Court Opinion

ID: 6965234
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:52:40.027067+00
Date Added: 2024-06-11T09:12:02.135966
License: Public Domain

Mr. Justice Magruder delivered the opinion of the Court: Appellee testifies, that the deed made to him by appellant, conveying to him the west half of the lots in controversy, was executed by her in pursuance of a previous contract, which she had made with him, in reference to payment for his legal services. He swears, that, by the terms of this contract, she was to pay all the costs and he was to have a contingent fee of one half of what should be recovered both in the suit for alimony, and in the chancery suit in regard to the lots. The evidence shows, that this contract was .made during the pendency of the legal proceedings which the appellee was conducting for the appellant. It was not entered into before, or at the time of, his original employment, which took place on February 15, 1882, nor did it exist when he filed the bill on February 23,1882. His answer states, that “early in the spring or summer of 1882 * * * it was * * * mutually agreed that this defendant should have and receive as a contingent fee for his services one half.” He testifies, that he cannot fix the date of the agreement, but that, to the best of his recollection, “it was in March, or April, possibly in May, after I discovered I had a pretty good-sized job on hand, and a good deal of work to do, and had done a good deal of work. * * * She claimed to have no money early in the proceedings, and could not pay my fees in money, and that was why I subsequently made a different arrangement with her.” Appellant swears that she never made an agreement with the appellee to give him one half of the money, or of the land, to be recovered. The deed to appellee was also executed while the relation of attorney and client existed between himself and the appellant. That deed was made on January IT, 1884, and he, concedes that he did not cease to-be appellant’s solicitor until some time thereafter. In England “it is a settled doctrine of equity that an attorney cannot, while the business is unfinished in which he has been employed, receive any gift from his client, or bind his client in any mode to make him greater compensation for his services than he would have a right to demand if no contract should be made during the relation.” (Weeks on Attorneys at Law,—2d ed.—sec. 364). More than fifty years ago, the English doctrine was .adopted by the Supreme Court of Alabama in an able opinion in the case of Lecatt v. Sallee, 3 Port. 115, where it was held, that “an agreement made by a client with his counsel after the latter has been employed in a particular business, by which the original contract is varied, and greater compensation is secured to the counsel, than ma.y have been agreed upon, when he was first retained, is invalid, and cannot be enforced.” The reason for the doctrine is to be found in the nature of the relation, which exists between attorney and client. That relation is one of confidence, and gives the attorney great influence over the actions and interests of the client. In view of this confidential relation, transactions between attorney and client are often declared to be voidable, which would be held to he unobjectionable between other parties. The law is thus strict, “not so much on account of hardship in the particular ease, as for the sake of preventing what might otherwise become a public mischief.” (Lewis v. J. A. & Edwards Ch. Rep. marg. page 599; top page 622). “No single circumstance has done more to debase the practice of the law in the popular estimation, and even to lower the lofty standard of professional ethics and self-respect among members of the legal profession itself in large portions of our country, than the nature of the transactions, often in the highest degree champertous, between attorney and client, which are permitted, and which have received judicial sanction. It sometimes would seem, that the fiduciary relation and the opportunity for undue influence, instead of being the grounds for invalidating such agreements, are practically regarded rather as their excuse and justification.” (3 Pomeroy’s Eq. Jur. sec. 960, note 1). Before the attorney undertakes the business of the client, he may contract with reference to his services, because no confidential relation then exists and the parties deal with each other at arm’s length. The same is true in regard to dealings which take place after the relation has been dissolved. (1 Story’s Eq. Jur.—13 ed.—secs. 310 to 313). But the law watches with unusual jealousy over all transactions between the parties, which occur while the relation exists. In the case at bar, it does not appear that any definite contract in regard to fees existed between appellant and appellee prior to the spring of 1882. But inasmuch as he undertook to manage her legal interests before that time, there was an implied contract, created by operation of law, which entitled him to receive such reasonable compensation as his services might be worth. “If the amount of compensation be not fixed by the terms of the contract, by which an attorney or solicitor was employed, he would be entitled to be paid such reasonable fees, as have been usually paid to others for similar services.” (Lecatt v. Sallee, supra). The question then arises, what was a reasonable compensation for the services rendered by the appellee to the appellant. He has introduced no independent evidence upon this subject. His only witness