Cofer v. Hearne

• Decision Date: 04 November 1970
• Docket Number: No. 11775,11775
• Parties: John D. COFER et al., Appellants, v. Douglass D. HEARNE et al., Appellees.
• Court: Texas Court of Appeals

Page 877

459 S.W.2d 877

John D. COFER et al., Appellants, v. Douglass D. HEARNE et al., Appellees.

No. 11775.

Court of Civil Appeals of Texas,

Austin.

Nov. 4, 1970.

Appellants' Motion and Appellees' Motions for Rehearing

Denied Dec . 2, 1970.

Small, Herring, Craig, Werkenthin & Shannon, C. C. Small, Jr., Austin, for appellants.

John W. Stayton, Austin, for appellees.

HUGHES, Justice.

This controversy emanates from the dissolution of the law firm composed of equal partners, John D. Cofer, Hume Cofer and Douglass D . Hearne. The dissolution occurred December 31, 1967, when Mr. Hearne withdrew from the firm. The nature of the controversy is an accounting and settlement of partnership affairs.

The principal question of law to be determined is the rule to be applied in disposing of legal fees paid for services performed partly before and partly after the dissolution of the partnership on business that came to the partnership before its dissolution.

The Cofers, who are appellants, contend that all fees collected by the partners on business which came to the firm before its dissolution were partnership assets to be equally divided and remained so regardless of when or by which partner the work was completed.

They rely upon the rule applicable to commercial partnerships which is that after the voluntary dissolution of a partnership no partner, in the absence of an agreement, is entitled to extra compensation for winding up its affairs. See Frates v. Nichols, 167 So.2d 77 (Fla.Ct.App.). ¹ Appellants rely particularly upon the case of Phoenix Land Co. v. Exall, 159 S.W. 474, Tex.Civ.App., Dallas, writ ref. (1913) which applied this rule to a law partnership. If refusal of application for writ of error had the meaning in 1913 that it has now, we would follow this case. The meaning of a refusal of writ of error prior to 1927 was examined by Mr. Gordon Simpson, later an associate justice of the Texas Supreme Court, in an article appearing in Vol. XII, p. 547, Texas Bar Journal, from which we quote:

'And it is undoubtedly true that up until the effective date (June 14, 1927) of the amendment by the 40th Legislature at its Regular Session (Chap. 144, p. 214), a refusal of an application for a writ of error did not necessarily approve the opinion of the Court of Civil Appeals either in whole or in part.

Indeed, as pointed out by Justice Hawkins in the Middleton case and as stated later in the City of San Angelo v. Deutsch, 126 Tex. 532, 91 S.W.(2d) 308, 312, a refusal of an application prior to the effective date of the 1927 amendment might not even mean that the questioned judgment, much less the opinion, was correct, since the applicant for the writ may have waived his right to complain of an erroneous ruling in both the opinion and the judgment by failing to urge the error.'

Under these circumstances, we do not feel obligated to follow Phoenix on this point since we believe the ruling wrong. We prefer the rule and the reasoning supporting it found in Lamb v. Wilson, 3 Neb. 496, 92 N.W. 167 (1902) where in settling the affairs of a law partnership voluntarily dissolved the Court said:

'The rule of law is well settled, by the weight of authorities, that neither partner of a dissolved firm is entitled to compensation for services rendered in winding up the partnership affairs unless it is expressly agreed otherwise, or can be fairly implied from the circumstances. It seems, however, that the rule should not be extended beyond the requirement of merely winding up the partnership affairs, by collecting its outstanding claims, paying debts, and distributing the surplus among the members, and that when it appears that time, skill, and labor have been expended by a partner in the continuance of the partnership business, which inure to the general benefit, he ought to receive, from the profits from his skill and labor, a reasonable compensation, varying according to the nature of the business, the difficulties and results of the undertaking, and its necessity or desirability. While few cases are found which directly support this view, it seems to us to be founded upon the plainest principles of equity and justice, especially when applied to partnerships among professional men, where the profits are almost wholly the result of professional skill and labor.'

To the same effect is Jones v. Marshall, 24 Idaho 678, 135 P. 841 (1913). See also In re Mondale and Johnson, 150 Mont. 534, 437 P.2d 636 (Sup.Ct.Montana 1968) and an annotation in 78 A.L.R.2d 280.

