Palms' Admrs. v. Howard

Opinion op the Court by Judge Settle — Reversing. This is the second appeal of this case. The first resulted in a reversal of the judgment of the circuit court because of error committed bv that court in prematurely submitting and deciding it. See Palms’ Adm’rs v. Howard, 102 S. W. 267, 31 Ky. Law Rep. 316. The issues presented by the pleadings are fully •stated in the former opinion, which also sets forth the ■provisions of the contract out of which litigation arose. It will therefore be sufficient for the purposes •of the present opinion to say that the action was brought by appellants, as administrators of the estate of P. P. Palms, deceased, to recover of appellee, Calloway Howard, moneys .paid him by their intestate by way of compensation, for services as attorney and agent, which appellee agreed to render and claimed to have rendered, but which the petition alleges were never performed, in protecting the intestate’s title fo and possession of 19,000 acres of land situated in Magoffin county which the latter supposed he owned. In other words, it is the contention of appellants, as gathered from the averments of the petition, that’ the intestate, at the cash price of $60,000', purchased in 1891 from one Webster and received of him a deed to the 19,000 acres of land in question .was covered "by what was known as the May-Martin .patent, issued in 1872, purporting to embrace 35,000’ acres, including, however, certain excepted tracts ainounting in the ■aggregate-to 16,000 acres; that the May-Martin .patent ■and deed conveying Palms the land were worthless and passed no title, and in point of fact the 19.,000 ■acres Palms supposed he had purchased were at the — 672 — time of Ms purchase, and long prior thereto, in the actual adverse possession of other bona fide purchasers and occupying claimants, whose possession, continued after his purchase, and yet continues, and that Palms never had possession of the land himself. The petition further avers that Palms never saw the land, and without knowing of the worthless character of his title he entered into the contract with appellee,, set out in the former opinion, whereby the latter undertook to inform him of the nature of his title and holding, protect his possession, keep off trespassers,, see to the payment of taxes thereon, show the land to-intending purchasers, and, if possible, effect its sale. Under this contract appellee was to receive for his. alleged services $100 per month, which salary he received down to the year 1895, at which time by agreement between .himself and Palms he was thereafter to be paid $800 per year for his services, and this, compensation he received for more than seven years. It is the compensation paid him for and during the time last mentioned that appellants seek to recover. It is further alleged in the petition that appellee knew of the fraudulent character of the-May-Martin-patent,. and that Palms obtained no title by his deed from Webster to the land in question, at the time he entered ipto the contract with Palms to render the-services Expected of him, and that he concealed these facts from Palms for the fraudulent purpose of obtaining of the latter the sums that were afterwards paid him under the contract. The averments of the petition were denied by the answer, the statute of limitation pleaded, \and a counterclaim set up for $1,366,. to which appellee claimed to be entitled under the contract for services rendered the last 18% months, of the continuancfe of the contract at the rate of $800 — 673 — per year. By the judgment rendered in the circuit court, appellants’ action was dismissed, and appellee allowed the full amount of his counterclaim. Appellants complain of that judgment; hence this appeal. Palms did not discover the alleged fraud practiced upon him hy appellee until shortly before his death, which occurred in 1904, and he was preparing to bring suit against appellee on account thereof at the time of his death. The action was later brought by appellants as his administrators, within five years of the discovery of the fraud and within ten years of the date of its perpetration. In an extended opinion in the case, supra (see Palms’ Administrators v. Howard, 102 S. W. 1199, 31 Ky. Law Rep. 814), this court said: “If Palms broke his contract with Howard without cause and without notice, as therein stipulated, Howard may recover such damages as he sustained thereby; the measure of damages to be regulated as in the case of other contracts for personal services. But the contract contemplated that Palms had land for Howard to look after, and when there was no land for him to look after the contract ipso facto terminated. When there was no land to look after, there was no need of notice by Palms to terminate the contract. It was incumbent on Howard to keep his principal informed as to the facts he knew as to the land, so far as they were necessary to protect his interests, and it was also incumbent on him to exercise ordinary care and diligence to keep himself