WESTERN LIFE INSURANCE COMPANY v. Nanney, Civ. A. No. 2229.

• Decision Date: 11 February 1969
• Docket Number: Civ. A. No. 2229.
• Citation: 296 F. Supp. 432
• Parties: WESTERN LIFE INSURANCE COMPANY, Plaintiff, v. Dan NANNEY, etc., et al., Defendants, Milton Kelner, Intervening Defendant.
• Court: U.S. District Court — Eastern District of Tennessee

296 F. Supp. 432

WESTERN LIFE INSURANCE COMPANY, Plaintiff, v. Dan NANNEY, etc., et al., Defendants, Milton Kelner, Intervening Defendant.

Civ. A. No. 2229.

United States District Court E. D. Tennessee, Northeastern Division.

February 11, 1969.

Roy C. Nelson, Elizabethton, Tenn., for plaintiff.

Lewis B. Merryman and Robert E. Banks of Street, Banks & Merryman, Elizabethton, Tenn., for defendants Nanney (all but Toni Nanney).

S. G. Milligan, Greeneville, Tenn., for defendants (all but Toni Nanney).

M. Lacy West, Kingsport, Tenn., Kelner & Lewis, Miami, Fla., for intervening defendant.

MEMORANDUM OPINION AND ORDER

NEESE, District Judge.

This Court ordered on August 15, 1968, herein, 290 F.Supp. 687, 690, that no part of the fund interpleaded herein be paid to or in behalf of the defendant Mrs. Toni Nanney until the matter of the claim of Kelner and Lewis, Esqs., of a lien for their services to her as attorneys had been adjudicated or lawfully settled. Milton Kelner, Esq., of such counsel, having filed in civil action no. 2198, this district and division, a notice of his firm's claim, and the subject matter in both such actions being the same fund, this Court ordered on August 19, 1968 that Mr. Kelner assert such claim herein as an intervening defendant or suffer such claim in no. 2198 to be stricken. Such intervening claim was filed on August 29, 1968, accompanied by a motion by the intervening claimants for a summary judgment,¹ Rule 56(a), Federal Rules of Civil Procedure.

Concluding that there were genuine issues of fact outstanding between the defendant Mrs. Nanney and the intervening defendant Mr. Kelner, the Court denied the motion for a summary judgment, memorandum opinion and order of November 8, 1968 and the intervening claim was assigned for evidentiary hearing and heard on December 20, 1968. The disputed issues considered thereupon were, (a) whether Kelner and Lewis was retained by Mrs. Nanney to represent her in her criminal as well as her civil matter, and (b) whether Mr. Kelner properly represented Mrs. Nanney in the matter of her claim to the proceeds of the fund interpleaded and remaining herein.

Mrs. Nanney was arrested by authorities of Dade County, Florida on July 25, 1967 and charged with having murdered in connection with insurance claims. Mr. sister in Elizabethton, Tennessee was advised seasonably of her incarceration. The following day Mrs. Nanny's sister and father arrived in Miami.

Her father, Guy Thompson, had known Mr. Kelner for about ten years and had formed a favorable opinion of his proficiency in the representation of clients in connection with insurance claims. Mr. Thompson, on reaching Miami, telephoned Mr. Kelner, advised him of Mrs. Nanney's plight, and sought his recommendation. Mr. Kelner recommended that Mr. Thompson consult Harry W. Prebish, Esq., a specialist in criminal law, and by telephone requested Mr. Prebish to visit Mrs. Nanney in jail.

In the interim, Mrs. Nanney had conferred with another attorney, but on the advice of her father, she retained Mr. Prebish. Mr. Thompson paid Mr. Prebish five hundred dollars ($500) to investigate the matter and to represent his daughter at the necessary² hearing, with no agreement as to his further representation. On the same date, Mr. Thompson and another daughter, Miss Charlynne Thompson, visited Mrs. Nanney's home in Fort Myers, Florida. There they discovered two policies of insurance on the life of the late Mr. Nanney, on each of which Mrs. Nanney was the primary beneficiary and her three children the secondary beneficiaries.

Mr. Thompson wished Miss Thompson to become acquainted with Mr. Kelner, and subsequently they visited him in his offices. In the course of conversation, Mr. Thompson apprised Mr. Kelner of the discovery of the policies, and, on his request, Mr. Kelner was permitted to review them.

A hearing was held on August 18, 1967, and Mrs. Nanney was enlarged on bail bond, which Mr. Prebish arranged for a bonding agency to post. Soon after Mrs. Nanney was enlarged, she and her father went to Mr. Prebish's offices. Mr. Prebish advised Mrs. Nanney that Mr. Kelner had her insurance contracts in his possession and "* * * is going to represent you * * *" in connection with the insurance claims. Mrs. Nanney was unaware until then that Mr. Kelner had such policies in his possession. Thereupon, a conference was held with Mr. Kelner in his offices, where Mrs. Nanney met Mr. Kelner for the first time.

