Overholt v. Matthews

Mr. Justice Eobb delivered the opinion of the Court: The learned trial justice, in his opinion, attached considei’able importance to the delay of complainant in the prosecution of his case and it is clear that this view was largely responsible for the conclusion reached. That the suit was seasonably brought there can be no serious question, and while the complainant did not testify, as he might have done, in support of the averments in paragraphs 8 and 13 of his bill to the effect that he did not learn of the sale of the stock by defendants until shortly before the institution of his suit, it is not alleged in the answer that he ever was given this information by the defendants or anyone else. Moreover, the discouraging letter of the defendant Matthews under date of January 31, 1903, clearly indicates that complainant had not then been informed of what actually had taken place and that it then was the policy of the defendants to suppress the facts. It fairly appears, therefore, that there was no undue delay in the institution of this suit. Certain it is that none of the parties, so far as the [491] record shows, was in anyway prejudiced by the delay, if delay there was. Having instituted the suit within a reasonable time, the complainant may not be prejudiced because of a delay for which the defendant Matthews was as much responsible as was he. Meloy v. Keenan, 17 App. D. C. 235. It there was said: “The defendant had it in his power to prevent unnecessary or unusual delay. By the use of ordinary diligence he could have forced the case to call for trial and its dismissal upon default of the plaintiff. Having been as indifferent as the plaintiff in respect of further proceedings he is in no situation to complain of his neglect.” As late as November of 1909 the defendant acquiesced in an order enlarging the time for the taking of testimony, and there is nothing in the record to indicate that he thereafter made tlie slightest effort to bring the case to trial. Indeed, it is not a violent assumption that he was quite content with the situation. If his lips now are sealed, so, too, are those of complainant, at least as to relations between the two. Coming now to the merits, complainant’s case substantially amounts to this: He invented a train signal device, applied for a patent thereon, and subsequently became acquainted with Mr. Matthews, an attorney and evidently a forceful and energetic man. Mr. Matthews took charge of the situation, reducing the agreement between the two to writing and characterizing himself therein as Overliolt’s attorney. Matthews, who was either to procure a purchaser for the invention or to organize a company for its exploitation, then interested Tyng and Stringfield, and a new contract was entered into in which Matthews and Tyng were made “sole attorneys and agents” of Overholt. At the same time Matthews and Tyng, in a separate agreement, were given an option on the patent for six months from the date of transfer of the patent to a company to be formed. The company was formed for the exploitation of Overholt’s device and the patent thereon was to be, and was, the only asset of the company when formed. The first annual report of the treasurer of the company shows the receipt of $9,000. This must have been from the sale of company stock. Matthews, in his [492] answer, admits receiving upward of $1,000 on account of stock sold, but says it was tbe proceeds of tbe sale of his own stock. The treasurer’s report and the stock accounts in evidence, however, indicate the contrary. Obviously, the $9,000 received by the corporation represented the sale of coxqporate, and not individual, stock. Otherwise, it is reasonable to assume that the proceeds would not have found their way into the treasury. Mr. Matthews not only characterized himself as Mr. Overholt’s attorney and agent, but the contracts and correspondence between them clearly show that such was their real relationship. The coxrrespondence further shows that Overholt relied upon Matthews, and had a right so to do, not only to represent him in good faith, but to keep him informed of all facts material to his interest. In such circumstances the burden is on the attorney to prove good faith if it appears, as it cex’tainly does here, that he has reaped a special benefit from the relationship. Jones v. Byrne, 149 Fed. 457; Ringen v. Ranes, 263 Ill. 11, 104 N. E. 1023; Dunn v. Record, 63 Me. 17; Palms v. Howard, 129 Ky. 668, 112 S. W. 1110; Manheim v. Woods, 213 Mass. 537, 100 N. E. 747; Porter v. Bergen, 54 N. J. Eq. 405, 34 Atl. 1067; McConkey v. Cockey, 69 Md. 286, 14 Atl. 465; Baker v. Humphrey, 101 U. S. 494, 25 L. ed. 1065; 6 C. J. 686; 2 R. C. L. 966. In Thomas v. Turner, 87 Va. 1, 12 S. E. 149, the court, speaking of the duty of an attorney to his client, said: “All transactions between the parties to be upheld in a court of equity must be oberrima fides, and the onus is on the attorney to show, not only that no undue influence was used or advantage taken, but that he gave his client all the information axxd advice as against himself that was necessary to enable him to act undex’standingly.” It is a familiar rule that courts of equity have jurisdiction to compel an accounting whex*e, as here, fiduciary relations exist or a discovex’y is soxxght. Warren v. Holbrook, 95 Mich. 185, 35 Am. St. Rep. 554, 54 N. W. 712; Thomas v. Hartshorne, 45 N. J. Eq. 215, 3 L.R.A. 381, 16 Atl. 916; Goddin v. Bland, 87 Va. 706, 24 Am. St. Rep. 678, 13 S. E. 145; Beggs v. Edison Electric Illuminating Co. 96 Ala. 295, 38 Am. St. [493] Rep. 94, 11 So. 381. And even where the main relief sought may not be granted, an accounting may be directed although not mentioned in the prayers for relief. Miller v. Sterringer, 66 W. Va. 169, 25 L.R.A.(N.S.) 596, 66 S. E. 228; Swan v. Talbot, 152 Cal. 142, 17 L.R.A.(N.S.) 1066, 94 Pac. 238. The answer in the present case admits the receipt by Matthews of more than $1,000 from the sale of stock. The complainant received substantially nothing. $9,000 was put into the treasury from the sale of stock. There is no contention that complainant was informed of this, and yet he furnished the only asset of the corporation and was the owner of a majority of its stock. Certainly enough appears to entitle him to the accounting for which he prays. The testimony of Tyng and Stringfield, by deposition or otherwise, will be as available to the executrix of Matthews as to Overholt, and from that testimony it should appear what disposition was made of the $9,000. The decree is reversed, with costs, and the cause remanded for further proceedings not inconsistent with this opinion. Reversed and remanded. The Ciitef Justice dissents.