Goldman v. Kane

• Decision Date: 13 June 1975
• Citation: 329 N.E.2d 770,3 Mass.App.Ct. 336
• Parties: Maurice M. GOLDMAN, Executor, et al. v. Barry KANE et al.
• Court: Appeals Court of Massachusetts

Page 770

329 N.E.2d 770

3 Mass.App.Ct. 336

Maurice M. GOLDMAN, Executor, et al. v. Barry KANE et al.

Appeals Court of Massachusetts, Barnstable.

Argued April 16, 1975.

Decided June 13, 1975.

Robert W. MacDonald, Bourne, for defendants.

Maurice M. Goldman, Brewster, for plaintiffs.

Before HALE, C.J., and ROSE and ARMSTRONG, JJ.

HALE, Chief Justice.

The defendants, Barry Kane and Higley Hill, Inc., appeal from a judgment of a Probate Court ordering them to pay $50,806, plus interest, to the plaintiff Goldman, as the executor of the estate of Lawrence E. Hill. ¹ We have before us the trial judge's findings and rulings, along with various exhibits. The transcript of the evidence is not before us. A summary of the pertinent facts found by the judge follows.

Lawrence Hill, a fifty-three year old law school graduate, and his wife moved to Cape Cod in October, 1967. At that time Hill was the income beneficiary of two trusts. He received weekly income from one trust of about $200, and from the other he received approximately $30,000 a year, which was divided into two semi-annual payments. In 1968 Hill was introduced to Barry Kane, a practicing attorney with offices in Chatham and Yarmouth, after Hill had decided to purchase a parcel of real estate in Chatham (Kent Road property). As Hill's attorney, Kane set up a corporation, Lawrence Properties, Inc. (the other plaintiff in this suit and of which Hill owned all the outstanding shares), drew up a purchase and sale agreement for the Kent Road property whereby title to the parcel was to be taken by Lawrence Properties, Inc., and arranged for and obtained a mortgage loan on Hill's behalf. Between 1968 and 1970 Kane acted as Hill's attorney on a number of matters, including matters arising from the death of Hill's wife. During that period he received fees for legal services performed by him. It also appears that at various times throughout their relationship Hill paid money to Kane, who in turn paid Hill's bills.

In October, 1970, Hill decided to 'change his lifestyle and live aboard a boat;' whereupon he left for Florida in the 'Alas II,' a twenty-two foot sloop which he owned. At about this time, Hill decided that he needed a larger vessel. While he was in the process of looking for an appropriate vessel to buy, Hill continuously sought advice from Kane both by telephone and letter. On April 17, 1971, Hill signed an agreement to purchase a forty-three foot ketch called the 'Sea Chase' for $31,500, towards which he paid a deposit of $3,150, agreeing to pay the balance on or before May 17, 1971. Prior to Hill's signing the agreement Kane advised him on matters such as negotiations for the transfer of the 'Sea Chase,' the registration thereof, and technical nautical requirements of the vessel. Hill also asked Kane to arrange for the financing of the balance of $28,350 which would have to be paid by May 17.

In early May, 1971, Kane informed Hill that he was unable to arrange a loan with a bank, whereupon Hill instructed Kane to sell the Kent Road property. That property was put on the market at an offering price of $85,000, but Kane was unable to effect a sale. On May 30, Hill telephoned Kane on two or three occasions and told him he was in dire need of the money because he stood to lose the $3,150 deposit if he should be unable to raise the balance of the purchase price of the 'Sea Chase' by the next day. In one of those conversations Kane told Hill that 'it was virtually impossible' to get a loan in view of Hill's financial predicament and in view of the time limitation. In a subsequent conversation Kane told Hill that Kane's corporation ² would loan him $30,000 but that, in consideration of making the loan, Hill would have to convey to the corporation absolute title to (1) the Kent Road property, (2) all of the personal property located therein, and (3) the 'Alas II.' In addition, Hill and Lawrence Properties, Inc. would have to execute a note to Kane's corporation for the repayment of the $30,000, and to secure the performance of the note, Hill would have to convey to Kane's corporation title to the 'Sea Chase,' which would be reconveyed upon full repayment of the note. After Hill agreed to the terms of the loan, Kane obtained the $30,000, prepared some of the necessary documents, and left for Florida, arriving there shortly after midnight on June 2. During that day he advised Hill not to enter into the agreement and to 'walk away' from his deposit (see n. 3). However, Hill insisted on going forward, and the transaction was consummated on June 2, when Hill signed the following documents prepared by Kane: (1) a quitclaim deed transferring the title of the Kent Road property from Lawrence Properties, Inc. to Kane's corporation, subject to two outstanding mortgages; (2) a bill of sale transferring the 'Alas II' from Hill to Kane's corporation; (3) a bill of sale transferring all of the personal property located in the Kent Road property from Lawrence Properties, Inc. to Kane's corporation; and (4) a non-interest bearing note for $30,000 requiring payment in two installments of $15,000 each on September 15, 1971, and March 1, 1972. Hill also signed an agreement, prepared by Kane, which recited the terms of the loan and which indicated that Hill was aware of the drawbacks of the agreement and that Kane had advised him against entering into it. ³ Shortly thereafter, by arrangement of the parties, title to the 'Sea Chase' was taken in the name of Kane's corporation.

In July, 1971, Kane's corporation sold the Kent Road property with furnishings for $86,000. In September, 1971, Hill defaulted on the first payment of the $30,000 note, whereupon Kane, without notice to Hill, took possession of the 'Sea Chase.'

The judge concluded that at the time of the transaction the relationship of attorney and client existed between Kane and Hill and that Kane breached his fiduciary obligations to Hill by taking unfair advantage of that relationship. As a result the judge ordered that the defendants pay to Hill's executor $50,806, plus interest. ⁴

The defendants contend that the judge erred in concluding that an attorney-client relationship existed between Kane and Hill at the time of the transaction. This contention is without merit, as the judge's subsidiary findings amply support his conclusion. See Hill v. Hall, 191 Mass. 253, 266, 77 N.E. 831 (1906).

The defendants argue that even if an attorney-client relationship existed the record does not support the conclusion that there was a breach of that relationship. We disagree. The relationship of attorney and client is highly fiduciary in nature. Hill v. Hall, supra, at 262--263, 77 N.E 831; Berman v. Coakley, 243 Mass. 348, 355, 137 N.E. 667 (1923); Tarr v. Vivian, 272 Mass. 150, 153, 172 N.E. 257 (1930); Allen v. Moushegian, 320 Mass. 746, 757, 71 N.E.2d 393 (1947); Hendrickson v. Sears,--- Mass. ---, --- ^a, 310 N.E.2d 131 (1974). 'Unflinching fidelity to their genuine interests is the duty of every attorney to his clients. Public policy hardly can touch matters of more general concern than the maintenance of an untarnished standard of conduct by the attorney at law toward his client.' Berman v. Coakley, supra, 243 Mass. at 354, 137 N.E. at 670.

The law looks with great disfavor upon an attorney who has business dealings with his client which result in gains to the attorney at the expense of the client. 'The attorney is not permitted by the law to take any advantage of his client. The principles holding the attorney to a conspicuous degree of faithfulness and forbidding him to take personal advantage of his client are thoroughly established.' Berman v. Coakley, supra, at 355, 137 N.E. at 671; Tarr v. Vivian, supra, 272 Mass. at 153, 172 N.E. 257; Dunne v. Cunningham, 234 Mass. 332, 335, 125 N.E. 560 (1920); Ruczinski v. Russ, 337 Mass. 514, 516, 150 N.E.2d 10 (1958). See Canon DR 5--104 of the A.B.A....