Title: WINER v JONAL CORP

State: montana

Issuer: Montana Supreme Court

Document:

No. 13020 I N T H E SUPREME C O U R T O F THE STATE O F M O N T A N A 1975 JULIUS H. WINER, M.D., and MARTIN M. EVEN, M.D., P l a i n t i f f s and Appellants, JQNAL CORPORATION, a Montana corporation; MIDWEST PACIFIC DEVELOPMENT C O M P A N Y , a Montana Corporation; WESTERN STATES SALES C O M P A N Y , a Montana Corporation; WILLIAM K. STRICKFADEN and FRANCIS G. STRICKFADEN, husband and wife; ALLEN R. BLUM; JOHN G. SWINFORD; ROBERT PAULIN; DOROTHY JEAN PAULIN; and P A U L K A L L M A N , Defendants and Respondents, Appeal from: D i s t r i c t Court of t h e Thirteenth J u d i c i a l D i s t r i c t , Honorable Robert Wilson, Judge presiding. Counsel of Record: For Appellants : Pedersen, Herndon and Harper, B i l l i n g s , Montana Bruce Harper argued, B i l l i n g s , Montana Schulhofer and Bramble, Beverly H i l l s , California For Respondents: Towe, Neely and B a l l , B i l l i n g s , Montana Kallman & Levenberg, T,os Angeles , California Allen R. Blum, Beverly H i l l s , California James N. Barber, S a l t Lake City, Utah Submitted : December 3, 1975 Decided : FEB - 5 1976 M r . J u s t i c e John Conway Harrison delivered the Opinion of t h e Court. This appeal i s from an award granting attorney fees + a r i s i n g out of an action on an agreement between J u l i u s H. Winer, M.D. and Martin M. Even, M.D., p l a i n t i f f s and appellants herein, and the Jonal Corporation, an e n t i t y organized under the laws of Montana, i t s president Allen R. Blum, and i t s vice- president John G. Swinford, defendants and respondents herein. Several other p a r t i e s were named and joined t o the action f o r various reasons, among them defendants William K. and Francis G. Strickfaden; attorney Paul Kallman representing Blum and ap- pearing pro s e ; and two other Montana corporations, Midwest Pacific Development Company and t h e Western States Sales Company. Two others, Robert and Dorothy Jean Paulin were p a r t i e s t o a r e l a t e d contract with the Jonal Corporation, and were joined a s defendants a s necessary and proper p a r t i e s . On March 10, 1970, Winer and Even executed a written agreement providing f o r a loan t o t h e Jonal Corporation i n t h e amount of $51,000 on a f i v e year promissory note. The note was t o be secured by an undivided one-half i n t e r e s t i n c e r t a i n r e a l property located i n Billings, Montana. A t about t h e same time, Robert and Dorothy Paulin agreed t o loan Jonal Corporation $52,500 on an i d e n t i c a l note secured by the remaining undivided one-half i n t e r e s t i n t h a t same r e a l property. I n l a t e 1971, Winer and Even were contacted by Blum and informed the Jonal Corporation was experiencing serious finan- c i a l d i f f i c u l t y . This began a s e r i e s of negotiations which, on February 25, 1972, culminated i n an agreement cancelling the promissory notes of 1970 and replacing them with a promissory note i n the amount of $137,500. This note represented an obligation owed by Western State Sales Company t o William K. Strickfaden. The note had been assigned by Strickfaden t o Midwest Pacific Development Company, the parent of Jonal Corporation a wholly owned subsidiary. Several days p r i o r t o the execution of t h i s new agreement, Striclcfaden f i l e d a s u i t i n federal d i s t r i c t court together with a notice of l i s pendens, against Jonal Corporation, Midwest Pacific Development Company, Blum and Swinford. These documents referred t o the same property as t h a t described i n the o r i g i n a l agreement of March 10, 1970, and purported t o r e s t r a i n the s a l e or t r a n s f e r of t h a t property pending the outcome of the l i t i g a t i o n . The s u i t was s e t t l e d several months l a t e r by a s t i p u l a t i o n which a l s o transferred control of Jonal Corporation t o Strickfaden. O n December 15, 1972, Winer and Even and Paulins issued a