Court Opinion

ID: 9636809
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:43:49.464217+00
Date Added: 2024-06-11T18:09:49.842248
License: Public Domain

MAJOR, Circuit Judge
(dissenting).
I know of no other case where the findings of fact made by a District Judge have been so completely disregarded. Defendant argues the case here as though it were being tried de novo, and the majority opinion indicates what the result shows, that it is being heard and decided on the same basis. On a printed record which contains over 700 pages of testimony, oral and documentary, wherein the District Court after hearing oral testimony for seven days made voluminous findings of fact upon which its judgment was predicated, this court now reverses such judgment in an opinion which fails to mention even one of the findings thus made. Rule 52 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, provides: “Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.”
Notwithstanding that this is a case particularly appropriate for the application of such Rule, it is brushed aside on the specious basis that this court does not agree with the judgment.
The opinion states, “He [the District Judge] concluded as a matter of law that at the time of the execution of the contract a relationship of special trust and confidence existed between plaintiff and Smart,” and later, after referring to certain authorities, states, “With these rules in mind, we have examined the record so as to ascertain whether it contained sufficient evidence to warrant a conclusion that a fiduciary relationship existed between the parties.”
Thus, this court treats the vital issue in the case as one of law and overlooks the following finding of fact: “By his acts David A. Smart became and was the friend and adviser of plaintiff as regards his business and domestic affairs and invited and had the special trust and confidence of plaintiff as regards such affairs far beyond the trust and confidence ordinarily existing between men associated in a business as employer and employee.”
Even the defendant did not ignore this finding, but argued it was not supported. In its brief it states, “The court’s finding of fact that David Smart stood in a fiduciary relation to Vargas is unsupported by substantial evidence and should be set aside.”
I recognize the futility of dissent, but in fairness to the District Judge and for the purpose of keeping the record straight, I feel impelled to recite a few of the more salient evidentiary findings upon which the lower court predicated its ultimate finding as to the existence of a fiduciary relation*657ship, none of which are mentioned in the opinion, which are not challenged by the defendant. The court found that during the time plaintiff and his wife resided in Chicago, Smart “was consulted by plaintiff and his wife as regards their places of abode, he visited the apartments they desired to rent, and he was consulted about and advised them concerning the furnishing of their apartments”; that he was a “frequent visitor at the home or apartment of plaintiff”; and that he advised plaintiff and his wife that they might obtain from the defendant “money they might need properly to furnish the different places in which they resided and which they might from time to time require for various other purposes.” The court further found that the defendant, in addition to the compensation, which * was obligated by contract to pay the plaintiff, advanced to him and his wife large sums of money, including “$5,000.00, advanced in 1943 to bring plaintiff’s mother and sister from Peru; $2,250.00, advanced to plaintiff to buy his wife a ring; $728.00, advanced to purchase plaintiff’s wife a coat, in addition to the very substantial sums advanced for the decorating and furnishing of the residences of plaintiff and various other purposes.” Further, the court found that subsequent to May 15, 1941 “no accounting was ever made by defendant to plaintiff in regard to his account with defendant,” and at no time “was any demand ever made for the repayment by plaintiff of any sums advanced by defendant”; further, that “David A. Smart had complete control of the work done by plaintiff for defendant to be sold to others, and plaintiff for his earnings from such work necessarily relied upon and trusted to the judgment of said David A. Smart in regard thereto.”
As the court found, for the calendar year 1942 the defendant advanced to the plaintiff the sum of $3,419.29, in addition to the salary and compensation provided by contract. While this amount was charged to plaintiff, no demand was ever made for its payment. For the calendar year 1943, defendant, as found, advanced to the plaintiff the sum of $10,573.12, in addition to his contract salary of $325 per month, and at the end of the year the amount of these advances exceeded the compensation earned by the plaintiff under his contract in the amount of $5,699.80. Included in such advances are the following: January 14, 1943, $1,000; March 12, $473.12; April 14, $500; June 14, $500; June 19, $5,000 (this was the money to bring plaintiff’s mother and sister to the United States) ; November 16, $500, and December 14, $1,600. In addition, Esquire rented a studio for plaintiff during the last six months of this year and advanced the rent of $55 a month.
At the conclusion of the year 1943, a formula was worked out between Smart and other officials of the defendant by which plaintiff was credited on defendant’s books with an amount sufficient not only to absorb the advancements which had been made but which showed there was a balance of $565.85 owing to plaintiff. A check was issued to Vargas for this amount, with, a voucher attached which showed that it was to balance his account. This formula was worked out, all of plaintiff’s indebtedness to the defendant by reason of the advancements which it had made were cancelled, and a balance ascertained to be due the plaintiff, without consulting him and without knowledge on his part.
The court further found that “David A. Smart from the time of the arrival of the plaintiff and his wife in Chicago on or about July 1, 1940, throughout their association with defendant, exhibited an unusual interest in everything pertaining to their life.” This is the only evidentiary finding which the defendant mentions in its brief, and as to this it states: “There is no testimony to support so broad a finding.”
