Mahoney v. Sharff

• Decision Date: 14 April 1961
• Docket Number: No. 19340,19340
• Citation: 12 Cal.Rptr. 515,191 Cal.App.2d 191
• Parties: V. T. MAHONEY, Plaintiff, Appellant and Respondent, v. Roy A. SHARFF, Defendant, Respondent and Appellant. Roy A. SHARFF, Petitioner and Appellant, v. Vera BLACKBURN, Respondent.
• Court: California Court of Appeals Court of Appeals

Page 515

12 Cal.Rptr. 515

191 Cal.App.2d 191

V. T. MAHONEY, Plaintiff, Appellant and Respondent, v. Roy A. SHARFF, Defendant, Respondent and Appellant.

Roy A. SHARFF, Petitioner and Appellant, v. Vera BLACKBURN, Respondent.

No. 19340.

District Court of Appeal, First District, Division 1, California.

April 14, 1961.

Rehearing Denied May 9, 1961.

Hearing Denied June 6, 1961.

Orlando J. Bowman, Edmund L. Regalia, Oakland, for V. T. Mahoney.

John E. Anderton, Richard H. Perry, San Francisco, for Roy A. Sharff.

BRAY, Presiding Justice.

Appeals by both parties to the judgment.

Questions presented.

Primarily, the question involved is the interpretation of an attorney's retainer contract. ¹

Defendant's Appeal.

1. Is plaintiff entitled to credit the attorney's fees awarded defendant in the divorce action on the amount of the attorney's fees provided in the contingent contract?

2. Is the judgment in excess of the trial court's jurisdiction?

3. Was interest properly awarded plaintiff?

Plaintiff's Appeal.

Was the order in the divorce case requiring plaintiff's former husband to pay the community debts a 'recovery' under the contingent fee contract? ²

Record.

Defendant is an attorney. In December, 1954, plaintiff and defendant entered into an 'Attorney's Retainer Agreement.' Thereafter plaintiff sued defendant for return of certain moneys which she claimed that defendant had improperly retained under the contract. Defendant counterclaimed and also filed a petition for a declaration of rights asking the court to interpret the contract. The court awarded plaintiff judgment against defendant for $992 plus interest. In arriving at that sum the court credited plaintiff on her indebtedness to defendant under the contract with the sum of $4,500 awarded defendant in Blackburn v. Blackburn, 160 Cal.App.2d 301, 324 P.2d 971, a divorce action brought by plaintiff against her then husband. Defendant appeals from the allowance of that credit. The court credited defendant (1) with 40 per cent of $5,403.04, the latter being the total amount of debts incurred by plaintiff and her husband during their marriage and which the court in the divorce action decreed the husband should pay; (2) with one-third of $4,500 temporary alimony paid plaintiff by her husband in the divorce action; (3) with 40 per cent of $1,000 alimony paid plaintiff after trial in the divorce action.

1. The Contract.

In November, 1954, plaintiff contacted defendant and asked him to represent her in an annulment action previously brought by her, and a divorce action then on file. The parties then executed the 'Attorney's Retainer Agreement.' It provides for a $1,000 retainer fee to be credited against the percentage contingent fee provided in the contract. (The retainer fee was paid.) The agreement provided that defendant was to receive 'one-third of the amount recovered before suit set for trial or forty percent after date of trial set.' In the annulment suit of Blackburn v. Blackburn, the court appointed a receiver for the California property belonging to plaintiff's husband. Defendant then amended plaintiff's complaint for annulment, asked for a divorce and alleged breach of contract and damages. Defendant rendered a considerable amount of services for plaintiff in Blackburn v. Blackburn.

The contract provided that in the event of no recovery at all, defendant's fees for the services to be rendered would be limited to the $1,000 retainer fee. Under certain circumstances where a divorce action is pending a plaintiff wife may legally enter into a contingent fee contract with an attorney who is to represent her in that proceeding. Krieger v. Bulpitt, 1935, 40 Cal.2d 97, 251 P.2d 673. (No claim is made in this case that the contract is improper or that there was any overreaching by the attorney in obtaining it.) In such a contract the wife can obligate herself to pay a sum independent of, and in addition to, any fees which may be awarded by the courts. McDonald v. Johnson, 1949, 229 Minn. 119, 38 N.W.2d 196, 200; see also Collins v. Welsh, 1934, 2 Cal.App.2d 103, 110, 37 P.2d 505. The question here is, did the contract provide that the 40 per cent contingency fee (the Blackburn case went to trial, so the higher fee applied), was to be in addition to any fee to be paid by the husband which the court in the divorce action might allow. The contract is silent upon the subject.

There are no California cases dealing directly with the problem here. However, there are cases which seem to indicate that defendant is not entitled to the court award in addition to the contract fee.

