Opinion ID: 2031892
Heading Depth: 1
Heading Rank: 5

Heading: damages for legal malpractice

Text: It is implicit in the trial court's findings and conclusions that the remaining damages were awarded based upon the plaintiff's allegations of legal malpractice. These damages include $4,400 for the failure to place Robert's mineral acres in joint tenancy with Mavis, and a total of $44,241.30 for advising Mavis to pay off the cattle and car loans. Both parties presented expert testimony on these issues. The standard of care to which an attorney is held in the performance of his professional services is that degree of skill, care, diligence, and knowledge commonly possessed and exercised by a reasonable, careful, and prudent lawyer in the practice of law in the state. Bohn v. Johnson, 371 N.W.2d 781, 784 (N.D.1985); Martinson Bros. v. Hjellum, supra, 359 N.W.2d at 872 (N.D.1985). In a legal malpractice action, the plaintiff has the burden of proving by a preponderance of the evidence that the attorney breached a professional duty owed her and that the breach was the proximate cause of her damages. Martinson Bros. v. Hjellum, supra . Whether an attorney has breached his professional duty, and whether the breach was the proximate cause of the damages, are ordinarily questions of fact. Martinson Bros. v. Hjellum, supra . The trial court found that Lee failed without justification or excuse to prepare the necessary instruments to create a joint tenancy between Robert and Mavis in Robert's remaining mineral interests. The court further found that as a result, the mineral interests were subject to probate and creditor's claims, damaging the plaintiff in the amount of $4,400, the value of those interests. It is well established that an attorney is liable for all losses caused by his failure to follow with reasonable promptness and care the lawful instructions of his client. See McWhorter, Ltd. v. Irvin, 154 Ga.App. 89, 267 S.E.2d 630, 631 (1980); Olfe v. Gordon, 93 Wis.2d 173, 286 N.W.2d 573, 577-578 (1980); R. Mallen and v. Levit, supra, at § 106. An attorney's honest belief that the instructions were not in the best interests of the client is not a defense to a suit for malpractice. Olfe v. Gordon, supra ; Note, Attorney Malpractice, 63 Colum.L.Rev. 1292, 1302 (1963). We conclude that the trial court did not err in awarding the plaintiff $4,400 for Lee's failure to follow Robert's instructions to place the mineral interests in joint tenancy. The defendants also attack the trial court's award of $36,319.61 in damages resulting from the defendants' advice to Mavis to pay off the cattle loan. The award represents the amount remaining due on a promissory note signed by Robert and co-signed by W.S. Raymond. The trial court determined that, based upon the defendants' counsel and advice, Mavis used her personal funds to satisfy this estate debt. The defendants assert that even assuming the advice was given, it was of no consequence because Mavis intended to pay off the cattle loan so that W.S. Raymond, a personal friend, would not be liable for the balance owed. The defendants' argument is, in effect, an attack on the trial court's determination of proximate cause, which is a question of fact. E.g., Leno v. Ehli, 339 N.W.2d 92, 96 (N.D.1983). While we may have viewed the evidence differently if we had been the trier of fact, we cannot say that the trial court's finding that Mavis paid off the cattle note [b]ased on defendants' advice and counsel is clearly erroneous. The defendants also assert that the trial court erred in awarding the plaintiff $7,921.69 in damages for payment of the car loan. On August 12, 1983, Robert received a loan from the Citizens State Bank of Ray. The maturity date of the promissory note was February 8, 1984. One of the items securing the note was a 1979 Cadillac, which was titled in both Robert and Mavis' names. However, Mavis did not sign the promissory note or security agreement. The trial court awarded these damages, which represent the amount due on the note which was paid by Mavis, concluding that [t]here is no evidence that plaintiff had joined in signing over the Cadillac title to the bank. The defendants assert, in effect, that this award constitutes a double recovery because Mavis received the Cadillac free and clear of any lien of the bank as well as receiving the amount she was required to pay to free the Cadillac of the lien. Although the trial court's reasoning is somewhat cryptic, we believe that implicit in the trial court's ruling on this issue are determinations that: 1) Robert and Mavis held title to the Cadillac in joint tenancy; and 2) because Mavis did not sign the note and security agreement, the bank did not hold a valid security interest in the Cadillac which could