William Hozie and Karen Hart lived together for more than three years, sharing possessions as well as housing, before agreeing in December 1973 to end their relationship.

As these tales sometimes do, theirs has slowly but surely developed since into a story of lawsuits, loot and lost love.

Last week, in a federal courtroom here, the latest chapter unfolded when a Washington attorney - contacted by Hozie to draw up the separation agreement between Hozie and Hart - was ordered by a jury to pay $40,000 to Hozie for alleged legal malpractice.

The malpractice suit - rare because, rather than centering on legal arguments, it boiled down to whether the jury was going to believe layman Hozie or lawyer Douglas Rykhus - revolved around the separation agreement and who said what to whom at the time it was being drafted.

Rykhus said Hozie came to him and said "he and Karen had decided to split" and that he had already agreed to give her $25,000 half the antiques in a 200-year-old house in which the two had lived in the Charlottesville, Va., area, and a new car, according to Rykhus' testimony.

Rykhus said Hozie told him he was in a hurry to sign the agreement, so three lawyers worked on it over two days, and it was signed without serious hitch.

Not so, said Hozie in his testimony.

Hozie said he told Rykhus "Karen was threatening to sue me for everything I had," to which Rykhus replied "Karen could cause me a lot of trouble,"

Hozie said Rykhus advised him to talk privately with Hart and not tell her he had been in touch with a lawyer "because then I would be in big trouble," Hozie testified. He took Rykhus' advice, Hozie added, and talked her down from a settlement amounting to more than $75,000 to the eventually formalized $25,000 agreement.

At no time, Hozie said, did Rykhus tell him that under Virginia law he did not owe Karen Hart a penny since they were not married.

As a result, Hozie said, he was out $19,000 (the amount of the judgment that Hart ultimately won against him when she enforced the separation agreement in a Virginia lawsuit); $8,000 worth of antiques and other property; $2,200 in payments he made on a car for Hart and $7,800 in attorneys' fees fighting suits over the original agreement.

Although aired in U.S. District Court Judge Louis F. Oberdorfer's courtroom here last week, the story of Bill Hozie and Karen Hart began in San Francisco in 1970 when Hozie was a member of a college faculty and counseling students - one of whom was Karen Hart.

Hart said the first meeting between them occurred in January 1970 and she moved in with Hozie 2 1/2 weeks later. Hart was 24, Hozie was 30.

They never got married, Hart testified in a pretrial deposition, because "my understanding was the same as his at one point in time, and that was we felt we were . . . married in more aspects than most legally married people are . . . and we were conducting our lives and activities as such."

The two moved to the Charlottesville area, where they lived in a house they called "The Headquarters" at Browns Cove, Va., and - according to Hart - worked together to restore the $110,000 property so its value was increased to nearly $200,000. He had become an anthropology professor at the University of Virginia.

Their memories about just who did what differ, according to their testimony. Hart said she understood the $25,000 was for her help in restoring the house; Hozie said in his testimony in the case she did "negligible" work on it, and seldom even cleaned or cooked.

She said they officially separated in November 1973 after Hozie took a job at ABS Duplicators Inc. in Washington as executive vice president, "against my feelings." Hozie moved to Waterford, Va., where he and Hart signed a purchase agreement on a house.

As the relationship deteriorated, Hart said, Hozie told her at a restaurant in Charlottesville that if they ever decided to separate he would give her $25,000. She said all the discussions were on "a friendly basis . . . There was no argument as such, no ugly scenes. It was simply an understanding."

"We both agreed that he had no legal obligation, but rather a moral obligation," Hart said in a pretrial deposition. She did not testify at the trial, however.

After signing the agreement, she testified she waited six months without receiving any payment from Hozie. She voluntarily reduced the figure to $12,500, she said, and began urging that he pay it.

"He screamed a few parting words and that was the last time I have talked to him," Hart said. She went to court in Charlottesville to enforce the agreement, and won the $19,000 judgment.

Hozie testified, though, that he never made an informal voluntary decision to pay Hart anything and only agreed to give her money and goods on the basis of Rykhus' legal advice.

He said he told Hart not to use his last name in any future dealings, although he conceded that they had used it to file joint federal and state income tax returns as husband and wife for at least two years. In addition, her name appeared as Hozie on some real estate documents.

Both Hozie and Hart now live - separately - in Colorado, and there are a handful of suits between the two or between Hozie's current wife and Hart over a wide range of matters, including real estate transactions, alleged slander and the separation agreement.

There's one little bit of other outstanding legal business for Hoize: a judment by a Virginia court that ended a suit filed by Rykhus against him. Hozie, according to the judgment, owes Rykhus $750,50 for legal services rendered, it so happens, in connection with Hozie's separation from Hart.