In Re the Estate of Montgomery , 272 N.Y. 323 ( 1936 )

The claimant, Everett K. Van Allen, as attorney, entered into a contract with Marguerite Montgomery, as executrix of the will of James H. Montgomery, deceased, to perform certain services in the settlement of the estate for the sum of $5,000. Prior to the execution of that contract, he had performed some services for the estate but without agreed compensation. Prior to the death of the testator, he had acted as his attorney and held an unliquidated claim against his estate for services rendered upon which he claimed to be entitled to recover over $10,000. After the death of the testator, the executrix had caused the claimant to prepare her will and she had named him as executor therein. She also allowed his claim at $10,000. The value of the estate was in excess of $600,000. It was made up of real estate holdings first and second mortgages, leases, etc., on property in Rochester. Concededly, it was a situation involving very much work on the part of an attorney. The executrix was an old lady and it is apparent that she was not the easiest kind of a client. She refused properly to co-operate with the attorney in the liquidation of the estate. When the claimant had performed about five-sixths of the services contracted to be performed, the executrix discharged him and secured another attorney.

The findings are that the contract was not terminated by mutual consent; that the executrix was not justified by the attorney's conduct or by the manner in which he performed his services in terminating the relation and that the discharge was without adequate cause. The Surrogate, as a conclusion of law, found that there was no breach of the contract by the executrix in terminating the contract.

At first it might seem that such conclusion of law is contrary to the finding of fact that the discharge was without adequate cause. It is, however, based on the ground that a client is permitted to discharge an attorney at any time without cause. In such a case the measure of recovery is based on the principle ofquantum meruit, and the attorney must be paid for the services rendered. The question is how much he must be paid and on what principle his compensation must be adjusted. (Matter of Dunn,205 N.Y. 398.)

On the other hand, an attorney who is discharged for sufficient cause has no right of recovery. (Holmes v. Evans, 129 N.Y. 140. )

In some jurisdictions the discharge of an attorney without cause gives the attorney a right of action for damages. (Martin v. Camp, 219 N.Y. 170, 175.)

In this jurisdiction we have adopted a different principle. Where an attorney engaged under a contract for a definite purpose and not under a general retainer is discharged without cause, he is entitled to recover on quantum meruit the fair and reasonable value of the services rendered, although the client is not compelled to pay damages as for breach of contract for exercising the right of discharge given by law. (Martin v.Camp, supra.)

In the case at bar the recovery allowed is upon the basis ofquantum meruit without regard to the contract price, and the question for determination is whether the right of the attorney to recover is limited by the contract price of $5,000.

Thus far it has been decided that the discharge of the attorney canceled and annulled the contract and that the contract having been canceled, it could not limit the amount of the recovery although it might be considered in fixing the amount of the reasonable value of the services rendered, the theory being that the cancellation could not be a half-way cancellation.

"It wholly stands or totally fails." (Matter of Tillman,259 N.Y. 133; Matter of Krooks, 257 N.Y. 329.)

Under that theory, the contract price does not constitute a limitation on the amount of an attorney's recovery, although its effect may be to enhance the amount the client may be compelled to pay and in a certain sense penalizes the client for exercising a privilege given by law to discharge an attorney at will regardless of cause.

We are committed to the quantum meruit rule without limitation to the contract price in cases where the client voluntarily discharges the attorney. If the termination of the contract is, however, involuntary, as by the death of or disability of an attorney before his specific contract is performed, recovery for services rendered is limited to the contract price. (Sargent v. McLeod, 209 N.Y. 360.)

In such cases it is said the contract comes to an end without default by either party; therefore, that recovery should be limited by the terms of the contract.

In the case at bar, however, the client has voluntarily canceled the contract. Why should the attorney be bound by the contract which the client has voluntarily canceled and is no longer bound by?

"After cancellation, its [contract] terms no longer serve to establish the sole standard for the attorney's compensation." (Matter of Tillman, 259 N.Y. 133.)

"The contract has been canceled and its terms cannot establish the standard for compensation." (Matter of Krooks, 257 N.Y. 329,332; Lurie v. New Amsterdam Casualty Co., 270 N.Y. 379.)

Matter of Snyder (190 N.Y. 66) is authority for holding that the attorney is not limited by the contract price. (Cf. 3 Williston on The Law of Contracts, p. 2595.)

The first impression that there is something wrong with a rule that allows an attorney to recover upon quantum meruit more than the contract price, although he has only performed in part, disappears in this case when it is considered that other elements entered into the agreement which induced the attorney to make a contract to perform the work for less than a reasonable fee.

The application of the rule will work both ways, sometimes in favor of a discharged attorney and at other times in favor of a client. In determining the amount of recovery, the learned Surrogate has considered those facts and also the fact that the contract fixed the price to be paid for the services to be rendered under it. The evidence fully justified the Surrogate in fixing the fair and reasonable value of the services rendered at the sum allowed claimant.

The order should be affirmed, with costs.