Lawall v. Groman

Opinion by

Mr. Justice Mitchell,

At the close of the plaintiff’s testimony defendant moved for a nonsuit on three grounds, 1, there was no evidence of the relation of attorney and client, 2, there was no evidence of negligence, fraud or collusion, and 3, there was no evidence of any damages sustained by the plaintiff. The court entered a non-suit, and in refusing to take it off dwelt principally upon the failure to establish the relation of attorney and client between the parties, but we must of course assume that all three of the grounds were considered.

The payment of a fee is the most usual and weighty item of evidence to establish the relationship of client and attorney, but it is by no means indispensable. The essential feature of the professional relation is the fact of employment to do something in the client’s behalf. There must be an agreement, express or implied, for compensation, but whether payment is made in part or in whole by retainer in advance is not material. Nor is it even indispensable that the compensation should be assumed by the client. Ordinarily it is so from the nature of the employment which in the vast majority of cases involves the guarding or enforcement of the client’s interest against an adverse one, and is therefore exclusive. But even adverse interests if to be amicably adjusted may be represented by the same counsel, though the cases in which this can be done are exceptional and never entirely free from danger of conflicting duties. In matters of the present kind it is not uncommon, in many places, including some at least of the counties of this state, for the same counsel to represent both borrower and lender, upon mortgage or similar securitjr, although the former only is expected to pay the fees. In Scholes v. Brook, 63 Law Times, N. S. 837, plaintiff had invested money on mortgage relying on the opinion of “ valuers,” and the property proving inadequate she sued the valuers for negligence. Romee, J., said: “No doubt in this case, as is common, the costs of Brook and Dansfield’s valuation were intended to be paid by the mortgagor, just as the costs of the solicitors employed by the mortgagee were expected to be paid by the mortgagor in the sense that they would be paid out of the money advanced; but that does not determine the relation between the parties. I am satisfied on the evidence that, as between Brook and Dansfield on the one hand and the plaintiff on the other, it was understood by both that Brook and Dansfield were advising the plaintiff, and' that the plaintiff was going to act in her capacity as mortgagee, on the footing and faith of their valuation and of their being her ad-visors. ... It was contemplated, according to what, as I said before, was a usual custom, that the costs' of the valuation, if the proposed loan was effected, should be borne ultimately by the mortgagor; but to my mind it is clear that Brook and Dansfield were asked to make the valuation, to their knowledge as valuers, on behalf of the mortgagee, not the mortgagor.” On appeal this was affirmed by the Lords Justices, 64 Law Timés, N. S. 674. So in Wittenbrock v. Parker, 102 Cal. 93, the custom was recognized, it being said, “ The burden cast upon the mortgagor of paying for the services of the attorney selected by Bithell (the mortgagee) to guard his interests, was simply a condition of the loan, and did not alter the status of such attorney or diminish the duty or responsibility which he owed to his employer.”

In the present case it is undeniable that the defendant Avas acting for Roberts the borrower, from whom he received his compensation, and to whom alone, upon the manifest understanding of all parties he was to look for it. But that fact does not of itself prevent the relation of attorney and client between plaintiff and defendant, if such was the mutual understanding. There was no evidence of custom in that respect, and the court below might not be able to say as matter of law, certainly we cannot, that such was in fact the custom. But outside of the existence of any general rule there was evidence from Avhich the jury might have inferred that such was the understanding of these parties in this particular case.

The defendant unquestionably acted to some extent for and in behalf of the plaintiff. After the money was paid over he kept the mortgage which was then the property of plaintiff, and he put it on record. In so doing he was clearly acting for plaintiff, and if he had negligently delayed recording until a subsequent judgment or other incumbrance slipped in ahead of it, there can be no question that he would have been liable for the negligent performance even of a duty voluntarily assumed. But there was evidence that he did more for plaintiff than put the mortgage on record. Lawall testified that lie told defendant “ to search the title and the records in reference to liens ” and that “ he said he Avould,” and more to the same effect. The presumption is that this was done in behalf of plaintiff. To Roberts, the borrower, the priority of other incumbrances was of no concern with regard to this loan, except as bearing on plaintiff’s willingness to advance the money, but to plaintiff it was a material fact as part of the inducement or consideration for risking the investment.