Mr. Kelner dictated a proposed document authorizing his firm and Mr. Prebish jointly to represent Mrs. Nanney in both her criminal and civil problems. Mr. Prebish objected to some of the proposed language, stating that his customary fee in first-degree murder representations was $25,000, that he was agreeing to represent Mrs. Nanney for only $10,000, but that he wanted this amount not to be contingent in any manner and a majority of it paid within a short time.

Inter alia, Mrs. Nanney committed³ to these her claims under all the insurance policies wherein she and/or her children were beneficiaries. It was agreed between these attorneys⁴ that Mr. Prebish would be leading counsel for Mrs. Nanney in the criminal matter and would take a two-thirds ( 2/3 ) split of the fee therefor, and that Mr. Kelner would be a leading counsel for her in the civil claims and would take a two-thirds ( 2/3 ) split of the fees therefor.

Although Mr. Kelner did not dictate the pertinent provisions thereof into the memorandum of this agreement, Florida law which subsisted at the time of the agreement became by implication a part of it. United States v. Quincy (1866), 71 U.S. (4 Wall.) 535, 550, 18 L.Ed. 403, 408. The direct legal operation of such law controlled or affected these attorneys' obligations thereunder. General Development Corp. v. Catlin, C. A.Fla.App. (1962), 139 So.2d 901. Thus, these attorneys were obligated under the agreement to "* * * `faithfully, honestly, and consistently represent the interests and protect the rights, of' * * *" Mrs. Nanney, and to discharge their duties to her "* * * `with the strictest fidelity, to observe the highest and utmost good faith toward' * * *" her and to obey her "* * * `lawful directions.' * * *" Gay v. Heller, C.A. 5th (1958), 252 F.2d 313, 316-317 7, citing Weekley v. Knight (1934), 116 Fla. 721, 156 So. 625 and In re Clifton (1934), 115 Fla. 168, 155 So. 324.

Mrs. Nanney returned forthwith to Elizabethton with her relatives thereafter. While enlarged on bail awaiting her criminal trial in Florida, she was confronted with an equity proceeding in Carter County, Tennessee to remove from her custody temporarily her children. With financial assistance from her grandfather, she employed Stuart Hampton, Esq., a member of the bar of this Court, as her solicitor in that proceeding.

Mr. Kelner advised Mr. Hampton by letter of August 24, 1967 that his firm represented Mrs. Nanney; that Mr. Prebish represented her in the defense of the criminal charges; that he had been advised that Mr. Hampton had been consulted by "* * * our client * * *" with reference to regaining custody of her children; that Mr. Thompson had advised that a Tennessee resident had been appointed administrator of the estate of Mr. Nanney; that administration proceedings should be filed in Florida; but that such action in Florida was being withheld, pending Mr. Hampton's advice; and offered assistance to Mr. Hampton in furnishing affidavits or advising him with reference to the status of the criminal charges. Thus, Mrs. Nanney's exclusively authorized attorneys were then on notice to represent her interests, protect her rights, and take all legal steps necessary to enforce her claim under the plaintiff's policy without restriction. This included any action which might thereafter be instituted against Mrs. Nanney in the courts of Tennessee or elsewhere, relating to the enforcement of such claim.

The Chancery Court of Carter County entered a decree granting temporary custody of these children to the late Mr. Nanney's sister, Mrs. Donald E. Barnett, her husband, and Mrs. Lotta Nanney, their paternal grandmother. Mr. Hampton so advised Mr. Kelner by letter of September 7, 1967, expressed his opinion that an appeal on the technical record would result in a reversal of the decree, but stated he was not recommending an appeal because of the financial embarrassment of his client. One week afterward, Mr. Kelner advised Mr. Hampton that he was "suggesting" to Mrs. Nanney and her father that an appeal be taken and offered his "* * * assistance on this end. * * *"

Commencing on August 23, 1967, Mr. Kelner had pursued Mrs. Nanney's claim to the proceeds of the plaintiff's policy, from which the fund herein resulted. The plaintiff declined to pay the proceeds of its policy to any one. Messrs. Prebish and Mr. Kelner were in professional agreement that in the situation suits should not then⁵ be filed in Florida against the plaintiff to enforce their client's claims. Matters were pretty much in limbo thereafter until a verdict was reached in the criminal trial.

On March 11, 1968,⁶ Mrs. Nanney was acquitted by a jury of the criminal charges. Her erstwhile lover and codefendant Mr. Felix Lopez was convicted therein and sentenced to life imprisonment. Mrs. Nanney made an accelerated departure from Miami after her acquittal and returned to Elizabethton.

On the day following Mrs. Nanney's acquittal, the administrator of the late Mr. Nanney's estate and his children, by their general guardian Mrs. Barnett, commenced an action against the plaintiff and Mrs. Nanney in the Chancery Court of Carter County, Tennessee, for a declaration that Mrs. Nanney had forfeited her rights to the proceeds of the plaintiff's policy and to award the fund to the complainants. A similar action was commenced against Mrs. Nanney as to another such policy.

Three days thereafter, Mr. Kelner renewed his client's demand on the plaintiff for payment, advising...