Court Opinion

ID: 8831649
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:05:39.797668+00
Date Added: 2024-06-11T17:04:56.419735
License: Public Domain

POLLOCK, District Judge
(dissenting). I regret my inability to concur in the opinion of my associates in this case. My reason for not so doing is this:
To my mind, a fundamental error pervades this entire record. That the judgment for damages directed by the court against defendants in this case is not supported by the pleadings and is utterly lacking in evidence in its support. Conceding there is found in the record an abundance of evidence to go to the jury on the question of defendants' negligence in the conduct of the litigation complained of, yet on this record, to my mind, the judgment must be decreed erroneous as a *350matter of law, and -for the soundest reasons and on fundamental principles, and for the following reasons.
' First, conceding there was an abundance of evidence of negligence, which is done, to have required a jury in finding by their verdict such negligence, yet this is an action at law to recover damages for the loss sustained by the plaintiff by reason of the failure of defendants through negligence to have collected the judgment taken in the name of the plaintiff in this case. It is in no sense an action on the promissory note set up in the pleadings or to recover the contents of that note. Now, in taking the case from the jury the court not only finds defendants guilty of negligence as a matter of law, but assesses damages against defendants for the loss sustained by the plaintiff, for the full amount of the note merged in judgment thereon without any pleading in its support and without a syllable of evidence to sustain such directed verdict and judgment.
To uphold such verdict and judgment-on the ground of negligence on which the plaintiff has founded its action in this case the burden is upon plaintiff to plead and prove by the preponderance of the evidence the full amount of the judgment entered on the promissory note is the measure of loss it has sustained. However, when we come to look at the record - we find the .plaintiff has neither so pleaded nor proven in this case. The petition charges the promissory note of Sauntry to Mayhem was indorsed by Mayhem to plaintiff and riot having heen paid by the maker, Sauntry, at maturity, but dishonored, it was by plaintiff duly protested in order to hold Mayhem liable as indorser thereon. Now, there is neither an allegation in the petition nor a syllable of evidence in the record” as to the financial ability of Mayhem, the indorser, to pay the'note or that he has not or will not pay the same on demand. In other words, so far as the petition discloses the plaintiff had two' debtors, Sauntry, the maker of the note, and Mayhem, the indorser thereon, both liable to plaintiff, yet, by simply alleging and proving one of these debtors to plaintiff has not been compelled by defendants to make payment of the note, and without any pleading or showing of the inability or unwillingness of the. other debtor to pay plaintiff, that the entire debt has been lost to it. Therefore it demands and has been awarded a judgment against defendants that the entire amount of the note merged in the judgment against the maker Sauntry alone has been entirely lost, and, further, that the amount of this note measures the extent of the loss plaintiff has sustained.
However, to my mind, this is not the most 'glaring of the errors committed against defendants by the directed verdict and judgment thereon in this action to recover for a wrong done plaintiff or a tort. The record discloses the plaintiff did not have and own the full face value and interest of this note. In fact, the record nowhere shows what the extent of the interest of plaintiff in this note was. True, for the purpose of making the contents of the note available to the use of plaintiff as collateral security, the payee named therein indorsed it over to the plaintiff and thus placed the legal title to the note in plain*351tiff. In such manner it could and did maintain its action at law against the maker to recover the judgment thereon, but the evidence discloses, instead of plaintiff being the absolute owner of the paper, it was merely the equitable owner of an interest therein as collateral security, holding the legal title to make such equitable right available. Thus, Campbell, the New York counsel for plaintiff, who placed the note in the hands of defendants for collection, notified defendants in his letter of May 31, 1911, transmitting the note to defendants for collection, as follows:
“I am inclosing herewith said note duly protested and would ask you to proceed in the matter at once, for which purpose I am inclosing herewith my check to your order for $25.00 for the purpose of suit. You say your charges will be 10 per cent, of the amount realized; this is agreeable to me, provided, of course, you allow me the usual one-third thereof.
“I cannot quite see that Sauntry could interpose any answer to a lawsuit in this matter, but of course on this point we should await developments. The note was given principally as seeurity for the payment of a hill which the hotel at that time held against H. 3. Mayhem, hut incidentally two dishonored cheeks made hy Sauntry were also taken up, the amount thereof protest fees being $102.83 and $227.85 respectively, as well as a charge for telegram against Sauntry for $1.10.”
