Summary
In Holtzman v. Hopwood Realty, Inc. (1946), 77 Ohio App. 515, the defendant lawyer, as did Pfizenmayer in the instant case, took a fee to which he was not entitled.
Summary of this case from PFIZENMAYER v. NAIROpinion
No. 3870
Decided February 16, 1946.
Attorney and client — Suit by client to recover money in possession of attorney — Defense that money represented attorney fees — Finding for client not against weight of evidence — Attorney authorized to sell client's stock and invest proceeds — Investment made contrary to client's instructions — Finding for attorney not contrary to law, when — Instrument acknowledging indebtedness but not stating amount — Not an account stated — Evidence — Fidelity and good faith — Burden of proof on attorney — Res judicata — Defense not available, when.
1. A defense of res judicata is not proven if the case settled, on which the defendant relies, was not between the same parties, involved a different cause of action, although related, and the same evidence would not have sustained both cases.
2. In a controversy between attorney and client arising after the termination of certain litigation as the result of which the attorney came into possession of a sum of money belonging to the client and retained it, claiming the client agreed he should retain it as attorney fees, which the client denied, a finding of the trial court in favor of the client who claimed the money, was not against the manifest weight of the evidence or contrary to law.
3. Where the client testified that he authorized his attorney to sell certain stock and invest $10,000 in a single premium life insurance policy and gave directions to the attorney to have named as beneficiaries certain members of the client's family, and the attorney in pursuance thereof sold the stock for approximately $11,000 and invested $8,000 in a single premium life insurance policy, retaining the balance of the fund as attorney fees, in pursuance of a letter of instruction signed by the client and addressed to the attorney directing him to sell the stock and invest $8,000 in a single premium life insurance policy and retain the balance of the proceeds as attorney fees, a finding of the trial court in favor of the attorney was not against the manifest weight of the evidence or contrary to law.
4. Where the attorney purchased a single premium life insurance policy on the life of his client, in pursuance of instructions given him by the client, but had members of his own family designated as beneficiaries, contrary to instructions of the client, and refused for a period of nine months to deliver the policy to his client or allow his client to examine it, until the client executed an agreement to pay an attorney's fee of approximately $2,700, which agreement was then consummated and the policy was delivered, and for the first time the client learned of the amount of the policy and that the beneficiaries named in the policy were members of attorney's family, whereupon the attorney and client mutually agreed to recover the amount of money paid in purchase of the policy by making a loan, which was consummated in the sum of $7,564.70 and the policy was allowed to lapse by mutual agreement, the finding of the trial court that the money realized from said loan less a claim for payment of legitimate bills of the client, belonged to the client, was not against the manifest weight of the evidence or contrary to law, and the contention made by the attorney that the fund belonged to him as attorney's fees was without merit and not supported by the evidence.
5. A document signed by the client and delivered to his attorney to file in a law suit, which document purports to be an acknowledgment of an indebtedness of the client in favor of the attorney, which did not state a definite amount due and which was never intended to be a final adjustment between the parties of the amount due, does not constitute an account stated.
6. Where an issue arises between attorney and client the burden of proof rests upon the attorney to prove that he is entitled to retain his client's money or property which came into his possession by reason of the relationship of attorney and client, and it is incumbent on the attorney to show that he has exercised a high degree of fidelity and good faith.
APPEAL: Court of Appeals for Franklin county.
Mr. Allen I. Pretzman, for appellee.
Messrs. Williams, Williams Reynolds, for appellants.
This is an appeal on questions of law from a judgment of the Common Pleas Court of Franklin county. The defendants, appellants herein, have filed 25 assignments of error. The court does not believe it would serve any useful purpose to treat each assignment of error separately.
With respect to the first cause of action, the main contention of defendants is that the settlement and dismissal of two actions in the Court of Common Pleas, Franklin county, constitute res judicata. The record shows that in 1942 Ida Earnhart held a note against the plaintiff, appellee herein, Holtzman, which was secured by mortgage on certain real estate owned by Holtzman. After the note and mortgage were executed, Holtzman conveyed the property to the Suburban Home Mortgage Company. The note and mortgage became in default and Holtzman employed the defendant, Hopwood, as his attorney to negotiate for a settlement of the note and mortgage. The negotiations extended over a period of many months and during the negotiations Hopwood represented to Holtzman that in order to settle the note and mortgage liability Holtzman would be required to deed certain lots to the Earnharts, a portion of which real estate was covered by the mortgage. The title at that time stood in the name of the Suburban Home Mortgage Company. Later, during the negotiations, Hopwood represented to Holtzman that in order to settle the note and mortgage liability Holtzman would be required not only to deed the above mentioned property to the Earnharts, but he would also be required to pay to them $2,000 in cash. The record shows that thereupon the Suburban Home Mortgage Company, of which Holtzman was president, executed a deed to certain lots to Hopwood and later Holtzman paid to Hopwood $2,000 in cash on the representation that the lots in turn would be conveyed to the Earnharts and the $2,000 would be paid to them in settlement of the note and mortgage liability. The Earnhart note and mortgage was not settled by Hopwood, and Helen Harley, the daughter of Ida Earnhart to whom the note and mortgage had been assigned and transferred, instituted a foreclosure suit in the Common Pleas Court of Franklin county, being case numbered 164137. Holtzman commenced the present action against Hopwood for the recovery of the money, in May 1943. The Suburban Home Mortgage Company commenced an action against Hopwood to recover the lots (case numbered 167838) in October of 1944. The foreclosure action went to trial and during the trial of that case a compromise and settlement was entered into whereby the lots in question were conveyed to a purchaser at a price sufficient to discharge the mortgage liens and pay the taxes. As a part of the settlement agreement between the parties, the action instituted by the Suburban Home Mortgage Company against Hopwood to recover the lots was likewise settled and dismissed. The foreclosure action, being case numbered 164137, was also settled and dismissed.
