Morse v. Cremer, 82-16

• Decision Date: 30 June 1982
• Docket Number: No. 82-16,82-16
• Parties: William R. MORSE, Plaintiff and Respondent, v. Leo J. CREMER, Jr., for himself, individually and for and on behalf of Bertha R. Cremer, Inc., et al., Defendants and Appellants.
• Court: Montana Supreme Court

Page 358

647 P.2d 358

200 Mont. 71

William R. MORSE, Plaintiff and Respondent, v. Leo J. CREMER, Jr., for himself, individually and for and on behalf of Bertha R. Cremer, Inc., et al Defendants and Appellants.

No. 82-16.

Supreme Court of Montana.

Submitted on Briefs April 22, 1982.

Decided June 30, 1982.

Berger, Sinclair & Nelson, Billings, for defendants and appellants.

Drysdale, McLean, Screnar, Cok & Wheat, Bozeman, for plaintiff and respondent.

HARRISON, Justice.

William Morse brought this action for attorney fees against the defendants. The cause was tried before the District Court, sitting without a jury, in the Sixth Judicial District of the State of Montana, in and for the County of Sweet Grass. Judgment was entered for Morse against all named appellants for the full amount of the complaint, $13,338.69. All appellants appeal the judgment.

The theory of respondent's suit was for an accounting; basically for attorney fees rendered over a long period of time to a rancher client. Following numerous motions, proceedings and discovery, the trial court issued a pretrial order on April 22, 1981. The agreed facts arising out of the pretrial order were (1) that the plaintiff is an attorney at law, duly licensed to practice in the State of Montana, who performed legal services for the defendants prior to the filing of the action in this matter; and (2) that $50 per hour is a reasonable attorney fee for services rendered by respondent.

Respondent is a lawyer in Absarokee, Montana, and has represented appellants in various legal matters from before 1970 through March 1980. During this time respondent and appellants established an attorney/client relationship that was close, informal and personal. Respondent also billed appellants informally. The testimony indicates that, as respondent performed work, he prepared a slip listing the services performed and the time involved. Each month the services and time involved were added to a single bill.

The slips from which the billings were made were shown to appellants, and the charges and services over this period of time were discussed. After this was done, respondent disposed of the slips and transferred a memorandum of the amounts involved to an account book of appellant, Leo J. Cremer, Jr., with notations as to the litigation or services involved. Testimony at trial indicated respondent gave appellants a monthly billing. At various times over the years the account remained unpaid and accumulated into rather large amounts of money without questions being raised by either side. When payments were made, they were made by Leo J. Cremer, Jr., on his ranch account. The checks from Cremer to respondent indicated merely a payment of fees.

From April 1977, until March 1980, respondent represented Leo J. Cremer, Jr., in an action entitled Cremer v. Cremer (1981), Mont., 627 P.2d 1199, 38 St.Rep. 574, a case Cremer lost. During this same period of time respondent handled numerous other matters and actions for appellants. Respondent claims that in January 1980 appellants owed him more than $10,000 and that at that time Leo J. Cremer paid respondent $10,000. Respondent indicated through an exhibit that all accounts except the Cremer v. Cremer case were paid to date by the $10,000 payment. Late in January 1980, appellant requested that respondent return to him $5,000 of the $10,000 paid earlier that month. Leo Cremer, Jr., agreed in writing to repay this sum to respondent but did not do so. At the time he returned the money to appellants, respondent added the $5,000 to the Cremer account as part of the accounts receivable.

Throughout this time the informal relationship of the parties was such that respondent continually performed services for appellants and Cremer periodically made payments to respondent on his behalf and on behalf of the other appellants for services performed. Respondent's records indicate that throughout this period, in addition to his hourly charges for his services, he requested and received from appellants costs and other expenditures. The trial court found these expenses reasonable and necessary.

In addition to his findings and conclusions in favor of respondent, the trial court judge submitted a memorandum setting out the reasons for his ruling. There the court noted that the central issue was how much was owed and whether the proof of the account made under Rule 803 or 1006, Mont.R.Evid., was applicable. The court noted:

"The defendant objects to its admission; he insists it is at the best nothing more than a summary; that the original time and costs sheets are the original documents. The evidence shows plaintiff lawyer made these entries from time and cost sheets and then destroyed them!