It therefore appears, while the note was taken from Mayhem in payment of two small dishonored checks of Sauntry held by the plaintiff, the entire remainder of the note was taken by plaintiff as collateral security for a hotel bill owed by Mayhem. Now, what was the amount of this hotel bill owed by Mayhem to plaintiff? Clearly, when this bill was paid, the collateral would b,e released and returned to the equitable owner of the remainder, Mayhem. But how, in this state of the evidence, could either court or jury determine the extent of plaintiff’s interest in the note? This interest was measured by the extent of the debt of Mayhem to the hotel, plus the amount of the dishonored checks and telegram, and, of necessity, that amount measured the extent of plaintiff’s loss, conceding, as has been done, the fact that defendants were negligent and such negligence lost to plaintiff the fruits of the judgment by plaintiff held against Sauntry. To my mind, all well-considered decisions on this subject reach the same conclusion, and all text-writers speak with one voice.
Thus, 2 Shearman and Redfield on Negligence, § 753, states the rule as follows:
“Where an attorney is chargeable with negligence, an action lies immediately. * * * The damages do not necessarily extend to the nominal amount of the debt lost by the attorney’s negligence, but only to the 1ms actually sustained. * * * The existence of the debt, alleged to have been lost by the attorney’s negligence, must of course be proved by competent evidence.”
Weeks on Attorneys at Raw (2d Ed.) § 319, states the rule, as follows:
.“In actions against attorneys for negligence or wrongs, the debt lost and costs' sustained through their negligence furnished, when the action can be maintained, the obvious measure of damages, where this measure definitely exists.”
*352In Stevens v. Walker, 55 Ill. 151, it was held:
“If injury results to the client, for the want of such a degree of reasonable care and skill, he must respond in damages, to the extent of the injury sustained.”
In Quinn v. Van Pelt, 56 N. Y. 417, it was held that, in an action brought against an attorney for a breach of contract for employment fo recover damages, the onus is upon the plaintiff “of proving the breach and the amount of damages, and he can only recover the damages thus proved.” See, also, Russell v. Palmer, 2 Wilson, 325.
In Vooth v. McEachen, the Court of Appeals of New York, 181 N. Y. 28, 73 N. E. 488, 2 Ann. Cas. 601, held:
“Plaintiff sued defendant, an attorney, for settling a claim against an ■estate for less than its face value without authority. The court instructed that if there was any negligence, in consequence of which plaintiff had lost his case, it was not incumbent on him to show that but for the negligence he would have succeeded. Held error, as authorizing the adoption of a wrong measure of damages, as it was incumbent on plaintiff to show that the settlement was unauthorized, and that the claim was valid, and that •it was worth more than the amount collected thereon.”
In Maryland Casualty Co. v. Price, 231 Fed. 397, 145 C. C. A. 391, Ann. Cas. 1917B, 50, the Circuit Court of Appeals for the Fourth Circuit, Knapp, Circuit Judge, delivering the opinion for the court, said:
“We are satisfied that this conclusion is in accord with the weight of authority, although there is some conflict in the reported decisions. Among the cases which sustain the views we have expressed are Harter v. Morris, 18 Ohio St. 492; Bruce v. Baxter, 7 Lea (Tenn.). 447; Spangler v. Sellers (C. C.) 5 Fed. 822; Staples v. Staples, 85 Va. 76, 7 S. E. 199; Goldzier v. Poole, 82 Ill. App. 469; Vooth v. McEachen, 181 N. Y. 29, 73 N. E. 488, 2 Ann. Cas. 601; Gabbert v. Evans, 184 Mo. App. 283, 166 S. W. 635. The rule established by these cases is to the effect that suits against attorneys for negligence are governed by the same principles as apply in other negligent actions. If an attorney in disregard of his duty, neglects to appear in a suit against his client, with the result that a default judgment is taken, it does not follow that the client has suffered damage, because the judgment may be entirely just, and one that would have been rendered notwithstanding the efforts of the attorney to prevent it. It is said that there is a difference between the case of an attorney who fails to do anything for his client, and one who makes an inexcusable mistake in attempting to comply with instructions; but we do not perceive any basis in principle for such .a distinction.”
Conceding, therefore, the negligence of defendants to have been so fully established by the evidence a jury would have been certainly justified in finding, and surely would have found, the claim of the hotel company was thereby lost as against its debtor Sauntry, yet, as the amount of this claim so lost nowhere appears in either pleading or proof, and as the hotel company still holds Mayhem, one of its ■dehtors, for payment of its loss, whatever that loss may be shown to be, and as there is neither allegation nor proof that its debtor Mayhem may not pay or be compelled to make good its loss, I favor a reversal of the judgment, that these errors may be corrected on a retrial lof the case.