Opinion
01-12-1911
WAGNER et al. v. PHILLIPS et al.
Charles M. Mason, for complainants. R. D. Crocker and T. L, Raymond, for defendant. Phillips. F. M. McDermit, pro se. Howe & Davis, for defendant. Trust Company. Mr. Montieth and Mr. Campton, for defendant Helbig.
Bill by Freda Wagner and others against Gordon B. Phillips and others. Decree for complainant Wagner, on certain conditions.
Charles M. Mason, for complainants.
R. D. Crocker and T. L, Raymond, for defendant.
Phillips. F. M. McDermit, pro se. Howe & Davis, for defendant.
Trust Company. Mr. Montieth and Mr. Campton, for defendant Helbig.
EMERY, V. C. Upon the pleadings and proofs in this case two questions are involved: First, whether a conveyance of the equity of redemption made by Mrs. Wagner, one of the complainants, and her husband to the defendant Helbig, who was, actually or substantially, a mortgagee of the premises at the time of the conveyance, shall be allowed to stand; and, second, if not, upon what terms it should be set aside.
The grantee in this case was the second and last indorser on notes of the mortgagors, or one of them, which had been given to defendant McDermit, their attorney, the payee and first indorser, for compensation for services rendered and to be rendered in relation to a criminal prosecution. At the time of receiving the first two notes, the attorney received from his clients, the mortgagors, a conveyance in fee of the real estate standing in the name of Mrs. Wagner which was recorded. One note for $1,000 was signed by both Mr. and Mrs. Wagner; the second for $600 by Mr. Wagner only. By a separate instrument, which was not acknowledged and could not be recorded, the attorney declared the absolute deed to have been given as security for the notes, with the right of the attorney to pledge the property as collateral for the payment of the notes. The attorney conveyed the lands in fee to an officer of a trust company which discounted the two notes after the attorney had procured a second indorser, who was the defendant Helbig. Subsequently two other notes, one for $000 and one for $300, signed by the husband only, were made to McDermit as payee and indorsed by him and discounted by the Trust Company. The $000 note was indorsed by Helbig, but not the $300 note. The conveyance now attacked was made by the mortgagors to Helbig, the second indorser, on the commencement of foreclosure proceedings by the holder of a mortgage prior to the conveyance by Wagner to their attorney. As part of the consideration to be paid by the second indorser on taking the deed, he agreed to take up the notes given to the attorney, which he had also indorsed for the attorney, and also the $300 note not indorsed by him. This agreement was carried out, and Helbig's individual note was discounted by the Trust Company, in payment of all the notes, thereby relieving the attorney as first indorser from all liability on the notes, and the notes so taken up were delivered by Helbig to McDermit, who still holds them. At the time of the conveyance by the mortgagors to the second indorser, the relation of clients and attorney still existed between the mortgagors and the first indorser, and the attorney advised the transfer to his subsequent indorser and surety.
The case in this aspect therefore involves the additional question as to how far the validity of the sale by the mortgagors to the mortgagee is affected by the fact that the transfer was in part a payment by the client of compensation to his attorney. A transfer of the equity of redemption by the mortgagor to the mortgagee may be valid, but, when properly questioned, is carefully scrutinized by the court, for the purpose of preventing oppression or fraud, and so far as the transaction is substantially one between attorney and client, involving the transfer of the client's property as security or in payment for the services of the attorney, it comes under the application of the further rule that the burden of establishing the fairness, adequacy, and equity of the negotiation rests upon the attorney, and the security or conveyance taken will only be allowed to stand as security for the amount shown to be fairly due. 1 Story's Eq. § 311; Brown v. Buckley, 14 N. J. Eq. 451, 458 (Green, Ch., 1862); Condit v. Blackwell, 22 N. J. Eq. 481, 486 (Err. & App. 1871); Porter v. Bergen, 54 N. J. Eq. 405, 406, 34 Atl. 1067 (Err. & App. 1896); 3 A. & E. Ency. L. (2d Ed.) 337.
