Crocheron v. Savage , 74 N.J. Eq. 629 ( 1908 )

Howell, V. C.

The law has placed rather close restrictions upon the dealings between two parties where one stands in a fiduciary relation: to the other. In the case of trustee and cestui que trust the restriction amounts to a prohibition. In the case of other fiduciary relationships the burden is cast upon the purchaser of showing that the bargain is, speaking generally, as good as any that could have been obtained by due diligence from any other purchaser. This rule applies to the relation of solicitor and client. Where a solicitor purchases from his client the property which is the subject-matter of the employment, the solicitor must show, in case the transaction is attacked, not only that the bargain is'.as good as could have been obtained by due diligence from other purchasers, but also that he gave his client all that reasonable advice against himself which his office of solicitor would have made it his duty to have given the client against, a third person, or, in other words, he must show that the client was duly informed, duly advised, and that the transaction was fair. In the absence of these requisites the court will set aside the purchase if completed, or refuse specific performance of the contract. In Edwards v. Meyrick, 2 Hare 60, Sir James Wigram, V. C., states the law to be that a solicitor is not under an actual incapacity to purchase from the client. “There is not in that case the positive incapacity which exists between a trustee and his cestui que trust, but the rule the court imposes is that inasmuch as the parties stand in a relation which gives or may give a solicitor an advantage over the client, the onus lies on the solicitor to prove that the transaction was fair.” Montesqueiu v. Sandys, 18 Ves. 302; Cane v. Allen, 2 Dow 289. The rule is expressed by Lord Eldon * * * to be that if the attorney will mix with the character oif attorney that of vendor'he shall, if the propriety of the transaction comes in question, manifest that he has given his client all that reason•able advice against himself that he would have given him against a third person. Gibson v. Jeyes, 6 Ves. 266. * * * In some cases as between trustees and cestui que trust the rule 'goes to the extent of creating a positive incapacity, the duties of the office of trustee requiring, on general principles, that that particular case should be so guarded. The case of solicitor and client is, however, different. * * * The nature of the proof which the court requires must depend upon the circumstances of each case according as they may have placed the attorney in a position in which his duties and his pecuniary interests were conflicting, or may have given him a knowledge which his client did not possess, or some influence or ascendency or other advantage over his client, or, notwithstanding the existence of the relation of attorney and client may have left the parties substantially at arms’ length and on an equal footing. Hatch v. Hatch, 9 Ves. 292; Welles v. Middleton, 1 Cox 112; Hunter v. Atkins, 3 Myl. & K. 113. See, also, Hugenin v. Baseley, 2 W. & T. L. C. 1156, and notes (at p. 1216).

It was held by the house of lords in Lewis v. Hillman, 3 H. L. Cas. 607, that in a case where an attorney was able to convince the court that- he had a right to- purchase from his client he must purchase openly, and if he purchased in the name of a third person as his, the attorney’s, trustee or agent, without disclosing the fact, the purchase was void. This case is mentioned for the reason that it appears that in the case in hand the defendant took title not in his own name, but in the name of his clerk, so that under the authority last cited the deed would be void if no disclosure of the name of the true purchaser was made. The defendant testifies that he made such a disclosure to the complainant at the time the deed was executed, and his statement in relation thereto is not denied by her. The point of the case of Lewis v. Hillman was that there the solicitors put forward their clerk as the real purchaser, when in fact the solicitor himself advanced the money and was the responsible vendee. Here no such fact exists.

The cases concerning this delicate relation between attorney and client are harmonious and of universal application. They have been adopted by the court of errors and appeals of this state in tile case of Dunn v. Dunn, 42 N. J. Eq. (15 Stew.) 431, and to the opinion, in that case of Mr. Justice Magie, after-wards chancellor, nothing can be added. Applying the rule to-the case in hand, we find that the defendant was not the general solicitor for the complainant, but acted with relation to the single matter above mentioned; that he kept the complainant fully informed of the progress of the negotiations which he was-carrying on with the railway company, and that she saw from time to time the letters written by the railway company’s officials to the defendant, and.- in particular did she see the letter of September 22d, 1903, written by Mr. Loomis to the defendant, in which he sa}rs that he is advised that the railway company is not disposed to regard this'tract of land of any signal value, or to make any substantial offer for the complainant’s interest, if she has any, which seemed doubtful; that he was willing, however, in order to close the discussion and avoid expense to pay the complainant $100 for a quit claim to the company of any alleged interest in the property.

At the interview which resulted in the execution of the deed by the complainant-to- the defendant, the only subject that was-pointedly discussed was the question whether the railway company had offered more than $100 for the land in question. I have been unable to find any" fact in the case which was kept from the complainant. When she executed the deed she and hex-son, who was her adviser, knew as xixuch about the situation, location, value, salability and prospects of the property as did the defendant. It was within sight of her home, and there were-annually more or less transactions to bring it to her attention. A perusal of her own testimony shows that she had perfect knowledge of the sitxxatioix. It is significant that the complainant aixd her son tell the same story practically], as does the defendant, about the interview of Januax-y 3d, 1906, when the-, deed was executed, and likewise significant that after the proposition had been made by the defendant to purchase the land the-complainant axxd her son adjourned to another room to confer about the matter. I therefore think that the defendaxxt had put himself in such a. situation! as to qualify him to become a purchaser of the land ixi question, provided the price was fair. There was no testimony in the case on behalf of the complainant touching the value of the land which-can be relied upon as evidence of its present market value. In fact, it-would be difficult to ascertain the market value of a'piece-of land which was accessible onh- by boat, and admitted on all hands to be of little or no value to anybody except the railroad company. There was some conversation between the defendant and the railway officials, in which rather large values were mentioned, but these conversations took placé after the deed had been executed by the complainant to the defendant, and were quoted b_y the railway officials and the defendant in negotiations between the railroad company and the defendant for the partition of this land and the straightening of lines between his property and its property in other locations. I do not think that the valuations so discussed could be relied upon as any safe criterion of the present market value of the .property. There was no evidence of sales in the neighborhood, nor any direct evidence by experts of the actual market value.

There will therefore be a decree for the defendant.