Glasgow v. Hall

• Decision Date: 18 February 1975
• Docket Number: No. 427,427
• Citation: 24 Md.App. 525,332 A.2d 722
• Parties: Norman W. GLASGOW v. W. Luther HALL et ux.
• Court: Court of Special Appeals of Maryland

Page 525

24 Md.App. 525

332 A.2d 722

Norman W. GLASGOW v. W. Luther HALL et ux.

No. 427.

Court of Special Appeals of Maryland.

Feb. 18, 1975.

William A. Ehrmantraut, Rockville, with whom were Donahue & Ehrmantraut, Rockville, on the brief, for appellant.

Ferdinand J. Mack, Rockville, with whom was Shadoan & Mack, Rockville, on the brief, for appellees.

Argued before MENCHINE, LOWE and MELVIN, JJ.

LOWE, Judge.

Norman Glasgow, an attorney whose proficiency was greatest in real estate law, has appealed to us from a jury verdict suffered by him in the sum of $142,700.00. This sum, less a remittitur of $15,071.46, represented legal costs expended by appellees, W. Luther and Elizabeth Hall, in the collection of a promissory note from a reluctant guarantor upon the note maker's insolvency.

The appellant participated on behalf of appellees in a somewhat involved sale of real estate in Montgomery County ¹ in which appellees took back a purchase money promissory note in the amount of $352,000.00 from a corporate buyer which succeeded the individual contract purchaser, Milton Barlow. Anticipating the nonrecourse assignment by Mr. Barlow to one of his corporations, Prospect Properties, Inc. ² (chartered for this transaction), appellant attempted in vain to obtain Mr. Barlow's individual endorsement on the note as surety. Mr. Barlow compromised by agreeing to endorse on behalf of The Barlow Corporation, another company of the 'schizocarpous' Mr. Barlow. This was satisfactory to Doctor and Mrs. Hall, who then executed the contract of sale to which had been appended an addendum containing the following paragraph, among others:

4 '(b) The Barlow Corporation shall guarantee by endorsement the purchase money note.'

Such endorsement was neither asked nor offered at the initial settlement on January 18, 1965, or subsequently when appellees subordinated their note to Prospect's construction loan. The absence of that endorsement has been the fulcrum of substantial litigation of which this case is the most recent.

In addition to consenting to the provision in paragraph 4(b), quoted supra, Mr. Barlow orally agreed that he would provide The Barlow Corporation guarantee. Adding Ossa upon Pelion, appellant elicited from Mr. Barlow the following letter dated May 21, 1965 which was three days before the date of the subordination agreement:

'Dear Mr. Glasgow:

Paragraph 4(b). It is my understanding that the Halls will produce at settlement their note to which there will be affixed an endorsement by Barlow Properties, Inc., (Barlow Corporation) guaranteeing payment.

Respectfully submitted,

PROSPECT PROPERTIES, INC.

by /s/ Milton A. Barlow

Milton A. Barlow

President.'

When the news media publicized the insolvency of Prospect Properties, Inc. in late 1966 or early 1967, Mrs. Hall became concerned and called Mr. Glasgow. That he might more accurately respond to her inquiries, the note was obtained from her lock box and both attorney and client were dismayed to discover the absence of The Barlow Corporation endorsement, or any other for that matter.

Appellant precipitously made demand upon Milton Barlow for The Barlow Corporation's endorsement but he refused. Mr. Barlow's continued refusal to provide the corporate endorsement resulted in one of several suits filed by the Halls, and twice brought to the Court of Appeals, Hall v. Barlow Corporation, 255 Md. 28, 255 A.2d 873, and Hall v. Barlow, 260 Md. 327, 272 A.2d 386. The latter case resulted in a judgment for the Halls against Milton Barlow in the full amount stipulated to have been due under the promissory note. It is ironic that it was Mr. Barlow's promise to provide a corporate endorsement in lieu of his personal guarantee that ultimately brought about his individual liability. Perhaps even more ironic was the fact that when Mr. Barlow was finally compelled personally to pay the note the solvency of The Barlow Corporation, whose endorsement he had refused to provide, was questionable.

After the judgment was affirmed by the Court of Appeals, the Halls received prompt payment of the stipulated amount due of $322,522.56. The damages the Halls now seek from Glasgow consist of the attorney's fees and costs of litigation expended by them to collect the balance due on the note. They total $127,628.54, represented by the final judgment below.

