McInerney v. Massasoit Greyhound Ass'n

• Decision Date: 20 April 1971
• Citation: 269 N.E.2d 211,359 Mass. 339
• Parties: Timothy J. McINERNEY v. MASSASOIT GREYHOUND ASSOCIATION, Inc. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 211

269 N.E.2d 211

359 Mass. 339

Timothy J. McINERNEY v. MASSASOIT GREYHOUND ASSOCIATION, Inc. et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Dec. 11, 1970.

Decided April 20, 1971.

Richard Wait, Boston (Timothy J. McInerney, Boston, with him) for plaintiff.

Frank L. Kozol, Boston (Harvey E. Pies, Boston, with him) for Massasoit Greyhound Assn., Inc.

Robert G. Clark, Jr., Brockton, for Elinor E. Farrell.

Before SPALDING, CUTTER, SPIEGEL, REARDON and QUIRICO, JJ.

REARDON, Justice.

The case is before us on appeal by the plaintiff from a final decree dismissing his bill for declaratory relief. The judge made findings of facts, and we have, in addition, a report of the evidence and numerous exhibits.

The bill seeks determination of the rights of the plaintiff in 167 shares of the common stock of Massasoit Greyhound Association, Inc. (Massasoit), alleging the assignment of that stock to him by the defendant Elinor E. Farrell (Elinor). The defendants filed answers and counterclaims, in general denying the validity of the assignment of the shares by Elinor to the plaintiff for reasons which will be discussed, and stating further that the actions of the plaintiff in his capacity as a lawyer were such as to preclude giving him the relief he seeks. The defendant Elinor in her counterclaim specifically characterized the assignment and an agreement as 'champertous, unconscionable and inequitable.'

The plaintiff bases his claim on an arrangement for fees which provided that he would retain one-third from any settlement he obtained for Elinor over and above alimony and support payments. He asks us to enforce that agreement and, in particular, to state his right to 167 shares in Massasoit, one-third of the 500 shares which became the property of Elinor on the death of her husband, pursuant to a property settlement negotiated by the plaintiff. Elinor, who repudiates the agreement, has entered an agreement to sell the entire block of 500 shares to Massasoit. Massasoit's counterclaim alleges that the purported assignment to the plaintiff of the 167 shares was of no force and effect, not only because of the invalidity of the fee agreement, but also because the restrictions on the transfer of its stock provided for in the amended articles of organization of the corporation were not complied with by either party to that assignment. The trial judge concluded that the 'so-called contract was champertous, unreasonable and unenforceable,' and that 'Massasoit acted within its rights in refusing to accept McInerney as a valid stockholder.' He further found that since the stock transfer restrictions were not complied with by Elinor or the plaintiff there was no valid transfer to the plaintiff of the Massasoit stock by Elinor.

1. A proper disposition of this case necessitates a fairly full account of the facts. Following a telephone call from Elinor to the plaintiff seeking a discussion with him concerning her marital difficulties with her husband, the late Stanley Russell Murray, who had left her in July, 1961, she met with the plaintiff on August 17 of that year at his office in Boston. She brought with her various documents relative to her problems. After a ten or fifteen minute discussion the plaintiff told her, 'We'll have to make an agreement at the threshold of my professional relationship with you.' He thereupon dictated the first version of the fee agreement which underlies this suit. The agreement, signed by Elinor and the plaintiff, provided that he was to obtain a separate support or divorce decree for her in addition to a property settlement, and secure for her 'everything which * * * (she was) entitled to receive from * * * (her) husband.' In return for the plaintiff's services she undertook to pay him a reasonable fee, with the understanding explicitly stated in the agreement that the fee might be paid by her husband pursuant to an order of the probate judge. In addition, she agreed to pay the plaintiff 'a fee of a sum equal to one-third (1/3) of everything obtained for me over and above payments by way of support or alimony including a fee of a sum equal to one-third (1/3) of everything recovered, if it becomes necessary to litigate the question of title to stock I now hold in my possession * * * in (Massasoit).' At this time she was in possession of 1,500 shares which she claimed as a gift from her husband. On this first visit to the plaintiff's office she remained for several hours.

