State ex rel. Junior Ass'n of Milwaukee Bar v. Rice

• Decision Date: 08 November 1940
• Citation: 236 Wis. 38,294 N.W. 550
• Parties: STATE ex rel. JUNIOR ASS'N OF MILWAUKEE BAR et al. v. RICE.
• Court: Wisconsin Supreme Court

236 Wis. 38

294 N.W. 550

STATE ex rel. JUNIOR ASS'N OF MILWAUKEE BAR et al.

v.RICE.

Supreme Court of Wisconsin.

Nov. 8, 1940.

Appeal from a judgment of the Circuit Court for Milwaukee County; Otto H. Breidenbach, Judge.

Action by the State, on the relation of Junior Association of Milwaukee Bar, John F. Savage and others, as members of the Executive Committee of the Junior Association of Milwaukee Bar, against Abraham M. Rice, to restrain defendant from practicing law. From a judgment ordering defendant to cease and desist from doing acts which court concluded constituted the practice of law, defendant appeals.-[By Editorial Staff.]

Judgment affirmed in part and reversed in part and cause remanded with directions.

The action was commenced on December 21, 1936, by the State of Wisconsin, on the relation of the members of the Executive Committee of the Junior Association of the Milwaukee Bar, against the defendant, Abraham M. Rice, an independent insurance adjuster, for the purpose of restraining him from continuing certain practices and rendering certain services to insurance companies, which, it was asserted, constitute the practice of law.

It is alleged in the complaint that the defendant is a partner in the firm of Joseph Rice & Company; that the only other partner in said firm is Joseph Rice; that neither the defendant nor Joseph Rice are licensed to practice law in this state or elsewhere; that for more than seven years last past the defendant has continuously engaged in the practice of law, is now so engaged and has wrongfully and illegally usurped a franchise, to-wit, the privilege of practicing law, by doing the following things: (1) advertising and holding himself out as being engaged in the business of investigating and adjusting claims based on personal injuries and damage to property; (2) undertaking, for compensation, to adjust such claims; (3) giving legal advice relative to questions of liability and damages; (4) investigating such claims and negotiating and adjusting settlements thereof for compensation; (5) preparing contracts, releases and other instruments incidental to the settlement of such claims; (6) giving advice as to the purpose and effect of such contracts, releases and other instruments; (7) preparing, for compensation, and filing in judicial proceedings, process and pleadings. It is further alleged that the foregoing acts of the defendant were not incidental to any lawful, usual or ordinary business of the defendant.

The defendant answered and denied that he had engaged in the practice of law or had wrongfully or illegally usurped and exercised a franchise, to-wit: the privilege of practicing law; admitted that he had advertised and held himself out as being engaged in the business of investigating claims against insurance companies based on personal injuries and damage to property, and had negotiated and carried out for compensation adjustments of such claims and had prepared releases and other instruments incidental to the settlement of such claims; alleged that all such acts were incidental to his lawful, usual and ordinary business and denied that any of such acts or practices constituted the practice of law; denied that he had systematically and continuously given advice relating to the purpose and effect of contracts, releases or other instruments incidental to the settlement of property damage and personal injury claims and denied that he had undertaken to perform for compensation any legal services including questions of liability and damages or had prepared process and pleadings in judicial proceedings.

Trial was had to the court. The facts, supplemented by the adverse examinations of the defendant and one of his former employees, were stipulated.

The court found the facts in accordance with the undisputed proof and concluded that the following acts on the part of the defendant constituted the unauthorized practice of law:

(a) Appearing in a representative capacity before a justice of the peace.

(b) Advising or recommending that an insurance company settle a claim asserted against it for any amount or sums.

(c) Advising or recommending that an insurance company refuse or reject a claim asserted against it.

(d) Advising or recommending others, including insurance companies, of their rights or duties towards insurance companies or third persons.

(e) Advising or recommending that insurance companies have subrogation or contribution claims against other insurance companies.

(f) Negotiating settlements or adjustments for or on behalf of insurance companies with others in a representative capacity.

(g) Engaging in the practice of being an intermediary between an attorney and third persons.

