Schulder v. Dickson , 66 Utah 418 ( 1926 )

This case was first argued in this court at the 1924 October term. An opinion was thereafter rendered. A petition for rehearing was filed. The members of the court concurring in the opinion, after further consideration of the case and of the arguments in the petition for rehearing, concluded that the law applicable to the facts appearing in the record did not support or justify the conclusions reached in the original opinion; nor does the record support in its entirety the statement of facts made in that opinion. A rehearing was therefore granted, and the cause was again orally argued at the February term, 1925. Since the date of the reargument and resubmission, we have again gone over the record and carefully considered the same. We are now firmly convinced that the court's former opinion should not stand as the judgment in the case. It will for that reason not be published, and this opinion instead will be filed and published officially.

This is an action for an accounting instituted by respondent, plaintiff below. An accounting is sought of the affairs of the partnership theretofore existing between respondent and appellants, William H. Dickson and Adrian C. Ellis, Jr., defendants below. Subsequent to the taking of testimony and prior to the entry of judgment, Dickson died. The executor of his estate was thereafter substituted as defendant. The trial court rendered judgment in favor of respondent. Motion for new trial was denied. The case is here on appeal taken jointly by Ellis personally and by Ellis as executor of Dickson's estate.

The proceeding is one in equity. The assignments assail practically each and all of the trial court's findings. We are asked, and it is our duty, to review the record and determine whether the court's findings are supported by the weight of evidence and, if supported, whether the conclusions of law are supported by the findings.

The following facts appear in the record: In the year 1895, William H. Dickson, Adrian C. Ellis, Sr., and Adrian C. Ellis, Jr., formed a partnership for the general practice of law in Salt Lake City, Utah, under the firm name of Dickson, Ellis Ellis. Judge Dickson and Ellis, Sr., were then lawyers of many years experience. In 1903 respondent married Judge 1 Dickson's daughter. Upon the request of Judge Dickson, respondent was admitted as a member of the partnership. The firm was thereafter known and styled Dickson, Ellis, Ellis Schulder. That partnership continued until 1912. In that year Ellis, Sr., passed away. The surviving members thereupon organized a new firm under the name of Dickson, Ellis Schulder. In their new firm the division of fees was three-eighths to Dickson, three-eighths to Ellis, Jr., and two-eighths to Schulder. This action is to recover respondent's pro rata share under this partnership agreement of certain fees claimed to have been received by appellants. The fees in controversy were for services rendered in litigation claimed by respondent to have been pending business at the date of the dissolution of the partnership.

The firm of Dickson, Ellis Schulder continued until July 1, 1916. Upon that date Judge Dickson retired, and at the date of his retirement announced to the other members of the firm that he expected to receive his pro rata share of the retainers of the firm until January 1, 1917, and also that he would expect to receive his pro rata share of all amounts received from business or litigation then pending in which the firm was interested whenever such business or litigation was finally terminated. Neither respondent nor Ellis desired Judge Dickson to withdraw from the firm, but, at the latter's request, acquiesced in such arrangement. It was evidently contemplated at that time that Schulder and Ellis would continue in the practice of law at the same offices then occupied by the firm and would devote such efforts and time as were required to wind up the business of the old firm. In November, 1916, a partnership agreement was made between Ellis and Schulder, by the terms of which they engaged in the practice of law under the firm name of Ellis Schulder. That partnership arrangement continued till June 9, 1917. At that time Ellis advised Schulder that he would not continue the relationship and advised him that he (Ellis) would move away from the offices occupied by the firm and let Schulder retain them, or that he would retain the offices and Schulder could remove therefrom. Schulder demurred to the termination of the partnership, but was advised by Ellis that the partnership relation would cease. Ellis also advised Schulder at that time that he (Schulder) would receive his pro rata share of the retainers until July 1st; that Schulder was at liberty to take as much of the business of the firm as he could take, including retainers, and that he (Ellis) would do likewise; that there would be no division of fees after July 1st. The retired member of the old firm, Judge Dickson, was not a party to this new agreement between Ellis and Schulder, and he stated in his testimony that he did not know of the arrangement for some years afterwards.