is an office companion, who says, that, in his opinion, appellee’s legal services were worth $30.00 per day, but does not claim to have full knowledge of the services rendered in the matters herein involved. Appellee is unable to state, except approximately, the time spent by him in attending to appellant’s matters, but he says: “I believe that in the whole matters * * * I spent at least forty days.” Forty days’ services at $30.00 per day would be $1200.00. We do not think, however, that the proof establishes $1200.00 as the value of the services. Mr. W. I. Culver swears, that the customary and usual charge for all the work done by appellee in the divorce, attachment and “resulting trust” cases would be $250.00 in money. Mr. B. F. Richolson, the attorney for Pratt, swore that appellee’s services in the chancery, or “trust,” suit in regard to the land were reasonably worth from $300.00 to $350.00, and he made the following statement: “If the fee was contingent upon success, I think he would be justified in charging somewhat more; I hardly think double that, because I think the success was so reasonably assured there was not very much doubt.” What was the value of the-lots, of which appellee was to have one half ? In the affidavit filed by appellant in the divorce proceeding on March 6, 1882, she swore that she had been informed that the lots were then worth $3000.00, and were encumbered for $540.00 only. This affidavit was drawn by appellee, and was presented to the court upon an application to set aside the agreement of settlement for $500.00. We cannot suppose, that the value of the lots was exaggerated, in order to induce the court to believe that Pratt was not too poor to pay more than $500.00. Taking $3000.00 as the estimated value of the lots on March 6, 1882, then, by appellee’s agreement for fees, he was to get property worth $1500.00 less $270.00 of encumbrance, amounting to $1230.00. This amount exceeded the reasonable compensation to which appellee would have been entitled under the implied contract, under which he began his services for appellee. We have recently held in Morrison v. Smith, 130 Ill. 304, that a sale by a client to an attorney will be sustained, if it is fair and honest and in no manner tainted with fraud, undue influence or corruption, and that the law does not go so far as to hold such a sale voidable at the election of the client. In that case the subject matter of the purchase by the attorney from the client was a judgment obtained by the former for the latter. The judgment debtor was insolvent except as to his ownership of an undivided interest in land, which was subject to a life estate. The doctrine of that ease is the law of this Court as applied to such a purchase by an attorney from a client as is there described. The litigation had reached the point where judgment had been obtained; the judgment was a lien upon a reversionary interest in land; its value could, therefore, he easily ascertained by ascertaining the value of the interest in the land subject to the life estate. But there is a manifest distinction between a purchase by an attorney from a client, and a contract, made during the pendency of a litigation, for the conveyance or transfer by the client to the attorney of a part of the property involved in the litigation, as a compensation for his legal services therein. Where a purchase is proposed, the seller is always, to a certain extent, put on his guard. He knows that it is for the interest of the buyer to get the property as cheaply as possible. He has every motive to enquire into and learn the value of the thing to he sold. But, in the case of the contract above indicated, the client is at a great disadvantage. The value of the property in litigation depends upon the result of the litigation; and being unable to understand the legal aspects of the case, he is unable to foresee what such result will be. He must rely, not upon his own judgment, but upon the judgment and statements of his attorney. Moreover, he is unable to judge as to the value of his attorney’s services, because he cannot know what legal steps are necessary to be taken in the conduct of the case. The advantage is overwhelmingly on the side of the attorney where such a contract is made. Whatever may be the rule as to a purchase by an attorney from a client, we think, that, where the title to property is so involved in litigation that the value of the property depends upon the decision as to such title, a contract made during the pendency of the litigation to compensate the attorney for his legal services with a part of the property involved therein, should be held to be voidable at the election of the client, irrespective of the fairness or unfairness of the contract, provided such election is exercised within a reasonable time. Such a rule as this is demanded by public policy and in the interests of a wholesome administration of justice. The distinction here noted is pointed out in Berrien v. McLane et al. 1 Hoff. Ch. Rep. 420, where it is said: “A voluntary gift made while the connection of attorney and client subsists is absolutely void, and the property transferred by it can only be held as security for those charges which the attorney can legally make. Next, * * * a transfer of property made upon an ostensibly valuable consideration, such as a lease or sale, is presumptively void; the client has the advantage of driving the attorney to produce evidence to prove its fairness, and to show that the price or terms were as beneficial as could have