In re Bensel

The commissioners have found:

“That David Tichnor and Herrmine Tichnor are the owners of a mortgage covering this parcel, dated May 8, 1907, and recorded in the Ulster county clerk’s office May 9, 1907, Book of Mortgages No. 281, page 130, upon which there is due $700 for principal and interest from May 8, 1907, and also that John G. Van Etten appeared before us as attorney for Charles M. Preston, individually and as executor of the will of Susan M: Preston, and for Mary M. Preston and Frances E. Preston, and Arthur A. Brown by Harrison T. Slosson, of counsel, appeared before us as attorney and counsel for William C. Preston. Subsequently John G. Van Etten withdrew his appearance as attorney and counsel for Frances E.. Preston and Mary M. -Preston. We recommend that the sum of $101 be allowed to John G. Van Ettén for expenses and disbursements, including reasonable compensation for witnesses, and a further sum of $195 for counsel fees. We further recommend that there be allowed to Arthur A. Brown by Harrison T. Slosson as counsel for expenses and disbursements, including reasonable compensation for witnesses, the sum of $78.”

This report was subsequently confirmed by the Supreme Court, and the recommendations of the commissioners followed. The court held:

“The person entitled to be paid the said sum (i. e., $3,900) is Charles M. Preston as executor of the will of Susan M. Preston, deceased, subject to the interest of said David Tichnor and Herrmine Tichnor, mortgagees as aforesaid.”

The order further .provided as follows:

“Parcel No. 385. John G. Van Etten appeared as attorney for Charles M. Preston, individually and as executor of the will of Susan M. Preston, deceased, and the sum of $101 is allowed for expenses and disbursements, including reasonable compensation for witnesses, and the further sum of $195 for counsel fees. Arthur Brown appeared as attorney for William C. Preston, one of the persons interested in said parcel, and the sum of $78 is allowed for expenses and disbursements,- including reasonable compensation for witnesses.”

The report was confirmed March 20, 1909.

Upon presenting the above-mentioned assignment to the representative of the comptroller’s office, payment was refused and the money

An assignment is also filed by Arthur A. Brown and Harrison T. Slosson of the sum of $100 payable cut of said award, said assignment being made by Mary M. Preston as administratrix with the will annexed of Susan M. Preston, deceased, and individually, and Frances E. Preston, and payment therefor is asked by Messrs. Slosson and Brown, and not objected to by said Mary M. Preston and Frances E. Preston.

Then comes into the motion said corporation, the Award Company, which presents a claimed contract or agreement or power of attorney dated November 3, 1906, signed by Susan M. Preston, which paper is short, and is inserted in full herein:

• ■ “The Award Company. .

“The undersigned hereby request, authorize, and empower the Award Company, its counsel and agents, for me and in my name to take such proceedings as it may deem advisable toward obtaining compensation for any loss or damage whatsoever, sustained or which may be sustained, by me on account of any property, real, personal or mixed, taken in, or injuriously affected by, any action or proceeding on the part of ‘the board of water supply of tire city of New York’ or the city of New York itself, in connection with such water supply or otherwise.

“In consideration of such services and necessary disbursements I do hereby promise, assign and agree to pay said company, its successors and assigns (plus all costs and expenses allowed), in full payment therefor—but only from and out of such awards as shall come to me by virtue of any such loss or damage!—the sums following, to wit:

“(1) In respect of lands taken as designated on maps filed by the city of New York (a) a sum equal to ten per cent. (10%) of the amount allowed between the assessed value thereof as of 1905 and $1,500; and (b) a sum equal to fifty per cent. (50%) of the amount allowed in excess of said ($1,500).

“(2) In respect of lands injuriously affected but not taken a sum equal to twenty-five per cent. (25%) of the amount allowed for any decrease in the value thereof.

“(3) In respect of any other loss or damage whatever, a sum equal to one-third of the amount allowed, received or confirmed.

“Dated Kingston, N. Y., Nov. 3, 1906.

“[Signed] Susan M. Preston, 58 Pair St, Kingston, N. Y.

“In presence of:

“[Signed] William C. Preston.”

This paper is not signed by the Award Company. It will be searched in vain to ascertain therefrom what it is that the Award Company binds itself or agrees to do or attempt to do for such liberal payment as it required Susan M. Preston to agree to pay it. There is no agreement to do anything on its part.

