heard her say, as the contract sets forth, that if she had employed any other attorney, she believed she would not have gotten anything. The same witness also says that while she was in the room, where the contract was signed, she was reminded (he does not say by whom) that she had repeatedly declared if she got “ Bob’s Creek ” farm, she would be willing to give Mr. Fitzpatrick (the appellee) all the rest, and that she replied, she would do so then “ if he required it,” but “ she hoped he would not be too hard on her.” He also says she seemed .“ very gratefulall of which, to say nothing of any other evidence in the case, shows very clearly that the contract, instead of being an act of rational consideration, an act of pure volition uninfluenced,was rather the impulsive, hasty, and unadvised act of one who, to use the surprisingly apt language of the appellee’s own counsel, was under a “generous thraldom of gratitude” to the attorney whom she regarded as her “ deliverer.” In other words, she was subject to the influence originated by a confidential relation.
It is argued she had a right to be generous, and so she had,
There is no principle of equity, therefore, upon which the contract in question can be made to stand. The rule we have mentioned was intended to prevent it; or, in other words, to shut the door as well against the temptation of an attorney to take advantage of the unguarded generosity as of the actual necessities of his client. Hence, it matters not that the evidence shows, in a general way, that the contract was read and explained to the appellant, and that she expressing herself as satisfied, afterwards signed it, or rather affixed her mark to it. To support the transaction it was for the appellee to show that the instrument was executed without a speck of imposition or undue influence, and that it was the result of a well-considered, definite, and settled purpose on her part. And by undue influence in this connection is not meant an actual influence consciously and designedly exerted, but the influence which naturally springs from a confidential relation.
“The question,” said Lord Eldon, in Huguenin v. Baseley, “is not whether she [the party subject to influence] knew what she was doing, had done, or proposed to do, but how the in
That there was any independent advice in the present case can hardly be pretended. The justice of the peace, whose certificate of acknowledgment is appended to the contract, was called in, not by the appellant, but by the appellee, and was called in, as in his deposition he says he thought, merely to take her acknowledgment. He was not asked to act, and did not undertake to act, and, perhaps, was not competent to act, as her adviser, and, moreover, says he understood the contract %s the appellant swears she did. The instrument is quite a long one, and perhaps somewhat obscure, which is an additional reason why independent advice should have been recommended by the. appellee, especially as he had prepared the contract himself without previous consultation with the appellant. Her husband, it is true, was present when the contract was signed; but he was as ignorant as she, and no doubt quite as much in need of advice respecting a transaction of such importance.
The concluding clause of the contract, upon which much reliance was placed in the argument, is, indeed, in these words:
“ The said Emily B. Thomas willingly makes this agreement and assignment, and requests the court to ratify the same, it being much less than she was willing to give, and proposed to give, during the litigation.” But this, instead of removing the imputation of undue influence, is rather an additional evidence of it. Bridgeman v. Green, Wilm. 58, 71. In Twyne’s Case, 3 Co. 81a, cited in 2 Min. Inst. 603, one of the enumerated badges of fraud in that case was this: “that the deed contains that the gift was made honestly, truly, and bona fide;” for, said the court, " clausulas inconsuetutae semper inducunt suspicionem.”
It is very clear, therefore, in the light of these principles,
But, apart from the question of undue influence and of her understanding of the contract, did she understand the nature and extent of her rights ? There is no evidence that she did, and we must, therefore, assume that she did not. The appellee, although he had been her counsel from the death of the testator, and was also the administrator of the estate, admits that he himself was not definitely informed on the subject; for in his deposition he says: “After she signed the contract * * I told her she was the richest person in the county; that she owned more land; that the personal estate would pay all the debts, the balance on Frank Turner’s legacy, all the costs of administration, including my fee as agreed on in the contract, and that I thought there would be a balance going to her of from $3,000 to $5,000; but as to that I could not speak de.finitely, it was mere surmise.”
On the other hand, the appellant contends that the balance ought to exceed $6,000, and this seems probable, although the exact amount does not appear from the record. Enough, however, does appear to show that under the contract, if sustained, the appellee’s compensation would exceed $10,000.
The result, therefore, was that, as the appellant was in the dark as to the nature and extent of her rights, it was impossible for her to comprehend the scope and effect of the contract, even had she construed it as the appellant did; and for this reason also the same must be declared invalid as to her, independently of the objections to its validity already considered.