been obtained from a stranger. And lastly * * * a transfer of a part of the property actually in litigation, or a contract to. transfer a pa/rt, is * * * Yoid; illegal * * * because of the existing relation of the parties: * * * such a contract will not be enforced'on the application of the attorney; and if the client applies will be cancelled on equitable terms.” The above passage from the Berrien case is quoted for the purpose of showing, that a distinction is recognized between a sale and a transfer of a part of the property in litigation in payment of fees, or a contract to transfer the same, but we do not gó so far as to hold with the learned vice-chancellor in that case, that such a contract or transfer is absolutely void, but that it is voidable at the option of the client. The view here expressed is supported by the following authorities. (Rogers v. Marshall, 3 McCrary, 76, and note to first opinion and cases cited in note; 4 Kent’s Com.—12 ed.—page 449 note b; Wallis v. Loubat, 2 Denio, 607; Lecatt v. Sallee, supra; Pearson v. Benson, 28 Beavan, 598; Newman v. Payne, 2 Vesey, Jr. 199; Wood v. Downes, 18 Vesey, Jr. 119; Lewis v. J. A. supra; Starr v. Vanderhegden, 9 Johns. 253; West v. Raymond, 21 Ind. 305; Simpson v. Lamb, 40 Eng. Law & Eq. 59; Hall v. Hallett, 1 Cox, 134; Hawley v. Cramer, 4 Cowen, 717; Weeks on Att’ys at Law—2 ed.—sec. 273; Armstrong v. Huston’s Heirs, 8 Ohio, (Hammond) 552; Gray v. Emmons, 7 Mich. 533; Merritt v. Lambert, 10 Paige, 352; Bolton v. Daily, 48 Iowa, 348; 1 Perry on Trusts—3 ed.—sec. 202. But even if the rule, which applies to a purchase by aattorney from his client, should be held to be applicable in the present case, the contract and the deed made in pursuance thereof must be-subjected to a rigid test. In case of such a “purchase, the transaction is presumptively fraudulent, and the burden is on the attorney to show “fairness, adequacy and equity.” (Lewis v. J. A. supra). He must remove the presumption against the validity of the transaction “by showing affirmatively the most perfect good faith, the absence of undue influence, a fair price, knowledge, intention and freedom of action by the client, and also that he gave his client full information and disinterested advice.” (2 Pom. Eq. Jur. sec. 960.) In order to sustain the deed made to appellee on January 17, 1884, it must appear that the consideration received by appellant was “adequate,” and that the appellee paid “a fair price.” This involves the determination of the question whether the services rendered to the appellant were worth what the property was worth on the day of the delivery of the deed. Counsel on both sides have presented this as one of the material issues in the case, and have introduced testimony to show the value of the lots in January, 1884. Of appellant’s witnesses three swore that the lots were then worth $3200.00; two, that they •were worth $4000.00; and two, that they were worth $4800.00. Of appellee’s witnesses two placed the value of the lots at that time at about $900.00, one at from $1000.00 to $1400.00, one at $1200.00, and one at from $1950.00 to $2400.00. It is claimed by counsel for appellee, that the valuations of his witnesses are based upon actual sales, while the valuations proven by appellant are matters of opinion formed from a general knowledge of values. It has been well' said, that “there is no more important factor in determining the value of particular property than the sales of similar property in the same neighborhood at about the time in question.” (Lewis on Eminent Domain, sec. 443). We have'held, that “actual sales of property, in the vicinity and near the time, are competent evidence, as far as they go.” (Provision Co. v. City of Chicago, 111 Ill. 651). But, while such sales may be the mossatisfactory evidence of value, yet they are only one of the modes of proving value, and not the only mode, (St. L., V. & T. H. R. R. Co. v. Haller, 82 Ill. 208). It is true that the° witnesses of appellant do not testify to actual knowledge of sales, made in the neighborhood where these lots are located in the year 1884, or about that time, and that some of the witnesses of .appellee do refer to sales. Purchases made in 1879, are not an exact criterion of values in 1884. Nor are forced sales under trust deeds and foreclosure decrees always a correct indication of value. After making allowance for the difference thus indicated between the testimony produced by appellee and that produced by appellant, we are unable to reach the conclusion, that the value of the services rendered to the appellant was equal to the value of the lots conveyed to appellee in January, 1884. "We cannot say, however, after a careful review of the evidence, that the contract for compensation, and the deed made in pursuance thereof are liable to any other objections than these two: 1st, they were executed during the existence of the relation of attorney and client; 2nd, they secured a larger compensation for legal services than those services were really worth. We see no evidence of any undue influence exercised by the appellee over the appellant, except perhaps in the matter of obtaining from her a renewal of the contract. In the fall of 1882 appellee seemed to fear that appellant would make a settlement with Pratt without consulting him, or upon a basis not approved by him; and on November 24,1882, he wrote her a letter, in which, after referring to her previously expressed desire that he should conduct her business “upon a contingent fee of 50 per cent of the