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Sokol v. Mortimer

MARCH 14, 1967.




Appeal from the Circuit Court of Cook County, Municipal Department, First Municipal District; the Hon. JOSEPH M. WOSIK, Judge, presiding. Judgment affirmed.


This is an appeal from a judgment entered on a jury verdict in favor of the plaintiff, Bernard H. Sokol and against the defendant, Bernard Mortimer, for $5,000, for an attorney's fee.

Plaintiff, Bernard H. Sokol, is an attorney at law licensed to practice in Illinois and the United States District Court and had specialized in the defense of federal tax litigation for approximately seventeen years. Defendant, Bernard Mortimer, was a medical doctor specializing in gynecology.

In April of 1963, the plaintiff was called to defend a case involving an alleged failure by the defendant to report certain income on his federal tax returns over a period of years. Pursuant to conversations had between the two parties, the plaintiff's specific attention was directed by defendant to an alleged irregular practice by certain nurses in his employ, during the period in question. The alleged irregularity concerned the nurses' failure to post receipt of patients' fee payments on the patients' respective records maintained in the doctor's office. As a consequence, plaintiff contends he focused his investigation and defense of the defendant on a thorough audit of these records and the corresponding bank deposits relating to them. The fulcrum of the investigation was to account for certain unreported income of the defendant, and attribute such to the misconduct of the nurses.

Prior to October of 1963, plaintiff was employed by defendant in this case with a retainer of $1,500, pursuant to an oral agreement between them. In October of 1963, plaintiff proposed to defendant that they enter into a written agreement for the payment of attorney's fees in the sum of $10,000, half of which, ($5,000), was to be a bonus, contingent upon the defendant's discharge or acquittal, and pursuant to which plaintiff agreed to undertake the investigation. This agreed upon sum included the previous $1,500 retainer. The proposal was submitted to defendant in the form of a written letter of advice dated October 10, 1963, and was signed by both parties. Thereafter, plaintiff continued his investigation and preparation of the case.

In December of 1963, defendant was indicted for income tax evasion. Plaintiff continued to pursue the procurement of information and affidavits relating to the nurses' posting procedures. In March of 1964, two weeks before the defendant's trial, plaintiff was notified by the federal prosecutor that his office had procured 158 money orders of defendant's totaling some $152,000, which had been purchased by the doctor with over a thousand of his patients' checks, none of which had been deposited in his bank account so as to evidence income. Plaintiff contends that this revelation necessitated an entirely new theory of investigation for the proper preparation of the defendant's defense, the substance of the investigation having theretofore been devoted to the misconduct of the nurses and not that of his client.

Subsequently, the two parties conferred in regard to this new development. Plaintiff sharply criticized his client for having concealed such vital information from him, maintaining that the importance of his prior investigative efforts of several months had thus been minimized or wasted. The doctor denied having wilfully concealed the information, asserting that he had every right to assume that the checks in question had been properly posted before negotiating them for the money orders. John F. Kelly, who had assisted plaintiff in his preparation of the case, testifying for plaintiff, stated that he was of the opinion at that time the money orders were not material to the government's proof of the doctor's income.

The resulting commencement of an entire new series of investigations caused plaintiff to submit, in a writing dated March 17, 1964, six days before the trial, that the contingent portion of their prior fee agreement should be voided, and that the attorney's fees totaling $10,000 be paid to him regardless of the final determination of the tax evasion trial. This alteration in the fee agreement was agreed to by defendant, in writing. Whether defendant agreed to the change without protest is a fact in much dispute.

Defendant was tried for income tax evasion and convicted. An unsuccessful appeal was taken by counsel other than plaintiff. United States v. Mortimer, 343 F.2d 500, 65-1 USTC ¶ 9301 (1965). After repeated demands, defendant refused to pay plaintiff the $5,000 balance of his fee. The plaintiff instituted this action and judgment was entered on a verdict in favor of plaintiff for $5,000. Defendant filed motions for a judgment notwithstanding the verdict and for a new trial, both of which were denied and from which defendant appeals.

It is defendant's theory: (1) that such attorney-client fee agreements are presumptively fraudulent, thereby making it incumbent upon the attorney to sustain the burden of proof as to the agreement's validity, (2) that the trial court erroneously instructed the jury as to such burden of proof, (3) that the trial court erred in refusing the defendant's instructions relating to a presumption of the honesty and the credibility of defendant, (4) that the trial court prejudiced defendant's case by insulting his wife while she testified, (5) that the court below erred in admitting, over objection, certain confidential communications between the attorney and his client, (6) that plaintiff, having violated Canon 37 of the Canons of Professional Ethics, is not entitled to compensation, (7) that the judgment is not supported by the allegations and proofs, and (8) that the verdict is contrary to the manifest weight of the evidence.

Plaintiff responds: (1) that attorney-client fee agreements are not presumptively fraudulent, and thus the jury instruction on burden of proof was proper, (2) that the rule prohibiting testimony as to confidential communications is inapplicable to the facts of this case, (3) that the court did not err in refusing defendant's tendered instructions on honesty and credibility, (4) that no prejudice was created by the court in reprimanding defendant's wife while on the stand, and (5) that the verdict and judgment are consistent with and supported by the allegations and evidence.

Defendant maintains that attorney-client fee arrangements, due to the fiduciary capacity in which the attorney negotiates, are presumptively fraudulent, making it thereby incumbent upon such attorney to sustain the burden of proof as to his utmost good faith and freedom from the exercise of undue influence during such negotiations. He further alleges that it was thus error for the court below, by way of instructions to the jury, to cast the burden of proof as to matters of consideration, undue influence and the like, upon him. In this conjunction, defendant relies principally upon the cases of Elmore v. Johnson, 143 Ill. 513, 32 NE 413 (1892); Miller v. Lloyd, 181 Ill. App. 230 (1913); Woods v. First Nat. Bank of Chicago, 314 Ill. App. 340, 41 N.E.2d 235 (1942); Jordan v. Ray Schools-Chicago, Inc., 49 Ill. App.2d 1, 199 N.E.2d 827 (1964) and Awotin v. Abrams, 321 Ill. App. 304, 52 N.E.2d 827 (1944).

This court takes full cognizance of the holdings and reasoning of these cases, but after careful examination, can find no underlying rule which establishes that attorney-client fee agreements create a presumption of fraud per se. No such rule obtains from this line of cases because: (1) such a rule would necessarily exculpate a client from dealing in an open and above board fashion with his attorney and impose upon such attorney an unwarranted and inequitable burden, and ...

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