Riegi v. Phelps

Corliss, J. This case presents the betrayal of a trust reposed in an attorney. The plaintiff was the owner of a note for $235, on which was due the principal and about 13 years’ interest. It was executed by her brother. She lived in Rochester, Minn. After the execution of this note her brother removed to the territory of Dakota to live. In August, 1892, she placed the note in the hands of Bear & Granger, attorneys at Rochester, Minn., with instructions to them to collect it for her. At this time she knew that her brother was living in the State of North Dakota. This note was sent by Bear & Granger to the defendants, who were attorneys practicing law at Grafton and Minto, in this state, with directions for them to collect the amount due on it. Upon being notified by defendants that they had this note for collection, the maker of it (plaintiff’s brother) came to the office of the defendants in Grafton, and in a short time paid them $369 in settlement, certain claims of the brother against his sister being deducted from the amount of the note in the adjustment of the matter. After this money had been paid, the note delivered, and the whole matter closed, so far as the brother was concerned, defendants (or rather defendant H. W. Phelps, on behalf of defendants) sent Bear & Granger the following telegram: “Will client take one hundred dollars net for Folske note, and you twenty-five? He claims forty paid and board account of eighty-five. Answer.” Bear & Granger wired acceptance of this offer, [275] and defendant paid them the amount stated in the telegram, i. e. $125. Plaintiff, having discovered how much had been collected, brought this action to recover the balance, less a reasonable collection fee. Why was this telegram sent by the defendants? Certainly not that the defendants might, by the answer to it, receive defínate instructions as to the terms on which they should settle, for they had already settled. The only possible explanation of their object in sending it is that they desired to entrap the owner of the note into consenting to receive only a small part of her property, and thus fraudulently secure an enormous collection fee by concealing from the attorneys in Rochester, Minn., and the owner of the note, the true state of facts. It is insisted that the charge made by the defendants for the collection is reasonable, as the note was outlawed. If defendants thought so, why did they studiously suppress the truth? Why did they not disclose the amount paid, and remit the balance, claiming that they were •entitled to retain $244 out of a collection of $369, or nearly 70 per cent, of it? They knew that such a claim was monstrous, and they covered up the truth, hoping to be able to retain this amount by a deceit which might never be discovered. It is difficult to write dispassionately in such a case as this. There is nothing in defendants’ claim that they were not acting as attorneys for the plaintiff. They knew from the talk with her brother that she was the owner of the note. Their telegram to Bear & Granger discloses the fact that they knew that that firm did not own the note, but had sent it forward for a client for collection. They say in their telegram, “Will client take $100, and you twenty-five.” It is said that the relation of attorney and client did not exist, because they did not know her name. This is a sample of the points which are here urged to secure a reversal of this righteous verdict, in the face of the undisputed facts which have been already set forth in this opinion. The telegram not only suppressed the true facts; it also contained an implied representation that the best the defendants could do was to obtain for plaintiff [276] and her attorneys in Rochester, Minn., $125, after securing a reasonable fee for themselves. It was this idea that the telegram conveyed to the minds of the plaintiff and her attorneys there, and it was the intention of the defendants that just such an impression should be derived by the client and her local attorneys from the message. On no other theory can the conduct of the defendants in sending the dispatch be accounted for, and it is obvious that any client who had confidence in an attorney making such a communication under such circumstances would assume that the attorney meant to retain only a reasonable fee for his services, and could obtain only the sum specified in addition to such reasonable fee. Whether Bear & Granger were authorized to employ the defendants is unimportant. With full knowledge of the fact of such employment, she ratified their acts in this respect. When the telegram was received from the defendants, Bear &'Granger read it to her. This telegram disclosed the fact that other attorneys were acting for her in the mattex-, and Mr. Grangei-, one of her attoxmeys at Rochester, testified that before that time he had told plaintiff that he ■ had sent the note to a firm of lawyei's at Grafton, N. D., for collection. At no time did the object to the employment of defendants. On the contrary, she acquiesed in and fully ratified their employment by her attorneys, Bear & Grangei". Whether the defendants were acting strictly as attoi'neys for plaintiff, or only as her collection agents, is entirely immaterial. As her agents they owed her the duty of absolute fealty' to her interests in the matter. They were under obligations to disclose to her, or to those acting for her, who had employed them, all facts affecting her rights. They were bound to apprise her of the amount which had been collected before securing her assent to accept fi'om them any sum in settlement of the note. To inveigle her into consenting to x'eceive only 30 per cent.-of the amount collected, by a suppression of the facts, was not only a betrayal of trust, but, under the circumstances, amounted to a positive fraud. We have cited no decisions, as the principles which govern the case are elementary. We refer, [277] however, to Burnham v. Hesleton (Me.) 20 At. 80, as being very much in point. (60 N. W. Rep. 402.) Many of the errors assigned are unworthy of notice, and, in view of the admitted facts, none of the alleged errors could possibly have been prejudicial, even assuming them to be errors in the case. The court did not err in withdrawing everything from the jury, except the single question as to the amount of reasonable compensation for making the collection. That amount was fixed by the verdict of the jury. This was all that defendants were entitled to retain out of the balance in their hands. The judgment of the district court is therefore affirmed. All concur. (We are requested by the defendant H. W. Phelps to state, and such appears to be the fact, that his brother J. D. Phelps, never had any connection with the transactions referred to in the opinion, and was in no manner interested therein; the business conducted by him (H. W. Phelps) at Grafton being his individual, and not the partnership, business.) Note — An attorney can as against his client acquire no beneficial interest in or title to the subject matter of the litigation antagonistic to the title or interest of his client. Yerkes v. Crum, 2 N. D. 72. But he may obtain a lien upon moneys due his client, in the hands of the adverse party. Clark v. Sullivan, 3 N. D. 280, and this lien extends to and embraces any judgment rendered in an action to recover such moneys, also to appeal undertaking and the cause of action thereon. Clark v. Sullivan, 3 N. D. 280. An attorney cannot without the consent of his client be examined as to any communication made by the client to him, or his advice given thereon in the course of professional employment, but this privilege will not extend to communications made concerning a deed of conveyance drawn by an attorney when he acted as a mere scrivener. O’Neill v. Murry, 6 Dak. 107.