Court Opinion

ID: 3270806
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:39:15.279778+00
Date Added: 2024-06-11T07:41:24.896531
License: Public Domain

The basis of my dissent is that I adhere to the conviction that the contract of September 2, 1936, between Poe and Rolfe should be sustained *Page 560 
and the rights of the parties measured by that contract.
In order to demonstrate the reasons that impel this conviction, I will recite the facts in considerable detail, preliminary to the conclusions to be drawn from such facts.
On March 2, 1927, William A. Rolf received an insurance policy contract on his life for $10,000 from the New York Life Insurance Company. This contract had three main provisions: (1) that in case of total permanent disability of Rolf, premiums would be waived, and the insured would receive $100 per month for life; (2) on the natural death of Rolf, the beneficiary (appellee's wife, Regina Rolf) would receive $10,000; and (3) in case of accidental or violent death of the insured, the beneficiary would receive $20,000. I refer to these provisions as (1) disability benefits; (2) death benefits; and (3) accidental death benefits. The consideration of the policy was an annual premium of $481.90. Nine annual premiums were paid by the insured; and on December 24, 1935, the insurance company found the proof of total permanent disability to be sufficient (an arthritic condition and heart trouble had developed), and waived further premiums, and commenced the payment to the insured of $100, per month under the disability benefit provision.
The insurance company continued these monthly payments until August 21, 1936, when the company advised the insured and the beneficiary, by letter, that certain misrepresentations had been made by the insured in the original application in 1927. The company suspended further disability benefit payments, and tendered return of so much of the premiums as covered the disability benefits. The company also gave notice that the death benefit and the accidental death benefit provisions of the policy would forfeit unless adequate premium payments were resumed.
Within a week or ten days after the receipt of this letter from the insurance company, the appellee went to *Page 561 
the office of Tom Poe, then a successful practitioner of the Little Rock bar, and employed Poe to represent appellee against the insurance company for resumption of payments of the monthly disability benefits. A written contract was introduced in evidence by the appellee, and, omitting signatures, it is as follows:
"This agreement, made and entered into on this the 2nd day of September, 1936, by and between William A. Rolf, of Little Rock, Arkansas, party of the first part, and SAM T.  TOM POE, attorneys of Little Rock, Arkansas, parties of the second part.
"Party of the first part hereby employs parties of the second part to represent him in the prosecution of a claim against New York Life Ins. Co., for money due him by reason of insurance issued by this company.
"Party of the first part hereby agrees to pay parties of the second part fifty (50%) per cent. of all sums hereafter collected whether by suit, compromise or otherwise.
"Parties of the second part undertake employment from party of the first part to represent him in his claim against New York Life Ins. Co. and agree to devote their best efforts to the prosecution of same."
The lower court found that Tom Poe was practicing law under the firm name of "Sam T. and Tom Poe," but Tom Poe alone was interested.
The appellee contends that he either made an oral contract with Poe, or that appellee understood this written contract to be different from its terms. Appellee testified: that Poe was to receive a total of $2,000, contingent on winning the suit against the insurance company; and that this $2,000 was to be paid at the rate of one-half of each payment received from the insurance company until the total of $2,000 had been paid; and that the $2,000 was to be in full to Mr. Poe. I refer to the appellee's contention as "the alleged oral contract."
On November 27, 1937, the New York Life Insurance Co. filed suit in the United States District Court at *Page 562 
Little Rock against the insured, William A. Rolf, and his beneficiary, Mrs. Regina Rolf, seeking cancellation of the total permanent disability benefit and the accidental death benefit clauses of the policy, and demanding return of the $600 paid to the appellee under the disability benefit provision, and demanding the resumption of premium payments on the death benefits portion of the policy.