The facts in detail are substantially as follows: The complainant Freda Wagner and Herman, her husband, were arrested and in custody on October 24, 1907, charged with keeping a disorderly house in the city of Newark. While in custody they employed the defendant Frank M. McDermit as their attorney and paid him as such in cash either $400, as the Wagners swear and as McDermit's answer and agreements signed by him admit, or $300, as McDermit testifies at the hearing. It appears that Wagner's son and a woman Tillie Bush had been arrested on the previous day and were bailed by McDermit on the 25th in the sum of $250, and the $100 about which this question arises were probably paid by the complainants for McDermit's services in connection with that charge. On the present issues this dispute is immaterial, for McDermit's written agreement, made on receiving a deed for complainants' property, stated that $400 hadbeen paid in cash by the Wagners, and that statement is decisive for present purposes. An examination upon the charge against complainants was held on the 25th of October; McDermit appearing on their behalf. Bail to await action of the grand jury was fixed at the large sum of $5,000 for each, apparently on account of the revolting character of the evidence, and in default of bail they were both committed to the county jail. On November 6, 1907, and while in jail, the complainants conveyed to McDermit, by a deed absolute on its face, two tracts of land, the title to which was in Freda Wagner, the wife. This conveyance was made for the purpose of securing McDermit, who was to become their bail, and the first dispute on the facts is whether it was for this alone, or whether it was also to secure McDermit's fees for professional services. Mr. Thorn, the master in chancery who took the acknowledgment of the deed, says that there was a slight reluctance on the part of Mrs. Wagner to making a deed for her property, but that, after the necessity of its execution for the purpose of putting in bail was explained to her, she signed the deed. This explanation was made in the German language by a person who was present as interpreter, and Mr. Thorn at the time of taking the acknowledgment knew nothing about the agreement between McDermit and the Wagners. On the same day, November 6, 1907, and while in jail, Mrs. Wagner and her husband signed a note for $1,000 payable at 90 days to McDermit's order at the Union National Bank, and Mrs. Wagner says that when she signed it McDermit said it was needed for expenses. When she signed her husband was not present.
On November 7th, the day after his release Herman Wagner at McDermit's office signed another note, in which his wife did not join, for $600 at 60 days to McDermit's order, also payable at the Union National Bank, and on that day McDermit signed an agreement relating to the conveyance and the notes as follows: "Received from Herman and Freda Wagner, the sum of two thousand ($2,000) dollars, consisting of four hundred ($100) dollars cash and two promissory notes, one for one thousand ($1,000) dollars and one for six hundred ($600) dollars, on this seventh day of November, A. D. Nineteen hundred and seven. It is agreed on bebalf of the undersigned that he shall faithfully and diligently serve as attorney the said Wagners during their present troubles and defend in court any charges or indictments that may be found against them or either of them. It is further agreed that the undersigned will cause to be reconveyed to the said Wagners their real estate which has been conveyed to the undersigned as a pledge to protect the payment of the said two notes, and also to protect him for bail bonds to be executed in securing the release of the said Wagners from custody on the pending charges. The undersigned has the right to pledge the property as collateral for the payment of the notes. When the notes shall have been paid and the bonds discharged, the undersigned agrees to at once convey the property to the Wagners. If the Wagners shall sell the property at any time pending these troubles the undersigned agrees to accept cash security for the bonds. And it is further agreed that the said two thousand ($2,000) dollars shall be in full for all services rendered or to be rendered or to be hereafter rendered on account of charges now pending against the said Wagners in any of the courts of this state, where it may require the undersigned to be present. In witness whereof I have hereunto set my hand this seventh day of November, A. D. 1907. Frank M. McDermit. Witnessed by: Fred. R. Lehman. Anthony J. Castellano." This agreement was executed in duplicate, one copy signed by McDermit alone, which was received afterwards by Mrs. Wagner, and the other signed by McDermit and Herman Wagner and kept by McDermit. Neither of them was acknowledged or proved for purposes of recording, so that the absolute record title was placed in McDermit.
