Fischer-Hansen v. Brooklyn Heights Railroad

The law has made great progress in protecting members of the bar since Blackstone wrote that “ a counsel can maintain no action for his fees, which are given not as looatio vel conductio, but as guiddam honorarium / not as a salary or hire, but as a mere gratuity, which a counselor cannot demand without doing wrong to his reputation.” (Chase’s Blackstone [3rd ed.], 630.) It seems strange to the lawyer of this generation to read the report of a case decided as recently as 1841, in which those eminent lawyers, Samuel Stevens and Peter Cagger, as copartners, had sued their client to recover the sum of $300 for arguing two cases in the Court of Errors. (Stevens v. Adams, 23 Wend. 57 ; affirmed, sub nom. Adams v. Stevens, 26 Wend. 451 .) It was gravely argued for the defendant “ that at common law a counselor cannot maintain an action for his fees ; ” that “ such is undeniably the law of England, and in this state it has not been held otherwise, the question never having been directly brought up for adjudication.” It was held, however, without a dissenting vote either in the Supreme Court or the Court of Errors, that the action would lie, although there was no reported precedent in this state to justify it. Chancellor Walworth, writing for the Court

Thus within the memory of lawyers now living the right of counsel to recover compensation from their clients, outside of the fee bill, was challenged at the bar and elaborately discussed by the bench, three opinions haying been written in the court of last resort to show that the right existed. There has been a marked advance since then, mainly through the legislature, which has been generous to members of the legal profession, not only in costs and allowances, but also in providing a lien upon the subject of the action to secure their compensation.

When the Code of Procedure was enacted in 1848 the fee bill was abolished, all restrictions upon “ the right of a party to agree with an attorney, solicitor or counsel, for his compensation ” were repealed and the measure of such compensation was thereafter “ left to the agreement, express or implied, of the parties.” (L. 1848, ch. 379, § 258.)

In 1876, when the first part of the Code of Civil Procedure was passed, the only regulation upon the subject was the following : “ The compensation of an attorney or counsellor for his services, is governed by agreement, express or implied, which is not restrained by law.” (L. 1876, ch. 448, § 66.)

While this statute was in force a case arose wherein the plaintiff sued a railroad company for damages owing to personal injuries caused by its negligence. He made a written agreement with his attorney to give him one-half of the recovery for prosecuting the action and paying the expenses. After the commencement of the action the defendant, with notice of the facts, settled with the plaintiff by paying him

After this decision and doubtless owing to it, said section was amended by adding at the end thereof the following: “ From the commencement of an action or the service of an answer containing a counterclaim, the attorney who appears for a party has a lieu upon his client’s cause of action or counterclaim, which attaches to a verdict, report, decision, or judgment in his client’s favor, and the proceeds thereof in whosoever hands they may come ; and cannot be affected by any settlement between the parties before or after judgment.” (L. 1879, ch. 542, p. 617, § 66.)

In 1899 the section was further amended by making it apply to a special proceeding, extending the lien to a claim as well as a cause of action and a counterclaim and providing a remedy to determine and enforce the lien upon the petition of either attorney or client, so that the section in its present form, and as it stood when this controversy arose, is as follows : “ The compensation of an attorney or counsellor for his services is governed by agreement, express or implied, which is not restrained by law. From the commencement of an action or special proceeding, or the service of an answer containing a counterclaim, the attorney who appears for a party has a lien upon his client’s cause of action, claim or counterclaim, which attaches to a verdict, report, decision, judgment or final order in. his client’s favor, and the proceeds thereof in whosoever hands they may come; and the lien cannot be affected by any settlement between the parties before or after judgment or final order. The court upon the petition of the client or attorney may determine and enforce the lien.” (L. 1899, ch. 61, p. 80, § 1; Code Civ. Pro. § 66.)

This act was construed by us in a recent case where the cause of action had become merged in a judgment, and we held that the statute created “ a lien in favor of the attorney on his client’s cause of. action, in whatever form it may assume in the course of the litigation, and enables him to follow the proceeds into the hands of third parties without regard to any settlement before or after judgment;” that all the world must take notice of the lien, and that it was unnecessary for the attorney to give notice of his claim to the other party. (Peri v. N. Y. C. & H. R. R. R. Co., 152 N. T. 521.)