In the case pending in the federal court, Poe filed a motion to dismiss; and the motion was argued, and written briefs were filed. On March 12, 1937, while the federal suit was pending, Poe filed suit for William A. Rolf against the insurance company in the Pulaski Circuit Court to secure resumption of payment of monthly disability benefits and waiver of all premiums. The insurance company answered that suit. On March 30, 1937, the federal court sustained the motion to dismiss the federal suit. Mr. A. F. House, who represented the insurance company in both suits, was called as a witness by appellee in the case at bar. Mr. House's testimony shows how chivalry still exists in the legal profession, because he spoke of his erstwhile adversary (now deceased) in these words:
"Mr. Poe was a very experienced insurance lawyer. In fact, he `trimmed' me time after time. . . . He not only had the reputation (of being a very capable insurance lawyer), but he was, for a fact."
After the motion to dismiss was sustained in the federal court, an agreement was reached whereby the insurance company abandoned the proposed appeal of the federal case, and secured the dismissal of the case in the state court. In return, the insurance company paid all of the monthly disability payments that had been withheld, and resumed payment of the monthly disability benefits thereafter, and waived all premiums on the entire policy contract. In short, Tom Poe obtained a complete victory. This was effected on June 25, 1937; and on that date the appellee and his wife executed and acknowledged an assignment addressed to the insurance *Page 563 
company, assigning to Tom Poe and his executors, administrators, and assigns "50 per cent. of all . . . monthly installments of disability benefits . . ." under the policy involved. The assignment was witnessed and acknowledged, and forwarded to the insurance company; and the insurance company paid the accumulated and unpaid $1,200 of monthly disability benefits, and this amount was divided equally between appellee and Tom Poe.
Thereafter, each month the insurance company sent the $100 check payable to "W. A. Rolf and Sam T. 
Tom Poe, attorneys"; and Mr. Rolf would indorse the $100 check and deliver it to the office of Tom Poe and receive in return the check of Tom Poe for $50; or Tom Poe would indorse the $100 check when he received Rolf's check for $50. In short, division was made of each monthly check. By approximately September, 1939, Tom Poe had received a total of $2,000; and appellee contends that that $2,000 was all that Tom Poe was to receive. Nevertheless, the division of the monthly checks continued as before, until the death of Tom Poe on May 8, 1941. C. E. Johnson was appointed administrator of the estate of Tom Poe in June, 1941, and this equal monthly division of the checks continued until 1942, when the insurance company withheld further payments because of failure to receive a certified copy of the letters of administration of C. E. Johnson. By this time, Tom Poe and his estate had received a total of $3,550 under the contract and assignment.
On July 1, 1942, the appellee instituted this suit in the Pulaski Chancery Court, claiming: that the "alleged oral contract" was the governing agreement concerning the fee; that the two written contracts and the assignment should be canceled as obtained through overreaching and constructive fraud; that appellee should recover $1,550 from the estate of Tom Poe; and that the New York Life Insurance Company should make all future payments direct to appellee. Issue was joined upon answer filed by Johnson as administrator, the intervention of Lowery as guardian, and the reply to the intervention. *Page 564 
The chancery court sustained the alleged oral contract, and canceled the written contract between Poe and appellee.
I. The Written Contract of September 2, 1936, Should be Sustained, and the Rights and Duties of the Parties Determined by that Contract. Some of the reasons that impel me to this conclusion are:
(a) Appellee admitted executing this contract.
(b) It was dated within a week or ten days from the time appellee received the letter of August 21, 1936, from the insurance company; and appellee testified that this was about the time that he first went to see Poe.
(c) Appellee never fixed any date of any oral contract of employment prior to September 2, 1937.
(d) Appellee continued to divide the monthly checks long after Poe had received the $2,000.
(e) Appellee continued to refer to his "understanding of the contract," rather than to testify that any oral contract superseded the written contract of September 2, 1936.
Rolf testified on direct examination:
"Q. Do you remember how many contracts you did sign, first and last, in this case? A. No, I don't really. It seems to me like I signed one when Mr. Poe and me come to an agreement on the price of handling the case."
. . . .
"Q. Mr. Rolf, of course, when you went up to see Poe  Poe, you talked with Mr. Tom Poe? A. That's right. Q. And you discussed with him the terms under which he was to take the case? A. That's right. Q. And you recall what those terms were, yourself? A. Yes. Q. I hand you this contract and ask you: is that your signature on the bottom? A. Yes, sir; I think it is."
