OLIVER v. CAMPBELL

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District Court of Appeal, Second District, Division 3, California.

OLIVER v. CAMPBELL.*

Civ. 19610.

Decided: January 21, 1954

Wm. H. Neblett, Los Angeles, for appellant. Clyde C. Shoemaker, Byron O. Smith, Los Angeles, for respondent.

Plaintiff, an attorney at law, brought this action against the special administratrix of the estate of Dr. Roy Campbell, deceased, upon a common count alleging an indebtedness of Roy Campbell in the sum of $10,000, as the reasonable value of legal services rendered to him by plaintiff. It was alleged that $450 had been paid on account; that thereafter Roy Campbell died; a claim for $9,550 was presented to defendant, administratrix with general powers, and that the claim was rejected. A copy of the claim was attached to the complaint claiming $10,000, less credits, for ‘work, labor and services.’ In a court trial judgment was for the defendant and plaintiff appeals.

The answer of the defendant denied the indebtedness and alleged that the services of plaintiff, and of another attorney, Ralph D. Paonessa, were rendered jointly pursuant to a written agreement for an agreed compensation of $750. It was admitted that only $450 had been paid on account.

The court found that Roy Campbell employed plaintiff and Ralph D. Paonessa to represent him in an action for separate maintenance instituted by his wife, Iva Lee Campbell, in which he filed a cross complaint for divorce, ‘* * * for a total fee of $750.00 plus Court Costs and other incidentals in the sum of $100.00 making a total sum of $850.00. Said fees of $750.00 to be paid after trial.’ It was found that pursuant to said contract plaintiff and Paonessa became attorneys for Roy Campbell; that Iva Lee Campbell amended her complaint to sue for divorce; the trial proceeded and consumed 29 trial days, during which Campbell was represented by plaintiff and Paonessa; the court's decision was announced December 6, 1950, directing an interlocutory decree in favor of the plaintiff therein; findings and judgment were prepared; Dr. Campbell became dissatisfied with his attorneys over proposed amendments to the findings and on January 25, 1951, substituted himself, in proper person, with the consent of his attorneys, ‘* * * and thereby the representation of said Roy Campbell in said action by said John Oliver and Ralph D. Paonessa was terminated.’ It was also found that the services of the attorneys were ‘* * * under and pursuant to said written contract dated December 16, 1949, and for an agreed compensation and total fee of seven hundred fifty dollars ($750.00). That the reasonable value of all the aforesaid work, labor and services is the sum of five thousand dollars ($5,000.00), performed by the plaintiff John Oliver.’ It was further found that the action was not founded upon the written contract nor was the claim based thereon. The court concluded that the written contract covered all the work, labor and services rendered and performed. It was also concluded that the amendment of the complaint which converted the action into one for divorce did not alter the primary issues in the action, and ‘* * * that said contract of December 16, 1949, between said Roy Campbell and said John Oliver and Ralph D. Paonessa remained in full force and effect. That there was no breach of said contract by reason of said amendment whereby said action became an action for divorce instead of an action for separate maintenance.’

It is not questioned on the appeal that the services were rendered under and pursuant to the terms of the written agreement, the sole contention being that the discharge of the attorneys was a breach of the contract of employment which released them therefrom and entitled them to recover the value of their services, unlimited by the written agreement.

The primary question for the trial court was whether the contract of employment had been rescinded. If the contract was not rescinded, abandoned, or superseded by a new contract, it remained in effect and the contracting parties were bound thereby. Any action for the recovery of compensation would of necessity be founded upon the contract. Lavenson v. Wise, 131 Cal. 369, 375, 63 P. 622.

Upon the other hand, if the contract was rescinded neither party would be bound thereby and the attorneys would be entitled to receive the reasonable value of their services. Lessing v. Gibbons, 6 Cal.App.2d 598, 607, 45 P.2d 258; Brown v. Crown Gold Milling Co., 150 Cal. 376, 384, 89 P. 86; Hart v. Buckley, 164 Cal. 160, 128 P. 29; Welch v. Gunn, 101 Cal.App. 359, 281 P. 704; Laiblin v. San Joaquin Agr. Corp., 60 Cal.App. 516, 213 P. 529; Davidson v. Laughlin, 138 Cal. 320, 71 P. 345, 5 L.R.A.,N.S., 579; Adams v. Burbank, 103 Cal. 646, 37 P. 640; Cox v. McLaughlin, 76 Cal. 60, 18 P. 100; Gray v. Bekins, 186 Cal. 389, 199 P. 767.