At the beginning of the trial in the district court, there was introduced in evidence a statement of the cases pending at the time of the withdrawal of Judge Dickson from the firm. This statement is known as "Plaintiff's Exhibit 1." It contains 12 items and gives amounts and dates of payments as well as the division made of such payments. All of the amount in controversy were fees received by appellants subsequent to the date of the termination of the partnership of Ellis Schulder. The services for which these fees were received, with possibly one or two exceptions, were rendered after Ellis and Schulder had ceased to be partners. The district court took the view that respondent was entitled to such share of those fees as he would have been entitled to had the partnership continued. In other words, that he should receive his one-fourth notwithstanding the dates when collections were made and notwithstanding respondent rendered no services in the litigation after July 1, 1917, out of which those fees were received. It should be stated that respondent Schulder, after the termination of the partnership of Ellis Schulder, stated to Mr. Ellis that he would be glad to devote any time and render any services necessary in concluding the old partnership business. He was not, however, requested to, nor did he, render any services in the cases pending except in one or two. In these cases he was requested so to do by the clients. Respondent had received prior to the institution of this action his pro rata share under the partnership agreement of approximately $27,500 fees received by appellants for business pending in the office at the time of the withdrawal of the senior member, Dickson.

The trial court, among other things, found the fact of the organization of the partnership in 1912 between respondent and appellants for the practice of law in Salt Lake City, and also found the agreed division of fees by each party; that the partnership continued from the date of its organization till July 1, 1916; and that during all of that time the said partnership carried on and conducted a general practice of law as a firm with offices at Salt Lake City and divided the net returns of the business according to the agreement of partnership. In its fourth finding the court found that on July 1, 1916, Judge Dickson, one of the firm, requested the dissolution of the firm and that the firm was thereupon dissolved "upon an agreement then made between said Schulder, the said Ellis and the said Dickson; that said agreement was in substance to the effect that all pending and unfinished business belonging to the firm should be wound up and completed by said three parties, and that the fees and moneys received as such for services rendered by said parties in the finishing and completion of said business should be divided in accordance with the then existing partnership agreement, namely, three-eighths to said Dickson, three-eighths to said Ellis, and two-eighths to the plaintiff herein, and that all of the then members of the firm agreed and recognized that the then pending business should be divided upon such 2 basis." That finding of the court, in our judgment, is supported by practically the uncontradicted evidence in the case, not so much from what was said at the time of the dissolution as from the conduct and acts of the parties following the dissolution. It appears without dispute that for a year after the dissolution the members of the partnership occupied the same offices occupied by them prior to the dissolution; that they devoted their time and attention to the winding up of all of the pending business and divided all fees received in conformity with the partnership agreement. Furthermore, after the dissolution of the firm of Ellis Schulder in July, 1917, the fees collected for services rendered in connection with the pending unfinished business were so divided.

The court's finding (and, as indicated, that finding is supported by the record) is that the agreement related to the then "pending business." It is therefore necessary to inquire and determine just what was intended by "pending business." Pending business was of necessity limited to the partnership employment then actually in force. In other words, the termination of the employment of the partnership then existing respecting any business or litigation did necessarily end the partnership's relation to such business. The partnership had ceased to exist except in so far as it related to the pending business. If the services for which the partnership was employed terminated, then, of necessity, it would seem, the business was no longer "pending" so far as the partnership was concerned.

As has been pointed out, at the beginning of the trial an agreed statement was introduced in evidence known as Plaintiff's Exhibit 1, which contained all of the items in dispute, 12 in number, and for which respondent seeks to recover part of the fees received. The court found that each of those items was pending business at the date of the dissolution in July, 1916, and that any work or service rendered in each or all of those actions subsequent to the dissolution was for and in the interest of the partnership and upon pending or unfinished business, and determined as a matter of law that respondent was entitled to his pro rata share of the fees received for such services. The findings of the court on 11 of the 12 items included in the statement are sufficiently supported by the record to preclude us from disturbing such findings. The remaining item or amount in controversy, known as item No. 5 and designated "Silver King-Conkling" Case, presents a more serious question.

