Winslow v. Atz

Offutt, J., delivered the opinion of the Court. On and prior to December 22nd, 1930, the Universal Sand & Gravel Corporation owned a tract of land containing about twenty-five acres known as the Roa Hook property, situated in the Town of Cortlandt, Westchester County, New York, which was subject to a first mortgage for $18,000 to the Mercantile Credit Company, of Baltimore, and to a second mortgage for $122,000 to the American Security Company, trustee. One Frank K. Sauer represented the Universal Sand & Gravel Corporation, as attorney and agent, and J. Leiper Winslow represented the American Security Company and other corporations, as attorney and agent. The first mortgage being in default, the Mercantile Credit Company, as mortgagee, had prior to that date instituted proceedings to foreclose it, and that proceeding was then pending in the New York Supreme Court, County of Westchester, against Winslow’s clients.

On December 22nd, 1930, Sauer and Joseph Atz, a member of the New York Bar, met Winslow at the latter’s office in Baltimore, and discussed (1) refinancing the first ²³⁵ mortgage, (2) delaying the foreclosure sale under the proceedings instituted by the Mercantile Credit Company, and (3) a sale of the property by Atz. Winslow said that “Mr. Sauer was his client who had arranged to pay off the first mortgage and all legal charges if defendant’s clients would give him a half interest in their mortgage.” As a result of their negotiations, Winslow and Sauer executed two agreements called herein “Agreement No. 1” and “Agreement No. 2.” Under Agreement No. 1, which was executed by Win-slow as attorney and agent for the New York Tidewater Gravel Corporation, the Tidewater Bondholders’ Corporation, and the American Security Company, designated as the contractor, and Frank K. Sauer, of Elizabeth, N. J., as attorney and agent for the Universal Sand & Gravel Corporation, designated as contractee, the contractee agreed to negotiate a loan to take up the first mortgage with interest and legal charges, and to have that mortgage extended for a period of three years. The contractor agreed to have a foreclosure proceeding pending “on the second mortgage” satisfied of record, or to deliver to the contractee fifty per cent, of the bonds accompanying such second mortgage. It was further agreed that the property described in the two mortgages should be held by the contractor and contractee as tenants in common equally, and the contract contained also this provision, that “any fee for title searches and legal fees of Joseph Atz of New York City shall be equally paid by the contractor and contractee herein.” It contained other stipulations which are not material to the questions involved in this appeal.

Agreement No. 2 was executed by Winslow and Sauer as individuals and as attorneys and agents for the parties and corporations specifically mentioned in Agreement No. 1. Under it Atz was authorized to sell the Roa Hook property for $200,000 and from that sale he was to receive a commission of five per cent. On January 2nd Atz wrote Winslow a letter, in which,, among other things, he said: ²³⁶ “On even date herewith, I interviewed Mr. Pyne and Mr. Parker, of Emory and Pyne, the attorneys for the Mercantile Credit Company, and on behalf of the Universal Sand & Gravel Company filed a notice of appearance, and requested a stipulation for a period of twenty days, so that such corporation would not be in default. I likewise informed them, that, we hope, within the next ten days to pay the first mortgage. “It is not clear to me, if the intent of the agreement entered into, the time we were at Baltimore, is to authorize me to appear for the various companies that you are interested in.

The attorneys for the Mercantile told me, that no one on your behalf has appeared so far. Such an appearance should be made and a stipulation obtained, so that such corporations will not be in default, as we wish to keep our rights open until we have time to take up the first mortgage. “If it is the intention of your associates and yourself to have me appear for you then it will be essential that I have an authorization in writing. I am enclosing such document.” The “authorization” referred to in that letter, after stating the title of the foreclosure case in the New York Supreme Court, Westchester County, continued: “I, J. Leiper Winslow, of Baltimore, Maryland, individually, as agent, and as attorney for the following: New York Tidewater Gravel orporation; Tidewater Bondholders Corporation; American Security Corporation as Trustee; Do Hereby Authorize Joseph Atz, counsellorat-law, of the City of New York, to appear and act as attorney for the various designated corporations herein, in the above-entitled action. ²³⁷ Dated, Baltimore, Md., January 3rd, 1931. J. Leiper Winslow, Individually, as agent and as attorney for the above-described corporations.” Winslow signed and returned the “authorization” to Atz and at the same time wrote him: “I am enclosing document so that you can file same at the proper time.

