Walker v. Telex Corp.

• Decision Date: 31 January 1978
• Docket Number: 50571,Nos. 50419,s. 50419
• Citation: 583 P.2d 482
• Parties: Floyd L. WALKER, Appellee, v. The TELEX CORPORATION and Telex Computer Products, Inc., Appellants.
• Court: Oklahoma Supreme Court

Page 482

583 P.2d 482

Floyd L. WALKER, Appellee, v. The TELEX CORPORATION and Telex Computer Products, Inc., Appellants.

Nos. 50419, 50571.

Supreme Court of Oklahoma.

Jan. 31, 1978.

Rehearing Denied Sept. 18, 1978.

Appeal from the District Court of Tulsa County; Robert G. Green, Trial judge.

Attorney brings action under his contract of employment with client. Client's counterclaim contains two counts contending attorney was negligent and also responsible for fees client paid other attorneys. Trial court granted a partial summary judgment finding attorney entitled to recover, with that amount based on benefit to client of a settlement relating to litigation that was the subject of the employment contract. Trial court submitted to jury the value of that benefit to client. Jury determined that value. Trial court entered judgment for attorney based on the jury determined value. On the counterclaims, the trial court granted summary judgment for the attorney as to the negligence count. Second count tried to court, with judgment entered denying recovery to client. Client appeals.

AFFIRMED IN PART AND REVERSED IN PART; AND REMANDED WITH INSTRUCTIONS.

Bert McElroy, Sanders, McElroy & Carpenter, J. Warren Jackman, Walker, Jackman & Livingston, Tulsa, for appellee.

Frederic Dorwart, J. Michael Medina, Holliman, Langholz, Runnels & Dorwart Tulsa, Deaton, Gassaway & Davison, Inc., Ada, Serge Novovich, The Telex Corp., Tulsa, for appellants.

LAVENDER, Vice Chief Justice:

For the purpose of this opinion, we consolidated both appeals.

Floyd L. Walker (Walker), an attorney, entered into an employment contract with Telex Corporation and Telex Computer Products, Inc. (Telex, refers to both entities) on January 21, 1972. As attorney for Telex, Walker was to prosecute a civil anti-trust action against International Business Machines Corporation (IBM). The contract provided for a contingent fee arrangement with a sliding scale as to the percentage of the recovery. Prior to trial, IBM brought a certain counterclaim against Telex. By its letter of April 9, 1973, Telex sought for the fee to be calculated on net recovery of Telex based on any difference between any judgment on the original action and any judgment on the counterclaim. Walker's letter of April 11, 1973, agreed to this calculation. That letter also provided that, if there was no judgment due to a prior settlement, then the fee was to be computed upon the gross profits received on any arrangement negotiated with IBM in settlement that was in lieu of cash settlement to Telex. ¹

At trial in the federal district court, Telex was granted a two hundred fifty million dollar judgment against IBM with IBM receiving an eighteen and one-half million dollar judgment against Telex on its counterclaim. Both judgments were appealed to the Circuit Court of Appeals. There, the Telex judgment was reversed, and the IBM judgment on the counterclaim was affirmed. Telex filed its petition for Writ of Certiorari as to both actions with the Supreme Court of the United States.

While the petition for Writ of Certiorari was pending, Telex and IBM settled the litigation, with the knowledge but without the consent of Walker. This was proper under the employment contract. Principal effect of the settlement was the forgoing of any judgment by either party. ² Mechanically, Telex withdrew its petition for Writ of Certiorari from the Supreme Court. This made the actions of the Circuit Court of Appeals final, including the reversal of the Telex judgment. IBM gave a release and satisfaction of its judgment to Telex. No monies were paid for this release.

