Dunn v. Hudson River Electric Co.

At sometime one Hebert, as administratrix, brought an action against the Hudson River Electric

While the action was in the condition left by said last-mentioned order an order was made in the Circuit Court of thellnited States, which, after reciting that said defendant and other allied companies respectively were being mismanaged and were insolvent, appointed the above-named respondents receivers of said defendant and of all of its prcperty with directions to take possession thereof and manage the same, and commanding the defendant and all of its officers and agents and employees to deliver up to said receivers possession of all of said property and to refrain ffbm -interfering with the possession by said receivers of said property or with the discharge of their duties as such. It is assumed that said order became effective and that said receivers took possession of such property and entered on the complete and exclusive management of the affairs of said corporation.

The relations between appellant and said receivers were or became unfriendly. While it does not appear what may have been the original cause of this, it is sufficiently evident that the feeling of antagonism was both pronounced and reciprocal. Under these circumstances the appellant notified respondents of his unwillingness to continue to act as attorney in the above-mentioned action and requested them to substitute other counsel in his place and provide for payment for his services already rendered. The receivers disclaimed ability to do the latter, but insisted that appellant continue to act as counsel in the case, expressing their ability and willingness to pay him for such services as might be thereafter rendered. The attempt was made to solve the disagreement and situation thus precipitated by the order already referred

We all seem to be in accord concerning the general principles which govern the substitution of attorneys and the preservation or loss of a lien by the attorney who is displaced. I accept the statement of these principles made by the chief judge in his opinion when he says, “The present practice seems now well settled that the courts will not enforce a-substitution of attorneys where the first attorney is without fault, unless the amount due the attorney for his services and expenditures is either paid or secured. At the same time it is equally well settled that if the attorney has refused, without just cause, to proceed with the prosecution of the case a client has the right to the substitution of a new attorney in his place (citations) and thereby the old attorney by his voluntary withdrawal forfeits his lien on the papers in the suit.”

The controversy arises, as so often is the case, over the application of these general principles to specific facts and it must be largely decided by the answer which is given to the narrow question whether the appellant refused “without just cause” to proceed with the defense of the Hebert action under the respondents as receivers. If he was justified in declining to continue and extend the obligations of his original retainer under and for the benefit of the receivers, then it must be conceded that they had no right to deprive him of his lien because he did so. It seems to me that neither principle nor authority compelled him to serve them as counsel simply because he had been originally retained by the corporation to the management of whose affairs they had succeeded.

That the relationship between attorney and client is one

It is apparent that a relationship so personal and confidential may be more easily disturbed than a less sensitive one, and that its effectiveness may be so impaired by any change which destroys the confidence of the client or which requires the unwilling transfer by the attorney of his allegiance in a given matter to a substituted client as to make it desirable to permit a termination of the relation rather than to attempt to coerce its continuance under adverse conditions. This policy of permitting its dissolution in a manner which would not prevail in the case of ordinary contracts has been upheld in various cases.

It is well established in the" case of the client that he may at any time for any reason which seems satisfactory to him, however arbitrary, discharge his attorney. If the latter has not been guilty of any tangible violation of the relation, this substitution must be made on conditions which are fair to him. (Tenney v. Berger, 93 N. Y. 524 , 529; Matter of Prospect Avenue, 85 Hun, 257 ; Matter of Paschal, 77 U. S. 483 , 496.)

In illustration or amplification of this general rule it has been held that a retainer accepted by an attorney will terminate with his client’s death and that he is not under obligation to transfer and continue the relationship to and with the representatives. (Whitehead v. Lord, 7 Exch. 691; Avery v. Jacobs, 15 N. Y. Supp. 564 .)

Also it has been laid down that a client may not introduce into a case a counsel who is professionally or personally objectionable to the attorney already retained therein, and if he attempts so to do the latter may discontinue his retainer. (Tenney v. Berger, 93 N. Y. 524 , supra.) Of course it is unnecessary to refer at length to those other palpable violations of a client’s duty to his attorney which justify the latter’s withdrawal, as that the former refuses to advance the necessary funds with which to prosecute the litigation, or that he attempts to enforce the employment of unworthy methods of sustaining his litigation.

