Due v. Due

• Decision Date: 24 January 1977
• Docket Number: No. 58226,58226
• Citation: 342 So.2d 161
• Parties: Mrs. Tatiana Turan DUE, Plaintiff-Respondent, v. Paul H. DUE, Defendant-Relator.
• Court: Louisiana Supreme Court

Page 161

342 So.2d 161

Mrs. Tatiana Turan DUE, Plaintiff-Respondent, v. Paul H. DUE, Defendant-Relator.

No. 58226.

Supreme Court of Louisiana.

Jan. 24, 1977.

Rehearing Denied Feb. 25, 1977.

Felix Weill, David W. Robinson, Watson, Blanche, Wilson & Posner, Baton Rouge, A. N. Yiannopoulos, Baton Rouge, of counsel, for defendant-relator.

John J. McCann, New Orleans, Janet Mary Riley, New Orleans, of counsel, for plaintiff-respondent.

TATE, Justice.

The issue before us is: Are a lawyer husband's contingent fee contracts pending as of the date of the dissolution of the marital community to be included in the accounting of the community assets as between the husband and his wife?

A wife here sues her former husband, an attorney, to set aside a community property settlement on the ground of fraud and lesion. She also prays that the court order an inventory of the assets of the former community, in order to partition it between the spouses.

Her discovery interrogatories included inquiries as to contingent fee contracts entered into by her husband in his law practice for a period during the marriage preceding the date of dissolution of the community.

The defendant husband objected to these interrogatories. He contends that contingent fee contracts which were not consummated when the community dissolved did not fall within the community of acquets and gains.

The trial court sustained the husband's contention. It concluded that such contracts do not form part of the community because no interest is vested in the attorney until the contract is completed by successful disposition of the case.

The court of appeal granted supervisory writs and reversed. 331 So.2d 858 (La.App.3d Cir. 1976). It reasoned that a contingent fee contract from the date of its execution creates a right to share in the eventual proceeds (albeit subject to successful conclusion of the litigation), and that this right constitutes a property right which falls into the community, although its value can be determined only when the proceeds are realized. When realized, the interest in the community is determined in the proportion that the value of the husband's services rendered at the date of the community's dissolution bears to the total services performed by the husband in earning the fee.

Because of the importance of the issue, we granted certiorari, 337 So.2d 518 (La.1976), to review the husband's contention that a contingent fee contract cannot be included in the community because it creates no property right prior to completion of the attorney's work after the community's dissolution.

I.

In Louisiana, all property acquired by the labor and industry of the spouses during the marriage belongs to the community of acquets and gains existing between them. Civil Code Articles 2402, 2405, 2334. Included among the assets of the community, thus subject to inventory and spouses' joint ownership at the community's dissolution, are obligations based upon the right to receive money to become due in the future, even though this right is contingent upon the happening of an event at a future time. Messersmith v. Messersmith, 229 La. 495, 86 So.2d 169 (1956). See also T. L. James & Co., Inc. v. Montgomery, 332 So.2d 834 (La.1976).

The defendant husband contends, however, that this principle does not apply to an attorney's contingent fee contracts. He argues:

(1) A contingent fee contract, depending on an uncertain event (winning or compromising the litigation), is an aleatory contract, Articles 1776, 2982, which creates no obligation until the happening of the event;

(2) Even if the contingent fee contract is a conditional obligation creating contemporaneously a right to enforce it upon happening of the condition, Article 2041, the right so created is only of specific enforcement, not to vest it retroactively to the contract's creation, Wampler v. Wampler, 239 La. 315, 118 So.2d 423 (1960);

(3) Further, however classified, the contingent fee contract has no ascertainable value prior to successful completion of the work; it therefore does not form part of his patrimony at any earlier time.

II.

We ultimately conclude that, whatever the theoretical nature of the right, a contingent fee contract creates in the husband a patrimonial asset, i.e. (in ordinary language) 'property', which is acquired by him during the marriage, Article 2334, and which (to the extent that his labor and industry contribute during the marriage, Article 2402) is an asset of the community existing between his wife and himself at the time of its dissolution, Article 2405.

A contingent fee contract executed between a client and his attorney is legislatively recognized as creating in the attorney an enforceable right to share in the proceeds eventually recovered. La.R.S. 37:218. ¹ The obligation in his favor is, of course, subject to the suspensive condition that the outcome will be favorable, Articles 2021, 2043, and to the implied resolutory condition his interest may be divested if he does not perform the contractual services expected of him, Articles 2021, 2046.

