Palfy v. Rice

473 P.2d 606, 1970 Alas. LEXIS 157
CourtAlaska Supreme Court
DecidedAugust 14, 1970
Docket1095, 1114
StatusPublished
Cited by95 cases

This text of 473 P.2d 606 (Palfy v. Rice) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Palfy v. Rice, 473 P.2d 606, 1970 Alas. LEXIS 157 (Ala. 1970).

Opinion

OPINION

DIMOND, Justice.

Mrs. Fern Palfy brought this action against Julian Rice to recover $60,000, representing two $30,000 loans made by Mrs. Palfy to business enterprises represented by Rice. The case was tried by the court without a jury. Judgment was entered in Rice’s favor, and Mrs. Palfy brought this appeal.

A cross-appeal was taken by Rice, confined solely to the issue of the attorney’s fees allowed by the superior court.

The Trucking Loan.

In March 1962 Rice obtained from Mrs. Palfy a $30,000 loan for a trucking business, the Alaska Valdez Transport Company, 1 which Rice represented as the company’s attorney. A promissory note for that amount, together with interest, was given to Mrs. Palfy. It was signed by Tom Jatzeck, individually and as president of A.V.T. The loan was secured by a chattel mortgage on certain trucking equipment of A.V.T.

The business did not meet with success and the note was not paid. Mrs. Palfy commenced foreclosure proceedings with *608 respect to the chattel mortgage and later abandoned them. Subsequently, A.V.T. assigned to Mrs. Palfy its operating rights from the Interstate Commerce Commission and the Alaska Public Service Commission, and transferred certain of its property to Mrs. Palfy.

Mrs. Palfy sued Rice, rather than A.V.T., for the $30,000. The theory of her action was misrepresentation; she alleged that Rice, her attorney, had induced her to make the $30,000 loan by misrepresenting the solvency and financial condition of A.V.T. On this point the trial judge made these particular findings:

The Court further finds that the relationship of attorney and client between the Defendant Rice and the Plaintiffs is of no importance relating to the AVT transaction, since the Plaintiffs were fully advised that Defendant Rice represented AVT and because the loan in regard thereto was made to AVT, and was at the time of making of said loan and shortly thereafter fully secured by the documents hereinbefore referred to and the property of AVT. Furthermore, there was no evidence whatever of bad faith on the part of Defendant Rice and that Defendant received no personal benefit or gain from said loan as is evidenced by Exhibits LL and 000. The Court finds that Defendant made no untrue statements of fact to plaintiff. I find there was no fraud, deceit or misrepresentation on the part of the defendant in this action. The Plaintiff entered the transaction freely and with an understanding of the nature and extent of the financial problems AVT was having at the time. I find the Defendant acted fairly with AVT and the Plaintiff in all matters involved in this Count.
* * * * ⅜ ⅝
The Court further finds from the un-contradicted evidence that Mr. Rice did not act in a fiduciary relationship with the Plaintiffs and fully advised the Plaintiffs of his representation of AVT and did further fully advise the Plaintiffs that said AVT was in financial difficulty and that AVT needed money to pay current obligations and that said loan of $30,000.00 could be secured by the property and rights of AVT. The Court specifically finds that there is no evidence that the Defendant, Julian C. Rice, was aware of any fact contrary to the representations made to the Plaintiffs in connection with the loan of $30,000.00 to AVT and Thomas Jatzeck.

As to this aspect of the A.V.T. loan, Mrs. Palfy asserts that the trial judge erred in failing to reach the conclusion that the loan transaction was conducted in an attorney-client relationship, and in not finding that Rice, as Mrs. Palfy’s attorney, had breached his fiduciary duty of dealing with her with the utmost good faith and honesty.

We accept the legal proposition urged by Mrs. Palfy, that an attorney has a duty in dealing with his client to exercise the utmost good faith, integrity, fairness, and fidelity, and that business dealings between an attorney and his client are subject to close scrutiny by the courts when a client alleges a breach of the fiduciary relationship by the attorney. This is indeed the law. 2 The question here is whether an attorney-client relation existed between Mrs. Palfy and Rice with respect to the A.V.T. transaction and if so, whether Rice violated the standard of conduct expected of an attorney in these circumstances.

Rice acknowledged that between January 1960 and March 1962 he had done some legal work for Mrs. Palfy’s husband, such as handling real estate transactions and collections. He had also probated the estate of Mr. Palfy’s first wife and had advised him with regard to a tax assessment. At the time Rice obtained the $30,- *609 000 loan from Mrs. Palfy for the A.V.T. enterprise, he had in his possession a check in the amount of $30,000 from Dr. Weston, representing partial payment of a debt owing from Weston to the Palfys. Rice deposited Dr. Weston’s check, and Mrs. Palfy sent him another check for $30,000 as a loan for A.V.T. At the time Rice talked to Mrs. Palfy on the telephone about the $30,000 loan, he made it clear to her that he was representing A.V.T. Mrs. Palfy testified to this, as did Rice.

The findings of a trial court will not be disturbed on appeal unless they are clearly erroneous. 3 A finding is not clearly erroneous unless from a review of the entire record we are left with a “definite and firm conviction that a mistake has been made.” 4

Appellant in this case has failed to point out where the findings of the superior court are clearly erroneous, and our independent review of the record has not left us with a definite and firm conviction that a mistake has been made. Appellant points to evidence and testimony, particularly that of Mrs. Palfy, which could tend to show that Mrs. Palfy thought that Rice was acting as her attorney. However, there was other evidence, relied upon by the superior court in making its findings, tending to show that Rice was not acting as her attorney. This is exactly the type of situation in which the “clearly erroneous” rule is designed to operate. Where there is conflicting testimony, the trial court is in a better position than we are to evaluate and resolve the conflict in view of the trial court’s opportunity to hear and observe the witnesses in person and judge their credibility. We do not have this opportunity. That is why we shall not set aside a trial judge’s findings except when they are “clearly erroneous.” 5

In addition to finding that appellant and appellee were not in a fiduciary relationship, the superior court found that the presence or absence of a fiduciary relationship was not important, because appellee had made a full and fair disclosure of A.V.T.’s financial condition to appellant, and appellee acted fairly and in good faith throughout the transaction. Again, appellant has failed to point out where this finding of the superior court is clearly erroneous.

Appellee made it clear to Mrs. Palfy that he was representing A.V.T.

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Bluebook (online)
473 P.2d 606, 1970 Alas. LEXIS 157, Counsel Stack Legal Research, https://law.counselstack.com/opinion/palfy-v-rice-alaska-1970.