Wise v. Curdes

• Decision Date: 16 March 1942
• Docket Number: 27590.
• Parties: WISE v. CURDES et al.
• Court: Indiana Supreme Court

40 N.E.2d 122

219 Ind. 606

WISE v. CURDES et al.

No. 27590.

Supreme Court of Indiana

March 16, 1942

Appeal from Superior Court, Allen County; Edward W Meyers, judge.

S K. Frankenstein, of Fort Wayne, for appellant.

Eggeman Reed & Cleland and Martin P. Torborg, all of Fort Wayne for appellees.

RICHMAN Judge.

Arnold G. W. Curdes (who will be referred to hereinafter as appellee) sued appellant Wise and his co-appellee Felger to enjoin the latter as sheriff from enforcing an execution on a judgment in favor of appellant against appellee. After a hearing an interlocutory order was entered granting a temporary injunction from which order this appeal is taken.

The following pertinent facts are shown by the evidence: Appellant and appellee had been associated in business together in Fort Wayne. They had a disagreement and appellant left the state. He employed Lake E. Rariden an attorney of Fort Wayne to collect a claim against appellee growing out of their former business relations. Judgment was taken thereon May 12, 1932, in the DeKalb Circuit Court and transcript thereof filed with the Clerk of Allen Circuit Court by which the judgment became a lien on real estate in Allen County in which appellee had some interest.

In March, 1935, a certain lot in Ft. Wayne was released from the lien of the judgment by a 'partial release' recorded on the judgment docket dated March 12, 1935, signed 'James C. Wise, Lake E. Rariden Attorney' and acknowledged March 30, 1935, before a notary public, the acknowledgment clause stating 'Personally appeared James C. Wise by Lake E. Rariden attorney and acknowledged etc.'

The judgment docket shows release similarly signed and acknowledged dated July 16, 1935, releasing another lot from the judgment. A third lot was similarly released July 17, 1935, but without acknowledgment.

October 11, 1935, the receiver of the Old-First National Bank and Trust Co. paid Rariden $25 to release a fourth lot from appellant's judgment. On the judgment docket, the lot is similarly released, 'James C. Wise by Lake E. Rariden, Atty.' A quitclaim deed to the receiver for the same lot, executed by appellant and his wife October 28, 1935, was procured by Rariden and recorded.

December 11, 1936, the receiver paid Rariden $50 for another release from appellant which release was similarly executed.

Between October, 1935, and December, 1936, appellee on his voluntary petition was adjudicated a bankrupt. The first meeting of creditors was held June 4, 1936. Rariden was present, stated to appellee's attorney that he (Rariden) was there on the Wise claim and that it was apparent from the schedules and hearing that there were no assets out of which collection could be made, that he did not care to have a trustee appointed and that he would not object to appellee's discharge in bankruptcy.

In due course on September 8, 1936, appellee was discharged. In this case he bases his right to the injunction on the fact of such discharge as relieving him from the payment of appellant's judgment. Appellant contends however that the judgment was improperly scheduled and that he had no notice or actual knowledge of the bankruptcy proceedings so that he may still enforce the judgment.

By § 7 of the Bankruptcy Act, 11 U.S.C.A. Ch. 3, § 25, the bankrupt's schedule is required to contain 'a list of his creditors showing their residence, if known; if unknown, that fact to be stated * * *.' Appellee's schedule complied with this statute except that appellant's residence was not stated and there was no alternative statement that such residence was unknown. The evidence herein warrants the inference and the court found that in fact appellee did not know where appellant then resided.

Section 17 of the Act, 11 U.S.C.A. Ch. 3, § 35, provides that 'a discharge in bankruptcy shall release a bankrupt from all of his provable debts, except such as * * * (third) have not been duly scheduled in time for proof and allowance, with the name of the creditor, if known to the bankrupt, unless such creditor had notice or actual knowledge of the proceedings in bankruptcy.'

We need not determine the effect of appellee's failure to state that appellant's residence was unknown if from the evidence it may reasonably be inferred that appellee was notified or had actual knowledge of the bankruptcy proceedings.

