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Greenbaum & Browne, Ltd. v. Braun

OPINION FILED AUGUST 26, 1980.

GREENBAUM & BROWNE, LTD., PLAINTIFF-APPELLEE,

v.

RICHARD L. BRAUN, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. THOMAS J. O'BRIEN, Judge, presiding.

MR. PRESIDING JUSTICE PERLIN DELIVERED THE OPINION OF THE COURT:

Rehearing denied October 1, 1980.

Plaintiff-appellee, Greenbaum & Browne, Ltd., an Illinois professional corporation whose shareholders are licensed to practice law in the State of Illinois, brought an action to recover the sum of $14,192.64 allegedly due from defendant-appellant, Richard L. Braun, for legal services rendered. The circuit court of Cook County entered judgment upon a jury verdict in favor of plaintiff in the amount of $14,192.64. Defendant appeals contending that the trial court erred in denying his post-trial motion to reduce the amount of the judgment.

For the reasons hereinafter set forth we reverse in part and affirm in part.

During a meeting at plaintiff's office in December 1974, attorneys Greenbaum and Browne discussed with defendant an outstanding balance of $8,264.61 for legal services rendered by plaintiff to Kaplan & Braun, Inc., a corporation with which defendant is allegedly associated. *fn1 At this meeting attorney Greenbaum advised defendant that because Kaplan & Braun, Inc., had encountered serious financial difficulties, *fn2 plaintiff would be unable to render further legal services to Kaplan & Braun, Inc., or to defendant individually unless defendant (1) agreed to be personally liable for the outstanding account of $8,264.61 for the services rendered to Kaplan & Braun, Inc., and (2) agreed to be personally liable for all future services rendered on behalf of defendant individually or on behalf of any of the various entities with which defendant was associated. Attorneys Greenbaum and Browne testified that defendant so agreed. However, defendant testified that he had informed attorneys Greenbaum and Browne that "he did not feel responsible for the debts of the corporation," nor was he "in a position to pay those debts." Defendant further testified that he had requested that plaintiff continue to represent him in "personal matters" for which he "would attempt to pay a reasonable fee."

Subsequent to the December 1974 meeting plaintiff rendered legal services to defendant individually, to Kaplan & Braun, Inc., and to an entity referred to as "Bralen." Plaintiff periodically sent statements to defendant requesting payment for these services, for the services rendered to Kaplan & Braun, Inc., prior to December 1974 ($8,264.61), and for services rendered to an entity referred to as Lake Zurich Associates.

Defendant testified that during a meeting at plaintiff's office in either May or June 1976 he again informed attorneys Greenbaum and Browne that he did not feel personally obligated for the fees for services rendered to Kaplan & Braun, Inc. Defendant further testified that attorney Browne threatened to file a lawsuit against defendant and "attach" his house.

The jury, after hearing the evidence and arguments of counsel, found in favor of plaintiff and against defendant in the amount of $14,192.64. The trial court entered judgment on the jury's verdict and denied defendant's post-trial motion to reduce the amount of the judgment.

I.

The law in Illinois, at least since 1893, when our supreme court decided Rolfe v. Rich (1893), 149 Ill. 436, 35 N.E. 352, has placed special obligations upon an attorney by virtue of the relationship between attorney and client. These obligations, generally referred to as the fiduciary duty of the attorney, permeate all phases of the relationship, including the contract for payments. In Rolfe the court opined at page 437:

"While the law is, that dealings between attorney and client, resulting in advantage to the former, will be closely scrutinized, and the attorney be required to show the utmost good faith and fairness, and that the client dealt with full knowledge of his rights, it does not prohibit all dealings between them, or declare all contracts made by the attorney with the client ipso facto void, or voidable at the instance of the client."

See also In re Kutner (1979), 78 Ill.2d 157, 162, 399 N.E.2d 963.

Defendant first contends that the trial court erred in not reducing the amount of the judgment by the sum of $8,264.61, that is, the amount of the fees previously billed by plaintiff to Kaplan & Braun, Inc., for services rendered to Kaplan & Braun, Inc., prior to December 1974. In support of his contention defendant argues that plaintiff failed to prove the fairness and reasonableness of these fees. Plaintiff maintains that it proved a novation whereby Kaplan & Braun, Inc.'s debt to plaintiff was not extinguished and in its stead was substituted defendant's promise to pay the fees. In support of its contention plaintiff argues that "[t]he prior obligation, and its underpinnings, are not subject to review or question."

• 1 Novation may be broadly defined as a substitution of a new contract or obligation for an existing one which is thereby extinguished. More specifically, it is the substitution by mutual agreement of one debtor or of one creditor for another, whereby the existing debt is extinguished. (Faith v. Martoccio (1974), 21 Ill. App.3d 999, 1003-04, 316 N.E.2d 164; Printing Machine Maintenance, Inc. v. Carton Products Co. (1957), 15 Ill. App.2d 543, 552, 147 N.E.2d 443.) The essential elements of a novation are (1) a previous, valid obligation; (2) a subsequent agreement of all the parties to the new contract; (3) the extinguishment of the old contract; and (4) the validity of the new contract. (Kiefer v. Reis (1928), 331 Ill. 38, 43; Faith, at 1003-04.) The party seeking to prove the novation has the burden of proof and must ...


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