Archer v. Griffith

• Citation: 390 S.W.2d 735
• Decision Date: 18 November 1964
• Docket Number: No. A-9644,A-9644
• Parties: Fancher ARCHER, Petitioner, v. Nova Dean GRIFFITH, Respondent.
• Court: Supreme Court of Texas

Page 735

390 S.W.2d 735

Fancher ARCHER, Petitioner, v. Nova Dean GRIFFITH, Respondent.

No. A-9644.

Supreme Court of Texas.

Nov. 18, 1964.

Rehearing Denied May 19, 1965.

John E. Allen, L. Hamilton Lowe, Austin, for petitioner.

Kuykendall & Kuykendall, Austin, for respondent.

WALKER, Justice.

This is an action to set aside a deed executed by Mrs. Nova Dean Griffith, respondent, to her attorney, Fancher Archer, Esq., petitioner, pursuant to the provisions of a contingent fee contract between the parties. The case was tried before the court without a jury, and judgment was rendered cancelling the deed and awarding petitioner $400.00 in addition to the amounts previously received by him for his services to respondent. No findings of fact or conclusions of law were filed or requested. The Court of Civil Appeals affirmed. Archer v. Blakemore, 367 S.W.2d 402.

Respondent originally employed the law firm of Archer & Archer in January, 1959, to institute divorce proceedings in her behalf. She made a deposit for court costs and gave them $100.00 at the time, but according to her testimony they said their fee would be collected from the husband. According to their testimony she orally agreed to pay a contingent fee of one-fourth of any property recovered for her in the suit. After a preliminary investigation of the property rights involved, the divorce action was instituted by filing an original petition which was verified by respondent and signed by petitioner as her attorney. She there prayed for a temporary restraining order, temporary alimony, divorce, custody of the minor child born to the marriage, an allowance for the support of the child, and attorney's fees in the amount of $1,000.00. Prior to the issuance of a restraining order, however, respondent notified her attorneys that she and her husband had effected a reconciliation and were living together again. No further action was taken in the suit at that time, and no additional payment was requested from her.

About eighteen months later respondent again consulted the Archers and insisted on going forward with the suit. She then signed a written contract employing petitioner to represent her 'in preserving, keeping and managing my separate property and my community property * * * and * * * to file suit and take such other action and steps by suit or otherwise to preserve and protect my property.' It was further stipulated that in consideration of services rendered and to be rendered, petitioner would be entitled to one-fourth of 'whatever property either personal, real or money which shall be determined to be mine either through settlement or suit.'

After making further investigation, petitioner prepared and filed an amended original petition in the divorce action. A temporary restraining order was issued and served on the husband, who thereupon employed an attorney. The latter filed special exceptions to the petition, had the case put on the jury docket, and indicated that the suit would be contested. Petitioner then began preparing for a contest. Among other things he drafted a second amended original petition with a prayer for a receivership and the recovery of $5,000.00 attorney's fees and sent a copy to the husband's lawyer.

This brought about serious overtures for a settlement of the case. The negotiations, which involved a number of conferences and extended over a period of several weeks, resulted in the execution of a settlement agreement whereby the property in controversy was divided as follows: (1) the home, the business known as Griffith Wall Paper and Paint Company, a 1951 Packard automobile, and 10.8 shares of stock in American Guaranty Accident Life and Health Insurance were set apart to the husband; (2) the household furnishings and 5.4 shares of American Guaranty Accident Life and Health Insurance were set apart to the wife; (3) all savings and bank accounts and certain other securities were divided equally; and (4) it was agreed that the premises on 13th Street in Austin, which had been acquired during the marriage, would be owned by the parties in equal shares subject to an existing encumbrance in the amount of approximately $22,500.00, and an additional lien was impressed on respondent's undivided one-half interest to secure payment of $7,750.00 to the husband in satisfaction of his claim for separate funds used to purchase the property. It was further stipulated that an attorney's fee of $500.00 would be paid by the husband to Archer & Archer, and that all other attorney's fees would be paid by the respective parties to his or her attorney.

