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NICHOLAS BURGRAF v. JOHN T. BYRNES

Minnesota Supreme Court1905-04-20No. Nos. 14,320—(135)
94 Minn. 418

Summary

Holding. The trial court's dismissal was reversed and the case remanded. The plaintiff retained his right to recover damages from his attorney for the unauthorized settlement of the judgment, and his attempt to compel the attorney to account for funds received did not waive this broader remedy or split the causes of action.

Plaintiff hired defendant as his attorney to collect on a judgment worth $360.47 against a third party. Without authorization, the attorney settled and compromised the judgment for only $150 and satisfied it of record, causing the plaintiff to lose his lien on the debtor's property. The plaintiff did not discover this settlement for over two years, by which time the debtor had disposed of his assets. The trial court dismissed the case, apparently finding the plaintiff had no remedy. The appellate court disagreed, holding that the attorney's unauthorized settlement exceeded his authority and belonged to the plaintiff under general agency principles.

The court rejected the defendant's argument that the plaintiff ratified the settlement by filing summary proceedings to compel the attorney to account for the $150. Such efforts to recover the funds did not waive the plaintiff's broader right to recover damages for the harm caused by losing his lien position. The court concluded that seeking return of the money and claiming damages for lost recovery rights were not inconsistent claims but rather complementary remedies available to the client against his agent.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether an attorney may settle a judgment without client authorization
  • Whether a client's attempt to recover funds from an unauthorized attorney settlement bars a subsequent action for damages
  • Whether profits obtained by an agent in breach of duty belong to the principal
  • Whether demanding return of funds constitutes ratification of unauthorized agent conduct

Procedural posture

The trial court dismissed the action on the pleadings, and the plaintiff appealed from that judgment of dismissal.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

LOVELY, J.

This appeal is from a judgment dismissing plaintiff’s action upon an order of the trial court holding, in effect, that under the showing made by the pleadings plaintiff was remediless.

It appears from the complaint that plaintiff -employed defendant as an attorney at law to prosecute a suit against a third party, one John Lukentsch, for $32-1.47; that such proceedings were duly had that judgment was obtained for plaintiff on August 13, 1901, for $360.47. On April 2, following, defendant, without authority from plaintiff, settled and compromised the judgment with the judgment debtor for $150, and satisfied the same of record. Plaintiff did not ascertain or know that the judgment had been satisfied until more than two years, afterwards. In the meantime Lukentsch had disposed of all his real property upon which the judgment was a lien, and of personal property upon which execution could have been levied, whereby plaintiff was deprived of the means of making it good. The answer admits that defendant, as attorney at law, recovered the judgment set forth, and alleges that proceedings were instituted by plaintiff to recover of defendant $150, for which the judgment was satisfied, and claims that plaintiff had thereby ratified and confirmed defendant’s acts. Plaintiff, in reply, sets forth that the alleged ratification arose upon proceedings on a petition which the plaintiff had filed with the district court, asking for an order requiring defendant to turn over the $150 collected by him of the judgment debtor, and for the difference between the amount collected by his attorney and the damages plaintiff had suffered by the alleged unlawful satisfaction of the judgment.

We are unable to give any substantial force to the theory that the summary proceedings by plaintiff to compel his attorney, the defendant, to pay over the money which he had obtained from Lukentsch is to be treated as a final adjustment, or even ratification, of Attorney Byrnes’ unlawful acts. Upon the allegations of the complaint, which we are bound to accept upon this review, the unauthorized compromise of the claim of the judgment by the attorney was in excess of the latter’s authority, but his client had a right to whatever had been received, and might by the summary course adopted under section 6195, G. S. 1894, require his attorney to account to him for that sum upon proceedings in the district court. It is the general doctrine that all profits made in the course of an agency belong to the principal, whether they are in performance of or in violation of the agent’s duty to his principal. Smitz v. Leopold, 51 Minn. 455, 53 N. W. 719; Goodhue Farmers’ Warehouse Co. v. Davis, 81 Minn. 210, 83 N. W. 531. And this rule would apply between attorney and client as well as to any other relation of trust and confidence, and it does not follow that the efforts of the plaintiff to compel his attorney to account for the moneys received by his unlawful compromise necessarily exhausted his remedy. The client was entitled to what his attorney had obtained, to treat it as his own, and, the judgment having been satisfied within two years from its entry — which was within the statutory right of the attorney (G. S. 1894, § 6184) — to have the damages which he had sustained in being deprived of his lien upon the lands of the judgment debtor or his personal property recovered in an action for that purpose, which was the nature of the claim presented in this suit.

We are very clear that the course pursued by the plaintiff waived no rights to which he was entitled against defendant; neither was there a severance or splitting of the causes of action which made the summary proceedings to compel the payment of the money collected a bar to plaintiff’s right to recover.

The judgment is reversed, and the cause remanded for further proceedings.