Telephone Man, Inc. v. Hinds County, Mississippi ( 1998 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 1999-CA-01660-SCT
TELEPHONE MAN, INC.
v.
HINDS COUNTY, MISSISSIPPI AND BOARD OF SUPERVISORS HINDS COUNTY,
MISSISSIPPI
DATE OF JUDGMENT: 07/07/1998
TRIAL JUDGE: HON. L. BRELAND HILBURN, JR.
COURT FROM WHICH APPEALED: HINDS COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT: H. D. GRANBERRY, III
ATTORNEYS FOR APPELLEES: RUMA HAQUE
BEN J. PIAZZA, JR.
SPENCE FLATGARD
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: REVERSED AND REMANDED - 08/02/2001
MOTION FOR REHEARING FILED:
MANDATE ISSUED: 8/23/2001
EN BANC.
DIAZ, JUSTICE, FOR THE COURT:
¶1. Telephone Man, Inc. (TMI) petitioned the Circuit Court of the First Judicial District of Hinds County to
set aside an agreed order requiring Hinds County to pay TMI $14,570.00 in settlement of a payment
dispute. TMI claims that William H. Harrell, acting as its attorney, entered into the settlement agreement
with Hinds County without TMI's knowledge or consent and forged another attorney's signature on the
complaint and agreed order. Furthermore, TMI claims that Harrell engaged in these activities after having
been disbarred.
¶2. The circuit court denied TMI's motion to set aside the agreed order finding that Hinds County had acted
in good faith when it entered into the settlement agreement. From that ruling, TMI filed a timely appeal
alleging that the trial court abused its discretion in refusing to set aside the agreed order which was forged
by a disbarred attorney without the consent of his client.
FACTS
¶3. In 1997, Hinds County accepted TMI's bid to install telephone wiring in county offices. During the
course of the project, additional work was required which was not contemplated in TMI's original bid. An
emergency work order was issued by the county administrator, and TMI completed the non-bid work.
¶4. TMI submitted invoices totaling $73,000.00 for the additional work which far exceeded the original bid
of $12,999.00. A dispute arose as to the payment of the invoices. Because Hinds County was unable to
resolve the matter administratively, TMI retained an attorney.
¶5. TMI located William H. Harrell in the Yellow Pages and hired him to "handle the matter." No written
contract was executed concerning this representation.
¶6. On May 15, 1998, Harrell filed suit on behalf of TMI, against Hinds County seeking $73,000.00 for the
non-bid work performed by TMI. Three days later, on May 18, 1998, Harrell was disbarred by order of
this Court, effective June 17, 1998. On May 26, 1998, Harrell filed an amended complaint with supporting
documents. Harrell forged the signature of another attorney in his firm, Thomas Starling, on both complaints.
¶7. On July 7, 1998, Harrell again forged the signature of his colleague on an agreed order settling the case
for $14,570.00. Hinds County issued a check in that amount made payable to TMI. Harrell fraudulently
endorsed and deposited the check in his own account. In September of 1998, TMI discovered that Harrell
had filed and settled a lawsuit on its behalf. TMI confronted Harrell, and he issued a check to TMI for $13,
952.00 which was returned for non-sufficient funds. Harrell subsequently paid TMI $9,200.00 of the
settlement amount.
¶8. On October 26, 1998, TMI moved to set aside the agreed order citing M.R.C.P. 60(b)(6) and arguing
that the agreement was procured by forgery and fraud. Without holding an evidentiary hearing, the circuit
court upheld the agreed order finding that Hinds County was dealing in good faith when it entered into the
settlement agreement with Harrell.
DISCUSSION
I. WHETHER THE TRIAL COURT ABUSED ITS DISCRETION IN REFUSING TO SET
ASIDE THE AGREED ORDER WHICH WAS FORGED BY A DISBARRED
ATTORNEY WITHOUT THE CONSENT OF THE CLIENT.
¶9. This Court will reverse the grant or denial of a M.R.C.P. 60(b) motion only upon a showing of abuse of
discretion. Moore v. Jacobs, 752 So. 2d 1013, 1015 (Miss. 1999). TMI argues that the refusal of the trial
court to set aside the agreed order was an abuse of discretion "in light of the manifest fraud by which it was
effected." TMI cites M.R.C.P. 60(b)(6) as the basis for setting aside the agreed order. Subsection (6) is a
"catch-all" type provision that allows a judgment to be set aside for "any other reason justifying relief from
the judgment." This Court has noted recently that "[r]elief under Rule 60(b)(6) is reserved for extraordinary
and compelling circumstances," and that the Rule is a "grand reservoir of equitable power to do justice in a
particular case." Briney v. United States Fid. & Guar. Co., 714 So. 2d 962, 966 (Miss. 1998).
¶10. The trial judge abused his discretion when he refused to set aside the agreed order. Surely if ever
"extraordinary and compelling circumstances" existed to invoke the "grand reservoir of equitable power,"
housed in Rule 60(b)(6), TMI offers them today.