Appellant questions certain instructions to the jury by the trial judge and asserts as well that the judge erred in denying his motion for directed verdict. Since we reverse as a result of erroneous instructions to the jury we need only say that our review of the record satisfies us that there was sufficient evidence to permit a jury determination.

In Kendall v. Rogers, 181 Md. 606, 611, 31 A.2d 312, the Court of Appeals recited with approval the essential elements set forthe in Md. Casualty Co. v. Price, 231 F. 397, 401 (4th Cir.) necessary to recovery in a suit against an attorney for negligence. For subsequent analysis we bisect the second of these matters of proof, in order to treat its two parts separately. The prerequisites set forth were:

'(1)-The attorney's employment;

(2)-his neglect-of a reasonable duty; and

(3)-that such negligence resulted in and was the proximate cause of loss to the client.'

For the purpose of submission of the case to a jury evidence adequate to support all of the elements was available. The attorney's employment (1) was admitted but the scope of it was put in issue by the defense. Appellant claimed that the limitations of the employment raised a question of whether or not the scope of that employment (2) created a duty to obtain the endorsement. ³ That in itself became a jury question when testimony of the experts put it at loggerheads. Assuming arguendo that there was such a duty (and that it was neglected) we found ample evidence for a jury to determine that the missing endorsement resulted from the negligence.

On the issue of whether the loss was proximately caused, appellant contended in defense that The Barlow Corporation was insolvent and its endorsement would not have assured payment of the note, even if it had been obtained. Since evidence as to solvency was submitted by both sides the issue was subject to a jury determination and well set out by the trial judge:

'In order for a client to recover damages against an attorney for negligence, a client must show that the injury proximately resulted from the attorney's negligent act. That is really the basic point that you have to decide first and of necessity, therefore, the plaintiff must demonstrate injury, and in this case the Halls have to establish by this fair preponderance of the evidence that had they been able to bring an action on their note against the Barlow Corporation, they would have been able to recover against that corporation. That is, that the Barlow Corporation would have been financially able to satisfy the judgment obtained by the Halls against them. If you should find or if you are not convinced by this fair preponderance of affirmative evidence that they would not have been able to recover, then you should return a verdict for the defendant because, as I say, there is no real loss incurred by not having it, that guaranty on the note.'

Thus the employment, the duty and the proximate cause were all contested issues with sufficient evidence on both sides to warrant their submission to the jury. We have intentionally withheld our discussion of the 'neglect' portion of the element we dimidiated because it relates directly to the cause of our reversal. We hasten to note, however, that we do not question that the evidence of neglect was sufficient to submit to a jury since it is uncontroverted that the endorsement was never obtained.

-neglect-

The theory of recovery propounded by the Halls is that had appellant obtained The Barlow Corporation's endorsement, it would have met the annual payments under the note as they came due. It follows they would not have had to pay the $127,628.54 legal fees that it cost to collect the balance due on the note.

Appellant contended on the other hand, that even assuming it was his responsibility to obtain the endorsement, it had not been proven at what point in time the failure to do so became neglect. He pointed to the case of Hall v. Barlow, supra, and noted the Court of Appeals had already interpreted not only the very contract in question here but the precise paragraph calling for The Barlow Corporation endorsement. He condensed part of the holding of that case into a prayer which he submitted to the trial judge for use as part of his instructions:

'It has been established beyond contradiction that the promise made by Milton Barlow to affix the endorsement of the Barlow Corporation on the Hall's purchase money note survived the execution and delivery of the deed as well as the date of the execution of the subordination agreement, that is, January 1965 and May 1965 respectively. It is, therefore, well settled that the Halls did not forfeit or waive their right to have the guarantee endorsement of the Barlow Corporation by the fact that such endorsement was not affixed to the note by May 1965.'

The appellant's theory was obviously that if Mr. Barlow's obligation to endorse was a continuing one, appellant's duty to obtain the endorsement likewise continued and the time by which he was bound to obtain it would be whatever the jury determined to be a reasonable time.

The judge's denial of that request may have been partially accounted for by his explanation to the jury that it was his practice to reject all specific instructions 'but to try and embody in my oral instructions . . . the general principles the parties have given to me that I believe are applicable.' However, not only did he fail to include the 'general principle' asserted, his instructions set forth, as a matter of law, a principle diametrically opposite to the interpretation sought by the appellant. His instructions in that...