Central Cab Co. v. Clarke

• Decision Date: 13 November 1970
• Docket Number: No. 66,66
• Citation: 259 Md. 542,270 A.2d 662
• Parties: CENTRAL CAB COMPANY, Inc. v. William H. CLARKE.
• Court: Maryland Court of Appeals

Page 542

259 Md. 542

270 A.2d 662

CENTRAL CAB COMPANY, Inc. v. William H. CLARKE.

No. 66.

Court of Appeals of Maryland.

Nov. 13, 1970.

Clarke had decided not to defend Central in the Doyle case and returned the file directly to Bankers on March 20, 1967, with an accompanying letter, as follows:

'Gentlemen:

'Under date of January 23, 1967, John Roane Company sent us the file and suit papers in the above matter.

'I immediately reviewed the file and then put in a telephone call to your Mr. Donald V. Joy and then I later confirmed that telephone call with our letter of January 26, 1967. I enclose herewith a photostatic copy of that letter for your records. In short I requested a retainer fee of $150.00 to handle this case.

'I then again called your company, not having heard from you and talked with Mr. Shearer and I wrote him a letter under date of March 2, 1967, and I enclose a photostatic copy of that letter.

'I have secured an extension of time from plaintiff's counsel in this matter so that there would be no default. Inasmuch as you have not met the terms of our employment, I am returning the file to you together with a copy of a letter I am writing to plaintiff's counsel explaining what has happened.'

The letter to which Lipton referred in the aforegoing letter to Bankers was also dated March 20 and is, as follows:

'Dear Mr. Lipton:

'I wrote you under date of January 26 on the above matter, and asked that you not take a default judgment because we were corresponding with the company. I wrote the company the same day and I followed it up with a telephone call and a further letter and I find that the company has not complied with the terms of our employment. Accordingly, I am sending the papers back to the Bankers and Telephone Employees Insurance Company, Gettysburg, Pennsylvania and we will not be representing them.

'Briefly we requested a retainer fee for accepting this case and the company has not seen fit to give us this fee. In the meantime the company has not answered our letters and we are unable to contact them by telephone and we have heard from a rather reliable source that they are in the hands of receivership.

'I would like to suggest that you give the company some additional time so that they can choose new counsel. In the case you want to correspond with the company direct, I have listed above the policy number, the claim number and the date of accident.'

A copy of the letter of March 20 to Bankers was sent to John Roane, Inc., the adjuster, and a copy was sent by error to Takoma-Langley Taxi Company instead of to Central. The president of Takoma-Langley Cab Company returned the copy to Clarke, whereupon Clarke threw the copy in the wastebasket.

On April 10, 1967, Mr. Lipton wrote Bankers, as follows:

'Gentlemen:

'I am the attorney for the plaintiff Margaret Doyle in the above cited case. Service was effectuated upon the Central Cab Company and I received a request from William H. Clarke, Esq. of Galiher, Stewart & Clarke for an extension of time until that firm could ascertain whether they were going to represent the defendant. I have since heard from Mr. Clarke indicating that his firm would not represent the defendant. Mr. Clarke also requested that I give your company some additional time to choose new counsel. This letter is to so advise you. For your information the policy number is SAC 61799 and it is claim number 5B-40343.

'Unless I hear from new counsel on or before April 25, 1967 I will presume your company has no intentions to proceed in this claim.'

Bankers had been placed in receivership by the Court of Common Pleas of Dauphin County, Pennsylvania on March 30, 1967, the Insurance Commissioner of Pennsylvania having been appointed as Statutory Liquidator.

Not having heard from Bankers and no appearance having been entered for Central or any pleadings filed, the plaintiff Doyle on May 3, 1967, filed a Motion for Judgment by Default which was granted by the Circuit Court on May 16; the lower court then passed an order setting the case for an inquisition before a jury to inquire of the damages and costs. Central did not learn of this until August of 1967 when it received a notification from the Assignment Officer of the Circuit Court that an inquisition for damages was scheduled. On August 31, Central filed a motion to set aside the judgment by default; but at the hearing on this motion on September 22, Central's motion was denied.

