Kittler and Hedelson v. Sheehan Properties, Inc.

• Citation: 295 Minn. 232,203 N.W.2d 835
• Decision Date: 19 January 1973
• Docket Number: No. 43446,43446
• Parties: KITTLER & HEDELSON and J. Patrick Kittler, Respondents, v. SHEEHAN PROPERTIES, INC., et al., Appellants.
• Court: Minnesota Supreme Court

Page 835

203 N.W.2d 835

295 Minn. 232

KITTLER & HEDELSON and J. Patrick Kittler, Respondents, v. SHEEHAN PROPERTIES, INC., et al., Appellants.

No. 43446.

Supreme Court of Minnesota.

Jan. 19, 1973.

Syllabus by the Court

In an action involving the propriety of an attorney fee arrangement, the rulings of the trial court and the verdict of the jury will not be overturned where the record discloses ample evidence to support such rulings and verdict. The amount of the fee is only one factor to be considered in addition to the other factors found in the record herein. Where we find no abuse of discretion on the part of the trial court, and the jury's verdict is based on substantial evidence to sustain it, the result is affirmed.

O'Connor, Green, Thomas, Walters & Kelly and Frank J. Walz, Minneapolis, for appellants.

Hvass, Weisman & King, Meagher, Geer, Markham & Anderson, and O. C. Adamson, II, Minneapolis, for respondents.

Heard before KNUTSON, C.J., and OTIS, KELLY, and SCHULTZ, JJ.

HAROLD W. SCHULTZ, Justice. ^*

This is an appeal from an order denying defendants' motions for a new trial. The principal issue presented in this case concerns the propriety of attorney fee arrangements. The action was brought by plaintiffs, a law partnership, and by J. Patrick Kittler, individually, to recover attorneys' fees, expenses, and interest for services rendered from April 5, 1966, to April 30, 1968. The action was brought against defendants James L. Sheehan and John D. Sheehan and four corporations wholly or partially owned by them, namely, Sheehan Properties, Inc., Dugger-Holmes, Inc., Gale Institute, Inc., and Brooklyn Center Industrial Park, Inc. (hereinafter referred to as Industrial Park). The Sheehans counterclaimed to recover prior payments. Gale Institute and Industrial Park counterclaimed for abuse of process. The case was tried before a jury and at the close of the evidence, after 3 weeks of trial, the court granted plaintiffs' motion to dismiss the Sheehans' counterclaim but denied their motion to dismiss the counterclaim of Gale Institute and Industrial Park. The motions of defendants Gale Institute and Industrial Park to dismiss the complaints against them were granted. The partnership's claim was submitted to the jury on the theories of express contract, account stated, and quantum meruit. Kittler's individual claim was submitted on the theories of express contract and quantum meruit. A special verdict was returned in the amounts requested against all four remaining defendants. The jury apparently found express contract or account stated since interest was awarded. The jury found against Gale Institute and Industrial Park on their counterclaims for abuse of process.

J. Patrick Kittler is a Minnesota attorney limiting his practice to matters of international law. He practiced in partnership with Raymond V. Hedelson until November 1967 and thereafter as an individual practitioner. Defendants James L. Sheehan and John D. Sheehan are Minneapolis businessmen with extensive business interests and considerable experience in employing services of lawyers. On April 5, 1966, Kittler was contacted to represent Sheehan Properties concerning the legal advisability of acquiring a Panama corporation owning a 2-million-acre ranch in Paraguay, South America. This developed into a relationship of attorney and client that continued until May 10, 1968. The work required many months of travel by Kittler or one of his associates to Europe, South America, and cities within the United States. It involved research, the examination of documents, the preparation of bonds and associated details, and the rendering of opinions and advice. The matters concerned complex financing arrangements and the discussion of them with many people in the United States and abroad.

The first billing for services by the plaintiffs was on a time and expense basis and was paid out of defendants' account by their bank. Discussions were held between the parties concerning the hourly rates, daily rates for being absent from the office, and necessary expenses. Subsequent conversations and letters between the parties reiterated the rates charged and included an arrangement giving plaintiffs a 25-percent interest in the ranch for forbearance in demanding immediate payment for services and expenses. Payments were periodically made on account and monthly statements were submitted to defendants, which defendants admitted they received and never objected to or questioned. Finally, defendants admitted that prior to this action they had never orally or in writing expressed to plaintiff Kittler that his work was unsatisfactory.

