Northwest Realty Co. v. Perez

• Decision Date: 08 January 1963
• Docket Number: 9988,Nos. 9987,s. 9987
• Citation: 119 N.W.2d 114,80 S.D. 62
• Parties: NORTHWEST REALTY COMPANY, a corporation, Plaintiff and Appellant, v. Leonard J. PEREZ, Defendant and Respondent. Leonard J. PEREZ and Virginia Perez, Plaintiffs and Respondents, v. NORTHWEST REALTY COMPANY, a corporation, and Sheldon F. Reese, Defendats and Appellants.
• Court: South Dakota Supreme Court

Page 114

119 N.W.2d 114

80 S.D. 62

NORTHWEST REALTY COMPANY, a corporation, Plaintiff and Appellant, v. Leonard J. PEREZ, Defendant and Respondent.

Leonard J. PEREZ and Virginia Perez, Plaintiffs and Respondents, v. NORTHWEST REALTY COMPANY, a corporation, and Sheldon F.

Reese, Defendats and Appellants.

Nos. 9987, 9988.

Supreme Court of South Dakota.

Jan. 8, 1963.

Rehearing Denied Feb. 5, 1963.

Morrill & Morrill, Sturgis, for appellants.

Sieler & Brady, Rapid City, for respondents.

BIEGELMEIER, Judge.

These appeals involve the authority of an attorney at law to compromise and settle claims and causes of action in favor of, and those made against, his client. At the time of the employment of John C. Searle to handle their legal affairs, two actions were pending: one by Northweat Realty Company against Perez to replevin the property covered by, and foreclosure of, a conditional sales contract; the other a counter suit by Perez and his wife against Northwest Realty and Reese, its president, for actual and exemplary damages claiming the unlawful conversion of personal property attached and garnisheed in the first action. The two challenged stipulations were signed by Searle. One of these settled the replevin suit by agreeing that action be dismissed with prejudice and the property described in the complaint to be 'returned' to plaintiff Northwest Realty pursuant to the stipulation in the conversion action. The other stipulation provided for dismissal of the conversion action with prejudice, the release of the articles garnisheed in the hands of a storage company and 'defendants agree to pay to the plaintiffs the sum of $2,500'; other details are hereafter mentioned. Both stipulations were dated October 27, 1961. The replevin stipulation was filed November 16, 1961 and an order entered thereon dismissing that action with prejudice and releasing the garnishment. The stipulation in the conversion action was filed November 21, 1961 but no judgment or order was then entered. Searle never reported to Reese the execution of these stipulations or his settlement of the actions. While he received amounts in excess of $1,000 monthly, for services rendered on itemized statements for over three months after his employment, differences arose between Searle and Reese over claimed failure to give status reports of matters he was handling, which resulted in Searle's terminating his relationship as his attorney by telegram November 9th. Searle, Reese and Northwest Realty offices were all located in the same city.

Reese learned of the settlements by having his employees and one David Morrill, another attorney employed by him in some other legal affairs, check the records. On November 24 he promptly moved to set aside both stipulations and the order of dismissal. In addition to affidavits, the circuit judge heard oral testimony. From orders denying the relief requested and a judgment entered after that hearing for the Perez plaintiffs in the conversion action for $2,526.26 based on the stipulation, Northwest Realty and Reese appeal.

The rule is almost universal that an attorney who is clothed with no other authority than that arising from his employment in that capacity has no implied power by virtue of his general retainer to compromise and settle his client's claim or cause of action. Dwight v. Hazlett, 107 W.Va. 192, 147 S.E. 877, 66 A.L.R. 102 and note page 107; 30 A.L.R.2d 945; 7 C.J.S. Attorney and Client Sec. 105; 5 Am.Jur., Attorneys at Law, Sec. 98. It applies to an agreement to accept less than the amount due or claimed by his client. Dwight v. Hazlett, supra; Weidenfeld v. Olson, 132 Neb. 303, 271 N.W. 806; or discharge or terminate the right of action by a dismissal with prejudice (the modern name for a retraxit) without special authority. Robinson v. Hiles, 119 Cal.App.2d 666, 260 P.2d 194; see also Mongeon v. Burkebile, 79 N.D. 234, 55 N.W.2d 445, 452 and Radosevich v. Pegues, 133 Colo. 148, 292 P.2d 741. An attorney employed to obtain a change of venue and serve an answer has no authority to withdraw the answer or consent to judgment by default and a judgment so entered must be vacated. Emerson-Brantingham Implement Co. v. Olson, 56 S.D. 132, 227 N.W. 567. The general principle that an attorney, merely by virtue of his employment, has no implied authority to release his client's claim or cause of action or compromise or settle his claim was recognized by this court, but held not to apply to the attorney's agreement that the sheriff hold a car under a levy pending final disposition of the action; this for the reason the resulting damage due to depreciation 'was no part of the original claim, but a mere incident arising out of the proceedings * * *.' Schievelbein v. Boos, 74 S.D. 428, 54 N.W.2d 172. The attorney is in effect a special agent limited in duty to the vigilant prosecution and defense of the rights of the client and not to bargain or contract them away. His employment to prosecute, defend or manage the cause for his client as an officer of a court of justice is inconsistent with the power to dismiss or agree to make payment of the claim and it is reasonable to require those added powers to be specially delegated. 66 A.L.R. 112; Bank of Glade Spring v. McEwen, 160 N.C. 414, 76 S.E. 222; Nothem v. Vonderhaar, 189 Iowa 43, 175 N.W. 967, 974. Mindful of their relationship as special agents with their professional and official status, the requirement is not only reasonable, as the Iowa Supreme Court described it, but one that comports with the high standard to which the bar must adhere. The attorney may negotiate for and advise settlement of the controversy (Rules of Professional Conduct, No. 8) but the decision is the client's. The client, not the lawyer, is the litigant. Rule No. 17. The client owns the cause of action or owes the obligation. The powers of counsel are limited to those affecting the remedy and incidental proceedings. As to the...