Walker brought an action under the employment contract against Telex. A counterclaim was filed by Telex. That counterclaim contained two counts contending Walker was negligent in defending the IBM counterclaim, and that Walker was responsible for fees paid by Telex to other attorneys in the course of the IBM litigation. Trial court granted a partial summary judgment, finding Walker was entitled to recover, with that amount based on the benefit to Telex of the settlement with IBM. Trial court submitted the issue of value of the settlement benefit to a jury. Jury determined that value to be approximately twenty two million dollars. Trial court entered judgment for attorney, based on that jury determined value, of some one million four hundred thousand dollars. On the counterclaim, the trial court granted summary judgment for Walker as to the negligence count. The second count was tried to the court, in conjunction with the jury trial, with judgment entered for Walker and recovery denied Telex. Telex appeals.

On appeal, both parties would first argue the employment contract not to be ambiguous. But, each would apply a different provision of the whole contract, found by the trial court to consist of the original agreement and the two subsequent letters. Telex suggests no judgment was in its favor with an eighteen million plus against it, so no net recovery to Telex on which Walker can seek an attorney fee. Walker says there was a settlement in lieu of cash payment through a business arrangement that had gross benefit to Telex with an attorney fee earned and based on that value.

The construction of an unambiguous contract is a matter of law for the court. Van Horn Drug Co. v. Noland, Okl., 323 P.2d 366 (1958). If an ambiguity arises by reason of the language used and not because of extrinsic facts, construction of the contract remains a question of law for the court. See Paclawski v. Bristol Laboratories, Inc., Okl., 425 P.2d 452, 456 (1967). In present case, if there is any ambiguity in the contract, it comes from the language used and not because of extrinsic facts.

The term "profit," as applied to a corporation, covers benefits of any kind, the excess of value over cost, acquisition beyond expenditure, gain or advance. "Profit," Black's Law Dictionary, Revised Fourth Edition, p. 1376, citing Booth v. Gross, Kelley & Co., 30 N.M. 465, 238 P. 829, 831, 41 A.L.R. 868.

We apply the settlement portion of the contract. The trial court was correct in granting, as a matter of law, a partial summary judgment as to recovery by Walker. The facts surrounding the settlement were not in dispute. Although there had been trial judgments, and a judgment remaining after an appeal, there was no final judgment at the time of the settlement between Telex and IBM. The appeal court's action was pending review by the Supreme Court through a petition for Writ of Certiorari. Settlement came prior to withdrawal, granting, or denial of that petition. At settlement time, there was no judgment. Two considerations of unknown, and possibly of unequal, value were exchanged. A possibility of a judgment against IBM was forgiven in exchange for forgiving the possibility of a judgment against Telex. Settlement was in lieu of any cash payment to Telex. There was "benefit" to Telex with its value being a disputed fact and correctly made a jury question by the trial court.

Trial was to both a jury and the court. The jury issue was limited solely to the value of the benefit of the settlement to Telex. On appeal, Telex complains of the presumption and shifting of the burden of proof contained in the instructions to the jury. The trial court instructed the jury the law directed a deduction to be made by reason of a presumption that the value of the benefit to Telex was the accrued amount on the counterclaim judgment of some twenty two million dollars, ³ and because of such a presumption, the burden of proof had shifted to Telex to establish by a preponderance of the evidence a lesser value to Telex. ⁴ This then was coupled with a form of verdict containing an interrogatory that required the jury to consider the presumed value first. ⁵ Telex objected to both the instructions and the form of the verdict.

Walker contends the IBM judgment is an obligation in a fixed amount and carries with it the presumption of worth at its face value, as if a note or bond. That position is unsound. There is no presumption of finality of that judgment. Until that judgment became final, there was no fixed obligation. But, says Walker, the judgment did become final upon withdrawal of petition for Writ of Certiorari. We do not dissect the settlement. The petition withdrawal was a mechanical means of carrying out the settlement. At the time of the arrangement between IBM and Telex, the IBM judgment was not final. That judgment was not a fixed obligation and did not carry with it a presumption of worth of the face value. Nor does a presumption shift the burden of proof, but rather has certain procedural consequences as to the duty of production of other evidence by the opponent. The presumption disappears if evidence to the contrary is offered by the opponent. Kramer v. Nichols-Chandler Home Building & Brokerage Co....