We have carefully examined the case, and are of opinion that a decision could hardly be rendered more repugnant to public policy, or one the probable consequences of which would be more mischievous than would be a decision upholding this contract under the circumstances disclosed by the record. To uphold it would be to overturn or to ignore prin
We have said nothing about the trustee not being a party to the contract, because it is not necessary to the decision of the case. It is right, however, to add that there is nothing in the present case affecting the moral character of the appellee, whose only fault has been that, in dealing with the appellant, he overlooked, or did not sufficiently attend to, the rule of equity, to which we have called attention, relating to dealings between persons standing, or who have lately stood, in a confidential relation.
Then the question is, the contract being invalid, what is the proper disposition to make of the case ?
The entire residuum of the estate was left by the testator in trust for the sole and separate use of the appellant for life, with power of appointment by will, and, in default of such appointment, to her heirs and next of kin. Her children, therefore, are only remotely and contingently interested, and one of them is an infant. The others, who are sui juris, assented to the contract, and have not appealed from the decree, although in- their depositions they say they thought the contract was for five thousand dollars only, to be paid out of the principal. In cases somewhat similar to the present it has been held that although the contract cannot be upheld,
We think a reasonable fee ought to be allowed for protecting the trust estate against the claims asserted against it, and that an allowance of five thousand dollars, to be paid out of the corpus of the estate, is reasonable and ample. The defence of the case in the circuit court involved considerable time and labor, although a stronger case for the application of the equitable doctrine relating to laches and stale demands could hardly be imagined. The estimates of the attorneys, who were examined as witnesses in the case on the subject of the appellee’s compensation, seem to have been based on the idea-of an employment on a contingent fee; but there was no Such employment, nor is that a proper basis upon which to ascertain what is justly due under an implied contract.
The decree, in so far as it is in conflict with this opinion, will, .therefore, be reversed, and the cause remanded for such further proceedings, not inconsistent therewith, as may be necessary in order to a final decree.
Dissenting Opinion
dissenting, said:
I do not concur in the opinion of the majority, and as my dissent goes to the construction of an important statute of this State, I will briefly explain its grounds.
The estate devised was in amount about |50,000 as the record discloses, and claims were urged against it by suit amounting to its full value or nearly so. The beneficiary under Lemuel
She was without money to pay fees, and whatever compensation her counsel should receive, if he undertook to serve, must necessarily be wholly contingent, and while she was not able to pay him anything in advance, she offered and agreed to pay him, in the event of a successful issue, all of the estate except the “ Bob Creek ” farm upon which she lived. That she so agreed is proved by the appellee in the record and admitted by her.
The appellee, for reasons not appearing in the record, succeeded in having Dillard removed as executor, and procured the appointment of himself as administrator de bonis non. The work of defending this estate from the assaults of the disappointed relatives of the testator, who was a bachelor, then commenced in earnest, with the assistance of other able counsel, and was so far successful, that recoveries were defeated» as to all of these claims, except $18,000, for which decree was rendered by the circuit court of Nelson county. But the appellee appealed to this court, where the said appellant was completely successful, and the suit of the Dillards was dismissed for reasons stated in the case of Turner’s Adm’r v. Dillard, supra.
Camp, the witness, does say that he understood the fee was to be $5,000, but he also says that he paid very little attention to the details of the matter, and that he did not charge his memory with it. But he also says:
“The contract (set forth in full in opinion of majority) was then read in the presence and hearing of all in the room; at the end of nearly every paragraph Captain Fitzpatrick would make an explanation, so that it might be clearly understood. After W. C. Fitzpatrick (the son of appellee) finished reading the article, Emily Thomas expressed herself perfectly satisfied, and thought, taking everything into consideration, Captain Fitzpatrick’s fee was reasonable enough, and signed and acknowledged the same in my presence, and I, as a justice of the peace, certified the same.” He further says the appellee “showed every disposition to make the matter perfectly clear to her—frequently, while it was being read to her, would have the reading stopped and he would explain to her, and he seemed very desirous that she should understand every part of the contract before signing the same.”
And further, that he had known the appellant from her birth, and that he had always considered her a person of good mind.
Now, here we have a contract entered into freely and voluntarily after full explanation, by a person of good mind and understanding, for a valuable consideration. And this was acquiesced in until, applying to her trustee for money, the appellant w'as refused any payment, because the interest up to 1890 had been assigned to her said counsel; and she then and
This contract was enforced by the learned judge of the circuit court, but by the opinion of the majority it is set aside.
Because by an “equitable and wisely-established rule which applies to such cases,” “all dealings between attorney and client, for the benefit of the former, are not only regarded with jealousy, and closely scrutinized, but they are presumptively invalid on the ground of constructive fraud, and that presumption can be overcome only by the clearest and most satisfactory evidence.”
My opinion is that there is no such rule established in Virginia, whether it be equitable or inequitable, wise or unwise.
