City of Whitewater v. Baker

• Decision Date: 16 October 1980
• Docket Number: No. 79-1697,79-1697
• Parties: CITY OF WHITEWATER, a Municipal Corporation, Plaintiff, v. Harley E. BAKER, Mildred D. Baker, d/b/a Baker's Garage, Defendants. Gerald W. PELISHEK, Plaintiff-Appellant, v. The CITY OF WHITEWATER, Wisconsin, The Wisconsin Department of Transportation and The State of Wisconsin, Defendants-Respondents. *
• Court: Wisconsin Court of Appeals

Page 584

299 N.W.2d 584

99 Wis.2d 449

CITY OF WHITEWATER, a Municipal Corporation, Plaintiff, v. Harley E. BAKER, Mildred D. Baker, d/b/a Baker's Garage, Defendants.

Gerald W. PELISHEK, Plaintiff-Appellant, v. The CITY OF WHITEWATER, Wisconsin, The Wisconsin Department

of Transportation and The State of Wisconsin,

Defendants-Respondents. ^*

No. 79-1697.

Court of Appeals of Wisconsin.

Submitted on Briefs Aug. 22, 1980.

Opinion Released Oct. 16, 1980.

Opinion Filed Oct. 16, 1980.

Stephen P. Hurley of Pieper & Hurley, Stoughton, Bradford W. Wilcox of Vance, Wilcox & Short, S.C., Fort Atkinson, of counsel, for plaintiff-appellant.

Martin W. Harrison of Allen, Harrison & Williams, Whitewater, for defendant-respondent.

Before VOSS, P. J., and BROWN and SCOTT, JJ.

SCOTT, Judge.

Pelishek appeals from the trial court's judgment dismissing his complaint for a declaration of his interest in certain property located in the City of Whitewater and for an injunction against the City, the State and the Department of Transportation to prohibit their encroaching upon his property. Pelishek argues, among other things, that the trial court erred in failing to disqualify Attorney Clark Dempsey from representing the City because Dempsey had represented Pelishek during Pelishek's acquisition of the very property now in dispute. We agree and remand the cause for a new trial in which Dempsey is disqualified from participating.

In our view, the record shows an obvious and serious conflict of interest on the part of Attorney Dempsey. In September 1969, Pelishek retained Dempsey to represent him in the purchase of certain property located in the City of Whitewater including an old grist mill and an adjacent dam. Dempsey prepared the offer to purchase, which was executed on September 9, 1969 and accepted by the owners of the mill and dam.

In December 1969, Pelishek was served by the City with an order of condemnation directing that the mill building be razed due to its structural decay. The order had been drafted by the city attorney, Mr. Dempsey. For the next three years, Dempsey continued to represent both Pelishek and the City, during which time Pelishek negotiated with the City to try to avoid the destruction of the building and close the real estate purchase.

Around October of 1972, Dempsey advised Pelishek he could no longer represent both Pelishek and the City due to a possible conflict of interest, and he was withdrawing from further representation of Pelishek regarding the purchase of the mill property. Dempsey continued to represent Pelishek in other business matters until 1976.

On October 13, 1972, the owners of the mill property executed a warranty deed conveying the grist mill property, but not the dam, to Pelishek. The deed was drafted by Pelishek's new attorney, Ronald Todd. The conveyance of the property had been delayed from 1969 to 1972 partly because of the condemnation proceedings and partly because of the Public Service Commission's lack of assent to the conveyance of the dam. After having delayed the condemnation proceedings for several years, Pelishek dismantled the mill for its possible future reconstruction.

On August 30, 1975, the former owners of the mill property executed a quitclaim deed conveying to the City the dam Pelishek had attempted to acquire along with the grist mill. This deed was drafted by Dempsey on behalf of the City.

Around 1978, the City determined it would widen the street which traversed the dam and passed in front of the property owned by Pelishek. The street, named Main Street, was designated as U.S. Highway 12 and at this location followed the general route of the territorial road of 1839 between Rochester and Madison. The right of way of the territorial road was sixty-six feet. The proposed widening of Main Street to sixty-six feet overlapped that portion of the property deeded to Pelishek where the southwest corner of the grist mill used to stand.

