Baker v. Beal

• Decision Date: 22 January 1975
• Docket Number: No. 56782,56782
• Citation: 225 N.W.2d 106
• Parties: Sue Ann BAKER, Appellant, v. Ralph D. BEAL et al., Appellees.
• Court: Iowa Supreme Court

Page 106

225 N.W.2d 106

Sue Ann BAKER, Appellant, v. Ralph D. BEAL et al., Appellees.

No. 56782.

Supreme Court of Iowa.

Jan. 22, 1975.

Newport, Newport, Wine & Buzzell, davenport, for appellant.

Betty, Neuman, McMahon, Hellstrom & Bittner, Davenport, for appellees.

Heard by MOORE, C.J., and MASON, REES, UHLENHOPP and REYNOLDSON, JJ.

REYNOLDSON, Justice.

Plaintiff's intoxicated husband, transported home by a bartender from the Kickapoo Tavern, Davenport, Iowa, at about 1:30 A.M. on July 2, 1967, apparently stumbled as he entered the house. He sustained severe lacerations when his arm went through a glass in the kitchen door and he died at about 3:00 A.M. the same morning.

Shortly after the funeral, plaintiff employed these defendant-lawyers, as they later admitted, 'to represent her interests for the purpose of recovering whatever amount she was entitled to recover from whomever was responsible to her under the statutes of the State of Iowa.'

November 1, 1967, defendant Doyle was present when plaintiff's statement was taken by attorneys for Northwest Sportsmen's Club, Inc. For almost two years defendant-lawyers negotiated with the 'dram shop insurance lawyers' but received an offer of only $1500 which plaintiff rejected.

Increasingly concerned, plaintiff telephoned a different lawyer who told her the two year statute of limitations was about to expire. She again contacted defendant Doyle's office. A zero-hour dram shop suit was instituted July 2, 1969 against 'Carl Haas d/b/a Kickapoo Tavern.' This action, grounded on the 'new' dram shop statute, § 123.95, The Code, 1966, prayed for $35,000 in damages for plaintiff's loss of means of support.

Haas filed a special appearance. August 8, 1969, these lawyer-defendants amended plaintiff's petition by adding Kickapoo Tavern and Northwest Sportsmen's Club, Inc., d/b/a Kickapoo Tavern as party defendants. All those defendants filed motions to dismiss. Haas' motion was sustained on the ground the petition did not allege Haas was a permittee or licensee as required by § 123.95. The amended petition was dismissed because the cause of action was barred by the limitation statute.

Plaintiff then commenced this legal malpractice action against these lawyer-defendants praying for $250,000 in damages. Following a non-jury trial the court filed extensive findings of fact and conclusions of law and held against plaintiff, who appeals. We reverse and remand for new trial.

Summarized, the following issues are presented for our review: 1) Did trial court err in holding plaintiff failed to prove her original action would have been successful absent defendants' negligence? 2) Did trial court err in finding there was no evidence of the amount of support plaintiff lost by reason of her husband's death? 3) Did trial court err in holding defendants not negligent in failing to file suit under the 'old' dram shop statute, § 129.2, The Code, 1966? 4) Did Trial court err in holding defendants were not negligent in failing to properly assess plaintiff's damages in the dram shop action?

I. At close of plaintiff's evidence and at close of all evidence defendants entered motions to dismiss or for a directed verdict. Three months after trial, without reference to these motions, trial court proceeded to file 'Findings of Fact, Conclusions of Law and Judgment Entry.' Upon a careful study of this instrument, the motions, and the record, we are persuaded trial court did not rule on a motion for directed verdict, but rather determined the whole controversy on its merits. See Batliner v. Sallee, 254 Iowa 561, 564, 118 N.W.2d 552, 554 (1962). Its findings of fact have the effect of a special verdict and are equivalent to a jury verdict. Frantz v. Knights of Columbus, 205 N.W.2d 705, 708 (Iowa 1973). If supported by substantial evidence and justified as a matter of law, the judgment will not be disturbed on appeal. Rule 344(f)(1), Rules of Civil Procedure.

II. Plaintiff asserts trial court erred in holding she had not sustained her burden of proving her dram shop action would have been successful absent defendants' alleged negligence.

This plaintiff does not challenge the prevailing case law holding a client who seeks to recover against his or her lawyer in a malpractice action based upon negligent handling of a lawsuit for money damages must not only prove negligence but must also prove that, absent the lawyer's negligence, the underlying suit would have been successful. 7 Am.Jur.2d, Attorneys at Law § 190, pp. 157--58, and citations; Annot., 45 A.L.R.2d 5, 10, 19, and citations; Coggin, Attorney Negligence * * * A Suit Within a Suit, 60 W.Va.L.Rev. 225 (1958). Although no Iowa decision has directly held that rule to be the law of this jurisdiction, it finds support in Getchell & M. Lumber & M. Co. v. Employers' L. Assur. Corp., 117 Iowa 180, 90 N.W. 616 (1902).