Defendants first contend that it was error to submit the issue of express contract to the jury because the fees were allegedly so excessive and overreaching that the court, as a matter of law, should have limited recovery to the reasonable value of the services. The right to enter into fee arrangements with an attorney is protected by Minn.St. 549.01, which provides:

'A party shall have an unrestricted right to agree with his attorney as to his compensation for services, and the measure and mode thereof * * *.'

The essentials of such contracts, whether oral or written, express or implied, are the same as any other contracts. Holt v. Swenson, 252 Minn. 510, 90 N.W.2d 724 (1958). When a fee agreement is fairly entered into with the client and involves no fraud by the attorney, it is as valid and binding as other contracts not involving a fiduciary. Eriksson v. Boyum, 150 Minn. 192, 184 N.W. 961 (1921). Even if the amount of compensation is altered after commencement of the employment, that fact by itself will not invalidate the contract. Anker v. Chicago Great Western R. Co., 144 Minn. 216, 174 N.W. 841 (1919).

However, this court has also observed that, while the freedom to contract between attorney and client is unimpaired, agreements made after services have been rendered should be closely scrutinized to see that there has been no overreaching and that the client was fully informed. Meagher v. Kavli, 251 Minn. 477, 88 N.W.2d 871 (1958); Beals v. Wagener, 47 Minn. 489, 50 N.W. 535 (1891). Defendants urge upon this court the higher standard that an attorney must first prove the contract was fair and reasonable, citing Cooper v. Conklin, 197 App.Div. 205, 189 N.Y.S. 552 (1921). Plaintiffs correctly point out that subsequent New York decisions have held that the contract will be presumed fair until the contrary appears; it is a matter of proof. See, e.g., Rodkinson v. Haecker, 248 N.Y. 480, 162 N.E. 493 (1928). Defendants show no compelling reason to alter Minnesota's present standard of careful scrutiny of such contracts. The instructions in the present case cautioned that the contract should be scrutinized for overreaching. The evidence shows many instances of fee discussion, acceptances of services, and requests for additional services. The Sheehan brothers were experienced businessmen, knowledgeable about attorney-client relationships. This court has previously recognized such experience as a factor indicating less susceptibility to overreaching. Farmer v. Stillwater Water Co., 108 Minn. 41, 121 N.W. 418 (1909). With this in mind, it cannot be said as a matter of law that there was overreaching in the execution of the express contract.

Similarly, it cannot be said as a matter of law that the fees were so excessive as to preclude recovery on the contract. While some fees may come within this category the present case is not of this nature. Provisions of the Canons of Professional Ethics, ¹ Canons 12 and 13, and the Code of Professional Responsibility, ² DR 2--106 and E.C. 2--18, establish criteria for judging the reasonableness of fees. Code of Professional Responsibility, DR 2--106(B) reads in part:

'A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee.'

This court has on many occasions echoed and supplemented the Code in enumerating the factors to be considered in ascertaining whether a fee is reasonable. We have recently noted that a large fee is not necessarily an unreasonable fee. Obraske v. Woody, 294 Minn. 105, 199 N.W.2d 429 (1972). Other factors we have considered include: (1) The time and labor required; (2) the responsibility assumed; (3) the magnitude of the principal amount; (4) the results obtained; (5) the fees customarily charged for similar services; (6) the experience, character, reputation, and ability of counsel; (7) the fee arrangements; (8) the circumstances under which the services were rendered; (9) the nature and difficulty of the proposition involved; (10) the doubtful solvency of the client and the apparent difficulties of collection; (11) the anticipation of future services; and (12) the preclusion of other employment. O'Donnell v. McGee Trucks, Inc., 294 Minn. 110, 199 N.W.2d 432 (1972); State, by Head, v. Paulson, 290 Minn. 371, 188 N.W.2d 424 (19...