Liability to Third Parties Not in Privity - Policy Considerations

The determination whether in a specific case the defendant will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, and the policy of preventing future harm. Here, the end and aim of the transaction was to provide for the passing of Maroevich's estate to plaintiff. Defendant must have been aware from the terms of the will itself that, if faulty solemnization caused the will to be invalid, plaintiff would suffer the very loss which occurred. As Maroevich died without revoking his will, plaintiff, but for defendant's negligence, would have received all of the Maroevich estate, and the fact that she received only one-eight of the estate was directly caused by defendant's conduct.

Defendant undertook to provide for the formal disposition of Maroevich's estate by drafting and supervising the execution of a will. This was an important transaction requiring specialized skill, and defendant clearly was not qualified to undertake it. His conduct was not only negligent but was also highly improper. He engaged in the unauthorized practice of the law which is a misdemeanor in violation of section 6126 of the Business and Professions Code. Such conduct should be discouraged and not protected by immunity from civil liability, as would be the case if plaintiff, the only person who suffered a loss, were denied a right of action.

We have concluded that plaintiff should be allowed recovery despite the absence of privity, and the cases of Buckley v. Gray and Mickel v. Murphy are disapproved insofar as they are in conflict with this decision.

The judgment is affirmed.

See also Espinola v. Provenzano.

AS - Plaintiffs Share in the Proceeds

The last controverted item is the interest charged against this trustee. In the settlement of a trustee's account in a court of equity he is or is not charged with interest according to the circumstances. There is no statute or arbitrary rule on the subject. When a court of equity charges the trustee with interest, it is when, and only when, the circumstances of the case render it right and just to do so. In this case the various sales of real estate ran through a period from March, 1888, to February, 1902, and the trustee is charged with interest on each item at 6 per cent. per annum from the date of the sale to date of decree, January 14, 1904.

We do not think the circumstances of this case justify the charging of the trustee with interest. The evidence shows that he did not receive any interest on it, and, whilst it shows that he spent it for his own purposes and it is now all gone, yet he did so openly, believing it to be his own and under circumstances which show that the plaintiffs had notice of it. If the plaintiffs thought that they were entitled to a share in the proceeds of these sales, they ought to have said so earlier. But they allowed a period of about 18 years to pass after the final settlement in the probate court, and 10 years or more after defendant began selling this land, before they gave any intimation to him that they claimed any interest under their grandfather's will.

During all that time they seemed to acquiesce in that interpretation of the will on which defendant acted. They now say that these controverted items of credit claimed by the trustee are afterthoughts of his trumped up to meet the exigencies of this case, and very likely that is so, but the plaintiffs' case also bears evidence of being an afterthought. It would have appeared in a more favorable light if it had been brought to the attention of the court 10 years or more ago, or when defendant first began selling the land. The judgment of $140.29 on final settlement in the probate court would bear interest under the statute from the date of its rendition, but the record shows that since that date, and before the filing of this suit, the trustee paid out sums to the beneficiaries more than the amount of that balance; therefore the interest on that sum should not run in this account.

Taking all the other items of the account as stated by the court about which there is no controversy, eliminating the items of interest on both sides, giving the defendant credit for $1,575 in addition to the $900 allowed him by the court for the maintenance of the widow of the testator, and $500 as a fee for his attorneys, leaves as total amount of debits against defendant $10,118 and credits in his favor $4,904.71, leaving as a basis for distribution a balance of $5,313.29, but, as against the respective shares of some of the distributees, defendant is entitled to credit for amounts already paid them, as will be shown in the figures following.

The judgment is reversed, the account is restated to conform to the above views, and a final judgment will be entered here in accordance therewith, the defendant Linus Sanford to pay the costs incurred in the circuit court. All concur.

Albert v. Sanford

The evidence shows that November 16, 1880, the defendant, at the request of Mrs. Albert, paid $1,000 for the purchase of a judgment against her husband, which transaction resulted in material benefit to her and her family. The ground on which the respondents resist the allowance of this item is that the interest of Mrs. Albert vested in her at the death of her father in November, 1861, when she was a married woman, and, it being before the enactment of the married woman's statute, it did not become her separate estate, and therefore in 1880, when she requested the defendant to advance this money to save her home, she could not by contract bind her property. We need not discuss the married woman's act, or the power of Mrs. Albert to bind her property by contract. It is sufficient for the present purpose to say that this is a suit in equity in which the heirs of Mrs. Albert are asking a court of conscience to compel the defendant to render unto them what is right and just, and, if they ask equity, they must show a disposition to do equity themselves. Besides, the authority to advance this money to protect one of the testator's daughters from what the trustee though was a pending danger is to be found in the large discretionary power given the trustee by the will. Defendant is entitled to credit for that item.

The court refused to allow the trustee any sum for payment of his attorneys in this suit. The record shows that the trustee was faithful in the management of the estate, and exercised good business judgment in its preservation. In fact, it is due alone to the fidelity and good judgment of the defendant that there was any estate left for distribution. When it came into his hands, it was insolvent; and but for his services it would have all gone under the sheriff's hammer. The trial court recognized this fact, and allowed him as compensation for his own services the sum of $1,000, but by refusing to allow him anything as compensation for his legal counsel in this suit in effect compelled him to pay his counsel out of the sum allowed for his own labor. The court put its refusal to allow this item on the ground that in this suit the defendant is denying the plaintiffs' right to any part of the estate and is claiming it all as his own. The allowance of attorney's fees in a case of this kind is to a considerable extent within the discretion of the court. As a rule, a reasonable allowance is made unless bad faith or culpable mismanagement appears. Here there is no suspicion of bad faith, and, as already said, excellent management is shown. The fact that the defendant was advised that under the terms of the will these plaintiffs had no interest in the estate and no right to call him to account should not be charged up against him under the head of bad faith. If he was advised that such were his rights, he had a right to ask the judgment of the court to that effect. That it was a very doubtful question in the case is shown, not only by the elaborate briefs of learned counsel on both sides, but by the very learned written opinion of the trial judge with which we have been favored and by which we have been persuaded. But that stage of the cause once passed, and the defendant ordered to produce an account of his trusteeship, it is then a matter in which the conflict is not necessarily restricted to the plaintiffs on the one side and this defendant on the other, but one in which the respective interests of the beneficiaries among themselves are to be considered, not only among those present, but also the far away heirs of the deceased brother. The court ought to have allowed the defendant at least $500 for his attorney's fees.