74 Wn.2d 483, ROBERT T. KENNEDY, Respondent and Cross-appellant, v. V. D. CLAUSING et al., Appellants
[No. 38394. En Banc. Supreme Court September 26, 1968.]
ROBERT T. KENNEDY, Respondent and Cross-appellant, v.
V. D. CLAUSING et al., Appellants.«*»

The trial court correctly instructed the jury, under instruction No. 4, that the plaintiff attorney was required to prove that the two contracts were fair and reasonable:

For the plaintiff to recover on an express contract for legal services performed by the plaintiff on behalf of the defendant, the plaintiff has the burden of proving, by a fair preponderance of the evidence:

492 KENNEDY v. CLAUSING [74 Wn.2d 483

1. That the parties had a meeting of the minds resulting in a contract between them as to

(a) the work to be done by the plaintiff, and

(b) the compensation to be paid, and

2. That the agreement was fair and reasonable.

The finding that the plaintiff proved that the contracts were fair and reasonable thus inheres in the jury verdict. This finding, in our opinion, negates the possibility that the jury could have determined that the evidence showed duress, undue influence, coercion, or failure by the attorney to disclose necessary facts. Moreover, by instruction No. 5, as given, the issues of duress, undue influence, coercion and failure to disclose were clearly before the jury; and by its verdict it found against the defendant on these issues.

The verdict demonstrates that the jury believed the testimony of the plaintiff, which, considered in the light of the defendant's high level of intelligence, familiarity with the legal profession, and extraordinary business acumen, reasonably resulted in the conclusion that the defendant was fully aware and informed of all that was involved in forming the contracts, and that the defendant was not coerced, deceived or overborne by the plaintiff in any manner. As an example of the defendant's singular talents as a man of affairs, the record shows that while he was hospitalized recuperating from a nervous breakdown, he dictated 13 pages of instructions to the plaintiff attorney concerning the conduct of matters in the plaintiff's hands. Thereafter, in early 1963, as heretofore stated, the defendant prepared and presented his own petition to the city planning commission in the rezoning matter, without consulting the plaintiff. The record is also replete with examples of the defendant's widespread and ambitious business ventures, and his past involvements in litigation.

We approach the record and issues in this case in the same manner as we did in Albert v. Munter, supra. In that case the trial court made no finding as to the issues of duress, coercion or disclosure. Yet this court did not invalidate the contract, but affirmed the trial court. We there said at 176:

Sept. 1968] KENNEDY v. CLAUSING 493

In this case, as the lower court found, and on the whole record, we have no doubt whatever that the contract in question was entered into fairly and understandingly, was acted upon by respondents with great skill, energy and fidelity, that their services were multifarious and valuable, that they could not have foreseen the ultimate result of their activities in behalf of appellant, and that a contingent contract for their attorney's fee on his and their part was almost unavoidable. We are, therefore, well satisfied to sustain the findings of the trial court as to the reasonableness, good faith and enforcibility generally of the contract.

There is a much stronger basis for enforcing the contracts in the instant case than the contract in Albert v. Munter, supra. Here, the jury has found by its verdict that there was no duress, undue influence, coercion or failure to disclose, in addition to finding that the plaintiff has proved the contracts to be fair and reasonable. Further, the plaintiff attorney in this case was unusually successful in the representation of his client, and his services pursuant to the contracts were remarkably valuable. All of the foregoing reasons make it inconceivable to us that the defendant was prejudiced by instruction No. 5, given in this case.

[3] The defendant further contends that it was error to refuse to give his offered instructions Nos. 3, 4 and 5. We will not set out these instructions here. It suffices to say that they substantially reflect the correct rule as to burden of proof, but are infected with repetition and overemphasis to such a degree that we could not approve them as written, and accordingly, we do not find error in the trial court's refusal to give them.

The defendant also assigns error to the trial court's refusal to give his additional requested instruction No. 3, which reads:

If you find that:

1. Due to the defendant's mental condition or the relationship of trust and confidence between the attorney and client, the defendant was acting under duress, undue influence or coercion; or

2. That the plaintiff failed to fully and fairly apprise the defendant as to his legal and economic position,

494 KENNEDY v. CLAUSING [74 Wn.2d 483

respecting a particular contract for legal services, then such express contract cannot be enforced and you will not bring in a verdict based on such an agreement.

The plaintiff has the burden of proving the foregoing by a fair preponderance of the evidence. The defendant likewise has the burden of proving payment by a fair preponderance of the evidence.

It was proper to refuse this instruction because it is obviously incoherent and incorrect, in that it requires the plaintiff to prove the affirmative defenses of the defendant. The defendant's contention is without merit.