posted as to the matters within the scope of his agency. ’ ’ Our examination of the entire record in this case convinces us that Palms never had title to or the possession of this land, and that these facts were ■nnlrnown to him, but fully known to appellee, at the — 674 — time lie entered into the contract with Palms to render the services therein provided for; that knowledge of these facts was concealed by appellee from Palms; and that the latter, throughout their long connection as client and attorney, never advised Palms of the defective character of his title, or of the fact that the land had been in the actual adverse possession of others for .a period of more than 30 years. Indeed, the concealment of these facts is shown by the letters of appellee to Palms, without reference to other evidence in the case. The evident purpose of this correspondence was to keep alive in the breast of Palms the belief that he had in these lands the opportunity for future large profits. "Whenever any one struck oil, wherever coal was found or a new railroad talked of being constructed in the vicinity of these lands, information thereof was written by appellee to Palms, and the opinion expressed that it would add to the value of the lands. As late as 1902, when a nephew of Palms visited the land with a prospective purchaser and informed his uncle of the spurious nature of his title and possession, appellee succeeded by correspondence in counteracting in Palms’ mind the effect of his nephew’s communication, and persuaded him that the latter had misrepresented the facts as to the land, Avith the intent to ultimately secure it himself at a price less than its true value. Twice, or oftener, appellee; when complaint was received from Palms that he had been informed trespasses were being committed upon the land and timber destroyed, wrote him, in substance, that such trespass did not result in serious injury to the land; intimated that they were inadvertently committed by owners of some of • the tracts included in certain excepted surveys covered by the May-Martin patent and in ignorance of the true — 675 — location of their lines; and explained that he had not instituted suits against the trespassers, whom he designated “exclusionists,” as there might be difficulty in establishing the lines between some of th.e excepted tracts and these “exclusionists” and the land of Palms covered by the May-Martin patent. It seems apparent from the record that the supposed trespassing Palms complained of was not due by the so-called “exclusionists” at all, but by persons or their vendees in the actual adverse possession and claiming to be the owners of the land covered by the May-Martin patent and deed from Webster to Palms. It seems further apparent that these facts, though known to appellee, were not revealed by him to Palms, notwithstanding his undertaking to keep the latter advised of all that occurred concerning the land. We are unable to find that appellee rendered any real or valuable service to his employer. He may have done some work in tracing and making an abstract of Palms’ supposed paper title; but the report of this work was unaccompanied with any communication of the valid claims or adverse possession of the occupants of the land, which in law and in fact made Palms’ title worthless. Nor did he make any effort to induce the occupying claimants to abandon their possession of the land. It is true litigation over the land would have resulted in no benefit to appellee’s client; but he should have frankly advised the client of the true situation, instead of concealing it from him. Such information would doubtless have convinced the latter of the worthless character of his title, caused him to abandon his claim to the land, and enabled him to avoid the expense in taxes and salary to appellee to which he was subjected. In any event, if appellee had given such advice, and the client — 676 — had, in the face thereof, persisted in claiming the land, paying the taxes thereon, and to appellee a. salary for such services as the latter rendered under the contract between them, such conduct would have relieved appellee of any responsibility as to results, and estopped Palms or his administrators to demand a return of the sums paid him. It does not appear that any material effort was made by appellee to procure a purchaser for the land, which he agreed to assist in doing and claims to have rendered some service to his client in attempting to accomplish. It is true prospective purchasers occasionally presented themselves, but it does not appear that they were taken by appellee to see the land. Whether this was because inspection of the land would have disclosed to the intending purchaser its actual possession by others, or whether, as intimated in the record, appellee was apprehensive of bodily injury to himself or others, contemplating the purchase of the land, from the persons in possession, we are unable to say; but, whatever the deterrent, it seemed sufficient to keep ham off the land. The law