Bingham v. Sheldon

Woodward, J.: The plaintiff in this action is a widow, fifty-eight years of age and a person who appears to have been singularly innocent and confiding in reference to her business affairs. It appears that she had some kind of a claim against the Arizona Copper Company, and early in the spring of 1901 she left her home near Boston and came to New York to make inquiry about this claim, aggregating something like $4,000. She went to the office of the Arizona Copper Company, and was told that her claim was not against that company, but the party whom she found in the office told her that he could direct her to the proper person, a Mr. Simmons, in the same building. This Mr. Simmons introduced her to the defendant as a . gentleman and a lawyer to prosecute her claim against the copper company, and it is alleged that.Mr. Simmons was the secretary of such company. After some negotiation the copper company agreed “ to give the plaintiff $1,000 in settlement of her claim, and this . amount, less $250 retained by the defendant as counsel fee, was subsequently paid over to the plaintiff. Before she left the city, however,, the defendant called upon her to bid her good by, and as an incident to that visit, lie-sold the plaintiff ten shares of stock in the Colonial Exploitation and Trading Company of New York, taking $700 in cash and her promise to pay $300 more at a subsequent time, telling her a very ingenious story of Iris good fortune in being able to secure this stock for her, and promising a dividend of $10 per share in the following January. This certificate of stock was subsequently, delivered to the plaintiff, and although there are allegations of fraud in connection with this transaction, the learned court withdrew this from the consideration of the jury, and no question is raised upon this appeal, the transaction having no other purpose, as evidence, than to show the course of dealing. Soon after the above transaction, which occurred on the 27th day of April, 1901, the defendant went to South America ostensibly on business for the exploitation company, ánd he took occasion while absent, under date of Port of Spain, Trinidad, B. W. I., May 15, 1901, to write a letter to the plaintiff telling her of his trip, his hopes, the prospects of the business, etc., .closing with, “ Please take good care of yourself and try to avoid being worried by anyone.” [50] Then follows a postal' card telling .of the bright'prospects of the Company, followed by a letter from the secretary' and treasurer of the company giving official assurances. On .the eighteenth of. June the defendant writes to the plaintiff from the home office in New York, .apparently full of enthusiasm and regard for the plaintiff, and assures her that “ If all clients were as satisfactory and pleasant as you have been, this profession would be much more attractive,” thus recognizing her as one of his clients on the 18th day of June, 1901. On July 2, 1901, the . defendant writing the plaintiff .in reference to some stocks which she held in another company,' hoped to be able to advise you just what to do.” In the same month the'defendant visited the plaintiff in Boston and while there induced'her to-invest $2,500 in the stock of the American Coke and Gas Company, upon his assurance that he could purchase the stock for her and before the fifteenth day of August could realize a profit of $500, giving her $3,000 for the $2,5.00, a thing which he apparently did at a later period.- In the latter part of July the defendant again visited the plaintiff at Boston after some intermediate correspondence and on the plaintiff making inquiries as to the $2,500 investment defendant told her that- he had Sold the stock for $3,000, but that he could .not get the money until the fifteenth of August. He then told her that he was very sorry that- lie had sold the stock as it was going very much higher ; that he had been elected president of the company and he knew whát it would do, adding that he had an opportunity to purchase seventy-five shares more' of the stock for the plaintiff if she could raise $4,500: After some explanation of her-financial affairs the plaintiff .testifies that slie told the defendant that if he thought it the thing, to do that she would do it, and the- transaction resulted in the defendant getting $4,500, for which lie gave the .following receipt: “ Parker House, Boston, July 27, 1901. “ Received this day -from Jennie Bingham Forty-five hundred dollars for. seventy-five shares of the capital stock of the American 1 Coke & Gas Co. of the par value of $1Q0 each. Certificate to be delivered one week from date. : “ PAUL SHELDON.” The plaintiff testifies that she never received the certificate of stock for this seventy-five shares, of .stock, and the defendant con [51] cedes that she'has not, his defense being that there was an understanding between himself and the'plaintiff that he should be liable upon this $4,500 as upon a loan, the defendant having promised to return the same to the plaintiff on demand. The record contains