The defendants contend that the settlement and dismissal of the two actions referred to constitutes res judicata. We do not believe that the facts support that contention since those actions were not between the same parties and the same evidence would not sustain both. True, the matters were related, but they were different causes of action. Neither the settlement of the note and mortgage liability between the Earnharts and Holtzman nor the recovery of the lots by the Suburban Home Mortgage Company in settlement of Holtzman's indebtedness to the Earnharts constitutes a bar to the present action in which Holtzman seeks to recover $2,000 in cash which he paid to his attorney, Hopwood, for the purpose of effecting a settlement with the Earnharts, but which was never paid to the Earnharts, it being retained by Hopwood and converted to his own use. Those facts do not operate as an estoppel, neither does the doctrine of res judicata apply. 30 American Jurisprudence, 918; 23 Ohio Jurisprudence, 973; Norwood v. McDonald, 142 Ohio St. 299, 52 N.E.2d 67.
The defendants contend also that the trial court erred in its findings of fact numbered eight, nine and ten on the first cause of action. This assignment of error raises the question whether the contention of Hopwood that after the negotiations for the settlement of the Earnhart note and mortgage were terminated, Holtzman thereupon agreed that Hopwood should retain the $2,000 as attorney's fees. On that issue it was Holtzman's word against that of Hopwood. The trial court found in favor of Holtzman. Furthermore, we are of the opinion that the judgment of the trial court is not against the manifest weight of the evidence; neither is it contrary to law. We find no error in the record relative to the admission or the exclusion of evidence on the first cause of action of which the defendants complain. We are of the opinion that the trial court did not commit error in overruling the motion for new trial and in rendering judgment for the plaintiff in the amount prayed for, to wit, $2,000, with interest from March 24, 1942.
The defendants have filed 12 assignments of error relative to the third cause of action, the first being that the trial court erred in its findings of fact numbered seven. In that finding the trial court found that Hopwood was not entitled to receive any further credits over and above $1,415.60 allowed by the court out of the proceeds of the insurance company refund check. After reading the record, this court is of the opinion that the trial court properly allowed credits in the amount of $1,415.60, and the evidence does not support the contention of Hopwood that additional credits should be allowed.
Defendants contend also that the trial court erred in its conclusions of law numbered one, two, three, four, five, eight and nine; also that the judgment of the court was against the manifest weight of the evidence and contrary to law. The record shows that in May 1939, Holtzman decided to sell certain shares of stock which he held in the Columbus Southern Ohio Electric Company. Holtzman contends that he employed Hopwood to sell the stock, and, at the suggestion of Hopwood, authorized him to invest $10,000 of the proceeds in a single premium life insurance policy. The stock was sold for approximately $11,000. Hopwood invested $8,000 in a single premium life insurance policy with the American United Life Insurance Company and retained the balance of the proceeds and converted the same to his own use. There is a dispute as to who were to be named as beneficiaries in such policy, the defendant Hopwood contending that he, his wife and his children were to be named as beneficiaries, whereas the plaintiff contends that he gave the names of six of his cousins and two sisters to Hopwood on a slip of paper for the purpose of inserting those names in the beneficiary clause. The policy as written named Hopwood, his wife and children as beneficiaries. No right was reserved in the policy to change the beneficiaries. The trial court found, and rightly so, that by reason of the letter of authority which Holtzman gave to Hopwood instructing him to sell the stock and invest $8,000 of the proceeds in a single premium life insurance policy and further to retain the balance as attorney fees, Holtzman could not complain relative to Hopwood retaining the balance of the proceeds.
The record shows that Holtzman made repeated efforts to gain possession of the insurance policy but Hopwood refused to deliver the policy or even show the policy to Holtzman unless Holtzman would execute an agreement to pay Hopwood a sum of money which was stated to be approximately $2,700. About nine months after the policy was issued, at the insistence of Hopwood, Holtzman executed such an agreement, whereupon the policy was turned over to Holtzman. He testified that he then first learned that the beneficiaries in the policy were members of the Hopwood family rather than members of his own family and that it was an $8,000 rather than a $10,000 policy. Within a short time, Holtzman and Hopwood mutually agreed that the policy should be cancelled and in order to recover a substantial part of the money which was paid in the purchase of the policy they agreed on making a loan, which was consummated. The loan amounted to $7,564.70. The policy was allowed to lapse by mutual agreement. Furthermore, the record shows that out of the proceeds the defendant Hopwood paid for the use and benefit of the plaintiff certain of his obligations totaling $1,415.60, which the trial court allowed as proper credits against the proceeds of the refund check. The trial court found that there was due to Holtzman from Hopwood the sum of $6,149.10, which represents the difference between the proceeds of the life insurance refund check and the credits which were allowed by the court.