But that by the mandate of express statute, an attorney at law is entitled to the benefit of his contract with his client for his fee, exactly like any other person claiming under any contract is entitled to the benefit of his contract, which is honestly and fairly entered into, without deceit or fraud.
And that no other nor greater burden is placed upon an attorney contracting with his client by the law than is placed on any and all persons making contracts.
Here is the law in our Code upon the subject of attorney’s fees:
(Section 11, chapter 160, Code of 1873), in force at the time this contract was made.
“An attorney shall be entitled as a fee to the amount which the clerk is authorized to tax in the bill of costs in any suit or for any service as such attorney.
“But ANY CONTRACT made WITH AN ATTORNEY EOR OTHER OR HIGHER EEES SHALL BE VALID, AND MAY BE ENFORCED IN LIKE MANNER WITH ANY OTHER CONTRACT.”
How, what does this mean ? Any contract with an attorney ! To be enforced in like manner with any other contract.
We are told in the opinion that all dealings between attorney and client, for the benefit of the former, are presumptively invalid on the ground of constructive fraud.
This statute is still the law in Virginia; it was somewhat amended in the report of the revisors. Chapter 155, section 3239, page 736, of the printed report of the revisors to the legislature, and was adopted as proposed by those gentlemen by the legislature.
It is now as follows:
“Sec. 3201. Attorney’s fee.—An attorney shall be entitled as a fee to the amount which the clerk is authorized to tax in the bill of costs in any suit or for. any service as such attorney.
“But any contract made with an attorney for higher compensation shall be valid, and he may recover such sum as he contracts for from the party for whom the service is rendered; and if there be no such contract, he may recover from such party what his services are reasonably worth.”
Code of Virginia, section 3201, in force May 1st, 1888.
Then I may ask, where does this supposed “equitable and wisely established rule” stand in this State?
The legislature is our law-making power.
“The legislative power of this Commonwealth shall be vested in a general assembly, which shall consist of a senate and house of delegates.” Constitution of Virginia, Article 5, section 1.
It is not in the power of this court to set up any rule, however wise, in plain contravention of a statute.
But, says the opinion, this statute applies to contracts made before the relation of attorney and client began.
The authority for this limitation upon this statute is not given; the statute does not so limit itself. The statute says any contract made with an attorney .for other and higher fees. That is, by a client, for clients are the persons who contract to pay fees.
In the case of Yates and Ayers v. Robertson and Berkeley, 80 Va. R., p. 475, this court, referring to this statute (chapter 160, section 11, of the Code of 1873, supra) said:
“The ground of this exception is that, by section 11, chapter 160, of the Code of 1873, the fee of an attorney is fixed ■and limited to the amount which the clerk is authorized to fax in the bill of costs in any suit; and that by section 13, of chapter 181 of the Code, such fee in this cause so authorized to be taxed is two dollars and fifty cents. Section 11, chapter 160, supra, does provide for such a fee, but the section further provides: “ But any contract made with an attorney for other •or higher fees shall be valid, and may be enforced in like manner with any other contract.”
Under the 14th and 15th sections of chapter 76, of the Code ■of 1810, volume first, the lawyers of the Commonwealth were limited to fees provided for in the said 14th section, the 15th ■section providing that no lawyer in any suit to be brought for his fees or services, shall recover more than the fees so provided, notwithstanding any agreement, contract, or obligation ■entered into by the party against whom such suit shall be brought, retaining from the older acts of 1761, chapter 3, ■sections 11 and 12, of edition of 1769, and chapter 71, section 12, of editions of 1794,1803, and 1814 the provision: “ If such ■agreement, contract, or obligation shall have been entered into before the suit or suits in which such fees shall have accrued, -or services been rendered; were finally determined,” which ■provisions were in force from January 1st, 1820.
The legislature, however, January 2,1840, repealed this pro
“But any contract made with an attorney for other or higher fees shall be valid, and may be enforced in like manner with any other contract”; which provision appears in the Code of 1849, and is the law, as we have seen, in the present Code.
In arriving at the true construction to be given to this provision of the law, as found in 11th section of chapter 160, we may observe the striking contrast between the severe restriction to be found in the 15th section, of chapter 76, of the Code of 1819, and the entire absence of all restriction in the present law.
The policy of the law as to the lawyers appears to be entirely-changed, and they are left free to conduct their business transactions with their fellow men upon the same basis as other citizens; they and those dealing with them to be mutually bound by their contracts, express or implied.
Mr. Minor, speaking upon this subject, says: “In respect to' the compensation of attorneys, the policy so long and so vainly persisted in of prescribing and limiting their fees was abandoned at the revisal of 1849, so that since that period an attorney may make any contract for fees with his client and it will be valid, and maybe enforced like other contracts” (citing section 11, chapter 160, Code 1873, supra).