¶11. William J. Harrell, although not licensed to practice law in the State of Mississippi, continued to do so,
going so far as to forge the signature of a licensed associate on settlement documents to disguise his ruse. It
is uncontested that Harrell is guilty of forgery. See Dunson v. State, 223 Miss. 551, 553, 78 So. 2d 580,
581 (1955) (recognizing that the essential elements of forgery are (1) drafting a false instrument, (2)
fraudulent intent, and (3) capability of instrument to effect fraud). Under Mississippi law, where a written
contract is procured by fraud committed by one party on another, the defrauded party may come forward,
show the true facts, and avoid the contract. Fornea v. Goodyear Yellow Pine Co.,181 Miss. 50, 64,
178 So. 914, 918 (1938). This option is available to the defrauded party because no contract exists that is
procured legal fraud. Id. See also Allen v. Mac Tools, Inc., 671 So. 2d 636 (Miss. 1996) (holding that a
contractual obligation obtained by fraudulent representation is voidable upon discovery of the underlying
fraud if the wronged party acts promptly to repudiate the agreement). That fraud vitiates everything it
touches is a well- founded, long- recognized principle of our law. J.A. Fay & Egan Co. v. Louis Cohn
& Bros., 158 Miss. 733, 740, 130 So. 290, 292 (1930). We have further held that rescission is an
appropriate remedy for fraud. Ezell v. Robbins, 533 So. 2d 457, 461 (Miss.1988).
¶12. Specifically, consent decrees may be set aside when the following circumstances exist:
(1) the facts constituting the fraud, accident, (or) mistake or surprise must have been the controlling
factors in effectuation of the original decree, without which the decree would not have been made as it
was made. (2) The facts justifying the relief must be clearly and positively alleged as facts and must be
clearly and convincingly proved. (3) The facts must not have been known to the injured party at the
time of the original decree. (4) The ignorance thereof at the time must not have been the result of the
want of reasonable care and diligence.
Wray v. Langston, 380 So. 2d 1262, 1263 (Miss. 1980).
¶13. The facts of this case plainly fall under this rubric. Harrell's actions constituting fraud were clearly the
controlling factors in effectuating the settlement agreement with Hinds County for an amount TMI
considered unsatisfactory. TMI pled these facts at trial when requesting relief under Rule 60(b)(6). The
facts surrounding Harrell's disbarment and subsequent fraudulent actions were not known by either of the
principals involved. TMI tried unsuccessfully on numerous occasions to contact Harrell. TMI did contact
Starling in September of 1998 after seeing his name on the agreed order instead of Harrell's. Only then did
TMI discover the forgery and Harrell's disbarment. If this Court's paramount concern when called upon to
interpret an agreement is to give effect to the intentions of the parties, We must reverse because TMI never
intended to settle for the amount negotiated by Harrell. Holloman v. Holloman, 691 So. 2d 897, 899
(Miss.1996).
¶14. Although an attorney who agrees to a judgment against his client is presumed to act with his client's
consent and such judgment is ordinarily conclusive against the client, Harrell was not an attorney when the
consent decree was negotiated or signed. Harrell's disbarment is a supervening factor. To endorse this
contract as valid is to endorse the illegal practice of law.
¶15. No private contract can authorize the unauthorized practice of the law. In re Battelle Mem'l Inst.,
170 N.E.2d 774, 782 (Ohio Com. Pl. 1960)(rev'd on other grounds). See also Herndon v. Lee, 199
So. 2d 74, 78 (Ala. 1967) (affirming injunction granted to candidate for elected office to enjoin placing the
name of another candidate on general election ballot because the petition was not presented by an attorney
to court); Ramada Inns, Inc. v. Lane & Bird Advertising, Inc., 426 P.2d 395, 396-97 (Ariz. 1967)
(finding defendant's answer defective because not signed by an attorney, following the position taken by the
vast majority of jurisdictions); Leonard v. Walsh, 220 N.E.2d 57, 59 (Ill. App. Ct. 1966) (citing Robb v.
Smith, 4 Ill. 46 (1841) (holding that no person can commence or maintain an action in a court of record as
'agent' for another unless he is a regularly licensed attorney)).
¶16. The practice of law is more than a mere privilege and is granted only upon fulfillment of certain rigid
requirements established by this Court. Harrell is no longer granted that distinct honor in the State of
Mississippi. Because the settlement agreement was tainted by fraud and illegality based upon Harrell's
participation, we must reverse the judgment of the circuit court and grant TMI relief under Rule 60(b)(6).
CONCLUSION
¶17. The trial court erred in denying TMI's motion to set aside the agreed order. Because Harrell
fraudulently entered into the settlement agreement under the guise of a licensed attorney, we reverse the
judgment of the Circuit Court of the First Judicial District of Hinds County upholding the agreed order, and
we remand this case for further proceedings consistent with this opinion.
¶18. REVERSED AND REMANDED.
