Court Opinion

ID: 7935205
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:08:47.38152+00
Date Added: 2024-06-11T16:33:20.092686
License: Public Domain

Grant, J.
(dissenting). September 1, 1885, complainant and defendant Kelley entered into a copartnership *426for tbe practice of the law, to continue for one year. By the agreement, which was in writing, Kelley was to receive five-eighths and Gilchrist- three-eighths of the proceeds of the business. Kelley was a practitioner of long standing and experience, having lived in Alpena, Mich., for some 20 years. Gilchrist was a young man, admitted to practice in the state of Ohio only three months prior to the formation of this copartnership. At the close of the year they decided not to continue in business together, and after some negotiations Kelley bought out Gilchrist for the sum of $960 as his share in the interest of the business. This was upon the basis that $2,500 was the fair value of the year’s business, exclusive of the cash receipts. This settlement was concluded September 6, 1886, notice of dissolution given, and Gilchrist assigned all his interest in the assets of the firm to Kelley. Gilchrist subsequently claimed that he was deceived and defrauded in this settlement, and brought this suit to set it aside, and to .obtain an accounting from Kelley. The controversy arises over two items, — one a fee of $20,000, for which defendant recovered a judgment against Diana Richardson; the other a note of $5,000, which Gilchrist insists was received for services rendered by Kelley & Gilchrist, but which Kelley insists was a gift to him on account of services for which he had made no charge. A full statement of the facts is necessary to a full understanding of the questions involved.
June 18, 1886, one Charles W. Richardson died, leaving an estate valued at several hundred thousand dollars. He left a widow and several brothers and sisters, but no children. A will, executed many years before his death, was presented for probate. By this will his large estate was devised to his widow, Diana Richardson. The collateral heirs raised the question of a subsequent will. Moore & Moore, attorneys from Detroit, were employed *427by the heirs. The matter was amicably settled on August 30, 1886, by Mrs. Richardson paying to George Richardson, one of the heirs, for the benefit of all, $120,000. The firm of Kelley & Gilchrist was employed by her June 24, 1886, to look after the estate. This employment was made with Mr. Kelley. Mrs. Richardson did no business directly with Mr. Gilchrist. She went to the office of Kelley & Gilchrist but twice, and then did not see Mr. Gilchrist. The testimony, is conflicting as to how this happened; the testimony of the complainant tending to show that Kelley requested Mrs. Richardson to keep Mr. Gilchrist ignorant in the matter, and the testimony on the part of Kelley tending to show that she requested him to keep Gilchrist ignorant because he was boarding with one of the heirs. It is immaterial to determine which is correct. The important fact remains that Gilchrist was not consulted by herj and that all he knew of the matter was derived from his partner, Kelley. Kelley, however, informed Gilchrist of the questions .involved, who assisted in looking them up. Gilchrist also appeared in the probate court,' and assisted in proving the will, which occupied only about half a day. Aside from these, Gilchrist took no part in the settlement of the estate. No other serious contest arose in the settlement of the Richardson estate.
After the dissolution of the firm Kelley continued to act as Mrs. Richardson’s adviser until some time in October, or, as he said, in November, following, and on October 21, 1886, he rendered to Mrs. Richardson a bill for “professional services from June 24 to October 21, 1886, in probating and closing the estate under will of deee^ed, and other services connected with the said estate, $20,000.” This Mrs. Richardson declined to pay, and Kelley thereafter brought suit against her, in which *428he filed a bill of particulars, claiming $35,000. This bill of particulars is as follows:
June 24—
To retainer in the matter of will of Charles W.
Richardson, deceased......................... $10,000 00
To making brief and preparing for contest______ 10,000 00
To probating will and closing up estate..-..... 10,000 00
To services in counseling and assisting in management of business from July 26 to November 22, 1886.................................. 5,000 00
$35,000 00
June 11, 1887, Kelley recovered a verdict and judgment against Mrs. Richardson for $20,000.