Nevertheless, 'The contract of which the condition forms a part is, like all others, complete by the assent of the parties * * *.' Article 2028. As noted at Planiol, Civil Law Treatise, Volume 1, sec. 319, p. 216 (LSLI translation, 1950): 'The owner or creditor . . . is not therefore, properly speaking, either an owner or a creditor as long as the condition is still pending. The simple possibility of the realization of the condition, nevertheless, constitutes a chance which is already considered an asset or liability.'

III.

The defendant's characterization of the contingent fee contract as aleatory, Articles 1776, 2982, or as involving a revocable mandate by the client for the attorney to render legal services for him, Articles 2985, 3028, does not convert the attorney's property interest in the contract into a non-as-set.

(a) Aleatory contract:

The attorney's interest is 'contingent' in the sense that he will be compensated for his efforts and will receive a benefit under the contract only in the uncertain event that a favorable judgment or settlement is arrived at. To this extent, the contract is an aleatory one, in which the rights and obligations of the parties depend on the happening of an uncertain event and there is a chance of either gain or loss. Articles 1776, 2982. See: 6 Litvinoff, La. Civil Law Treatise, Obligations, sections 105, 108 (1969); Planiol, cited above, Volume 2, sections 954--956.

However, the distinction between contracts which are certain, on the one hand, and aleatory contracts, on the other, has no significance with regard to whether the contract creates an obligation which may be a property right. The code definitions 'only . . . signify that a contract which is certain is exactly the opposite of an aleatory one, meaning that it gives rise to obligations which are pure and simple, neither of which is subject to a condition.' 6 Litvinoff, previously cited, p. 193. ²

(b) Revocable mandate:

As with any other contract for the services of an attorney a contingent fee contract, as the decisions cited by the defendant show, involves a mandate or agency by which the client empowers the attorney to act for him. Article 2985 et seq. The contingent fee contract is thus subject to the rules of mandate, including revocation at the will of the client-principal (Article 3028; see, e.g., Foster, Hall, Barret & Smith v. Haley, 174 La. 1019, 142 So. 251 (1932)), and expiration on the death of the attorney-agent (Article 3027, see, e.g., Succession of Zatarain, 138 So.2d 163 (La.App.1st Cir. 1962), certiorari denied).

Nevertheless, where the relationship is terminated at the will of the client, the attorney may recover at least the value of his services performed prior to termination. See, e.g.: Smith v. Westside Transit Lines, 313 So.2d 371 (La.App.4th Cir. 1975), writ denied 318 So.2d 43, Guilbeau v. Firemen's Fund Ins. Co., 293 So.2d 216 (La.App.3d Cir. 1974); Wright v. Fontana,290 So.2d 449 (La.App.2nd Cir. 1974).

Likewise, where the attorney-client relationship is terminated as a result of the attorney's death, his heirs may recover for the value of his services prior thereto. See, e.g.: Succession of Payne, 155 La. 177, 99 So. 29 (1923); Pittman Construction Co. v. Housing Authority of New Orleans, 183 So.2d 343 (La.App.4th Cir. 1966), certiorari denied 249 La. 376, 186 So.2d 627 (1969); Annotation, Attorney's Death Prior to Final Adjudication or Settlement of Case, As Affecting Compensation Under Contingent Fee Contract, 33 A.L.R.3d 1375 (1970). See also Oil Purchasers, Inc. v. Kuehling, 334 So.2d 420 (La.1976).

Accordingly, we find no merit to the defendant's argument that, somehow by reason of technical characterization, no economic value should be attributed to an attorney's interest in a contingent fee contract until the successful prosecution of the claim entitles him to actual compensation for his services.

IV.

Our code articles refer to the community's ownership of the 'produce of the reciprocal industry and labor of both husband and wife', Article 2402, and of the property 'acquired by the husband and wife during marriage', Article 2334. At the dissolution of the community, 'all effects which both husband and wife reciprocally possess, are presumed common effects or gains, unless it be satisfactorily proved which of such effects they brought in marriage, or which have been given them separately, or which they have respectively inherited.' Article 2405.

The intent, we believe, is that all property (in the broad sense of the word) is to form part of the community, if acquired during the marriage (with the narrow and non-applicable exceptions noted). Property, in its broad sense, denotes all patrimonial rights. 2 Yiannopoulos, Louisiana Civil Law Treatise, Property, Section 1 (1967). The civil law concept of patrimony includes the total mass of existing or potential rights and...