Seaman v. Neel

OPINION SHARPE, Justice. This appeal is from a judgment rendered after jury trial in favor of appellee against appellant in the amount of $21,900.00. Appellant asserts thirty points of error. Most of them need not be discussed, however, because we have concluded that the judgment of the trial court must be reversed and the cause remanded for the joinder of a necessary and indispensable party. Appellee, Adrienne Neel, as Independent Executrix of the estate of C. B. Neel, deceased, sued appellant, John G. Seaman, to recover a portion of legal fees for services rendered in connection with administration of the estate of Dr. J. H. Harvey, deceased. Corpus Christi Bank & Trust was the Independent Executor of said estate, but was not made a party to the suit. Appellee’s Fourth Amended Original Petition alleged in substance the following: Appellant, John G. Seaman is an attorney at law. Appellee, Adrienne Neel, is the widow of C. B. Neel, deceased, and the legal representative of his estate. C. B. Neel was for many years a practicing attorney at law in Corpus Christi, Texas, and for some years prior to his death maintained an office in that city with appellant John G. Seaman for the practice of law. On September 11, 1963, C. B. Neel and John G. Seaman entered into a written agreement, in the form of a letter from Neel to Seaman, concerning their respective interests and the operation of their law office. The provision most directly involved reads as follows: “It is distinctly understood that the fees accruing during the calendar month in which I die, or retire, shall be divided upon the basis above indicated, and fees for all work done after the said calendar month shall belong to you. If any work has been done upon any matters in the office prior to my death or retirement, then you and my representatives, in the event of my death, or myself upon retirement, shall agree upon the division of these fees upon an equitable basis taking into consideration the amount of work theretofore done, and as to the amount of work thereafter to be done.” Appellee further alleged in substance the following: A partnership existed between Neel and Seaman under which they shared all expenses related to operation of the law practice and Neel received 60% and Seaman 40% after the deduction of the operating expenses from gross fees that were received. C. B. Neel died on January 29, 1965, leaving his estate to appellee. All matters concerning the law practice were resolved except as to the estate of Dr. J. H. Harvey. Neel and Seaman had prepared a will for Dr. Harvey who died on January 8, 1965. The will named Corpus Christi Bank & Trust as independent executor for the estate of J. H. Harvey, deceased. Appellee further alleged that appellant had billed and received $30,000.00 from Corpus Christi Bank & Trust, the independent executor of the Harvey Estate, as partial fee prior to the filing of this suit; that appellant had breached the contract between him and C. B. Neel because he had failed to divide the fee in the Harvey estate on an equitable basis; that certain provisions of the Texas Uniform Partnership Act had been violated; that, alternatively, a joint venture existed between Neel and Seaman and appellee was entitled to share in the fee from the Harvey estate on such basis; that, alternatively, if the contract between Neel and Seaman was not breached by the latter, that appellee should — 661 — be entitled to recover C. B. Neel’s fair share of the attorneys’ fees from the Harvey estate based on an equitable division of the fee taking into consideration the amount of work theretofore done and the amount of work thereafter to be done, which share would be a sum of at least $60,000.00. After the evidence had closed, appellee, over objection of appellant, was granted leave to file a trial amendment which, omitting formal portions, reads as follows: “Plaintiff says that subsequent to the death of Dr. J. H. Harvey on January 8, 1965, the Plaintiff’s deceased husband, C. B. Neel, performed certain services for the J. H. Harvey estate which were as follows : he conducted the initial interview concerning the application for probating the estate of J. H. Harvey; he prepared an application for the probating of the will of Dr. J. H. Harvey; he had such application set down for hearing; he attended and conducted on behalf of the estate of J. H. Harvey the hearing on the above application; he prepared the order admitting the will to probate; he secured the necessary judicial approval of such order; he prepared and filed the oath of the independent executor nominated in such will; further, he wrote such letters and performed other services connected with the initiation of probate proceedings in connection with the J. H. Harvey estate. Apart and aside from any agreement which may have existed between C. B. Neel and the Defendant John G. Seaman, Plaintiff says that C. B. Neel from the period of Dr. Harvey’s death on January 8, 1965 until the time of C. B. Neel’s death on January 29, 1965, that C. B. Neel rendered legal services to the J. H. Harvey estate and that a reasonable fee in and around Nueces County, Texas, for such services is the amount of THIRTY EIGHT THOUSAND AND NO/100 ($38,000.00) DOLLARS and Plaintiff does hereby pray judgment of the Court in this amount, in addition to the other damages alleged and pled in the Plaintiff’s Fourth Amended Original Petition.” The trial court submitted two special issues to the jury which were answered as follows: “SPECIAL