Oviatt v. Smith

197 N.W. 535, 226 Mich. 253, 1924 Mich. LEXIS 517
CourtMichigan Supreme Court
DecidedMarch 5, 1924
DocketDocket No. 123.
StatusPublished
Cited by5 cases

This text of 197 N.W. 535 (Oviatt v. Smith) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Oviatt v. Smith, 197 N.W. 535, 226 Mich. 253, 1924 Mich. LEXIS 517 (Mich. 1924).

Opinion

*255 Fellows, J.

(after stating the facts). We may accept defendant’s testimony that he honestly believed that the divorce suit had been “dropped” and his employment at an end when he purchased the property. It may be the attorneys had abandoned hope of getting the parties to a settlement; but independent of defendant’s belief the case as a matter of fact was still pending in court and undisposed of and plaintiff’s rights in the property which he was employed to protect were *256 still unsettled. He had not been discharged and the relation of attorney and client still existed. The property he purchased was that in which his client had an interest, which interest his employment related to. Under these circumstances, may he purchase the property for his own benefit or does the purchase inure to the benefit of his client?

We shall first consider the cases cited by defendant. In Humphrey v. Hurd, 31 Mich. 436, the attorney had advised- the client to buy an outstanding claim in one Chapman. The client refused to buy it as he considered it of no consequence. Later the attorney was employed by another to procure the Chapman title for him; this he did. It was held that the later transaction was not invalid by reason of the attorney’s former employment.

In Webber v. Wannemaker, 39 Colo. 425 (89 Pac. 780), the relation of attorney and client had never existed between the parties. In Fisher v. McInerney, 137 Cal. 28 (69 Pac. 622, 92 Am. St. Rep. 68), the purchase was made with the consent of the client. In Rogers v. Gaston, 43 Minn. 189 (45 N. W. 427), the title was not acquired by the attorney until two years after his employment had ceased. And in Baker v. National Bank, 77 Iowa, 615 (42 N. W. 452), the attorney took the title in his own name to protect his client and held title as security for the amount paid by him. The client refused to repay him and it was held that he was justified in selling the premises to protect himself for the money advanced and that he might bid the property in himself and that he thereby acquired a good title. All of these cases it will readily be seen are distinguishable from the one before us.

In Taylor v. Young, 56 Mich. 285, this court had before it a similar situation to the case at bar. The sale was a judicial one and the premises were bid in in the name of complainant and her attorney who made the bid, he claiming an interest by way of lien for *257 his professional service. The gist of the holding is found in the following excerpt from the opinion:

“There can be no doubt that under the' purchase made by Draper, while acting as her attorney, whether the bid was in his or her name, the purchase was hers and not the attorney’s, and it was his duty to release the property to her, if bid off in his name, at any time she might request it, and in case he refused, it was optional with her to hold him as her trustee, and require him to account as such therefor, or compel him to convey to her.”

This holding is in accord with the uniform trend of authorities. A few quotations will, we think, show how firmly this rule is intrenched in the law.

“The purchase by an attorney of an interest in the thing in controversy in opposition to the title of his client is forbidden, because it places him under temptation to be unfaithful to his trust. Such a purchase is not voidable merely, but void absolutely. An attorney who has been employed professionally to sustain a title to land may not, either before or after the cause is ended, or during the continuance, or after the termination of the relation of counsel and client, while the client holds, or after he has conveyed his interest, purchase for himself any outstanding title; if he does, it may enure to the client or his vendee, who may recover the premises from the counsel by paying or tendering the amount of the purchase money with interest; and a purchaser from such counsel, with notice of the facts, is in the same situation.” Weeks on Attorneys at Law (2d Ed.), § 277.

“It can be safely stated as a sound and salutary legal principle that, so long as the relationship of client and attorney exists, the attorney is a trustee for his client in and about the cause or the subject thereof, and any trade that he makes or benefits he may derive, resulting from the litigation, will inure to the benefit of the client, the cestui que trust. This is a rule so wholesome and just that citation of authority is needless, and it would be difficult to find an authority holding *258 to the contrary.” Singo v. Brainard, 173 Ala. 64, 66 (55 South. 603).

“An unbroken line of authorities, both in England and in America, establishes beyond question the doctrine that when an attorney is entrusted with litigation, the conduct of proceedings or the management of any business in which he is under the slightest obligation to look after and protect the interests of others, he will not be permitted to derive therefrom any personal benefit which conflicts in the least degree with that obligation and the protection of those interests.” Crayton v. Spullock, 87 Ga. 326 (13 S. E. 561).

“That an attorney cannot himself purchase at judicial sale the property in litigation in which his client is concerned, and hold it to his own use without the consent of his client, is an elementary principle. If he so purchase, the client may at his election treat him as a trustee and enforce the trust. Motives are immaterial, and it is also immaterial whether the client actually lost or gained by the transaction. Such a purchase is contrary to public policy.” Olson v. Lamb, 56 Neb. 104, 114 (76 N. W. 433, 71 Am. St. Rep. 670).

“A solicitor can not secretly purchase the subject-matter in litigation, or any interest therein, and hold the same adversely to his client. Such a purchase is voidable as to his client.

“If he does so purchase, he will be held to be a trustee for his client as to the property or interest so purchased. The purchase of the subject-matter of litigation is forbidden as against public policy, and because it places the solicitor under temptation to be unfaithful to his trust.” Sutherland v. Reeve, 151 Ill. 384 (38 N. E. 130).

“The rules of law governing the transactions of an attorney with his client are most strict, and operate to protect the client from any advantage- that may be possessed by the attorney on account of superior knowledge or confidence reposed in him by the client. What the law does not consider unfair dealing between other parties, where no fiduciary relation exists, will frequently not be sustained as between attorney *259 and client. While the relation exists, an attorney is not permitted to take advantage of the client’s affairs, against his interest, to make money.

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Bluebook (online)
197 N.W. 535, 226 Mich. 253, 1924 Mich. LEXIS 517, Counsel Stack Legal Research, https://law.counselstack.com/opinion/oviatt-v-smith-mich-1924.