Richards v. Washburn

I concur with Mr. Justice O’Brien on the ground that the plaintiffs acted throughout as counsel for Mr. Harbeck and not for the defendants, and that the agreement of the defendants to pay Mr. Harbeck’s lawyer’s fees for examining the title, was part of the contract .for the loan, and not an independent contract between the defendants and the plaintiffs, under which the defendants could be liable for the amount agreed upon as the plaintiffs’ fees, irrespective of the completion of the contract between the defendants and Harbeck. Brown, one of the plaintiffs, testified: “ I have been Mr. Harbeck’s counsel for a number of years, and I do the searching of titles for him when he loans money on real estate, whenever parties who are to take the loan request me to do it, and agree to pay my fee for it. Mr. Harbeck sends the borrowers to me and tells them to make any arrangements that they can make as regards the payment and the charge for my services. I act as attorney and counsel for Mr. Har•beck in searching the title and I protect his interest. Q. So that he was the party yon represented in this transaction? A. Ves, I did. Q. And the only arrangement that was made between you and Mr. Washburn was an arrangement as to the amount that was to be allowed for searching the title ? A. And the agreement to pay my *242fees.” It thus appears that the plaintiffs were not employed by the defendants; did not act for them, but did act for Hr. Harbeck as his counsel in searching the title. The agreement between the plaintiffs and the defendants was that the defendants were to pay the plaintiffs’ fees for searching the title, not as an independent -employment, but while they were acting as counsel for Harbeck and representing him. The payment of the plaintiffs’ fees by the defendants was, therefore, a part of the contract to make the loan, and the defendants were liable only in case Harbeck performed his agreement. I think, also, that Harbeck’s refusal to perform his agreement without the insertion of a receiver’s clause in the mortgage, when it was not a part of the original agreement for making a loan that such receiver’s clause should be inserted in the mortgage, was a breach of his agreement, and that the failure to make the loan was, therefore, by reason of a refusal on the part of Harbeck. to perform, and not a refusal of the defendants. The loan not having been made in consequence of a failure on the part of Harbeck to perform Ms agreement, the defendants were released from any •obligation to perform the contract made by them; and, as part of that contract was to pay Hafbeck’s counsel for examining the title, that being no independent liability that the defendants incurred therein, were not liable.

Judgment reversed, new trial granted, costs to appellants to abide •event.

The question presented is whether or not, as matter of law, defend- . ants were obligated to pay plaintiffs’ fees.. It appears that the searching of the title and the procuring of a policy from the'Lawyers’ Title Company were mere incidents to the main purpose of the defendants,, which was the procuring of a loan from Mr. Harbeck. Under these circumstances, whether we regard the ..plaintiffs as acting for Mr. Harbeck or for the defendants, we are brought to the same conclusion. Mr. Harbeck agreed to loan on an undivided interest, and to take a mortgage as security. In the absence of any agreement to the contrary, this meant the usual mortgage, which would not inclnde a receiver’s clause. As the defendants had but an undivided interest in the property, and such a clause would cause complications with the other part owners in the collection of the rents and the management of the property, and as the value.of the security was not questioned, the defendants were justified in objecting to the receiver’s clause. If this or any other burdensome clause-was to be insisted upon by the plaintiffs acting for Mr. Harbeck, it was their duty to disclose that fact to the defendants; and, if omitting such duty, they were not able to procure the policy of insurance or the loan for the defendants, the fault was theirs or Mr. Harbeck’s, If, on the other hand, they were acting as attorneys' for the defendants, then it was clearly their duty to obey the latter’s instructions;; and when requested, they should have omitted the receiver’s clause, it appearing that without it the- mortgage would have been acceptable to the title company and the policy would have been issued, and thus the plaintiffs would have been, able to perform their agreement. As the defendants, therefore,- Were not responsible for the. failure, we do not think, as matter of law, that they were liable. It is fairly inferable from the facts that the searching of the title and the procuring of a policy were not to be for their benefit, but were to be used, as already said, in connection with the procuring of a loan, and the only benefit they were to derive from the services was. denied them because of the unreasonable insistance upon the receivership clause by the plaintiffs and Mr. Harbeck.

The defendants asked to go to the jury upon two questions of' fact: (1) Whether or not they ever employed the plaintiffs as their attorneys, and (2) whether or-not the defendants ever prevented the *241plaintiffs from procuring the policy of insurance. Upon these the jury might have found that the plaintiffs were Harbeck’s attorneys; that they were examining the title for his information, and that when he unjustly refused to accept a proper mortgage, the plaintiffs were remitted to him for compensation for services which had by his act become useless to the defendants. Without going so far, therefore, as to hold that upon the whole case the complaint should have been dismissed, we are of opinion that the defendants were entitled at least to have the questions proposed submitted to the jury, and that in any event the direction of a verdict upon the theory that the defendants, as matter of law, wrere liable, was erroneous.

The judgment should be reversed and a new trial granted, with costs to the appellants to abide the event.

Van Brunt, P. J., Williams, Ingraham and Patterson, JJ., concurred.