If Rariden had been the creditor instead of being his attorney this question would be simple, for the evidence above set forth shows that he knew of the proceedings in time to have proved appellant's claim which proof, by the way, would have been useless for there were no assets for general creditors. We think also that from this evidence the court may properly have concluded that Rariden was then employed as attorney for appellant and acting within the scope of his employment. The authority of an attorney employed to collect a claim is said to end when the claim is reduced to judgment, but this is not always so. From his acts in releasing lots from the lien of the judgment and procuring appellant's quitclaim deed and from his presence at the meeting of creditors and his statements then made, it may reasonably be inferred that he was authorized to collect as well as take the judgment and that he was acting for and in the interests of his client in the investigation of the possibility of such collection in the bankruptcy proceedings. Whether this was a new or a continuation of the original employment is immaterial.

In Butler v. Knight, 2 Law R.Ex. 109, as stated in Weeks on Attorneys at Law, 2d Ed. 1892, § 238, the court 'admitted the general proposition that the force of an attorney's retainer is at an end, and his power to bind his client ceases, when judgment is recovered,' but the court said (Weeks, supra, p. 491):

"We are bound by authority to admit it as a technical rule, but we are equally bound not to extend that rule one hair's breadth, since its effect on transactions in the relation of attorney and client is directly opposed to the common action and understanding of mankind in such matters. To whom does it ever occur, except to a technical lawyer, that unless something further is done to re-establish the attorney's authority, it ceases at judgment, and that without new instructions the steps necessary to obtain the fruits of litigation cannot be taken? It would be very mischievous to hold, in any case where evidence existed of the relation of attorney and client having been continued or recreated, that the attorney had not authority to act according to the exigency of the case.' The authority may be continued by any acts showing the client's intention that his attorney shall continue to act in that relation.'

See, also, State ex rel. Share v. Boyd, 1878, 63 Ind. 428, Newman v. Kiser, 1891, 128 Ind. 258, 26 N.E. 1006, Larkin v. Frazier. 1918, 224 N.Y. 421, 121 N.E. 105; Id., 172 A.D. 912; 156 N.Y.S. 1130; Conway County v. Little Rock, etc., R. R., 1182, 39 Ark. 50.

It appears from the record that after December 11, 1936, and before the trial of this cause Rariden died. There is no contention that he was guilty of any fraud or misconduct in his relations with appellant. It may be assumed therefore, that he was acting within what he considered to be the scope of his duty to his client. In some of the cases above cited the statement is found that an attorney employed to collect a claim has no authority by virtue of that employment to release a judgment taken by him except upon payment of money. It seems to us the trial court was justified in assuming from the fact that the attorney did release the lien of the judgment as to several lots, some without payment of money, that his employment was broad enough for that purpose, particularly as coincidental with one of those releases he procured appellant's quitclaim deed to the lot. We find no evidence submitted by appellant denying Rariden's authority so to act. It is to be noted that one of the releases was procured about three months after the bankrupt's discharge.

Ordinarily the knowledge of an attorney gained while acting for a client and within the scope of his employment is deemed to be the knowledge of the client to whom it is presumed to have been imparted. This rule was applied recently as to the particular section of the bankruptcy act here involved in Katz v. Kowalsky, 1941, 296 Mich. 164, 295 N.W. 600, 603, 134 A.L.R. 179, from which we quote as follows:

'Were this strictly a common law question, we would have no hesitation in ruling that the knowledge of Daniel, if obtained within the limits of authority delegated by his sister, must be deemed the knowledge of plaintiff. Ordinarily, where a client is represented by an attorney, knowledge acquired by the attorney while acting within the scope of his authority is by fiction of law the knowledge of the client. Littauer v. Houck, 92 Mich. 162, 52 N.W. 464, 31 Am.St.Rep. 572; Security Trust Co. v. Tuller, 243 Mich. 570. 220 N.W. 795; Rogers v. Palmer, 102 U.S. 263, 26 L.Ed. 164: In re Locust Bldg. Co., 2 Cir., 299 F. 756. However, we are dealing here with the words 'notice or actual knowledge' as used in a specific statute. We need not inquire into whether the words of the statute have all of the connotations the terms usually bear in common law jurisprudence, for reference to the definitions provided in the statute itself gives a complete answer to the problem. 11 U.S.C.A. § 1(11) explains the construction to be given the word 'creditors,' 'unless the same be inconsistent with the context * * * 'Creditor' shall include anyone who owns a debt, demand, or claim provable in bankruptcy, and may include his duly authorized agent, attorney, or proxy.'

'This definition includes an attorney at law. In re Henschel D.C., ...