Oviatt v. Smith

• Decision Date: 05 March 1924
• Docket Number: No. 123.,123.
• Citation: 226 Mich. 253,197 N.W. 535
• Parties: OVIATT v. SMITH.
• Court: Michigan Supreme Court

226 Mich. 253

197 N.W. 535

OVIATT

v.SMITH.

No. 123.

Supreme Court of Michigan.

March 5, 1924.

Appeal from Circuit Court, Lapeer County, in Chancery; Glenn C. Gillespie, Judge.

Bill by Jessie Oviatt against Herbert W. Smith. Decree for plaintiff, and defendant appeals. Affirmed.

Plaintiff employed defendant, an attorney at law, to file a bill of divorce against her husband, John Oviatt. The bill was filed December 12, 1914. Mr. Oviatt contested the case, and upon a hearing plaintiff's bill was dismissed. The parties to that suit owned as tenants by the entireties a house and lot in Lapeer. On the dismissal of plaintiff's bill and on July 13, 1915, they gave to the State Savings Bank of Lapeer a mortgage for $160 to pay their respective attorneys and the expenses of the case. They did not resume marital relations. In December of 1917, plaintiff again consulted defendant about a divorce and obtaining her rights in the property, which was then occupied by her husband and from which she derived no income. Defendant advised her that she could not secure a decree for divorce under the circumstances but suggested that possibly if she filed a bill her husband would file a cross-bill setting up desertion, obtain a decree on that ground, and have their property matters adjusted. He therefore prepared a bill for her, and it was filed December 3, 1917. Defendant's appearance was entered, and the attorneys attempted an adjustment. Plaintiff's husband, however, was obdurate, and outside of an application for temporary alimony being filed nothing was done in the case so far as the calendar entries disclose, until December 15, 1920, when an answer and cross-bill was filed by Mr. Oviatt. The substance of this pleading does not appear. Plaintiff consulted defendant occasionally, and he advised her and correctly so that if she paid off the mortgage the title to the property would still remain in her and her husband as it was. She was then living in Bay City, and defendant agreed to notify her if any steps were taken to foreclose the mortgage.

The mortgage to the bank not being paid, it commenced foreclosure by advertisement. Defendant promptly wrote plaintiff advising her of this proceeding, but she claims she did not receive the letter, although she did know of the sale before the period for redemption expired. On December 20, 1919, the promises were sold on foreclosure for $220 to defendant; he being the highest bidder. They are admitted to be worth $1,450. After the period of redemption had expired it is undisputed that plaintiff offered to reimburse defendant if he would deed the property to her and that he refused. This bill was then filed and a decree was entered requiring defendant to deed the premises to plaintiff upon payment of the sum of $220 with interest, taxes, etc. From this decree defendant appeals.

Argued before CLARK, C. J., and McDONALD, BIRD, SHARPE, MOORE, STEERE, FELLOWS, and WIEST, JJ. Herbert W. Smith, of Lapeer, in pro. per.

Vincent D. Ryan, of Flint, for appellee.

FELLOWS, J. (after stating the facts as above).

We may accept defendant's testimony that he honestly believed that the divorce suit had been ‘dropped’ and his employment at an end when he purchased the property. It may be the attorneys had abandoned hope of getting the parties to a settlement; but, independent of defendant's belief, the case as a matter of fact was still pending in court and undisposed of, and plaintiff's rights in the property which he was employed to protect were still unsettled. He had not been discharged, and the relation of attorney and client still existed. The property he purchased was that in which his client had an interest, which interest his employment related to. Under these circumstances may he purchase the property for his own benefit or does the purchase inure to the benefit of his client?

We shall first consider the cases cited by defendant. In Humphrey v. Hurd, 31 Mich. 436, the attorney had advised the client to buy an outstanding claim in one Chapman. The client refused to buy it as he considered it of no consequence. Later the attorney was employed by another to procure the Chapman title for him; this he did. It was held that the later transaction was not invalid by reason of the attorney's former employment.

In Webber v. Wannemaker, 39 Colo. 425, 89 Pac. 780, the relation of attorney and client had never existed between the parties. In Fisher v. McInerney, 137 Cal. 28, 69 Pac. 622, 907, 92 Am. St. Rep. 68, the purchase was made with the consent of the client. In Rogers v. Gaston, 43 Minn. 189, 45 N. W. 427, the title was not acquired by the attorney until two years after his employment had ceased. And in Baker v. First National Bank of Davenport, 77 Iowa, 615, 42 N. W. 452, the attorney took the title in his own name to protect his client and held title as security for the amount paid by him. The client refused to repay him, and it was held that he was justified in selling the premises to protect himself for the money advanced, and that he might bid the property in himself, and that he thereby acquired a good title. All of these cases it will readily be seen are distinguishable from the one before us.

In Taylor v. Young, 56 Mich. 285, 22 N. W. 799, this court had before it a similar situation to the case at bar. The sale was a judicial one, and the premises were bid in in the name of complainant and her attorney who made the bid, he claiming an interest by way of lien for his professional service. The gist of the holding is found in the following excerpt from the opinion:

‘There can be no doubt that under the purchase made by Draper, while acting as her attorney, whether the bid was in his or her name, the purchase was hers and not the attorney's, and it was his duty to release the property to her, if bid off in his name, at any time she might request it, and in case he refused, it was optional with her to hold him as her trustee, and require him to account as such therefor, or compel him to convey to her.’

This holding is in accord with the uniform trend of authorities. A few quotations will, we think, show how firmly this rule is intrenched in the law.

‘The purchase by an attorney of an interest in the thing in controversy in opposition to the title of his client is forbidden, because it places him under temptation to be unfaithful to his trust. Such a purchase is not voidable merely, but void absolutely. An attorney who has been employed professionally to sustain a title to land may not, either before or after the cause is ended, or during the continuance, or after the termination of the relation of counsel and client, while the client holds, or after he has conveyed his interest, purchase for himself any outstanding title; if he does, it may inure to the client or his vendee, who may recover the premises from the counsel by paying or tendering the amount of the purchase money with interest; and a purchaser from such counsel, with notice of the facts, is in the same situation.’ Section 277, Weeks on Attorneys at Law (2d Ed.).

‘It can be safely stated as a sound and salutary legal principle that, so long as the relationship of client and attorney exists, the attorney is a trustee for his client in and about the cause or the subject thereof, and any trade that he makes or benefits he may derive, resulting from the...