The hearing in the divorce action was held the following day, and judgment was entered awarding respondent a divorce and custody of the child. According to the recitals of the judgment, the settlement agreement was explained to the court, which found that there was no necessity for adjudicating the property rights of the parties. Immediately after the divorce was granted and before the parties left the court house, respondent executed and acknowledged the following three deeds: (1) a conveyance of the home to her former husband; (2) a deed establishing their interests in the 13th Street property in accordance with the settlement agreement; and (3) the instrument now in controversy, which conveyed to petitioner one-fourth of respondent's undivided one-half interest in the 13th Street property. The husband later paid petitioner the $500.00 fee as provided in the settlement agreement.

Petitioner insists that the trial court erred in setting aside the deed because there is no evidence of any fraud in connection with its execution and delivery. It was stipulated by the parties that the relationship of attorney and client existed between petitioner and respondent when the deed was executed and delivered. That fact has an important bearing on the controversy. The relation between an attorney and his client is highly fiduciary in nature, and their dealings with each other are subject to the same scrutiny, intendments and imputations as a transaction between an ordinary trustee and his cestui que trust. 'The burden of establishing its perfect fairness, adequacy, and equity, is thrown upon the attorney, upon the general rule, that he who bargains in a matter of advantage with a person, placing a confidence in him, is bound to show that a reasonable use has been made of that confidence; a rule applying equally to all persons standing in confidential relations with each other.' Story, Equity Jurisprudence, 7th ed. 1857, § 311. This principle has always been recognized by the Texas courts. ¹ Cooper v. Lee, 75 Tex. 114, 12 S.W. 483; Holland v. Brown, Tex.Civ.App., 66 S.W.2d 1095 (writ ref.) Bell v. Ramirez, Tex.Civ.App., 299 S.W. 655 (writ ref.).

The general rule mentioned above applies to a contract or other transaction relating to compensation provided the attorney-client relationship was in existence at the time. 'Although an attorney is not incapacitated from contracting with his client for compensation during the existence of the relation of attorney and client, and a fair and reasonable settlement of the compensation to be paid is valid and enforceable, if executed freely, voluntarily, and with full understanding by the client, the courts, because of the confidential relationship, scrutinize with jealousy all contracts between them for compensation which are made while the relation exists. There is a presumption of unfairness or invalidity attaching to the contract, and the burden of showing its fairness and reasonableness is on the attorney.' Pomeroy, Equity Jurisprudence, 5th ed. 1941, § 960d. See also Tippett v. Brooks, 28 Tex.Civ.App. 107, 67 S.W. 512 (writ ref., 95 Tex. 335, 67 S.W. 495); Laybourne v. Bray & Shifflett, Tex.Civ.App., 190 S.W. 1159 (no writ), on subsequent appeal, 214 S.W. 630 (writ ref.); Annotation, 19 A.L.R. 847.

We assume without deciding that the parties to this case were dealing at arm's length when the written contingent fee contract was signed by respondent. If such agreement had been binding upon both parties, it might afford a basis for upholding the deed without regard to the fairness of the transaction. In this instance, however, petitioner was married when the contract was made, and the agreement was voidable at her election. It does not appear that she owned any separate property, and the employment of an attorney to institute and prosecute proceedings for divorce and partition of community property is not an incident of the wife's power to manage, control and dispose of her separate property. Cf. Cauble v. Beaver-Electra Refining Co., 115 Tex. 1, 274 S.W. 120; Parker v. Boyles, Tex.Civ.App., 197 S.W.2d 842 (writ ref. n. r. e.).

Petitioner argues that the contract in the present case is now binding on respondent because she adopted the same by executing the deed after her disabilities of coverture were removed. He also says that since the agreement has been fully performed on both sides, respondent is not entitled to recover the property she voluntarily conveyed in pursuance of its provisions even though the contract was voidable and unenforceable as an original proposition. See Leake v. Saunders, 126 Tex. 69, 84 S.W.2d 993; Pitts v. Elser, 87 Tex. 347, 28 S.W. 518; Oil Exchange & Board of Trade v. Hogle, Tex.Civ.App., 272 S.W. 1114 (no writ). These cases have no application where, as here, the instrument said to constitute adoption or performance of the preexisting contract was made to an attorney by his client. In view of the circumstances under which the agreement and deed in this case were executed, the contingent fee contract does not preclude an inquiry into the fairness of the entire transaction and it cannot be said as a matter of law that the deed amounts to an adoption or voluntary performance of the contract.

Respondent alleged that petitioner was paid a total of $600.00 in cash; that such amount was an adequate and reasonable fee for the services...