Wiley v. Mahood

Johnson, Judge: There is much complication in these causes; and if their consolidation had not been acquiesced in, without objection, it would certainly have been improper to have made such an order. Both the appellant, and appellees Hopkins, Hull & Co., claim that there is error in the decree of the 21st of October, 1874; the former, because the claim of Hopkins, Hull & Co. was placed before that of Wiley, in the distribution of the proceeds of the sale of Mahood’s lands, Wiley contending that Cecil, the attorney of Hopkins, Hull & Co., had received of Mahood, bonds, &e., in full satisfaction of their judgment; and that if they were not received as a payment of the judgment, that they were received as collaterals, and that Hopkins, Hull & Co. aré responsible for the negligence in their attorney in not using due diligence in collecting these claims. Hopkins, Hull & Co. complain that they were sub — 220 — jected to a loss of interest in crediting the $174 realized -from a sale under the trust deed, in 1873, as of January 15, 1861. Was the judgment paid by a transfer of bonds made to Cecil, the counsel of petitioners ? An attorney at law occupies a position of trust, and his duties, and the extent of his powers, have been very clearly defined. At one time it was doubted whether he had any right to receive the money of his client; but it has been long ago definitely settled that where an attorney has received a claim for collection, that a payment to him of the money due to his client on the claim is a payment to the client himself, as far as the debtor is concerned. But without special authority, he has no right to receive any thing from the debtor except money. If the attorney owes the debtor of his client an amount equal to the claim which he has for collection, the law will not permit the attorney to pay his own debt by giving up the claim of his client. In Cost v. Genette & Smith, 1 Porter, 212, an action was brought to recover the amount of a promissory note, which, according to an agreed state of facts, the plaintiff had confided to an attorney at law for collection, and which by an agreement between the said attorney and defendant, had been surrendered to him in payment and discharge of the attorney’s own debt to the defendant; and the plaintiff received the amount of the note from the defendant. Judge Thornton in delivering the opinion of the court, said: “ I will take occasion to remark that, although I consider the general doctrine of agency so essential to the advantageous conduct of the commerce of the world, as applying to the relation of client and attorney, yet perhaps in no other case does the safety of the community require it less than in this. It may be from that esprit de corps which to some extent actuates every individual of a class ; but I have thought that no caste in the commuñity gave better evidence of trustworthiness than the profession of the law. Their whole business is confidential, and at all times much of — 221 — the property of the country is subject to their disposal. That such confidence is rarely broken speaks a higher eulogium upon the honesty of the profession than any language I could use. It was put with much ingenuity by the counsel that if the attorney could collect the money and then pay off his debts with it, why not permit that to be done which, in its result, is just like it— that is, pay off his debt at once with the note ? Now, though these cases are alike, yet nullum simile et idem, the only reason why the first is allowed is, that from a necessity it cannot be avoided, and so does not furnish any argument in favor of what, though no worse, may be avoided.” The money could not be followed, but the improperly surrendered note can; and it would not do for the courts to countenance such conduct in persons occupying such confidential relations to those for whom they transact business as attorneys sustain to their clients. Its manifest tendency would be to impair the confidence that clients must necessarily repose in their attorneys. See also Gullett v. Lewis, 3 Stew., 23; Craig v. Ely, ex’or, 5 Stew. & P., 354; Commissioners v. Rose et al., 1 Desau., 461; Wilkinson & Co., v. Holloway, 7 Leigh, 277. An attorney at law employed to collect a debt may receive payment in money, but has no right to accept any thing else in satisfaction, without express authority. Wilkinson & Co. v. Holloway, 7 Leigh, 277; Wright v. Daily, 26 Tex., 730; Gullett v. Lewis, 3 Stew., 23; Kent v. Ricards, 3 Md., Ch. 393; Smock v. Dade, 5 Rand., 639; Smith’s adm’r v. Lamberts, 7 Gratt., 138; Harper, adm’r, v. Harvey et al., 4 W. Va., 539. In Smock v. Dade Judge Summers said : “ The authority of the attorney to receive payment of the debt which he is employed to recover, we think well settled, but that authority, in our opinion, does not extend to its commutation without th'e assent of the client.” In that case the receipt of the attorney was as follows : “ Received 25th November, 1822, from Col. Lawrence — 222 — Dade, one hundred and fifty-four dollars and seventy in money, also tbe bond of 'William Quarles for one hu:tl(fre(l and seventy dollars and thirty-nine cents, payable in four months, and a draft on Anthony Buck for three hundred dollars at ten days’ sight, which, when paid,- will be in full of the executions of James Smock and Peter Smock against