The only evidence as to the circumstances in which the substitution was made was given by plaintiff. Testifying at the trial he was asked whether he had any conversation with Dr. Campbell about compensation at the time of the substitution. He testified that Dr. Campbell requested him to propose a finding which would declare his wife's attorney to have been guilty of improperly influencing witnesses at the trial, that he refused to do so, and that Dr. Campbell stated that he could be discharged; that the substitution was agreed to and signed, and that he told Dr. Campbell that he expected to be paid the ‘reasonable value;’ that Dr. Campbell asked: ‘What do you think the reasonable value of your services are?’ and that he replied: ‘I expect to be paid as much as Mr. Shoemaker’ (stated in the brief of appellant to be $9,000), and that Dr. Campbell said: ‘I am not going to pay you a cent more.'1 Mr. Oliver did not converse with Dr. Campbell again, nor during the latter's lifetime did he make any demand upon him for the payment of money.

The court found that Dr. Campbell was substituted in propria persona ‘* * * and thereby the representation of said Roy Campbell in said action by said John Oliver and Ralph D. Paonessa was terminated.’ Plaintiff says this finding establishes as a matter of law that the contract between Dr. Campbell and his attorneys was rescinded; ‘It does not matter whether the rescission of the contract is pinned to the discharge of his attorneys by Doctor Campbell or to a substitution of himself in their place, done with the attorneys' consent. Rescission follows from either one or both acts.’ The finding that the representation of Campbell by his attorneys was terminated was not a finding that the contract was cancelled or rescinded.

The conclusion of the trial court that the contract was still in full force and effect was not a finding that there had been no rescission nor does it indicate that the question of rescission had been considered by the court. Apparently it had been contended that the change of the action from one for separate maintenance to one for divorce in some manner abrogated plaintiff's employment contract. The conclusion was related to that contention. The failure of the court to determine, as a fact, whether the contract had been rescinded may be accounted for by the contentions of the parties at the trial. They did not recognize that it was a controlling question of fact upon the decision of which depended defendant's liability, whether upon the contract in quantum meruit.

In the first briefs on the appeal, and it is to be presumed at the trial, plaintiff took the position that when he was discharged he was entitled, at his election, to sue for the reasonable value of his services. He assumed that his discharge was a complete repudiation of the contract of employment and he relied entirely upon the statement in Lessing v. Gibbons, 6 Cal.App.2d 598, at page 607, 45 P.2d 258, at page 262, quoted in Neblett v. Getty, 20 Cal.App.2d 65, 70, 66 P.2d 473: ‘It is well settled that one who is wrongfully discharged and prevented from further performance of his contract may elect as a general rule to treat the contract as rescinded, may sue upon a quantum meruit as if the special contract of employment had never been made and may recover the reasonable value of the services performed even though such reasonable value exceeds the contract price.’ In the Lessing case, and in all the other cases in the first group cited above, it was either admitted or assumed that the defendant at fault had not only failed to perform but had repudiated the contract altogether, and that each defendant's intention to that effect had been manifested, as stated in Atkinson v. District Bond Co., 5 Cal.App.2d 738, at page 743, 43 P.2d 867, at page 870, infra, in a manner that was ‘distinct, unequivocal, and absolute’.

The Lessing and Neblett cases upon which plaintiff relies are not in point. In neither case was there an agreement for the payment of a definite amount; therefore the only available basis of recovery was in quantum meruit.