A Director of the Mercantile Credit Company called in my office today and stated that you had written their lawyers, that the first mortgage would be paid off within ten days.” To that letter Atz replied: “On receipt of yours dated the 3rd of January, 1931,1 promptly appeared in the first mortgage foreclosure proceeding for your various companies, and obtained an extension until the 28th of January, 1931, so that none of the defendants could get in default. “I lodged with the Title Company a requisition for a certificate to be issued to the assignee of the first mortgage, that same is a first mortgage lien. “Before the end of the week of the 12th, the prospective purchaser promises arrangements will be made as to a contract for the sale of this property.” Although it was conceded that there was no meritorious defense to the foreclosure proceeding, Atz, by manipulating the legal processes available for the protection of defendants in such cases, was successful in delaying the foreclosure for many months, but he did not succeed in obtaining a purchaser for the property, nor did Sauer succeed in refinancing the first mortgage. Prior to October 1st, 1931, Atz’s connection with the foreclosure proceedings appears to have terminated, and ²³⁸ on that day he sent Winslow a statement in which he charged Winslow and Sauer jointly $3,000 for: “Professional Services Rendered: In re: Foreclosure Action—Mercantile Credit Company vs. New York Tidewater Gravel Corporation, Tidewater Bondholders Corporation, American Securities Corporation, as trustee, and Universal Sand & Gravel Corporation, et als.” and $126.01 for expenses. Winslow declined to pay the bill, and on May 10th, 1933, Atz brought this action in the Baltimore City Court against him to recover it. The declaration contained the six common counts, and there was filed with it a document called an “Account,” which read as follows: “J. Leiper Winslow, Esq., Munsey Building, Baltimore, Md. “To: Joseph Atz, Dr. Bill for Professional Services Rendered the 1st day of October, 1931, $1,571.01” In response to the defendant’s demand, Atz later filed a bill of particulars and an “Additional Bill of Particulars,” in which he set out (1) the “authorization” contract of January 3rd, 1931, and (2) described in these terms his services: “That the plaintiff in pursuance of the employment by the defendant, as set forth in the Bill of Particulars heretofore filed in this case, defended the foreclosure action for said defendant by interposing answers, defending motions, defending motions for judgment, making motion for accurate computation of interest, making motion to review previous motion as to interest, succeeding in having interest changed by appealing to the Appellate Court from an Order striking out defendant’s answer, by acting generally in the foreclosure proceedings up to and ²³⁹ including an attendance at the sale under the foreclosure action, for which services the plaintiff has charged the defendant Fifteen Hundred ($1500.00) Dollars; that the plaintiff incurred one-half of the following expenses in connection with his services as hereinbefore set forth, viz: 1931 Jan 9—At Title Co., White Plains, in re: Search.

Expenses............$ 2.50 March 1—Argument, Special Term, Part 1, White Plains.................. 3.50 April 24—Paid for Papers on Appeal from Motion....................................... 74.40 May 7—Special Term, Part 1, White Plains Before Witchief, J...... 2.50 16—Telegraphed to Winslow................36 28—Paid for printing Appeal............... 25.50 June 9—Special Term. White Plains......... 2.50 July 8—Service Co. answering actions in White Plains, and following Calendar numbers...... 1.00 Aug. 15-16-17 — Baltimore Conference with Sauer, Winslow and Taylor in re: Plan for Sauer to cooperate in purchase at foreclosure—expenses ............ 12.50 Aug. 20—Attended sale of property at White Plains.............................. 1.25 Total Disbursements............$126.01” A demurrer to the several counts of the declaration was overruled as to the counts for “work done,” etc., and for “money paid,” and sustained as to the others. Defendant then filed (1) general issue pleas, (2) a qualified denial of the execution of the “authorization,” and (3) two other special pleas. As a result of these and subsequent pleadings, which need not be considered in detail, the defendant set up as a defense to the action: (1) ²⁴⁰ That he had been induced to sign the authorization by the false representation that arrangements had been made to “take up the first mortgage”; (2) that it was not signed , for the purpose of enabling Atz to contest the foreclosure, because Atz and plaintiff knew there was no legitimate defense to that suit, but to give Sauer, who was in fact Atz’s client, an opportunity of carrying out Agreement No. 1, and to give Atz time to sell the property under Agreement No. 2; (3) that Atz’s activities in the foreclosure proceedings were not for the purpose of defending the same, but to harass and delay the mortgagee in the enforcement of a just claim and were against the will and direction of Winslow; and (4) that he, Atz, had been fully paid for his expenses by Sauer.