On May 14, 1979, Pelishek instituted the present action under ch. 841, Stats., to declare his interest in the grist mill property and to enjoin the City, the State and the Department of Transportation from encroaching on his property. Pelishek's action was consolidated with an action instituted by the City against a certain Baker for the removal of Baker's alleged encroachments upon the street to be widened.

At the pretrial hearing held on June 7, 1979, Pelishek objected to Dempsey's appearance on behalf of the City. Pelishek pointed to Dempsey's representation of Pelishek from 1969 to 1972 in the acquisition of the grist mill property that was the basis for the present suit and asked the court for an order compelling the City to substitute counsel. Dempsey responded to the oral motion by maintaining he saw no conflict and stating:

I haven't pulled the old file out, I intentionally haven't pulled it, and I have instructed everybody in my office to leave the old file intact. We haven't used it in any way.

The trial court denied Pelishek's motion and indicated the matter was more properly one for the State Bar Discipline Committee. On June 21, 1979, Pelishek filed a motion asking the trial court to reconsider its ruling and cited Ennis v. Ennis, 88 Wis.2d 82, 276 N.W.2d 341 (Ct.App.1979). The trial court responded by holding a hearing on June 28, 1979 and treated Pelishek's motion for reconsideration as a renewed motion to bar Dempsey and his office from representing the City. At the hearing, the court took testimony from Pelishek concerning Dempsey's activities on his behalf, heard the arguments of counsel and again denied the motion, stating:

I think we have to recognize that lawyers who practice in small communities tend to represent a lot of people at many times. I guess at this point at least I can't feel that there's much of anything here in order for me to remove the firm. I've got to in effect make a finding that they were unethical in representing the city.

We believe the trial court misunderstood its duty. Before disqualifying an attorney from representing a client on the ground that such representation would conflict with his duties to a former client, a court need not find an attorney has actually been unethical or made disclosures of his former client's confidences. It need only find the attorney has undertaken representation of a client whose interests are adverse to those of the former client. Attorneys are obligated to avoid even the appearance of impropriety. Ennis, supra, 88 Wis.2d at 98-99, 276 N.W.2d at 348; Canon 9, Code of Professional Responsibility, 43 Wis.2d lxxi (1969). Attorneys are further obligated to preserve the confidences of a client and to exercise independent professional judgment on behalf of a client. Canons 4 and 5, Code of Professional Responsibility, 43 Wis.2d xxxvi and xxxix.

"An attorney is an officer of the court charged by every rule of law and by the highest ethical consideration to keep inviolate the confidence of his client, and he should never under any circumstances make that relationship a basis of personal gain in another action against his client." Harvey v. Harvey, 202 Wis. 553, 560, 231 N.W. 580, 583 (1930).

The disadvantage under which a litigant must labor who is opposed, in the effort to enforce or defend his rights, by an attorney to whom he had, in the confidential relation of attorney and client made a full disclosure of the facts as he claims them, is obvious.... The rule ... is not only for the good of the profession, but for the safety of clients.

Michel v. McKenna, 199 Wis. 608, 611, 227 N.W. 396, 398 (1929) (quoting Kluht v. Mitchell, 199 Iowa 1163, 1168, 199 N.W. 294, 296 (1924).

Of course, an attorney's acceptance of employment to act in opposition to his former client is not by itself improper. The interest represented by the attorney in the subsequent employment must be adverse to the interest represented in the original employment. See Annot., 52 A.L.R.2d 1243, 1262 (1957), and cases cited therein.

The test of whether the attorney's employment is inconsistent with his duty to a former client is whether acceptance of the new retainer will require him in forwarding the interest of the new client to do anything that will injuriously affect a former client in any matter in which he formerly represented him and also whether the attorney will be called on, in his new relation, to use against a former client any knowledge or information acquired in the former relationship. ¹ See 7 Am.Jur.2d Attorneys at Law § 156, p. 140 (1963), and cases cited therein.

In the present case, Dempsey represented Pelishek in Pelishek's acquisition of certain property. Dempsey then represented the City in Pelishek's action against the City to clear Pelishek's title in the very same property. The two interests represented by Dempsey are obviously adverse to one another. In representing the...