Benard v. Walkup

torney to withdraw in the event that his investigation discloses “no insurance, no liability of defendant, or contributory negligence." Below plaintiff’s signature on this agreement the following language appears: “ I accept said employment and agree to do all things necessary to prosecute said claim." This statement is followed by Stern’s signature. As of May 5, 1962, no action had been filed by Stern against Williams, and on this date any such action was barred by the one-year statute of limitation provided in Code of Civil Procedure section 340.^[1]

On January 29, 1964, plaintiff retained Walkup to represent him in an action against Stern. At that time plaintiff signed a contingent fee agreement with Walkup. On July 31, 1964, Stern sent Walkup a copy of the contingent fee agreement between him and plaintiff. With respect to this agreement Stern testified that he did not sign it or fill in the blanks at the time plaintiff signed the agreement, but that he did so just before sending it to Walkup.

Sometime thereafter and prior to November 12, 1964, Walkup informed plaintiff that “Ohio Farmers" had advised him that the two-year statute of limitations barred the malpractice action against Stern, and Walkup advised plaintiff he should consult other counsel.^[2] On November 12, 1964, Walkup nonetheless filed an action against Stern on behalf of plaintiff, alleging both breach of contract and negligence in failing to commence the action against Williams before it was barred. Stern raised the defense of the statute of limitations in his answer. Thereafter, on May 3, 1966, plaintiff filed suit against Walkup alleging both breach of contract and negligence in failing to commence the action against Stern before it was barred.

The two eases were consolidated for trial by the court with counsel for plaintiff in the action against Walkup being substituted for Walkup in the action against Stern. At the trial it was stipulated that if an action had been filed against Williams on behalf of plaintiff, plaintiff would have recovered damages.

Findings and Conclusions

Essentially, the trial court found that on November 20,

553 , 413 P.2d 153 ]; Chavez v. Carter, 256 Cal.App.2d 577 , 580 [ 64 Cal.Rptr. 350 ] ; Fazio v. Hayhurst, 247 Cal.App.2d 200 , 202-203 [ 55 Cal.Rptr. 370 ] ; Yandell v. Baker, 258 Cal.App.2d 308 , 311 [ 65 Cal.Rptr. 606 ]; Bustamante v. Haet, 222 Cal. App.2d 413 , 415 [ 35 Cal.Rptr. 176 ]; Griffith v. Zavlaris 215 Cal.App.2d 826 , 828 [ 30 Cal.Rptr. 517 ]; see Heyer v. Flaig, 70 Cal.2d 223 , 231-234 [ 74 Cal.Rptr. 225 . 449 P.2d 161 ].) The eases which have discussed this rule, however, have apparently dealt with actions upon a contract, obligation or liability not founded upon an instrument in writing.* *^[3] The existence of a valid contingent fee contract and the subsequent application of the four-year period were not in issue in any of the eases which applied the two-year period. Therefore, the question of the proper statute of limitations in an attorney malpractice suit predicated on a contingent fee agreement is a matter of first impression.

Section 337, subdivision 1, provides that “An action upon any contract, obligation or liability founded upon an instrument in writing” must be commenced within four years. In Stone v. Carpenter, 211 Cal.App.2d 491 , 497 [ 27 Cal.Rptr. 203 ], this section was held to be applicable to an action on a written contingent fee contract for legal services.^[4] Our inquiry, in the instant case, therefore, must be directed to whether the present action is one “founded upon an instrument in writing.” In making this determination it is not sufficient that the cause of action is in some way remotely or indirectly connected with such an instrument or that the instrument is a link in the chain establishing the cause of action, but the instrument must, itself, contain a contract to do the thing for the nonperformance of which the action is brought. (McCarthy v. Mt. Tecarte Land & Water Co., 111 Cal. 328 , 340 [ 43 P. 956 ]; O’Brien v. King, 174 Cal. 769 , 772 [ 164 P. 631 ]; Meyers v. Guardian Life Ins. Co., 20 Cal.App.2d 268 , 270 [ 66 P.2d 753 ].)