When the question of the subsequent will arose, Kelley, by the direction of Mrs. Richardson, associated with him in the matter two attorneys, residents of Alpena, — Messrs. Turnbull and Sleator. After that matter was settled, each of these attorneys presented a bill for services, which Mrs. Richardson declined to pay, and they each brought suit against her, each recovering a verdict for '$8,000. These three suits against Mrs. Richardson were appealed to this Court, and the judgments affirmed April 20, 1888. 69 Mich. 400, 430, 478.
It was the custom, as well as duty, of both Gilchrist and Kelley to make charges for the business done by each individually, and to enter the same upon the partnership books. No entry was made upon the books by either of any charges for services rendered the Riqhardson estate or Mrs. Richardson. Kelley testifies that from the time of his employment to its close in October he was in consultation with Mrs. Richardson at her house on an average from three to four times a day. The above are the undisputed facts, and in the light of them we come to the settlement between Gilchrist and Kelley.
It is apparent that' Gilchrist, both from his inexperi*429ence and his lack of the full knowledge of the services rendered by Mr. Kelley, was not as well qualified to judge of the value of the services as was Mr. Kelley. In this respect they clearly were not on an equal footing. It was the duty of Mr. Kelley to put his partner in possession of all the facts within his knowledge, and to give him his judgment and decision upon the value of the services rendered. The duty belonged to him as the more experienced lawyer, and as being more familiar with the facts and the value of his services. If he failed in the performance of this duty his conduct was a fraud upon Mr. Gilchrist, and it becomes of no consequence whether Mr. Kelley was guilty or not of an actual intent to defraud. Briefly stated,'Mr. Gilchrist’s testimony is that Mr. Kelley told him that he had carefully and fairly estimated the value of the entire copartnership business to be worth about $2,500; that for the sake of a speedy settlement of the copartnership affairs he would buy out Gilchrist’s interest on the basis of that estimate; that Gilchrist told him that he thought the amount low, to which ’Kelley replied that it was all the business was worth; that after examining the books, and finding no entries in regard to the Richardson business, he told Mr. Kelley that there were no charges made upon the books in regard to that matter; that Mr. Kelley said he had memoranda of all copartnership transactions not entered therein, and that he made his estimate from such memoranda and the books; that Gilchrist said he had no means of determining for himself the adequacy of the estimate, but if it was fair, and all the business was worth, and included the Richardson business, he would accept the proposition; that Kelley again assured him that it was fair and adequate, and included the Richardson business, and all the copartnership business; and that he, Gilchrist, relied upon these representations, and made *430the settlement, which he would not otherwise have done.
Gilchrist would not certainly have made this settlement had he had any intimation that Kelley valued his services at such a figure. The settlement was therefore made by Gilchrist without any knowledge or information of the real value of those services, which constituted the great bulk of the partnership assets. It is a fair presumption that Gilchrist would not have settled for that sum without some assurance from Kelley as to the value of these services. Kelley at that time either did or did not possess a knowledge of the value of those services. He either did or did not inform Mr. Gilchrist what his knowledge and judgment thereof were. If he possessed such knowledge, and failed to communicate it to Gilchrist, he committed an intentional fraud. If in fact he then possessed no such knowledge, and had formed no judgment, it follows that he accomplished the settlement with' Gilchrist upon a false basis, excluding an important element then unknown to either. The result in the latter case is as unjust and as disastrous to Gilchrist as in the former. If the latter be the case, upon what principles of equity or morality can Kelley be allowed to profit by a settlement made by both in ignorance of an important fact? Shall Kelley be allowed to profit by his own ignorance, when it was his duty to be first informed, and then to inform his less experienced partner, who did not possess his facilities for information? May Kelley, under such circumstances, pocket $7,500 which in justice belongs to Gilchrist? To deny relief under these circumstances would, in our judgment, be a disgrace to a court of equity.
