Hart v. Mayor of New York — 53 N.Y. St. Rep. 353

Majority

p. 353

Thomas M. Hart, Resp’t, v. The Mayor, etc., of the City of New York, App’lts.

(Supreme Court, General Term, First Department,

Filed May 12, 1893.)

Headnote

Attorneys—Lien.

The lien secured to an attorney, by § 66 of the Code, does not debar a person who has agreed to give his attorney as compensation for his services in an action a portion of the recovery from settling without the consent of such attorney, although if the party is irresponsible, so that a payment to him might result in prejudice to the attorney, the court should allow the latter to proceed with the action for his own benefit, unless within a fixed time his proportion of the amount given on settlement be paid to him.

Appeal from an order granting the plaintiff’s attorney of record leave to carry on and prosecute the above action for his own benefit for the purpose of recovering his fees and prosecuting his lien on the cause of action for his compensation.

William H. Clark (Sidney J. Cowen, of counsel), for app’lts; John C. Robinson (L. E. Chittenden, of counsel), for resp’t.

This action was brought for the recovery of $3, ■040, plaintiff's salary as an inspector of masonry. An agreement was made between the plaintiff and his attorney, Bobinson, that in consideration of professional. services to be rendered in the action the attorney was to have half of the claim, or fifty per cent, of the recovery. Hotice of this agreement was served on counsel for defendants. The latter endeavored to reach a settlement with the plaintiff and his attorney, but an impediment to this was ■encountered in the person of the attorney, who refused to assent to a settlement. Subsequently the defendants settled with plaintiff, in the face of the attorney’s notice of lien, for the sum of $800. This settlement, and the release to defendants, were then interposed by an amended answer. The plaintiff’s attorney then moved for an order to be permitted to prosecute the action for his ■own benefit, which at first was denied upon the ground that no leave was necessary, and that the attorney could proceed with the action. Thereafter, on the case being reached for trial before the same judge who denied the motion, he concluded, contrary to his former opinion, that leave of the court was necessary, and thereupon granted leave to apply anew, which was done, and such leave was granted by an order from which the defendants now appeal.

The question of an attorney’s lien and the mode of its enforcement have frequently been before our courts, and many cases might be cited which carefully review these subjects as they existed prior to and since the enactment of present § 66 of the Code

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of Civil Procedure. As the latter is now controlling, it would be useless to go over the ground already covered, it being sufficient, upon the facts here appearing, to refer to a few of the cases which have come before the courts since the enactment of the section of the Code referred to, and deduce therefrom our conclusion. Section 66 of the Code provides that “ the compensation of an attorney or counselor for his services is governed by agreement, express or implied.” In addition, it gives the attorney a lien upon the client’s cause of action, and prescribes that it is not to be affected “by any settlement between the parties before or after judgment.” The construction placed upon this section is that the lien which thus attaches in the attorney’s favor cannot be impaired of destroyed by collusion or fraud ; and in cases where this is made to appear the court has undoubted power, and will exercise it, to set aside a judgment, if such has been procured in an action, to the end that, an attorney may proceed and enforce the lien or claim upon the cause of action. The authorities, therefore, which bear upon cases-wherein the element of fraud or collusion is present are to be carefully distinguished from a case which presents facts similar to those in the case at bar. There is no suggestion here of fraud or collusion, but a question as to whether or not a person who has-given to his attorney a right to one-half of any amount that may be recovered by judgment or by way of settlement as and for his compensation is thereby debarred and prevented from settling the action without such attorney’s consent, and, if the client makes such settlement in good faith, whether the action can thereafter be prosecuted for the benefit solely of the attorney. As already shown, the section (66) provides that the compensation is to be determined by agreement, express or implied. The notice served upon and "which binds the defendants states that the attorney has “ a lien on the cause of action herein to the amount of one-half of any judgment, settlement or recovery therein for professional services rendered to the plaintiff in this action, and I request you to make no settlement thereof with any person except myself, 'without due notice to me, and provision for the payment of the amount of said lien.” We do not think that it can be seriously contended that this form of notice should be so construed as to be extended in favor of respondent’s view that the plaintiff had divested himself of all right of settlement Its language is plain that the attorney was to have one-half of the amount of any settlement for his professional services, and this is followed, it is true, by a request that the defendants should make no settlement except with the attorney. After having attempted, however, to negotiate such a settlement with the attorney, and failed, it was entirely legal for the defendants to settle with the plaintiff, and thus buy their peace.

As said in Lee v. Vacuum Oil Co., 126 N. Y., 579 ; 38 St. Rep., 662 , “We are of the opinion that the existence of such a lien in favor of the attorneys does not confer a right on them to stand in the way of settlement of an action which is desired by the parties, and which does not prejudice any right of the attorneys. We do not think that such an agreement deprives a

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party of the right to control the management of his own cause, and to determine when the litigation shall cease, and how far it shall be extended. The client still remains the lawful owner of the cause of action, and is not bound to continue the litigation for the benefit of his attorneys when he judges it prudent to stop, providing he is willing and able to satisfy his attorneys’ just claims. In fact, the lien under the agreement was intended for and operates only as a security for the attorneys’’ legal claims, and, unless those are prejudiced by the client’s contract, she has unrestricted control of the subject of the action and the terms upon which a settlement shall be effected.”

And in Poole v. Belcha, 131 N. Y., 204 ; 42 St. Rep., 856 , it is said: “ The lien secured to an attorney by § 66 of the Code does not prevent the party who owns the judgment from receiving payment thereof, and executing a discharge. When it is shown that such payment or discharge will operate to deprive the attorney of his costs, the court has power to protect him; but it cannot be assumed that a settlement is in fraud of his rights. Until the lien of the attorney is asserted in some way, the judgment remains the property of the client.”

And in the same case it is said: “ In order to warrant the court in disregarding a settlement and release made in an action, it must be shown that to give full effect to them will operate as a fraud upon the attorney, or at least to his prejudice, by depriving him of his costs, or turning him over to an irresponsible client.”

Here, it is made to appear that the plaintiff is not responsible, and the payment of the whole amount of $800 might result in prejudice to the attorney; and we think that, upon this fact appearing, it was the duty of the court to have permitted the attorney to proceed with the action, unless, within a time to be fixed in the order, one-half of the amount given upon the settlement was paid to the attorney.

The order should, therefore, be so modified, and, as thus modified, affirmed, without costs to either party.

Van Brunt, P. J., concurs.