him in Orange county.” • Judge Summers further said: “ In relation to Quarles’ bondj we regard Banks” (who was the attorney for Smock) “as the attorney of Dade, not of Smock. On giving an acquittance or receipt for the money he must have represented the former, not the latter. It was a new engagement) in which all his authority was derived from Dade ; to him he must have looked for compensation, and to him he was accountable. To extend the authority of the attorney beyond this limit, without a gederal discretionary power from the party employing him, would carry the responsibility of the first client into transactions far beyond the first engagement, and which might be induced solely with a view to the profit of the attorney or the accommodation of the debtor.” This decision of the general court of Virginia was approved in Wilkinson v. Holloway, 7 Leigh, 277, and in Smith’s adm’r v. Lamberts, 7 Gratt., 136. In the last named case the receipt of the attorney was very similar to the one in this case. It was as follows: “ Deceived June 10, 1819, of Mr. George White, Jr., one of the executors of James D. Dishman’s estate, William Coak-ley’s note for 396 dollars, 21 cents, due 1st March, 1819, on which I am to bring suit, and after paying myself my fee and commission, I am to apply the balance to the credit of S. and J. Lamberts’ judgment against Dish-man’s executors.” In that case the attorney collected the money, and the court said by Daniel J.: “1 do not see how we can approve the decision in Smock v. Dade in regard to so much of the creditors demand as was held to be paid' by the proceeds of the draft, and yet consistently decide — 223 — that the debt in this case has not been satisfied by Brooke’s (the attorney’s) receipt in actual money of the amount of Ooakley’s note.” "We think there is no doubt, where the attorney collects the money, although he collects it upon a bond that the debtor may put into the attorney’s hands; the moment the attorney receives the money it is a payment on his clients claim. It cannot be that there was any payment by Mahood to Hopkins, Hull & Co., by placing the bonds, &c., in their attorney’s hands; if it had been a complete assignment to the attorney of the bonds, it would in the absence of special authority to Cecil from his clients have been wholly unauthorized. But the terms of the receipt itself, brings it within the rule decided in the cases we have cited, and shows, if Cecil had authority to accept the bond in payment it was not done. We conclude that Cecil acted entirely as the’ counsel of Mahood in the matter, unless it satisfactorily appears that he was acting under the authority of Hopkins, Hull & Co., or that they by their ratification of his acts, have made them their own. It is true that Hopkins, Hull & Co., by way of recitation say, after setting up their judgment, “that subsequently said Alexander Mahood placed in the hands of petitioner’s counsel as collateral security to be collected and applied as a credit on said judgment, a large amount' of bonds, &c., &c., which if they had been realized according to the amount thereof, would have nearly paid off said judgment, but such was not the fact. “A large amount of said claims has not been made,or realized and cannot be, and that after applying all that has been made or realized, or all that can be made will leave a balance, &c.” This allegation is positively denied by Mahood’s answer. He insists they were not put in his hands as collateral security, but were transferred as payment. The petitioners do not say that they ratify the act of their counsel, do not say that what he|did was with their — 224 — knowledge or consent, and tbe prayer of their petition is inconsistent with the idea that they ratified the act of Cecil. The receipt itself shows that Mahood’s claims were not put into Cecil’s hands as collateral security; the terms of the receipt itself show that was not the intention, but that Mahood put the claim into Cecil’s hands, as his attorney, and was to pay him for collecting them, and directed him what to do with the money when collected. There was no obstacle in the way of Mahood going to Cecil at any time and requiring him to follow his directions as to the claims, how they should be collected, &c. Cecil was answerable to Mahood for his conduct in Collecting said claims, or rather' in his negligence concerning them. The petitioners were evidently mistaken in the facts when the petition was drawn, and it is probable that neither of them ever saw the petition. "Where the plaintiff has incorrectly stated circumstances with which he may well be presumed to have been unacquainted, and the defendant does not rely upon them in his answer, the plaintiff will not be held bound by the statement. 