This brings us-to Mr. Kelley’s version of the transaction. He says that about a week before the 1st of September he informed Mr. Gilchrist that their partnership could not continue another year; that he instructed *431Mr. Gilchrist to get everything on the books, and that they would settle according to them; that about the 1st of September Gilchrist told him that '•he had got everything on the books except what belonged to the Richardson matter; that he said to Gilchrist it was a hard thing to say what ought to be done about that, the work was not completed, and- the matter might- largely depend upon the result; that Gilchrist then asked him what he would give in a gross sum for his interest; that he replied he preferred to sell, and offered to take $4,500, with certain reservations; that the cash account showed receipts of about $1,700; that he asked Gilchrist if he did not think it would be a fair thing to call the year’s business $4,000; that Gilchrist said he thought it would; that he then deducted the $1,700 from the $4,000, and made the estimates on that estimate, and offered Gilchrist $960; that he said to Gilchrist that Mrs. Richardson would not do business with him; that he, Kelley, was obligated to see her through to the end, had promised to stand by her through the fight, and therefore reserved that from his contract to go out of business should Gilchrist buy him out; that Gilchrist asked for two or three days to copsider, which he gave; that on September 6 Gilchrist accepted his offer to buy him out; that in this settlement the value of the services in the Richardson matter was not determined; that it was utterly impossible, under the situation of things, to determine dt; and that the offer was made in gross, without going into details. Being asked upon what basis he made the offer to Gilchrist, he says:
“Upon the basis of a fair and reasonable average of what we had done. I made that upon the basis of the business that I had done in former years, — other years. I had done from three to four thousand and four thousand five hundred a year, good and had. That had been about the extent of my business, and I took that as about the *432average of what we had done that year. It may have been a little less or a little more than I had done the year before. I think the business that year was a little less. There was a falling off from 1885 to 1886 in the law business of Alpena county. There was a very perceptible falling off that year from what it had been in former years."
He further testified that Gilchrist knew substantially everything pertaining to the Richardson business; that he had a general knowledge of what had transpired, but that he (Kelley) “did not inform him of the little peculiar characteristics of his client which took place at her house;" that he (Gilchrist) understood distinctly it would be almost impossible to say what would be a reasonable charge; that he (Kelley) had not made up his mind what his charge would be, until about the time he rendered his bill, saying: “I didn’t know what would be the usual and ordinary charge. I only wanted what other lawyers would charge under ordinary circumstances."
Such is substantially the story told by Mr. Kelley. It exhibits some remarkable features and serious defects. The statement that it was impossible at the time of the settlement with Gilchrist to estimate the value of the services in the Richardson matter is entirely without foundation. It was no more difficult then than when he rendered his bill October 21, on which day he was still in the employ of Mrs. Richardson, and says he so continued until about November 22. The only contest was over the will. This was settled during the copartnership, and was the chief element in the large bill for services rendered. $20,000 in the bill of particulars is charged for that alone. His testimony in the suit against Mrs. Richardson shows that this contest was the chief element in making his charges. Upon that trial he testified:
“ It was the most important case I had ever had in all my practice. It was a case that of necessity was to be *433one of State reputation. It was a case in which I considered that, to be successful in, where a contest was made by those twelve heirs, was a matter of some importance to me, and was a matter of great importance to my client, so that my client required that I devote my time, regardless of anything and everything else of my own business. She went so far as to ask me whether or not I could not give up all my other business, to assist her until this estate was closed up and converted into money.
“ Q. What did you charge her $25,000 for? Five months* services?
“A. Well, sir; because I think the services rendered in a matter of this magnitude and importance of so large an interest to the party, that the services that were actually rendered, and the result of securing the entire property to her, I think it is fairly well worth it, and I base that judgment upon what I know of the elements that are taken into consideration in estimating such services under similar circumstances, and what the best practitioners in the State would assume would be fair and reasonable. * * * I have not charged Mrs. Richardson any more in this case than I would charge any client in an ordinary litigation, taking into consideration the importance of the case and the amount involved. * * * * * =!= H= ' * V * * *
“ Q. Would you not have accepted five thousand dollars a year from her for a year’s services if she would have employed you?
