Opinion
No. 27305.
October 22, 1928.
ATTORNEY AND CLIENT. Seller held not entitled to recover on trade acceptances after settlement by attorney without complaint for several years thereafter.
Where a manufacturing company through an agent sells a merchant graphophones, taking a written contract therefor with trade acceptances for the purchase price, and where the goods have been returned to the manufacturing company by the buyer and the trade acceptances are placed in the hands of an attorney for collection, and such attorney makes a settlement of compromise, taking a check in payment for the same, payable to the manufacturing company, and surrenders the trade acceptances to the buyer, and the check is collected by the manufacturing company and no complaint made of the settlement for several years thereafter, and there is no evidence to show that the attorney did or did not have authority other than such facts, a court is warranted in holding that such facts constitute sufficient evidence to find for the defendant.
APPEAL from circuit court of Jones county, Second district; HON. R.S. HALL, Judge.
Welch Cooper, Roy P. Noble and Jas. T. Welch, for appellant.
Is the alleged settlement made by the attorney, S.V. Little, binding upon The Brenard Manufacturing Company? We say that it is not. 6 Corpus Juris, 659, par. 175.
In the Mississippi case of Fitch v. Scott, 34 Am. Dec. 86, 3 Howard 314, this court held that "an attorney has no authority to compromise the claim of his client, and if he does so, he takes upon himself the consequences of the law, or the damages which he may sustain." In this case appellee, Scott, placed in the hands of Fitch and Morgan, attorneys, for collection, a note then due, but suit was not commenced on it until the following term, when the suit was dismissed, the note surrendered, and the transfer of a judgment on a third person accepted. Morgan having died, Scott instituted an action against Fitch for the sale of the note. Judgment was rendered for the plaintiff. Fitch appealed and the judgment of the lower court was affirmed.
The above case is quoted with approval in Terry v. Brown, 56 Miss. 86. This case also quotes with approval Garvin v. Lowrey, 7 S. M. 24, wherein it was held that an attorney cannot receive anything save in lawful money in satisfaction of a claim in his hands for collection. See Pierce v. Jarnagin, 57 Miss. 107.
The point involved in the case at bar is fully discussed in the case of United States v. Beebe et al., decided by the supreme court of the United States and reported in 45 L.Ed. 563. See Clark and Skyles on the Law of Agency in Vol. 2, at page 1425.
By the great weight of authority, more especially by the decisions of this court, the rule is well settled that it is not within the scope of the authority of an attorney when claims have been placed in his hands for collection to compromise the claim without special authority, or to receive anything less than the full amount in payment thereof.
Deavours Hilbun, for appellee.
There was no evidence offered at the trial of the case to show that the attorney had only limited authority to collect the note. The question then is upon whom does the burden of proving these limitations rest? Upon the appellant who had set them up as grounds for avoiding the compromise when pleased as a defense? Or upon the appellee who did not have at the time and never has had, notice of any such limitations?
Cases cited by appellant are all cases where lack of authority on the part of the attorney to compromise claims was affirmatively shown by the evidence. In this case no evidence was offered as to the limitations on the authority of the attorney. The appellant retained the attorney to collect the claim upon terms and conditions known only to themselves and the attorney. The appellee was wholly unacquainted with the limitations upon the powers of the attorney if any existed. These were facts peculiarly within the knowledge of the appellant and its attorney. Appellee then contends that the burden was upon appellant to prove that such limitations existed and not upon the appellee to prove that such limitations did not exist.
An examination of the decisions of our own courts failed to disclose any decision in point on this question. Conceding for the sake of argument only, that a compromise made by an attorney without special authority is not binding, still it is the contention of the appellee that this compromise is valid because of subsequent ratification by appellant. The note and contract sued on were executed on December 2, 1921. The trade acceptances were turned over to the attorney about nine months later, and at that time the compromise was entered into. Appellee heard nothing further of this claim of the appellant until suit was instituted against him on July 30, 1926, practically four years after the compromise had been entered into. See 6 C.J. 661, 175; Bryant v. Rich's Grill, 216 Mass. 344; Co-operative Association v. McConnico, 53 Miss. 233.
