Moreno v. Russell

• Decision Date: 13 January 1936
• Docket Number: Civil 3619
• Citation: 53 P.2d 411,47 Ariz. 38
• Parties: J. F. MORENO, as Trustee of National Gold Corporation, a Corporation, Appellant, v. J. E. RUSSELL, Appellee
• Court: Arizona Supreme Court

53 P.2d 411

47 Ariz. 38

J. F. MORENO, as Trustee of National Gold Corporation, a Corporation, Appellant, v. J. E. RUSSELL, Appellee

Civil No. 3619

Supreme Court of Arizona

January 13, 1936

APPEAL from a judgment of the Superior Court of the county of Yavapai. C. C. Faires, Judge. Judgment modified and affirmed.

Mr. Leo T. Stack, for Appellant.

Mr. J E. Russell, Appellee pro se.

OPINION

LOCKWOOD, C.J.

This is an action filed by J. E. Russell, hereinafter called plaintiff, against National Exploration Corporation, a corporation, hereinafter called the Exploration Company, and National Gold Corporation, a corporation, hereinafter called the Gold Company. The Gold Company went into bankruptcy while this suit was pending, and J. F. Moreno, the trustee in bankruptcy, was substituted as party defendant.

There are four counts in the complaint, but as only one of them is discussed in the briefs we shall consider only that one. It alleges, in substance, that plaintiff is an attorney at law and that the two defendants are corporations; that the Exploration Company acquired a contract of purchase on some mining property in Yavapai county, and operated the property for some time, but fell into financial difficulties, and in September, 1932, was reorganized. The manner of reorganization was alleged to have been as follows: The Gold Company was formed and it proceeded to exchange its stock with all the stockholders of the Exploration Company at the ratio of one share of Gold Company for five shares of Exploration Company. The Gold Company then took over all the property formerly belonging to the Exploration Company. At the time of the reorganization the Exploration Company was indebted to plaintiff upon an account stated for legal services performed in the amount of $1,860.97. There was then certain litigation pending in which the Exploration Company was interested, and plaintiff, in his capacity as attorney, settled such litigation; his services being alleged to be reasonably worth $300. The prayer for recovery was for the $1,860.97 with interest from September 1, 1932, the time at which the account was claimed to have been stated, and for the $300 with interest from March 1, 1933, the time at which the litigation for which the fee was claimed was disposed of. Defendants answered with a general denial. In addition thereto, the Exploration Company, not waiving its general denial but as a further answer, alleged that about the 22d day of September, 1933, plaintiff, by an instrument in writing,

"duly cancelled one certain account with this defendant for the sum of two thousand one hundred sixty and 97/100 dollars ($2,160.97), which said account was composed of the sum of $1,860.97 for services stated to have been theretofore rendered and expenditures theretofore made on behalf of this corporation, and the sum of $300.00 for services stated to have been rendered in procuring the favorable disposition of one certain appeal case, 'Midnight T. v. Linesba et al.', which said sums are the sums mentioned in paragraph III of the first cause of action contained in said complaint";

and alleged such cancellation to be a full discharge from any liability. Plaintiff replied to the separate answer as follows:

"That he denies the truth of the allegations of fact as set forth in said separate answer of National Exploration Corporation, and alleges the facts to be, that on or about the 22nd day of September, 1933, W. W. Linesba, general manager of National Gold Corporation came to plaintiff office and requested the release of the indebtedness of the National Exploration Corporation to plaintiff; that plaintiff then and there agreed to release said indebtedness upon the consideration that plaintiff be continued as counsel for National Gold Corporation for the ensuingyear at the then retainer of one hundred dollars per month and that said retainer be paid promptly each month which agreement was duly accepted by said W. W. Linesba for and on behalf of said National Gold Corporation, and plaintiff then and there receipted and released said indebtedness for said consideration; that said National Gold Corporation did not keep its said agreement, but on the 15th day of December, 1933, discharged plaintiff as its counsel and paid him up to December 15th, 1933, and no more, and, therefore, as a matter of law the consideration for said release pleaded by defendant, National Exploration Corporation, totally failed, and under the authority of the case of Barbara Development Corporation et al. v. Jordan , 295 P. 782 (Arizona), the consideration for the release was rescinded by defendant and plaintiff was placed in a position where he could lawfully treat such as a rescission of the settlement and proceed upon the original claim."

Defendants thereafter filed the following pleading:

"Come now the defendants above named and without waiving their answers heretofore filed herein, but for a further and additional answer to the first cause of action contained in plaintiff's complaint and plaintiff's reply to defendants' answer, admit, deny and allege as follows:

"I. Defendants deny that the release and cancellation referred to in their answer was made upon the consideration of plaintiff's retention as counsel for defendants, or either of them, for the term of one year, or for any other length of time; deny that any such agreement was made, and allege that plaintiff was, at and before the cancellation of said account, retained by these defendants as legal counsel on a month to month basis, and that such employment was terminated for cause.

"Defendants further allege that the sole consideration for said cancellation and release was the cancellation and release by various other individual creditors of said National Exploration Corporation of their claims against said corporation, and that such cancellation and release was final and conclusive when made."

The case came to trial before a jury and voluminous evidence was taken; many objections to the introduction of evidence were made by each party; motions for an instructed verdict in favor of the defendants were made both at the close of plaintiff's case and at the end of all of the evidence, and by the court denied; and the jury returned a general verdict in favor of plaintiff. Judgment was thereafter rendered on the first cause of action for the sum of $300, with interest at 6 per cent. from March 1, 1933, and the sum of $2,160.97, with interest thereon from September 1, 1932, whereupon this appeal was taken by Moreno as trustee.

There are ten assignments of error raising several legal propositions, which we consider as seems advisable.

It is defendant's theory that the pleadings and the evidence show a compromise and settlement of plaintiff's original cause of action for legal services rendered and, such being the case, plaintiff's remedy, if any, was not a suit on the original account but one for breach of the contract of settlement. It is plaintiff's contention, on the other hand, that they show, if anything, an accord and satisfaction in which the satisfaction was not carried out according to its terms, and that he could, therefore, repudiate the accord and sue on the original cause of action. The principles of law applying to these mutual contentions are set forth by us in the case of Cano v. Arizona Frozen Products Co., 38 Ariz. 404, 300 P. 953, 954, as follows:

"There are two forms of settlement of matters in dispute between parties. The first is called an 'accord and satisfaction.' An 'accord' is an agreement whereby one...