s a t i s f a c t i o n of the mortgage securing t h e new agreement i n exchange f o r the sum of $100,000. O n July 28, 1972, Winer and Even f i l e d i n t h e d i s t r i c t court, Yellowstone County, t h i s action t o recover damages f o r breach of contract and f o r fraud and conspiracy. Other forms of r e l i e f were a l s o requested, among them rescission, foreclosure of an equitable l i e n and l e g a l mortgage, specific performance and reformation. T r i a l was had on September 17 and 18, 1974, before the court s i t t i n g without a jury. The c o u r t ' s findings of f a c t and conclusions of law supported defendants and denied a l l r e l i e f t o p l a i n t i f f s . Judgment was entered on October 8 , 1974. Appellants Winer and Even a r e residents of California, a s a r e respondents Blum, Swinford, Kallman, and the Paulins. Respondents Strickfaden a r e residents of Colorado. N o c o n f l i c t s of law issues have been raised. Appellants challenge c e r t a i n findings and conclusions of the d i s t r i c t court regarding t h e award of attorney fees. I n paragraph 10 of the substituted agreement of February 25, 1972, t h i s statement appears: "10. In the event t h a t s u i t i s brought t o enforce t h i s Agreement or any provision thereof the prevailing party s h a l l receive from the adverse party such attorney's fees a s the Court deems reasonable. I1 In the context of t h i s provision, the d i s t r i c t court found reasonable attorney fees and expenses incurred by these attorneys: Paul Kallman - $3,500; James N. Barber - $1,250; Thomas Towe - $1,000; Gary Wilcox - $675. The d i s t r i c t court i n i t s finding of f a c t No. 26 found: h hat the Defendant Paul Kallman, had he not been an attorney himself, would have had t o employ an attorney t o defend him i n t h i s action and t h a t he i s e n t i t l e d t o be paid ik 9 : 3: even though he acted a s h i s own attorney. 11 Appellants f i r s t contend t h a t the award of attorney fees t o respondent Paul Kallman, a licensed California attorney, and representing Blum, was improper. They point out the general r u l e a s adopted by t h i s Court, t h a t i n the absence of contractual agree- ment or specific s t a t u t o r y authority, attorney fees a r e not recov- erable a s costs by t h e prevailing party. Nikles v. Barnes, 153 Mont. 113, 454 P.2d 608; Stalcup v. Montana T r a i l e r Sales & Equipment Co., 146 Mont. 494, 409 P.2d 542; Kintner v. Harr, 146 Mont. 461, 408 P. 2d 487; In r e ~ i c k c h ' s Estate, 114 Mont. 258, 136 P.2d 223. It i s suggested by appellants t h a t t h e i r action against respondents Blum and Kallman sounds i n t o r t and not i n contract, since appellants1 claims against them were based on allegations of fraud. This claim c l e a r l y has no merit, nor i s it consistent, especially i n view of appellants' consistent requests f o r attorney fees i n a l l counts of t h e i r pleadings a t the t r i a l level. The d i s t r i c t c o u r t ' s findings regarding the award of attorney fees a r e a l s o challenged on grounds t h a t an attorney who appears i n propria persona may not be awarded h i s own attorney fee. In support of t h i s position, appellants c i t e several California cases: O'Connell v. Zimmerman, 157 Cal.App.2d 330, 321 P.2d 161; City of Long Beach v. Sten, 206 Cal. 473; 274 P. 968; City of Los Angeles v. Hunt, 8 Cal.App.2d 401, 47 P.2d 1075. While these cases support the r u l e f o r which they a r e c i t e d , appellants neglect t o comment upon t h e l i n e of cases which stand f o r the exact opposite. The b e t t e r r u l e i s t h a t a party who appears f o r himself, and i s himself an attorney or counselor a t law, i s e n t i t l e d t o be awarded the same c o s t s a s he would be e n t i t l e d t o had he employed another. The r u l e and supporting authority i s reviewed a t 5 Am.