It is urged on behalf of all the parties except the Award Company that it, the Award Company, has no standing in court; that it could not appear and practice law; and that therefore this contract, agreement, or power of attorney between it and Susan M. Preston was void, 6 as there was no consideration moving between said company and said Susan M. Preston, and that the contract, also, if it had any validity in its inception, would be void because it was unconscionable in amount, and that, the contract being void in its inception, no validity or life could be imparted to it by Charles M. Preston thereafter. The principal contention therefore arises here as to the claim of the Award Company. If that is disposed of adversely to it, there are sufficient funds to satisfy the other claims, and leave an amount due to the owners of the award as made and confirmed by the court. I think that the Award Company has no standing here to enforce its lien against this award, for these reasons:

First. The agreement between Susan M. Preston and the Award Company bears date November 3, 1906. Susan M. Preston died November 30, 1907. The first hearing before the commission upon this claim was February 10, 1908. Assuming for a moment that the Award Company had any right or power to make such a contract, the most that could be claimed for it would be that it was a power of attorney, and the death of Susan M. Preston pripr to the acting under that power of attorney would, of course, revoke it; so at the time tire trial began the Award Company in any event had no power of attorney from Susan M. Preston.

Second. Charles M. Preston, as executor of the will of Susan M. Preston, could not make a contract with himself as president of the Award Company; hence he could not give as executor, if so disposed, a valid power of attorney to this corporation, if it could act as an attorney and counselor at law. No such power of attorney was submitted.

Third. An executor of an estate has no power in a case of this kind to enter into a contract with any person or persons and to agree (to

Fourth. The contract is utterly unconscionable between the parties. Here is an old lady possessed of premises apparently worth $3,900. She signs a contract with a corporation having no right or authority to practice law by which a bill is ultimately presented against her or her estate for $1,500 for legal services for recovering $2,400 to the estate. This is not a contingent case or a contingent fee. There is nothing contingent about the recovery in this case. There had to be a recovery and the issues were simple; i. e., the market value of the property. The city, of New York was to take the property, and it was required by the act and by the Constitution to pay a just compensation therefor, and, in any event, the city could not escape that liability. In addition the act provides that compensation shall be made to the party or parties for reasonable counsel fee, and in this case as we have seen, in addition to the payment of witnesses fees, $195 was allowed to one counsel as counsel fees, which is to be paid by the city of New York. The land was there in plain sight. The city of New York was applying to obtain that land. Even assuming for a moment that the Award Company had the power to enter into such a contract, the conscience of the court would be shocked at the amount sought to be obtained for any services that could be rendered under that contract, or that were in fact rendered by any person or persons in this proceeding.

_ Fifth. A careful examination of the trial of the case which occupied two days with a part of a day for an argument concerning a law point therein fails to disclose any appearance whatever upon the part of the Award Company. The court had before it in this case Judge Van Etten and Messrs. Brown and Slosson. It made to them fitting and appropriate allowances for counsel and witness fees in this case. No one can practice law under disguise or without announcing his appearance to the court. It is extremely unlikely that if the court had been advised of the existence of any such contract as here claimed, and that such contract would be attempted to be enforced, that any allowance would have been made payable to the attorneys for the claimants from the city of New York. The court is entitled at all times to preserve its dignity,- and for the furtherance of justice to know all the parties appearing before it either as attorneys or principals. It was so informed in this case at all stages until this motion was made, when for the first time it is claimed that there was a party claiming to surreptitiously represent all the interests of the claimants in this litigation at all' stages and for, some time before any hearing was had. Judge Van Etten and Messrs. Brown and Slosson had, so far as the record disclosed and so far as actual physical appearance went, appeared for the claimants. It is now claimed by Mr. Dunne on behalf of the Award Company that it, the Award Company, had been an invisible but present party all through the litigation, carefully protecting and establishing the rights of claimants. Judge Van Etten announced that he appeared, and he did so appear, before the commissioners for Charles M. Preston individually and as executor of the will of Susan M. Preston and for Mary M. Preston and Frances E.