Defendant takes the position that ‘Where an attorney is employed under an express agreement for an agreed compensation and is discharged without cause, the measure of his damages is the compensation named in the contract. Webb v. Trescony, 76 Cal. 621 [18 P. 796]; Elconin v. Yalen, 208 Cal. 546 [282 P. 791].’ The cited cases are not in point. They did not involve the question of a claimed rescission. The Webb case was for damages for breach of contract; the plaintiff was entitled to recover what he would have received had he not been prevented from completing his services. In Baldwin v. Bennett, 4 Cal. 392, cited in the Webb case, the contract price for a fixed sum was allowed on the theory that it was the only practicable measure of damage. In Elconin v. Yalen there was no agreement as to the compensation to be paid to the attorney and a recovery in quantum meruit was allowed. The statement [208 Cal. 546, 282 P. 792]: ‘Had there been included in said contract a provision as to plaintiff's compensation, such provision upon his wrongful discharge would have measured the amount of his recovery. Kirk v. Culley, 202 Cal. 501, 261 P. 994; Webb v. Trescony, 76 Cal. 621, 18 P. 796.’ was unnecessary to the decision and is not supported by the cases cited. We cannot agree with the contention of either of the parties.

An agreement of rescission, like any other agreement, requires mutual consent, which may be express or implied. Under the pleadings and the evidence plaintiff's right to sue in quantum meruit could be established only by a finding that the contract had been rescinded. That was a question of fact. Tuso v. Green, 194 Cal. 574, 582, 229 P. 327; Treadwell v. Nickel, 194 Cal. 243, 259, 228 P. 25. If the parties intended to rescind it by the discharge of the attorneys, acquiesced in by the latter, Dr. Campbell became obligated to pay the reasonable value of the legal services. If there was no rescission the contract price was the measure of his liability. Lavenson v. Wise, supra, 131 Cal. 369, 63 P. 622. There was no finding that the contract was or was not rescinded.

The evidence did not establish, as a matter of law, that the contract was rescinded. It is not every breach of a contract by one party that amounts to a repudiation or offer to rescind which gives to the other party a right to treat the contract as rescinded. We agree with the statement in Atkinson v. District Bond Co., 5 Cal.App.2d 738, at page 743, 43 P.2d 867, at page 869: ‘Where one party to an executory contract refuses to treat it as subsisting or binding upon him, there is, in legal effect, a prevention of performance by the other party. A mere declaration, however, of a party of an intention not to be bound will not of itself amount to a breach, so as to create an effectual renunciation of the contract; for one party cannot by any act or declaration destroy the binding force and efficacy of the contract. To justify the adverse party in treating the renunciation as a breach, the refusal to perform must be of the whole contract or of a covenant going to the whole consideration, and must be distinct, unequivocal, and absolute.’ In accord, Thompson v. Municipal Bond Company, 23 Cal.App.2d 402, 411, 73 P.2d 274; Bozeman v. Curtis, 108 Cal.App. 648, 291 P. 870; Ross v. Tabor, 53 Cal.App. 605, 200 P. 971; 17 C.J.S., Contracts, § 46, p. 389.

In McConnell v. Corona City Water Co., 149 Cal. 60, at page 64, 85 P. 929, at page 930, 8 L.R.A.,N.S., 1171 it was said: ‘One who has been injured by a breach of contract has an election to pursue any of three remedies. He may treat the contract as rescinded and may recover upon a quantum meruit so far as he has performed; or he may keep the contract alive, for the benefit of both parties, being at all times ready and able to perform; or, third, he may treat the repudiation as putting an end to the contract for all purposes of performance, and sue for the profits he would have realized if he had not been prevented from performing.’ In Rehart v. Klossner, 48 Cal.App.2d 46, at page 50, 119 P.2d 148, it was said that a communication is not sufficient to establish repudiation by a party to a contract unless it amounts to an absolute and final renunciation and repudiation; a mere expression not to be bound by it is not sufficient. And in Tracy v. MacIntyre, 29 Cal.App.2d 145, 147, 84 P.2d 526, 528, the court said: ‘While a client may cancel the retainer contract by an arbitrary discharge of his attorney, he must abrogate the contract in its entirety and not in part.’ The mere discharge of an attorney under employment for a fixed fee is not, in all cases, such a breach of the contract of employment as to justify the attorney in treating it as rescinded. May not the client say, ‘I am dispensing with your further services, but I will pay you the balance of your fee’, without abrogating the contract? May not a party to any contract tender full performance on his part and excuse further performance on the part of the other without subjecting himself to any further or different liability? It cannot be questioned that he has that right. And even though no offer of performance is expressed, if there is a willingness and intention to pay a stipulated sum in fulfillment of the contract, does the mere excusing of further performance on the part of the other party amount to an offer to rescind the contract which is open to acceptance? Reason does not suggest an affirmative answer to the latter question, nor, to our knowledge, has any court so held. The flat statement found in some of the cases that the discharge of an attorney gives him the right to treat the contract of employment as rescinded or abrogated cannot be considered without regard to context, nor is it a correct statement unless the discharge amounts to a clear repudiation or abrogation of the agreement of employment in its entirety. It is true that Dr. Campbell did not offer to pay the balance of the agreed fee but it is also true that his intentions in the matter were to be determined as a fact, and as an inference from the facts in evidence.