In holding plaintiff failed to establish a viable underlying dram shop case under the provisions of § 123.95, The Code, 1966, trial court relied on her omission to prove 'the Kickapoo Tavern, whatever its correct corporate name may be, was or was not a licensee or permittee.'

It is true only licensees and permittees are liable under § 123.95, The Code, 1966, which relevantly provided:

'Every * * * wife * * * who shall be injured in * * * means of support * * * resulting from the intoxication of any * * * person, shall have a right of action * * * against any licensee or permittee who shall sell or give any beer or intoxicating liquor to any such person while he is intoxicated, or serve any such person to a point where such person is intoxicated for all damages actually sustained.'

Plaintiff's petition in the case Sub judice alleged Kickapoo Tavern was owned and operated by Northwest Sportsmen's Club, Inc. (which defendants admitted) and that corporation was licensee and permittee of Kickapoo Tavern (which was denied).

But plaintiff also alleged she relied on the legal competency of defendants in employing them 'to represent her interests for the purpose of recovering whatever amount she was entitled to recover from whomever was responsible to her under the statutes of the State of Iowa,' which was admitted in the answer, as were the allegations plaintiff thereafter assumed they were 'diligently proceeding to negotiate a settlement with the various parties concerned, the identities of which Plaintiff left in the hands of the defendants to ascertain.' Defendants' answer further admitted defendant Doyle was present on or about November 1, 1967 when plaintiff's statement was taken by attorneys representing Northwest Sportsmen's Club, Inc.

Finally, defendants conceded in the pleadings the dram shop action they brought was instituted under the provisions of chapter 123, The Code.

Thus defendants, who admittedly had two years to carry out their responsibility to determine the proper party or parties defendant in the dram shop case, and who negotiated with the dram shop insurance carrier, belatedly instituted action under § 123.95, The Code, 1966, which case could only lie against a permittee or licensee. Had there been no licensee or permittee the available action, of course, would have been under § 129.2, The Code, 1966 (since repealed, see Acts 64 G.A., ch. 131, § 152).

The above facts are undisputed. The only inference which can be drawn therefrom, assuming trial court drew any inference, militates against defendants. In these circumstances the restraints of the special verdict review referred to in division I apply neither to trial court's conclusions, Insurance Managers, Inc. v. Calvert Fire Ins. Co., 261 Iowa 155, 156, 153 N.W.2d 480, 481 (1967), nor to its application of rules of law, Disbrowe v. Tucker, 211 N.W.2d 318, 320 (Iowa 1973).

In a legal malpractice action against these defendant-lawyers we hold they shall not be heard to argue plaintiff's underlying dram shop case would not have been successful because she did not prove Kickapoo Tavern was operated by a licensee or permittee. For the purposes of this litigation, that element was sufficiently established by uncontroverted proof these defendants elected to bring the dram shop action under § 123.95, The Code, 1966. We will not assume after they had the case in their office for two years they selected a statutory cause of action upon which no relief could be granted. We hold plaintiff is entitled to the same presumption defendants rely on in another context: everyone is presumed to have discharged his duty, whether legal or moral, until the contrary is made to appear. Dorf v. Relles, 355 F.2d 488, 492 (7 Cir. 1966).

III. Closely allied to the issue treated in division II is plaintiff's assertion trial court erred in finding there was no evidence of the amount of support plaintiff lost by reason of her husband's death. Without citing any authority, defendants apparently urge that plaintiff has not established her underlying case until she has mathematically proved the exact amount of support her husband would have provided but for his untimely death.

In its factual finding trial court observed, 'There was no evidence introduced as to how much of his (decedent's) income was or would have been used for the support of the Plaintiff or how much he did or would have used for the support of himself or to take care of his other financial obligations.' The legal impact of this observation was not mentioned in trial court's conclusions of law, nor is there any other reference which would lead us to infer this lack of evidence formed a basis for the holding below.

However, as all parties assume this finding was a factor in the decision appealed from, we treat it as such. And in so viewing it, we are not persuaded plaintiff's burden was as onerous as defendants contend.

This court has frequently recognized the principle most recently restated in Northrup v. Miles Homes, Inc. of Iowa, 204 N.W.2d 850, 857 (Iowa 1973):

"Courts have recognized a distinction between proof...