Schwartz v. Schwerin

• Decision Date: 20 February 1959
• Docket Number: No. 6432,6432
• Citation: 85 Ariz. 242,336 P.2d 144
• Parties: John M. SCHWARTZ, Appellant and Cross Appellee, v. Martin SCHWERIN, Arvetta Schwerin, Solana Land Company, Appellees and Cross Appellants.
• Court: Arizona Supreme Court

Page 144

336 P.2d 144

85 Ariz. 242

John M. SCHWARTZ, Appellant and Cross Appellee, v. Martin SCHWERIN, Arvetta Schwerin, Solana Land Company, Appellees and Cross Appellants.

No. 6432.

Supreme Court of Arizona.

Feb. 20, 1959.

Scruggs & Rucker, Tucson, for appellant.

Frank J. Barry, Tucson, for appellees.

UDALL, Justice.

This is an action in three counts by plaintiff (appellant) John M. Schwartz against defendants (appellees) Martin Schwerin, Arvetta Schwerin, his wife, and Solana Land Company, a corporation, for attorney's fees on quantum meruit basis. The parties will hereafter be referred to as they appeared in the lower court, and the corporate entity, where referred to separately, will be termed 'Solana'. The case was tried to the court, sitting without a jury. Plaintiff prayed for judgment in the aggregate sum of $115,000; the trial court entered judgments totalling $12,500, which the plaintiff, by this appeal, contends was inadequate, i. e., in amounts 'grossly insufficient' in each instance for the services rendered.

It should also be noted there is a cross appeal by the defendants against plaintiff which will be considered later.

The problems presented on this appeal are not involved. At a pre-trial conference it was stipulated 'that the only issue to be tried on Counts I and II of the Complaint is the reasonable value of plaintiff's services to the defendants.' For all practical purposes the same thing may be said as to Count III. By their separate answer to each count, defendants admitted the relationship of attorney and client existed; that they had not paid plaintiff anything for such services; and they further assert the defendants stood ready to pay plaintiff a reasonable attorney's fee for services rendered. As a matter of fact, shortly after this litigation commenced defendants made a written offer to allow judgment to be entered against them for $11,000.

Where, as here, the amount of compensation claimed is not fixed by an agreement between the parties, the attorney must declare for relief on a quantum meruit, which means the reasonable value of services rendered. 7 C.J.S. Attorney and Client § 191.

At the outset it is well to determine on what record the validity of the judgment in question is to be decided. Plaintiff Schwartz bases several assignments of error, and much of his argument, upon loose statements appearing in a 'Memorandum Opinion'--which was the medium used by the trial judge in announcing his decision--rather than attacking specific findings of fact or conclusions of law mae by the trial court at the time judgment was entered. The law is settled in this jurisdiction that a memorandum opinion of the trial judge cannot form the basis of an assignment of error. Robinson v. Herring, 75 Ariz. 166, 253 P.2d 347; Haynie v. Taylor, 69 Ariz. 339, 213 P.2d 684; Ollason v. Glasscock, 26 Ariz. 193, 224 P. 284. We shall therefore ignore any assignments, or arguments, predicated upon statements appearing only in the memorandum opinion.

Before discussing the separate counts, it seems advisable that we state the well-known basic elements to be considered in determining the reasonable value of an attorney's services. From a study of the authorities it would appear such factors may be classified under four general headings (1) the qualities of the advocate: his ability, his training, education, experience, professional standing and skill; (2) the character of the work to be done: its difficulty, its intricacy, its importance, time and skill required, the responsibility imposed and the prominence and character of the parties where they affect the importance of the litigation; (2) the work actually performed by the lawyer: the skill, time and attention given to the work; (4) the result: whether the attorney was successful and what benefits were derived. See, 7 C.J.S. Attorney and Client § 191 a. (2), p. 1080 et seq.; 5 Am.Jur., Attorneys at Law, section 198. Cf. Ives v. Lessing, 19 Ariz. 208, 168 P. 506. Furthermore, good judgment would dictate that each of these factors be given consideration be the trier of fact and that no one element should predominate or be given undue weight.

A careful reading of the entire record convinces us that the learned trial court fully understood these principles and applied them in rendering its judgment.

