Rogers v. Marshall

Decision Date01 January 1882
Citation13 F. 59
PartiesROGERS v. MARSHALL and others.
CourtU.S. District Court — District of Colorado

Luther S. Dixon and W. B. Felker, for complainant.

John F Dillon, J. B. Henderson, Geo. W. Kretzinger, and N. A Cowdrey, for respondents.

McCRARY C. J.

This important case has been exhaustively reargued by eminent counsel upon a petition for rehearing, based (1) upon the record as it stood at the former hearing, and (2) upon alleged newly-discovered evidence. The questions raised, some of them now for the first time, have been carefully considered, and the conclusions reached are as follows 1. On the former hearing it was held, as will be seen by the opinion then announced, that an attorney at law cannot purchase from his client the subject-matter of litigation in which he is employed and acting, if, as a part of his negotiations for the purchase, he advises his client as to the probable outcome of the litigation, and its effect upon the value of the property he is seeking to purchase. Counsel for respondents, both upon the former hearing and upon the reargument, have insisted that such is not the law, and that if under such circumstances the attorney can show that he gave honest and sound advice concerning the pending litigation, and otherwise discharged the duties imposed upon him by fully disclosing all his knowledge of the value, etc the sale is valid. There are certainly some respectable authorities holding that a purchase by an attorney from his client of the subject-matter of the litigation pendente lite is void not only for champerty, but also on grounds of public policy. West v. Raymond, 21 Ind. 305; 4 Kent, Comm. (10th Ed.) 530; Simpson v. Lamb, 17 Com.B. 306; Hall v. Hallett, 1 Cox. 134; Wood v. Downes, 18 Ves. 120. I will assume, however, (without deciding,) that the rule is the other way, and that an attorney may purchase from his client the subject-matter of the suit in which he is employed and acting, provided before the negotiations are opened the relation of attorney and client is ended, or at least for the time being suspended, and the client placed in a position to deal with the attorney upon terms of perfect equality. It may be conceded that such is the rule, and still the doctrine heretofore announced in this case may be perfectly sound.

According to all the authorities, it is, at all events, clear that in order to uphold such a transaction the client must be placed in a position such as to enable him to deal with the attorney at arm's length, and upon terms of perfect equality. The relation of attorney and client must be, so far as the transaction of purchase and sale is concerned, dissolved and ended. In that transaction the attorney cannot act as such. If it becomes necessary or desirable for the client to be advised as to the nature of the pending litigation, and the danger to his title to be apprehended therefrom, as a means of determining the question of selling or of fixing the price, the attorney must decline to give him advice upon those points, and the client must employ other counsel, or act upon his own judgment. There is a plain and necessary distinction between the right of the attorney under such circumstances to give the client information touching the value of the property in the market, and his right to advise him upon the legal questions involved in the pending litigation. As to the former he and his client may be equally well advised, and when they are so advised they may stand on an equality and at arm's length; but as to the latter this is not so. The questions of law presented by a litigation in which the attorney has been employed are matters within his peculiar knowledge; he deals with them as an expert; they are frequently questions of a technical, and always a professional, character. They are often questions which go to the very root and marrow of the inquiry which the seller must make in determining the price at which he will sell. This is well illustrated by the present case, since it appears that Marshall, the attorney, was defending for the complainant and others certain suits involving the validity of her title, and which, if decided adversely to her, would have destroyed every vestige of her property in the mine. It follows, therefore, that to decide the question whether these suits were well grounded, or whether there was danger of a decision therein adverse to complainant, was to decide upon the question of the value of complainant's interest. To allow Marshall to advise her or her agent upon this question was to enable him to influence materially the fixing of the value of the property while negotiating for its purchase. The law will not permit an attorney to deal with his client in this way. Such dealing is manifestly against the policy of the law-- as much so as a purchase by a guardian from his ward, or that of a trustee from his cestui que trust. Such transactions are not held to be void upon the ground of intentional fraud, or proven bad faith, but because the relations of the parties are such that the one may make use of his position of power and influence over the other, or of his superior knowledge derived while in the employment of the other, to take an unfair advantage of him. The law, upon grounds of high public policy, seeks to destroy the temptation to abuse such opportunities, and therefore does not inquire whether the transaction was fraudulent or not. In such a case the attorney, by continuing to advise the client about the pending litigation, while at the same time negotiating for the purchase of the property in controversy in such litigation, confounds his position as attorney with that of purchaser, and, however honest he may be, the purchase is not permitted in any case.