amount recovered,” he said: “A definite understanding is therefore necessary before any further action is taken.” He says that after this date she renewed the contract for one half of what should be recovered ; and, thereafter, in March, 1883, as the record shows, he amended the bill by praying that Pratt be declared a trustee, etc. It was said in Bolton v. Daily, supra: “We think that where an attorney sets up an express agreement to pay more than an ordinary fee, exacted of a client when the work was two thirds done, under a threat of withdrawing from the case if the agreement was not made, nothing but the best of reasons would be sufficient to uphold the agreement.” Here, however, the implied threat to t'aké no further action without a definite understanding had reference to reaffirming a contract already-made rather than to the making of a contract for the first time. Appellee had perhaps good reasons for asking for a definite understanding. The appellant had thrown out intimations of. a settlement of her litigation. She had shown herself to be changeable in her humor, and had already employed two attorneys besides appellee in her lawsuits. She had repudiated the agreement of settlement entered into with her second husband. She had made some incorrect statements to her counsel: for example, she had charged that the note to Eimers and the trust deed to Thornton had been obtained by fraud, when the evidence overwhelmingly established the fact .that those .securities represented a bona fide loan, and that she herself had voluntarily united in the execution of the trust deed. Aside from the haste with which appellee secured his deed on January 17, 1884, we are satisfied that the action of appellant in the execution of that deed was free and voluntary. She admits that she was pleased with the result reached in getting a decree for the lots. The proof does not sustain her in the claim which she now makes, that she thought she was conveying to appellee an undivided one half of the lots., so that as co-tenant she would have the benefit of his services in the future management of the property. On the contrary, the proof shows, that the.deed was fully explained to her, and that she well understood it to be a conveyance of the west half of the lots, and that she chose the east half in preference to the west half upon being given her choice. We think the proof also shows that appellant was fully advised of all the steps taken in the suit. She was acquainted with the value of the lots, and received information in relation thereto from the beginning of her troubles, having accepted a trust deed thereon in 1879, and having executed a trust deed thereon in 1880. In 1882 she had made an affidavit as to .the value of the lots. Afterwards she is shown to have talked with a number of persons in regard to the future outcome of the property. She was a shrewd, capable, business woman; had been engaged in business before she married Pratt;' and, though without much ready money, owned a house and two lots in a suburb called Melrose. If appellant had filed her bill within a reasonable time, we are of the opinion that she would have been entitled to have the deed to appellee set aside, either upon the ground that both the deed and the contract which preceded it were obtained from her while the relation of client and attorney existed between herself and appellee,-or upon the ground that the property, agreed to be given and subsequently conveyed to appellee as compensation for his legal services', was worth more than the reasonable and customary valué of those services. But inasmuch as the contract, which appellee could not have enforced, was fully completed and executed by the-conveyance to him of one half the property, the question arises whether or not appellant has been guilty of laches in not sooner filing her bill to have the deed set aside. From January, 1884, when the deed was made, to December, 1890, when the present bill was filed, a period of almost seven years elapsed. In connection with the question of laches it is a fair subject of inquiry, under the facts of this case, whether the conduct of the appellant does not show acquiescence, if not confirmation, on her part. Where bills are filed to set aside contracts or deeds between parties standing ’ in a confidential relation to each other, the defense of laches is not usually regarded with favor. It has-been said that “length of time weighs less in such a case than in any other,” and that it is “extremely difficult for a confidential agent to set up an available defense grounded on the laches of his employer.” (Wood v. Downes, 18 Vesey, Jr. 130, note 1.) But even in cases where it has been held, that such-contracts and sales, without reference to their fairness or honesty, will be set aside upon the application of the party in interest, it has at the same time been held, that such application must be made within a reasonable time to be judged of by the court under all the circumstances of the case. (Hawley v. Cramer, 4 Cowen, 717; Smith v. Thompson’s Heirs, 7 B. Monroe, 310; Fox v. Mackreath, 1 Lead. Cases in Eq. pt. 1, White & Tudor (4th Am. Ed.) p. 188, sec. 115 and page 257; McCormack v. Martin, 5 Blackf. 