The defendant next contends that the evidence was insufficient to warrant submission to the jury of the two contingent fee contracts. We do not agree, because the record does contain direct, corroborative and circumstantial evidence which considered together supports the formation and execution of the alleged contracts. Further, there is substantial evidence in this record from which the jury could determine the amounts due if the contracts were found to exist.

The defendant contends that the trial court erred in giving its instructions Nos. 4 and 16, relating to the elements of a contract, and also in refusing the defendant's additional requested instructions Nos. 4 and 5. We think that the instructions given were proper, and that there was no error committed in refusing the instructions proposed by the defendant.

The defendant next contends that the trial court erred in refusing to give his proposed instruction No. 6:

The law of the State of Washington makes it unethical for an attorney to represent a party with adverse interest to his client or to represent his own interests against those of his client and for the attorney to do so is a breach of the fiduciary duty owed by the attorney to his client, and the attorney is not entitled to any compensation from his client during the period he is representing others with adverse interests to his client or representing his own interests rather than his clients.

[4] It is argued that there was evidence to establish that the plaintiff, in taking an assignment of a business

Sept. 1968] KENNEDY v. CLAUSING 495

claim from an associate of the defendant in the defendant's auto repair business, had acquired an adverse or conflicting interest in violation of Canon of Professional Ethics 6, RCW vol. 0. The trial court refused the offered instruction on the ground that the evidence in the case established the defendant's knowledge of and consent to the transaction. Our review of the record persuades us that the trial court did not err in so ruling.

The defendant finally contends that the trial court abused its discretion by improperly limiting the scope of the cross-examination of the plaintiff by the defendant's counsel. We find no merit in this contention.

[5] The plaintiff, pursuant to ROA 16, cross appeals from the trial court's refusal to allow interest on the amounts found due under the contingent fee contracts from the date of completion of the contracts. The trial court based its ruling on the fact that the plaintiff's fees under the contracts were unliquidated until verdict and judgment. We find that the ruling is supported by the record, and hold that interest is chargeable against the defendant only from the time that the fees became liquidated. Smith v. Saulsberry, 157 Wash. 270, 288 Pac. 927 (1930).

The plaintiff makes seven assignments of error which we need not discuss, in view of our disposition of this case.

The judgment is affirmed.

FINLEY, C. J., WEAVER, HALE, NEILL, and MCGOVERN, JJ., concur.

HAMILTON, J. (dissenting) - I agree with the majority that respondent performed extensive and valuable legal services for appellants, and that he is entitled to compensation for such services. Unfortunately, however, I cannot agree with the majority view that the instructional error which the majority concede - was nonprejudicial to appellants.

At the outset, it is necessary to bear in mind that respondent pursued his cause of action upon two distinct and alternative theories - (1) that he was entitled to stated

496 KENNEDY v. CLAUSING [74 Wn.2d 483

sums or percentages under the terms of two contingent fee contracts, and/or (2) that he was entitled to the reasonable value of his services. The amount or amounts which respondent would be entitled to recover could easily vary substantially depending upon the theory adopted by the jury.

The jury accepted the first theory, found the existence of the asserted contingent fee contracts, and awarded compensation accordingly. It reached this result, however, under instructions which misplaced the burden of proof with respect to factors which, under the circumstances of this case, the law and public policy require be established by respondent if he would sustain the asserted fee contracts. Furthermore, the jury was not advised in any fashion by the instructions it received as to the fiduciary nature of an attorney-client relationship and the bearing such a characteristic of the relationship between the parties had upon respondent's first theory.

As the majority correctly point out, the pertinent rule as to the burden of proof in an action to establish and enforce a fee contract entered into after the attorney-client relationship has come into existence is set forth in Albert v. Munter, 136 Wash. 164, 239 Pac. 210 (1925). This court there stated, at 175:

That the rule enunciated in the Albert case, is one of almost universal recognition can be affirmed by a reference to the following authorities: Rupp v. Cool, 147 Colo. 18, 362 P.2d 396 (1961); Bryant v. Hand, 158 Colo. 56, 404 P.2d 521 (1965); Lawrence v. Tschirgi, 244 Iowa 386, 57 N.W.2d 46 (1953); Coleman v. Sisson, 71 Mont. 435, 230 Pac. 582