Adverting to Stern’s contention, we first consider the argument by which he apparently maintains that the agreement was not a contract within the purview of the four-year statute because it was not signed by him before the ex

piration of the two-year statute. We find no merit in this argument because it is clearly the law that “The four-year statute of limitations, unlike the statute of frauds, does not require that the writing be signed by the party to be. charged. ’ ’ (Amen v. Merced County Title Co., 58 Cal.2d 528 , 533 [ 25 Cal.Rptr. 65 , 375 P.2d 33 ].) Also, the record is clear that even though Stern did not sign immediately, he accepted the agreement as signed by plaintiff. It is well established that the receipt and acceptance by one party of a writing signed by the other only, and purporting to embody all the terms of a contract between the two, binds the acceptor as well as the signer, to the terms of the writing.^[5] (Fidelity etc. Co. v. Fresno Flume etc. Co., 161 Cal. 466 , 473 [ 119 P. 646 , 37 L.R.A. N.S. 322 ]; Beatty v. Oakland Sheet Metal etc. Co., 111 Cal.App.2d 53 , 62 [ 244 P.2d 25 ]; Nissen v. Stovall-Wilcoxson Co., 120 Cal.App.2d 316 , 318 [ 261 P.2d 10 ]; Dallman Supply Co. v. Smith-Blair, Inc., 103 Cal.App.2d 129 , 132 [ 228 P.2d 886 ].) Stern’s acceptance of the agreement is also demonstrated by his signing the agreement before the four-year period expired.

Next, Stern argues that no contract existed because the blanks in the contingent fee form for the date of its execution, the date of the injury, and the identity of the injured individual were not filled in until the expiration of the two-year statute and after the conclusion of the attorney-client relationship. This argument is equally without merit. As we shall later point out, the contingent fee form does express an obligation undertaken by Stern on which he could be sued. The omission of information which was to be inserted in the blanks did not, therefore, invalidate the agreement but, at most, merely rendered it ambiguous. In this regard we note the established principle that “any ambiguities caused by the draftsman of the contract must be resolved against that party . . . . [Citations.] ” (Neal v. State Farm Ins. Cos., 188 Cal. App.2d 690 , 695 [ 10 Cal.Rptr. 781 ].) We note further that these ambiguities were clarified by the draftsman himself when he completed the terms of the contingent fee contract before the applicable four-year period expired. Moreover, there is nothing in the record to indicate that Stem did not consider himself bound to plaintiff because he did not complete these formalities at the time plaintiff signed the contingent fee form.

Stem further argues that the contingent fee agree

ment was not a contract because it did not specifically require him to file suit, to obtain any specific result, or to exercise any particular skill. The thrust of this argument appears to be that the agreement did not include an obligation on which he could be sued. Although it is true that “In order for an action to be based upon an instrument in writing, the writing must express the obligation sued upon. [Citations.] ” (Murphy v. Hartford Acc. & Indem. Co., 177 Cal.App.2d 539 , 543 [ 2 Cal.Rptr. 325 ]; Patterson v. Doe, 130 Cal. 333 , 337-338 [ 62 P. 569 ]), that requirement is satisfied in the instant case. The obligation undertaken by Stern was expressed in the agreement. The form agreement on Stern’s letterhead states that “I accept said employment and agree to do all things necessary to prosecute said claim. ’ ’ This obligation is found directly over the portion of the form provided for the attorney’s signature. Also, according to the agreement, plaintiff employed Stern to “commence and prosecute such claims” and it can be inferred that this was precisely the employment accepted by the attorney. Accordingly, we perceive no ambiguity or vagueness as to the obligation undertaken since Stern clearly agreed to do all things necessary to prosecute the claim.

