People v. Title Guarantee & Trust Co.

• Citation: 227 N.Y. 366,125 N.E. 666
• Parties: PEOPLE v. TITLE GUARANTEE & TRUST CO.
• Decision Date: 09 December 1919
• Court: New York Court of Appeals

227 N.Y. 366

125 N.E. 666

PEOPLE

v.TITLE GUARANTEE & TRUST CO.

Court of Appeals of New York.

Dec. 9, 1919.

The Title Guarantee & Trust Company was convicted of violating Penal Law, § 280, relating to the practice of law by corporations, and from a judgment of the Appellate Division (180 App. Div. 648,168 N. Y. Supp. 278), affirming a conviction, it appeals.

Reversed, and information dismissed.

Chase, Collin, and Cardozo, JJ., dissenting as to result, but concurring as to the reasons controlling the decision.

Appeal from Supreme Court, Appellate Division, Second Department.

Charles E. Hughes, of New York City, for appellant.

Harry E. Lewis, Dist. Atty., of Brooklyn, (Ralph E. Hemstreet, of Brooklyn, of counsel), for the People.

HISCOCK, C. J.

The appellant, originally incorporated under another name, was authorized ‘to guarantee bonds and mortgages and titles to real estate,’ and ‘to make and cause to be made and to purchase and to pay for all such searches, abstracts, indices, maps and copies of records as the trustees thereof may deem necessary,’ and for a long time has been engaged in the prosecution of this business.

It has been convicted of a violation of section 280 of the Penal Law (Consol. Laws, c. 40) prohibiting the practice of law and rendition of legal services by a corporation, and of which section the presently material provisions read as follows:

‘It shall be unlawful for any corporation * * * to hold itself out to the public as being entitled to practice law, or render or furnish legal services or advice, or to furnish attorneys or counsel or to render legal services of any kind in actions or proceedings of any nature or in any other way or manner, or in any other manner to assume to be entitled to practice law. * * * This section shall not apply to any corporation * * * lawfully engaged in the examination and insuring of titles to real property. * * * [And as amended in 1916:] But no corporation shall be permitted to render any services which cannot lawfully be rendered by a person not admitted to practice law in this state.’

The evidence upon which, if at all, the conviction of appellant must rest, is in substance as follows:

Appellant printed and kept for distribution a booklet of which the cover and each page were entitled ‘Fees for the Examination of Titles.’ There was contained in it the statement:

‘In all counties, fees for drawing and recording papers and fees for surveys are in addition to the regular charges. Survey charges are found on pages 17-28 and charges for drawing and recording papers on pages 29 and 30.’

On page 29, which had the additional heading, ‘Average Charges for Drawing Papers,’ was found the item, ‘Bill of Sale (Brooklyn & Queens) $3.00.’

On the occasion of the commission of its alleged offense, two detectives employed for that purpose visited the appellant's place of business in Brooklyn. Following directions given in answer to their inquiries they came to one of appellant's employés to whom one of the detectives explained that he was selling a store to the other for a given sum, of which part was to be paid in cash, and that he desired a bill of sale and chattel mortgage to be drawn. He gave to appellant's employé, in response to his request therefor, a list of the merchandise which it was claimed was involved. This employé then passed the detectives to another employé, who took and filled out in pencil blank forms of a chattel mortgage and bill of sale, which do not appear to have been prepared by the appellant, and gave them to a stenographer to be finally filled out. This stenographer returned them to the last employé, who looked them over, placed a seal on them, inquired the rate of interest, and stated that the date of execution, which was left blank, could be filled in when the papers were executed. For thus preparing these papers, fees were charged and paid. There was evidence that on some subsequent occasion some employé of appellant prepared some other instrument of the same general kind as those involved in this proceeding.