. . . .
"Mr. Owens: If Your Honor please, we offer in evidence this agreement dated September 2, 1936. Court: *Page 565 
Let it be introduced. Q. (Mr. Owens continuing): Did you understand you were signing an agreement to give him 50 per cent? A. No, I did not; my understanding was he was to get — he asked me — he wanted $1,000 for his part, cash."
Then the appellee (over the objections of the appellants duly preserved) detailed that Mr. Poe had offered to represent appellee for $1,000 cash, but appellee did not have the cash; and Poe offered to take the case on a contingent fee of $2,000 with payments to be made at the rate of 50 per cent. of every monthly disability payment until Poe received the $2,000, which was to be in full.
It is clear from appellee's testimony that his understanding of the terms of Poe's employment were contemporaneous with the execution of the written instrument of September 2, 1936. Of course, under these facts the written contract merged into its terms any oral contract or understanding, and the written contract governs over the appellee's mere understanding. Mrs. Regina Rolf testified that she went with her husband to Poe's office "only when he (her husband) asked me to go and sign the paper." Since she did not sign the contract of September 2, 1936, it is clear that she was not in the office at that time, and her understanding could not have been gained from the original conversation. Whether we view the alleged oral contract as contemporaneous with the written contract, or as merely the appellee's understanding of the written contract — in either event — the result is the same: the written contract governs. All previous negotiations are merged into the written contract. Standard Rice Co., Inc., v. Dilday, 191 Ark. 754,87 S.W.2d 588; 6 R.C.L. 839. An understanding of one party cannot be used to vary the written contract. Mitchell Mfg. Co. v. Ike Kempner  Bro., 84 Ark. 349,105 S.W. 880; Stone v. Prescott Special School District,119 Ark. 553, 178 S.W. 399; Outcault Adv. Co. v. Bradley,105 Ark. 50, 150 S.W. 148; 22 C.J. 1070; 32 C.J.S., Evidence, 892.
The rule is well established that when a transaction between an attorney and client is attacked, the burden is *Page 566 
cast on the attorney to show that the transaction was made in the best of faith and without disadvantage to the client, and that it was fair and equitable. McMillan v. Brookfield, 150 Ark. 518, 234 S.W. 621; Swaim v. Martin, 158 Ark. 469, 251 S.W. 26; Powell v. Griffin,178 Ark. 788, 13 S.W.2d 18; Thweatt v. Freeman, 73 Ark. 575,84 S.W. 720; Baker v. Humphrey, 101 U.S. 494,25 L. Ed. 1065; 5 Am. Juris. 289. In the case here, Poe took the contract of September 2, 1936, with Rolf at the inception of the employment; and until a contract was made, the relationship of attorney and client did not exist. See Hoskins v. Adkins, 184 Ark. 124, 4 S.W.2d 753, and White  Black Rivers Bridge Co. v. Vaughn,183 Ark. 450, 36 S.W.2d 672. The opinion in Hoskins v. Adkins, supra, has in it many statements that might well be quoted here.
Notwithstanding the absence of the attorney-client relationship until the employment was agreed to, nevertheless, the appellants, to show the reasonableness of the fee charged, offered proof that a contingent fee of 50 per cent. of the recovery was a reasonable fee in a case like this one. This was shown by an attorney of thirty-two years' experience, and of state-wide reputation; and appellee offered not the slightest evidence to dispute the reasonableness of the fee. The fact that the fee was contingent did not make the contract void. Davis v. Webber,66 Ark. 190, 49 S.W. 822, 45 L.R.A. 196, 74 Am. St. Rep. 81. In fact, under the fee arrangement of September 2, 1936, Poe took the risk that appellee might die within a few months: in which event Poe would have received a very small amount for his services.
