Niles v. Louis H. Rapoport & Sons, Inc.

This litigation arises out of an action commenced by plaintiff to recover for legal services rendered

The second cause of action was presented upon the theory of an account stated, but as to such claim the trial court held against plaintiff, and we need not concern ourselves therewith on this appeal. The third cause of action was based upon services allegedly rendered by plaintiff’s assignor to defendants “within two years last past” of the claimed reasonable value of $5,000.

By their answers the individual defendants denied any liability whatsoever. Defendant corporation by its answer denied all allegations of the first and second causes of action and admitted liability in the amount of $250 on the third or quantum meruit cause of action. Defendant copartnership likewise denied the allegations contained in the first and second causes of action, but admitted liability in the sum of $100 by reason of the allegations contained in the third cause of action. Bach defendant, by supplemental answer, set up the bar of the statute of limitations (Code Civ. Proc., § 339) as to the first cause of action.

During the trial the court granted plaintiff, over defendants’ objections, leave to file a fourth cause of action by way of amendment to the complaint. In general, the allegations contained therein were that about September, 1931, plaintiff’s assignor entered into an oral agreement with defendant corporation under the terms of which he was em

Following trial the court found that the defendants had collected $1,100 on account of what we shall designate as the “Abe Stern note transaction”; that the defendants within two years prior to the commencement of the action agreed to hold such note for the benefit of plaintiff’s assignor and defendants, share and share alike; that plaintiff was entitled to one-half the proceeds collected and to be collected thereon and was the beneficial owner of one-half of said note as well as the proceeds received and to be received therefrom; that the defendants were indebted to plaintiff in the sum of $2,200 (this apparently including the $1,100 theretofore found to have been collected on account of the Stern note), and further, that plaintiff was entitled to ‘ ‘ one-half of such sum as has been paid to defendants or any of them on the Stern note since the date of trial”; that the reasonable value of the services rendered by plaintiff’s assignor to defendants was $2,200, together with one-half of such sum as had been paid on the note by the Sterns since the date of trial and one-half of such sums as might be received or paid on said note in the future.

Upon these findings the court entered judgment against all the defendants and in favor of plaintiff in the sum of $2,200 “and one-half of such further sums as have been paid since the date of trial by Abe Stern and sons to defendants or any of them.” The judgment further recited that plaintiff was entitled to receive one-half of all sums that might be paid on said note thereafter and “that defendants and each of them convey to plaintiff by good and

Upon this appeal defendants are urging a reversal only insofar as the Abe Stern promissory note trust transaction is concerned. As to the items found by the court to be due under plaintiff’s third cause of action, which had reference to services rendered by plaintiff’s assignor for defendants in connection with transactions other than the Stern promissory note, no question is here raised. Appellants concede that as to the amount due on these items the evidence is in conflict and the trial court’s determination of the matter must.be final.

Appéllants first contend that there is no evidence to sustain and support any findings of a trust relationship, either voluntary or involuntary, between plaintiff’s assignor, Attorney Geffen, and his clients, the defendants herein, as to the Abe Stern promissory note transaction. Viewing the evidence in the light most favorable to the findings and the judgment predicated thereon, the record reveals that in 1931 plaintiff’s assignor was retained by defendant Harry Rapoport to bring an action against Abe and Mollie Stern to recover a deficiency judgment after foreclosure of a mortgage or trust deed. The original note was for $2,777.65, and the property, consisting of several lots, was sold to the Rapoports at a foreclosure sale for $1,000, leaving a deficiency of $1,778.41. Attorney Geffen filed the action August 12, 1931, and judgment was entered September 4, 1931, for $1,911.92, which amount included attorney’s fees of $100. Execution was issued, and was returned wholly unsatisfied on January 12, 1932. Attorney Geffen testified that so far as his fee was concerned, it was agreed that the same would be “fifty per cent of anything recovered” and that this fee arrangement was confirmed by defendants “from time to time.” Attorney Geffen testified that defendant .Harry Rapoport continually urged him to attempt to collect the judgment; that he advised Rapoport not to be too insistent, because there was some question as to the validity of the judgment by reason of the fact that Mr. Stern had been discharged in bankruptcy after his debt to the Rapoports had been incurred, and that the latter’s claim was listed in the schedule in bankruptcy. In his testimony Attorney

With reference to the existence of a trust agreement as to the Abe Stern note, plaintiff’s assignor testified: “I told Harry to take the note in the name of his company as payee, and that -he did not have to name me as one of the payees, but that he could send me one-half monthly as collected. He said that was all right. I then said that inasmuch as there was nothing more to do but sign a form of bank note I would leave. He said that he would show me the note when it was executed. Louis Rapoport left with me in my car. As we were going to the office he asked me if $25 would be all right for my services in making the settlement. I told him that Harry and I had an agreement that I was to re ceive fifty per cent of whatever we received. He said that I would then have to take the matter up with Harry. ’ ’

