Connors v. Connors
| Decision Date | 18 February 1980 |
| Citation | 594 S.W.2d 672 |
| Parties | John Joseph CONNORS, Jr., Petitioner, v. Claire Louise Adkins CONNORS, Respondent. |
| Court | Tennessee Supreme Court |
Freeman C. Marr, Bartlett, for petitioner.
David E. Caywood, Memphis, for respondent.
The single issue in this case is whether a fee of $20,000 awarded by the trial court to be paid by husband for the services of wife's attorney was reasonable.
A three page complaint for divorce was filed September 3, 1976, containing the vital statistics required by statute and alleging that husband was guilty of cruel and inhuman treatment, without particulars. In response to husband's motion, a bill of particulars was filed containing six one sentence paragraphs, alleging that husband was constantly in the company of and having affairs with other women. After husband filed an answer and cross-bill a three page answer was filed on behalf of wife.
The case was set for trial in the fall of 1977 but was continued apparently by mutual consent. On the next trial date, March 8, 1978, the parties and their witnesses went to the courthouse prepared for a contested case. While waiting for the trial to begin, husband and wife, out of the presence of their lawyers, reached a property settlement agreement except for attorney's fees. At the hearing wife presented proof sufficient to obtain an uncontested divorce and approval of the property settlement.
In substance, the property settlement incorporated into the decree was as follows:
(1) Wife to receive monthly alimony at rate of $25,000 per annum, to terminate on the remarriage or death of wife or the death of husband.
(2) Husband's interest as tenant by the entirety in home vested in wife, and all furniture and fixtures therein acknowledged to be property of wife.
(3) Husband agreed to pay for and keep in force a $200,000 life insurance policy on his life with wife as irrevocable beneficiary and owner.
(4) Husband agreed to pay the remaining installments on the automobile wife "was driving."
(5) If the parties should be unable to agree upon attorney's fees for wife's attorney that matter would be submitted to the court for determination.
The parties were unable to agree, and a hearing was held on June 8, 1978, to determine a reasonable attorney's fee for the services of wife's attorney. Husband's attorney insisted at the hearing that the question of who should pay the fee was likewise an issue.
A transcript of that hearing was included in the record submitted to the appellate courts.
The hearing disclosed these facts.
The total time devoted to representation of Mrs. Connors was one hundred hours, "give or take five hours." Included in the one hundred hours was four full days immediately preceding the trial date, March 8, 1978.
Husband voluntarily supported wife while the litigation was pending so that it was not necessary to negotiate or litigate alimony pendente lite. Husband paid a five hundred dollar attorney's fee pendente lite, the sum asked by wife's attorney.
Wife's attorney took the pre-trial deposition of husband on two occasions. Those depositions are not in the record but were described as of not more than one hour duration each, and the questioning was limited to husband's financial circumstances. None of the facts wife intended to rely upon for divorce were developed in the depositions because wife's attorney stated he had the assurance of both husband and his lawyer that husband would answer truthfully at the trial and he wanted to avoid matters that would be acrimonious.
Husband owned eighty percent of the stock of Southern Warehouses, Inc., a merchandise warehouse specializing in the storage of grocery products for the accounts of manufacturers until directed to deliver them to wholesale grocers. The remaining twenty percent of the stock was held by key employees, and apparently husband was the chief executive officer of the corporation. His actual salary was a matter of dispute, and a substantial portion of the one hundred and eight page transcript deals with the ability of the husband to pay a substantial attorney's fee. His W-2 form reflected that the corporation paid him wages and other compensation in 1977 of $121,779 and that $35,558.50 was withheld for federal income taxes. Husband testified that he owed the corporation $107,864 for loans made to him over the years; that he was repaying the corporation monthly and that the net sum he received per month as salary was $4,081, or an annual take-home pay of $48,972. However, it was shown that he filed a personal financial statement with Union Planters National Bank dated January 26, 1977, that did not list his debt to the corporation as a liability. That statement listed his salary as $75,000 per annum. The total net worth of the corporation as of March 31, 1978, was $238,511.58. Husband had no significant assets other than eighty percent of the stock in Southern Warehouses, Inc. The total value of the equity in the home, one-half of which was awarded to wife by the settlement, was $26,100. Wife's attorney testified that he had been practicing law sixteen years, had an A-V rating in Martindale Hubbell and was experienced in the handling of divorce cases.
The affidavits of two Memphis lawyers to the effect that they had "read the affidavit of David E. Caywood, the memorandum in support thereof describing the services rendered . . .", in the Connors' case, were filed in the cause prior to the hearing. One of the lawyers expressed the opinion that a fee of $25,000 was reasonable and the other that a fee of $20,000 to $25,000 was reasonable.
The affidavit of Caywood, read by the lawyers and also filed in the record, extracts the list of assets and liabilities of Mr. Connors from the January 26, 1977, personal financial statement submitted to the Union Planters National Bank showing a net worth of $394,000. Husband's stock in Southern Warehouses, Inc. was valued at $350,000, but the affidavit failed to show that the financial statement also reflected that the book value of that stock was $187,000 or that the real estate shown as having an equity of $45,000 was the home awarded to Mrs. Connors in the divorce decree.
Caywood's affidavit asserts that in attempting to ascertain the reasonable value of wife's right to future payments, wife has a life expectancy of twenty-four years, and the present value of her future right to receive $25,000 per year alimony, discounted at the rate of five percent, is $345,250. The affidavit emphasizes that the alimony payments were backed up by a "fully paid for $200,000 life insurance policy with wife as the irrevocable owner and beneficiary of the policy, the premiums being paid by Mr. Connors." The policy was not made an exhibit but the proof at the hearing developed that it was a term policy.
All of the Tennessee case law relied upon by wife's attorney in his memorandum of authorities, which is referred to as having been read by the two attorneys making affidavits, cites a line of cases said to establish that a sum equal to ten percent or more of the value of the alimony recovered by the wife is a proper attorney's fee for her attorney. The memorandum indulges the assumption that the instant case is governed by the same rule with this observation:
"First it should be observed that here unlike many situations concerning the fixing of attorney's fees, there exists a definite arithmetical standard."
The central theme of wife's attorney's advocacy in support of a requested fee of $25,000 was that a true in solido award for wife was impractical because substantially all of his net worth consisted of the stock in a closely held corporation from which his substantial annual salary was derived; that the $25,000 per annum alimony was thus in lieu of an in solido award, and a fortiori, the present value of those payments over the period of her life expectancy provided a proper figure for application of the "ten percent or more rule."
In this Court, wife's attorney takes issue with the Court of Appeals' opinion in Ligon v. Ligon, 556 S.W.2d 763 (Tenn.App.1977), wherein Judge Todd writing for the Court said:
"Contrary to widespread belief and the arguments in brief, there is no rule in Tennessee that the attorney who represents a wife in securing a divorce is entitled to recover from the husband a fee equal to 10 per cent of the amount of alimony granted to the wife." Id. at 768.
No further discussion of the ten percent rule was undertaken in that opinion.
Wife's attorney insists the cases are "legion" in this State upholding the "ten percent or more" rule and cities and discusses most of them, beginning with Riley v. Riley, 9 Tenn.App. 643 (1929).
It is appropriate that we put an end to any further doubt the status of the "ten percent or more" rule.
The first case to articulate a ten percent rule in divorce cases was Riley. Judge Owen, writing for the western section of the Court of Appeals said:
." Id. at 644.
McBee, the earliest case relied upon for that pronouncement,...
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