McDermit was unable to discount the $1,000 note at the Union National Bank, where it was payable, and on the same day the notes were given he thereupon applied to the defendant Gordon B. Phillips, treasurer of the Mutual Trust Company of Orange, to discount the $1,000 note. For the purpose of securing the money from the Trust Company on the $1,000 note, he conveyed to Phillips by warranty deed, for $1 and other valuable considerations, the premises conveyed to him by the Wagners, subject to mortgages of $6,200. This deed was dated, executed, and recorded November 7, 1907, and on the same day Phillips executed and delivered to McDermit the following agreement or declaration: "Whereas Frank M. McDermit and wife have by their deed of warranty, bearing even date herewith conveyed to me the two certain tracts of land and premises, the first tract, being located on Nech Lane (now Evergreen avenue, and the second tract being located on the westerly side of Frelinghuysen avenue and the southerly line of Mitchell Place: Now these presents are to declare, admit and make known that said premises were conveyed to me by the said McDermit and wife to secure the payment of a certain promissory note for the sum of one thousand dollars, bearing date November 6, 1907, payable in ninety days to the order of said Frank M. McDermit, and made by Freda Wagner and Herman Wagner. Said note being indorsed by said Frank M. McDermit and purchased by me, and I do hereby agree that upon the payment of said note to me that I will forthwith upon request reconvey said premises to said Frank M. McDermit without any incumbrance thereon placed or created byme. Dated November 7, 1907. Dated November 15. 1007. Gordon B. Phillips." This agreement was drawn at Mr. McDermit's request by Mr. Thorn, who had on the previous day taken the acknowledgment of the deed to McDermit. but who does not appear to have seen the agreement McDermit signed. This agreement also was neither acknowledged nor proved so that it might be recorded.
Six days later, November 13th, Mrs. Wagner was released on bail, which was reduced to $3,000; McDermit becoming bail for the grand jury. On the next day, November 14th, the $1,000 note of Mr. and Mrs. Wagner was discounted by the Trust Company, after being indorsed by McDermit and also by the defendant Helbig. The Trust Company before consenting to discount the note had asked for another indorser, and Helbig, a client, became the indorser at McDermit's request and for his accommodation. McDermit says that both Phillips and Helbig knew of the agreement with Wagner, and that he showed it to Helbig; but Helbig says that he knew nothing about the agreement, or that the property was held as collateral, and that he signed merely as an accommodation to McDermit. On the 15th of November an addition to the agreement of November 6th was signed, as follows, by Phillips: "Dated November 15, 1907. Same conditions and same privileges to apply as above on the $1,000 note to the note of $000 six hundred dollars dated November 7, 1907, indorsed by Oscar Helbig. Property to be redeeded upon payment of the said $1,000 to Frank M. McDermit. Gordon B. Phillips." This latter note of $000 signed by Mr. Wagner only was discounted by the Trust Company on November 21st, and was indorsed by McDermit & McDermit (the law firm of which defendant McDermit is a partner) and by Helbig.
At the December term, 1907, the Wagners were jointly indicted for keeping a disorderly house, and on December 5, 1907, were bailed in $1,500 each; Gordon B. Phillips, who then held the title to their property, becoming their bail and justifying as owner of the property. The Wagners knew at the time of Phillips' going bail that he held the title to the property. On the following day both the previous recognizances given by McDermit were discharged. After the release of the Wagners, and on January 2, 1908, Herman Wagner gave McDermit another note for $000 signed by him alone, payable two months after date, at the Trust Company. This note was also given in connection with McDermit's professional services for the Wagners, and at the time of receiving it McDermit signed the following agreement and gave it to Herman Wagner: "Jan. 2, 1908. It is agreed that if Herman Wagner is convicted that I shall return one note of six hundred dollars of the three notes by him given to me." This second note for $000 was discounted by the Trust Company on January 9, 1908, after being indorsed by McDermit & McDermit and by Helbig.