PITTMAN, C.J., McRAE, P.J., SMITH, WALLER AND EASLEY, JJ., CONCUR. COBB,
J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY MILLS, J. BANKS,
P.J., NOT PARTICIPATING.
COBB, JUSTICE, DISSENTING:
¶19. I must respectfully dissent. The majority first restates our well-established standard of review that this
Court will reverse the grant or denial of a M.R.C.P. 60(b) motion only upon a showing of abuse of
discretion. Moore v. Jacobs, 752 So. 2d 1013, 1015 (Miss. 1999); Page v. Siemens Energy &
Automation, Inc., 728 So. 2d 1075, 1079 (Miss. 1998); Sartain v. White, 588 So. 2d 204, 211 (Miss.
1991). But then its legal analysis fails to even mention the term "good faith" even though the circuit court's
decision, which is being reversed for an abuse of discretion, was clearly based on the "good faith" of Hinds
County.
¶20. TMI specifically cites Rule 60(b)(6) of the Mississippi Rules of Civil Procedure as the basis for setting
aside the agreed order. Subsection (6) is a "catch-all" type provision that allows a judgment to be set aside
for "any other reason justifying relief from the judgment." However, "[r]elief under Rule 60(b)(6) is reserved
for extraordinary and compelling circumstances." Briney v. United States Fid. & Guar. Co., 714 So. 2d
962, 966 (Miss. 1998).
¶21. TMI relies primarily on Briney, a case in which a husband (putative) and wife were involved in an
automobile accident and the wife was killed. Briney, 714 So. 2d at 964. However, Briney is easily
distinguishable from the case at hand.(1) In Briney, the recipient of the money had no legal right to the
money it had already been awarded. In the instant case, TMI is claiming a right to money that is not in its
possession and to which it may or may not have a legal right. The focus of such an inquiry should not be
merely whether there are any other avenues of relief available under Rule 60(b) but whether such
extraordinary relief is in fact justified.
¶22. This Court has held that "an attorney agreeing to a judgment against his client is presumed to act with
his client's consent and such judgment is ordinarily conclusive against the client." Hurst v. Gulf States
Creosoting Co. 163 Miss 512, 141 So. 346, 348 (1932), cited in Craft v. Burrow, 228 Miss.664, 89
So. 2d 722, 726 (1956). It is uncontroverted that TMI hired Harrell to represent it in its dispute with the
County. TMI instructed Harrell to conduct the negotiations, and Hinds County negotiated in good faith with
only Harrell in this matter. Hinds County also acted in good faith by promptly tendering payment once the
agreed order was finalized. After it learned of the settlement, TMI confronted Harrell seeking payment from
him of the funds he received from Hinds County. The majority declares that TMI never intended to settle
for the amount negotiated by Harrell, but that statement is contradicted by the fact that TMI ultimately
received from Harrell $9,200 of the $14,570 remitted by the County. Thus, the evidence clearly shows that
Harrell was authorized to act on TMI's behalf and that TMI benefitted from his work. TMI did not seek to
vacate the agreed order until it realized it would be unable to procure the remaining funds from Harrell.
¶23. Certainly, TMI was in a much better position to ascertain any problems with its attorney than was
Hinds County. TMI's failure to inquire into the status of its case until six months after the representation
began (two months after the agreed order) contributed substantially to its predicament. As a result, the
remedy in this case would be an action by TMI against Harrell and not against Hinds County. The majority
somehow concludes that affirming the circuit court would endorse the unlawful practice of law. The majority
misses the irony of its statement in that its decision would actually encourage the very practice it seeks to
prevent because the party that is punished would be an innocent party who has acted in good faith. Rule
60(b)(6) is not meant to provide relief where one party, such as TMI, simply does not like the avenue of
relief available to it. The trial judge did not abuse his discretion nor commit manifest error in finding that
Hinds County acted in good faith and in denying TMI's Rule 60(b)(6) motion to vacate the agreed order.
Accordingly, the circuit court's judgment should be affirmed.
MILLS, J., JOINS THIS OPINION.
1. In Briney, the husband was paid death benefits as the surviving spouse by the workers' compensation
insurer of their mutual employer. The husband also filed a separate claim related to the accident seeking
damages for his personal injuries and the wrongful death of his wife. Subsequently, it was determined that
the deceased wife was never legally married to the husband and that her mother, father, and siblings were
her rightful heirs. Her mother, as successor administratrix, moved to vacate an earlier circuit court order
involving death benefits paid to the putative husband from proceeds rightfully belonging to the wife's estate.
The Briney trial court did not try the case on the merits but found that Rule 60(b) of the Mississippi Rules
of Civil Procedure was controlling. However, relief was denied on the basis that the motion was not
timely filed. This Court reversed and remanded, noting the absence of any dispute that Rule 60(b)(6) was
the only available avenue of relief because the other five clauses of the Rule were facially inapplicable, and
ruling that the successor administratrix did not have standing to challenge the order until her appointment as
successor administratrix and that she promptly and timely filed eleven days thereafter. 714 So. 2d at 969.