Ranta v. McCarney, 11033
Citation | 391 N.W.2d 161 |
Decision Date | 16 July 1986 |
Docket Number | No. 11033,11033 |
Parties | Esko E. RANTA, Plaintiff and Appellee, v. Robert P. McCARNEY, Defendant and Appellant. Civ. |
Court | United States State Supreme Court of North Dakota |
Stephan A. Pezalla (argued), Golden Valley, Minn., and Ervin J. Lee, of Webster, Engel & Lee, Bismarck, for plaintiff and appellee.
A. William Lucas, of Lundberg, Nodland, Lucas & Schulz, P.C., Bismarck, for defendant and appellant.
Robert P. McCarney appealed from a judgment of the Burleigh County Court in favor of Esko E. Ranta for recovery of fees for legal services. We reverse and remand.
Ranta is an attorney licensed to practice in Minnesota. Since 1966 he has travelled to North Dakota to provide various legal advice to McCarney, primarily in the area of taxation. He never has been licensed to practice law in the State of North Dakota. Details of the fees to be charged were traditionally left open, with Ranta billing McCarney the amount Ranta believed was fair and reasonable for the services rendered. Ranta states that they never had any problems so far as fees were concerned, and that McCarney "referred to me at least twenty clients in this area, ..." At one point, Ranta opened what he called a "branch office" in Bismarck, apparently to serve those additional clients. 1
McCarney hired Ranta in 1977 in connection with the sale of McCarney's Ford, Inc. On November 7, 1977, the final documents selling the business were negotiated and signed in an all-day closing in Bismarck. On or about June 1, 1978, McCarney paid Ranta $5,000. At the end of that month Ranta sent McCarney his bill of $22,500, showing the $5,000 paid as a credit and a $17,500 balance due. The bill contained no statement of hours or costs incurred. At trial office records that showed approximately sixty-one hours of work on behalf of McCarney were submitted. According to Ranta, the only other time records were kept in his mind.
Section 27-11-01, N.D.C.C., prohibits the practice of law in this State without proper authorization:
This Court defined "the practice of law" in Cain v. Merchants Nat. Bank & Trust Co. of Fargo, 66 N.D. 746, 752, 268 N.W. 719, 722 (1936), by quoting In re Opinion of the Justices, 279 Mass. 607, 613-614, 194 N.E. 313, 317 (1935):
"... ..."
The court went on to state that "[i]f compensation is exacted either directly or indirectly, 'all advice to clients, and all action taken for them in matters connected with the law,' constitute practicing law." Cain, 66 N.D. at 752, 268 N.W. at 722, quoting In re Duncan, 83 S.C. 186, 189, 65 S.E. 210, 211 (1909). Cain and its progeny demonstrate that Ranta's conduct constituted the practice of law in this State. See also State v. Niska, 380 N.W.2d 646 (N.D.1986).
Although our statutory law does not specifically prohibit compensation of out-of-State attorneys who practice law in the State in violation of Sec. 27-11-01, the statute is clearly intended to provide protection to our citizens from unlicensed and unauthorized practice of law. As we stated recently in Niska, "North Dakota has a compelling interest in regulating the practice of law within its boundaries." 380 N.W.2d at 650. Section 27-11-01 "is aimed at preventing the harm caused by unqualified persons performing legal services for others." 380 N.W.2d at 649. Although Ranta may be competent (a factor which is irrelevant), he is not authorized to practice law in this State. The purpose of the statute is to determine before an individual practices in this State whether that person is competent and qualified to do so.
Prior to this case we have not had occasion to determine whether an out-of-State attorney not authorized to practice law in this State may recover compensation for his or her services. There are, however, two North Dakota cases which are analogous. Application of Christianson, 215 N.W.2d 920 (N.D.1974), involved legal work performed by a suspended lawyer which, the lawyer alleged, could be lawfully performed by a layperson. The Court held that the suspended attorney "is subject to the same restrictions as are laymen, such as the limitation that [the acts performed] involve his own business and that he charge no fee." 215 N.W.2d at 926. (Emphasis added.) 3
We believe a fair reading of Section 27-11-01 and Christianson indicate a preference by both the Legislature and our Court of furthering the strong policy considerations underlying the prohibition against the unauthorized practice of law that occurs in this State by barring compensation for any such activities. The statute is intended to protect the public from unlicensed attorneys and is to be liberally construed "with a view to effecting its objects and to promoting justice." Section 1-02-01, N.D.C.C. An out-of-State lawyer who is not authorized to practice law in this State (such as Ranta) sits in the same position as a suspended attorney previously admitted to practice law in this State (as in Christianson ); such a person cannot lawfully practice law in this State, nor can that person charge a fee for such services. We therefore hold that an out-of-State attorney who is not licensed to practice law in this State cannot recover compensation for services rendered in the State of North Dakota. This position is in accord with the majority view on the issue. See generally cases cited in 11 A.L.R.3d 907 (1967 & Supp.1985); 7 Am.Jur.2d Attorneys at Law Sec. 242 (1980); 7A C.J.S. Attorney & Client Sec. 285 (1980 & Supp.1985). We further hold that a violation of Sec. 27-11-01 precludes the application of equitable principles, such as equitable estoppel, because such a violation constitutes unclean hands. See, e.g., Gajewski v. Bratcher, 221 N.W.2d 614 (N.D.1974).
A problem develops, however, in relation to exceptions to the rule that many jurisdictions have developed. The exception of Federal court practice (as opposed to State court practice) does not apply because Ranta's conduct did not involve an appearance in a federal court. See, e.g., Spanos v. Skouras Theatres Corporation, 235 F.Supp. 1 (S.D.N.Y. 1964), affirmed in relevant part, 364 F.2d 161 (2d Cir.), cert. denied, 385 U.S. 987, 87 S.Ct. 597, 17 L.Ed.2d 448 (1966); Cowen v. Calabrese, 230 Cal.App.2d 870, 41 Cal.Rptr. 441 (1964). Nor do we perceive a justification for Ranta's conduct under the interstate practice exception. Although some States allow an out-of-State attorney to recover fees where the attorney made proper disclosure to the client and associated with local counsel, such as Massachusetts [ Brooks v. Volunteer Harbor No. 4, 233 Mass. 168, 123 N.E. 511 (1919) ], 4 we need not reach the issue because such is not the situation here. Another State has adopted a "sister-State" exception, allowing recovery when the attorney is licensed to practice law in a sister State and has not offended the spirit of intention of the statutes regulating the practice of law. See Freeling v. Tucker, 49...
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