McUllough v. Sullivan

• Decision Date: 01 February 1926
• Docket Number: No. 74.,74.
• Citation: 132 A. 102
• Parties: McULLOUGH v. SULLIVAN.
• Court: New Jersey Supreme Court

132 A. 102

McULLOUGH

v. SULLIVAN.

No. 74.

Court of Errors and Appeals of New Jersey.

Feb. 1, 1926.

(Syllabus by the Court.)

Appeal from Supreme Court.

Action by William McCullough against James A. Sullivan. Judgment for plaintiff, and defendant appeals. Affirmed.

Mackay & Mackay, of Hackensack (Howard Mackay, of Hackensack, of counsel), for appellant.

Jerome J. Dunn, of Jersey City, for respondent.

KATZENBACH, J. This is an appeal from a judgment of the Supreme Court entered upon the verdict of a jury rendered at a trial held at the Bergen circuit. The defendant below (hereinafter referred to as the defendant) is the appellant. In September, 1920, the plaintiff below (hereinafter referred to as the plaintiff) was the owner of a trucking business. He entered into an agreement to sell the business to a corporation formed for the purpose of acquiring it, known as the McCullough Trucking Company (hereinafter referred to as the trucking company). The purchase price was $100,500. The agreement provided for a cash payment of $5,000. The balance of the purchase price, $95,500, was to be paid in installments. For these installments the trucking company was to deliver to the plaintiff 68 promissory notes. These notes were to be secured by a chattel mortgage covering the chattels sold. The plaintiff consulted the defendant, who is an attorney and counsellor at law of this state informed him of the nature of the transaction, and engaged him to draw the chattel mortgage which he was to receive. The defendant drew the chattel mortgage. It was placed upon record. The trucking company defaulted in the payment of some of the notes as they matured. The plaintiff sought to foreclose the chattel mortgage. This resulted in the bankruptcy of the trucking company. In the bankruptcy proceedings the validity of the chattel mortgage was attacked. The ground of the attack was that the affidavit did not conform to the provisions of the chattel mortgage act (Laws 1902, p. 487) in that it did not set forth the true consideration of the mortgage. The attack was successful. The referee in bankruptcy who first passed upon the question of the validity of the chattel mortgage held it void as against general creditors, and dismissed the lien attaching to the proceeds of sale (the chattels having been sold by order of the court free of the chattel mortgage, the lien, if any, to attach to the proceeds of sale). The order of the referee was affirmed by the United States District Court. The order of affirmance of the United States District Court was subsequently affirmed by the United States Circuit Court of Appeals for the Third Circuit. 292 F. 103. There was a subsequent chattel mortgage between the same parties which was held valid. This has, however, no bearing upon the present action. The chattels presumably covered by the mortgage brought at the sale $20,000. From this amount the plaintiff was paid $4,362.19, which was the amount due upon the second chattel mortgage which was held valid, and the plaintiff's dividend as a general creditor. The balance of the proceeds of sale, $15,637.81, went to the other general creditors. The plaintiff would have received the entire sum had the first chattel mortgage been held valid. The plaintiff thereupon commenced the present action against the defendant to recover his loss upon the theory that the defendant had failed to exercise reasonable skill and care in the preparation of the chattel mortgage. The trial judge left to the jury the question as to whether or not the defendant had exercised reasonable skill and care in the drafting of the mortgage. The jury found in favor of the plaintiff, and rendered a verdict for $15,637.81. From the judgment entered on this verdict the defendant has appealed.

Before considering the grounds advanced by the appellant for the reversal of this judgment it is perhaps advisable to state the law applicable to the present cause of action. A lawyer, without express agreement, is not an insurer. He is not a guarantor of the soundness of his opinions, or the successful outcome of the litigation which he is employed to conduct, or that the instruments he will draft will be held valid by the court of last resort. He is not answerable for an error of judgment in the conduct of a case or for every mistake which may occur in practice. He does, however, undertake in the practice of his profession of the law that he is possessed of that reasonable knowledge and skill ordinarily possessed by other members of his profession. He contracts to use the reasonable knowledge and skill in the transaction of business which lawyers of ordinary ability, and skill possess and exercise. On the one hand, he is not to be held accountable for the consequences of every act which may be held to be an error by a court. On the other hand, he is not immune from responsibility, if be fails to employ in the work he undertakes that reasonable knowledge and skill exercised by lawyers of ordinary ability and skill. The duties and liabilities between an attorney and his client are the same as those between a physician and his patient. Both the attorney and physician are required to exercise that reasonable knowledge and skill ordinarily possessed and exercised by others in their respective professions.

In this state there appears to be a dearth of reported eases defining the relations in this respect between an attorney and his client, although many are found in the reports of other states. In Jacobsen v. Peterson, 91 N. J. Law, 404, 103 A. 983, Mr. Justice Trenchard, in speaking of the duty of an attorney, who is employed to investigate the title to real estate, to make a painstaking examination of the records,...