Herkert v. Stauber

378 N.W.2d 704, 127 Wis. 2d 87, 1985 Wisc. App. LEXIS 3800
CourtCourt of Appeals of Wisconsin
DecidedOctober 24, 1985
Docket83-2150
StatusPublished
Cited by4 cases

This text of 378 N.W.2d 704 (Herkert v. Stauber) is published on Counsel Stack Legal Research, covering Court of Appeals of Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Herkert v. Stauber, 378 N.W.2d 704, 127 Wis. 2d 87, 1985 Wisc. App. LEXIS 3800 (Wis. Ct. App. 1985).

Opinions

GARTZKE, P. J.

Robert Stauber appeals an order dismissing his motion to compel a law firm, Foley & Lardner, to make restitution of $38,000 garnished from his bank account. The attorneys represented Herman Herkert in the garnishment brought to enforce Herkert's judgment against Stauber. The garnishment reached about $60,000.00, slightly more than due on the judgment. With Herkert's consent, in late December 1981 the attorneys applied $38,000 from the garnishment proceeds to their bill for services and retained the balance in a trust account pending Stauber's appeal from the judgment. [89]*89March 26, 1982 the judgment was reversed as to Stauber on grounds that it was error to hold him personally liable for the breach of a contract with the professional corporation he and another architect formed. Herkert v. Stauber, 106 Wis.2d 545, 317 N.W.2d 834 (1982). After the judgment was reversed, the attorneys returned to him the balance in their trust account. Stauber contends that because the attorneys had a duty to hold the entire proceeds pending the appeal and have been unjustly enriched, they must return the $38,000 to him. We reject both propositions and affirm.

1. No Duty to Hold Garnishment Proceeds Pending Appeal

Stauber asserts that if a judgment creditor collects on the judgment pending appeal, an "automatic stay" prevents disbursement of the funds. He concludes that Herbert's attorneys had a duty to hold the garnishment proceeds until the appeal was resolved and to obtain an order from the trial court before disbursing the proceeds. We disagree.

The trial court did not stay execution pending the appeal. Merely taking an appeal does not stay the execution or enforcement of a judgment. Sec. 808.07(1), Stats. If a judgment is collected and is afterwards set aside or reversed the judgment creditor must, of course, restore it with interest from the time of execution. Sec. 806.09(1), Stats. Similarly, if the sheriff or other officer collects the judgment, the proceeds must be deposited with the clerk of court and held pending the appeal. Sec. 806.09(2), Stats. No statute, however, requires that a judgment creditor or the creditor's attorney hold the amount collected or obtain an order allowing use of the money until the appeal is decided.

[90]*90Nor does the case law justify Stauber's position. Until the judgment is reversed, the judgment creditor may do as he or she pleases with moneys collected on it. Slabosheske v. Chikowske, 273 Wis. 144, 150, 77 N.W.2d 497, 500 (1956). If the judgment is reversed, the creditor must return the amount collected, but this is not true of the creditor's attorney who has lawfully applied part of that amount to services. The judgment was valid before reversal. Herkert v. Stauber, supra, contains no suggestion that the judgment was obtained fraudulently. Under these circumstances, the attorney "is under no duty to repay money which he received on account of the judgment creditor and which he retains as payment for services or for a debt owed by the judgment creditor to him (see Illustration 20) since he received the money as a bona fide purchaser." Restatement of Restitution sec. 74 comment h, at 311 (1937).1 See also 87 ALR 174, 175-76 (1933) (citing cases from several jurisdictions to the same effect).

We conclude that Herkert's attorneys violated no statutory or case law rule by applying part of the garnishment proceeds to their fees.

2. Constructive Trust Doctrine

Stauber argues that a constructive trust should be imposed on the garnishment proceeds retained by Foley [91]*91& Lardner. He asserts that Herkert's attorneys unjustly enriched themselves by taking the proceeds wrongfully, unconscionably, or in abuse of a confidential relationship. Again we disagree.

Stauber's attorney testified that one of Herkert's attorneys, Porter, agreed that he would hold the garnishment proceeds pending the outcome of the appeal. The attorney for Stauber's codefendants testified that in a separate conversation he reached an agreement with Porter, by which Porter would hold the garnishment proceeds pending the appeal and the attorney would stop his attempts to "obstruct" the garnishment.2 Porter testified that he told both attorneys that he intended to hold the proceeds pending the appeal but that he indicated he was not promising anything. In Porter's letter to Stauber's attorney some four days after the conversation Porter wrote, "I told you what our present intentions were concerning receipt of monies pending appeals. I made no representation of any sort to you." Stauber's attorney testified he understood Porter's letter as to "present intentions" to confirm that Porter would hold the money pending appeal.

The trial court found that the evidence regarding both conversations and the correspondence showed only that Porter stated his then present intention to hold the funds pending the appeal. Because this finding is not clearly erroneous, we must accept it. Sec. 805.17(2), Stats. The trial court concluded that the evidence was insufficient to establish an agreement for an express trust. That [92]*92conclusion is not contested on appeal. The court refused to impose a constructive trust. We conclude that the court did not err.

The constructive trust is an equitable device created by law to prevent unjust enrichment, which arises when one party receives a benefit, the retention of which is unjust to another. A constructive trust will be imposed only in limited circumstances. The legal title must be held by someone who in equity and good conscience should not be entitled to beneficial employment. Title must also have been obtained by means of actual or constructive fraud, duress, abuse of a confidential relationship, mistake, commission of a wrong, or by any form of unconscionable conduct.

Wilharms v. Wilharms, 93 Wis.2d 671, 678-79, 287 N.W.2d 779, 783 (1980) (citations omitted).

Porter's statement of present intention was not a promise. Stauber had no right to rely on it as such. Compare Goetz v. State Farm Mut. Auto. Ins. Co., 31 Wis.2d 267, 142 N.W.2d 804 (1966) (insurance adjuster's statement that company intended to pay claim was not a promise to pay).

No confidential relationship existed between Stau-ber's attorney and Herkert's attorney. Confidential relationships usually arise between a person and his or her attorney, physician, guardian, spiritual advisor, employer, or close business relation. Will of Faulks, 246 Wis. 319, 358-59, 17 N.W.2d 423, 439 (1945). In our system, the professional relationship between opposing attorneys generally is adversarial, not confidential. Describing this as a hotly contested case, the trial court said as much regarding Stauber's attorney and Porter.

Porter committed no wrong. No fraud is suggested. The garnishment was lawful. Herkert authorized the [93]*93withdrawal.3

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Herkert v. Stauber
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Bluebook (online)
378 N.W.2d 704, 127 Wis. 2d 87, 1985 Wisc. App. LEXIS 3800, Counsel Stack Legal Research, https://law.counselstack.com/opinion/herkert-v-stauber-wisctapp-1985.