The appellee was competent to contract. He was a person sui juris, and sues here in that capacity. He is not represented by a guardian, and there is no serious claim that he is now, or ever has been, other than sui juris. Mr. L. B. Branch, while sheriff of Pulaski county, was called as a witness by the appellee to testify as to appellee's feeble faculties, as tending to show how easily appellee might have been overreached by Poe; but Mr. Branch admitted on the witness stand that he had *Page 567 
purchased real estate from the appellee as late as 1941. These questions were propounded to the witness, Branch, and the answers given, as follows:
"Q. Are you still interested with him? A. No, I bought him out a year ago. Q. What was it you bought from him? A. Some property we held in the city."
. . . .
"Q. You took a deed from him and his wife? A. I did. Q. You did not have any guardian appointed, did you? A. I did not. Q. You thought he was competent to execute a deed, didn't you?, A. He had never been pronounced insane, and I thought it was all right."
If the sheriff of the county, and a co-tenant with Rolf, thought he could accept a deed from Rolf, then I fail to see why the contract with Poe should be judged by any other standard, especially when the insurance company was claiming physical ills, and not mental ills, as the condition antedating the policy; and no physician testified that Mr. Rolf ever had any mental disorder; and the hospital record of former illnesses had no mention of any mental disorder. I mention this matter of mental condition — not because it was pleaded — but because it bears on the good faith of the attorney in taking the contract. The attorney acted just as Mr. Branch acted; and Branch was the witness called by the appellee.
I, therefore, conclude that the written contract of September 2, 1936, merged into its terms all previous and concurrent conversations and understandings, and cannot be varied or changed by parol evidence in this case. The rights and duties of the parties are measured by that contract.
II. The Construction and Interpretation of the Contract of September 2, 1936. This being an equity case, the court may interpret and construe the contract; and this I proceed to do, remembering always the rules for the construction of contracts, some of which are: (a) The court may acquaint itself with the persons and circumstances, and place itself in the same situation as the *Page 568 
parties at the time the contract was made, and judge the meaning of the words from that position. Ford Hardwood Lumber Co. v. Clement, 97 Ark. 522, 135 S.W. 343, and other cases listed in West's Arkansas Digest, "Contracts," 143 and 169. (b) The intention of the parties should be gathered from the whole instrument. Read's Drug Store v. Hessig-Ellis Drug Co., 93 Ark. 497,125 S.W. 434, and other cases listed in West's Arkansas Digest, "Contracts," 147(3). (c) An ambiguous contract should be construed most strongly against the person preparing it. Leslie v. Bell, 73 Ark. 338,84 S.W. 491, and other cases listed in West's Arkansas Digest, "Contracts," 155.
The contract of September 2, 1936, has already been set out in extenso in this opinion; and consists of four sentences. The first sentence identified the parties. In the second sentence Rolf employed Poe to represent Rolf "in the prosecution of a claim against New York Life Insurance Company for money due him by reason of insurance issued by this company." The parties clearly had reference to the monthly disability benefits, which was the only money that could ever come to Rolf under the insurance policy. The death benefits (natural or accidental) would go to the beneficiary. These monthly disability benefits could not be recovered until the policy was reinstated by the insurance company; and, upon such reinstatement, Rolf would receive money from the insurance company; and that was the claim that Poe was to prosecute. Such reinstatement of the policy necessarily carried with it the waiver by the company of future premiums, the restoration of death benefits, and of accidental benefits.
What was Poe to receive for his services? Rolf agreed in the third sentence to pay Poe 50 per cent. of all sums collected. Naturally, this meant sums collected by or for Rolf on the monthly disability payments. That was the only money that could ever come to Rolf. The contract necessarily meant that Poe would get the policy reinstated, and would receive 50 per cent. of the monthly *Page 569 
disability benefits, as long as they were paid. There was no limitation of time or amount, and none may be shown by oral testimony — as I have previously explained.
In the fourth sentence, Poe agreed to use his best efforts to perform the contract on his part. He did this as I have previously detailed; so Poe's estate is entitled to 50 per cent. of the monthly disability benefits as long as the same may be paid; and I am convinced that the chancery court was in error in holding otherwise.
The majority is striking down the written contract of September 2, 1936. For that reason, I dissent; and I am authorized to state that Mr. Justice FRANK G. SMITH and Mr. Justice MILLWEE join me in this dissent.