The evidence would not require a finding that Dr. Campbell repudiated his contract in its entirety. When Mr. Oliver said he expected to be paid as much as Mr. Shoemaker had received, and Dr. Campbell said he would not pay ‘a cent more,’ this might have meant either that he would pay no more than the balance of the agreed fee or no more than he had already paid. It is not for us to say what he meant. Unfortunately, there was no further communication between the doctor and Mr. Oliver after the latter's discharge, and the trial court must determine what was in Dr. Campbell's mind from the circumstances of the case and the scant testimony. And even if it should be determined that Dr. Campbell intended to go no further under his contract the questions would remain whether it was such a breach of contract as would give the attorney the right to treat the contract as rescinded and whether the actions of plaintiff during Dr. Campbell's lifetime and after his death amounted to an election to treat the contract as rescinded.

We may not affirm the judgment for defendant, nor may we direct a judgment for the plaintiff upon the theory that the discharge of the attorneys, accepted by them, effected a rescission of the contract as a matter of law.

The pleadings necessarily created an issue as to the effect of the discharge of the attorneys—whether it amounted to a complete repudiation of the contract by Dr. Campbell, and was treated as such by the attorneys. This was the vital issue. We repeat that if there was no rescission the contract remained in effect, and would have furnished a proper basis for a recovery of the balance of the fee in an action on the contract, or for the measurement of damages in an action for breach of contract. Lavenson v. Wise, supra, 131 Cal. 369, 63 P. 622. If it was rescinded it ceased to exist for any purpose, and the sole remedy of the attorneys would have been in quantum meruit.

In all cases where an attorney, employed for a fixed fee, has been discharged without cause, and it is questionable whether the dismissal and the conduct of the parties amounted to a rescission of the contract, a finding on that issue will determine whether the contract price or the value of the services is the proper measure of the client's liability. For the reasons stated, it is necessary that the judgment be reversed.

The judgment is reversed; the parties to pay their own costs of appeal.

I concur in the above opinion and judgment. The substitution of Dr. Campbell in place of his attorneys occurred at a time when, insofar as his attorneys were concerned, there was nothing further for them to do in the actual trial of the case. The trial was over and they had lost the decision. According to the testimony of one of the attorneys, the substitution was made in order that Dr. Campbell might request the judge to make a certain finding which the attorneys would not request. About six months after the substitution Dr. Campbell died. The attorneys had never made a demand upon him for payment of any sum as attorneys' fees. One of the attorneys, plaintiff herein, sued the administrix of the estate for $9,550 for services which the attorneys had agreed to render for $750. That suit is based upon a theory that merely by reason of the substitution (after the actual trial work had been finished) they were free to disregard their written agreement that they would do all the work for $750.

The finding herein that by the substitution the ‘representation * * * was terminated’ could mean only that the obligation of the attorneys to further represent their client was ended. Certainly that finding, which the learned trial judge carefully limited to ‘representation,’ did not mean that the client's obligation to pay the full agreed price of $750 was ended. Certainly, in view of that finding and the judgment for the balance of the $750, the trier of the facts was not of the opinion that the mere substitution, at that final stage of the case, abrogated the whole written agreement and made it nonexistent. Certainly the client did not intend, by the substitution, to set aside his written agreement to pay $750, and thereby to subject himself to a lawsuit by his attorneys for approximately thirteen times the amount the attorneys had agreed upon.

