REILLY
v.
BEEKMAN.
No. 201.
Circuit Court of Appeals, Second Circuit.
March 12, 1928.*792 *793 Olvany, Eisner & Donnelly, of New York City (James F. Donnelly and Samuel Michelman, both of New York City, of counsel), for plaintiff in error.
Parker, Marshall & Auchincloss, of New York City (H. Snowden Marshall and Clarence *794 L. Sager, both of New York City, of counsel), for defendant in error.
Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
AUGUSTUS N. HAND, Circuit Judge (after stating the facts as above).
It is true that the so-called transcript of record was filed within the extended term, but it was not a bill of exceptions. The certificate of the clerk, who could have no knowledge of the testimony taken at the trial, was confessedly based only on the stipulations of the parties, and not on the judge's minutes as settled and allowed by him, which alone could be the record of the trial.
The minutes are no part of the record, until made so by the judge. Metropolitan R. R. Co. v. District of Columbia, 195 U.S. 322, 25 S. Ct. 28, 49 L. Ed. 219; Young v. Martin, 8 Wall. 354, 19 L. Ed. 418; Duluth St. Ry. Co. v. Speaks (C. C. A.) 204 F. 573; Chicago Great Western R. Co. v. Le Valley (C. C. A.) 233 F. 384; Fraina v. United States (C. C. A.) 255 F. 28; Buessel v. United States (C. C. A.) 258 F. 811. As Chief Justice Marshall said in Lessee of Fisher v. Cockerell, 5 Pet. at page 254, 8 L. Ed. 114: "The unauthorized certificate of the clerk that any document was read, or any evidence given, to the jury, cannot make that document or that evidence a part of the record, so as to bring it to the cognizance of this court."
A bill of exceptions was necessary to make the so-called transcript a part of the record, and without one the record is limited to "the pleadings, the process, the verdict, and the judgment. * * *" Clune v. United States, 159 U.S. 590, 16 S. Ct. 125, 40 L. Ed. 269. In view of the foregoing, the only questions really open for consideration are whether the judgment was justified in view of the pleadings.
It cannot be disputed that, if Reilly was in a fiduciary relation to Mrs. Trenkman when he recommended Beekman to her as her attorney, he could not agree to profit from the business arising out of the introduction without her knowledge and consent. This is because Mrs. Trenkman was entitled to his disinterested advice as to the attorney to be recommended to her. That advice was not likely to be disinterested, if affected by the consideration of whether or not he could make a profit out of the recommendation of a particular person. Moreover, she was entitled to have him recommend an attorney, the amount of whose fees would depend on the services he had to perform, and would not be affected by what he had to pay out to the plaintiff for an introduction to the client. Auerbach v. Curie, 119 A.D. 176, 104 N. Y. S. 233; Alpers v. Hunt, 86 Cal. 78, 24 P. 846, 9 L. R. A. 483, 21 Am. St. Rep. 17; McNair v. Parr, 177 Mich. 327, 143 N.W. 42. If she knew Reilly's interest, and what he was to receive, and consented to the arrangement, the case would be different. She might be willing to sanction it, because it would save her from paying Reilly for his advice, or for other reasons. If, as is contended, Reilly was not acting in an ordinary sense as an agent for Mrs. Trenkman in respect to her business and financial affairs, and simply as a friend recommended a lawyer, when requested so to do, we think he stands in no better position. To be sure, in that case he would be only a volunteer; but if he offered merely as a friend to recommend an attorney, with no knowledge on her part that he was to derive any benefit from the recommendation, she was deprived of the disinterested advice which he assumed to give when he was under the pay of Beekman in making the recommendation.
This principle was clearly recognized in Bollman v. Loomis, 41 Conn. 581, Holcomb v. Weaver, 136 Mass. 265, Wyburd v. Stanton, 4 Esp. 179, and Williston on Contracts, vol. 3, p. 3035. The fact that he was a volunteer could make no difference. The objectionable feature was that he assumed to act as an apparently disinterested person, when under pay from Beekman for doing the very thing which he undertook to do for Mrs. Trenkman. In such circumstances the law regards the contract on which recovery is sought as unenforceable, because against public policy. The guilt or innocence of Beekman does not affect this result. If he knew that Reilly was not a lawyer, the agreement was bad under the provisions of section 274 of the New York Penal Law (Consol. Laws, c. 40). Defendant denied that he had such knowledge, and said, when he first acquired it, he repudiated the arrangement. If he knew that the plaintiff was acting in a fiduciary relation for Mrs. Trenkman and agreed to pay him for a recommendation, he was aiding a breach of trust; but he denied that he did more than to pay Reilly for work done.