We are of opinion therefore that there was sufficient evidence to submit to the jury on the existence of the relation of attorney and client in the case.

But the nonsuit was also erroneous for another reason. Independent of the relation of attorney and client, there was evidence, already noticed, that defendant undertook certain duties for the plaintiff. The learned judge rightly says that collusion or fraud could not be found on the evidence in the case, but this does not exclude liability arising from negligence. The principle settled in Coggs v. Bernard, 1 Smith’s Lead. Cases, that one who undertakes to do, even without reward, is responsible for misfeasance, though not for nonfeasance, has been generally adopted. If therefore defendant, knowing that plaintiff was relying on Mm in his professional capacity to see that her mortgage was the first lien, although Roberts was to pay the fees, undertook to perform that duty, he was bound to do it with ordinary and reasonable skill and care in his profession, and would be liable for negligence in that respect.

The argument for the third ground of nonsuit, that it has not yet been shown that plaintiff has suffered any damage, would not be without force if the question were new, inasmuch as she took the mortgage as security only and the mortgagor when called upon may pay the debt, or the mortgage being sued out the property may bring enough to cover it. But the law is settled the other way. Plaintiff is entitled to the security she contracted for, and may recover the difference in value between that and what she actually got. The cause of action is the breach of duty, not the damages, which are only an incident. Miller v. Wilson, 24 Pa. 114, was very similar to the present case. The plaintiff had judgments which were a lien on certain real estate, and agreed with a purchaser of the latter to accept his bond secured by mortgage on the land. Defendant was employed as attorney to carry out the agreement, and in that capacity satisfied plaintiff’s judgments, but neglected to have the mortgage recorded until other judgments were entered ahead of it. In meeting the point now made, Chief Justice Black said, “ The argument is that plaintiff has not as yet suffered any actual loss from the defendant’s violation of duty; and that she can recover from Miller (defendant) only in case Carson (mortgagor) make default; because the mortgage being but a security for the bond there is nothing due on the former until the condition of the latter is broken. But we hold it for clear law that defendant .... subjected himself to an immediate action, in -which the plaintiff may recover compensation for all she has lost, and all she is likely to lose through his misconduct.”

The cases have usually arisen on the statute of limitations, and it has been uniformly held that the right of action is complete so that the statute begins to run from the breach, although the damage may not be known or may not in fact occur until afterwards. In Moore v. Juvenal, 92 Pa. 484, it is said by the present chief justice, “ Where the declaration alleges a breach of duty and a special consequential damage, the breach of duty and not the consequential damage is the cause of action, and the statute runs from the date of the former, and not from the time the special damage is revealed or becomes definite.” See also Lilly v. Boyd, 72 Ga. 83, citing our own case of Rhines v. Evans, 66 Pa. 192.

On the question of damages the plaintiff’s case was weak. The statement avers that the property is “ not worth more than twelve hundred dollars.” The witness Yeager thought it would be “ cheap at ten or twelve hundred dollars,” and Dr. Eegley, the owner of the first and second liens testified that the property had “ rather increased during the last two years.” That is about all there is on the subject. But although it is meager we cannot say that it is not enough to go to the jury. If they should find the security worthless, and the court in view of the fact that the verdict must necessarily be based largely on opinion on that point, should have any doubt on the subject, its powers are sufficient to prevent injustice to the defendant. In Green v. Dixon, 1 Jurist, 137, a similar action against an attorney for taking an insufficient security, Lord Abinger having indicated his opinion that plaintiff had made out a cause of action, a verdict was rendered for plaintiff for the amount advanced, he undertaking to convey the security taken to any one appointed by the defendant. The equity powers of courts even in suits at law in Pennsylvania are ample to protect the defendant in the same or equivalent manner.

The offer contained in the third assignment was clearly incompetent. There was no evidence, as the learned judge said, of collusion or fraud, and nothing to make the declarations of Roberts evidence against defendant.

The fourth assignment however must be sustained. The authority of Edgar Lawall from Ms sister to pay over the money was a fact to which he could testify. Though agency cannot be proved by declarations of the alleged agent yet he is a competent witness to prove it, and his testimony cannot be restricted to the mere words used by the principal, but is admissible generally on the whole subject.

Judgment reversed and procedendo awarded.