As an adjunct to this last argument, Stern asserts that the law will not imply into the contract his promises that he will use particular skill or obtain a particular result. In support of this contention he cites Scrivner v. Woodward, 139 Cal. 314 , 316 [ 73 P. 863 ] for the proposition that “Promises merely implied by law, and not supported by any express promise or stipulation in the written instrument, do not fall within the provision of section 337, relating to contracts in writing. ’ ’ The quoted rule has no application here for, as the court pointed out in United States Liability Ins. Co. v. Haidinger-Hayes, Inc^[6] (Cal.App.) 71 Cal.Rptr. 721 “Despite some language to the contrary in earlier cases (cf. Scrivner v. Woodward (1903) 139 Cal. 314 , 316 . . .), it is now settled that1 [t] he promise which the law implies as an element of the contract is as much a part of the written instrument as if it were written out.’ (Communale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654 , 662 . . .) ” (71 Cal.Rptr. at p. 963) This principle was applied in Floro v. Lawton, 187 Cal.App. 2d 657 [ 10 Cal.Rptr. 98 ], where the court observed on the

subject of contingent fee contracts that “under the contract, the attorney simply impliedly contracted to exercise a degree of care, skill and knowledge which would ... be required by the negligence standard.” (P. 673.)^[7] Such an implied contract to exercise skill on behalf of plaintiff clearly results in the instant case from Stern’s undertaking.

Finally, Stern claims that the contingent fee agreement is invalid because it lacks mutuality. He bases this argument on the fact that under the terms of the agreement he was permitted to withdraw from the case if “in his opinion” investigation disclosed no insurance, no liability of defendant, or contributory negligence. Stern contends that the reservation of an absolute right to withdraw based on opinion fails to meet the test of mutuality and renders the contract illusory. Although we cannot agree with this contention, we do take cognizance of the rule that a contract is lacking in mutuality where one party has the right to terminate it at any time at his pleasure. (R. J. Cardinal Co. v. Ritchie, 218 Cal.App.2d 124 , 143 [ 32 Cal.Rptr. 545 ].) However, it is equally true that “A contract may contain a valid provision giving one or the other party an option to terminate it on specified conditions.” (Call v. Alcan Pac. Co., 251 Cal.App.2d 442 , 447 [ 59 Cal.Rptr. 763 ]; see B. J. Cardinal Co. v. Bitchie, supra.)^[8] In the instant case the reservation of the right of withdrawal is only on the occurrence of an extrinsic event, that is, the unfavorable results of an investigation. As for the contingency that the “opinion” of Stern would be involved in any withdrawal, we perceive that this provision is analogous to a right to terminate “for cause” or for “good cause,” that is, the right must involve an opinion formed upon reasonable grounds and in good faith. (Cf. R. J. Cardinal Co. v. Ritchie, supra, 218 Cal.App.2d 124 ,143-144,146.)

tract. Or it is altogether possible that if Stern had proceeded properly under his contract, the matter might have been compromised before the cause was tried. In such a situation he would have received 33% percent under the contract. But if judgment in favor of plaintiff had been obtained, or if the matter had been compromised after the trial began, Stern would have received 40 percent of the amount payable to plaintiff. Clearly there is here no way in which we can ascertain what amount of damages would have been produced by full performance of the contract on both sides. Under the circumstances, therefore, the applicable rule is that which states that one whose wrongful conduct has rendered difficult the ascertainment of damages cannot complain because the court must make an estimate of damages rather than an actual computation. (Zinn v. Ex-Cell-O Corp., 24 Cal.2d 290 , 297-298 [ 149 P.2d 177 ]; Pacific Scientific Co. v. Glassey, supra, 245 Cal.App.2d 831 , 842; Steelduct Co. v. Henger-Seltzer Co., 26 Cal.2d 634 , 651 [ 160 P.2d 804 ]; see Nelson v. Reisner, 51 Cal.2d 161 , 171-172 [ 331 P.2d 17 ]; Stott v. Johnston, 36 Cal. 2d 864 , 875-876 [ 229 P.2d 348 , 28 A.L.R.2d 580 ].) Moreover, in the present ease it was not established that Stern performed any part of the contract; nor did he cross-complain or counterclaim for any sums alleged to be due him under the agreement.^[9]

The judgments are affirmed. Plaintiff to recover costs on the appeal of defendant Edward Stem. Defendants Walkup, Downing, Wallach and Sterns to recover their costs from plaintiff.

Sims, J., and Elington, J., concurred.