Count One

Plaintiff's claim for a $75,000 attorney's fee under this count arises out of his defending a somewhat involved action for specific performance brought against Solana relative to a sale of section 19 (owned by said corporation) which lies in a very exclusive residential area in the Catalina Foothills north of Tucson. A complete resume of this case will be found in the reported decision of Solana Land Co. v. National Realty Co., 77 Ariz. 18, 266 P.2d 739, 43 A.L.R.2d 1002. It should be noted that the action was commenced by plaintiff, and an answer filed by the attorney who then represented Solana, before plaintiff Schwartz was employed as counsel the latter half of the year 1951. Attorney Schwartz tried the case, lost it in part in the superior court, but won a complete victory on appeal to the supreme court, wherein title was quieted in Solana. One of the findings of fact in the instant case was that at the time said litigation commenced, section 19 had an approximate value of $200,000 and that when the mandate of this court went down the property had an approximate value of $500,000. Eventually section 19 was sold for $550,000. Plaintiff claimed no credit for the sale, though according to his testimony he did advise as to certain minor phases of the contracts, etc. However, plaintiff testified: '* * * If I had not advised in the sale of the property I would have stated the same fee for the land case because I just considered it in there.'

This count was decided on the basis of expert testimony offered by both parties as to what would be a reasonable fee. One attorney, as a witness for plaintiff, in answer to a hypothetical question, stated that a reasonable fee would be $41,000 to $42,000, which sum he admitted was largely arrived at on the basis of ten percent of the amount 'saved' for Solana. One of plaintiff's other expert witnesses, without assigning any specific reason therefor, gave as his opinion that a reasonable fee would range 'from an absolute minimum of $35,000 to a reasonable maximum of $45,000.' Another attorney made an estimate of $35,000. We do not know what factors these reputable lawyers took into consideration in making their estimate of a proper fee, but it would appear to be based principally on the results and benefits derived by the client. We are not suggesting that the increased value of the property is to entirely disregarded; however, that factor need only be considered in order to determine the importance of the litigation and the enlarged responsibility thus imposed upon the attorney. Furthermore, in the matter of determining a reasonable fee there is a distinction between, as here, defending a client's property and enriching one client under the 'salvage' theory. See, Cooke v. Gove, 61 Nev. 55, 114 P.2d 87, 135 A.L.R. 855.

Two attorneys, called by defendants, who had heard plaintiff's testimony and carefully examined the complete file, testified that in their opinion a reasonable fee on this count would be $6,000. All of the attorneys who testified were prominent members of the Pima County Bar and were subjected to rigid cross-examination by opposing counsel. Upon the basis of this conflicting testimony the trial court entered judgment on this count against the corporation for the sum of $6,000.

As to count one, plaintiff assigns as error the refusal of the trial court to permit him to estimate, as the trial, the number of hours spent on this matter. The basis for this ruling is made clear in the Reporter's Transcript. When counsel for plaintiff asked for such an estimate, objection was made, and sustained, upon the ground of estoppel. It appeared that defendant, ten months prior to trial, had submitted written interrogatories in a 'discovery' effort to determine just how much time the plaintiff claimed he had spent so that he might better prepare his defense. Plaintiff failed or refused at that time to give any approximation on the time element and was very evasive as to any question submitted to him on this point. The trial court, by its ruling, merely required plaintiff to stand on the answers previously given. It is fundamental that interrogatories are a 'discovery process' and the inquiring party is entitled to be made aware of certain facts known only to the opposing party, so that he may be better able to prepare for trial. At best the ruling attacked raised a matter of discretion with the trial court, and upon this record we preceive no abuse of discretion or error in its ruling.

Count Two

Plaintiff, under this count, claimed there was due him from Solana the sum of $25,000 as a reasonable attorney's fee for services rendered to the corporation during the period December 1949 to March 1954, principally in connection with certain tax matters. Plaintiff not only prepared the corporate tax returns for the years 1948 to 1953 inclusive, but more particularly instituted an action in behalf of the corporation to upset a deficiency tax assessment for the year 1946 amounting to $26,872.35. This matter was heard before the United States Tax Court in Los Angeles. The trial lasted one afternoon. A favorable judgment was obtained for the taxpayer. Plaintiff further contends, and the trial court found it to be a fact, that as a result of this test case the Bureau of Internal Revenue abandoned its previous method of assessment, which resulted ultimately in additional tax savings to Solana of $68,254.66 for the years 1948, 1951, 1952 and 1953.

Two attorneys were called by plaintiff and in answer to hypothetical questions stated that in their opinion reasonable values of plaintiff's services in these...