Larey v. Baker

12 S.E. 684, 86 Ga. 468, 1890 Ga. LEXIS 282

Opinion

Simmons, Justice.

Mrs. Larey, formerly Mrs. Deweese, filed her petition against Baker, making in brief the following allegations: On Japuary 25th, 1875, Waitzfelder & Co. obtained a judgment against her ; on January 12th, 1876, Meador Brothers obtained a judgment against her. Afterwards she married Larey, and they determined to attempt to compromise all debts outstanding against her, and-he opened negotiations with some of her creditors or their attorneys. The judgment of "Waitzfelder & Co. was controlled by Murphey as their attorney, and he claimed to have authority to compromise. Previous to November 1st, 1887, the petitioner, through her husband, made an agreement with Murphey to compromise the Waitzfelder debt for $150. Thefi.fa. of Meador Brothers had been transferred to Silva and Peacock for considerably less than its face value, and the petitioner had an understanding, through her husband, with Peacock, to compromise his interest in the ñ. fa. at between $80 and $90. Silva was a stranger to Larey, and he did not know how to approach Silva for a compromise, but intended to open negotiations with him through' some attorney or friend. Pending this state of negotiations, Larey was advised by W. C. Baker to call on his brother, J. A. Baker, the defendant, for legal advice concerning the claims, the latter being a lawyer. Acting on this recommendation, Larey did call upon the defendant for advice, and the defendant elicited from-him all the facts and what he had been trying to do, and the arrangements he had made with Murphey and Peacock. In the course of the confidential communication Larey had with the defendant, he told the defendant of the difficulty he was under in approagbing Silva for a compromise; and the defendant said he knew Silva well and could easily manage that for the petitioner, and Larey engaged his services to to assist her in getting control of Silva’s interest in the fi.fa. at a discount, for her benefit, and in furtherance of her general jíurpose of compromising all of her outstanding debts. She expected to pay him a reasonable fee for his services, and relied upon him as her friend and attorney to assist her in the matter. Baker asked Larey to call again in a few days, by which time he would accomplish what he had engaged to do. Larey did call in a few days, and to his astonishment learned that instead of doing what he had agreed to do, Baker had bought both of the fi. fas. for his own benefit; that is, he had bought Silva’s interest in the Meador Brothers fi.fa., and had bought the Waitzfelder & Go. fi.fa.; against which purchases Larey then and there protested, lie bought from Mui’phey the fi. fa. of Waitzfelder & Co. for $150, and had it nominally transferred to Baker & Hall, and shortly afterwards took the transfer of the fi.fa. from Baker & Hall to himself. The petitioner offered to pay Baker what he had paid for the two fi .fas., with eight per cent, interest, and a reasonable sum as compensation for his services in securing thefi. fas., though she believes he is entitled to no compensation; but Baker refused to accept the offer, and stated that he would accept nothing less than $450. She tenders him principal and interest of what he claims he paid, and ten dollars for his services. The petition then charges various attempts made by Baker to subject different portions of the petitioner’s property, etc. It prays that the defendant be decreed to be the holder of th e fi.fa. in trust for her; that he be compelled to accept the sum offered by her in satisfaction of the money expended by him for the fi. fas., with interest, and that he be restrained from pressing the fi. fas., and that they may be decreed cancelled-

Baker answered, in substance, that be knew nothing of any negotiations or understanding between the petitioner and Murphey, or between the petitioner and Peacock or Silva. He denied that Larey ever called on him for any advice or counsel in relation to the judgments in question or the compromise, or that he elicited from Larey any facts about the petitioner’s case, or what Larey had been trying to do, or the arrangements he had made with Murphey or Peacock; or that Larey had employed him or proposed to employ him, or asked of him any advice or opinion, either as a lawyer or otherwise, in relation to thefi. fas. or the compromise of them in any way ; or that he gave Larey any opinion as counsel, for he (defendant) was at that time the attorney of Silva. Nor did he undertake in any character to compromise for the plaintiff or assist in any way to compromise the fi. fas. or any of them, or betray any confidence reposed in him by the plaintiff or her husband, or take advantage of any confidential communications. He bought Silva’s interest, but in so doing he was not guilty of any breach of duty or good faith. "W’aitzfelder & Co’s fi. fa. was really bought for Baker & Hall, and the defendant had no interest in the Ü. fa., nor any contract or understanding with Baker & Hall for any interest in it; but about a month after, he sold Baker & Hall some property, and agreed to and did take from them an assignment of this fi. fa. as a part of the purchase price.

The ease went to the jury upon this petition and answer, and the evidence of both parties, which it is unnecessary to set out any further than to say that it was conflicting as to the issues made by the petition and answer. The jury found for the complainant as to the Meador Brothers jl fa., and'for the defendant as to the "Waitzfelder & Co. fi. fa.; and the plaintiff moved for a new trial upon the several grounds therein set out, which was overruled, and she excepted.