There is no testimony in the record tending to show what arrangements or agreements were made between the partnership and its clients respecting any of the litigation involved in the items shown on Plaintiff's Exhibit 1. It only appears that the partnership was acting as attorneys for those several litigants under an employment the terms of which are not shown in the record. The history of the "Silver King-Conkling" Case, in which the partnership represented the Silver King Coalition Mining Company, is that the litigation in that case extended over a period of years and it was by the court so found. The case had been pending in the courts since the year 1909. The action was for an accounting for the value of ore alleged to have been taken by the Silver King Coalition Mining Company from grounds belonging to the complainant in that action. The case was tried in the federal District Court of Utah in the year 1912 and resulted in a judgment in favor of the mining company. An appeal from that judgment was taken to the Circuit Court of Appeals (230 F. 553), and there the judgment was reversed and the cause remanded, with directions to take an accounting between the parties. Some effort was made to obtain a review by the Supreme Court of the United States of this decision of the Circuit Court. That effort failed. The cause was remanded to the federal District Court of Utah, and an accounting was had in or about the month of June, 1917, and a judgment for a large sum was rendered against the mining company. The cause was again taken to the Circuit Court of Appeals, where the judgment of the federal District Court of Utah was affirmed and an additional amount added to the judgment of the District Court. This second judgment of the Circuit Court of Appeals was rendered in the year 1919. 255 F. 740, 167 C.C.A. 86. All the services connected with the accounting, the appeal to the Circuit Court, and the hearing in that court were performed and rendered by appellant Dickson or appellant Ellis, or by both jointly. At that stage of the litigation the officers of the Silver King Coalition Mining Company were desirous of compromising the judgment, settling the controversy, and stopping further expense in litigation. For that purpose they requested Messrs. Dickson and Ellis, as well as other and additional counsel employed by them in the case, to render statements for all services rendered to date. These statements were rendered and the amount thereof was paid in full. Respondent received his pro rata share of the fee paid to appellants at that time. The effort to compromise the judgment affirmed by the Circuit Court failed, and the appellants, with the other attorneys in the case, were instructed by the officers of the Silver King Coalition Mining Company to make an effort to have the case reviewed by the Supreme Court of the United States. That effort was made and it was successful, and ultimately, in the year 1921, resulted in the reversal of the judgment of the Circuit Court and the affirmance of the judgment of the federal District Court of Utah rendered in 1912. 41 S. Ct. 310, 426,255 U.S. 151, 65 L. Ed. 561. The item in controversy here is the amount claimed to have been received by appellants for services rendered in obtaining the review of the judgment of the Circuit Court of Appeals and final reversal of the same.

It is earnestly contended on behalf of appellants that the employment existing at the time of the dissolution of the partnership in this litigation terminated at the time of the affirmance of the judgment on the second appeal by the Circuit Court of Appeals; that the subsequent services rendered by appellants were under a new employment, and consequently that part of their work was upon business not pending at the date of the dissolution of the partnership. As indicated, the record is silent as to the agreement of employment at the time the firm undertook the defense of the action. The testimony of respondent is to the effect that this business came into the office about the year 1909. The most that can be said is that the employment was to defend the action brought against the firm's client without limitation as to duration or suggestion as to when the employment might cease. In its eleventh finding, respecting the work and services rendered in the Supreme Court of the United States in procuring the writ of certiorari, the court found that —

"This work in the United States Supreme Court, and the work incident thereto, was a continuation of the work of the firm of Dickson, Ellis Schulder; that the work done in the United States Supreme Court was not done pursuant to any new employment but was done in carrying out and performing the obligations of the original employment; that the result of all the work theretofore done was marshaled and used in performing the services rendered in the United States Supreme Court."

Does the evidence support the above finding, namely, that the work done, etc., was pursuant to and a part of the original employment?

It quite conclusively appears from the testimony of Mr. W.W. Armstrong and that of Mr. W. Mont Ferry, president and vice president, respectively, of the mining company, at the date of the affirmance of the judgment by the Circuit Court, that Schulder was not employed by that company to represent it in this litigation. Mr. Armstrong testified, quoting from the abstract:

"Mr. Schulder was not employed in any way by the Silver King company while I was director, on the executive committee, or president, to my knowledge."