Thereafter it would appear that there was comparatively little activity on the plaintiff's part until the spring of 1964 when, on June 18, a petition for separate support and a petition in equity to determine title to 1,500 shares in Massasoit were filed by the plaintiff in the Probate Court for Suffolk County. Meanwhile, through some arrangement not clear to us on the record, Elinor relinquished possession of the 1,500 shares to her husband, who subsequently transferred 975 of them by assignment to others named as defendants in the bill in equity. The equity proceeding came on for trial in November, 1965, on parts of nine days. Trial was terminated by negotiations entered into by the plaintiff, chiefly with Mr. Edmund Burke representing Murray. These negotiations culminated in a separate support agreement, an employment agreement, and a voting trust, all drafted in Mr. Burke's office. The separate support agreement provided that Murray was to pay Elinor $20,000 a year free of taxes by way of support, and that Massasoit was to buy from her the house in which she lived for $25,000 free of taxes, and sell to her its furnishings for $2,500. It provided also for the immediate payment by Murray of $25,000, which it was understood by the parties would be paid over to the plaintiff as a fee for services to Elinor. The employment agreement provided that Massasoit was to employ Elinor at $7,500 a year for life, requiring of her unspecified duties which it was understood would be sufficient to satisfy the Internal Revenue Service but which would have due regard for her other obligations, including obligations to her family. The voting trust agreement set up a trust of 500 shares of Massasoit common stock for the benefit of Elinor, with voting rights and rights to dividends in Murray until his death, at which time she was to receive the shares outright. This settlement was agreeable to Elinor, who nonetheless was left with the feeling that she was being overcharged by the plaintiff. Accompanied by her brother-in-law, she went to the plaintiff's office late in December, 1965, to discuss the matter of fees, a visit which the plaintiff resented. At no time did she or did the plaintiff suggest that she seek independent legal advice. ¹

The plaintiff testified in the instant suit that at length, on December 28, 1965, after having accused Elinor of trying to 'chisel' him when he had done a good job for her, he agreed 'to shave' his fee. Elinor testified that the plaintiff rejected her suggestion that they submit his proposed fee to the probate judge for approval, claiming it would jeopardize her settlement. The plaintiff testified in his turn that he felt 'it was not necessary' to submit his fees to the probate judge, although he conceded that was 'generally' the practice.

On December 28, 1965, Elinor signed a revised, second version of the fee agreement written out in longhand by the plaintiff, who signed it as a witness. Under the terms of this agreement Elinor 'hereby, freely & voluntarily * * * (agreed) to pay to Mr. McInerney after reflection, & after consulting others (not disclosed), the following:--a) 1/3 of the shares I receive under the settlement from Murray & I will give him an assignment of said shares forthwith. b) the sum of $40,000. as a fee for the $7,500 per annum employment contract for the rest of my life (33 yrs. by life expectancy tables) & I shall pay this sum at the rate of $2,000 per annum, at monthly intervals out of the employment contract receipts. Mr. McInerney is to receive my monthly checks from M.G.A. Inc. & Murray so as to insure prompt payments by them & he in turn will forward the appropriate amounts to me.' The property settlement, on the terms of which there had been previous agreement, was executed on January 26 and 27, 1966. As part of the settlement, voting trust certificate No. 110 for 500 shares was issued to Elinor. At the same time the plaintiff had Elinor sign a stock assignment separate from the certificate assigning to him 167 shares from the trust. He took this action despite his and Elinor's noncompliance with restrictions on the transfer of stock contained in Massasoit's amended articles of organization and summarized on the face of the voting trust certificate in the following terms: 'Any holder of a Voting Trust Certificate who wishes to sell or transfer the same to any person not a holder of the stock of said Massasoit Greyhound Association, Inc. or of a Voting Trust Certificate for the same, and any person who acquires a Voting Trust Certificate otherwise than by transfer to a holder of the stock of said corporation or of a Voting Trust Certificate for the same, is required to offer the Voting Trust Certificate to the corporation for purchase.' Reference to these restrictions was also contained in the voting trust agreement. The plaintiff, having gone over and approved the language of both, and having read the amended articles of organization in the Secretary of State's office, was thoroughly familiar with them. The restrictions had been waived by action of the board of directors to allow the transfer provided in the voting trust.

As had been understood by the parties, the plaintiff received from Murray a fee consisting of the $25,000 specified in the separate support agreement directly upon its execution. On February 10, 1966, both the proceeding in equity and the separate support proceeding were terminated by agreement, the former with prejudice and...