The defendant Hopwood in his answer and also during the trial of the case contended that he retained the $6,149.10 as attorney's fees; however, the trial court found that the evidence did not support the contention that there were any attorney's fees due him which would justify the retention of that sum of money in payment thereof.
There is ample evidence in this case to support the contention of Holtzman that the proceeds of the insurance refund check were regarded both by Holtzman and Hopwood as money belonging to Holtzman. The fact that Hopwood paid a number of bills of Holtzman and applied the balance on account of attorney's fees is sufficient evidence to sustain the claim of Holtzman that both persons regarded the fund as belonging to Holtzman. The claim of Hopwood that the money belonged to him by reason of being named beneficiary in the insurance policy, a contention which was made for the first time in his brief in this court, is disposed of by the factual situation in this case. The record does not support the defendant Hopwood's contention and we approve of the finding of the trial court, both with respect to its findings of fact and its conclusions of law.
During the trial of the case there was introduced into evidence a document which was offered as defendant's Exhibit "T," signed by Holtzman and dated September 30, 1940, in which Holtzman acknowledged an indebtedness to Hopwood "in a sum in excess of $2,500, the exact * * * of which indebtedness not having been agreed upon between the undersigned and said Hopwood * * *." The defendants contend that that document constituted an account stated. The trial court found that the document did not meet the legal requirements of an account stated. An account stated is an affirmative defense and must be pleaded, which was not done in this case. See Bates' Pleadings, Practice, Parties and Forms, Section 773; 31 Ohio Jurisprudence, 740, Section 175. Furthermore, we are of the opinion that the document did not constitute an account stated. In 1 American Jurisprudence, 272, is found this statement:
"An account stated properly exists only where accounts have been examined and the balance admitted as the true balance between the parties, without having been paid."
In 1 Corpus Juris Secundum, 704, the general rule is stated as follows:
"Account stated must be understood as final adjustment of demands and amount due; and an account rendered for another purpose, or showing that it is not final, is not sufficient on which to predicate an account stated.
"To constitute an account stated the transaction must be understood by the parties as a final adjustment of the respective demands between them and the amount due; and an account rendered for some other purpose will not be given the force and effect of an account that can be cenverted into an account stated. So a statement expressly providing that the balance shown therein does not indicate the amount to be paid or credited is not an account stated."
The record is silent as to a meeting of the minds of the parties involved before the execution of that document. Holtzman testified that Hopwood requested him to sign the document so that Hopwood could settle certain lawsuits in which Holtzman was involved. Clearly, this document was not intended by the parties to be a settlement of their accounts. This court approves the judgment of the trial court in finding that the document in question did not constitute an account stated.
This litigation arises between attorney and client, wherein the client has brought an action against his attorney to recover money in the possession of the attorney for which he should account to his client. The relationship between attorney and client is of the highest fiduciary character. A relation of trust and confidence exists between the parties. Under the law the attorney is required to exercise a high degree of fidelity and good faith. 4 Ohio Jurisprudence, 447, Section 42; 5 American Jurisprudence, 285; 7 Corpus Juris Secundum, 964.
When an issue arises between attorney and client, such as has arisen in this case, the burden of proof rests upon the attorney to prove that he is entitled to retain his client's money or property. 5 American Jurisprudence, 289; 7 Corpus Juris Secundum, 966; McAdams v. McAdams, Sr., 80 Ohio St. 232, 88 N.E. 542; Berkmeyer v. Kellerman, 32 Ohio St. 239, 30 Am. Rep., 577. See, also, Simmons v. Becker, Admr., 63 Ohio App. 374, 26 N.E.2d 939. In the instant case the burden of proof rested upon Hopwood to show that he had rendered legal services to Holtzman for which he had not been compensated, and that he was justified in retaining the moneys involved in the first and third causes of action and applying the same on his claim for attorney's fees. The record shows that both counsel and the court interrogated Hopwood at length in an effort to ascertain whether there was due him any amount of money from Holtzman for legal services rendered. The record shows that Hopwood at no time kept any records in his office or elsewhere which he produced in court. In testifying he relied on his memory but was not able to give the court any facts from which the court would have been justified in finding that there was anything due Hopwood. After reading the record, this court is of the opinion that on the whole justice has been done between the parties. We find that the trial court in rendering judgment for Holtzman on the third cause of action did not commit error, and that such judgment was not against the manifest weight of the evidence or contrary to law.
The judgment of the trial court is affirmed.
Judgment affirmed.
HORNBECK, P.J., and MILLER, J., concur.