The same witness further testified, again quoting from the abstract:

"To the best of my knowledge, no steps were taken to apply for the writ of certiorari until after the proposed settlement fell through. There were certain arrangements made with Mr. Ellis as chief counsel, if I am not mistaken, in the matter of arranging to apply for a writ of certiorari, to employ associate counsel, and Mr. Marioneaux and a man whose name I cannot recall, I think it was Judge Lindley, but I know we wished Mr. Ellis to be chief counsel and I can distinctly recall Mr. Marioneaux. We wished Mr. Ellis for chief counsel in all company matters."

This witness, however, testified on cross-examination (further quoting from the abstract) as follows:

"At the present time I have no official connection with the company. During all the time that I was a director I think Mr. Ellis was acting as attorney for the company. I was a director until after the decease of Thomas Kearns. From the time I was elected president I made arrangements with Mr. McCormick that we should cut down our legal expenses and confine it as far as possible to one firm. I understood that firm had been attorneys for the company for a great many years. I didn't understand that we were getting any new attorneys in confining our attention to this one firm. I would say we just continued relationship with that firm and cut off some other legal expenses. I have been intimately connected with and known the Silver King Coalition Mines Company ever since I went to Park City in 1889. I know that the firm of Dickson, Ellis, Ellis Schulder were attorneys for that company from the time it was organized and to the best of my knowledge and belief continue such to this day. I had nothing to do with the payment of the final fee in the Silver King-Conkling case. I had nothing to do with the settlement made by the company, after the final decision of the Supreme Court, with Mr. Ellis or Mr. Dickson. I know nothing about that."

Mr. Ferry testified, again quoting from the abstract:

"The committee of which I was a member did attempt to negotiate with the representatives of the Conkling Mining Company for a settlement which failed. I had nothing to do with the first negotiations for a settlement. I refer to the second. There had been prior negotiations during the incumbency of Mr. Armstrong as president. I had nothing to do with those. As a member of the executive committee and as a director some action was taken at the instance of the president of the company looking to the employment of attorneys for application to the United States Supreme Court for a writ of certiorari, the second. Those attorneys were Dickson, Ellis Lucas and subsequently Mr. Marioneaux. No others were employed at that time. I think there is a minute on the records which shows that happened the latter part of 1918. Mr. Schulder was not employed by the company."

There is no claim that respondent ever rendered any assistance in the services performed by appellants in the application for review to the Supreme Court of the United States or in the argument of the case before that court. If therefore the respondent is entitled to share in the fee received for such services, it must be, and can only be, by reason of his former relationship with the appellants as a member of the firm of Dickson, Ellis Schulder. Resort must therefore be had to the rules of law governing the employment of attorneys and the extent of that employment under the facts found by the court and as enumerated herein in order to determine whether the service rendered for the fee in controversy was for business pending at the date of the dissolution of the firm.

In Berthold v. Fox, 21 Minn. at page 53, the court says:

"At common law, the authority of an attorney to represent his client in an action ceased upon the entry of judgment; but for a year and a day thereafter he had authority to act for his client in enforcing the judgment by execution, etc. * * * But neither the common law nor any statute continues after judgment the authority of the attorney for the defeated party, the judgment debtor, or the defendant in the judgment, as he is aptly styled. * * * But after judgment, unless the defendant, by appeal or otherwise, seeks a reversal or modification thereof, or a stay of proceedings thereon, no reason is apparent why he should be represented by attorney, or why the authority of his attorney in the action should be presumed to continue. All that remains to be done in the action is the enforcing of the judgment. * * * But assuming that the retainer of the plaintiff's attorney continues indefinitely until the fruits of the judgment are realized by his client, there is no reason for presuming that the defeated party continues the employment of an attorney, for whose services he can expect to have no use, there being nothing left to be done on his part but to satisfy the judgment, or show upon a supplementary examination his inability to do so. Of course, where the defendant's former attorney, or any other, takes any proceeding in his behalf, the attorney's authority is presumed, as well after judgment as before. And the defendant may employ a new attorney to prosecute a writ of error, without a formal substitution or notice."