After the signing of the original notes and in February, 1908, the Wagners were called as witnesses for the state on the trial of one Thomas J. Corbally, a member of the Newark police force, for misfeasance in office McDermit was counsel for Corbally at the trial. The Wagners were not afterwards brought to trial on the indictments against them, which were nolle prossed more than a year later, in May, 1909. While the indictments were outstanding, the note for $1,000 and the two notes for $000 each, discounted by the Trust Company, were renewed from time to time as they became due, and finally on July 6, 1908. all of them (including interest) were combined in a single note for $2,253.80 at two months. None of the renewal notes were signed by Mrs. Wagner, being signed only by Herman Wagner as maker, but with the same indorsers, McDermit & McDermit and Helbig. After giving this note, and on July 18, 1908, Phillips, who then had the title to the property, executed and had recorded a mortgage on the property for $2,530 to one William L. Clinton, a relative. This mortgage was executed without any communication to the Wagners or even to Clinton, the mortgagee, who disclaimed both by his answer and at the hearing any interest in the mortgage. Clinton says that he had no knowledge whatever of the mortgage until he was made party to the foreclosure suit by reason of its appearing on the record. Phillips' explanation of it as given by his answer (for he has not offered himself as a witness) is that it was executed by him and his wife on the advice of McDermit and for the better protection of the Trust Company, who had purchased the Wagners' notes, and with the intention of assigning the mortgage to the Trust Company. This intention was not carried into effect, and the mortgage was left with McDermit upon the understanding that it was not to be recorded unless it should be determined to have it assigned to the Trust Company. McDermit's statement is that the mortgage was drawn so as to take up the notes by a loan, but the loan was not obtained and the transaction did not go through. While this loan may have been one object, the execution of the mortgage to Clinton was probably due in some measure to the execution on the same day by Phillips of a bond and another mortgage on the premises to secure it, given to one James T. Mooney, for $245.09, payable two months after date. Mooney was a mechanic who had on Herman Wagner's order done work on the premises previous to July, 1907, and who on April 20, 1908, had recovered a judgment against Herman Wagner for the debt. This mortgage to Mooney, given without any consent however of the Wagners, so far as appears, was to secure the debt, andthe mortgage itself stated that it was a third mortgage and subject to the building and loan mortgage and a second mortgage given by Phillips. Mooney, so far as it appears, had no knowledge of the secret agreements relating to the title, and in the absence of some declaration, saving the debts secured by them, Mooney's mortgage might have been the prior lien. The Mooney mortgage has not been fully paid, and Phillips by his bond is personally responsible to Mooney for the balance due. Phillips also gave to Mooney his personal note for the amount of the bond, which note was renewed from time to time and was reduced by payments made by Phillips so that the amount due at the hearing was about $75.
While the note for $2,253.80, dated July 6, 1908, at two months, and indorsed by McDermit and Helbig, and the note for $303.20 at two months, also dated July 6th signed by Herman Wagner and indorsed by McDermit, but not by Helbig, were running, the Building & Loan Association filed a bill of foreclosure, and on August 10, 1908, subpœnas were issued to all the parties to this suit except McDermit, returnable September 1, 1908, and delivered to McDermit for acknowledgment of service. He did not acknowledge service, but sent for the Wagners and Phillips, and as the result of that interview in his office a paper was drawn and signed by both the Wagners, authorizing Phillips to sell their property for a sum which would reserve to them the sum of $2,000 for their equity in the property, and "also hereby ratifying and confirming all prior acts done by him for us." It does not appear that any explanation was made to the Wagners as to what acts had been done or were intended to be ratified by this agreement. Phillips at that interview, according to McDermit's statement, questioned the Wagners' estimate of the value of the property as too high, said that both tracts together were not worth more than $10,000, and that he regarded Helbig's indorsement as the main security on the notes. No sale was made by Phillips, and on August 28th, three days before the return day of the subpoena, the Wagners and Phillips again met at McDermit's office, when, as McDermit says, Wagner was told that the subpœa would be returnable in three days, and that if he wanted to avoid costs he had better make arrangement if he could. Phillips, according to McDermit, said he would not carry the property, and unless he could get possession of it for disposal to protect himself he would have to see what he could do, and finally the Wagners said if they could not get better than $500 they would take it. The Wagners say that Phillips offered them $500, and that both McDermit and Phillips told them if they did not take that they would not get anything at all. The Wagners finally consented to sell for $500, and, going with Phillips to the office of the solicitor of the Building & Loan Association, they executed a quitclaim deed for their interest in the property to the defendant Helbig. The deed was delivered to Phillips, who then gave his individual check for $500 to the Wagners, and subsequently (August 31st) gave a second check to the solicitor for $645.30, the interest and dues on the mortgage.
