Tragman v. Littlefield — 45 N.Y. St. Rep. 673

Majority

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Diedrich Tragman et al., Resp’ts, v. Frederick M. Littlefield et al., App’lts.

(New York Common Pleas, General Term,

Filed April 4, 1892.)

Headnote

1. Attorneys—Contract with client.

Because of the fiduciary relation between the parties and the commanding position of the attorney, any dealing between him and his client in which the interest of the client may have been betrayed is prima facie fraudulent and void; but the presumption is provisional only and may be overcome by proof of good faith and fair conduct on the part of the attorney and free volition and intelligent action on the part of the client.

3. Same—Deed.

In an action to set aside a conveyance made by a client to his attorney the court found that the conveyance was an absolute transfer without any condition whatever; that its consideration was professional services rendered by defendant; that no fraud was intended by either plaintiff or defendant,; that defendant used no threats or coercion or misrepresentations to plaintiffs; that he explained the deed and situation to plaintiff; that the sale was made by plaintiff with full knowledge of the situation of the property and its value,and in the conveyance acted freely and voluntarily, and that a subsequent release executed by plaintiff was given voluntarily and without fear or compulsion with full knowledge of defendant’s dealings, and that defendant practiced no deceit or fraud to obtain it. Held, that from these findings it must result that the conveyance to defendant is unimpeachable, and that a judgment for plaintiff could not be sustained.

Appeal by defendants from a judgment in equity.

The necessary facts appear in the opinion.

W J. Leitch, for resp’ts ; Wm. B. Hornbbwer, for app’lts.

A detail of the complex circumstances recited in the pleadings and developed by the findings is unnecessary to exhibit the reasons of our decision; but for that purpose it suffices to state that, in substance and effect, the action is by a client against an attorney, on the ground of fraud and undue influence, to set aside a conveyance by the former to the latter pending the relation between them.

The appeal is before us on the judgment roll alone, and hence

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the only inquiry is whether the judgment can stand consistently with the facts found. If the contention of the appellant were merely that the findings of fact are insufficient to sustain the conclusions of law, then in the absence of the evidence we should presume that it was adequate to authorize inferences of fact necessary to support the judgment. But the position of the appellants being that the facts as found negative the conclusions of law, it follows inevitably that, in the event of such repugnancy, we have no alternative but to reverse the judgment.

The test propounded by the law of this state for determining "the validity of a transaction between client and attorney involving adverse interests is as well established as it is easy of application. Because of the fiduciary relation between the parties and the commanding position of the attorney, any dealing between them in which the interest of the client may have been betrayed, is prima facie fraudulent and void ; but the presumption is provisional only, and may be overcome by contrary proof. The burden is upon the attorney to adduce such evidence. But, what is the evidence that will thus avail to repel the presumption against the transaction and re-establish its validity? We answer, such proof as demonstrates good faith and fair conduct on the part of the attorney, and free volition and intelligent action on the part ■of the client If the attorney be guilty of no fraud or ,undue influence, and if the client, comprehending clearly the circumstances ■of the situation, be moved only by the impulses of his own will, the transaction, though in the event favorable to the attorney and unfavorable to the client, cannot be impugned even in a court of equity.

The principle is abundantly sustained by authority and illustrated in adjudged cases. Whitehead v. Kennedy, 69 N. Y., 462 ; Haight v. Moore, 5 J. & S., 161; Mason v. Ring, 3 Abb. Ct. App. Dec., 210 ; Post v. Mason, 26 Hun, 187 ; Hitchings v. Van Brunt, 38 N. Y., 335 , 342; Taylor v. Bemiss, 110 U. S., 42 , 45; Brock v. Barnes, 40 Barb., 521 ; Jennings v. McConnel, 17 Ill., 148 ; Wharton v. Hammond, 20 Fla., 934 ; Nesbit v. Lockman, 34 N. Y., 167 ; Cowee v. Cornell, 75 id., 91, 100.