“A. If she would have employed me for five years, I would. I would not have taken it for one year. I would not have accepted a five thousand dollar retainer if she had offered me a retainer that was to cover my services or my retention.”
Under this testimony it is impossible to believe that Mr. Kelley did not conceal from his partner his real judgment as to the value of the services.
But this is not all. In the suits brought by Mr. Turnbull and Mr. Sleator against Mrs. Richardson for services rendered in the same contest, Mr. Kelley was a witness for the plaintiffs, and in his testimony showed *434great familiarity with and knowledge of charges for legal services in this Státe. He valued Turnbull’s services at from $12,000 to $15,000, and Mr. Sleator’s at $10,000. His testimony in those cases as an expert was only admissible upon the basis of his familiarity and knowledge of the value of such services, gained by experience. If all he knew of such charges were statements made to him by other members of the profession within six weeks prior to his rendering his bill, his testimony would have been excluded. Such testimony would have been as incompetent as that of a layman who had made inquiries and received similar statements.
The situation is therefore forced upon us that Mr. Kelley, a man of age and experience in the law, in his dealing with a man of youth and inexperience keeps from him, either intentionally or unintentionally, that which it was his duty to disclose, and that therefore the settlement made was void. It is also significant in this connection to notice that Kelley, in his suit against Mrs. Richardson, testified that he “offered Gilchrist so much money to go his way on the 1st of September; that the proposition reserved entirely the Richai’dson business; and that he knew nothing about it, and had nothing to do with it.” This position is entirely inconsistent with the one taken in the present ease, and shows the unreliableness of Mr. Kelley’s testimony. His testimony is untrue, either in the one case or in the other. Under this record, no light, in our judgment, is thrown upon the transaction, nor is Mr. Kelley’s credibility as a witness enhanced, by the fact that he was, shortly after his settlement with Gilchrist, elected to the office of circuit judge.
' Kelley complains that Gilchrist acted inequitably towards him upon -the trial of his suit against Mrs. *435Richardson, in that he testified against him, and cast his influence and sympathy with Mrs. Richardson. The claim is not sustained by the evidence. Kelley at no time applied to Gilchrist for his assistance, nor did he ask for his testimony. After the partnership between him and Gilchrist had -been proven upon the cross-examination of Kelley, Gilchrist was subpoenaed on behalf of Mrs. Richardson, and gave only such testimony as was elicited by a proper examination. He volunteered no testimony or information to the defense in that case. He testified simply of the settlement made with Kelley, and that the services rendered the Richardson estate were included in that settlement, which testimony, as above shown, was denied by Mr. Kelley, who claimed that the Richardson matter was not included. Gilchrist did no more than he was compelled to do under the subpoena, and he testifies that he gave this testimony under protest.
It is also claimed by Kelley that Gilchrist was guilty of laches in not moving promptly after ascertaining what he believed to be his rights, and also in not returning the notes which he had received in settlement. There is no foundation for this claim. Gilchrist had disposed of these notes prior to the trial of the suit of Kelley against Mrs. Richardson. He disposed of the last one in April or May, prior to the trial, which was June 11. If, however, he had still retained the notes, he would have been under no obligations to return them, nor was he under any obligations to return their value in any aspect of the case. Kelley owed him more than that. Kelley was not, therefore, injured nor prejudiced in his rights by the retention of the notes or money. A party might be insolvent, and in such case there would exist the best of reasons why the money or property received in settlement should not be returned. The rule requiring a tender or return of the property received upon a contract void for *436fraud does not apply to such a case. What Gilchrist received he was entitled to. He was also entitled to more. So long as Kelley was not injured by any delay on the part of Gilchrist, Gilchrist’s right to maintain this suit remains until barred by the statute of limitations.