ISSUE NO. 1 What do you find from a preponderance of the evidence to be the reasonable value of the legal services rendered on behalf of the J. H. Harvey Estate for the period from January 8, 1965 to January 29, 1965 ? Answer in Dollars and Cents. Answer 36500.00 SPECIAL ISSUE NO. 2 What do you find from a preponderance of the evidence to be an equitable division of fees for work done on the J. H. Harvey Estate prior to January 29, 1965, taking into consideration the amount of work theretofore done and as to the amount of work thereafter to be done ? Answer by stating a percentage. Answer: Plaintiff 60 per cent. Answer: Defendant 40 per cent.” The trial court rendered judgment based on the verdict that appellee recovered from appellant the amount of $21,900.00, which sum represents 60% of $36,500.00. Appellant’s points twelve, thirteen, fourteen and fifteen read as follows: “POINT OF ERROR NO. TWELVE In permitting the determination of the reasonable value of legal services rendered, when a necessary and indispensable party, Corpus Christi Bank and Trust, Independent Executor of the Estate of Dr. J. H. Harvey, Deceased, was not a party to the proceedings. — 662 — POINT OF ERROR NO. THIRTEEN In allowing evidence as to a reasonable attorney’s fee for services rendered for the benefit of said Bank, as such Executor, in connection with the affairs of the Dr. J. H. Harvey Estate, since said Bank is not a party to this suit. POINT OF ERROR NO. FOURTEEN Submitting Special Jury Issue No. 1, based upon a quantum meruit count, when the necessary and indispensable defendant, Corpus Christi Bank and Trust, Independent Executor of the Estate of Dr. J. H. Harvey, Deceased, was not a party. POINT OF ERROR NO. FIFTEEN Rendering judgment against this defendant for a specific amount of a fictitious reasonable attorney’s fee, when said Bank, as such Executor, was not a party to the proceedings.” The material facts relating to the above-stated points may be summarized as follows: Appellant, John G. Seaman, and C. B. Neel, began practicing law together in 1951. From 1951 until 1963 appellant was an associate or employee of C. B. Neel and worked with him on a salary arrangement. At the time appellant joined C. B. Neel, Mr. Neel had a very active oil and gas practice. Also, at this time, C. B. Neel had a long-time friend and client named Dr. J. H. Harvey. On September 11, 1963, appellant Seaman and C. B. Neel executed a letter agreement by which the nature of the association was changed from one in which appellant was paid a salary, to one under which, in substance, he was to receive 40 per cent of the net profits from the operation of their legal association. Appellant and C. B. Neel operated under this agreement from September 11, 1963, until the time of C. B. Neel’s death. On January 8, 1965, Dr. J. H. Harvey died leaving a will dated the 17th day of December 1963, in which the Corpus Christi Bank & Trust Company was named the independent executor. This will also provided that “The executor and trustee shall employ Neel and Seaman (C. B. Neel and/or John G. Seaman) as attorneys, or attorney, for the estate of J. H. Harvey, deceased, and the trust created herein.” Upon Dr. Harvey’s death, Neel and Seaman commenced to represent the Corpus Christi Bank & Trust Company, as the independent executor of the J. H. Harvey Estate. The value of that estate was approximately 2½ million dollars. On the 29th of January, 1965, C. B. Neel died. All matters relative to the financial arrangements between C. B. Neel and the appellant were concluded with the one exception which constitutes the subject matter of the present lawsuit, to-wit, the extent to which the appellee was to participate in the fee from the J. H. Harvey Estate. Representation of the Executor Bank was continued by appellant following C. B. Neel’s death until approximately June of 1965 when appellant formed a partnership for the practice of law with the members of the firm of Keys, Russell, Keys & Watson, which thereafter practiced under the name of Keys, Russell, Watson & Seaman. Subsequent to the formation of that partnership, various members of it performed legal services in connection with the estate of J. H. Harvey. In January and July, 1966, the firm of Keys, Russell, Watson & Seaman billed the Corpus Christi Bank & Trust for $15,000.00 or a total of $30,000.00. Each of these billings, which were paid by the bank, was on an interim basis and did not designate for what legal services such bills were being rendered. On January 4, 1966, the appellant Seaman wrote the appellee, Mrs. Neel, a letter on the stationery of Keys, Russell, Watson & Seaman and enclosed therewith a check in the amount of $5,000.00, which purported to represent Mrs. Neel’s share in the fee from the J. H. Harvey Estate. Mrs. Neel, by letter dated January 17, 1966, returned the check stating in substance that she felt it was premature and that after the Harvey Estate was finally settled she would be happy to discuss settlement of the matter with appellant and Mr. Keys. No — 663 — agreement was ever made between Neel and Seaman or John G. Seaman or Keys, Russell, Watson & Seaman and the Corpus Christi Bank & Trust Company as to the total fee to be charged for the legal services connected with the administration of the Harvey Estate. The interim billings of $15,000.00 each were made without any negotiations with the Corpus Christi Bank & Trust Company and in these billings there was no indication of what amount remained to be paid nor any