But it is said that Mrs. Trenkman knew that Reilly had an interest in Beekman's fees and consented that he be paid by the latter. It is true that there was testimony in the case that Mrs. Trenkman was told by *795 Beekman that "he was taking care of" Reilly, and that he had paid Reilly $50,000 for the introduction and various other things. This was very different from the full disclosure which Reilly was bound to give to secure her consent to his 50 per cent. contract with Beekman. It is not apparent even that she thought Reilly was really paid other than for services in connection with the law business on which Beekman was engaged. At any rate, a disclosure had to be complete to avoid the illegality which otherwise affected the agreement. It certainly might have made a great difference to Mrs. Trenkman whether she knew she was in effect paying a fee of $500,000 or $600,000, 50 per cent. of which was wasted on the plaintiff, or that he was only getting an indefinite amount, presumed to be reasonable, or just the sum of $50,000. The disclosure was too indefinite a one on which to base a consent to the contract sued upon. It at most only went far enough to cover the payment of the $50,000, of which Mrs. Trenkman acquired knowledge. It had to be full, and the burden to prove that it was is on the agent. Dunne v. English, L. R. 18 Eq. Cas. 524; Liquidators of Imperial Mercantile Credit Ass'n v. Coleman, L. R. 6 H. L. 194. Moreover, there is nothing in the testimony to show that Reilly ever told Mrs. Trenkman that he had any interest in Beekman's fees, or even that Mrs. Trenkman was told by Beekman that he had to take care of Reilly at or before the time when she employed Beekman.
It is contended finally that the illegality of the contract was not raised by the pleadings, because the "sixth separate defense" only alleged that Reilly "did not, at the time of the recommending and employment of the * * * defendant by * * * Mrs. Trenkman, or at any time, disclose to her that he had an agreement to share in the compensation which she might afterwards pay to the defendant," and failed to allege that it was made with the knowledge and consent of Mrs. Trenkman. It is our opinion that the defendant set up a good defense when he alleged that the plaintiff stood in a fiduciary relation to Mrs. Trenkman, and everything else was mere surplusage. That allegation set forth an illegal contract, and called for pleading in the reply by way of confession and avoidance, which would show something in the nature of a waiver of Mrs. Trenkman's right to object to a contract which was prima facie void as against public policy. It is hardly necessary to say that a waiver or release must be affirmatively pleaded.
It is said that the complaint was good, and was so held by Judge Mack on a demurrer to one of the defenses; but that is of no moment, for the complaint alleged the breach of what was pleaded as an ordinary contract perfectly valid on its face. It set forth no fiduciary relation of Reilly to Mrs. Trenkman, and no advice on his part to her to employ Beekman as a lawyer. In Auerbach v. Curie, 119 A.D. 175, 104 N. Y. S. 233, the complaint alleged that the layman suing the lawyer had made his contract for a division of the lawyer's fees with the knowledge and consent of the client, and the plaintiff failed to prove it. Undoubtedly nothing but a general denial was necessary in that case, in order to meet a complaint which set forth the entire arrangement as a basis for recovery. It is hard to see why the plaintiff here, by setting up a cause of action which did not disclose all the facts, should be relieved from the burden of pleading a consent which he must prove in order to recover, and which he should have pleaded in the first place.
We think it clear that there is no evidence properly before us, because no bill of exceptions was settled, allowed, or filed. We have gone out of our way to discuss the testimony appearing in the so-called transcript of record, as was done in Fraina v. United States (C. C. A.) 255 F. 28, where Judge Hough said there was no bill of exceptions, in order to show that, even on plaintiff's own attempted showing, he adduced no testimony in support of his cause of action sufficient to justify a submission to the jury, and was bound, even if he had perfected his record, to fail on the merits.
The record properly open for consideration consists of the writ of error, petition for the writ of error, the citation, assignment of errors, the summons and complaint, the answer, the reply, the extract from the minutes, and the judgment. The only assigned error which can properly be considered on this record is the supposed one of directing a verdict for the defendant upon the sixth separate defense. We hold that defense to have been sufficiently pleaded. That being so, in the absence of a bill of exceptions, everything necessary to support the direction of the verdict is conclusively presumed to have been proved on the trial.
The verdict was accordingly regular, and the judgment is affirmed.