Helbig did not meet either of the Wagners during these negotiations for the sale, which as between them seem to have been conducted altogether through Phillips. Helbig says that Phillips represented him, and that he authorized Phillips to buy the property and the Building & Loan stock for $500. Helbig also agreeing to pay the Building & Loan dues and interest and to take up all the Wagner notes by his own note to the Trust Company.
On September 4th Helbig made his individual note at four months for the $500 paid to the Wagners and the Building & Loan dues and interest ($1,168.28), which note was discounted by the Trust Company on September 10, 1908, and on September 8th Helbig also gave his individual note for $2,609.10 at four months, which was discounted by the Trust Company to pay the two notes falling due on that day, the $2,253.80 made by Herman Wagner and indorsed by McDermit and Helbig, and the $303.20 note made by Wagner and indorsed by McDermit, but not by Helbig, and which he was also to pay as part of the consideration. The Wagner notes were delivered to McDermit by Helbig after erasing his own indorsement. When these two notes of Helbig's for $1,168.28 and $2,253.80 came due on January 4, 1909, a combined note at four months of $3,851.18 was made by Helbig to renew them, and this note has been renewed from time to time after payments on account, and the amount due at the last renewal before the hearing was $3,351.18. Phillips acted for Helbig in relation to the conveyance to him of the Wagners' title, and it was after his consultation with the solicitor of the Building & Loan Association that the deed to Helbig was prepared and executed. This deed is a quitclaim deed only, and the legal title to the premises then stood and still stands in Phillips himself. Helbig says that he supposed he was getting by his deed the absolute title to the property, and further that he never saw the McDermit and Phillips agreements or knew that the property was held as collateral to the notes. His deed from the Wagners has not yet been recorded. Phillips' explanation to him of his continuing to hold the title was that it was to protect the Trust Company on the notes. The Trust Company, however, by its answer and by proofs at the hearing disclaims any interest under the deed held by Phillips or in the property. Phillips in his answer states that by the agreement between him and Helbig, at the time of the delivery of the Wagners' deed to Helbig, it was agreed that he (Phillips) should continue to holdthe title for the security of the Trust Company, but, although attending at the hearing, he has not offered himself as a witness to explain or contradict Helbig's statement that the latter thought he was getting the absolute title, or the Trust Company's disclaimer of any interest under the deed. Phillips himself, so far as the proofs before the court show, is not and never has been under any legal responsibility whatever upon any of the Wagner notes or upon any of the transactions connected therewith, unless it be for the balance due on his bond given for the Mooney judgment in connection with the mortgage to Mooney, which is still uncanceled of record. Mooney was a bona fide purchaser under his mortgage having no knowledge or notice of the agreement upon which Phillips held title, or of the previous agreement of McDermit, and, inasmuch as part of the consideration actually paid by Helbig for the purchase included the payment of the Mooney debt for repairs on the premises, this mortgage in Mooney's hands, for whatever amount is still due, is a valid lien and should not be set aside.