be foreclosed if the note had not been paid. Whether personal property is held in joint tenancy with the right of survivorship depends on the intentions of the parties and is determined in light of all of the circumstances. Liebelt v. Saby, 279 N.W.2d 881, 886 (N.D.1979). We have reviewed the record and conclude that the trial court did not err in determining that Robert and Mavis held title to the car in joint tenancy. A joint tenant may not convey or otherwise encumber another joint tenant's interest in property without the authorization or consent of the co-tenant. E.g., Brandhagen v. Burt, 117 N.W.2d 696, 700 (N.D.1962). The defendants do not assert that Mavis consented to or otherwise ratified Robert's encumbrance of her joint tenancy interest in the car. It is equally fundamental, however, that a joint tenant can deal with strangers as freely as owners of property held individually, and therefore may convey or otherwise encumber his own interest in the property without the consent of the other joint tenant. Robar v. Ellingson, 301 N.W.2d 653, 662 (N.D.1981); Brandhagen v. Burt, supra ; Adamsen Construction Company v. Altendorf, 152 N.W.2d 576, 578 (N.D.1967). Because Robert died before the loan became due, the issue becomes whether the bank's rights under the security agreement would have been, to the extent of Robert's interest in the car, superior to the interest of Mavis as the surviving joint tenant. Courts which have recently considered this question have concluded that because ownership in a surviving joint tenant vests immediately upon the other's death, a security agreement encumbering only the interest of one joint tenant is extinguished upon the death of that joint tenant. See Commercial Banking Co. v. Spurlock, 238 Ga. 123, 231 S.E.2d 748, 749 (1977); Ogilvie v. Idaho Bank & Trust Co., 99 Idaho 361, 367, 582 P.2d 215, 221 (1978); Home Trust Mercantile Bank v. Staggs, 714 S.W.2d 792, 794 (Mo.Ct.App.1986); Sherman Cty. Bank v. Lonowski, 205 Neb. 596, 289 N.W.2d 189 (1980); and Franke v. Third Nat'l Bank & Trust Co., 31 Ohio App.3d 189, 509 N.E.2d 955, 958-959 (1986). [6] The courts in Spurlock, Ogilvie, Staggs, and Lonowski, reasoned, or relied on real property decisions to the effect, that because a mortgage or pledge of property as security constitutes merely a lien on the property and conveys no title to the secured party, the mortgage or pledge does not operate to sever the joint tenancy and thus the right-of-survivorship feature is left intact. E.g., People v. Nogarr, 164 Cal.App.2d 591, 330 P.2d 858, 860-861 (1958); Harms v. Sprague, 105 Ill.2d 215, 473 N.E.2d 930, 933 (1984). Compare § 35-01-08, N.D.C.C. [Notwithstanding an agreement to the contrary, a lien or a contract for a lien transfers no title to the property subject to the lien.] [7] We recognize that under the secured transaction provisions of the Uniform Commercial Code, Chapter 41-09, N.D.C.C., [t]he location of the title to the collateral, as between creditor, the debtor, or a third person, has no significance in determining the effect of an Article 9 secured transaction, the various provisions of that Article being applicable to the transaction without regard to the ownership of the property. 8 R. Anderson, Uniform Commercial Code § 9-202:4, at p. 655 (1985) [Footnotes omitted.]. Section 41-09-15 (9-202), N.D. C.C., succinctly provides that [e]ach provision of this chapter with regard to rights, obligations, and remedies applies whether title to collateral is in the secured party or in the debtor. Nevertheless, the court in Franke, noting the indifference to title location under the Code, reached the same result as the other courts. The Franke court rested its conclusion on the basic principle that the deceased joint tenant could not give the bank a security interest in collateral that was greater than his own interest. See also 1 Bender's Uniform Commercial Code Service, Secured Transactions § 2.08[3][c] (1987). In other words, the court held that because the debtor's interest consisted of only the debtor's lifetime interest in the property subject to the other joint tenant's right of survivorship, a certificate of deposit, that interest was extinguished upon the debtor's death and, consequently, the bank's security interest was extinguished with it. Responding to the secured creditor's argument against that result, the court in Franke explained: The bank argues that because Michael had the right to withdraw principal and interest during his lifetime, Dora Franke should not be heard to complain because he merely pledged the certificate of deposit. The simple answer to this argument is that this is not what happened. Michael did not withdraw money from the certificate of deposit. He pledged it, and by the time