“Nor does it seem to be material whether the contract is express or implied, so that if no contract be proved, the attorney will be entitled to receive a fair and adequate compensation for his services. It should be observed, however, that the clerk is not authorized to tax against the losing party any other attorney’s fee (whatever the successful adversary may have actually paid) than the very inconsiderable sum prescribed by law, in most cases not to exceed f 2.50 in a court of law,” &c. 4 Min. Inst., 477.
And it may be further said, that this is taxed only on one
Under the construction contended for by the plaintiffs in error, what is the .fee to be paid to the attorney on the losing side ? The law makes no provision for it whatever; it is left to depend upon contract. Aiid this fee, fixed and provided in the statute, is intended for cost, to recompense the party to the cause for his outlay, &c., and is in no wise intended by the. law makers to limit the fee of a lawyer as between him and his client, which is expressly left to depend upon contract between the parties which, like contracts growing up in the transactions of other citizens of the Commonwealth, may be either express or implied.”
The legislature responded to this interpretation of its statute, by amending the law in accordance with our construction of the same, so as to make it so plain that nothing should hereafter be left to construction, and the statute as we have seen is extended by express words to cover the case of an implied contract, and the foregoing case is cited in the margin by the code makers. The decision now in hand, as I understand it, sets back the law fifty years, and goes behind the statute of 1840, supra. And if a decision of this court can amend or alter a statute, then the statute I have been considering has ceased to exist. But I do not consider that the decision of any case can have that effect, except so far as the case in hand is concerned, and the law is still in force for the future. But in this case I may remark that in my opinion the appellee has suffered a diminution of his just rights. His contract with his client is overturned because it was with his client, and although the client, who was a person of good sense, surrounded and advised by her natural protectors, her husband and her adult sons, deliberately and consciously made, because her counsel agreed not to let her sign it until she said she understood it. She has succeeded in having it set aside upon her subsequent declaration that she did not understand it, aided by
Upon the question as to what the fee should reasonably have been upon the principles of a just compensation for services rendered, Judge Brown testifies that the demands defeated by Judge Fitzpatrick would have swallowed up the whole Turner estate if they had been allowed, and that under the contract the fee would not have exceeded $8,000; and says further, “ I feel no hesitation in saying that the contract is in all respects a reasonable one, and should be approved by the court.”
Mr. Caskie, a well-known and able lawyer of that bar, testifies that claims against the estate of Turner would have aggregated $80,000 if successful, and says: “ I should certainly regard $5,000 as an inadequate fee by itself, and that one-third of the sum which the court of appeals reduced the decree of the circuit court, would be exceedingly reasonable.”
Mr. W. M. Cabell, another prominent lawyer and citizen of that county, testifies that the bulk of Turner’s estate would have been swept by the defeated claims, and says that $5,000 out of the principal of the estate should be paid appellant in addition to the assignment out of the interest (and so also said Mr. Caskie above mentioned), and that the contract is reasonable and should be enforced.
Mr. R. M. Brown, the counsel who brought the original Dillard suit, says: “The case required great labor on the part of counsel, both in court in the argument, and out of court in taking depositions, and these duties were assiduously performed by Judge Fitzpatrick, and elaborately with eminent skill and ability, and that $8,000 would be reasonable and fair.” That is a contingent fee to him of one-fifth of $40,000 in order as he succeeded in wholly defeating claims fully to that amount.
The late Hon. Ro. A. Goghill, a lawyer of extensive practice and wide fame in Virginia, and counsel for the Dillards, testifies as follows: “ The case was well managed, there
The matter was considered by Commissioner Cabell, and he reported in favor of the fee contracted for, and the circuit court decreed in support of the contract. Let us enquire who fixed the fee of $5,000 as a proper fee in the evidence?
The answer is, Emily E. Thomas, the appellant, Eeed Thomas, Callie Thomas, Charlotte Thomas, her adult children, who, like herself, had agreed to and had signed the contract, as did her husband also.
M. K. Estes, the trustee, said that Emily Thomas told him she thought the contract was for $5,000.
I do not consider that there"was any ground to be found in the evidence to justify the upsetting of this fair and just agreement. Numerous- witnesses of the finest intelligence and highest character, fully conversant with all the circumstances, say-that the contract is just and fair, and should be enforced, while Emily Thomas and her adult children, after executing the contract in the fullest light of explanation, deny their responsibility when called on to comply with their just agreement, and fix the fee at $5,000, and this is all the evidence to assail the contract or to establish $5,000 the proper amount of the fee, so I dissent upon the merits as well as upon the law of the case as set forth in the opinion of the majority.
Decree reversed.