Bohn v. Johnson

• Decision Date: 23 July 1985
• Docket Number: No. 10718,10718
• Citation: 371 N.W.2d 781
• Court: North Dakota Supreme Court
• Parties: Graydon J. BOHN, Sr., Plaintiff, Appellee, and Cross-Appellant, v. Mildred JOHNSON and Johnson, Milloy, Johnson & Stokes, Ltd., Defendants, Appellants, and Cross-Appellees. Civ.

Page 781

371 N.W.2d 781

Graydon J. BOHN, Sr., Plaintiff, Appellee, and Cross-Appellant, v. Mildred JOHNSON and Johnson, Milloy, Johnson & Stokes, Ltd.,

Defendants, Appellants, and Cross-Appellees.

Civ. No. 10718.

Supreme Court of North Dakota.

July 23, 1985.

Ernest I. Reveal (argued) and Kathleen A. Marron, of Robins, Zelle, Larson & Kaplan, Minneapolis, and Leland F. Hagen, of Lee Hagen & Associates, Fargo, for plaintiff, appellee, and cross-appellant.

Kermit Edward Bye (argued), Mart R. Vogel, and Pamela J. Hermes, of Vogel, Brantner, Kelly, Knutson, Weir & Bye, Fargo, and Johnson, Weis & Paulson, Rhinelander, Wis., for defendants, appellants, and cross-appellees.

VANDE WALLE, Justice.

Mildred Johnson and the law firm of Johnson, Milloy, Johnson & Stokes, Ltd. (hereinafter collectively referred to as Johnson), have appealed from a district court judgment entered upon a jury verdict in a legal malpractice action instituted by Graydon Bohn, Sr., who cross-appealed. We reverse the judgment and remand the case for a new trial.

In 1960, Harry Bohn and his sons, Graydon and Clyde, executed a partnership agreement to farm and do business as Bohn Implement Company. After Harry Bohn's death in 1968, Clyde, Graydon, and their mother continued the partnership. After their mother's death in 1979, Clyde and Graydon became sole partners. At Clyde's behest, Johnson prepared a new partnership agreement, which Clyde and Graydon signed on December 29, 1979. Paragraph 14 of the new agreement provided that on the death of either partner, the surviving partner had the right to either terminate and liquidate the partnership business or purchase the interest of the decedent, the purchase price of which was set forth in Paragraph 15:

"15. Purchase Price.

"A. The value of the partnership interest of Clyde M. Bohn or Graydon J. Bohn, Sr., for the purpose of this agreement, shall be:

"a. The capital amount of the decedent's interest as shown by the books of the partnership as of the end of the last fiscal year before his death, plus

"b. the decedent's share of profits, or less the decedent's share of losses, of the partnership computed to the last day of the month in which his death occurred less all withdrawals prior thereto during such fiscal year...."

The quoted portion of Paragraph 15 is virtually identical with Paragraph 11A of the 1960 partnership agreement.

After Clyde's death on April 18, 1980, Graydon notified Clyde's widow, JoAnn Bohn, that he elected to purchase Clyde's interest in the partnership and tendered an offer therefor. JoAnn rejected Graydon's offer and commenced an action on behalf of Clyde's estate. The trial court determined that Graydon must pay JoAnn one-half of the net fair market value of the partnership if he elected to purchase Clyde's interest. This court affirmed the trial court's judgment in Bohn v. Bohn Implement Company, 325 N.W.2d 281 (N.D.1982).

Graydon Bohn brought the instant legal malpractice action against Johnson for damages allegedly resulting from Johnson's negligence in drafting the 1979 partnership agreement. Trial of the action resulted in a jury verdict and judgment in favor of Bohn. This appeal raises numerous issues relating to: the trial court's rulings with respect to the prior case of Bohn v. Bohn Implement Company, supra; the trial court's determination that the partnership agreement was ambiguous and its jury instructions regarding ambiguity; the trial court's determination and jury instructions regarding the partners' intent with respect to the buy-out provision; various other jury instructions; various evidentiary rulings; rulings on damages; the trial court's failure to direct a verdict in favor of Johnson; the trial court's refusal to take judicial notice of the ordinary meaning of the words "capital" and "amount" and its refusal to instruct thereon; the award of attorney fees in connection with requests for admissions; costs and disbursements; whether or not Johnson was deprived of a fair trial by the manner in which the trial judge conducted the trial and because of bias and prejudice on the part of the trial judge; and whether or not the cumulative effect of errors denied Johnson a fair trial.

