Lewis v. Morgan

• Decision Date: 23 September 1942
• Docket Number: 149/123.
• Parties: LEWIS et al. v. MORGAN et al.
• Court: New Jersey Court of Chancery

28 A.2d 215

132 N.J.Eq. 343

LEWIS et al.

v. MORGAN et al.

149/123.

Court of Chancery of New Jersey.

Sept. 23, 1942.

Syllabus by the Court.

1. The existence of a confidential relationship between an attorney and client has been recognized from the earliest times and the charges of an attorney are always subject to the scrutiny and review of this court.

2. Although the client expressly agreed to pay the specified fee, equity will investigate the fairness and reasonableness of the contract.

3. Courts of equity have inherent jurisdiction in all cases of fraud, and the enlargement of the powers of the common law courts to include cognizance of such cases did not displace the inherent jurisdiction of courts of equity.

4. In determining the propriety of assuming jurisdiction, the prior pendency of an action at law, the substantial right of jury trial, the adequacy and plenitude of the remedy at law and the special circumstances, if any, of the individual case are factors of primary significance.

5. Ordinarily and in the absence of some special agreement between them to the contrary, the executor or administrator who retains counsel to aid him in the administration of the estate becomes obligated in his individual and not in his representative capacity to pay for such services notwithstanding counsel was retained and his services were performed solely for the benefit of the administration of the estate.

6. In the present case, held: That a more comprehensive and dispositive adjudication of the rights and remedies of the parties can be had in this court; hence the action at law is restrained.

Suit by Charles Lewis, Jr., executor and trustee under the last will and testament of Charles Lewis, deceased, and others, against Kays R. Morgan, surviving member of the firm of J. Otto Rhome and Kays R. Morgan, late partners trading as Patterson, Rhome and Morgan, and others, to enjoin the prosecution of an action at law.

Order advised restraining prosecution of the action at law until final hearing.

Lester C. Leonard, of Asbury Park, for complainants.

William J. O'Hagan and J. Stanley Herbert, both of Asbury Park, for defendants.

JAYNE, Vice Chancellor.

The impending subject of consideration in this cause is the application of the complainants for an order restraining, pendente lite, the prosecution of an action at law.

It is evident that in April, 1942, Kays R. Morgan, the surviving member of the law firm practicing as Patterson, Rhome and Morgan, instituted an action in the Court of Common Pleas of Monmouth County in which he alleges that Charles Lewis, Jr. (the complainant in this cause), individually or in his representative capacity as executor under the will of Charles Lewis, deceased, is indebted to him in the sum of $15,800. In the action at law, it is averred that on August 15, 1935, Lewis, Jr., expressly promised and agreed to pay to Morgan or his firm the sum of $30,000 for professional services rendered and to be rendered for Lewis in matters appertaining to the administration of the decedent's estate; that the services were performed and that pursuant to the agreement Lewis has paid $14,200 and has declined to pay the subsisting indebtedness of $15,800. As executor, Lewis has already filed an answer to the complaint at law, but he has now individually and as executor united with other beneficiaries of the decedent's estate in filing the present bill.

Stated concisely, the bill relates the death of the testator, the qualification of the complainant Lewis as executor and the relationship of attorney and client between the firm of which Morgan was a member, and Lewis. It charges that in August, 1935, Morgan advised Lewis that payments for the professional services of the firm should be made periodically from the funds of the estate and a request for the immediate payment of $5,000 was made, whereupon Lewis sought merely to ascertain the estimated aggregate amount of such fees and Morgan informed him that the charges for legal services would not exceed $30,000. An express contract to pay this sum is denied by Lewis. However, it is averred that, heeding the instructions thus given him, Lewis disbursed from the funds of the estate to Morgan and his partner in all the sum of $14,400. On August 12, 1936, Mr Rhome died and it is alleged that thereafter Lewis experienced so much difficulty in obtaining consultative advice and instructions from Morgan that he was obliged to retain another attorney; that Morgan declined to aid in securing the approval of his fees by the Orphans' Court upon submission of the executor's account and ultimately instituted the action at law to recover additional compensation for services which, it is asserted, were of little value.

The following paragraph of the bill is expositive of the alleged grievance of the complainants:

"24. By reason of the premises complainants charge the said Kays R. Morgan, in gross abuse and violation of the confidential relation between attorney and client, has fraudulently attempted and is still pursuing the fraudulent attempt to withdraw from scrutiny of a court the taking by him and his firm of $14,400.00 from said estate without due notice to all parties in interest and without the approval of the court obtained in the customary manner; and in furtherance of such fraudulent scheme has deliberately and wrongfully sought to spell out of a natural and innocent inquiry by the executor as to what the estate would be expected to pay for legal services, an express contract to pay $30,000.00, on which he now attempts to sue."

The prayers of the bill are (1) that the defendants answer; (2) that the further prosecution of the pending action at law be restrained; (3) that the defendants account for the sum of $14,400 and "that an accounting be had to determine the amount justly earned by Rhome and Morgan for the services rendered by them."

At the argument, the defendant Morgan in his affidavit reasserted the existence of an express agreement which definitely specified the compensation he or his firm would receive for the services already rendered and thereafter to be rendered. Additionally it was proposed on his behalf (1) that the factual circumstances alleged in the bill are not sufficient to invoke the jurisdiction of this court, and (2) that the facts alleged do not warrant the withdrawal of the case from the court of law. No motion, however, is made to strike the bill.

The existence of a confidential relationship between an attorney and client has been recognized from the earliest times and it must now be acknowledged that the charges of an attorney are always subject to the scrutiny and review of this court. Brown v. Bulkley, 14 N.J.Eq. 451; Schomp v. Schenck, 40 N.J.L. 195, 29 Am.Rep. 219; Porter v. Bergen, 54 N.J.Eq. 405, 34 A. 1067; Kelley v. Schwinghammer, 78 N.J.Eq. 437, 79 A. 260; Raimondi v. Bianchi, 100 N.J.Eq. 448, 136 A. 320, reversed 102 N.J. Eq. 254, 140 A. 584; Grimm v. Franklin, 102 N.J.Eq. 198, 204, 140 A. 236. Although a client agreed to the estimated amount of the fee...