In discussing the subject we said: “ It is urged by the defendant’s counsel that this construction of the section is against public policy, as the law favors settlements; that the plaintiff’s attorney might refuse to disclose his lien, and thereby stand in the way of settlement and compel parties to litigate who desired to compromise their differences. This criticism overlooks the fact that the existence of the lien does not permit the plaintiff’s attorney to stand in the way of a settlement. The client is still competent to decide whether he will continue the litigation or agree with his adversary in the way.”

There is much learning in the books relating to the lien of an attorney upon a judgment for his costs as it existed before

We now have under consideration a case where a settlement was made before judgment or even a trial, and the defendant claims that the lien of the plaintiff did not attach to the sum which it agreed to pay for a release of the cause of action. Its counsel concedes that the plaintiff might have interposed and prosecuted the action to judgment in his own behalf, notwithstanding the settlement. This form of relief is clumsy and illogical, because it authorizes the trial of a dead lawsuit in the interest of one who never owned the claim upon which it was founded. It was a device of the courts, not of the legislature, and sprang from the necessity of providing some remedy against fraudulent settlements. While it may still be resorted to in such cases, it would be of no value to the plaintiff, because his client immediately after the settlement went beyond the jurisdiction of the courts of this country and has remained absent ever since. Moreover, by bringing this action the plaintiff ratified the settlement and can have no relief except under the statute, which it is now our duty to construe.

The statute is remedial in character, and hence should be construed liberally in aid of the object sought by the legislature, which was to furnish security to attorneys by giving them a lien upon the subject of the action. The common law gave them no lien until the entry of judgment, but the statute gives them one from the commencement of the action. If the claim is prosecuted to judgment, or to a decision upon which judgment may be entered, the lien reaches forward and attaches to that also. When the claim is thus extinguished by

Of course, we do not refer to dishonest settlements made to cheat attorneys, which the courts will brush aside with a strong hand, but to honest settlements, made in good faith because the client preferred something certain in hand to the uncertainty of protracted litigation. Such settlements are not prohibited by the existence of the attorney’s lien. The legislature did not intend to make the lien the chief thing, nor to compel the client to abdicate his position as principal in favor of the agent or attorney whom he employed in order to secure his rights. It did not intend to prevent him from dealing with his own property as he saw fit, provided he exercised his honest judgment and took no advantage of his attorney. In this case the plaintiff, by standing on the settlement, admits that it was made in good faith and thus confirms his lien upon the proceeds, which was not defeated by payment to his client, for the defendant paid at its peril. It had both actual and constructive notice of the lien, and while it does not appear that it knew the share of the fund that the plaintiff v/as entitled to receive, its duty was to ascertain the amount and retain it for him.

Moreover, the general rule is that a lien upon property attaches to whatever the property is converted into and is not destroyed by changing the nature of the subject. Thus a lien upon timber ordinarily extends to the shingles made out of it; a lien upon domestic animals to their young subsequently born, and a lien upon a mortgage to the land into which the mortgage is converted by foreclosure. It follows its subject and cannot be shaken off by a change of form or substance. It clings to any property or money into which the

The remedy provided by the Code by means of a petition is " not exclusive, but cumulative, for a court of equity has always had power to ascertain and enforce liens. We have endeavored to establish that the plaintiff’s lien was transferred from the cause of action to the fund into which the claim was converted by the action of the parties, and hence within familar principles a court of equity has power to enforce that lien in an action brought for that purpose. Actions to establish and enforce liens are among those most familiar to equity jurisprudence. Even- if the relief ultimately granted is in the form of a money judgment, still that will be possible only through the exercise of equitable jurisdiction in ascertaining the lien and determining its amount. A money judgment may then follow, as a foreclosure is unnecessary when the subject of the lien lias already been converted into money. (Baily v. Hornthal, 154 N. Y. 648 , 661; Mooney v. Byrne, 163 N. Y. 87 , 96.) While the statute gives the lien, the plaintiff must show that he comes within the statute by establishing the facts alleged in his complaint, and the action is open to any defense tending to show that no lien ever existed, or that if it once existed it was discharged with the consent of the plaintiff, or was waived or forfeited by his misconduct or neglect. r ' •

Parker, Ch. J., Gray, Bartlett, Haight, Martin and Werner, JJ., concur.

Judgment reversed, etc.