3 Greenl. Ev., §275. The receipt which the petitioners say in their petition they will file, and which the person who drew up the petition probably had never seen, when produced shows conclusively that the statement referred to was a mistaken statement. In the case of Wilkinson & Co. v. Holloway, 7 Leigh, 277, there was an attachment in chancery against Holloway, who claimed he had paid the debt by a transfer of a bond of Thompson & Scott. In the bill they exhibited a copy of the record of the suit brought for their benefit on the bond against Thompson & Scott, and admitted they had paid costs in that suit, but failing there, they brought their suit directly against Holloway. Judge JBrockenbrough said: “ The plaintiffs have not admitted by their pleadings, nor is there any proof of actual consent; but it has been inferred that there was suchyconsent, from the circumstance that the plaintiffs paid some of the costs incurred in the suit brought on — 225 — tbe bond which Glenn, the attorney, took from Holloway in discharge of his bond. It is to be remarked that the answer of Holloway does not put his defense on the ground of the acquiescence of the plaintiffs, but relies on the authority of the attorney to make the arrangement which he did make. I do not think that the court ought to supply his deficiencies and furnish him with a weapon he did not wish to wield. If he had thought proper to rely on the acquiescence the plaintiffs might have given circumstances in evidence which would have led irresistably to the conclusion that they did not agree to take the bond of Thompson & Scott in satisfaction of Holloway’s debt to them; and that although they were willing to wait to see whether anything could be made from the suit against those obligors, and for that purpose to pay the costs, yet that they did not ratify the act of Glenn, who, in that matter, acted rather as the agent and attorney of Holloway, than of themselves.” Judges Carr, Cabell and Brooke concurred with Judge Brock-enbrough, and Judge Tucker, the president of the court, dissented, taking the ground that the plaintiffs had ratified the action of Glenn. In this case, according to the principles decided by the court in that case, we think the petitioners, Hopkins, Hull & Co., have in nowise ratified the action of Cecil. Mahood did not rely on the admission that'the claims were placed in Cecil’s hands as collaterals, but insisted that they were transferred to him in payment of the judgment. In the case of Wilkinson & Co. v. Holloway, there was no receipt given by the attorney; here there was; and by that receipt it is shown that the claims were placed in his hands by Mahood, qnd that as to them he was the attorney of Mahood, and riot of Hopkins, Hull & Co. Wiley can occupy no higher ground than Mahood. He does not, in the case, attempt to-charge, or prove, that Hopkins, Hull & Co. acquiesced in and ratified the act of Cecil and made it their own. It follows, as a necessary consequence, that the decree — 226 — *s erroneous as to Hopkins, Hull & Co., where it gives Mahood credit on their claim, as of the 15th of January, 1861, instead of the — day of -, 1873, the date of the sale under the trust deed, which date is not fixed in the record. Hopkins, Hull & Co. are entitled to interest on their claim, without any abatement thereof during the war. It is a well settled principle, that where assets are to be marshaled, and one creditor has two funds to which he may resort for the payment of his claim, and another has but one, that the first must be paid out of the fund to which the other cannot resort. If Pearis & Mahood had any partnership property, that property would, under ordinary circumstances, be primarily liable for the payment of the claims of Hopkins, Hull & Co., and Benjamin White, as their judgments were recovered against Pearis & Mahood. It does not appear in the cause that Pearis was before the court at all. The commissioner was hot directed to ascertain whether there was any partnership property of the firm of Pearis & Ma-hood, or to ascertain what property Pearis had, who was jointly bound with Mahood. The commissioner ought to have been directed to have ascertained and reported these facts. The sale was ordered without confirming the commissioner’s report. Where there are various liens on lands of a debtor, it is error to decree a sale of the lands without first ascertaining the amounts of the liens and their priorities. Cralle v. Meem, 8 Gratt., 530; Buchanan v. Clark et al., 10 Gratt., 165; Livesays, ex’rs, v. Jarrett, 3 W. Va., 283; Murdock’s adm’r v. Welles et al., 9 W. Va. 552. No time was given Mahood to j)ay the liens before the lands were ordered to be sold, and it is error to decree the sale of land, without giving to the. defendant a day to redeem the property by paying the amount charged upon it. Pecks v. Chambers, 8 W. Va., 210. For these reasons the decree for the sale of the residue of Mahood’s — 227 — lands entered on the 5th day of May, 1874, is reversed and annuled ; and the decree rendered in these causes on the 21st of October, 1874, so far as it directs the distribution of the proceeds arising from the sale ot Alexander Mahood’s lands, be reversed, with costs to William A. Wiley, the appellant, against the appellees, Hopkins, Hull & Co., and in all other respects said decree is affirmed ; and this cause is remanded to the circuit court of Mercer county, with instructions to have the said Geo. W. Pearis served with process, if he has not already been served, to recommit the report of commissioner-Gooch, that it may be ascertained whether the firm of Pearis & Mahood have any property, and if so what, and the liens thereon, and their priorities; also what property, if any, said Geo. W. Pearis has, and the liens thereon, and their priorities, and further to proceed with said cause according to the principles of this opinion, and the rules governing courts of equity. Decree Reversed and cause remanded.