'The general interests of justice requiring it to be destroyed in every instance, and no court is equal to the examination and ascertainment of the truth in much the greater number of cases. ' Hawley v. Cramer, 4 Cow. 737.

'Where fidelity is required, the law prohibits everything which presents a temptation to betray the trust. The orison which depreciates temptation is the offspring of infinite wisdom, and the rule of law in accordance with it rests upon most substantial foundations. ' Henry v. Raiman, 25 Pa.St. 359.

'Where the law creates fiduciary relations it seeks to prevent the abuse of confidence by insuring the disinterestedness of its agents. It holds the relations of judge and party, of buyer and seller, to be entirely inconsistent. The temptation to the abuse of power for selfish purposes is so great that nothing less than incapacity is effectual, and thus a disqualification is wrought by the mere necessity of the case. Fullness of price, absence of fraud, and fairness of purchase are not sufficient to countervail this rule of policy. To give it effect it is necessary to recognize a right in the former owner to set the sale aside in all cases on repayment of the money advanced. ' Armstrong v. Huston's Heirs, 8 Ohio, 554.

Upon this branch of the case, after full reconsideration of the question, I am constrained to adhere to the rule announced upon...

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5 cases
  • Neihart v. Buek
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • May 27, 1931
    ...572, 1 Am. St. Rep. 257; Keenan v. Scott, 64 W. Va. 137, 61 S. E. 806; Thomas v. Turner's Adm'r, 87 Va. 1, 12 S. E. 149, 668; Rogers v. Marshall (C. C.) 13 F. 59. See, also, Ridge v. Healy (C. C. A.) 251 F. 798, 805; Condit v. Blackwell, 22 N. J. Eq. 481; 6 Corpus Juris, 686; 3 Am. & Eng. E......
  • Beedle v. Crane
    • United States
    • Michigan Supreme Court
    • April 22, 1892
    ...477. This rule has been applied very strictly to transactions between attorney and client. Yeamans v. James, 27 Kan. 195; Rogers v. Marshall, 3 McCrary, 76, 13 F. 59; Baker v. Humphrey, 101 U.S. 494. While the death the client has been said to terminate the relation, (Works, Attys. at Law, ......
  • Egan v. Burnight
    • United States
    • South Dakota Supreme Court
    • October 26, 1914
    ...of all material facts known to himself. Dunn v. Record, 63 Me. 17; Arden v. Patterson, 5 Johns. Ch. [N. Y.] 44; Rogers v. Marshall [(C. C.) 13 F. 59] 3 McCrary, 4 Kent's Com., notes to, § 449; Weeks on Attorneys at Law, § 268, and notes. It has been been held by high authority that such tra......
  • Reber v. Gundy
    • United States
    • U.S. District Court — Western District of Pennsylvania
    • January 1, 1882
  • Request a trial to view additional results
1 books & journal articles
  • Legal Malpractice: a Brief History in Time
    • United States
    • Colorado Bar Association Colorado Lawyer No. 26-6, June 1997
    • Invalid date
    ...2 Colo.App. 70, 29 P. 1011 (1892). 5. McCafferty, supra, note 3. 6. Schmidt, supra, note 2; People v. Razatos, 636 P.2d 666 (Colo. 1981). 7. 13 F. 59, 3 McCrary 87 (1882). 8. 9 F. 721, 3 McCrary 76 (1881). 9. 795 P.2d 1357 (Colo.App. 1990). 10. 851 P.2d 192 (Colo.App. 1990). 11. Id. at 198.......

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