As to the execution of the contract in suit, the court found, “David A. Smart knowingly withheld from plaintiff information of a material nature and information of such a nature that if known to plaintiff he undoubtedly would not have signed the contract in question,” that Smart “knowingly misrepresented to the plaintiff matters of a material nature as regards said contract,” and that he did so “with the purpose and intent and in a fashion ealeu-*658fated to induce plaintiff to sign said contract.” The court further found that in •the execution of the contract “plaintiff did not act as a free agent,” “plaintiff through the acts of David A. Smart was misled,” •“plaintiff by the acts of David A. Smart ■was imposed upon,” and that “plaintiff while not acting as a free agent signed the contract.” The court further found that .the contract “is unfair-and inequitable as regards plaintiff and in signing the same he .acted to his great damage and detriment,” .and that “plaintiff did not know and understand in many important particulars the •contents and provisions thereof.” Also, the .court found that “If plaintiff had known and understood the contents and provisions .of the contract * * * and the truth of •the matters misrepresented to him, and of the matters withheld from him by defendant, he undoubtedly would not have signed the said contract.”
The record discloses unmistakably that plaintiff and his wife had little knowledge and less concern as to their financial dealings with defendant. Whether their desire or fancy called for a home, furniture, a diamond ring, a fur coat, or the privilege of bringing their relatives to this country, ;Smart was their financial guardian angel. 'There is no evidence that he ever refused them. The money thus advanced was charged to plaintiff’s account, with never ¡a demand or notice for payment, and at the end of the year the advance was cancelled. This relation standing alone furnishes a solid basis for the confidence and trust which the District Court found and which plaintiff says he reposed in Smart.
A few further circumstances gleaned from this voluminous record may be mentioned. In 1941, Smart informed the plaintiff that all mail addressed to him must come through the defendant’s office, that his office must be listed under the same number as the defendant, and that plaintiff should not have his telephone listed. This was to make sure that every offer for outside commercial work would come through Smart. At the same time, he was informed by Smart, “All you have to do is, you have absolute trust in me, that I am .doing the best things as I see for you, for your own good. As long as you keep on working and you keep on delivering the stuff that everybody likes, and especially me, I shall make everything within my power to make it possible for you to earn more and more from the work on the outside.” At that time plaintiff stated to Smart, “I put all my faith in you. You handle all my business any way you see fit, because I don’t know anything about business. I know I am trying to paint pictures the best way, and if you say that my mail and my address and my telephone and all that has to be done through your office it is perfectly all right with me.”
In 1944, plaintiff and his wife made a trip to California. Before leaving, Smart made Mrs. Vargas a present of two rings and a brooch. Later in the same year, after their return from California, plaintiff told Smart that the apartment in which they were living was too small. Smart approved the idea that they find a little house in the country and promised to talk to the real estate men to see if a place could be found in Glenview, near where Smart lived. No place was found, and Smart suggested that plaintiff buy land and build a home. Smart told him that he should have a fine house and several cars, and on one occasion accompanied plaintiff and his wife to look at a house. Smart thought the house was too small and persuaded plaintiff not to buy it, although he offered to have Esquire lend plaintiff $13,000.00 cash if a suitable home could be found.
The first contract expired July 1, 1943, and the second contract (the one in suit) was not executed until May 23, 1944, so there was a period of some eleven months during which the parties were not under contract. During this period the relationship of the parties remained the same. The plaintiff never urged or requested a new contract; neither did he request an increase in salary during this period or at any other time. He seemed content to do whatever was requested and to accept whatever compensation the defendant saw fit to pay him. His willingness to continue his work without a contract and without any agreement or understanding as to the compensation he was to receive *659during such period is a further significant circumstance in support of the plaintiff’s oft-repeated statement that he had faith and confidence that Smart would treat him right.
That Smart recognized that he was something other than a mere employer of plaintiff is illustrated by the autographed photograph which he sent to the plaintiff in 1942, which read:
“To my talented friend Al. Vargas and his good wife Anna May who labored like slaves to perpetuate the Ziegfeld tradition so that Esquire can boast ‘Through these pages walk and lie the most beautiful girls in the world.’
“Sincerely — David A. Smart.”
The intimate as well as the affectionate regard which plaintiff and his wife entertained for Smart is further illustrated by the fact that they called him “Uncle David.” That this appellation was not1 distasteful to Smart is shown by a telegram which he sent to plaintiff’s wife September 14, 1945, signed “Uncle David.”
If this record does not support the finding that a relation of special trust and confidence existed between plaintiff and Smart, it would be futile to attempt to make such a record. It is the character of a finding which is peculiarly within the province of the trier of the facts who has seen and heard the witnesses, although I have no hesitancy in expressing the view that I would make the same finding on the record before us. While the relationship had its inception at a time when the plaintiff was an unknown and unheralded artist and was maintained during a period when he became famous, there is no showing and I think no reason to believe that plaintiff made progress in any other field. His knowledge of business, such as finance and contracts, must have been meager in the beginning and was not enhanced during all the time he did business with Smart. The situation did not suggest, much less require, that he pay any attention to such matters. He was an artist and his time and energy were confined to that field. It is doubtful if he had any inclination and certainly no reason to do otherwise, because he had often been assured by Smart that he need not worry or concern himself with financial matters but that they would be taken care of by Smart. It is quite plain that Smart desired plaintiff to devote himself in toto to the production of art. It perhaps is true, as asserted by the defendant, that it was good business on the part of Smart to accord to plaintiff the generous treatment which the record discloses. Such altruistic treatment, however, did not dispel, in fact it succored, the trust and confidence engendered in the plaintiff.
The majority having refused to accept the finding of the District Court that a special relationship of trust and confidence existed between plaintiff and the defendant, there is no occasion to go farther. Evidently this is the vital and controlling issue in the case and the only purpose of this dissent is to enter my protest to what, in my judgment, is a usurpation by this, court of a function so clearly lodged in the District Court.