ROLIKATIS v. LOVETT

Attorney at Law. Trust, Constructive. Equity Jurisdiction, For an accounting, Laches. Interest.

Where a woman client of an attorney at law, reposing trust and confidence in such attorney, employs him to attend a foreclosure sale of real estate and to purchase the property in her name to protect her interests, and the attorney, instead of doing this, causes the property to be purchased at the sale for his own benefit and afterwards sells it at a profit, for which he refuses to account to his client, he holds the proceeds of the sale subject to a constructive trust for the benefit of his client, who can maintain against him a suit in equity for an accounting.

In a suit in equity by a woman against an attorney at law for an accounting for the income and profits derived from certain real estate, which the defendant wrongfully had bought for his own benefit at a foreclosure sale when he had been employed by the plaintiff to buy it for her in order to protect her interests, where it appears that the bill was not filed until a year and nine months after the defendant's purchase of the real estate, but that the plaintiff was of foreign birth and unacquainted with the English language, that during the time of such delay she had implicit faith in the defendant's honesty of purpose and believed from his conduct and statements that he had acted in her behalf, and that when the defendant refused to recognize her rights and claimed the property as his own she brought the suit, it seems that such lapse of time would not be a bar to the bill, even if the defense of laches were pleaded and therefore were open to the defendant, which here it was not.

In a suit in equity by a woman against an attorney at law for an accounting for the income and profits derived from certain real estate, which when employed by the plaintiff as his client to purchase for her he wrongfully had purchased for his own benefit, the defendant is not entitled in such accounting to be allowed interest on the amount of the price paid by him for the real estate, because, having committed wilfully a breach of trust to the disadvantage of the plaintiff, he should not be permitted to receive compensation in the form of interest.

BRALEY, J.

The evidence not having been reported, the master's findings of fact are conclusive, and it follows that, when the defendant, an attorney at law, acquired the property which is the subject of this suit, the fiduciary relation of attorney and client existed between the parties. It further appears that his attendance at the sale was upon an understanding and arrangement that he should safeguard the plaintiff's interests, and bid off the property for her, and the master unhesitatingly finds that instead he took advantage of the opportunity to obtain the title for himself. A clear breach of the trust and confidence which she had reposed in him is shown by the report. The extent and nature of this relation and the scrupulous care which should be exercised by the court, when the validity of transactions where the attorney acquires the property of his client, or property which he has engaged to procure for his client, are under review, have been so recently pointed out that further discussion is unnecessary. Hill v. Hall, 191 Mass. 253. Kelly v. Allin, 212 Mass. 327. Manheim v. Woods, ante, 537.

It is true that the plaintiff, although prepared to advance the purchase price, did not do so, and consequently there is no resulting trust. Bourke v. Callanan, 160 Mass. 195. But, whenever an attorney at law, who is retained or employed to purchase, buys the property indirectly on his own account without the client's assent, as in the case at bar, a constructive trust arises, and he will be held to be a trustee at the election of his client, who is entitled to the benefit of the transaction. Hawkes v. Lackey, 207 Mass. 424, where the cases are collected. Manheim v. Woods, ante, 537.

The defense of laches, not having been pleaded, is not open. Stewart v. Joyce, 201 Mass. 301. But, if pleaded, we should hesitate long before holding that the delay of less than two years, where the plaintiff is shown to have been of foreign birth and unacquainted with our language, and during the time had implicit faith in the defendant's singleness of purpose and believed from his conduct and statements that he had acted in her behalf until he refused to recognize her rights and claimed the property as his own, when thereupon she brought suit, should bar relief in a court of conscience. Sawyer v. Cook, 188 Mass. 163.

Nor did the master or the judge err in refusing to allow the defendant interest on the purchase price. It is to be presumed that he knew the law, and, having acted to the disadvantage of the plaintiff, he should not be permitted to receive compensation in the form of interest. Morse v. Hill, 136 Mass. 60. Hayes v. Hall, 188 Mass. 510. Milwaukee Minnesota Railroad v. Soutter, 13 Wall. 517.

The exception to the admission of evidence, not having been argued, calls for no comment, and, finding no error of law in the refusals to rule as requested or in the master's report, the exceptions are overruled.

So ordered.