indication as to what services the billings applied to. Since July of 1966 no further bill has been submitted to the Corpus Christi Bank & Trust Company for the legal work which has been done on the Harvey Estate by appellant or the law firm of which he is a member. Appellant testified that he or members of the law firm with which he is now associated had spent over 500 hours in handling legal matters in connection with the administration of the estate. The J. H. Harvey Estate is still in administration. All matters other than routine are referred to the trust committee of the executor bank, which makes the final decision and Mr. Morrison, the bank trust officer, testified he would not recommend to the trust committee a fee without substantial study. The firm of Keys, Russell, Watson & Seaman continued to represent said bank, as independent executor of said Dr. J. H. Harvey Estate, and was still doing so at the time of trial of this cause. We have concluded that appellant’s basic contention under his points Twelve through Fifteen that Corpus Christi Bank & Trust, Independent Executor of the Estate of Dr. J. H. Harvey, Deceased, was a necessary and indispensable party to this suit must be sustained. Rule 39, Texas Rules of Civil Procedure; Petroleum Anchor Equipment, Inc. v. Tyra, 406 S.W.2d 891 (Tex.1966); Kelsey v. Hill, 433 S.W.2d 241 (Tex.Civ.App., Texarkana, 1968, n. w. h.). In Petroleum Anchor Equipment, Inc. v. Tyra, supra, our Supreme Court held that under Rule 39, T.R.C.P., “persons having a joint interest” are indispensable parties. In Kelsey v. Hill, supra, the Court held that there was a nonjoinder of an indispensable party and in part said: “The case previously cited, Petroleum Anchor Equipment, Inc., v. Tyra, 406 S.W.2d 891 (Tex.1966) considers the effect on current practice of Texas Rules of Civil Procedure, rule 39 governing join-der of necessary parties. Referring to the rule the opinion says: ‘It is * * * at once apparent that “persons having a joint interest” within the meaning of paragraph (a), properly interpreted, are indispensable parties, * * The section referred to in the rule states that:‘Persons having a joint interest shall be made parties and be joined as plaintiffs or defendants.’ The term ‘joint interest’ means joined together in interest, a united interest or an interest shared in common. A comprehensive definition applicable in all cases detailing the meaning and procedural consequence of the term ‘joint interest’, as the term is used in the rule, would be extremely difficult to fashion. For the purposes at hand a useable test for isolating indispensable parties may be suggested, however. It is this: When a person’s interest in the subject matter of a suit is directly involved and must be considered and decided in the process of adjudicating the issues between the parties actually named in the suit, the person has a joint interest in the subject matter of the suit and is an indispensable party to the action.” In this case it is established that the parties at all material times have looked to the Executor Bank for payment of all fees properly owing for legal services rendered in connection with the Harvey Estate. The Executor Bank undoubtedly is or will be obligated to pay a fee or fees for the legal services rendered at its request for its benefit as independent executor of the Harvey Estate. This obligation to pay legal fees properly owing would apply to services rendered in the Harvey Estate by Neel & Seaman for the three weeks period prior — 664 — to Mr. Neel’s death, and for services thereafter rendered by Mr. Seaman until the formation of the law firm of Keys, Russell, Watson & Seaman, and for services rendered by that firm for services rendered after its formation. However, in this case, we are directly concerned only with the fee and the amount thereof which appellee, as independent executrix of the Estate of C. B. Neel, deceased, is entitled to recover against appellant John G. Seaman. As submitted to the jury herein the only questions decided were: (1) That the reasonable value of the legal services rendered on behalf of the J. H. Harvey Estate for the period from January 8, 1965 to January 29, 1965 was $36500.00, and (2) that an equitable division of fees for work done on said estate prior to January 29, 1965, taking into consideration the amount of work theretofore done and thereafter to be done was 60% for plaintiff-appellee and 40% for defendant-appellant. The parties agree that the judgment in favor of appellee against appellant for $21,-800.00 (60% of $36500) representing the fee earned by C. B. Neel for the period January 8-29, 1965, does not fix the liability of the bank in such respect. It is apparent that the amount of the fee which appellee would be entitled to recover could be fixed only in one of two ways : (1) by agreement between appellant, appellee and the Executor Bank, or (2) by court judgment in a suit wherein all of them were parties. Although the evidence shows that the Executor Bank has paid $30,000.00 to the firm of Keys, Russell, Watson & Seaman on interim statements, it does not establish what amount is to be allocated for the period January 8-29, 1965, nor the amount to be paid for services rendered thereafter. In short, it appears that the amount for which the Executor Bank may be liable for payment of legal fees has not been established by either of the above-mentioned methods for any particular period of time. In this situation appellant is placed in a position of great