Court Opinion

ID: 7985205
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:24:45.763663+00
Date Added: 2024-06-11T16:35:10.891114
License: Public Domain

ChalmeRS, J.,
delivered the opinion of the court.
This is a bill brought by Johnson, seeking to hold Outlaw as trustee for him in the purchase of a tract of land, upon the ground that Outlaw, as his retained attorney at law, was precluded from buying for himself, and that his purchase inured to the benefit of the client. The facts are these : Outlaw held, for suit and collection, three notes belonging to and received from Johnson, against one Wilbourn. Upon all. of them suit had been brought, and upon one of them a judgment had been recovered. There were various other judgments, in favor of different persons, enrolled against Wilbourn, several of which were older in time and prior in lien to that of Johnson. One of these older judgments was in favor of Outlaw as administrator of H. O. Bridges, deceased. In the autumn of 1870, Outlaw caused an execution on this judgment in his favor as administrator to be issued and levied on Wilbourn’s undi*545vided half-interest in three hundred and eighty acres of wild land jointly owned by Wilbourn and Johnson. At the sale under this levy, Outlaw purchased the land for himself; and it is this title, thus acquired, that Johnson seeks to have the benefit of.
The land, or rather Wilbourn’s half-interest in it, sold for the trifling sum of $200. Its intrinsic value was about $1,200 or $1,500; but Wilbourn had only a tax-title, which, though probably good, was distrusted ; and it is shown, moreover, that there was at the time no market value for such lands, and there was such scarcity of money in the country that many places more valuable had been sold under the hammer at prices equally inadequate. The sale was fairly conducted, upon a public day, when some other lands were sold at prices equally ruinous. There was quite a crowd present, among whom was the second husband of the widow of H. O. Bridge's, in whose interest the sale was made. The representatives of the Bridges estate were then, and are now, entirely satisfied with the sale, and are content that Outlaw should retain the land. But Outlaw was also the attorney of Johnson, who lived in another county, who was not present, and who had no notice of the sale. What were his duties as to him? So far as the notes, upon which suits were then progressing, are concerned, it is evident that they must be left out of view. They were not liens on the land, and had no connection with it; nor had it then been judicially ascertained that they were ever valid debts against Wilbourn. The mere fact that an attorney holds for collection choses in action, not liens, nor in any way charges upon the property of the debtor, will not operate to preclude him from purchasing the property of the debtor at a judicial sale with which his client has no connection ; nor is he bound to notify his client bf the sale, in advance. We speak, of course, of a case free from' actual fraud, intentional mala jides, upon the part of the attorney.
But upon one of the notes due Johnson a judgment had *546been by Outlaw already recovered ; and while he might, in the interest of the estate which he represented, and which had the older lien, antagonize Johnson’s interests under this judgment, he could not do so for his own benefit.
He occupied exactly the attitude of a person who is trustee in a senior and a junior mortgage. At a sale under the senior, he may purchase for the benefit of the cestuis que trust secured thereby; but if he buys for himself, he holds at the option of the beneficiaries iii either instrument to claim the property. Whether claimed by either, they are only required to refund the money expended in the acquisition by him.
Outlaw excuses his act in buying for himself, and his failure to uotify Johnson of the sale in advance, upon the ground that there wore so many and such large judgments prior in lien to that of Johnson, that he did not conceive it. possible that the latter could have any interest in the matter, or would think for a moment of buying the property thus encumbered. The record bears him out in these assertions, and acquits bim, we think, of any intentional bad faith. But it is not a question of good and bad faith; it is a legal disability imposed by law,' a positive prohibition, springing out of the relation of client and attorney.
The lawyer shall not antagonize his client. It is not for him to judge whether his act will be practically detrimental to the client or not. If he buys property upon which his client has a claim, and in relation to which he has, in any manner, assumed a professional connection, it is for the client alone to say whether he will claim the benefit of the purchase.
This rigid rule is essential to the confidence which must subsist between the parties ; and, by precluding the possibility of a profit made at the expense of the client, removes all temptation to attempt it.
