Baker v. Otto

Delaplaine, J., delivered the opinion of the Court. This appeal of C. Walter Baker and Nora M. Baker, his wife, is from a decree of the Circuit Court for Washington County dismissing their bill of complaint praying that Norman Otto and Mrs. John McKee, surviving executors of the estate of Annie S. Miller, deceased, be directed to release a certain mortgage executed by the appellants. It was alleged that the mortgage in the sum of. $2,450 covered a vacant lot on North Potomac Street in Hagerstown, but that it had been paid on March 17, 1939. Baker, who was Mrs. Miller’s attorney, endeavored to prove that he had paid the entire indebtedness by producing (1) his cancelled check for $2,500 bearing a notation “North Potomac Street lot,” and (2) a receipt from Mrs. Miller for $2,500 containing the words “same being payment of mortgage” but not specifying the mortgage.

Baker swore that he wrote the notation on the check before he gave it to Mrs. Miller. The chancellor, however, observed that the color of the ink used in making the notation was different from that in the signature. Moreover, the executors showed that'oh February 23, 1939, Mrs. Miller received a check for $2,500 from Mrs. Mary I. Keedy for ⁵⁵ the release of another mortgage, and on its endorsement Baker deposited it in his personal account in the Nicodemus National Bank of Hagerstown. Baker claimed that he accommodated Mrs. Miller on that day by giving her therefor $2,500 in cash, but did not obtain a receipt.

The general rule is firmly established both at common law and in equity that any disputed transaction between attorney and client is prima facie fraudulent and invalid, and the burden is upon the attorney to show that he used no undue influence or deception but that the transaction was fully understood and fair in all respects. Justice Story observed that this rule was established on account of “the importance of preventing a general public mischief, which may be brought about by means, secret and inaccessible to judicial scrutiny, from the dangerous influences arising from the confidential relation of the parties.” 1 Story, Equity Jurisprudence, sec. 311. The rule is founded on public policy because the confidential and fiduciary relationship enables an attorney to exercise a very strong influence over his client and often affords him opportunities to obtain undue advantages by availing himself of the client’s necessities, credulity and liberality. Courts of equity consequently watch over such transactions with great solicitude and exercise the most exact scrutiny to be certain that the attorney has taken no unfair advantage of his client.

Merryman v. Euler, 59 Md. 588 , 43 Am. Rep. 564 ; Etzel v. Duncan, 112 Md. 346 , 76 A. 493 ; McLean v. Maloy, 136 Md. 467, 513 , 111 A. 91, 107 ; Rhodes v. Ries, 99 N. J. Eq. 638, 133 A. 712 ; 23 Am. Jur., Fraud and Deceit, sec. 14. Objection was made to the admission of evidence regarding the check for $2,500 given by Mrs. Keedy to Mrs. Miller and its deposit to the use of C. Walter Baker.

The appellants contended that this evidence confused the chancellor. It is a fundamental principle that an attorney at law is an officer of the court sworn to aid in the administration of justice and held to uberrima fides in all his professional dealings. Gould v. State, 99 Fla. 662 , 127 So. 309 , 69 A. L. R. 699. When a transaction be ⁵⁶ tween attorney and client is attacked, the presumption of fraud can be overcome only by the clearest and most satisfactory evidence.

Moore v. Rochester Weaver Mining Co., 42 Nev. 164 , 174 P. 1017 , 19 A. L. R. 830. The extreme degree of care required for the correction of abuses of confidence was recognized by Chief Judge Robinson in the following words: “No part of the jurisdiction of the court is more useful, it has been said, than that which it exercises in watching and controlling transactions between parties standing in a relation of confidence to each other. * * * The broad principle * * * is that wherever there exists such a confidence * * * the court will not allow any transaction between the parties to stand, unless there has been the fullest and fairest explanation and communication of every particular resting in the breast of the one who seeks to establish a contract with the person so trusting him.” Zimmerman v. Bitner, 79 Md. 115, 126 , 28 A. 820, 821, 822 . In determining whether an attorney or any other beneficiary in a confidential relationship has met the burden of proof which' the law casts upon him, the court must consider all the facts and circumstances in each particular case. Mead v. Gilbert, 170 Md. 592, 606 , 185 A. 668 .

The attorney involved in the