& Eng.Annot.Cases 834, and t h e r a t i o n a l e s t a t e d therein derives from t h e application of plain common sense: "* * * It can make no difference t o the defeated party, who i s by law bound t o pay the costs of the attorney of the prevailing party JC * * whether t h a t attorney i s the prevailing party himself o r another attorney employed by him. He, l i k e any other pro- fessional man, i s paid f o r h i s time and services, and i f he renders them i n the management and t r i a l of h i s own cause i t may amount t o a s much pecuniary l o s s o r damage t o him a s i f he paid another attorney f o r doing it, * JC JC" See a l s o 20 Am Jur 2d, Costs 978. The d i s t r i c t c o u r t ' s finding No. 26 i s amply supported i n both law and policy, and was therefore not error. Appellants a l s o a t t a c k the d i s t r i c t c o u r t ' s actions regarding the award of attorney fees a s being i n excess of i t s j u r i s d i c t i o n under section 93-2023, R.C.M. 1947, which provides: "It s h a l l be unlawful f o r any court within t h i s s t a t e t o allow attorneys' fees i n any action o r proceeding before said court i n which attorneys' fees a r e allowed by law t o e i t h e r party t o such actions o r proceeding, when such party i s represented by any- one other than a duly admitted or licensed attorney a t law. I' This Court f i r s t construed the provision c i t e d above i n 1923. It was held t h a t an attorney who has not been licensed t o practice i n the s t a t e of Montana may not recover attorney fees, although d i s t r i c t courts may s t i l l permit such attorneys t o conduct a particular case. V a i l l v. Northern Pacific Railway Co., 66 Mont. 301, 213 P. 446. This view has been examined and adopted by a number of other jurisdictions. See Annot., 1 1 ALR3d 907. A n opposing view has evolved from Brooks v. Volunteer Harbor No. 4, 233 Mass. 168, 123 N.E. 511, 4 A.L.R. 1086, wherein it was held t h a t an attorney licensed i n one s t a t e may recover f o r services rendered i n a s t a t e i n which he i s not duly licensed, i f he i n i t i a l l y discloses t h a t f a c t t o h i s c l i e n t and further informs him of the necessity t o associate with local counsel. This is a r u l e whikh, i n a l l f a i r n e s s , we f e e l impelled t o adopt. W e find t h a t such an interpretation i s b e t t e r suited t o the modern practice of law and i n the i n t e r e s t s of promoting comity between the s t a t e s . Such a r u l e i s p a r t i c u l a r l y appropriate i n cases such a s the i n s t a n t one, where the attorney i n question i s a member i n good standing of the California Bar. Under these circumstances, neither t h e s p i r i t nor the i n t e n t of section 93-2023, regulating the r i g h t t o practice law i n t h i s s t a t e , has been violated. These statements appear i n Freeling v. Tucker, 49 Idaho 475, 289 P. 85, 86, regarding the purpose of s t a t u t e s such a s ~ o n t a n a ' s section 93-2023: "* * * The s t a t u t e s above referred t o governing admis- sion t o the bar i n t h i s s t a t e , requiring a license t o practice law i n t h i s jurisdiction and providing a p l t y f o r violation of t h e i r provisions, a r e obviously aimed a t persons who hold themselves out a s qualified t o , o r a c t u a l l y carry on the business of practicing law i n t h i s jurisdiction without the proper credentials t o do so, i n flagrant disregard of the requirements. Respondent has not offended the s p i r i t o r intention of these s t a t u t e s , the f a c t s of t h i s case showing i t t o be one c a l l i n g f o r the application of the r u l e permitting an attorney from a s i s t e r s t a t e , regularly admitted and licensed t o practice therein, t o make appearance i n the courts of t h i s s t a t e , a s a matter of comity, incident t o the disposition of a p a r t i c u l a r matter isolated from h i s usual practice i n the s t a t e of h i s residence. 11 V a i l l v. Northern Pacific Railway Co., supra, must be overruled. The judgment of the d i s t r i c t court i s affirmed.