is emphatic in its denunciation of anything amounting to deception or fraud on the part of the attorney toward the client; and it is the policy of the courts, where complaint is made by the client, to examine critically transactions between them, that the rights of the client may be protected against any attempt of the attorney to secure any advantage to himself. In such case proof of actual fraud is not necessary in order for the client to obtain relief. The confidential relation being established, any disadvantage resulting to the client from a transaction with the attorney will be held sufficient to authorize the court to interfere in behalf of the former. The doctrine — 677 — referred to is thus discussed in Story’s Equity Jurisprudence, section 310: “It is obvious that this relation (of client and attorney or solicitor) must rise to great confidence between the parties and the very strong influence over the actions and rights and interests of the client. The situation of an attorney or solicitor puts it in his power to avail himself not only of the necessities of his client and of his good nature, liberality, and credulity, to obtain undue advantages, bargains, and gratitudes. Hence the law, with a wise providence, not only watches over all the transactions of parties in this predicament, but it often interposes to declare transactions void which between other persons would be held unobjectionable.” “A person standing in the relation of attorney must bring everything to the knowledge of his client that he knows pertaining to such position. Cases of undue concealment sometimes arise from the relation of client and attorney. In these cases the law, in order to prevent undue advantages from the unlimited confidence which the relation naturally creates, requires that there must be the utmost degree of good faith in all transactions between the parties. If there is any misrepresentation, or any concealment of a material fact, or a just suspicion of artifice or undue influence, courts of equity will interpose and pronounce the contract void, and' as far as possible restore the parties to their original rights.” Story, Eq. Jurisprudence, sections 192-219-311; Weeks on Attorneys, sections 258, 259, 262; Burch v. Nicholas, 80 S. W. 1132, 26 Ky. Law Rep. 264. It must not be overlooked that in such transactions as occurred between appellee and the decedent, Palms, the onus of proving that the former took no advantage of his client is upon him; for, as said in 3 Greenleaf, section 253: ‘ ‘ The great principle — 678 — by which, courts of equity are governed in cases between attorneys and clients is that he who bargains in the matter of advantage with a person placing, confidence in him is bound to show that a reasonable use has been made of that confidence.” Hill v. Phillips, 7 B. Mon. 308. We are of opinion that appellee, in his dealings with the decedent, Palms, failed to manifest that skill, diligence, and good faith required of an attorney; that his conduct throughout was not such as constituted a fair or reasonable use of the confidence placed in him; and that his concealment of the true state of Palms’ title and claim to the land described in the record induced the latter to enter into the contract between them, and caused him the unnecessary outlay and expense- complained of, amounting in the aggregate to more than $10,000. This being true, it was plainly the duty of the lower court to give judgment against him and in behalf of appellants for the amount illegally received by him, from and after May 17,1895, of the decedent, Palms, as salary; this sum being all that is claimed by appellants. As appellants are not seriously insisting in this court upon a judgment for the taxes paid by their decedent upon the 19,000 acres of land, and the proof being somewhat indefinite as to the amount thereof, we express no opinion on that subject. It was, however, error on the part of the circuit court to allow appellee’s counterclaim, for no legal services were rendered by him under the contract with Palms for which he is entitled to be compensated. Therefore his counterclaim should have been dismissed. In other word!, as said in the extended opinion on the former appeal: “The contract contemplated that Palms had land for Howard to look after, — 679 — and when there was no land for him to look after the contract ipso facto terminated. When there was no land for Howard to look after, there was no need of notice by Palms to terminate the contract.” For the reasons indicated, the judgment is reversed, with directions to the lower court to set it aside and enter in lieu thereof another in favor of appellant and against appellee, for the amount of salary paid the latter by the decedent, Palms, under the contract between them, from May 17, 1895, down .to the date of his (the decedent’s) death, with 6 per cent, interest on each payment from the date thereof, and also adjudge the dismissal of appellee’s counterclaim. 0 ’Rear, C. J., not sitting. Petition for rehearing by appellant overruled.