Brown v. Monticello State Bank of Monticello

420 N.W.2d 475, 1988 Iowa Sup. LEXIS 69, 1988 WL 22652
CourtSupreme Court of Iowa
DecidedMarch 16, 1988
DocketNo. 86-669
StatusPublished
Cited by2 cases

This text of 420 N.W.2d 475 (Brown v. Monticello State Bank of Monticello) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brown v. Monticello State Bank of Monticello, 420 N.W.2d 475, 1988 Iowa Sup. LEXIS 69, 1988 WL 22652 (iowa 1988).

Opinions

LARSON, Justice.

When Howard Brady became seriously ill in 1974, he appointed the Monticello State Bank as his conservator. Approximately two weeks after the appointment, on December 30, 1974, Brady executed a will naming as executors the bank and Thomas Brown, who, with his brother, Ralph Brown, are the plaintiffs in the present case. When Brady died, a simmering disagreement between the bank and Browns erupted into an ongoing legal battle. Several lawsuits developed, and two of them found their way to this court. See Brown v. Monticello State Bank, 360 N.W.2d 81 (Iowa 1984); In re Estate of Brady, 308 N.W.2d 68 (Iowa 1981).

In the present appeal, the Browns challenge a judgment against them in their suit against the bank for malicious prosecution arising out of the litigation between the Browns and the bank. The bank cross appeals from a judgment for Ralph Brown in his suit against the bank for its alleged conversion of Brady’s cattle. We affirm on both appeals.

I. The Malicious Prosecution Appeal.

After Brady executed his December 1974 will, he went to Wisconsin to live with the Browns, apparently being unable to care for himself. There, on March 5, 1975, Brady signed a new will which removed the bank as executor. Brady died on March [477]*47720, 1975. Browns began Wisconsin probate proceedings on Brady’s will of March 5, 1975, and so notified the bank, which commenced Iowa probate proceedings on Brady’s will of December 30, 1974. The bank also requested, and received, an order from the Iowa district court to intervene in the Wisconsin proceedings for the purpose of challenging jurisdiction of the Wisconsin court on the grounds of residency. It also challenged the will on grounds of testamentary capacity and undue influence. Throughout the proceedings surrounding the Brady conservatorship and estate, the bank was represented by J.E. Heiserman, an attorney of Anamosa.

The bank lost the issue on residency in the Wisconsin court, which held Brady to be a Wisconsin resident. The bank dismissed its petition of intervention, and the Wisconsin court later held Brady’s March 5 will to be valid.

The bank then obtained an ex parte order authorizing it to commence a declaratory judgment in Iowa to determine which will was the last will and testament of Mr. Brady. The bank again raised the issues of residency, lack of testamentary capacity and undue influence. The Iowa court ruled Mr. Brady was an Iowa resident, but agreed with the Wisconsin court that the Wisconsin will of March 5 was valid.

In late 1977, the bank filed its final con-servatorship and estate reports and application for fees. Browns objected to these reports and applications. On appeal, these reports and applications were accepted. See Brady, 308 N.W.2d at 73.

In July 1978, Browns filed suit against the bank for malfeasance in the administration of the conservatorship and estate, malicious prosecution for filing the December 1975 declaratory judgment action, and conversion of the cattle. The first two claims were dismissed by the district court, leaving only the claim of conversion. On appeal, this court affirmed the dismissal of the malfeasance claim but reversed and remanded on the malicious prosecution claim. See Brown, 360 N.W.2d at 88.

Trial was finally held in March 1986 on the malicious prosecution and conversion claims. The bank prevailed on the malicious prosecution claim, but the jury returned a verdict against it on Browns’ conversion claim. Both sides have appealed.

In Browns’ appeal, they raise several alleged errors: (1) the court’s submission of the bank’s defense that it had acted on the advice of counsel, (2) denial of Browns’ motion for summary judgment, and (3) refusal to admit certain of Browns’ exhibits and limitation of Browns’ examination of a witness.

The jury found, in response to a special interrogatory, that the bank had established its advice-of-counsel defense. Advice of counsel is a complete defense to a claim of malicious prosecution if the advice is obtained in good faith and if the attorney is given a full and fair disclosure of all facts in the possession of the client. Liberty Loan Corp. v. Williams, 201 N.W.2d 462, 465 (Iowa 1972); Restatement (Second) of Torts § 666 (1977).

Browns argue that the defense of advice of counsel is not available to the bank here for two reasons: (1) there is no substantial evidence of the bank’s full and fair disclosure of the facts to its attorney; and (2) as a matter of law, an attorney’s advice is not a defense if the attorney is a member of the board of directors or a shareholder of the defendant corporation. (It is clear that Heiserman was a director of the bank; it also appears he was a shareholder although that is not clearly established in the record.)

We summarily reject the argument that there was not sufficient evidence of a full and fair disclosure of the facts. This is a law action, and we will affirm on a fact question if there is substantial evidence to support the jury’s finding. Richard Moore, the bank’s trust officer, testified that “a full disclosure was had with Heiserman” about the Brady matters. Heiserman testified, in general terms, about the information given to him by the bank and also related that information gained by him through his own investigations.

The Browns argue that there must be evidence as to what specific facts had been [478]*478disclosed to the attorney in order for a client to take advantage of the advice-of-counsel defense. We do not agree; testimony, as here, that a full disclosure had been made is sufficient to support the jury’s finding. Any lack of specificity in the testimony as to what facts were disclosed could have been brought out on cross-examination, and any deficiency in the specifics of those facts would bear on the weight of the evidence. We therefore reject this argument.

The next question is whether the advice-of-counsel defense is available to a corporation whose attorney is also a director or shareholder of the corporation. This is at the heart of Browns’ appeal; they argue that when such a relationship exists between the attorney and client, the advice-of-counsel defense is unavailable as a matter of law.

The general rule is that the advice-of-counsel defense is available only if the attorney is impartial, without prejudice or bias; there cannot be justifiable reliance on the advice of an attorney who has an interest of his own which would be advanced by his advice. See 52 Am.Jur.2d Malicious Prosecution § 80, at 238 (1970).

We do not believe that the interest of an attorney as a director or shareholder will necessarily preclude the advice-of-counsel defense. It is true that an attorney in those circumstances might gain personally from his client’s litigation if it is successful. But, the converse is also true; if the action goes awry because of bad advice from the attorney, the attorney could suffer a personal loss as well. Therefore, we believe it would not be proper to infer from the attorney’s relationship as a shareholder or director that his advice to proceed with the litigation is necessarily based on self-interest.

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Bluebook (online)
420 N.W.2d 475, 1988 Iowa Sup. LEXIS 69, 1988 WL 22652, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brown-v-monticello-state-bank-of-monticello-iowa-1988.