The real questions in the case relate to the complainants' being entitled to relief against all or any of the other defendants, Helbig, Phillips, and McDermit, and the conditions of such relief. These several defendants occupy different positions in relation to the equity asserted by Mrs. Wagner, as the owner of a property originally conveyed by absolute deeds, but as security only. Helbig by reason of his indorsement of the Wagner notes and the agreements to secure them made with the previous indorser, McDermit, the benefit of which inured to him, stood at the time of the purchase substantially in the relation of a mortgagee dealing with a mortgagor for the purchase or release of the equity of redemption. Part of the consideration of the sale by the Wagners was that Helbig should pay all of the Wagner notes and the Mooney claim and the Building & Loan dues and costs of suit, these assumptions together amounting to over $3,300, and Helbig has in fact assumed these payments in such a way that the Wagners were personally entirely relieved therefrom. So far as Helbig is concerned, this amount must, in considering the fairness of the bargain, be included as part of the consideration which he was to pay for the equity. Complainants claim that none of the notes (except the $1,000 first signed) were valid obligations of Mrs. Wagner, and that, as Helbig at the time of the sale was chargeable with knowledge or notice of their invalidity, he cannot, except perhaps to the extent of the $1,000 note, be considered as a bona fide purchaser by their payment, and therefore, in considering the fairness of the purchase of the equity of redemption, he is not entitled to include any indebtedness beyond the $1,000 as having been paid by him. Helbig's notice that the notes, other than the $1,000, were not liabilities of Mrs. Wagner, is claimed to be established by McDermit's evidence? that he showed to Helbig the two agreements relating to the object of the deeds, and that Helbig knew all about them. Helbig's own statement is that he knew nothing about the agreements, and that he indorsed the notes relying on McDermit and as an accommodation to him. Admitting Helbig's notice of the agreements, this of itself would not be sufficient to charge him with oppression or unfair dealing in including all of the notes as part of the consideration of his purchase, and there is no evidence that either when he indorsed the husband's notes, or purchased the equity, he was chargeable with notice that any of the notes were without consideration in McDermit's hands. Neither of the Wagners objected to the validity of any of the notes at the time of Helbig's purchase and assumption of their payment, and, although Mrs. Wagner might not have been bound to pay any debt of her husband by a conveyance of her property, she certainly had the right, if she chose, to so convey it, and a conveyance in legal form of her lands for such purpose is valid both at law and in equity. Warwick v. Lawrence, 43 N. J. Eq. 179, 184 (Err. & App. 1887). The question therefore, so far as Helbig is concerned, is whether, so far as these notes were part of the consideration, he is entitled to protection, after having paid them. In my judgment he is so entitled, and no facts are proved in the case which show that in so including them Helbig was chargeable with any such fraud or oppression as would entitle the Wagners to set aside his deed and at the same time be relieved from payment of the notes assumed by Helbig.
If this view be correct, then the equitable liability of Helbig, on the whole case, must rest on the relation of seller and purchaser, being at the same time mortgagor and mortgagee, and that even after taking into account the amount of the mortgagee's claim (being the notes indorsed or assumed) the sale cannot be supported. At the time of the purchase the amount due for interest to the Building & Loan Association, including the dues, $565.30, and costs, $80, was $622.30. The amount of Wagner notes assumed was about $2,800, and. with the $500 paid in cash to the Wagners, the whole amount (including the principal of the mortgages, $6,200) was about $9,526.30. The only evidence as to values given in this suit is that of the president of the Building & Loan Association, who says that a conservative estimate of the value of the property in the fall of 1907 was $11,500. This would be about $2,000 more than Helbig gave, and was about the amount fixed for the sale by Phillips, by the agreement of the Wagners in August, 1908. Helbig himself, however, swears that he offered the property for sale at $4,800 subject to the association mortgage, being about $1,000 over the amount he paid, but was not able to sellit. By reason of the peculiar situation of the parties in this case, in which McDermit was practically counsel for all the parties interested, while at the same time he was personally interested in protecting Helbig against the latter's indorsement on notes which had already been discounted to pay fees due or claimed to be due to himself, and on which he had received the proceeds, the burden is upon the grantee to establish clearly that the sale upon the part of the Wagners was for a fair and adequate consideration. This has not been done, and, upon all the evidence in the case, I conclude that the deed to Helbig must be set aside, but upon the conditions of repaying to him the sums paid or obligations assumed as part of the consideration.