It seems to me that the principles involved in these cases when applied to the present one in the light of the general observation made by Judge Earl in the Tenney case, “that the rule that an attorney is bound to an entire contract should (not) be very rigidly enforced, while the client is left with the right arbitrarily to discharge him at any time,” fully justified the appellant in declining to extend and give the benefit of his retainer to substituted and new clients with whom his personal relations were unfriendly, for it must be insisted that for all practical purposes there was a substitution of clients when the respondents were appointed receivers. It may be conceded that technically the corporation retained its title to property and that there was a mere legal possibility that

Two illustrations have been suggested for the purpose of sustaining the position of the respondents and of opposing the views herein expressed.

It is said that the officers and. directors of a corporation might he changed at any election and it is asked whether such a change could justify an attorney in declining to carry on a retainer by the corporation. It certainly would not, and I do not see the similarity between that case and this as applied to the question before us. An attorney who undertakes the conduct of an action in behalf of a corporation must he assumed to contemplate those changes which continually happen in the ordinary management of a corporation and to make his contract with reference thereto. Moreover, a change in the officers or directors of a corporation does not alter the identity of the client. It simply means that the stockholders who constitute and own the corporation have selected new agents for the management of their business just as the attorney has been selected. The case is very different from one where insolvency, not to be expected or assumed in making a contract, has ensued and has been followed by the' selection by a judicial power outside of and superior to the corporation of persons entirely disconnected with the cor

It has also been asked whether the appointment of receivers of a corporation would entitle an ordinary employee of the latter to discontinue his contract of employment. The concession that this result would not follow does not at all seem to me to impair the conclusion that the relationship of attorney and client, which has been given a peculiar and confidential character, is subject to principles and rules which do not apply to an ordinary contract.

In my opinion the order should be modified by striking out the clause requiring the appellant to turn over to the substituted attorneys the pleadings and papers in the case, and as so modified it should be affirmed, with costs to the appellant.

(dissenting). I do not see how any distinction can be drawn between the right of the appellant to resist the substitution of an attorney hi his place and his right to a lien on the papers in the action. The present practice seems now well settled that the courts will not enforce a substitution of attorneys where the first attorney is without fault, unless the amount due the attorney for his services and expenditures is either paid or secured. At the same time it is equally well settled that if the attorney has refused, without just cause, to proceed with the prosecution of the case, a client has the right to the substitution of a new attorney in his place (Matter of H., 93 N. Y. 381 ; Sessions v. Palmeter, 75 Hun, 268 ; Halbert v. Gibbs, 16 App. Div. 126 ), and that the old attorney by his voluntary withdrawal forfeits his hen on the papers in the suit. (White v. Harlow, 5 Gray, 463 ; Morgan v. Roberts, 38 Ill. 67 ). Two rules, one to the effect that the withdrawal of an attorney authorizes his client to substitute a new attorney, and the other, that despite such withdrawal and substitu

Mr. Brackett declined to proceed in the action because of unpleasant relations between himself and the receivers. I think this was an insufficient ground. The relation between client and attorney is, of course, confidential, and it may be that the assignment by the client of the cause of action to another party would justify a withdrawal from further procedure in the action by the attorney, though, personally, I do not believe that such is the law. In Avery v. Jacobs ( 15 N. Y. Supp. 564 ) it was held that the death of the client terminated the relation

The ground on which the attorney’s relation to his client ceases upon the death of the latter is because death revokes all agencies. On the death of the client notices and papers in the suit can no longer be served upon the attorney by his adversary. Of course, that was not the case here. We have, within a few weeks, refused to dismiss the appeal of a corporation at the instance of the adverse party who claimed that, the corporation having gone into bankruptcy and the trustee in bankruptcy having refused to prosecute the appeal, the corporation had no longer the

Haight, Vann and Collin, JJ., concur with His-cock, J.; Willard Bartlett and Chase, JJ., concur with Cullen, Oh. J.

Ordered accordingly,.