509; Williams v. Reed, 3 Mason, 405.) What is a reasonable time cannot well be defined, but must be left, in large measure, to the determination of the Court in view of the facts presented. Equity does not always follow the period of limitation fixed by statute and enforced in courts of law. Parties will be required to assert their rights within a shorter time in States where the values of real estate increase rapidly, and greater temptations are thereby afforded for speculative litigation. (Burr v. Borden, 61 Ill. 389.) But the party, who is entitled to set the transaction aside, cannot be charged with delay, or with acquiescence, or confirmation, unless there has been full knowledge of all the facts, and perfect freedom of action. Acts, which might appear to be acts of acquiescence, will not be held to be such, if the client or cestui que trust is ignorant of the circumstances, or under the control of the original influence, or otherwise so situated as not to be free to enforce his rights. (Rogers v. Marshall, supra; Hawley v. Cramer, supra.) Confirmation may be evidenced by long acquiescence, “as by standing by and allowing the purchaser to lay out money in the firm belief that his title would not be contested.” (Pearson v. Benson, 18 Beav. 598.) Let us see how the appellant stood relative to the two objections, heretofore pointed out, on January 17, 1884, and for nearly seven years thereafter. She must be held to have known that the property, which she conveyed to appellee was worth more than his services. She alleges in her bill in this case, that she agreed to pay him $400.00, and, while that allegation is not sustained by the proof, she must be held to be bound by it. In her testimony, after stating that appellee introduced the subject of his fees after Pratt’s arrest, she says: "I asked him * * * what would be his fees for attending to all my business and making everything perfectly clear and straight' for me. * * * He said there was a great deal of work about the case and would probably be a great deal more, and he would have to have $400.00.” She swears that she thus knew the value of his services as fixed by himself. On January 17, 1884, with knowledge, according to her own evidence, that his services were estimated by himself to be worth only $400.00, she conveyed to him one half of property, which she had sworn to be worth $3000.00 in March, 1882, and which was of greater value in 1884. With admitted knowledge as to the disparity between the value of the land and the value of the services, she permitted the appellee to deal with the west half of the land as his own, and recognized him as the owner thereof, for six years and eleven months, without giving any intimation that she intended to disturb his title. In December, 1884, he paid off one half of the incumbrance held by Eimers, and she not only permitted him thus to spend his own money on the property, but furnished him with the money to pay off the other half of the incumbrance for herself. From June 30, 1884, down to the time of filing the present bill, she paid taxes on the east half of the property and suffered him to pay taxes on the west half, sometimes taking the money over to the treasurer’s office for him and paying his taxes for him on the west half. A little more than a month before filing the bill, she paid $83.35 for an outstanding tax title against the east half, and he at the same time with her consent paid the same amount for a tax deed to himself of the same outstanding title against the west half. In 1888 and 1889 she made efforts not only to sell her own lots in the east half, but also to sell for him the lots in the west half which she had conveyed to him. She went out to the property in 1885 and employed a man to plant trees for her on the east half, telling him that appellee owned the west half. In 1886 she had some negotiation with oneWhittemore about selling one of her lots in the east half to him, and spoke of Johnson as the owner of the west half by deed from herself for services. At another time she was present when appellee offered to sell his lots in the west half for $75.00 a lot, and talked to the same party about buying her own lots in the east half. In 1887 she occupied a part of the office of a real estate agent named Hopson, and proposed to him that he should sell her lots, referring to appellee as the owner of the adjoining lots and as being willing to sell them. The evidence shows, that between January, 1884, and December, 1890, a belt line railroad was built to the west othese lots, and the Wisconsin Railroad Company laid its tracks in the neighborhood, and certain locomotive works were located in that vicinity. On account of these improvements the lots, which had been bought for $600.00 in 1879, had become worth $16,000.00 in 1890. It appears from the evidence that the defendant went into the office of the appellee as a type-writer in 1883 and did the business of a typewriter for several years. The appellee and two other attorneys had each a private room, and a large reception or waiting room. The appellant was permitted to use a type-writer belonging to appellee, occupying the reception room for that purpose. She was allowed the use of the room and of the type-writer without charge, and, in consideration thereof, she did for appellee sueh typewriting as he required. We cannot see that the appellee owed her anything for work done under this arrangement. While she was in his office, she seems to have done a profitable business as a type-writer for outside parties. When she procured a typewriter of her own and took another office in the same building, he paid her for the services which she rendered. Upon the grounds of laches and acquiescence we think that the court below properly dismissed the bill. The decree of the Superior Court of Cook County is affirmed. Decree affirmed.