Summary
In Kelley v. Schwinghammer, 78 N.J. Eq. 437 (Ch. 1911), the attorney had begun an action at law on a promissory note given him by his client in settlement of legal services.
Summary of this case from Hughes v. EisnerOpinion
02-25-1911
KELLEY v. SCHWINGHAMMER.
U. G. Styron, for complainant. Thompson & Cole, for defendant.
Bill for injunction by Hannah E. Kelley against Eugene I. Schwinghammer to restrain proceedings in an action at law. Injunction granted.
U. G. Styron, for complainant.
Thompson & Cole, for defendant.
LEAMING, V. C. Defendant is an attorney and counselor at law and solicitor in chancery and is payee in a certain promissory note made by complainant The note was given to defendant by complainant in settlement for legal services which defendant had performed for complainant as his client. An action at law has been brought by defendant against complainant to recover the amount of the note. That action is now pending. The present bill seeks to restrain further proceedings in the action at law and prays that an accounting may be had to determine the amount justly due from complainant to defendant. The note, of which the present note is a renewal, appears to have been executed at a time when the relation of attorney and client existed between the parties.
I am unable to doubt the jurisdiction of this court in a case of this nature. The existence of a trust relationship between an attorney and client has been recognized from the earliest times; and, in all the adjudicated cases touching transactions through which attorneys have acquired property of or from a client, the courts appear to have not only given recognition to the trust relationship referred to, but also to have administered remedies with especial reference to the existence of such trust relationships. See 1 Story's Eq. Juris. § 310 et seq.; Pomeroy's Eq. Juris. § 960; Strong v. Mundy, 52 N. J. Eq. 833, 31 Atl. 611.
In an agreement between an attorney and his client, pending the relation of attorney and client, touching the quantity and reasonable value of services performed or being performed by an attorney for his client, the client, in my judgment, in the absence of independent counsel, is frequently, if not uniformly, almost as dependent upon the attorney as in other matters intrusted to the attorney's care; although this view does not appear to have received uniform recognition.
In this court, however, it has been expressly determined that where, pending the relation of attorney and client, a bond or other security is given by the client to his attorney as compensation for his services, the transaction will be regarded as constructively fraudulent, in consequence of the confidential relations subsisting and the means of undue influence which the attorney may exert over his client. In such case the burden is thrown on the attorney of showing its fairness, adequacy, and propriety. Brown v. Bulkley, 14 N. J. Eq. 451, 458. The note now in question clearly falls within the principles of that case. See, also, Porter v. Bergen, 54 N. J. Eq. 405, 34 Atl. 1067.
I think it clear that a court of law cannot without embarrassment adequately administer the relief to which defendant in this case is entitled, and that this court is the appropriate court for that purpose.
I will advise an order for an injunction restraining the further prosecution of the action at law until final hearing of this suit. If there is real danger that a judgment against complainant for the amount alleged to be due on the note will be of less value at a later time than now, I will entertain a motion on behalf of defendant to make the injunction conditioned on proper security being given against such loss.