Johnson seeks reversal of the judgment and a remand for entry of judgment in favor of Johnson or, in the alternative, a new trial before a different district judge and a change of venue. Bohn seeks affirmance of the judgment. Johnson and Bohn both seek modification of the costs and disbursements allowed. ¹

This court recently reiterated several principles relevant in legal malpractice actions with regard to the standard of care owed by an attorney, the determination of negligence vel non, and the effect of imperfect draftsmanship in Martinson Bros. v. Hjellum, 359 N.W.2d 865, 872-873 (N.D.1985):

"The standard of care to which an attorney is held in the performance of his professional services is that degree of skill, care, diligence, and knowledge commonly possessed and exercised by a reasonable, careful, and prudent lawyer in the practice of law in the State. Sheets v. Letnes, Marshall & Fiedler, Ltd., 311 N.W.2d 175 (N.D.1981); Feil v. Wishek, 193 N.W.2d 218 (N.D.1971).... Thus in a legal malpractice action the plaintiff has the burden of proving by a preponderance of the evidence not only that his attorney was negligent, but that the negligence was the proximate cause of his damage. See Feil, supra.

"This court has often said that issues of negligence and proximate cause are questions to be decided by the trier of fact unless the evidence is such that reasonable minds can draw but one conclusion. E.g., Layman v. Braunschweigische Maschinenbauanstalt, 343 N.W.2d 334 (N.D.1983).... [I]n the context of a legal malpractice action, whether or not an attorney has breached his professional duty is ordinarily a question of fact. Sheets, supra....

* * *

"Martinson first asserts that Hjellum was negligent in redrafting the December 1977 contract between Oakes and the Martinsons. He relies primarily on our statement in Oakes Farming Ass'n, supra, 318 N.W.2d at 908 [N.D.1982] that 'the contract is, at best, confusing or ambiguous as to what was actually purchased by Martinson.' ...

"A lawyer, without an express agreement, ' "is not a guarantor ... that the instruments he will draft will be held valid by the court of last resort." ' Feil, supra, 193 N.W.2d at 224 [quoting McCullough v. Sullivan, 102 N.J.L. 381, 384, 132 A. 102, 103 (1926) ]. See also Kirsch v. Duryea, 21 Cal.3d 303, 146 Cal.Rptr. 218, 578 P.2d 935 (1978); Dillard Smith Const. Co. v. Greene, 337 So.2d 841 (Fla.Dist.Ct.App.1976). A successfully asserted claim of legal malpractice requires more than the fact, standing alone, that a trial or appellate court interpreted a document differently than the lawyer or his client assumed they would. Denzer v. Rouse, 48 Wis.2d 528, 180 N.W.2d 521 (1970)."

Johnson asserts that the trial court erred in admitting into evidence the judgment, liquidation order, and settlement agreement from the prior case of Bohn v. Bohn Implement Company, supra. We agree.

The judgment in Bohn v. Bohn provided in part:

"NOW, THEREFORE, IT IS ORDERED AND ADJUDGED that the defendant, Graydon J. Bohn, Sr., has the option to purchase his deceased brother, Clyde Bohn's, partnership interest in the Bohn Implement Company, and the purchase price should be the equivalent of 50% of the net fair market value of the assets of the partnership as of April 18, 1980, and said value is 1.5 million dollars."

It also provided that if Graydon did not elect within 30 days to purchase Clyde's interest, the partnership should be liquidated.

The final order for liquidation in Bohn v. Bohn recited, among other things, that the judgment provided that Bohn could purchase the partnership assets by paying Clyde's estate $750,000 plus interest, that trial costs of $1,907 and appeal costs of $75 were taxed against Bohn, that a loan of $65,000 was obtained on June 4, 1982, to pay estate taxes and interest thereon due from Clyde's estate and:

"(F) That the Supreme Court of the State of North Dakota affirmed the Judgment in this case ..."

The liquidation order also ordered that the assets be liquidated by sale and distribution in kind and that Clyde's estate was entitled to the following:

"(A) Cash representing fifty percent (50%) of the Bohn Implement Company net profits for the years ended December 31, 1980 and December 31, 1981.

"(B) Cash representing interest on the sum of $750,000.00, at the rate of six percent (6%) per annum, from January 22, 1982, the date Judgment was entered, through June 3, 1982.

"(C) Cash representing interest on the sum of $685,000.00, at the rate of six percent (6%) per annum from June 4, 1982, the effective date of the loan from the Production Credit Association, through the date that this Order is signed.

"(D) Cash and property having a net value of $685,000.00."

The order also stated the value of each of the parcels of real property owned by the partnership and that the estate's share of the partnership's 1980 and 1981 profits was $15,480.50.

Also admitted into evidence was a "Settlement Agreement Upon the Liquidation of the Bohn Implement Company" by which Graydon and JoAnn Bohn "agreed upon the interpretation of the 'Final Order For Liquidation' and as to how the proceeds from sale of partnership assets and distribution of partnership property are to be made."

Bohn was entitled to introduce evidence relating to Bohn v. Bohn to show that JoAnn had rejected his offer for the purchase of Clyde's interest and brought suit, resulting in a judgment requiring Bohn to pay fair market value in order to purchase Clyde's interest. Beyond that, the documents relating to Bohn v. Bohn were inadmissible and prejudicial to Johnson. A party to litigation is generally not bound by a judgment in a previous action to which he was not a party and the judgment and evidence introduced in the...