Sept. 1968] KENNEDY v. CLAUSING 497

(1924), as reaffirmed in Daniels v. Paddock, 145 Mont. 207, 399 P.2d 740 (1965); Morton v. Forsee, 249 Mo. 409, 155 S.W. 765 (1913), as recognized in Fein v. Schwartz, 404 S.W.2d 210 (Mo. App. 1966); and In re Schanzer's Estate, 7 App. Div. 2d 275, 182 N.Y.S.2d 475, aff'd 8 N.Y.2d 972, 204 N.Y.S.2d 349, 169 N.E.2d 11 (1959, 1960). And for earlier cases and pertinent discussion see Annots., Ann. Cas. 1917A, 531 (1917) and 19 A.L.R. 847 (1922); 7 Am. Jur. 2d Attorneys at Law § 267 (1963); 7 C.J.S. Attorney and Client 204a (2) (1937); 2 E. Thornton, Attorneys at Law §§ 428-32 and 532 (1914); E. Weeks, Attorneys at Law § 346 (2d ed. 1892).

Without going into a detailed analysis of the foregoing authorities, a succinct summary of the applicable rule - for comparison with the rule of the Albert case, supra - can be found in Rupp v. Cool, supra, where the Supreme Court of Colorado states, at 21:

Once the confidential relationship of attorney and client exists, the law governing contracts entered into between them is very different. The test applied to such contracts when the attorney seeks to enforce the same is well stated in 7 C.J.S., Attorney and Client, §204(2):

"Where after the relationship has been established, an attorney and client enter into an agreement in reference to the attorney's compensation, * * * the burden is on him to prove that the agreement was fairly and openly made, was supported by an adequate consideration, and that he gave the client full knowledge of the facts and of his legal rights, when he entered into the agreement, and that the services to be performed were reasonably worth the amount stated in the agreement;

* * *

Or, in Fein v. Schwartz, supra, where the Missouri court noted, at 223:

Directing our attention to the contention of appellant that respondents failed to sustain the burden in the respects complained of, we agree with their understanding of the law that where a contract for compensation is executed by an attorney and his client after the establishment of the fiduciary relation, the burden is on the attorney to show that the transaction was fair, that the

498 KENNEDY v. CLAUSING [74 Wn.2d 483

compensation provided for did not exceed a fair and reasonable remuneration for the services rendered or to be rendered, that the contract was free from all fraud and undue influence and that it was entered into by the client freely and with a full understanding as to her rights.

In developing and enunciating the rules reflected in the foregoing quotations, the courts and authorities have, with considerable uniformity, pointed to such considerations as the highly confidential and fiduciary relation existing between attorney and client once the relationship has been established; the potential dominance extant by virtue of the superior legal training, knowledge and experience of the attorney as opposed to that of the ordinary client; the opportunity, if not the temptation, to overreach or obtain undue advantage which is inherent in a relationship involving such a strong degree of trust and confidence; the ethics, the dignity, and the integrity intrinsic in and essential to the legal profession and continued public reliance thereon; the obligation and responsibility of the attorney to fully, fairly, and to the best of his ability advise his client in all matters pertaining to the business, transaction, employment or fees involved; and the maintenance and perpetuation of standards which will prevent fee negotiations - particularly those arising during the attorney-client relationship - from entering into the arena or embracing the customs of the common market place.

In fact, some authorities have found the array of public policy considerations so formidable as to cast a presumption of fraud or undue influence upon all contracts for compensation negotiated between attorney and client during the course of the relationship, which, they hold can only be overcome by the production of clear and most satisfactory proof. See Annots., Ann. Cas. 1917A, 531 and 19 A.L.R. 487, supra. Other authorities have suggested that the burden resting upon the attorney of establishing the fidelities of the fee transaction should be extended to agreements for compensation negotiated before the actual employment has taken place, arguing that no sound reason

Sept. 1968] KENNEDY v. CLAUSING 499

exists for any distinction between initial and later fee discussions. 2 E. Thornton, Attorneys at Law, § 432 (1914).

Against this background, then, and in keeping with the rule laid down in the Albert case, supra, it seems to me appellants were entitled as a matter of law to have the jury instructed that respondent had the burden of establishing by a preponderance of the evidence that the asserted contingent fee contracts were (1) fair and reasonable, (2) free from undue influence, (3) entered into after a fair and full disclosure of all pertinent matters, and (4) fully understood and comprehended by appellants.

Instead, the jury, by instructions Nos. 4 and 5, were instructed:

1. That the parties had a meeting of the minds resulting in a contract between them as to

(a) the work to be done by the plaintiff, and

(b) the compensation to be paid, and

2. That the agreement was fair and reasonable. (Instruction No. 4.)

If you find that:

1. Due to the defendant's mental condition or the relationship of trust and confidence between the attorney and client, the defendant was acting under duress, undue influence or coercion, or

Unmistakably, these instructions misplaced the burden of proof with respect to the presence or absence of the

500 KENNEDY v. CLAUSING [74 Wn.2d 483

elements of undue influence and full disclosure. Furthermore, they were in the nature of formula instructions, which, when erroneous, have been condemned as prejudicial by this court. Donner v. Donner, 46 Wn.2d 130, 278 P.2d 780 (1955); See v. Willett, 61 Wn.2d 681, 379 P.2d 915 (1963).