The trial of the case resulted on May 23rd, 1934, in a verdict for the plaintiff for $1,142.01. Defendant then filed a motion for a new trial and a motion in arrest of judgment, both of which were overruled. After a final judgment was entered on the verdict, on July 6th, he filed a motion to strike out the judgment, which was overruled, and on July 26th he took this appeal. Exceptions 1 to 17 involve rulings upon evidence, exception 18 relates to the court’s rulings upon the prayers, and exception 19 to the court’s action in overruling defendant’s motion to strike out the judgment.

From this statement of the case it is apparent that, when the authorization was signed Winslow, Atz, and Sauer were each in a different way interested in postponing the sale of the Roa Hook property in the foreclosure proceedings instituted by the Mercantile Credit Company. Sauer, whose client owned the ultimate equity, was interested because, unless the property brought more than $140,000, the aggregate of the principal sums due under the two mortgages, its equity would be extinguished ; Atz was interested because if he sold the property for $200,000, he was to receive a commission of $10,000; and Winslow was interested because his clients, the second mortgagee, and certain bondholders, might sustain a heavy loss if the property were sold in the ²⁴¹ foreclosure proceeding, and he would profit if Atz sold it for $200,000. It was to their common interest, therefore, to prevent or delay the foreclosure until Atz or Sauer could pay off the first mortgage or sell the property. Winslow’s contention was that the authorization contract should have been construed with contracts 1 and 2 as part of a single plan, under which Sauer was to get the money to negotiate a loan to take up the first mortgage, and Winslow and his clients considered as one party, and Sauer’s client, the Universal Sand & Gravel Company, considered as another party, would then own the land or the mortgage bonds in equal shares, and Atz would endeavor to sell the land for $200,000; that Winslow signed the authorization only for the purpose of giving Atz formal authority to represent his (Winslow’s) clients in the foreclosure suit; that Atz might thereby be enabled to negotiate with the first mortgagee for a stay of the proceedings in order that he (Atz) might have time to effect a sale of the property ; that Sauer might arrange to pay off the first mortgage; that Atz’s dilatory tactics were without Winslow’s consent and against his will, and were so unethical that it would be contrary to public policy to permit him to recover compensation for them in a court of justice.

Atz’s theory was that the authorization was a contract of employment, that Winslow was a party to it, that it was wholly independent of the other contracts, that when Winslow signed it he also by implication undertook to pay Atz for any services he might render under it, that he did render valuable services to Wins-low’s clients in the litigation, and that he was entitled to be compensated by Winslow therefor. The first question presented by the record is whether the demurrer to the second and fourth counts of the declaration were properly overruled. The sufficiency of these counts is not to be tested by their form and substance as filed, but by their substance as affected by the bills of particulars subsequently filed in the case. 2 Poe, ²⁴² Pl. & Pr. sec. 116, n 3; Noel Construction Co. v. Armored Construction Co., 120 Md. 237 , 87 A. 1049 ; Nelson v. Close, 147 Md. 216 , 127 A. 751 . The nar. counted against Winslow severally, whereas the contract alleged in the bill of particulars showed a joint contract by Winslow and others.

A several action cannot, over seasonable and proper objection, with exceptions immaterial here, be maintained against one of several joint obligors. A. L. I. Restatement, Law of Contracts, sec. 117; Williston on Contracts, sec. 327; Sittig v. Birkestack, 38 Md. 164 . But that defense is únavailing unless (a) it is presented by a plea in abatement, Sittig v. Birkestack, supra, Cruzen v. McKaig, 57 Md. 464 , or (b) unless the contract shows on its face that it is joint, as in this case, and the plaintiff fails to show why all the parties jointly liable have not been joined. Cruzen v. McKaig, supra.