(h) Advising or offering to advise, and construing the rights of insurance companies, claimants or third persons or their respective rights arising out of or by reason of a contract of liability, casualty, fire or indemnity insurance existing between any insurance company and another.

(i) Selection and preparation of releases, covenants not to sue, contracts or agreements for the settlement or compromise of claims against insurance companies or other similar agreements for or on behalf of insurance companies or third persons. (This does not apply to procuring execution of prepared instruments where defendant exercises no discretion in selection or preparation or to payment by delivery of check, draft or payment of money in discharge of claim.)

The court further concluded that the following acts or practices of the defendant did not constitute the practice of law: Discovering witnesses and evidence, taking photographs, statements of witnesses and acts of like nature, appraisement of damage to physical property where liability is disputed or undisputed.

Entry of judgment was accordingly ordered. From a judgment, entered June 13, 1939, which ordered the defendant to cease and desist from doing any of the things which the court had concluded constituted the practice of law, the defendant appealed.

Eugene L. McIntyre, of Milwaukee, for appellant.

John E. Martin, Atty. Gen., Warren H. Resh, Asst. Atty. Gen., John C. Doerfer, of West Allis, and Joseph J. Doucette, of Milwaukee, for respondents.

Walter W. Hammond, Chairman, Committee State Bar Ass'n on Unauthorized Practice of Law, of Kenosha, Ralph M. Hoyt, Giles F. Clark, Wolfe & Hart, Joseph A. Padway, and Otjen & Otjen, all of Milwaukee, C. H. Crownhart, Jr., of Madison, Michael Levin, of Milwaukee, Warren H. Resh, of Madison, John F. Savage, of Milwaukee, W. Mead Stillman, of Oshkosh, Sheldon Vance, of Fort Atkinson, and Francis J. Wilcox, of Eau Claire, amici curiae.

NELSON, Justice.

As stated in the foregoing recitation, the facts were stipulated and the adverse examinations of the defendant and one of his former employees, taken before trial, were received in evidence. So many of the facts found by the trial court as are necessary to an understanding of this controversy may be summarized as follows:

The defendant resides in the village of Whitefish Bay. His occupation is that of independent adjuster of casualty claims for various insurance companies. His business is carried on as a partnership, his only partner being Joseph Rice, his father, who does not reside in Wisconsin and who does not take any active part in the affairs of the partnership. Neither the defendant nor his father are licensed to practice law in this state or elsewhere. For more than seven years the defendant advertised and held himself out as being engaged in the business of investigating and adjusting claims made against insurance companies based on personal injuries or damage to property. The defendant had solicited business from various insurance companies by directing letters to them in an endeavor to interest them in the service rendered by him. He had advertised his business in insurance periodicals and had listed his business in the classified part of telephone directories. He had adjusted many claims made against numerous insurancecompanies. At times during his adverse examination, he referred to such companies as his clients. He is not a regular salaried employee of any insurance company. He maintains, at his own expense, an office at 312 East Wisconsin Avenue in the city of Milwaukee. He opens and closes his office at his pleasure, hires and discharges his clerical help and employees and charges the insurance companies who employ him as an adjuster upon an hourly or fee basis for the services rendered in adjusting each claim. The defendant's customary procedure and practice in investigating, adjusting and settling a claim arising out of an automobile accident was substantially as follows:

Upon receiving notice from an insurance company, or its agent, of an accident or injury, which notice was generally forwarded in the form of an accident report, the defendant himself, or through his employees, obtained as soon as possible full information regarding the accident, the nature and extent of any resulting injuries to persons and damage to property. If possible, he secured from the insured a written statement of the facts relating to the accident. After ascertaining the facts, he would in most cases determine or pass judgment on the question whether the insurance company for which he was investigating was liable. When reporting the facts to the insurance company he frequently recommended and advised the company of his opinion as to its liability or nonliability. Frequently he advised an insurance company to settle or not to settle a claim made against it. Sometimes, upon his own initiative and sometimes upon receipt of advice from an insurance company, he attempted to negotiate settlements with persons who had been injured or who had suffered damage to property. Upon arriving at a settlement, he sometimes drew a draft on the company and advised it that he had settled the claim. Many small claims made against insurance companies were settled by him...