Proper exceptions were taken by appellants to these instructions, and in lieu thereof appellants submitted a series of proposed instructions, the gist of which is found in proposed instruction No. 3, which reads:

The relationship of attorney and client is one of the strongest fiduciary relationships known to law and has always been regarded as one of special trust and confidence. The law, therefore, requires that all dealings between the attorney and his client shall be characterized by the utmost fairness and good faith and it scrutinizes with great closeness all transactions between them. A contract for compensation of the attorney made during the existence of the relationship of attorney and client may be considered void or voidable and the attorney has the burden of proving that the contract with his client was fair and reasonable and that he used no undue influence and the compensation contract was made after the attorney made a fair and full disclosure of the facts upon which it is predicated, and that it was entered into by the client freely and with a full understanding as to his rights.

Aside from a slightly argumentative tinge, the instruction otherwise appears to be squarely in keeping with the rule of the Albert case, supra.

The trial court not only rejected all of appellants' proffered instructions, embracing as they did appellants' underlying theory of the case as it pertained to respondent's contract theory, but the trial court also failed to inform the jury by any instruction that the parties at the time of the asserted fee negotiations stood in any form of a confidential or fiduciary relation, or to define such a relationship to the jury, thereby leaving the jury free to place its own interpretation on the "relationship of trust and confidence" referred to in instruction No. 5.

Thus, it seems to me, by virtue of misdirection and nondirection, the jury inescapably entered upon its

Sept. 1968] KENNEDY v. CLAUSING 501

deliberations with the conception that the parties virtually stood on an equal footing during the course of the pertinent fee negotiations, and the existence or nonexistence of the asserted contracts was to be measured by the same standards as be applicable to the ordinary garden variety contract. This, it seems to me, was prejudicial to appellants, for, whether appellants be wise or foolish, educated or uneducated, provident or improvident, they were entitled to have the jury properly instructed, particularly as related to their theory of the case. Certainly, it requires no citation of authority to support the proposition that a failure to properly submit a litigant's theory of the case to the jury constitutes prejudicial error.

The fact that the jury found against appellants upon the elements of undue influence and full disclosure does not necessarily mean, as the majority would have it, that the jury would have found in favor of respondent on these issues had it been correctly instructed as to respondent's burden of proof in respect thereto. At best we can only speculate as to the jury's findings had it been properly instructed. Hence, the most that can be fairly said, without substituting our deliberations for those of the jury, is that the jury more probably found that the appellants failed to carry the burden of proof which the instructions incorrectly placed upon them. This could likewise have been its reaction had respondent been impressed with the burden of proof. If this be correct, and the jury sustained the fee contracts upon an incorrect basis, then appellants were also prejudiced in that the jury could not and did not reach nor could it consider respondent's alternative theory of quantum meruit, which, had the jury done so, might well have produced a lesser verdict.

Under these circumstances, and as unfortunate and unhappy as it may be to remand this long and intensely contested litigation for retrial, it seems to me there can be no other result consistent with retaining and maintaining the high standards the law and public policy place upon the legal profession in fee negotiations.

502 KENNEDY v. CLAUSING [74 Wn.2d 483

I would conclude by stating that this dissent intends no imputation of unprofessional conduct on the part of respondent, nor does it arise out of sympathy for any other party. It rests solely upon the ground that instructional error was committed, which I cannot conscientiously view as harmless.

BRADFORD, J. Pro Tem., concurs with HAMILTON, J.

HILL, J. (concurring) - For the reasons epitomized in the third paragraph of the dissent, I concur therein.

December 31, 1968. Petition for rehearing denied.

74 Wn.2d 483, ROBERT T. KENNEDY, Respondent and Cross-appellant, v. V. D. CLAUSING et al., Appellants [No. 38394. En Banc. Supreme Court September 26, 1968.]ROBERT T. KENNEDY, Respondent and Cross-appellant, v. V. D. CLAUSING et al., Appellants.«*»

74 Wn.2d 483, ROBERT T. KENNEDY, Respondent and Cross-appellant, v. V. D. CLAUSING et al., Appellants
[No. 38394. En Banc. Supreme Court September 26, 1968.]
ROBERT T. KENNEDY, Respondent and Cross-appellant, v.
V. D. CLAUSING et al., Appellants.«*»