The relationship of attorney and client existed during the alleged conversation preceding the substitution. The attorneys owed their client the duty of telling him precisely what they had in mind regarding their fee, and that if the substitution were made they would then disregard their written agreement entirely and would sue him for more than the balance of the agreed price of $750. The interpretation of any uncertain or ambiguous expression in the alleged conversation between the attorneys and the client, regarding the substitution, should be resolved against the attorneys. If anything was said by the attorneys about being paid ‘a reasonable value,’ and if Dr. Campbell replied he would not pay ‘a cent more,’ his reply should be interpreted to mean that he would not pay a cent more than the agreed price of $750. If, by reason of certain cross-examination of claimant, there was a waiver of the disqualification of the claimant as a witness against the administratrix, the testimony of the claimant should be viewed with caution. The cross-examination of claimant, which allegedly was the basis for the asserted waiver of claimant's disqualification as a witness, was of such a nature that it is doubtful that there was such a waiver. The cross-examination related to uncontroverted matters which were wholly unrelated to any matter pertaining to the substitution. The finding that the ‘representation * * * was terminated’ might be regarded as a defective or incomplete finding in that it did not state expressly whether the contract was rescinded. Ordinarily when there is a defective or incomplete finding, a judgment should not be reversed merely by reason of that finding unless it is reasonably probable that on a retrial a finding might be made which would result in a different judgment. See Culjak v. Better Built Homes, Inc., 58 Cal.App.2d 720, 725, 137 P.2d 492. In the present case I think it is not reasonably probable that a finding might be made that the contract was rescinded and is not reasonably probable that there might be a different judgment. However, in the interest of clarifying the matter by obtaining an express finding of fact as to whether there was a rescission, I concur in the reversal.

I am of the opinion that the judgment should be reversed with directions to the superior court to render judgment for plaintiff for $5,000. The court found that the reasonable value of the services performed by plaintiff is $5,000. Plaintiff was the only witness who testified concerning his discharge by Dr. Campbell. The opinion of this court fails to state all of the testimony of plaintiff with respect to his discharge. I set it forth in toto in the margin.1 I think no reasonable conclusion can be drawn from the evidence other than that the discharge amounted to a clear repudiation and abrogation of the contract in its entirety, in which case plaintiff is entitled to recover the reasonable value of the service performed. The contract plaintiff made with Dr. Campbell did not limit his services to the trial of the case.2 Under the contract he agreed to represent the Doctor until final judgment, and he told the Doctor that he ‘thought the case would be reversed on appeal.’ Manifestly, the evidence will be no different on a retrial. Dr. Campbell is dead. Plaintiff is the only witness who can testify to the conversation. There is nothing in plaintiff's testimony to impugn his integrity. He did all any lawyer of the highest professional standards could have done under the conditions. Defendant waived plaintiff's disqualification under the deadman's statute.3 Deacon v. Bryans, 212 Cal. 87, 90–93, 298 P. 30. Defendant will be unable to make any showing to the contrary of the testimony of plaintiff. Under these circumstances, the judgment should be reversed with directions as I have indicated. Connor v. Grosso, 41 Cal.2d 229, 259 P.2d 435.

FOOTNOTES

1.  Mr. Oliver was questioned by defendant's attorney with respect to payments that had been made on account. When he was questioned concerning conversations had with Dr. Campbell at the time of the substitution defendant objected that his testifying would be in violation of section 1880 of the Code of Civil Procedure, subdivision 3. The objection was overruled upon the ground that the questioning of Mr. Oliver concerning the payments on account was a waiver of his disqualification under the section.