much further correspondence between the parties, in which it appears that the plaintiff insisted at all times that she was relying upon his integrity and judgment in these matters, and the defendant as plainly indicates that he understands that he is acting as her adviser, the transactions including correspondence over claims pending in Chicago against a railroad company and other matters, but although the defendant has returned the $2,500, with the $500 bonus, the plaintiff is still out about $4,000 on the transaction) for which she has a judgment, which the defendant is seeking to have overturned in this court mainly upon the ground that he was simply a borrower of the $4,500, and that this contract debt cannot be recovered in an action for fraud. This would undoubtedly be the case if it was clearly established that the transaction was merely a contract debt, free from fraud, but we are clearly of opinion that the transactions thus briefly set forth were such as to call upon the defendant to clearly establish that his dealings with the plaintiff were free from the taint of fraud. He offered no evidence in his own behalf, relying upon what he conceived to be the law of the case, and the jury having found in favor of the plaintiff, upon the undisputed facts, only questions of law are presented upon this appeal. Upon this appeal it appears to be the contention of the defendant that when he was paid for his services in the settlement of the Arizona Copper Company deal he ceased to be the attorney of the plaintiff, and that his subsequent dealings with her were upon the basis of individual transactions of a business character. But this payment for services wás made about the nineteenth of April, and the defendant, in going up to take leave of his client, interested her in a stock purchase, and the relations which began in his employment as attorney were continued through this entire series of transactions, the defendant referring to the plaintiff as his client on the eighteenth day of June, and the entire correspondence being based upon an assumed confidential understanding between the parties; and the defendant, being the one possessed of special information [52] and assuming to give confidential-and special advice, can hardly claim, with any degree of good faith, that the plaintiff understood she was defiling at arms length in business transactions with the-, defendant. He had come into her business affairs as a lawyer and a gentleman; ' he had come into her confidence because he was a lawyer; and in the absence of a distinct and unequivocal understanding between them that this relationship had ceased, we are of opinion that the defendant was subject to the rule that In' transactions between, attorney and client the former is bound to show that his dealings have beén fair and just; that his client acted on full information of all of the material circumstances, and that he did not take undue advantage of . his client’s complacency, confidence, ignorance or misconception. (Place v. Hayward, 117 N. Y. 487, 497, and authority there cited.) The rule is not limited to cases, of attorney and client, guardian and ward, trustee and cestui que tmst,- or other similar relations, but it holds good wherever fiduciary relations exist and there has been a confidence reposed which invests-the person trusted with an advantage in treating with the person so confiding. (Freelove v. Cole, 41 Barb. 318 ; Ford v. Harrington, 16 N. Y. 285.) ■ When this relation is shown to exist it imposes the burden of proof upon the person talcing securities, or making contracts inuring to his. benefit, to show that the transaction is. just and. ■ fair, and that he has derived no unfair advantage from his. fiduciary relation. (Fisher v. Bishop, 108 N. Y. 25, 29.) In the last above-cited case it was said: “One who has by'reason of his supposed ability and integrity been employed by another as a. confidential adviser to transact the business of obtaining surety from an insolvent debtor, and who draws the transfer -of property for that purpose, occupies a confidential position towards his employer, which, in good faith and common honesty, should preclude him from taking-advantage of his situation, and using the information thus acquired to the detriment Or disadvantage of his employer.” - (See Matter of Fitzsimons, 77 App. Div. 345, 350, and authorities there cited.) As all of the defendant’s exceptions are based upon the theory that he had a right to deal with the plaintiff upon a basis of equality^ and as the facts and ■ circumstances disclosed by the "evidence and undisputed show that he occupied a fiduciary relation toward the plaintiff, it does no't seem necessary tó review his various points.. It [53] is sufficient that they have been examined without disclosing reversible error. The judgment rendered appears to be a proper one, and it ought not to be disturbed. • The judgment and order appealed from should be affirmed, with costs. Hirsohberg, P. J., Bartlett, Jenks and Hooker, JJ., concurred. Judgment and order affirmed, with costs.