Sixth. The whole status of the Award Company and its rights under a paper of the kind submitted here has been definitely settled so recently as May 17th of this year by the Court of Appeals in the Matter of the Application of the Co-operative Law Company, a corporation organized under the business corporations law of the state of New York, reported in 198 N. Y. 479 , 92 N. E. 15 . The court there took up the question as to whether prior,to the passage of an act which in direct terms prevents a corporation similar to this" from practicing law such a corporation could practice law, and decides the question in the negative.

The corporation there seeking the indorsement of the Appellate Division in the Second Department was organized under the business corporations law with its objects stated in its certificate of incorporation practically similar to "those of the Award Company, which are as follows:

“Second: The purposes for which such corporation is formed, are:

“To carry on, conduct, and transact a general claim and collection business, in the collection and enforcement of all manner of claims throughout the United States of America and elsewhere, and more particularly to take charge of the prosecution, enforcement, adjusting, and compromising of all claims for damages, direct or indirect, growing out of or accruing from, the condemning, taking and acquiring of private property, real, personal, or mixed, whether corporate or individual, for state, municipal or corporate purposes, or for any purpose whatever, under the right of eminent domain; to enter into contracts with parties and claimants in respect of the compensation to be received or retained by it in the collection of such claims, or the prosecution and enforcement thereof; and in connection therewith, to use and employ all such means, remedies and usages, including the retaining and employment of counsel, as shall be best calculated for the safe and successful collection, prosecution and enforcement of all such claims as shall be entrusted to its care, management and control.

“Also to purchase from -rich owners or claimants all their rights and interests in and to real, personal or mixed property taken or to be taken as aforesaid.

“Also to do all and everything necessary, suitable and proper for the accomplishment of any of the purposes or the attainment of any of the. objects or the furtherance jf any of the powers hereinbefore set forth, either alone or in association with other corporations, firms or individuals, and to do every other act or acts, thing or things incidental or appurtenant to or growing out

of or connected with the aforesaid business or powers, or any part or parts thereof, provided the same be not inconsistent with the laws under which this corporation is organized.”

The court in the Matter of Co-operative Law Company, supra, in an opinion in which all the judges concur, says:

“We agree with the learned counsel for the appellant that the vital question is whether prior to the act of 1909 a corporation could be lawfully organized to practice law. He claims that authority may be found in that part of the business corporations law which provides that ‘three or more persons may become a stock corporation for any lawful business.’ Business Corporations Law (Consol. Laws, c. 4) § 2. This means a business lawful to all who wish to engage in it. The practice of law is not a business open to all, but a personal right, limited to a few persons of good moral character, with special qualifications ascertained and certified after a long course of study, both general and professional, and a thorough examination by a state board appointed for the purpose. The right to practice law is in the nature of a franchise from the state conferred only for merit. It cannot be assigned or inherited, but must be earned by hard study and good conduct. It is attested by a certificate of the Supreme Court, and is protected by registration. No one can practice law unless he has taken an oath of office and has become an officer of the court, subject to its discipline, liable to punishment for contempt in violating his duties as such, and to suspension or removal. It is not a lawful business except for members of the bar who have complied with all the conditions required by statute and the rules of the courts. As these conditions cannot be performed by a corporation, it follows that the practice of law is not a lawful business for a corporation to engage in. As it cannot practice law directly, it cannot indirectly by employing competent lawyers to practice for it, as' that would be an evasion which the law will not tolerate. ‘Quando aliquid prohibetur ex directo, prohibetur et per obliquium.’ Co. Lit. 223.