uncertainty. The Executor Bank has a duty to the Harvey Estate to pay only reasonable attorneys’ fees for services rendered to it. If the bank is unwilling to agree to pay a fee of $36,500.00 for legal services rendered from January 8th to 29th, 1965, it is entitled to litigate the question and to have the fee fixed by judgment of a court. If a lesser amount is awarded by the judgment in such event, it is apparent that appellant, if he is bound to pay the judgment in this case, would be prejudiced by such result. It is further apparent that the present judgment leaves appellant subject to a substantial risk of incurring multiple or inconsistent obligations in connection with the payment of attorneys’ fees by the Executor Bank and the portion thereof which appellee, as Executrix of the Estate of C. B. Neel, may be entitled to recover. We believe, therefore, that it is established that the amount of the fee for which the Executor Bank is liable for services rendered in connection with the Harvey Estate is directly involved herein and must be considered in the process of adjudicating the issues between the parties to this suit. We, therefore, hold that Corpus Christi Bank & Trust, Independent Executor of the Estate of Dr. J. H. Harvey, Deceased, was a necessary and indispensable party to the suit. In order to enable the court to grant complete relief between the parties before it, the Executor-Bank should be made a party to the suit. See Petroleum Anchor Equipment, Inc. v. Tyra, supra; Kelsey v. Hill, supra; Royal Petroleum Corporation v. Dennis, 160 Tex. 392, 332 S.W.2d 313 (1960); Fischer v. Rio Tire Co., 65 S.W.2d 751 (Com.App., 1933, holdings approved); Crabtree v. Burkett, 433 S.W.2d 9 (Tex.Civ.App., Beaumont, 1968, n. w. h., on subsequent appeal 450 S.W.2d 728, 1970, n. w. h.). Our conclusion that the Corpus Christi Bank & Trust, Independent Executor of the Estate of Dr. J. H. Harvey, Deceased, is a necessary and indispensable party requires that the case be reversed and remanded to the trial court and other points asserted by — 665 — appellant need not be discussed. However, if the Executor Bank is made a party to the suit and another trial is to be conducted, we deem it appropriate to refer briefly to appellant’s point No. Twenty-Four which reads as follows: “POINT OF ERROR NO. TWENTY-FOUR Refusal of the Court to require plaintiff to make the law firm of Keys, Russell, Watson & Seaman a party to this suit, since that firm, rather than John G. Seaman, individually, performed legal services for Corpus Christi Bank and Trust as Independent Executor of the Estate of Dr. J. H. Harvey, Deceased.” The record reflects that appellant filed two separate pleas in abatement asserting that the law firm of Keys, Russell, Watson & Seaman was a necessary party to this suit and that the cause be abated until such time as said firm is made or becomes a party to it. The pleas in abatement asserted in substance that after the death of C. B. Neel, the Executor Bank employed John G. Seaman to act as attorney for it in connection with the Harvey Estate until June 1, 1966; that thereafter the law firm of Keys, Russell, Watson & Seaman, a partnership, represented the Executor Bank and said Estate, including present representation; that appellee is claiming a share of the fees being earned by said law firm; that no fee arrangement or total fee has been agreed upon by any of the attorneys involved and the Executor Bank; that no accounting can be had regarding future fees, if appellee is legally entitled to such accounting, until the Harvey Estate is closed; and that the law firm of Keys, Russell, Watson & Seaman is a necessary party to this suit. Appellant’s pleas did not specifically assert that the Keys’ law firm was an indispensable party to the suit. The record does not show that any hearing was held on appellant’s pleas in abatement or that the trial court acted on them. On the present record we are not called upon to decide whether the firm of Keys, Russell, Watson & Seaman was an indispensable party or whether said firm was a “necessary but not indispensable” party, often called an “in-sistible” party. See Petroleum Anchor Equipment, Inc. v. Tyra, 406 S.W.2d 891 (Tex.1966). However the contentions made by appellant present serious questions and we call attention to the fact that Rule 39, T.R.C.P., has been amended effective January 1, 1971, pursuant to order of the Supreme Court dated July 21, 1970. The rule has been completely rewritten to adopt, with minor changes, the provisions of Federal Rule of Procedure 19 as amended. Section (a) of Rule 39, as amended, will read as follows: “Rule 39. Joinder of Persons Needed for Just Adjudication (a) Persons to be Joined if Feasible. A person who is subject to service of process shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party. If he should join as a plaintiff but refuses to do so, he may be made a defendant, or, in a proper case, an involuntary plaintiff. ^ ⅜ ⅜ It appears probable that any new trial herein will take place after January 1, 1971 and that questions concerning joinder of parties will be governed by Rule 39, T.R. C.P. as amended. Determination of such questions will then be for the trial court in the first instance and we do not express an opinion concerning appellant’s pleas in — 666 — abatement if they are properly urged on further proceedings in the trial court. The judgment of the trial court is reversed and the cause is remanded for further proceedings consistent with this opinion.