In Hooker v. Village of Brandon, 75 Wis. 17, 43 N.W. at page 744, the court says:

"We think, upon authority and principle, an employment to defend an action pending in a trial court does not, under ordinary circumstances, authorize such attorney to take an appeal to a higher court from the judgment rendered against his client. Public policy and the rights of litigants require that their attorneys in such case, especially where they have easy access to their clients, should first consult their wishes upon the question of taking an appeal from the judgment rendered against them in the trial court before incurring further expenses in such litigation. Any other rule would authorize an over-confident attorney to inflict unnecessary costs upon his client in a case when the client was entirely satisfied to abide the judgment of the trial court." Citing cases.

The first headnote to Tobler v. Nevitt, 45 Colo. 231,100 P. 416, 23 L.R.A. (N.S.) 702, 132 Am. St. Rep. 142, 16 Ann. Cas. 925, is:

"At common law the general rule is that the authority of an attorney to represent his client in an action ceases upon its final determination and the entry of judgment, especially as to the attorney of the defeated party; the attorney of the successful party being empowered under his employment to enforce collection of the judgment by suing out a writ of execution."

The second headnote to Delaney v. Husband,64 N.J. Law, 275, 45 A. 265, is:

"A retainer to prosecute a suit does not of itself constitute a retainer to bring a writ of error to reverse a judgment rendered in that suit."

The holding of this court is in harmony with the foregoing authorities. In Sandall v. Sandall, 57 Utah, 150, 193 P. 1093, 15 A.L.R. 620, this court quotes as a correct statement of the law the following from 6 C.J. p. 672, § 184:

"It is always a presumption that an attorney is employed to conduct the litigation to judgment, and no further; the relation of attorney and client and the general powers of the attorney cease upon the rendition and entry of the judgment. There is a distinction in this connection, however, between cases in which the attorney is retained to represent plaintiff, and those in which he represents defendant; in the latter case, the entry of final judgment always terminates the relation and the attorney's authority. * * *"

The employment of the partnership by the Silver King Coalition Mining Company was a general employment for the defense of the action, and the extent of such employment was not fixed by the terms of the contract, and by reason thereof such employment is, and must be, controlled, in so far as its termination is concerned, by the rules of law applicable to such state of facts. Considering the fact that at the termination of the action in the Circuit Court of Appeals, and the affirmance of the judgment against the partnership client, the attorneys were called upon by their client to render a bill in full for their services to date, and that such bill was tendered and paid; and in further consideration of the testimony of the president and the vice president of the mining company that the respondent was not employed by that company for services in the Supreme Court of the United States — we can see no escape from the conclusion that the finding of the trial court, that such services rendered were a continuation of the former employment, is not supported by the weight of the evidence. On the contrary, the evidence supports the contention or claim of appellants that the services rendered in the Supreme Court of the United States were under a new employment and were not a part of the original 3 employment of the partnership. In our judgment it is quite conclusive under the authorities that if the appellants, acting individually or as members of the firm of Dickson, Ellis Schulder, had refused to go forward with the efforts to have the judgment of the Circuit Court of Appeals reviewed, neither the appellants personally nor appellants and respondent as members of that firm would have been answerable for breach of contract. It is likewise conclusive, in our judgment, that if the mining company had been so minded as to employ other counsel and not re-employ appellants, or appellants and respondent, it could have done so without even consulting appellants individually or as members of the firm of Dickson, Ellis Schulder, and that the mining company would not have been guilty of breach of contract in so doing. The contention, based upon the cross-examination of Mr. Armstrong, that the old firm of Dickson, Ellis, Ellis Schulder had been from the organization of the mining company and still were its attorneys, in the light of admitted facts, cannot aid the respondent. The firm of Dickson, Ellis, Ellis Schulder terminated in 1912 by the death of Ellis, Sr. The firm of Dickson, Ellis Schulder terminated by agreement in 1916. The record discloses that the name of the respondent, or of the firm of Dickson, Ellis Schulder, does not appear on the record of the proceedings in the United States Supreme Court. It does not appear that at any time during that litigation the officers of the mining company consulted respondent in relation to this litigation. The respondent must therefore, as elsewhere pointed out, rely solely for support of his claim or contention that the efforts made by the appellants to have the judgment of the Circuit Court reviewed were rendered as part of the employment of the firm at the date of the termination of the partnership. The proven facts do not warrant that claim or contention.