1.  ‘Q. Mr. Oliver, did you have any discussion with Dr. Campbell about that contract or as to the writing of that contract sometime after Judge Clark had announced his decision, and about the time that you had received the proposed findings of fact drawn by Mr. Shoemaker for Mrs. Campbell. * * *‘The Witness: I did not.‘By Mr. Neblett: [Attorney for plaintiff]‘Q. Did you have a discussion with Dr. Campbell about that time in your office? A. I did.‘Q. What was said? * * * A. Dr. Campbell came into my office and stated that he was dissatisfied with the announced judgment of the court. In his opinion, Mrs. Campbell should have been allowed nothing by way of alimony. I told Dr. Campbell that after 28 years of married life and with his property and his earning capacity that I though the least the court would have allowed would have been possibly $250.00 a month.‘He also stated to me at that time that he was dissatisfied with the proposed amendments that I had prepared on the findings of fact and conclusions of law because he thought the findings should state in there that Mr. Shoemaker had suborned and bribed certain witnesses for the plaintiff.‘I told Dr. Campbell that there was no evidence of any such action on the part of Mr. Shoemaker and that I was not going to submit to the court any proposed findings in that regard.‘He stated at that time that if I wouldn't run this case the way he wanted it that he would discharge me, and asked me if I would sign a substitution of attorneys. I told him that I recognized that he had the power to discharge me as his attorney, that I was prepared to carry the case through to a conclusion, and I thought the case would be reversed on appeal.‘He said ‘no,’ he wanted to act as his own attorney, so he could argue the proposed findings himself; and with that I prepared the substitution of attorneys which is in the file, and Dr. Campbell signed it and I signed it.‘He left the office carrying the files of this case, the divorce case, and also the file of the Municipal Court case with him, and that is the substance of the conversation.‘Q. You turned over to Dr. Campbell at that time all of the files in Campbell against Campbell? A. The two cases.‘Q. And the other case that is, the case in the Municipal Court? A. The entire file.‘Q. You have had nothing to do with the case from that time until now? A. I have not.‘Q. Mr. Oliver, will you look in the file of Campbell against Campbell, Number D370,670, and find the substitution to which you have just referred? A. Here it is.‘Q. This substitution which you have presented to me appears to have been signed by Dr. Campbell, January 25, 1951, and by John Oliver on account of Ralph D. Paonessa and John Oliver on the same day? A. That is correct.‘Q. That is Dr. Campbell's signature? A. That is Dr. Campbell's signature; he signed that in my presence; and that is my signature.‘Q. That reads: ‘Defendant and cross complainant hereby substitutes himself Roy Campbell in pro per as his attorney of record in place of Ralph D. Paonessa and John Oliver,’ and under that: ‘We consent to the above substitution, dated: January 25, 1951.’‘Then on the other page there is another signature by Dr. Campbell above ‘substitution accepted.’‘A. That is correct.‘Q. Did you have any conversation at that time with Dr. Campbell about compensation? A. Yes, I told him that I expected to be paid the reasonable value. * * *‘(Continuing) That I expected to be paid a reasonable value for my services. He says: ‘What do you think the reasonable value of your services are?’ I said, ‘I expect to be paid as much as Mr. Shoemaker.’ * * *‘Q. When you told Dr. Campbell that you expected to be paid and you expected to be paid approximately, or the same amount that was allowed Mr. Shoemaker what did Dr. Campbell say? A. He said, ‘I am not going to pay you a cent more.’'

2.  The contract reads:‘December 16th, 1949‘We, the undersigned do hereby agree to represent Roy Campbell in an action for separate maintenance instituted by his wife, Iva Lee Campbell and on cross complaint for divorce filed by Roy Campbell against his wife, and which has been set for trial for February 20th, 1950, in Department 1 of the Superior Court of the County of Los Angeles State of California for a total fee of $750.00 plus Court Costs and other incidentals in the sum of $100.00 making a total sum of $850.00. Said fees of $750.00 to be paid after trial.‘Ralph D. Paonessa‘John Oliver‘I accept the services of Ralph D. Paonessa and John Oliver as per above agreement.‘RC_____’

3.  The court fails to state that in questioning plaintiff, in addition to asking him with respect to the payments that had been made on account, defendant's attorney questioned him about his signature and that of Mr. Paonessa on the contract, and thus waived plaintiff's disqualification under section 1880 of the Code of Civil Procedure.

SHINN, Presiding Justice.