On May 15, 1968, a stipulation between the plaintiff Doyle and the defendant Central was filed in which, inter alia, it was stipulated that the Circuit Court should enter judgment in favor of the plaintiff against the defendant in the amount of $4,500.00 with costs of suit and interest from the date of judgment. Such judgment was entered by the Circuit Court on May 21 and was satisfied on October 8, 1968.

Thereafter depositions were taken, one of which was that of the driver of the Central Cab, Yuan Yuan Chuh, to which we will refer more fully later in this opinion.

The third party action of Central vs. Clarke came on for hearing on January 9, 1970, before Judge Miller. In addition to the facts stated above Central called as a witness Roger W. Titus, a member of the Maryland Bar who prior to his admission to the Bar had been an adjuster for Allstate Insurance Co. Mr. Titus was also Chairman of the Committee on Legal Ethics of the Montgomery County Bar Association. He had handled between 10 to 20 cases for defendants insured by Allstate. In answer to a hypothetical question substantially incorporating the facts in the present case, Mr. Titus expressed the opinion that at the time the insurance company sends counsel the file in the case, 'an attorney-client relationship is established, unless I reject the file and send it back.' He further stated that where counsel communicates with the attorney for the plaintiff and requests him not to take a default judgment because counsel is checking into the matter, the attorney-client relationship with the insured exists; and it was his opinion that there was a duty upon counsel to notify the insured of his withdrawal especially where he retained the file and did not return it to the insurance company for two months.

The trial court, at the end of all the testimony in the case, granted Clarke's motion for a directed verdict. The lower court, for the purposes of the motion, assumed that Clarke was retained and that there was an attorney-client relationship between Clarke and Central; but the lower court was of the opinion that there was no evidence of a breach of Clarke's professional duty, Central not having established 'what the standard of care is generally in this locality' or in what manner Clarke 'breached that standard of care.' The lower court did not find it necessary, in view of its opinion in regard to the ground on which it ruled in Clarke's favor, to pass upon the question of whether Central had a meritorious defense in the Doyle action. Judgment for Clarke for costs against Central was duly entered on January 15, 1970; and Central filed a timely appeal to this Court from that judgment.

(1)

On appeal, Clarke, the appellee, earnestly argued that the lower court's assumption that an attorney-client relationship existed between Clarke and Central was in error and contended that no such relationship existed so that the judgment for Clarke for costs should be affirmed for this reason. We do not agree with this contention.

Bankers, as the liability insurer, undertook to obtain counsel for the insured to defend the Doyle action. Counsel when so employed represents the insured as well as the insurance carrier and the attorney-client relationship is thus established between the insured and the attorney selected for the insured by the insurance company. This attorney-client relationship continued when Clarke retained the file and requested the plaintiff's attorney's forebearance in taking a default judgment while he deliberated as to whether he would proceed further with the case. This attorney-client relationship was subject, of course, to later termination by Clarke if satisfactory arrangements, financial or otherwise, could not be made but only upon notice of such termination to his client, Central. Clarke, in effect, recognized the obligation to give notice of the termination of the attorney-client relationship by attempting to send to Central a copy of his letter of March 20, 1967, to Bankers. Because the copy of the letter was misdirected, it was not received by Central; and when the misdirected letter was returned to Clarke, he threw it into the wastebasket instead of redirecting it properly to Central. The obligation to notify Central of the termination of employment by Clarke was of particular importance in view of the prior correspondence with Lipton, as counsel for the plaintiff Doyle, his indulgence in regard to the entry of an appearance in the case and the filing of appropriate pleadings. Indeed, in the letter of March 20 from Clarke to Lipton, Clarke stated: 'I would like to suggest that you give the company some additional time so that they can choose new counsel.' (Emphasis supplied.)

Although an agreement upon the amount of a retainer and its payment is rather conclusive evidence of the establishment of the attorney-client relationship, the absence of such an agreement or payment does not indicate conclusively that no such relationship exists. Indeed, the payment of fees is not a necessary element in the relationship of attorney and client. The services of an attorney to the client may be rendered gratuitously but...