The two counts were therefore bad, and the demurrer to them should have been sustained. We do not regard the error as reversible, because the defendant failed either in this court or in the trial court to urge that objection to the counts, and it may be treated as waived. Defendant does contend, however, that they are bad because the contract did not bind him, since he was not a party to the litigation. There is no apparent point to that objection, because by the contract Winslow expressly stated that he made it “individually,” as well as in the capacity of agent and attorney for the corporations named therein, and he did not authorize Atz to represent him, but to represent the defendant corporations.

If he was willing to undertake that responsibilty, there is no apparent legal reason why he should not have done so, nor is there any reason why, having done so, he should not be answerable for his undertaking. Atz in the course of his testimony had sworn that he had incurred in the course of the litigation the expenses itemized in his “Additional Bill of Particulars.” In connection with that testimony he was asked to tell what the charge for expenses “In re Title Search” of January 9th was “for.” An objection to the question was overruled, ²⁴³ and that ruling is the subject of the first exception. There was no evidence that Winslow had ever expressly authorized Atz to incur that expense. He had agreed with Sauer that “any fee for title searches and legal fees of Atz” should be equally borne by Winslow and Sauer, but Atz was not a party to that contract, and even if it be assumed that it was so far beneficial to him that he could have maintained an action on it, a question not wholly free from doubt [Owings v. Owings, 1 H. & G. 484 ; Seigman v. Hoffacker, 57 Md. 321 ; McNamee v. Withers, 37 Md. 171 ; Small v. Schaefer, 24 Md. 143 ; Price v. Mut.

Reserve Life Ins. Co., 102 Md. 686 , 62 A. 1040 ; Williston on Contracts, sec. 356 et seq.; 13 C. J. “Contracts” secs. 808, 815, and notes], nevertheless, in his declaration as particularized, he did not in this action sue on the contract between Winslow and Sauer, but upon the contract or authorization signed only by Winslow, and he was therefore limited in his proof to obligations arising out of that contract (Noel Const. Co. v. Armored Const. Co., supra; Nelson v. Close, supra), which contained no stipulation as to the payment of expenses, nor even a reference thereto.

He was therefore entitled to recover only for such expenses as were reasonably necessary to the performance of his duty as attorney for the defendants in the foreclosure proceedings. 6 C. J. 734. There was nothing to show that the “Title Search” had any connection with that litigation, and the objection should have been sustained. After qualifying as an expert on attorney’s fees in New York, Atz was asked, “What would you say would be a fair and reasonable fee for the services that you performed for Mr. Sauer and Mr. Winslow?” and over objection was permitted to answer, and replied, “Three thousand dollars.” The question was objectionable because the issue in the case was the value of the services rendered by Atz to Winslow and his clients, not to Sauer, who was not a party to the litigation in which Winslow authorized Atz to appear. The form of the question was also objectionable because the inquiry was, not what Atz “would say” his fee ought to be, but what under all the ²⁴⁴ circumstances of the case would have been reasonable compensation for services of like character at the place where they were rendered.

The force of that objection is apparent when it appears that Atz had previously testified that a reasonable fee for defending a mortgage foreclosure would be ten per cent, of the judgment. The mortgage was for $18,000, and if the judgment was approximately for that amount, Atz’s opinion of what he ought to receive would have been nearly seventeen per cent, of the judgment. The third exception relates to the rejection of an offer of certain records from the New York Supreme Court, Appellate Division. It does not appear that the records were properly authenticated, and we find no error in that ruling, nor do we find any error in the ruling involved in the seventh exception, which deals with the refusal of the court to permit “an official edition” of the rules of the New York courts to be offered in evidence.

The book is not before us, and it will be presumed that it was not properly authenticated. The fourth and sixth exceptions relate to the admissibility of certain correspondence between Winslow and Atz. The correspondence was relevant to the issues in the case and properly admitted. The sixth exception relates to the action of the court in refusing to permit counsellor defendant to ask Atz to define “sham and frivolous pleading.” It did not appear that the phrase had any artificial meaning, and we find no error in that ruling.

The eighth exception relates to the rejection of evidence as to what the attorneys for the Mercantile Credit Company charged for their services in the