From the evidence it clearly appears that appellee gave his check to the attorney, payable to appellant, and that this check was paid through regular banking channels. It is beyond dispute then that the appellant had knowledge of the compromise sometime during the year 1922, and that they accepted the benefits accruing to them from it and acquiesced in this compromise for nearly four years. We submit, that such actions on the part of the appellant constitute ratification of the acts of their attorney which they will not now be heard to deny. In conclusion, therefore, it is submitted that the judgment of the county and circuit courts should be affirmed:
1st. Because the appellant has wholly failed to overcome the presumption as to the validity of the compromise.
2nd. Because any act done by the attorney of the appellant beyond the scope of his authority in making this compromise has been ratified and validated by the appellant by its acceptance of benefits from and long acquiescence in the compromise.
The Brenard Manufacturing Company brought suit against the appellee upon certain instruments executed by him, evidencing the purchase money for certain graphophones sold to appellee by an agent of the appellant. At the time of sale, a contract, in writing, was entered into, under the terms of which, in addition to the phonographs, certain further rights were granted to the appellee.
Appellee purchased six of these graphophones, and, on the trial, contended that he had an understanding with the agent at the time of the purchase that, if he could not sell the graphophones, he (the agent) would come back and sell them for him, or else would take them back.
The suit was instituted originally in the court of a justice of the peace, and was appealed from that court to the county and circuit courts, in turn, and the issues or pleadings were verbal.
When this evidence as to the agreement had with the agent was offered, it was objected to on the ground that it would vary the terms of the written contract. The contract made at the time of the purchase provided, among other things, that, "in consideration of tying up exclusive territory and in order to protect you in your expenditures this order cannot be countermanded."
After this evidence was received by the court, the defendant further testified that he had settled the matter with an attorney representing the appellant; that the defendant gave such attorney a check for eighteen dollars and forty cents, in full settlement of all demands; that said check was made payable to the Brenard Manufacturing Company, and that the trade acceptances were delivered to the defendant by the attorney; that the check, after having been so made and delivered to such attorney, was paid by the bank on which it was drawn; and further, that no notice of complaint of said settlement was made for several years, and that the check given and paid as above stated had been lost.
This evidence was objected to on the ground that the attorney who made the settlement did not have a right to compromise the claim for less than the full face value thereof, and that the settlement made showed that it was for much less than the face value of the claim.
The appellant did not introduce any other evidence, except the contract and the copies of the trade acceptances, which were identified by the defendant, but rested its case.
It is true that as a matter of law the mere retaining of an attorney or the employment of him does not authorize such attorney to compromise the subject-matter of a litigation without the consent of his client; but it is a rather common, and certainly a very frequent, practice for attorneys having such claims to negotiate settlements of compromise, usually, of course, getting specific authority to do so.
The attorney is an officer of the court, under high and solemn duty to conduct himself in a moral, upright manner in the transaction of his professional business; and, where a settlement is made by him, and where the instruments evidencing the debt have been delivered by him to the opposite party, and a check taken in the name of his client, and the check paid by the bank on which it was drawn, and no complaint of the settlement made for three, four, or five years, these facts are sufficient to warrant an inference or presumption that authority had been obtained by the attorney to make such settlement.
The Brenard Manufacturing Company could, of course, have promptly repudiated the settlement, and should have returned the check with reasonable promptness. There is nothing to show that the client, appellant here, was misled, in any respect, by the settlement; but it is shown that the check, made payable to the company, had been paid by the bank; and for a long time thereafter no complaint was made and no demand made against the defendant for the settlement of the debt evidenced by the contract of sale and acceptances. This being true, this alone would have warranted the court in granting a peremptory instruction for the defendant.
It is not necessary, therefore, to decide the other question as to whether a verbal contract, or verbal agreement, between the agent and the defendant, was admissible.
The case did not go to the jury, but was decided by the court, and a peremptory instruction awarded the defendant, followed by a judgment in his favor.
As stated, we think the court was warranted, from the evidence, in its finding, and that the peremptory instruction was properly given. The judgment will therefore be affirmed.
Affirmed.