Opinion ID: 2171471
Heading Depth: 1
Heading Rank: 5

Heading: Negligence of the claimants

Text: It will be recalled that the trustees denied the claims of Folly Farms both because of the absence of an attorney-client relationship and because [t]he negligence of the President of the Corporations contributed to the loss. Accordingly, our conclusion on the issue of the attorney-client relationship does not dispose of the matter. Rule 1228 i 3 enumerates certain factors which the trustees may consider, together with such other factors as they deem appropriate, when they exercis[e] their discretion in the matter of approval of claims. The last factor there enumerated (vii) is [a]ny negligence of the claimant which may have contributed to the loss. The term negligence as thus used is as difficult to define and to apply as a determination of what constitutes an attorney-client relationship. The trustees heard the witnesses and, under standard procedure for review in such cases, we take no issue with their factual conclusions. We are faced, however, with their legal conclusion that those facts amount to such negligence on the part of the claimants as would disqualify the claim. At this point we are not obliged to define just what might be negligence, but must determine whether the conduct of the officers of the corporation, and that of Brewster as president in particular, amounts to negligence. In other words, does his failure to make any inquiry into the affairs of the corporation of which he was president constitute such negligence as would bar recovery? As we see it, Brewster's conduct here must be evaluated no differently from that of an individual who is a co-executor with an attorney where an estate is receiving payments of dividends or other funds which come to the office of the attorney and which he is expected to deposit in the estate account. Would a lay co-executor be negligent if he did not on a monthly basis request the attorney co-executor to list down the items received and then proceed to reconcile this with the bank account? We think not; it is not negligence to trust one's attorney in the absence of facts which put one on notice or ought to put the client on notice that inquiry should be made. The reasons which dictate that a determination of what constitutes an attorney-client relationship for purposes of reimbursement from a client security fund should be under the but for test likewise dictate that negligence as used in this context must be given an interpretation somewhat different from that applied by the trustees. Conceivably, there might be a point in time when the failure of a corporate president such as Brewster to request an accounting would mount up to such negligence as would bar reimbursement for the attorney's defalcation. That point was not reached here. Exceptions sustained; costs to be paid by the Trustees of the Clients' Security Trust Fund of the Bar of Maryland.