The main contention between counsel in their argument here was, as to whether the court erred in refusing to give in charge to the j ury the written request of the plaintiff as set out in the 3d ground of the motion for a new trial, which is as follows : “ If you find from the evidence that plaintiff, through her husband acting as her agent and by her authority, employed the defendant, Baker, as her attorney to represent her in negotiating with A. P. Silva for the purchase by her of said Silva’s interest in the Meador Brothers^. fa., and that Baker undertook and agreed to represent her, and that neither plaintiff nor her said husband had any notice of said Baker’s employment by said Silva to collect said_yi. fa. (if you find that he was so employed by Silva), and that plaintiff, in seeking to purchase said Silva’s interest in said fi.fa., was doing so in order to carry out a general scheme or plan to buy up or compromise all outstanding^. fas. against her, and that she had at the time of her employment of defendant, Baker, through her husband, already arranged with her other judgment creditors, including B. W. Murphey, the attorney of Waitzfelder & Co., for the purchase of such other fi. fas., including said Waitzfelder & Co. fi.fa., at less than their face value, and that plaintiff’s husband, at the time he so employed said Baker, unfolded to him plaintiff’s entire scheme aforesaid, and informed him of the arrangement already made with other creditors* or their attorneys for purchasing their fi. fas., including said Waitzfelder & Go.fi. fa., and that plaintiff, by her said husband, so employed defendant to assist her in negotiating the purchase from said Silva of his interest in the Meador Brother’s fi.fa., in order to further and carry out her general scheme of settling or compromising all outstanding fi. fas. against her, and that defendant, Baker, knew of this purpose and undertook to represent plaintiff, to buy from said Silva his interest in the Meador Brothers fi. fa. in aid and furtherance of plaintiff’s general scheme aforesaid, — if you find from the evidence that these are facts, then I charge you that defendant, Baker, by such employment came into such fiduciary relation to plaintiff as her attorney 'that he could not, without plaintiff’s knowledge’or consent, become the purchaser for himself or others (than plaintiff) of either said Silva’s interest in said Meador Brothers fi.fa. or of the Waitzfelder & Co.fi. fa., and if you find from the evidence that defendant, Baker, while sustaining the relation aforesaid to plaintiff purchased foij himself from Silva the latter’s interest in the Meador Brothers fi. fa. at less than its face value, and from Murphey, for Baker & Hall, the Waitzfelder & Co. fi.fa. at less than its face value, and that he then, for himself, bought from Baker & Hall said last named fi. fa. at less than its face value, plaintiff, on payment to defendant, Baker, of the amount paid out by him for the purchase of said fi. fas. -with interest on such amounts from the time he so expended the same, would be entitled to have saidj^. fas. transferred and delivered to her.”

Under the pleadings and the facts of this case, we think the court should have given this request in charge to the jury. If Larey, as agent for his wife, consulted Baker as an attorney, and employed him to purchase Silva’s interest in the Meador Brothers fi.fa., and in. this employment disclosed his whole scheme of compromise to Baker, informing him of his purpose to purchase the Waitzfelder & Co .fi.fa., and the price which Murphey, the attorney, had agreed to take therefor, and of his general purpose to compromise all of his-wife’s debts, then in our opinion Baker, as his agent or attorney, could not take advantage of the information which he had derived from Larey and purchase the Silva interest in the Meador Brothers fi.fa. for himself, and could not rightfully purchase the Waitzfelder fi. fa. for Baker & Hall, although Larey had not employed him to purchase the Waitzfelder & Co. ji. fa. If he subsequently purchased it from Baker & Hall, the trust would attach to it in his bands, even if Baker & Hall would have been protected had they not assigned to him.

It was ruled by the House of Lords, in Carter v. Palmer, 8 Clark & Finnelly’s Beports, 657, that “the employment of counsel as confidential adviser disables him from purchasing for his own benefit charges on his client’s estates, without his permission : and although the confidential employment ceases, the disability continues as long as the reasons on which it is founded continue to operate. C., a barrister, who had been for sevei’al years confidential and advising counsel- to P., and had, by reason of that relation, acquired an intimate knowledge of his property and liabilities, and was particularly consulted as to a conrpromise of securities given by P. for a debt which C. considered not to be recoverable to the full amount, purchased these securities for less than their nominal amount, without notice to P., after ceasing to be his counsel. Held, that C’s purchase, while the compromise proposed by P. was feasible, was in trust for P.; and that O. was entitled only to the sum he had paid, with interest according to the course of the court.” In the case of Hobday v. Peters, 28 Beav. 349, it was held that where a mortgagor consulted a solicitor who turned her over to his clerk to assist her gratuitously, and the clerk, by reason of information derived during such employment, bought the mortgage for less than half the amount thereof, he was a trustee for the benefit of the mortgagor. In the Am. & Eng. Ency. of Law this rule is laid down: “Whenever one person is placed in such relation to another by the act or consent of that other, or the act of a third person, or of the law, that he becomes interested for him, or interested with him, in any subject of property or business, he is prohibited from acquiring rights in that subject antagonistic to the person with whose interests he has become associated.” 1 Am. & Eng. Ene. of L. 875. See also Holman v. Loynes, 53 Eng. Chan. Rep. 270; 1 Story Eq. §§310-11 and notes, 13 ed.; notes to Eox v. Macreth, White & Tud. L. C. in Eq. 228; Perry on Trusts, §203 et seq.

■ When we first read the above request, we thought the court did right in not giving it in charge to the jury, because it omitted to charge that Baker would have been entitled to reasonable compensation for purchasing the ji. fas.; but upon further consideration of the law and the facts of the case, we reached the conclusion that the omission was proper. We think the law is that where an agent or attorney is unfaithful to his trust, or violates his instructions, he is not entitled to any compensation. In 1 Am. & Eng. Enc. of Law, 397, the rule is laid d,own as follows: “Where an agent is unfaithful to his .trust and abuses the confidence reposed in him by his principal, or where he misconducts himself in the business of his agency, he may be deprived of commission and compensation. Also where he engages in transactions by which he acquires interests or employment adverse to the interests of his principal.”

The'court erred in not granting a new triak

Judgment reversed.