the bank was entitled to enforce its security interest, Michael's interest in the collateral had been extinguished by his death. Franke, supra, 509 N.E.2d at 958. We agree with the rationale employed by the Franke court, and, like the other courts which have recently addressed this issue, we conclude that a security agreement encumbering only the interest of one joint tenant is extinguished upon that joint tenant's death prior to default. In this case, because Robert died before the promissory note matured, upon his death Mavis became full owner of the car free of the bank's security interest. Consequently, the trial court's award to Mavis of $7,921.69 for payment of the car note does not constitute a double recovery because payment was unnecessary for her to retain full ownership of the car. Accordingly, this award is affirmed. [8] The plaintiff asserts that the trial court erred in failing to treble the $48,641.30 damage award under the provisions of § 27-13-08, N.D.C.C. This award represents the damages for her payment of the car and cattle loans and Lee's failure to place the mineral interests in joint tenancy. Section 27-13-08(1), N.D.C.C., provides in pertinent part that an attorney who is guilty of deceit or collusion or consents to deceit or collusion, with intent to deceive the court or any party, forfeits to the party injured treble damages. The damages which may be trebled must result from the attorney's acts of deceit or collusion. See Newman v. Silver, 553 F.Supp. 485, 498 n. 11 (S.D.N.Y.1982), aff'd in part and vacated in part, 713 F.2d 14 (2d Cir.1983); Michalic by Nakovics v. Klat, 128 A.D.2d 505, 512 N.Y.S.2d 436, 437-438 (1987); Diprima v. Diprima, 111 A.D.2d 901, 490 N.Y.S.2d 607, 608 (1985), construing a similar New York law. These damages were awarded for legal malpractice. The trial court found no actual damages as a result of defendants' acts of deceit. Accordingly, the trial court did not err in refusing to treble this award. Paul asserts that there is no basis for the trial court to hold him jointly and severally liable for the damage award. Initially, we note the trial court found as a fact that [b]ased on defendants' advice and counsel, plaintiff used her own personal funds to pay off the car note and the balance due on the cattle note.... [Emphasis added]. Mavis testified at trial that not only Lee, but Paul told her that the chattel mortgages had to be paid. Thus, this finding is not clearly erroneous, and supports the imposition of personal liability on Paul for the damages for payment of the car and cattle loans. With regard to the $4,400 award for the failure to place Robert's mineral interests in joint tenancy, there is no evidence to indicate that Robert requested Paul to do so. However, the defendants admitted in their answer and the trial court implicitly found that they were partners in the law firm. It is generally recognized that a partnership, or every member thereof, is ordinarily liable for a tort committed by one of the members acting within the scope of the firm's business, even though the persons sought to be charged did not participate in, ratify, or have knowledge of such conduct.... [T]he test of liability is generally based upon a determination of the question whether the wrong was committed in behalf of and within the reasonable scope of the business of the partnership. Annot., Vicarious Liability of Attorney for Tort of Partner in Law Firm, 70 A.L.R.3d 1298, 1301 (1976) (footnotes omitted). See also §§ 45-06-01, 45-06-05, and 45-06-07(1), N.D.C.C.; Truscott v. Peterson, 78 N.D. 498, 50 N.W.2d 245, 255 (1951). We believe that Lee's failure to place the mineral interests in joint tenancy, as requested by Robert, was a failure which fell within the ordinary course of the business of the partnership, § 45-06-05, N.D.C.C., and consequently, rendered Paul jointly and severally liable to the plaintiff on the theory of vicarious liability. Cf. Roach v. Mead, 301 Or. 383, 722 P.2d 1229, 1233-1234 (1986). The defendants assert that the trial court improperly concluded that defendant Lee Fraase is responsible for any consequence of his over-conveyance of Dunn County minerals. We agree. It is unclear what relevance this conclusion of law has to the instant case because the plaintiff claimed no damages as a result of any over-conveyance and Lee's possible liability to third parties was never at issue. We order that this conclusion be stricken from the judgment. Accordingly, we affirm the judgment insofar as it awards the plaintiff $48,641.30 plus interest. The judgment is otherwise reversed. VANDE WALLE, J., and SCHMALENBERGER, District Judge, concur. GIERKE, J., concurs in result. SCHMALENBERGER, District Judge, sitting in place of ERICKSTAD, C.J., disqualified.