Much of the foregoing testimony was denied or contradicted by the appellants, but it was for the trial court to determine the value and effect of all the evidence introduced, as well as the credibility of the respective witnesses. We are persuaded that the foregoing evidence is of sufficient substantiality to warrant the finding and conclusion by the trial court that defendants became voluntary, and as well, involuntary trustees for plaintiff’s assignor, and in such capacity were required to hold in trust for plaintiff’s assignor the Stern promissory note in the sum of $3,050 dated

Section 2223 of the Civil Code, reads, “One who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner, ’ ’ while section 2224 of the same code provides in part that one who gains a thing through the violation of a "trust or other wrongful act, unless he has some other or better right thereto, is an involuntary trustee of the thing gained for the benefit of the person who would otherwise have it. When, therefore, the court upon competent evidence found that after obtaining the note and certain payments made thereon, appellants denied that respondent’s assignor had any interest therein and wrongfully detained the note and proceeds received therefrom, a finding that an involuntary or constructive trust was created in favor of respondent’s assignor was justified, because there were present in the transaction between the parties those conditions stated in the last mentioned code section, and that is all that is necessary to warrant the establishment of an involuntary trust. (Lauricella v. Lauricella, 161 Cal. 61 [ 118 Pac. 430 ].)

We are not unmindful of the rule that in construing oral contracts between attorney and client concerning compensation, there may be circumstances where the contract is to be construed most favorably to the interests of the client by reason of the confidential relationship which exists, but these circumstances are present only when there is some ambiguity as to the intent of the parties. (3 Cal. Jur. 686.) In the instant case we cannot say that the arrangement between the parties herein was tainted with ambiguity or uncertainty.

Appellants ’ contention that the court failed to make any findings on the issue of the statute of limitations cannot be sustained. There is abundant evidence in the record to indicate that the original agreement for the payment of fifty per

Appellants next contend that the judgment is uncertain, and by reason of such uncertainty, invalid. As we read the judgment, it clearly and without ambiguity orders that plaintiff recover of and from the defendants the sum of $2,200 and one-half the sums received by defendants on the Stem note since the trial date. This latter portion of the judgment was warranted because a period of some ninety days elapsed from the date of trial to the date of judgment, during which time amortized payments became due on the note, and under the judgment plaintiff owned one-half of such payments. The judgment then determines that plaintiff is entitled to receive one-half of such sums as may be paid in the future upon the Stern note, and then directs defendants to convey to plaintiff, by good and sufficient assignment, a one-half interest in the note and the proceeds that may be received therefrom. We are in accord with appellants’ claim that the.portion of the judgment requiring that the note be delivered to the clerk of the court, to be impounded by him and one-half the proceeds

We cannot see where appellants were prejudiced by the court’s finding as to the Stern note transaction on the quantum meruit count of the complaint. There was ample evidence to support the court’s finding as to the reasonableness of the recovery, both on a quantum meruit basis and upon the express agreement made by the parties. Appellants assert that the effect of this is to permit plaintiff to recover on asserted inconsistent theories of express and implied contract. Where, as here, there is in the record evidence to support a recovery on either theory, the findings on the inconsistent theory may be disregarded as surplusage. (Baird v. Ocequeda, 8 Cal. (2d) 700 [ 67 P. (2d) 1055 ].) In the instant case the amount of the judgment, based upon either theory, was the same; that is to say, the court found that plaintiff was entitled to a specific sum, the amount of which was determined to be the same upon both a quantum meruit basis and an express agreement basis. Therefore appellants suffered no injury.

Appellants finally urge that even though respondent is entitled to fifty per cent of the recovery made on the Stern indebtedness, this should be what they denominate a “net recovery.” In this connection it appears that prior to 1939 Abe Stern and Mollie Stern owned certain lots which they hypothecated to secure the indebtedness to appellants represented by a promissory note. When the Sterns defaulted in the payment of their obligation under this note appellants foreclosed on the security and caused the same to be sold at a trustee’s sale. There being no bidders, appellants bought the lots in themselves, and as heretofore pointed out later retained plaintiff’s assignor to file suit for recovery of a deficiency judgment. It is this deficiency judgment that was settled by execution of the promissory note hereinbefore discussed in the sum of $3,050. Appellants contend that when they acquired title to the lots they were required to pay various taxes, assessments and other expenses from 1931 to the date of trial, and that at the time the agreement to execute the ¡Stern note pf $3,050 was made it was agreed that appellants

Por the foregoing reasons, the judgment is modified by c striking therefrom that portion which directs “that said note be delivered up to the clerk of the court to be impounded by him, and one-half the proceeds paid over to plaintiff when the same are received.”.As so modified, the judgment is affirmed, respondent to recover costs on appeal.

York, P. J., and Doran, J., concurred.

A petition for a rehearing was denied August 24, 1942.