"The Court realized this contest on admissibility was crucial and ruled to take it under advisement, asked for briefs and let the evidence proceed subject to defendants' objection.

"I rule it admissible under Rule 803, M.R.Ev.

"It adds nothing to the record to criticize the sloppy, meandering way the account is, but the record is eloquent that both houses-both the attorney's and the rancher's-were guilty of the same methods of record keeping. The payment of the check by rancher to lawyer and partial payment back is a bookkeeper's nightmare. I've attached the diagram furnished by plaintiff to highlight this topsy-turvy situation."

The issues presented on appeal are:

1. Whether the respondent's Exhibit 1 is admissible under Rule 803(6), Mont.R.Evid.

2. Whether the respondent's Exhibit 1 is admissible under Rule 1006, Mont.R.Evid.

3. If respondent is entitled to judgment, whether he is entitled to judgment against Bertha Cremer, Inc., Cremer Rodeo Land and Livestock, Bertha Cremer Enterprises, Crazy Mountain Resources and Bertha Cremer.

We affirm the District Court and find its admission of the evidence under Rule 803(6), Mont.R.Evid., controlling here.

Rule 803(6), Mont.R.Evid., provides:

"Hearsay exceptions: availability of declarant immaterial.

"The following are not excluded by the hearsay rule, even though the declarant is available as a witness:

"...

"(6) Records of regularly conducted activity. A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnosis, made at or near the time of the acts, events, conditions, opinions, or diagnosis, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of the information or the method or circumstances of preparation indicate lack of trustworthiness. The term 'business' as used in this paragraph includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit."

Appellants argue that respondent's Exhibit 1 does not conform to the requisites of Rule 803(6), Mont.R.Evid., because under this rule three criteria must be met before the document is admissible to the hearsay rule: (1) the document must be a memorandum; (2) the memorandum must be made at or near the time of the event; and (3) it must be made in the ordinary course of business. Appellants argue that the second element has not been satisfied here, citing 30 Am.Jur.2d Evidence, section 938.

As previously noted, the relationship between respondent and appellants was a continuing one brought about by numerous lawsuits and a personal confidential relationship that sometimes involved daily telephone calls and other frequent communications. One of the business relationships that respondent had with appellants was a contract for a total of $25,000 in which respondent would probate the estates of the appellant and his son or wife, whichever died first. That contract provided for annual payments of $2,500 a year. Respondent testified about his bookkeeping methods:

"Our office procedure involved keeping time and charges memorandum on small memorandum slips that were kept for that purpose, on a temporary basis until such time as they were transcribed into this ledger. And we usually retain them until after the billing to the client in case there is any question about it. And after the billing to the client the notes involved that appear to be superfluous, including these, are discarded."

Some of the charges, particularly for appellate work, were allowed to accrue for a period of time before they were billed to the client. This bookkeeping system appeared to be satisfactory to all concerned until 1980, when the $5,000 chargeback came into question.

In support of his contention that Exhibit 1 does not reflect the timeliness of entry of the documents required to comply with the second part of Rule 803(6), appellants rely on two cases, Tabata v. Murane (1946), 76 Cal.App.2d 887, 174 P.2d 684, and Hallmark Builders, Inc., et al. v. Anthony (Tex.1977), 547 S.W.2d 681. In Tabata the court stated:

"The court would have been justified in regarding the writings as mere fragments of an account relating to only a part of the business dealings of plaintiff and decedent. Before an account is admissible in evidence for the purpose of establishing a cause of action of an openbook account, it must be shown to have been accurately kept, which was not done in the instant case, and it must be so complete as to show the balance of indebtedness due from one party to the other, in which respect also plaintiff's evidence was deficient." 174 P.2d at 686.

Here, while respondent's testimony indicated that certain errors were made and later corrected, the trial judge found that the entries testified to were accurately made. Therefore, Tabata is not applicable.

Hallmark Builders, supra, is clearly distinguishable. In that case, the court found that since some invoices for the sale of building materials were not compiled until several...