Theuerkauf v. Sutton

• Decision Date: 02 June 1981
• Docket Number: No. 79-1716,79-1716
• Parties: Roy W. THEUERKAUF, Plaintiff-Appellant, v. Robert E. SUTTON, Defendant-Respondent-Petitioner.
• Court: Wisconsin Supreme Court

Page 651

306 N.W.2d 651

102 Wis.2d 176

Roy W. THEUERKAUF, Plaintiff-Appellant, v. Robert E. SUTTON, Defendant-Respondent-Petitioner.

No. 79-1716.

Supreme Court of Wisconsin.

Argued April 27, 1981.

Decided June 2, 1981.

Walter F. Kelly, Milwaukee, for respondent-petitioner.

Harry W. Theuerkauf, Milwaukee, for appellant.

COFFEY, Justice.

This is a review of a decision of the court of appeals reversing a judgment of the circuit court for Milwaukee county, the Hon. PATRICK J. MADDEN, presiding.

This case involves the question of an attorney's personal contractual liability for the cost of professional accounting services requested by the attorney in the preparation of his clients' (attorney's) cases. The attorney neither expressly promised to pay for such services, nor expressly disclaimed responsibility for payment and the record establishes that at the time the services were requested, neither party said anything as to whom the accountant was to look for payment.

The plaintiff in this case, Roy W. Theuerkauf, a certified public accountant, filed a small claims action on June 14, 1979, pursuant to ch. 799, Stats., against the defendant-attorney, Robert E. Sutton, for fees totaling $800 for accounting services he rendered in three divorce cases for Sutton. The complaint alleged that such services were performed "at the special instance and request of the defendant, ... (and) at agreed upon prices, which defendant agreed to pay." Sutton filed a written answer denying the allegations in the complaint and the case was tried to the court.

At trial, Theuerkauf testified that his first business contacts with Sutton involved preparing Sutton's personal income tax returns and "law practice payroll tax returns." He stated that from 1974 through 1978, Sutton personally asked him to review the value of the marital estates of at least eight of Sutton's divorce clients. In each case, Theuerkauf was always personally contacted by Sutton and requested to "prepare a property division which would produce the least amount of tax to both parties involved." ¹ Theuerkauf performed the requested work and, in each case, sent his bills directly to Attorney Sutton. All of Theuerkauf's services were billed to Sutton and paid in full, except the three cases in issue.

The three bills not paid in full form the basis for this suit and involve the services performed in the Sims, Klatt and Erdell divorces. The billings in these cases, as in all the previous cases, were sent directly to Sutton and captioned as follows:

"IN ACCOUNT WITH:

Mr. Robert E. Sutton

Attorney at Law

1409 E. Capitol Drive

Milwaukee, Wis. 53211"

Each bill contained a reference to the particular divorce action as well as a description of the services rendered and the total charge. ² We note that the first four words in the description of services set forth in the bill sent to Sutton in the Klatt case read, "Meeting with your (Sutton's) client...." (Emphasis supplied.) After periods ranging from three to seven months had elapsed and the bills sent to Sutton remained unpaid, Theuerkauf contacted Sutton and reminded him of the outstanding balances due and owing. ³ Shortly after Theuerkauf had sent Sutton a third reminder of the bill for services rendered in connection with the Erdell case, he (Theuerkauf) received Erdell's personal check for $100 in payment for the same, but Theuerkauf, at trial, did not remember whether the check was sent directly to him or forwarded through Sutton. There is no evidence in the record indicating that Theuerkauf ever sent his bills or reminders for the services rendered in any of the divorce cases to any of Sutton's clients. When Theuerkauf failed to receive any other payments on the open accounts, he phoned Sutton some four to six weeks before the commencement of the suit, and requested payment. He recited during this phone conversation that Sutton denied liability for his fees. This was the first time Sutton ever disclaimed responsibility for the costs of Theuerkauf's services in the five years that Theuerkauf dealt with him on the same type of contractual relationship. Theuerkauf to date has never received any payment for the services provided in the Klatt and Sims cases.