As against the defendant McDermit the right of the complainants to equitable relief against the inclusion of all the notes as part of the consideration of the sale stands on a different basis. He was, at the time of obtaining the notes and at the time of the conveyance by the Wagners, acting as their attorney, and under an agreement signed by himself as to the amount of his compensation for services rendered and to be rendered. The compensation under the agreement extended only to the $1,000 note signed by both the Wagners and the $600 note signed by the husband only, and these amounts, in connection with the $400 previously paid in cash, $2,000 in all, were under the agreement to "be in full for all services rendered or to be hereafter rendered on account of charges now pending against the said Wagners in any of the courts of this state, where it may require the undersigned to be present." The complainants' counsel claim that the evidence of the Wagners shows that the conveyance was made only for the purpose of securing McDermit as bail, but on this point I think the evidence of the attorney that it was to secure his fees as well is more reliable. Mrs. Wagner, moreover, says that the written agreement of November 7th, signed by McDermit and given to her husband, was received by her, and, inasmuch as McDermit did then undertake the services agreed upon, this agreement is the best evidence as to the object of the conveyance and the amount to be paid for all future services in connection with the pending charges. The first question on this branch of the case is whether either of the notes given by the husband to the attorney subsequent to the agreement are chargeable against Mrs. Wagner or her husband. The third note for $600 was given by Wagner January 2, 1908, and at the time of receiving it the attorney signed an agreement "that if Herman Wagner is convicted I shall return one note of $600 of the three notes by him given to me." This agreement shows on its face that all of the three notes, including the last $000 note, were given to McDermit for services of some kind in connection with the charges against Herman Wagner.
Considering all the circumstances existing at the time the contract was entered into, the agreed compensation was ample and even liberal, and no facts have been shown entitling the attorney to any increase in the amount chargeable on the wife's lands. In the subsequent transactions between the attorney and his clients, this $600 therefore must be considered as a sum which cannot be allowed to the attorney. Nor do I think the $300 note subsequently given by Wagner can be allowed. McDermit says it was for money loaned to Wagner, while Wagner swears that he never received any money from him, but that he paid him money for the Building & Loan. That Mrs. Wagner had the money or derived any benefit from it is not at all shown, and, on the question as to McDermit charging the property of Mrs. Wagner conveyed to him as security with debts of the husband other than those referred to in the agreement, evidence affecting Mrs. Wagner must be produced. These debts were practically additional debts claimed to be due to the attorney, as to which the attorney was interested adversely to Mrs. Wagner in securing payment of them from her property; and, inasmuch as he still continued to act and advise as her attorney in the matter of the sale to Helbig, the situation was one requiring the fullest disclosure and the utmost good faith, not only in reference to the existence of the claims, but their validity and in reference to the attorney's right to charge her lands with these additional debts in his own favor, so that if necessary she might procure other advice before satisfying the claims by a conveyance of her lands. If the statements of the Wagners are to be relied on, not only was no such opportunity given or suggested, but pressure for immediate sale was exercised as the only means of realizing anything.
My conclusion on the whole evidence relating to the transfer is that the attorney has failed to establish that as against Mrs. Wagner these two notes of her husband amounting to $900, of which the attorney got the proceeds, were fairly included as part of the consideration she was to receive on the conveyance of her equity, and to that extent he is bound to reimburse her. As against the defendant McDermit, a decree will be advised for such reimbursement, either as a contribution toward the payment she is required to make as a condition of relief against Helbig, or as a payment to be made to her should she refuse or fail to perform these conditions.
The defendant Phillips, at the time of the quitclaim deed from the Wagners to Helbig, held the legal title to the property, and, so long as he still continued to be bail for the Wagners, his retention of the title for his protection was proper. But the indictments against the Wagners were dismissed in May,
1909, and as he is not personally liable on the notes discounted by the Trust Company, and this company disclaims any interest in the lands, his only possible claim to hold the title, so far as appears by the evidence, is the liability upon the bond given for the Mooney claim, if the $75 due at the hearing is still unpaid. As this debt was for repairs on Mrs. Wagner's property, she should be charged with its payment as a condition of setting aside the deed to Phillips. As against the defendant Phillips, decree will be advised that upon such payment, and upon the conveyance by Helbig, he also convey to Mrs. Wagner the lands in question. The mortgage to Clinton will be declared void, and of no effect. The form of decree to be settled on notice.