In Boyles v. Leonardo, 1924, 65 Cal.App. 315, 224 P. 115, the court cites and relies on Culley v. Badgley, 1917, 196 Mich. 414, 163 N.W. 33, L.R.A.1917F, 359, which stated: 'We think it was the defendant's duty, in representing his client, to obtain, in the way of costs and expenses, what he in fairness could obtain at the hands of the court, to the end that his client might to that extent be relieved.' 163 N.W. at page 35. (Emphasis added.) In State ex rel. Arthur v. Superior Court, 1910, 58 Wash. 97, 107 P. 876, the court stated: 'A plaintiff in a divorce action may make an agreement with her attorney fixing the amount of his compensation, and, in the absence of an express agreement, the law will imply an agreement to pay the reasonable value of the services performed, and this obligation is not affected or abrogated by the allowance of an attorney's fee in the divorce action, except as to the amount allowed.' 107 P. at page 877. (Emphasis added.)

In McManus v. Montgomery, 1938, 12 Cal.2d 397, 84 P.2d 787, an action to recover the reasonable value of attorney's services, the court found that the wife and attorney had made no agreement concerning attorney's fees in the maintenance action. The divorce court had awarded the wife as attorney's fees $650. The court in the action for attorney's fees stated: 'The purpose of the [divorce] court in making provision for attorneys' fees * * * was to allow the full reasonable value of legal services to the 'entry of judgment'. * * * To permit recovery of a larger amount would constitute a fraud upon the court and upon their client.' 12 Cal.2d at page 400, 84 P.2d at page 788. (Emphasis added.) The court further stated: As 'no independent contract existed for payment of a fee, said attorneys are estopped now to contend that their client is indebted to them in an amount exceeding the sum allowed by the court in the maintenance action.' 12 Cal.2d at page 400, 84 P.2d at page 788.

In Schwartz v. Schwartz, 1959, 173 Cal.App.2d 455, 343 P.2d 299, an appeal from an order reducing an award of attorney's fees the court said: 'In analyzing the attorneys' rights regarding orders for fees it must be remembered that the attorney has no direct substantive or proprietary interest in the allowance of attorney's fees made to the wife. His right is only indirect and derivative. Weil v. Superior Court, 97 Cal.App.2d 373, 376, 217 P.2d 975.' 173 Cal.App.2d at page 457, 343 P.2d at page 301.

It may very well be that the services rendered by defendant to plaintiff are reasonably worth the contingency fee plus the award in the Blackburn case. However, defendant undertook these services under an agreement which granted him only a percentage of the 'recovery.' In fact, if there were no 'recovery' he agreed that the $1,000 retainer should be in full for all services. As he is an attorney and prepared the contract, if there is any ambiguity in it we must construe the contract most strongly against him.

In Bennett v. Potter, 1919, 180 Cal. 736, 183 P. 156, 157, the contract provided that the attorney was to prosecute an action for the partition of land and to receive as compensation 10 per cent of "* * * whatever is recovered * * *" The attorneys claimed that they were entitled as fees to 10 per cent of what was 'recovered' puls an attorney's fee allowed in the partition action. The court pointed out that section 1654, Civil Code, provided that a contract is to be "interpreted most strongly against the party who caused the uncertainty to exist" and then said that as the contract was drawn by the attorneys it should be 'interpreted most strongly against the plaintiffs. This rule is accentuated by the fact that the plaintiffs were attorneys at law and presumably familiar with legal terms and proceedings and accustomed to the use of language appropriate to the framing of contracts, while the defendant was a business man, with no special knowledge of, or familiarity with, these subjects. * * * We must also presume that the provision of the contract that the plaintiffs should have 'ten per cent. of whatever is recovered' was considered by the parties to be full compensation, so far as it applied to the particular suit, for all services to be rendered by plaintiffs as attorneys in that action, if, as might be the case, no attorney's fee was allowed therein. An interpretation which would give them both, as that of the court below does, would involve the absurdity of giving them twice the value of the service rendered.' 180 Cal. at pages 740, 741, 183 P. at page 158.

Section 137.5, Civil Code, provides: 'Whenever the court in any action for * * * divorce * * * orders one of the parties to pay attorneys' fees for the benefit of the other' (emphasis added) the court may make such fees payable 'to the attorney entitled thereto.' As the fees in Blackburn are paid for the benefit of plaintiff and as defendant has no direct, substantive or proprietary right therein, his right being only derivative from plaintiff, it is obvious that in the absence of a contract expressly providing that he may receive those fees in addition to his compensation under the contract, those fees must be credited to the amount payable under the contract.

State Bar rule 3, Rules of Professional Conduct (52 Cal.2d 896), providing 'A member of the State Bar shall not * * * except with a person...