Theuerkauf testified that there was never an express (written or oral) agreement between Sutton and himself regarding the payment of his fees, but he did recite that he had discussed his fees with Sutton "in the previous divorces that I did for him and in which I sent (him) my bill and I got paid." Because of his "prior experience (dealings) with Mr. Sutton," he (Theuerkauf) related that he never saw a need to enter into a "contractual signature-type contract" with either Sutton, Erdell, Sims or Klatt regarding the payment of his fees and thus never discussed fees with Sutton's divorce clients. Theuerkauf further testified he never met Sims, although he did have contact with Klatt and Erdell after Sutton had engaged him to prepare the property divisions in those cases and he regarded Sutton as his client rather than the divorce litigants. The plaintiff, Theuerkauf, stated he was unaware of and did not know who had paid him, Sutton or his clients, in the previous divorce cases, as his secretary handled the posting of payments to his accounts, but we again note that the bills in these cases, as in all the divorce cases, were sent only to Sutton.

Sutton, the only other witness to testify at the trial, stated that he had "referred" a number of his divorce clients, including Klatt, Sims and Erdell, to Theuerkauf and that Theuerkauf did in fact prepare suggested property divisions for him in each case. Sutton also recited that he relied on Theuerkauf's work in his divorce negotiations, but that he never expressly agreed to be personally liable for the services rendered. Sutton further stated that it was his standard practice to send the bills received from Theuerkauf to his divorce clients and when the clients sent him a check he would either forward the check to Theuerkauf or make out his own check in payment of Theuerkauf's services. He failed to explain at trial why, in some instances, he sent his own check to Theuerkauf rather than his client's. It should also be noted that during the course of the trial, Sutton's counsel stipulated that Theuerkauf charged a reasonable fee for his services.

At the close of the testimony, Sutton's counsel argued that the plaintiff had failed to establish an express contract as both witnesses testified that Sutton never stated he would personally pay for Theuerkauf's services. He further contended that the one-year and suretyship provisions of the Statute of Frauds barred enforcement of any contract that could be found from the circumstances of the transactions as there was no written evidence thereof.

Counsel for Theuerkauf argued that the circumstances surrounding the relationship between the parties, including the fact that Sutton personally requested the accounting services and that all of Theuerkauf's bills, including those in dispute, were sent only to Sutton and the parties' practice and procedure establish that Sutton, through the course of dealings, had agreed to pay for Theuerkauf's services. He contended that the cited provisions of the Statute of Frauds were inapplicable because the agreement was capable of performance within a year.

Following the arguments, the trial court rendered judgment from the bench dismissing the action on the ground that the plaintiff, Theuerkauf, failed to carry his burden of establishing that "there was a contract between Mr. Roy Theuerkauf and Mr. Sutton by which Mr. Sutton made himself responsible for these costs (accounting services in the three divorce cases involved)." The court failed to recite specific findings of fact or conclusions of law in support of the judgment, but it should be noted that the trial judge stated there was clearly no question as to the credibility of the witnesses (Theuerkauf and Sutton) and concluded, "What we have is a misunderstanding; and, so, we have to look elsewhere than to the credibility of the witnesses."

Theuerkauf appealed the circuit court's judgment to the court of appeals and the appellate court reversed the trial court, holding that the great weight and clear preponderance of the evidence established the existence of an implied in fact contract between Sutton and Theuerkauf in that Sutton had agreed to be personally liable for the costs of the accounting services. The appellate court reasoned that given the course of dealing between the parties, Sutton's silence upon receipt of the bills captioned in his name and the fact that in the usual course of legal associations between attorneys and clients, the attorneys, and not the clients, assume the dominant role in the conduct of the litigation, Sutton could not have escaped liability in this case unless he made a clear and unequivocal denial of responsibility either at the time the accounting services were originally requested or at the time he received Theuerkauf's bills.

Before this court, it is undisputed that Theuerkauf rendered the accounting services in each of the divorce cases at issue, and there is no challenge to either the adequacy of the services or the amounts charged therefor. The central issue presented for our consideration is whether the facts in this case establish the existence of an implied contract in fact between Sutton and Theuerkauf whereby Sutton agreed to be personally liable for Theuerkauf's fees for the work performed in the Klatt, Sims and Erdell cases.

One of the leading cases in this state on implied in fact contracts is Wojahn v. National Union Bank, 144 Wis. 646, 129 N.W. 1068 (1911). Wojahn involved a claim by the plaintiff against the National Union Bank for services performed in supervising the affairs of one of the bank's debtors. The supervisory services were performed at the request of an authorized officer of the bank who engaged the plaintiff...