Soon after Kelley rendered his bill to Mrs. Richardson, Gilchrist heard of the amount, but there was nothing to inform him what proportion of that bill Kelley claimed was earned by the firm of Kelley & Gilchrist. It was not until he heard Kelley’s testimony upon the trial that he became informed of the situation. He then immediately consulted Mr. Turnbull as to his rights, and informed Mr. Turnbull that he desired to bring suit to set aside the settlement. Turnbull advised him to wait until the final determination of Kelley’s suit; Gilchrist at the same time saying that he did not desire to have his rights prejudiced by delay. Within three days after the decision of the case in the Supreme Court Gilchrist filed the bill in this case. It is no reply to Gilchrist’s right of action to say that he waited with the intention to bring suit if Kelley won and to remain silent if Kelley lost. If Kelley lost, there was nothing to fight over. If Kelley was honest in his statement to Gilchrist at the time of the settlement, that he did not know what the services were worth, and allowed Gilchrist to settle upon that basis, good conscience would have directed him to inform Mr. Gilchrist, and give him an opportunity to assist him in maintaining the rights of both. It was Kelley’s duty to move to Gilchrist; not Gilchrist to move to him. Kelley failed to move, and therefore cannot now be heard to complain of Gilchrist’s temporary silence. What right of complaint has. Kelley, who was acting all the time in hostility to and denial of the rights of Gilchrist? We think Gilchrist moved with all the promptness that the circumstances required. This Court can *437now do exact justice between them, by requiring Gilchrist to.pay his portion of the expenses of that litigation.
The judgment rendered in the case of Kelley v. Richardson was assigned by Kelley to defendant Spratt with a full knowledge of the claims of the complainant therein, and he must therefore be held liable for the moneys received thereon.
After the settlement between Mrs. Diana Richardson and George Richardson on behalf of himself and the other heirs, Kelley assisted Mr. Moore, one of the attorneys for the heirs, in effecting a settlement between George Richardson and the other heirs. This settlement was effected by the payment to each of them of $1,500. Some of these heirs brought suit to set aside that settlement on the ground that it was obtained by fraud, each of them claiming that he was entitled to $7,500, instead of $1,500. That case was heard and appealed to this Court, and decided at the last October term. Richardson v. Richardson, 83 Mich. 653. It was remanded to the court below for the want of proper parties, with directions to the court to permit the bill to be amended, so as to make all those parties who had received any of the funds. Diana Richardson in her settlement with George turned over, among other things, to him a note of $5,000, as a part of the $120,000. This note George Richardson transferred to Kelley, and is the other item of dispute in this case. Kelley insists that this was a present to him on the part of George Richardson, while Gilchrist insists that it was for services rendered by Kelley in effecting that settlement while a member of the firm. The only testimony in regard to this note comes from defendant Kelley. He says that on October 4 George' Richardson sent for him to come to his house; that he went, and Mr. Richardson told him that these parties were threatening trouble to *438him and his folks if he should' be called away, and asked him to promise to defend them; that he told Mr. Rich, ardson he would, ana left him. A few days after that Kelley says he received an envelope containing this note, without any letter, and the only way he could know it came from George Richardson was that it was payable to him and indorsed by him; that the next morning he went to Mr. Richardson and asked him what it was for, and Richardson replied: “What did you promise me yesterday? — to look after my wife and children-if I am called away.” Kelley replied that that was more than he should want, and Mr. Richardson said: “You know what you have done for me. There was litigation you took charge of when I could not pay.” While it is fmdoubtedly true, as seems to be conceded by Kelley’s counsel in their brief, that this note was partly in compensation for services rendered by Kelley in that settlement, yet we do not think, under the testimony, that it can be considered a. partnership asset. Besides, if Mr. Kelley should be made a party defendant to the suit brought by the heirs to set aside the settlement, he may be compelled to surrender the proceeds of that note as a part of the fund belonging to the heirs.
The decree of the court should be reversed, and decree entered here declaring the settlement void, and remanding the case to the court below, with instructions to refer to-a commissioner for an accounting between the parties.
Morse, J., concurred with Grant, J.