In Brock v. Barnes, supra, an annuity by a client to an attorney was sustained upon proof that “ all was fair, and that the -client acted freely and understandingly.” (Note,- p. 536). In Post v. Mason, supra, a legacy to a lawyer was upheld upon proof that “the testator acted with full knowledge of all the surrounding circumstances, and that the transaction was free from all fraud and undue influence” on the part of the attorney. In Nesbit v. Lockman, supra, the action was to set aside a gratuitous conveyance from a client to an attorney. The trial court found as a fact “ that the assignment was a gift, freely and voluntarily made, without any fraud, deceit or undue influence on the part of the donee, or advantage taken by reason of his business relations, and without suggestion or inducement on his part, but of the ■donor’s own free will and purpose.” On review, the court of appeals said: “the presumption is against the propriet}'- of the ■transaction, and the onus of establishing the gift or bargain to

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have been fair, voluntary and well understood, rests upon the party dealing; ” but, the exigency being answered by the proof, the judgment for the defendant was affirmed, as a necessary legal corollary from the facts found. The court added: “ The English cases hold substantially the same doctrine, viz: that while a bargain between attorney and client is viewed with great jealously and suspicion, and its entire fairness must be shown by the party claiming the benefit of it, there is no inexorable rule pronouncing its illegality.” In a more recent case Cowee v. Cornell, supra, the court of appeals lay down the rule, thus: “ Whenever the relations between the contracting parties appear to be of such a character as to render it certain that they do not deal on terms of equality, but that either on the one side from superior knowledge of the matter derived from a fiduciary relation, or from overmastering influence; or on the other from weakness, dependence, or trust justifiably reposed, unfair advantage in a transaction is rendered probable, then the burden is shifted, the transaction is presumed void, and it is incumbent upon the stronger party to show affirmatively that no deception was practiced, no undue influence was used, and that all was fair, open, voluntary and well understood.”

As in Nesbit v. Lockman, supra, the single and the decisive question is: Do the facts found, by necessary inference of law,, displace the presumption of invalidity attached to the transaction from the relation of the parties ?

In determining the effect of findings of fact, the defeated party is entitled, if they be conflicting, “ to the benefit of those most favorable to him, in aid of his exceptions to the conclusions of law.” Bonnell v. Griswold, 89 N. Y., 122 ; Schwinger v. Raymond. 83 id:, 193.

The learned trial judge found as facts : That the conveyance to the defendant by the plaintiffs “ was an absolute transfer made without any condition whatsoeverthat its consideration “ was for professional services rendered by the defendant of the value of five hundred dollars that the defendant “ had no notice of any fraudulent- intent of the plaintiffs to defraud their creditors “ that no fraud was intended at the time of the deed by either the plaintiff or the defendantsthat “ the deed to defendant was not made to hinder, delay or defraud creditorsthat the defendant “ did not participate in any fraud, if any, of the plaintiffsthat the defendant “ did not intend when he took the deed of the Tragmans to hinder or delay their creditorsthat “no secret trust was intended to be created by the defendant in favor of the plaintiffsthat “ the defendant at the time of his purchase used no threats or coercion or misrepresentations to the plaintiffsthat the sale by the plaintiffs to the defendant “ was made with full knowledge of the situation of the properties and their value that at the time of the conveyance “ the defendant explained fully to the plaintiff the situation of the properties, and his inability to secure any consideration from his creditors, and also the nature of his services and their value “ that the plaintiff knew that the deed gave defendant the absolute titlethat the deed “ was ex

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plained by defendant to plaintiff in Wiley’s presencethat in the conveyance to defendant plaintiff “ acted freely and voluntarily. ”

While there is no specific finding that the consideration of the ■conveyance was adequate, that is the necessary deduction from all the facts.

Among the conclusions of law the learned trial judge found that “the transactions between plaintiffs and defendant were honest and in good faith, and free from actual fraud or imposition or undue influence on the part of the defendant;” that “ the deed was founded upon a good and valuable consideration,” and that it was not made with intent to hinder, delay or defraud the creditors of the plaintiffs.”

From these findings it results as an irresistible inference of law that the conveyance to the defendant is unimpeachable, and his title to the property absolute and indefeasible.

Another and an independent defense interposed by the answer and established by the findings, of itself makes a recovery by plaintiff a legal impossibility. Subsequently to the transaction of the sale and conveyance, the defendant, out of abundant caution, took from the plaintiff a general and absolute release; as to which the learned trial judge found that it “ was given to the defendant voluntarily, and without fear or compulsion,” and that the defendant “practiced no deceit or fraud, or used any force to obtain it;” that it “ was sufficiently explained,” and executed in the presence of a third person; and that at the time of its execution the plaintiffs “ had full knowledge of all defendant’s dealings with the properties.”

Surely, further argument is not needful to show that, in view of the findings, the judgment cannot stand.

Judgment reversed and new trial ordered, costs to abide event.

Daly, Oh. J. and Bischoff, J., concur.