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Spanos v. Skouras Theatres Corp.

decided: March 18, 1966.

NICK C. SPANOS, PLAINTIFF-APPELLEE,
v.
SKOURAS THEATRES CORPORATION, THEATRE & CINEMA, INC., PHILHAMBORO, INC., YOUNGSTOWN THEATRE CORPORATION AND MODERN PLAYHOUSES, INC., DEFENDANTS-APPELLANTS



Lumbard, Chief Judge, and Friendly and Smith, Circuit Judges. Hays, Circuit Judge (concurring in the result). Friendly, Circuit Judge (dissenting as to the claim and concurring as to the counterclaim). Lumbard, Chief Judge, with whom J. Joseph Smith, Circuit Judge, concurs (dissenting).

Author: Lumbard

LUMBARD, Chief Judge:

The principal question for decision is whether an out-of-state attorney can recover for legal services rendered in an antitrust suit in a New York federal court when he has not been admitted to the bar of New York State or of the federal court.

Defendants, Skouras Theatres and inter-related companies, appeal from a judgment in a diversity suit in the Southern District Court awarding Nick C. Spanos $89,606.29 as additional fees for legal services performed from 1953 to 1958 in connection with an antitrust suit instituted by the defendants in the Southern District Court, and dismissing defendants' counterclaim for the return of $83,013.49 already paid, plus interest.*fn1

The trial court, after finding that diversity of citizenship existed because Spanos was not a New Yorker, held that plaintiff's failure to become a member of the New York bar did not preclude his recovering legal fees earned in connection with federal antitrust litigation in New York. We agree with the lower court that diversity jurisdiction existed, but find that his failure to enter a special appearance in the federal court prevents recovery.

Because of our disposition the issues on appeal are limited, and the facts, fully set forth in Judge Wyatt's careful opinion, 235 F. Supp. 1 (S.D.N.Y.1964), can be summarized briefly. Spanos graduated from law school in 1947, having written a research paper about the movie industry and the antitrust laws. After a year in New York working in the motion picture antitrust field, he went to California where on January 4, 1949 he became a member of the California bar and commenced practice.

Spanos' success in winning a large treble damage award in a suit conducted in California and Missouri federal courts brought him to the attention of George Skouras, the dominant figure in the movie theatre companies which are defendants here. Skouras planned to bring a similar suit (known as the "industry suit") against the major movie producers for violation of the antitrust laws in the New York metropolitan area. Preparation of that case, which involved three law firms in addition to the companies' house counsel, had already begun and a draft complaint had been circulated among the proposed defendants, leading to settlement negotiations with one.

Skouras requested that Spanos confer with him in New York City late in 1952 and he persistently sought to bring him into the litigation despite Spanos' hesitancy. In the spring of 1953 Spanos made four trips to New York to attend settlement conferences and in California he did research work on the suit. Letters in June 1953 from Skouras to Spanos and from Spanos to James M. Landis, one of Skouras' lawyers, show that Spanos had agreed to work on the industry suit in association with Dean Landis for an undetermined part of Landis' contingent fee and with a minimum yearly guarantee of $15,000 as long as the industry case remained pending.*fn2 Spanos agreed to "move my principal place of business and my residence to New York City" by January 4, 1954.

Although Spanos worked extensively on the industry case, he did not move to New York until 1955. In 1956 Landis' firm withdrew, leaving Spanos' status uncertain. The trial judge found that Skouras then renewed the promise of a contingent fee and a $15,000 yearly minimum with the amount of the contingent fee again left open. Spanos' activities, however, decreased greatly thereafter, and when in August 1958 Skouras' lawyers negotiated a settlement with two of the defendants in the industry suit Spanos only learned about it through the newspapers in September. When he wrote to Skouras Theatres demanding payment of his contingent fee, Skouras discharged him. Spanos brought this action a year later on October 13, 1959.

I.

Diversity jurisdiction in this case exists unless Spanos was a citizen of New York when the suit was commenced since the defendants are corporations with their principal place of business in New York. We agree with the district court that he was not a New Yorker.

When the suit began Spanos was resident in Missouri, having moved there in the summer of 1959 with his family. However, he declared at trial that his residence was temporary because he intended to return to California.

Domicile, on which citizenship is based, consists of residence in fact, coupled with the purpose to make the place of residence one's home. State of Texas v. State of Florida, 306 U.S. 398, 59 S. Ct. 563, 83 L. Ed. 817 (1939). An old domicile continues even though a new residence is established until there is the intention to create a new home. Desmare v. United States, 93 U.S. 605, 23 L. Ed. 959 (1877); Restatement of the Law of Conflicts of Law § 23.

Appellants contend that Spanos could not have been a California citizen because he had abandoned all residence there in 1955, but by that standard he would not have been a citizen of New York in October 1959 either. Unless his domicile in California was superseded by one in New York, his absence from California would be irrelevant. Thus the district court was called upon to determine whether Spanos intended to make New York his home at any time while he was living there. There is no evidence at all as to where he voted and paid taxes, or about his social contacts, nor any contemporaneous statements as to his intent. Appellants can only point to Spanos' New York residence -- and, after his marriage in 1956, to that of his wife and family -- and to the fact that New York was his principal place of business.

On the other hand, Spanos never applied to become a member of the New York bar although he could have applied for admission on motion after six months' residence in New York.*fn3 His contacts with California continued: he maintained an office in Los Angeles continuously, hired associates there, and made frequent trips to the West Coast. During 1955-1957 he received fees of at least $347,000 for cases conducted outside of New York. The trial judge found that "his purpose in coming to New York was in connection with the services for which he here sues. It seems fair to infer that his intention was to give up any residence in New York when these services were concluded." We accept this finding.

II.

Spanos' right to any recovery presents a more difficult problem. New York implements its strong policy against the practice of law in New York by persons not licensed and admitted to practice by the state, New York Penal Code McKinney's Consol.Laws, c. 40, § 270, by refusing to permit suit for the recovery of fees for such unlawful practice. Spivak v. Sachs, 16 N.Y.2d 163, 263 N.Y.S.2d 953, 211 N.E.2d 329 (1965).

The district court granted recovery on the ground that Spanos' admitted legal services were a "solitary incident" rather than a continuing course of conduct, and thus did not constitute the "practice" of law as defined and made unlawful by § 270. Alternatively, it held that New York could not prevent compensation of ...


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