Riegi v. Phelps

• Decision Date: 23 July 1894
• Citation: 60 N.W. 402,4 N.D. 272
• Court: North Dakota Supreme Court

60 N.W. 402

4 N.D. 272

MINNIE RIEGI v. H. W. PHELPS, et al

Supreme Court of North Dakota

July 23, 1894

Appeal from District Court, Walsh County; Morgan, J.

Action by Minnie Riegi against H. W. Phelps and J. D. Phelps to recover a balance collected by defendants, as attorneys, on a note placed in their hands for collection. From a judgment for plaintiff, defendants appeal.

Affirmed.

Phelps & Phelps, upon the brief, (John M. Cochrane, on oral argument,) for appellant.

A mere agent of an agent is not responsible as such to the principal of the latter. Section 3790, Comp. Laws. Where a creditor places a claim for collection in the hands of a law and collection agency, who send it to a local attorney, there is no relation of attorney and client between the creditor and the local attorney. Hoover v. Greenbaum, 61 N.Y 305. A sub-agent is exclusively accountable to his immediate principal and can look for his compensation only to his immediate employer as well. I Am. and Eng. Enc. Law, 395; Story on Agency, § 387. Montgomery Co. Bank v Albany City Bank, 7 N.Y. 459. No fraud is pleaded in the complaint, there is no allegation that the plaintiff was misled, or that she relied on any act or omission of the defendants. The issues made by the pleadings must control in determining the case. Prairie School Tp. v. Haseleu, 55 N.W 938, 3 N.D. 328.

Sauter & Fraine, for respondent.

The sub-agent, lawfully appointed, represents the principal in a like manner with the original agent, § 4005 Comp. Laws. Where a sub-agent is employed by an agent to receive money for the principal, the principal may treat the sub-agent as his agent and sue him for the money received. Miller v Farmers Bank, 30 Md. 392; Wicks v. Hatch, 62 N.Y. 535. Strong v. Stewart, 9 Heisk. 137. An attorney employed by the agent for his principal is the principal's attorney and not the agents. Porter v. Peckham, 44 Cal. 204. The power of substitution is impliedly given to an agent, when the object of the agency is of such a character that it cannot be attained without a substitution; as where a draft payable at a distant place was left with the bank for collection. Planters Bk. v. First Nat. Bk. 75 N. Car. 534; Bank v. McGilvray, 64 Am. Dec. 92; Fabens v. Bank, 34 Am. Dec. 59; Bank v. Trip, 1 Peters U. S. 25. Or where the well known custom of trade is so understood by the parties. Bodine v. Ins., Co. 51 N.Y. 117; Van Schoick v. Ins. Co., 68 N.Y. 434; University v. Denny, 47 Vt. 13; Grady v. Ins. Co., 60 Mo. 116. An attorney who bargains with his client on a matter of advantage to himself, is bound to show that the transaction is fair and equitable, and that the client was fully informed of his rights and interests in the subject matter of the transaction, and the nature and effect of the transaction itself, and was so placed as to be able to deal with the attorney at arms length. Kisling v. Shaw, 91 Am. Dec. 644; Roberts v. Armstrong, 89 Am. Dec. 624; Cotton v. Sharpstein, 80 Am. Dec. 774; Thomas v. Turner, 12 S.E. 149. Weeks on Attorneys, § § 79 and 262. Where an attorney received a note for $ 250 for collection, and after ascertaining that it would be paid in full, agreed with his client to pay $ 75 of any amount collected and retain the balance for a fee; in assumpsit for money had and received, the burden of proof is on the attorney to show that the contract was fair and equitable. Burnham v. Hasleton, 20 At. Rep. 80; Michould v. Girod, 4 How. 554. The strongest justification and argument found to sustain the action of defendants, is in Part 1, King Henry IV, Act 1, Scene 2.

Prince Henry:--"I see a good amendment of life in thee, from praying to purse taking.

Fal.--Why, Hal, 'tis my vocation, Hal;

'Tis no sin for a man to labor in his vocation."

OPINION

CORLISS, J.

This case presents the betrayal of a trust reposed in an attorney. The plaintiff was the owner of a note for $ 235, on which was due the principal and about 13 years' interest. It was executed by her brother. She lived in Rochester, Minn. After the execution of this note her brother removed to the territory of Dakota to live. In August, 1892, she placed the note in the hands of Bear & Granger, attorneys at Rochester, Minn., with instructions to them to collect it for her. At this time she knew that her brother was living in the State of North Dakota. This note was sent by Bear & Granger to the defendants, who were attorneys practicing law at Grafton and Minto, in this state, with directions for them to collect the amount due on it. Upon being notified by defendants that they had this note for collection, the maker of it (plaintiff's brother) came to the office of the defendants in Grafton, and in a short time paid them $ 369 in settlement, certain claims of the brother against his sister being deducted from the amount of the note in the adjustment of the matter. After this money had been paid, the note delivered, and the whole matter closed, so far as the brother was concerned, defendants (or rather defendant H. W. Phelps, on behalf of defendants) sent Bear & Granger the following telegram: "Will client take one hundred dollars net for Folske note, and you twenty-five? He claims forty paid and board account of eighty-five. Answer." Bear & Granger wired acceptance of this offer, and defendant paid them the amount stated in the telegram, i. e. $ 125. Plaintiff, having discovered how much had been collected, brought this action to recover the balance, less a reasonable collection fee.

Why was this telegram sent by the defendants? Certainly not that the defendants might, by the answer to it, receive definate instructions as to the terms on which they should settle, for they had already settled. The only possible explanation of their object in sending it is that they desired to entrap the owner of the note into consenting to receive only a small part of her property, and thus fraudulently secure an enormous collection fee by concealing from the attorneys in Rochester, Minn., and the owner of the note, the true state of facts. It is insisted that the charge made by the defendants for the collection is...