To illustrate the harshness of the rule for which appellants contend, we quote from the testimony of Mr. Hume Cofer:

'Q Now, let's go for a minute, Mr. Cofer, to the contention that you and your father are making with respect to these fees that were collected after December 31st, 1967, when the partnership was dissolved. As I understand it, if a client had come into the office on December 31st, 1967, and had employed Mr. Hearne, a lifelong friend of Mr. Hearne's, and had employed him to do some legal work, and if Mr. Hearne had accepted the employment and then had withdrawn from the firm and gone with the firm of Maloney, Black & Hearne, and had spent two years of his time thereafter working on that legal matter, and had finally realized out of it a fee of $10,000.00, that you and your father are entitled to two-thirds of that $10,000?

A Yes, sir.'

We cannot bring ourselves to the voluntary acceptance of a rule which, in our opinion, is unconscionable and inequitable.

This case was tried below, in part, upon the principle that a law partner who does legal work on partnership business after the voluntary dissolution of the partnership is entitled to extra compensation for his work. We approve.

This case was tried to a jury whose findings we will note in passing upon specific points raised by the parties.

This appeal is by the Cofers. Appellee Hearne had cross assignments.

Appellants have grouped their first twelve points for briefing. These points are to the effect that the $50,000.00 Culp fee should be divided between the partners equally.

The Culp case originated in October 1967 when Mrs. Culp, according to her testimony, orally employed Mr. Hearne to represent her. She did not know either of the Cofers and did not employ them and did not know of the partnership between the Cofers and Mr. Hearne. It was the policy of the Cofer firm that any client dissatisfied with his representation could dismiss the attorney. Mrs. Culp was advised of this.

Subsequently, Mrs. Culp when advised of the friction between the Cofers and Mr. Hearne and its possible effect upon her case wrote a letter discharging the Cofers from any responsibility in her case. The jury was asked if Mrs. Culp had just cause to terminate the contract of employment that she made with the firm of Cofer, Cofer and Hearne and it answered 'Yes.' The Court adjudged and decreed that the Cofers were entitled to no part of the Culp fee. In this we believe there was error.

It is difficult for us to comprehend the effect of Mrs. Culp discharging an attorney which she testified she did not know and did not employ, insofar as this fee is concerned. If Mrs. Culp did not employ the Cofers she could not discharge them. She could tell them not to interfere. The relationship between Mrs. Culp and Mr. Hearne was one thing but the relationship between Mr. Hearne and his partners was another matter and one in which Mrs. Culp had no right to interfere except as it might affect her relation with her attorney.

We hold that the purported discharge of the Cofers by Mrs. Culp is of no materiality in this case.

We believe that the Culp fee should be decided on the basis of the portion of the total fee earned by Mr. Hearne before January 1, 1968, to be divided equally between the three partners, and the portion of the total fee earned after such date by Mr. Hearne, such amount to be subject to his sole disposition.

We sustain appellants' points to the disposition of the Culp fee to the extent above indicated, otherwise they are overruled. We overrule appellants' twenty-ninth and alternate point to the effect that we should render judgment for them on the basis of the testimony of their witness Tom Long for at least 80% Of the Culp fee . Mr. Long's testimony merely presented an issue of fact.

Appellants' second group of points, thirteen through seventeen, are to the effect that the Hudson fee of $10,000.00 should be divided equally between the three parties.

Mr. Hearne was employed in this case late in 1966 to the specific exclusion therefrom of either of the Cofers. The case was tried and settled in April 1968. The jury found an agreement was made between Mr. Hume Cofer and Mr. Hearne that Mr. Hearne would complete the representation of certain clients and give the Cofers two thirds of the fees collected and that Mr. Hearne would continue in the Hudson case alone and keep all the fee. Accordingly, the Trial Court decreed that the Cofers were not entitled to any of the Hudson fee.

Mr. Hearne testified that after he advised Mr. Hume Cofer in the summer of 1967 that he would leave the firm the first of January 1968, they agreed that Mr. Hearne would complete the Fuller, Hickman and Haskell County cases and would account to the Cofers for two thirds of the fees collected and that he would continue alone in the Hudson case and retain all of the fee.

The three cases which Mr. Hearne agreed to complete were difficult cases. While most of the work in the Fuller case was done before 1968, most of the work in the other two cases was done after 1968. In fact, the Haskell County litigation was not over at the time of this trial.

Mr. Hume Cofer denied the making of this agreement but its making was substantiated by the testimony of Mr. Frank Maloney that in February 1968, Mr. Hume Cofer told him that the Cofers were making no claim to any portion of the Hudson fee.

We overrule all of appellants' points as to the Hudson fee and...