Case ID: nys_92/html/1043-01.html
Source: Caselaw Access Project
Author: {"author": "LAUGHLIN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SCHREIBER v. HEATH.
    (Supreme Court, Appellate Division, First Department.
    April 7, 1905.)
    Attorneys—Negligence—Liability—Actions—Instructions.
    In an action against an attorney for negligence in loaning plaintiff’s ■ money, the burden was not on the attorney to establish that the transaction was fair and honest as such obligation obtains only in a case where the attorney obtains some property or property rights from his client.
    [Ed. Note.—For cases in point, see vol. 5, Cent. Dig. Attorney and Client, § 289.]
    Appeal from Trial Term, New York County.
    Action by Dora E. Schreiber against Henry G. K. Heath. From a judgment in favor of plaintiff, and from an order denying defendant’s motion for a new trial, he appeals. Reversed.
    Argued before VAN BRUNT, P. J., and McLAUGHLIN, PATTERSON, INGRAHAM, and LAUGHLIN, JJ.
    Henry G. K. Heath, in pro. per.
    Francis A. McCloskey, for respondent.
   LAUGHLIN, J.

The defendant is an attorney and counselor, and on different occasions had been employed by the plaintiff to loan moneys on bonds and mortgages. On or about the 9th day of September, 1897, she delivered to him the sum of $2,500, which it is alleged he undertook to safely and securely invest. He loaned the money to one Gregg, of the town of New Rochelle, county of Westchester, upon the security of a mortgage upon a number of vacant. lots and the bond of said Gregg. There was a' prior mortgage, on many of the lots. It is alleged that he represented that the mortgage procured for the plaintiff was a first mortgage; that Gregg, the mortgagor, was responsible; and that the investment was safe.■ It is further alleged that he was guilty of fraud and deception in misrepresenting facts and concealing the truth concerning the security, and that he was also negligent in making the investment and accepting inadequate security.

At the close of the evidence the court ruled that the action could not be maintained upon the ground of fraud, but that it would be submitted to the jury upon the theory of negligence on the part of the defendant in failing to perform his duty to the plaintiff of exercising proper care to safely invest her money. The cáse was presented to the jury upon that theory. The court, however, after the close of the main charge, and after charging certain requests, further charged:

“There is one thing, gentlemen, I should say to you, perhaps, and that is this: That, while the burden of proof is ordinarily upon the party who makes the allegations, yet that in any transactions between attorney and client the attorney is bound to establish that the transaction was fair and honest; that is, the law looks with more scrutiny on a transaction between attorney and client than it does between' two people who are supposed to stand upon an equality. At the same time, because a man is a lawyer, you must not proceed to punish him, but treat him with the same fairness and impartiality that you would any other party in a litigation before you.”

Counsel for the defendant then respectfully asked permission to except to certain portions of the charge, whereupon the court said: “You may except to anything I have stated. You may do it after the jury go out.” The court then gave instructions for a sealed verdict, and, after the jury retired, counsel for the defendant excepted to the charge that the measure of damages was the difference between the amount loaned and the sum the jury should find “the property was reasonably security for,” with .interest, and also excepted “to that portion of your honor’s charge in which your honor stated that the burden of proof is on the defendant to prove that the transaction was fair and honest.” The court thereupon remarked, “I did not say that.” Counsel for the defendant then said, “I may have misunderstood you.” The court then directed the- stenographer to read the charge on that subject, and, at the conclusion, counsel for defendant said, “If that is intended to take away the burden of proof from the plaintiff”— . The court at this point interrupted counsel for the defendant, saying, “It is not intended to take away the burden of proof.” Counsel for the defendant made no further attempt to take an exception. It is to be borne in mind that at this time the jury had retired, and did not receive the benefit of the remark of the court that the part of the charge to which the exception was addressed was not intended to relieve the plaintiff of the burden of proof. The evidence presented a fair question of fact as to whether the defendant exercised' proper care in investing the money upon reasonably safe security. The rule of law stated by the court, to which the exception was taken, applies to contracts and transactions between attorney and client where the attorney obtains some property or property rights from his client, but it has no application to a charge of negligence in failing to perform the contract duty of exercising ordinary care and skill as an attorney in protecting the rights of his client in a litigation or in transaction with others. It was prejudicial error to so instruct the jury on the issue of negligence that was submitted for their determination in this case.' The exception was sufficient to present the question, and we think it was not waived.

It follows that the judgment and order should be reversed, and a new trial granted, with costs to appellant to abide the event. All concur.