The law will not stop to inquire into motives and intentions, nor to calculate whether, in fact, a profit has been made ; but whenever advised that the attorney holds, as his own, property in relation to which he had been intrusted with guarding the *547interests of Ms client, it will compel Mm to hold as trustee, and not as owner. Lewis v. Cameron, ante, p. 76; Stockton v. Ford, 11 How. (U. S.) 232; Galbraith v. Elder, 8 Watts, 81; Hackenburg v. Carlisle, 5 Watts & S. 348.
It is evident that while the law gives to the client this ample protection, it must devolve upon him the reciprocal obligation of promptly notifying the attorney that he proposes to claim it. As soon, therefore, as he learns that the attorney has purchased for himself, he must at once exercise his election 'of claiming the benefit of the transaction. This duty will be especially incumbent where there has been, no moral turpitude in the act of the attorney, and where a delay in the assertion of his rights will affect the position of the parties or the value of the property.
In the case at bar, Johnson was informed of Outlaw’s purchase within a few weeks after it occurred. He manifested no sort of dissatisfaction with it; but, on the contrary, seemed gladly to welcome him as a co-tenant. In conjunction with himself, he permitted Outlaw to make valuable improvements on the property, and united with him in executing leases ; or, rather, he authorized Outlaw to act for him in making leases, which was done. He wrote him frequent letters, in which he referred to the land as “ our land,” and gave his consent to the improvements proposed. He shared with Outlaw in the expense and the benefits of those improvements; and upon one occasion, when called upon by Outlaw for his share of the expense of building a house which had been wholly erected by the latter, he excused himself on the ground that Outlaw had gotten the benefit of a house which he had himself built on the land before the acquisition by Outlaw of his title.
Again : when Outlaw proposed to make partition of the common property, he declined, upon the ground that his own title was perfect, while Outlaw had acquired only a tax-title.
Five years and a half intervened between the purchase by Outlaw and the bringing of this suit, during all of which time *548Johnson failed directly to assert the present claim. In the meantime the land has advanced greatly in value.
It is true that, about eighteen months after Outlaw had bought, Wilbourn, the judgment-debtor, filed a bill to vacate and annul the sheriff’s deed held by him, on account of various irregularities supposed to have occurred in the execution-sale ; and it was developed during the progress of that litigation that it was carried on for the benefit of Johnson, to whom Wil-bourn was to convey the land if recovered from Outlaw. That suit, however, was decided in favor of Outlaw; and if it is to be regarded as the assertion of a claim to the land by Johnson, it is res adjudicata as to him. But it was in no sense an assertion of the present claim, based on the fiduciary relation between client and attorney, and it could in no manner have admonished Outlaw that his client was dissatisfied with his conduct. Johnson undertakes to account for the long delay by saying that during all, or at least a considerable portion, of the time, he was ignorant that Outlaw was holding adversely to himself, and that he supposed that he would, or did, recognize his rights. Unfortunately his letters written within a few months of Outlaw’s purchase utterly negative this assertion, and conclusively show that he then regarded Outlaw as a co-tenant with himself, and as holding in his own right.
We have carefully scrutinized these letters, aided by the arguments of counsel on Johnson’s behalf, and have compared them with his pleadino-s and deposition, and we find them utterly irreconcilable. No possible meaning, consistent with the language used, can be given to them, except a plain recognition of Outlaw’s personal claim to, and right in, the land.
Taken in connection with many other facts in the case, they lead to the conviction that the idea of claiming the land on the theory presented by this bill was never conceived until, by the lapse of time, some of the encumbrances on it had become barred by the Statute of Limitations, and others had been discovered to be fictitious and fraudulent; and until, by the *549expenditure of labor and money, the land itself had greatly enhanced in value.
Under these circumstances, the bill cannot be maintained, and was properly dismissed by the chancellor. Marsh v. Whitmore, 21 Wall. 182.
Affirmed.