A statement made by Judge Dickson in a letter written to respondent March 14, 1919, is relied upon as showing a recognition on his part that respondent is entitled to share in the fee received for services rendered in the Supreme Court of the United States. In this letter, following reference to certain other litigation and the fee received therefor and of which respondent had had his portion, it is stated:

"The only other business that I know of in which I may have aught to do, which was pending in the office at the time of my retirement from the firm, is the case of the Conkling Mining Company v. Silver King. The attorneys for the Silver King Company may apply to the Supreme Court for a writ of certiorari. If the writ is granted and I argue the case in that court, you will receive one-fourth and the fees therein."

This statement seems to have had some weight with the trial court in making its findings. The reasons that induced Judge Dickson to make the statement are fully explained in his testimony. No good purpose could or would be accomplished by stating those reasons here. It is sufficient to say that the reasons that impelled the statement did not exist at the time of the institution of this action or at the time of the trial. The promise, if it be a promise, contained in 4 that letter, was without any present consideration, and unless the appellants were under a legal obligation to pay respondent part of the fees mentioned the letter would not and could not be binding on appellants. If statements in letters are to weigh in determining the rights of the parties, then the respondent should not make any claim for any part of the fees, enumerated in item No. 5 on Plaintiff's Exhibit 1, received by Judge Dickson. In a letter dated July 10, 1919, written by respondent in reply to the one of March 14th, respondent says:

"Both you and Mr. Ellis, however, stated to me that I would receive my part of the fees received from pending business, and Mr. Ellis did state that he would not give me any part or portion of the retainers received after I left, but so far as you personally are concerned, you need not send me any part or portion of any fees you may receive hereafter for services rendered by you individually in connection with such old business."

We regard the statements made in each of these letters as not being founded upon any consideration and wholly without probative value in determining the rights of the parties.

It may be contended that if the rule of law as to the termination of employment operated to end the employment upon the affirmance of the judgment by the Circuit Court of Appeals, by parity of reasoning the original employment of the partnership ceased at the date of the entry of judgment in the federal District Court upon the accounting. It is sufficient to say in that regard that no such claim or contention is made by appellants. The fees received for services rendered in the accounting and for services rendered on the second appeal in the Circuit Court of Appeals were treated by appellants as part of the original employment, and they accounted to respondent for his share under the old partnership agreement. By such acts the appellants have affirmatively recognized that the services rendered up to and including the affirmance by the Circuit Court of Appeals were a part of the firm's original employment and that respondent is legally entitled to receive his pro rata share of any fees received for such services.

The court made this additional finding:

"The court further finds that in fixing the fees for the United States Court work in said cause Dickson and Ellis took into consideration the amount of the fees theretofore received by them when they were unsuccessful and that the $40,000 fee charged was to cover not only services rendered in the United States Supreme Court but other services theretofore performed for which an adequate fee had not been paid when the firm representing said company was unsuccessful in the lower courts."

That finding, in our judgment, has support in the evidence. It is reasonably deducible from the history of the litigation. Whatever part or portion of that fee was for services rendered by appellants prior to the affirmance of the judgment by the Circuit Court of Appeals the respondent is entitled to his pro rata share. The court made no finding as to the value of the services rendered by appellants subsequent to the affirmance of the judgment by the Circuit Court of Appeals, and there is not sufficient data in the record from which the court could make such a finding. In order, therefore, that 5 complete justice be done between these parties, it will be necessary for the trial court to take additional testimony and determine the value of the services rendered by appellants subsequent to the affirmance of the judgment by the Circuit Court of Appeals and to credit appellants with such amount, if the court finds the value of such services to be less than the fee actually rendered, to enter judgment in favor of respondent for his pro rata share of the difference under the old partnership agreement.

The judgment of the trial court respecting all of the items on Plaintiff's Exhibit 1 save only item No. 5 thereof is affirmed. The judgment as to said item No. 5 is reversed, and the cause remanded to the district court of Salt Lake county, with directions to proceed in conformity with the views herein expressed. Costs on appeal will be equally divided between the parties.