Seligman v. Franco-American Trading Co. — 5 N.Y.S. 681

Majority

p. 681

Seligman et al. v. Franco-American Trading Co., Limited.

(Supreme Court, General Term, First Department.

May 24, 1889.)

Headnote

Judgment—Confession—Validity—Reference—Receiver.

Where a client confesses judgment for §2,500 in favor of Ms attorney for professional services, and the confession in attempting to show that the sum confessed is justly due, as required by Code Civil Proo. N. Y. § 1274, subd. 2, merely states that the attorney had charge of the client’s legal affairs, and rendered services of the reasonable value of §2,500, the receiver of the client, appointed at the suit of a judgment creditor, is entitled, on motion, to a reference to inquire into the justness of the attorney’s bill, and reduce the judgment, if there has been an overcharge.

Appeal from special term, New York county.

The Franco-American Trading Company, Limited, confessed judgment in favor of Theodore Seligman, Eugene Seligman, and George W Seligman. Kobert P. Lee, receiver of the company, moved to vacate the judgment. The motion was denied, and he appeals.

Argued before Van Brunt, P. J., and Brady and Daniels, JJ.

Oliver J. Wells, for appellant. Seligman & Seligman, respondents pro se.

The judgment was confessed on the 5th of October, 1885, for an indebtedness stated to be owing to the plaintiffs for professional services as the defendant’s attorneys and counsel; and on the 26th of December of the same year the appellant was appointed receiver of the property of the defendant at the suit of a judgment creditor, whose execution had been returned unsatisfied. The statement for the judgment was drawn with very great brevity, barely complying, if indeed it did comply, with what has been directed to be stated in it, to render it legal and regular, by subdivision 2, § "¡74, of the Code of Civil Procedure. That subdivision requires that the statement must show that the sum confessed is justly due, or to become due, while the statement itself contains no more than that the plaintiffs, as defendant’s attorneys and counsel, had general charge and cSnduct of its legal affairs, and rendered services from the 1st of January, 1884, to the 1st of October, 1885, of the reasonable value of $2,500. The receiver, considering that the statement was too deficient to comply with this direction of the law, or that the amount allowed was greater than the value of the services rendered, applied to vacate or set aside the judgment, after endeavoring to obtain a further statement disclosing the justice of the amount allowed by the judgment. To defeat the application the plaintiffs have taken the position that the receiver was not authorized to make it, and the case of Whittlesey v. Delaney, 73 N. Y. 571 , has been brought to the attention of the court as an authority sustaining this position-. But that case is entitled to no such weight or effect; for there the action was brought to vacate a judgment on the ground that it had been fraudulently recovered, and the court held that an action by the receiver was there necessary to secure that relief. In this respect it followed the decision made in Tracy v. Bank, 37 N. Y. 523 , which decided that a receiver could not move to vacate an attachment, as the law then existed, without first making himself a party to the action. But the

p. 682

judgment against which the receiver in this ease endeavored to obtain relief was entered on confession, and it has been the practice of the courts at all times to interfereiin, the way of vacating, modifying, or reducing such judg7 ments, by way of motion, and at the instance of other parties whose interests or rights may be shown to require protection against the judgment. And accordingly a subsequent judgment creditor was permitted to move to vacate the preceding judgment by confession, and that judgment was set aside on his application, in Chappel v. Chappel, 12 N. Y. 215 . And the principle upon which that decision was made is supported in Read v. French, 28 N. Y. 285 . A judgment entered upon the confession of the defendant, stands upon different grounds from one recovered by an actual adjudication of the court, and will not be allowed injuriously to defeat or postpone the legal rights of other parties. The receiver appointed in this case represented a judgment creditor, and, being vested with his rights, was authorized under these authorities to make this application. And from the very brief, if not materially defective, statements made for the plaintiffs’ judgment, he was justified in moving to vacate it, or to secure such an investigation concerning the amount mentioned in it as would prove the plaintiffs to be entitled to its allowance. And this rule applies with peculiar force to transactions between attorneys and clients. The relation is of a confidential character, and liable to be used by the attorneys for their advantage, to the prejudice of the parties employing them as well as of other creditors; and to sustain transactions between the attorney and client actual proof of good faith and fair dealing has been required by the law. And to promote that the receiver was entitled to a statement, supported at least by the evidence of the attorneys, showing that the amount allowed by the judgment was a just and legal claim against the defendant. That they failed to furnish, and, as the judgment contains no statements of facts from which the justice of the plaintiffs’ demand can be seen, a reference should be ordered upon which proof should be required to be given by them, or in their behalf, to establish their right, as against the defendant, to this sum of money, or to some portion of it; and, if the amount has been overcharged, then the judgment should be correspondingly reduced. The order from which the appeal ha.s been taken should be reversed, with $10 costs and the disbursements, and an order entered directing this reference. All concur; Brady, J., in the result.

Cases cited

Whittlesey v. Delaney 73 N. Y. 571 N.Y. 1878-05-21 p. 681
Chappel v. Chappel 12 N. Y. 215 N.Y. p. 682
Read v. French 28 N. Y. 285 N.Y. p. 682