“The relation of attorney and client is that of master and servant in a limited and dignified sense, and it involves the highest trust and confidence. It cannot be delegated without consent, and it cannot exist between an attorney employed by a corporation to practice law for it and a client of the corporation, for he would be subject to the directions of the corporation, and not to the directions of the client. There would be' neither contract nor privity between him and the client, and he would not owe even the duty of counsel to the actual litigant. The corporation would control the litigation, the money earned would belong to the corporation, and the attorney would be responsible to the corporation only. His master would not be the client, but the corporation, conducted it may be wholly by laymen, organized simply to make money and not to aid in the administration of justice, which is the highest function of an attorney and counsellor at law. The corporation might not have a lawyer among its stockholders, directors, or officers. Its members might be without character, learning, or standing. There would be no remedy by attachment or disbarment to protect the public from imposition or fraud, no stimulus to good conduct from the traditions of an ancient and honorable profession, and no guide except the sordid purpose to earn money for stockholders. The bar, which is an institution of the highest usefulness and standing, would be degraded if even its humblest member became subject to the orders of a money-making corporation engaged, not in conducting litigation for itself, but in the business of conducting litigation for others. The degradation of the bar is an injury to the state. A corporation can neither practice law nor hire lawyers to carry on the business of practicing law for it any more than it can practice medicine or dentistry by hiring doctors or dentists to act for it. People v. Woodbury Dermatological Institute, 192 N. Y. 454 [ 85 N. E. 697 ]; Hannon v. Siegel-Cooper Co., 167 N. Y. 244 , 246 [ 60 N. E. 597 , 52 L. R. A. 429 ]. The Legislature in authorizing the formation of corporations to carry on ‘any lawful business’ did not intend to include the work of the learned professions. Such an innovation with the evil results that might follow would require the use of specific language clearly indicating the intention. Recent legislation simply emphasizes and protects the established policy of

the state, and, although ex post facto, tends to show that no such object was in contemplation when the. general term ‘lawful business’ was used in the statute to authorize the formation of business corporations. Laws 1909, cc. 483, 484. Business in its ordinary sense was aimed at, not the business or calling of members of the great professions, which for time out of mind have been given exclusive rights and subjected to peculiar responsibilities. All statutes relating to the same subject-matter must be read together, and construed as parts of an entire system. When the provisions of the Code of Civil Procedure regulating the practice of law and the conduct of lawyers are read in connection with the clause of the business corporations law quoted above, it is obvious that they do not relate to the same subject-matter, and that in enacting the latter the Legislature was dealing with something utterly foreign to the former. Code Civ. Proe. §§ 56-81; Judiciary Law (Laws 1909, c. 35 [Consol. Laws, c. 30]). The special provisions relating to lawyers were not modified or affected by the general provision authorizing the formation of business corporations. * * * The Appellate Division was clearly right in vacating its inadvertent order of approval, for it had no power to approve of an organization not authorized by law. Clark v. Scovill, 198 N. Y. 279 [ 91 N. E. 800 ]. The appellant was not ‘a corporation lawfully engaged in a business authorized by the provisions of any existing statute,’ and according to no possible construction of the final sentence of section 280, of the Penal Law (Con-sol. Laws, c. 40) could its ‘existence, organization or incorporation’ be lawfully approved by the Appellate Division.”

An attorney’s lien against a cause of action or the resultant verdict, judgment, or award can only be successfully asserted and maintained by an attorney and counselor at law. This Award Company is not an attorney and counselor at law, and it cannot, as the above case holds, act as such by employing competent lawyers to do the work which it claims to have done; in other w’orcls, it cannot do indirectly that which it cannot do directly. See, also, in this connection Bronold v. Engler, 121 App. Div. 123 , 105 N. Y. Supp. 508 , affirmed in 194 N. Y. 323 , 87 N. E. 427 , 21 L. R. A. (N. S.) 176 , which holds that:

“Where parties hold themselves out as pursuing the trade of a master plumber, it is a violation of section 45 of the General Cities Law (Laws 1900, c. 327) to carry on that business without a license. Persons so doing are not exempt from the condemnation of the statute by the employment of a licensed master plumber as a manager of the business.”

In that case an action was brought to recover a balance due the plaintiffs on a contract for furnishing plumbing materials and labor. It was defended upon the ground that at the time of the execution of the contract and of the performance of the work the plaintiffs were unlawfully engaged in the plumbing business, not being plumbers. A recovery was originally had which was reversed by the Appellate Division, and that reversal was sustained by the Court of Appeals. By analogy no recovery could be had by the Award Company in this case against Susan M. Preston or her estate or the estate of Charles M. Preston or William Chauncey Preston, Mary M. Preston, and Frances E. Preston for undertaking .to act as attorneys and counselors at law without any authority so to do. Therefore, if no recovery can be had, certainly no attorney’s lien against the award can be successfully maintained.

An order may be handed up providing for the Farmers’ Doan & Trust Company from the amount deposited with it for the award and interest thereon to pay: First. To the mortgagees David Tichnor