In the consideration of the substantial and final question presented to us we can readily eliminate certain provisions of the statute and certain questions of evidence which have been a subject of discussion. Manifestly the provision in the statute that it ‘shall not apply to any corporation * * * lawfully engaged in the examination and insuring of titles to real property’ is not to be taken literally. So far as concerns this case, small controversy, if any, arises in respect of its meaning. On the one side it is not seriously denied that it would permit appellant, or save to it the right, to do the acts which are involved here, if they were an incident to its business and were necessary to place in insurable condition a title which was submitted to it for guaranty. On the other hand, it is not argued that it would enable appellant to prepare the instruments which on this occasion it did prepare, it they were not thus incidental to and connected with the conduct of its authorized business, and were otherwise prohibited.

[1] Under this interpretation of its powers, we think that the evidence furnished by the booklet referred to is ineffective to sustain the present conviction. We think that, in the light of all of the evidence derived from this booklet, the price advertised for drawing bills of sale is to be regarded as applicable to those which might be lawfully prepared as an incident to its regular business, and is not to be regarded as an advertisement holding out the appellant as soliciting and engaged in the business of drawing bills of sale in such manner as would amount to the practice of law. Also, in the view which we take, the evidence that subsequently a similar instrument was prepared by appellant's employés is of no importance. We do not think that there is a word of evidence which fairly sustains the contention of the prosecution that appellant's employés were asked to or did give legal advice leading to or in respect of the instruments which were prepared.

[2] So, stripped of inconclusive features and freed from unsupported claims of evidence, and eliminating any consideration of the principle of untra vires, the bare and decisive inquiry becomes whether a corporation, which, without giving any advice leading to and consummated therein, prepares a bill of sale and chattel mortgage by filling out blanks upon and in accordance with the specific direction of a purported customer, is rendering legal services or holding itself out as entitled to practice law. Under the circumstances of this case the general inquiry really is reduced to the narrow one whether this amounted to rendering legal services, for as we have pointed out there is no evidence that the appellant held itself out as entitled to practice law, unless it did so by performing legal services whereby law would be practiced. I think that a negative answer must be given to this inquiry.

In approaching the decision of the question, and at the outset we ought to consider what must have been the purpose of the Legislature in enacting the statute. That purpose seems obvious. There are certain fundamental requirements and features which, according to our conception, in this state attend and surround the practice of law and rendition of truly legal services. These are the possession of sufficient knowledge and skill, the existence of a relationship of trust and confidence upon which the client may securely rely, and the power of courts to use summary proceeding, if necessary, to enforce on the part of the attorney observance of the obligations and duties growing out of this relationship. A corporation could not adequately comply with and subject itself to these requirements, if there were no penal statute. Through the employment of attorneys as its agents it might fairly meet the requirements of knowledge, skill, and ordinary legal responsibility; but it could not establish a relationship of confidence, and be subject to summary control, as an individual attorney can. Matter of Co-operative Law Co., 198 N. Y. 479, 92 N. E. 15, 32 L. R. A. (N. S.) 55, 139 Am. St. Rep. 839, 19 Ann. Cas. 879. Therefore the statute undertakes by its prohibitive provisions to forbid a corporation to attempt or pretend to do what it cannot satisfactorily or fully do, by holding itself out as an attorney and by professing to perform services of such a nature that their performance ought to be safeguarded by those principles and methods which can be applied to an individual and cannot be applied to a corporation. This purpose to prevent a corporation from simulating the character of an attorney and from essaying to render such services is clearly indicated by the language of the statute. The corporation is forbidden to practice or appear ‘as an attorney at law,’ or to make it a business to practice ‘as an attorney at law,’ or ‘to assume to be entitled to practice law,’ or ‘to assume, use or advertise the title of lawyer or attorney, or attorney at law, or equivalent terms in any language in such manner as to convey the impression that it is entitled to practice law.’

[3] On the other hand, no convincing reason is suggested why a corporation should be punished for performing an act which, because of simplicity and lack of confidential character, it has not been thought necessary to confide to the exclusive care of attorneys, but which may be performed by a layman. Not only common sense, but the wording of the statute itself, dictates this view. This appears in that amendment to the statute which, after provisions that the section should not apply to corporations in certain cases, reads:

‘But no corporation shall be permitted to render any services which cannot lawfully be rendered by a person not admitted to practice law in this state.’

This sentence characterizes the purpose of the entire statute and outlines the final test. Various direct and specific prohibitions and...