Swaim v. Martin

Hart, J., (after stating the facts). The procuring of the conveyance of the Carlisle property from Martin to Swaim was during the existence of the relation of attorney and client. In such oases the burden is upon the attorney of proving the fairness and equity of the transaction and the adequacy of the consideration, and, upon his failure to make such proof, a court of equity will treat the case as one of constructive fraud. The reason is that the relation of client and attorney is one of trust and confidence requiring a high degree of fidelity and good faith. Thweatt v. Freeman, 73 Ark. 575, and McMillan v. Brookfield, 150 Ark. 518. The rule that an attorney who contracts with his client has the burden of proving that no advantage has been taken of the situation of the latter, is not restricted to contracts or dealings with respect to the rights or property in controversy in the particular proceeding in which the attorney is acting for the client, but it may extend to other transactions and contracts, where the relationship may be presumed to give the attorney some advantage over the client. It appears from the record in this case that Swaim acted throughout the whole proceedings as the attorney and confidential adviser of Martin. The rule of equity which oasts upon the attorney the burden of showing perfect fairness on his part in all his dealings ydth his client is based upon the consideration that the confidential relations existing between the parties is such that the attorney has it in his power to avail himself of his influence over his client, and of the sense of dependence which the latter has in him, and of the confidence which the relation always imposes to a greater or less extent. In the instant case both Martin and his wife testified that the deed to the Carlisle property was executed in order to protect the wholesale grocers who were giving credit to the moving grocery corporation, and thereby enable that corporation to continue in business. They say that it was expressly understood that, after the debts were paid, the instrument in question would be returned to them. Martin expressly denied that any part of the consideration was that he should return to Clement his notes given for stock in the moving grocery corporation. In this respect he was corroborated by the -testimony of Clement. Clement testified that he purchased .stock through the representations of Swaim, and that he obtained the return of his notes by employing -an attorney for that purpose. Swaim was paid in stock for organizing the '’corporation. He was paid for his -services in securing the patent, and it does not make any difference that he paid all the amounts received by him for this purpose to the Washington attorney, who, in reality, appeared before -the department and -obtained the patent. The only -other service performed by Swaim was to act in conjunction with the other directors in getting the creditors to delay bringing suit against the moving grocery corporation for the collection -of their debts. The chante-ellor found the is-sues in this respect against the attorney, and it cannot be said that his finding is against the preponderance of the evidence. Again, it is claimed that, after the -suit wa-s brought by Martin against Swaim, Martin gave a written order for the dismissal of the suit. This order, however, was conditioned upon the payment to him of $200 by Swaim, and the latter represented to liim that he had the money in a bank in the city of Little Bock for that purpose. The evidence showed that he did not have anything like that amount to his credit in the bank at that time. It is true that Swaim made a tender of the $200 in court, but it was too late to avail him at that time. He did not have the money in the bank at the time he procured Martin to sign the -order for the dismissal of the case, and it was too late for him to get the money after Martin discovered that he did not have the money in bank and recalled his order of dismissal. In this respect the finding of the chancellor was also against Swaim, and it cannot be said that his finding is against the preponderance -of the evidence and therefore should be overturned on appeal.- Martin lias taken a cross-appeal, and but little need be said on this branch of the case. The evidence shows that Anderson was an innocent purchaser for value of the Carlisle property from Swaim. This seems to be conceded by counsel for Martin; but they contend that the court erred in finding the value of the Carlisle property to be only $2,000 in excess of the mortgage indebtedness of $1,500 upon it. They point to the fact that several witnesses testified that the property was worth from $4,500 to $5,000. It appears, however, that the property is rented for only $30 per month, and, when this and other facts and circumstances introduced in evidence are considered, we do not think that the chancellor erred in rendering judgment in favor of Martin against Swaim for only $2,000. It follows that the decree will be affirmed.